Potash Politics

Ever since 1860 the U. S. has been almost entirely dependent on Europe for one very essential chemical: potash.* Last year the U. S. made history by producing 52% of its potash at home. Recently the annual report of the Bureau of Mines revealed that fact. Last week the consequences of it became apparent: Europe launched a potash war to recover the U. S. market.

Potash politics come easy to Europe's masters of power politics. Europe's Cartel is about two-thirds Potash Syndicate of Germany, some French, less Polish. Its bankers are British. Spain, an independent producer, thoroughly undercut the trust's prices in 1933 and 1934. But in the spring of 1935 the Syndicate, thanks to German control of Spain's oldest potash company, made a tentative deal with Spain. Immediately the world price snapped back from its trade war low.

This deal was soon voided when Spain's Republican Government nationalized the potash fields. Since Russian potash (fully occupied feeding the soil of the steppes) was the only other European rebel against Cartel discipline, German and French potash magnates sniffed the rise of a rival Socialist combine. So did their London bankers and sales agents--J. Henry Schroder & Co.--a firm which is an economic booster of the Rome-Berlin Axis. Franco's victory ended their fears, brought Spain back into the potash axis.

Meanwhile, Schroder & Co. had helped to form a company named Compensation Brokers, Ltd., which gave Germany strategic raw materials on the cuff. Germany's resultant debt served as an argument to push such German exports as potash in order to increase Germany's ability to pay. Last year, however, was a poor year: Schroder & Co. reportedly sold only $20,000,000 worth of the German Syndicate's potash.

Last week the appeasement-minded potash interests of Europe's democracies, and dictatorships, far from preparing for a war against one another, banded together more firmly than ever to keep the expanding U. S. potash industry from depriving them of the U. S. market. U. S. consumption in 1938 was 467,000 tons (15% of world production) which provided $23,260,400 worth of business, with the Cartel cut down to $13,512,110. Down came the Syndicate's U. S. price (50-c- to $1.75 a ton) on three important grades.

Irony of the Syndicate's sudden discovery that it had a real rival in the U. S. potash industry is the fact that U. S. production has been subsidized by no tariff. Had the foreign producers not set up monopoly prices, the U. S. industry might have grown more slowly, but the Cartel's greed was all the "protection" that the infant industry needed. The Syndicate's final stupidity was to maintain its prices during the 1938 depression. As a result its sales to the U. S. fell from 351,445 tons to 193,609 tons (45%), while sales of domestic potash expanded by 7%.

Last year, Potash Co. of America (owned in Denver) profited from the Syndicate's attempt to rig the market, and doubled its plant capacity at Hobbs, N. Mex. Union Potash and Chemical Company, also of New Mexico, and 50% owned by International Agricultural Corp. (big fertilizer company) acquired three new leases to Government potash land, sped up shaft sinking to new deposits.

No. 1 U. S. producer is American Potash and Chemical Corp., partly British-owned. Its plant at Searles Lake, in the Mojave desert in California, is a monument to U. S. chemical progress. In 1926 American Potash and Chemical, taking over a property three times bankrupt since 1896, began to research the problem of deriving potash commercially from its abundant borax properties. Directed by famed Chemist Dr. John Edgar Teeple (died: March 23, 1931), it perfected methods for producing potash--two tons of potash for each ton of borax.

This company's difficulty was that as it increased potash production it had to sell more borax. To accomplish this, borax prices were halved between 1926 and 1930 --when all other prices were skyrocketing. The price cut worked and borax exports rose from 14,000 tons in 1926 to 80,000 tons in 1929. Today, American Potash and Chemical and its two competitors can readily increase their capacity to supply all U. S. potash needs.

*Used in soaps, chrome tanning, optical glass, electroplating, photography and, above all, fertilizer. Originally potash was obtained from wood ashes. Now it is obtained more economically from mineral deposits or extracted from very salty water such as the Dead Sea being highly soluble, it is not found in surface deposits except in deserts.

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