Imperial Valley press., 1938-01-10

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backlog OF "bread-and-butter' de-
mand for industrial essentials,
Caustic soda and soda ash are in
dlspensable raw materials in the
soap, rayon, paper, textile, glass,
petroleum, and other industries.
All Customers
Every branch of the steel and
metal industries would be handi-
capped without plentiful supply
OF the oxy-acetylene gases used for
cutting and welding. Important
consumers in this field include the
automobile, railroad, construction,
and machine tool companies. Even
if further competition is offered
by electric welding, the acetylene
method is constantly working out
new applications. Coal and copper
mining require great volumes OF
explosives.
Carbon black is necessary for
making automobile tires. New con-
struction and home improvement
should boost the demand for paints
and lacquers Medical requirements
maintain a steady outlet for medi-
cal chemicals. Plastics are finding
their way into automobile, build
ing, and various other fields. Cen
eral business activity requires COM
mercial alcohol as its standard SOL
vent Even the food and grocery
trades are calling upon the chem
lists. 1t is truly the universal in
dustry. This is the second reason
for my enthusiasm.
Politics Proof
Not only today's proSaic needs,
but tomorrow's irresistible demands
are crowding business toward this
growing industry. Unruly labor,
cumbersome overhead charge S,
sharper competition, necessity for
speed, quicker style changes-are
all aiding the chemicals. Perhaps
the most important of these fac
tors today is the urge on the part
of many employers TO make their
business labor proof" Most peo-
pie do not think of it in this way,
but the chemical industry sells more
'labor-saving machinery" in the
form of new processes every year
than the neutrality-suspicious. them
selves {
Unlike mechanical methods, chem
duct without much more labor
Chemicals never sit down. Through
out the industry labor costs repre-
sent only 20 per cent of the value
added to the product by manufac-
turing as compared, for instance,
with 30 per cent in textiles. 1t is
winning bigger volume through
lower prices made possible by
greater efficiency. Late 1886 was
the first time since 1923 that chem
ical prices had been boosted. The
current slump has started prices
down again and the outlook is
consequently better. Moreover. the
industry is too complex and nimble
TO be an easy stickup for politi-
clans. This labor proof and pol
itics-proof" feature is a third rea-
son for my enthusiasm.
Hedges Against War
Furthermore, the industry is for
titled by two more hedges in ad-
dition to those already mentioned.
First, If the smoldering fires of in
flation blaze again, the industry
should be among the best of hav-
ems for capital. Second, see no
probability Of a general European
war in 1888. However, with world
conditions as unsettled as they are
war proof" industry naturally
is popular. Certainly, the chemical
makers would be running fuIl-blast
during a war period. Hence, while
the business seems TO be in a posi-
ton to benefit from good news, it
is also well-protected against dis
asters. This is a fourth reason why
the industry and its securities are
so popular with me.
OF course, for these four reasons
chemical stocks usually sell high
N relation TO their earnings. Inyes-
iors are willing TO pay a much big
ger price for chemical shares. Nov
ing-picture stocks sell at about
eight times annual earnings per
share, oils at twelve times profits;
/ while chemicals are customarily
priced at twenty TO thirty times
earnings. With the outlook for bet
ter business later in 1888, the chem
ical industry will be real lead
der Stocks of established concerns
in this Industry of 1888" should
be included IN every investors list
to provide balance, stability, and