(^290) THE WEALTH AND POVERTY OF NATIONS
based heavy-chemical industry producing alkalis, acids, and salt.
Then, it had all the ingredients for a carbon-based manufacture: no
country produced more of the raw material coal tar; nowhere was it
cheaper. Finally, it offered the world's biggest market for textile dyes.
Yet within a generation the industry left British shores to settle in
Germany and to a lesser extent in France and Switzerland. By 1881,
Germany was making about half of the world's artificial dyestuffs; by
1900, between 80 and 90 percent. The major German producers
were able to pay dividends of over 20 percent, year in and year out
through good times and bad, while investing large sums in plant,
research, and equipment. This was one of the biggest, most rapid
industrial shifts in history.^19
Why? Why this apparent violation of the "laws" of comparative
advantage and path dependency? Because apart from Perkin and a
few other sports, Britain did not have the trained and gifted chemists
needed to generate invention. Certainly not so many and so well
trained as could be found on the Continent. So when A. W.
Hofmann, Heinrich Caro, and their German colleagues in Britain
were drawn back home by attractive offers, the British organic
chemical industry shriveled. In Germany, by contrast, big
corporations arose and flourished: Hoechst, BASF (Badische Anilin
u. Soda-Fabrik), Bayer, Agfa, built around top-flight chemists and
chemical engineers, equipped with well-fitted house laboratories, and
closely tied to the universities.
The significance of this pool of talent combined with enterprise
and a research-oriented culture shows up well in the story of artificial
indigo. Here was a logical candidate for synthesis: a major colorant,
carbon compound, derived at high cost from exotic plants (woad
and others). In 1880, Professor A. Baeyer synthesized it and sold the
process to BASF and Hoechst, which decided there was enough to
share and pooled resources. They needed each other. Seventeen
years, 152 patents, and many millions of marks later, the two firms
still did not have a commercially feasible technique. One dead end
used a different synthesis, also by Baeyer; but it required so much
toluene that the coal-tar industry could not have supplied it without
flooding the market with such co-products as benzene and
naphthalene. Waste products are the curse of the chemical industry
and the people who live near it. They are also a powerful stimulant
to new research.^20
At this point, BASF and Hoechst turned to a method worked out
at the ETH (Eidgenôssische Technische Hochschule, also known as
nora
(Nora)
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