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Halogen Hardships
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Herbert H. Dow at the age of 22. Courtesy Post Street Archives. |
Herbert Dow tried and failed several times before finding the formula for chemical success
Just as in the business boom of the 1990s, start-up companies
in the 1890s lived on venture capital. Before the
turn of the 19th century, Midland, MI, sitting atop an alkali
basin, was inhabited mostly by tough men looking to make a
buck in the budding bromine business. Herbert Dow was one of
those ambitious young men, trying and trying again to build a
business on what was then a new, almost frontier, region.
Like the young dot-com entrepreneurs of the 1990s,
Herbert Dow was just months out of college when he started
his first company. In 1889, Dow was a 23-year-old graduate
of Case School of Applied Science (now Case Western
Reserve Univ.). As a college project, he had developed a
method for extracting bromine from brine in a one-step
process, instead of the multi-step process of evaporation, oxidation
and distillation required at that time.
With the ink barely dry on his diploma, Dow convinced a
group of investors in Canton, OH, to form the Canton
Chemical Co. and produce bromine based on his new process.
The company opened for business, produced a little
bromine, and shut down. While the process showed promise,
the new company ran out of money long before it had worked
through all the bugs in Dow’s method of bromine extraction.
Bromine battles
The next year, 1890, Dow went to Cleveland, found new
investors, and raised enough money to start the Midland
Chemical Co. on the banks of the Tittabawassee River, in
Midland, MI. This time the process worked, and the plant produced
bromine in commercial quantities. But the fledgling
company shortly ran into trouble because Dow, now 24, refused
to deal with the bromine cartel that controlled the market
in Michigan. Dow was promptly fired. The new plant superintendent
worked with the cartel, and the profits from the
plant went to the investors — not the inventor.
Undaunted, Dow moved into a barn down the street from the
plant that ousted him and started company number three. By this
time, Dow had developed an electrolytic process to produce
chlorine. As with the bromine process, he was sure the chloralkali
process would be a commercial success. He was further
convinced that chloralkali would eventually eclipse bromine in
commercial value — an intuition borne out by today’s annual
production figures, which show that chlorine production in the
U.S. is almost 50 times greater than bromine production. The
company that bears the Dow name today is also the world leader
in chloralkali production. Unfortunately, an hour after Dow
threw the switch on this start-up, the production cell exploded.
Dow left the wreckage in Midland, returned to
Cleveland, and raised still more money. This time he set up
a plant in Navarre, OH, just south of Canton, and edged
closer to complete success. He brought the process to commercial
viability, but the business failed.
By now Dow was convinced that the process was right and
that Midland was the best place for the business. Dow was
also convincing. In 1897, Dow, just 31 years old, persuaded
an even larger group of Cleveland investors to back him in
building a chloralkali business in Midland. This last start-up
would be known as The Dow Chemical Co.
Sweet revenge
As the twentieth century dawned, The Dow Chemical Co.
was firmly in charge of business in Midland. As Dow predicted,
chlorine demand had grown quickly. In a moment of revenge
granted to few entrepreneurs, the 34-year-old Dow
bought Midland Chemical Co. from the folks who ousted him
a decade earlier.
In the decades that followed, Dow expanded his business.
In addition to chlorine and bromine, Dow Chemical Co. produced
calcium, magnesium, iodine and sodium compounds
and became the world’s largest producer of then-popular
Epsom salts. As the blockade of Germany during World War I
caused shortages in many critical chemicals, the company produced
dyes, metals and other products critical to the U.S. economy
and war effort.
The post-war economic boom greatly increased demand
for cars and, as a result, for gasoline, the production of which
used large quantities of bromine. With domestic bromine reserves
dwindling, Dow invented a process for extracting the
high-demand halogen from seawater. It was to be the last
chemical innovation he made before his death in 1930.
Business history of the 1990s is full of stories of people
who were millionaires one month, scratching for backing the
next, and millionaires again a year later. More than a century
earlier, Herbert Dow did the same, walking the hard road of
turning good ideas into good business.
This article is based on a speech given by Herbert D. (Ted) Doan on his acceptance of the 2002 Petrochemical Heritage Award. Doan is a former chairman of The Dow Chemical Co., and grandson of the Herbert Dow.
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