February 26, 2013
When Herbert Henry Dow started producing and selling bromine in the 1890’s he took on one of the periods’ many industrial cartels, and gave them a dose of their own medicine.
Dow was born on Feb. 26, 1866, in Belleville, Ontario, Canada, but his family returned to Connecticut shortly thereafter. They moved again to Cleveland, Ohio, for his father’s job as a master mechanic for the Derby Shovel Manufacturing Company. His father was also an inventor, and encouraged Dow’s inquisitiveness and willingness to experiment.
Dow attended the Case School of Applied Science (now Case Western Reserve University) in Cleveland, where he studied chemistry. For a school project, he researched the chemical composition of local sources of brine, which he saw when he watched an oil well being drilled. The oil drillers treated the brine that accompanied the oil as waste, but Dow found sources near Canton, Ohio, and Midland, Michigan that were rich in bromine and magnesium. Bromine (Br, atomic number 35), which was discovered in 1825, was a popular ingredient in late 19th century medicines as a sedative, and beginning in the 1840’s as a more efficient method of processing photographic plates.
Dow wondered if there was an economical way to extract the bromine from the “waste.” The method in 1888 was to heat a ton of brine to crystalize the salts, treat the remaining brine with chemicals to extract any remaining salts and dump the liquid. A ton of brine might produce two or three pounds of bromine.
In 1888, Dow graduated from Case and taught chemistry in Cleveland while developing his research in extracting the chemicals from brine; he received his first patent in 1889 for a more efficient system of producing bromine. His first attempt to commercialize the patent ended in bankruptcy.
In 1890, he formed Midland Chemical Company in Midland, Michigan, and improved his patent with the Dow process to extract bromine by adding oxidizing agents to brine, filtering the solution, and then using electrolysis to separate the bromine. The process is also used to produce other valuable chemicals.
Dow’s partners at Midland were unwilling to finance his research into using the process beyond bromine and fired him. He moved back to Ohio, raised financing and created the Dow Process Company in 1895. Less than three years later, he bought his old company in Midland.
However, with little operating capital, Dow Processing was not that successful either.
The bromine market was dominated by several German chemical companies who had combined to create a cartel, Die Deutsche Bromkonvention, which fixed the worldwide price of bromine at $.49 per pound, which was significantly higher than Dow was charging. The Germans threatened Dow and other American companies to keep from selling outside of the U.S., so they continue their practice of limiting access to chemical products and charging high prices.
Dow saw an opportunity to build his company by exporting his bromine at much lower prices, and began contracting in Great Britain. In 1905, the German cartel responded by selling bromine in the United States for 15 cents a pound, less than half of Dow’s 36 cents per pound. Introducing the concept of predatory pricing in a significant way.
Dow, whose business sense was as honed as his science, ordered an agent to buy hundreds of thousands of pounds. He then re-sold the bromine in Germany for 27 cents a pound. The Germans responded by cutting their prices even more in the U.S., eventually to 10.5 cents per pound. Dow keep buying and re-packaging for the German market. In 1908, the Germans finally figured out how Dow was ruining their business, and called a truce.
With the operating capital earned in the “bromine wars,” Dow expanded to other chemicals, and continued his refusal to join with other chemical companies to fix prices.
Dow was awarded over 90 patents during his life. He died on October 15, 1930.