The Alchemy of Air (Book)

On gunpowder

• Because every barrel of gunpowder required three-quarters of a barrel of saltpeter, access to saltpeter became a matter of national survival.
• In 1626 England’s King Charles I commanded his subjects to “carefully and constantly keep and preserve in some convenient vessels or receptacles fit for the purpose, all the urine of man during the whole year, and all the stale of beasts which they can save” to be donated to the saltpeter plantations
• The mother lode of saltpeter, however, the only natural deposits in the world large enough to feed the gunpowder needs of an entire nation, was discovered in the mud flats of the Ganges in India (where it was believed that a combination of the river water, the hot climate, and the dung of holy cows combined to create a sort of huge natural saltpeter plantation). The British East India Company started shipping it to England by the ton in the mid-seventeenth century—it was one of the company’s most important cargoes—and this vital natural resource made India an especially important target for European colonial expansion. Saltpeter was a significant factor in favor of the British takeover of India.

On Guano and Peru's Economy

• They survived only because their village perched on the edge of one of the world’s richest fishing grounds. The great Humboldt Current, a giant river in the sea, rolled from Antarctica up along the west coast of South America, bringing with it a wealth of plankton, shrimp, and

fish that fed local seals, natives, and millions of sea birds. The land here was dead. But the sea was teeming.

• These were the Chinchas Islands, a sprinkling of rocks six miles off the coast of Pisco, Peru, which constituted, in 1850, acre for acre, the most valuable real estate on earth. The value came from the

ground the workers and the birds walked on: ten stories of guano, the world’s best fertilizer.

• Annual shipments grew to hundreds of thousands of tons per year in the United States and as much in Great Britain. Its availability became a matter of national policy. In 1850 President Millard Fillmore, in his first State of the Union address, noted that “Peruvian guano has become so desirable an article to the agricultural interests in the United States that it is the duty of Government to employ all the means properly in its power for the purpose of causing that article to be imported into the country at a reasonable price.”
• About a third of the sale price of every ton of guano went into the treasury of Peru, a flow of income that by 1859 accounted for three-quarters of the nation’s national budget.
• As long as the money lasted it looked as if Peru, as one enthusiastic observer wrote in 1857, was destined to become “at once the richest and happiest nation on earth.”
• The need was so great that in 1856 the U.S. Congress passed the Guano Islands Act, which allowed any U.S. citizen to lay claim to any deserted guano island anywhere in the world and make it U.S. territory.
• The Guano Islands Act is still in effect.
• In most places around the world, too much rain washed out the nitrogen content and lowered quality. Chinchas-level guano was found on only a very few rocks with the right mix of abundant seabirds and an arid climate. Nothing else came close.
• The end of guano also meant an end to Peru’s easy income. By the 1870s the nation was for all practical purposes bankrupt.

On nitrates and Chile's Economy

• By 1900, Chile was producing two-thirds of all the fertilizer used on earth.
• Nitrates were Germany’s life blood, and their distance from Germany—halfway around the world—became a matter of strategic importance. German entrepreneurs created fleets of majestic windjammers for the nitrate trade, the biggest sailing ships ever built, with clouds of sail that drove them so fast that they were preferred even in the age of steam.
• Soon nitrates were bringing in more than half of Chile’s total income (nitrates would remain the single most important factor in the national economy until the 1930s).
• His investors began making 10, 15, 20 percent dividends in a single year. "The company promoter has only to whisper the magic word nitrates and the market rises at him," marveled London’s Financial News. Speculators started calling Chilean nitrate white gold. (Again and again this happens. Across the decades and centuries. When something is in demand, crooks set up new companies and rename old ones, and the market drives up their prices)
• Then the bubble burst. Rampant nitrate speculation led by North pushed share prices well beyond the value of the land and mills. To keep returning high profits the refineries overproduced, flooded the market with nitrates, and held down prices. By the end of 1890 shares in nitrate companies were being sold for a quarter the price they had commanded a year or two earlier.
• Chile, like Peru, depended on foreign capital and foreign expertise (mostly European) to power those improvements. Unlike Peru, however, it kept its own people employed in the industry and offered a stable atmosphere for development.