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Potash Boom of World War I · Nebraska History Podcast

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The following episode features a historic article from the
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Nebraska History magazine. This article may reflect the
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language and attitudes of its time and while it offers
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valuable insight into the past, may contend expressions or
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viewpoints that are outdated or offensive by today's standards.
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Any outdated terms do not reflect the current views or
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perspectives of the Nebraska State Historical Society.
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Welcome to the Nebraska History podcast.
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I'm your host, Chris Goforth. Each episode we explore articles
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written and published in Nebraska History Magazine.
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On this episode, we journey back to World War One to uncover the
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surprising tale of Nebraska's potash boom.
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We explore the rapid growth and eventual decline of this
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intensive industry, revealing the truths behind the $1,000,000
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investments and ambitious production goals through the
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1987 Nebraska History Magazine article, Nebraska's World War
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One Potash Industry, written by Richard E Jensen.
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In Nebraska, there have been a few periods of Wildcat growth in
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particular industry, but perhaps none was as intensive as the
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potash boom during and after World War One.
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At least $5,000,000 were invested in the construction of
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10 huge plants, each with the capacity to produce 100 tons of
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potash per day. To support the industry, the
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towns of Antioch and Hofland were founded, and at least three
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other communities experienced noticeable population
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explosions. The scale of the industry, the
1:24
towns it created, and the rumors of exorbitant profits
1:28
contributed to its widespread notoriety, but perhaps more
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important was the popular misconception that the plants
1:35
produced a product vital for munitions.
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Unlike most common misconceptions, this one can be
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traced to its source. Early in 1917, several potash
1:47
lakes were discovered on state owned school land and a company
1:51
was quickly formed to lease the mineral rights.
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Since some of the company officials were or had been state
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employees, there were rumors that these men were receiving
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preferential treatment in securing the leases.
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In October, State Land Commissioner GL Shumway and
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Secretary of State Charles W Poole issued a press release
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denying the allegations and assuring the public that they
2:16
would not tolerate any delays in potash production on state land
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because, quote, our country needs the product for munitions.
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End Quote. Given the patriotic furor
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created by the war, this statement stood out boldly, and
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newspaper writers throughout the state perpetuated the erroneous
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assumption. Not everyone misunderstood the
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potash boom in a sarcastic article about school land leases
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beginning with the banner headline Potash for Munitions,
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the Alliance Semi Weekly Times published the news release and
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commented that quote. We have been hearing that
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practically all of the western Nebraska potash is being used
2:55
for fertilizer. We may be wrong, but it is
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generally conceded around the plants that the product is not
3:01
adapted to the manufacturer of munitions.
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So much for patriotism. End Quote.
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Other newspapers published the news release without the
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clarification, and from then on virtually all newspaper articles
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about potash included mentioned of munitions or gunpowder.
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Newspapers in the potash region, whose readers were likely to
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know the truth, simply ignored the issue and let others expound
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on the patriotic work of the industry.
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Before World War One, German mines produced the most of the
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world's potash, which was used in the manufacture of products
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as diverse as glass and soap. By 1900, huge quantities were
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being used as a fertilizer additive in the American Cotton
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Belt, and up to 1,000,000 tons were imported each year.
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The price remained fairly stable at about $8 to $10 a ton until
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1911 and 1912, when it began to rise, perhaps because of the
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unsettled political situation in Europe.
4:02
When the war broke out, the price began to skyrocket in the
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United States as imports declined and shortages became
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severe. When the potash boom was at its
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peak late in 1917, potash was selling for more than $150.00
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per ton. At war's end, Nebraska potash
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companies were unable to sell their product because consumers
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believed cheaper German potash would soon be available.
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As a result, the plants were forced to shut down early in
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1919 when imports were not forthcoming.
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The plants reopened in the fall and continued operations for
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another year. When normal trade relations were
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finally re established with Germany, the Nebraska firms were
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unable to offer their product at a competitive price.
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The demise of the industry was swift, if not merciful, as many
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companies ended in bankruptcy and sheriff's sales.
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There had been a few exceptions in American potash production
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before World War One. Potash was found as a byproduct
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in the production of beet sugar, molasses, and Portland cement.
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During the war, these sources accounted for slightly more than
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half the domestic production. However, the most promising
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single source was so-called Alkali lakes.
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The first attempt to utilize a lake source in Nebraska occurred
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about 1900. Francis McCarthy collected
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alkali crusts from the shores of the lake in the Sandhills,
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packaged this crude potash, advertised it as nature's
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product, and sold it in Omaha as a washing compound.
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This venture certainly did not revolutionize the soap business
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or relieve the nation's dependence on imports, but it
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was a testament to McCarthy's ability as a salesman.
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The cleansing ability of alkali crust is about equal to that of
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mud mixed with enough lie to give it a sharp odor.
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The first serious attempt to utilize this resource was
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undertaken in 1911 by Carl L Modisett and John H SHO.
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They investigated southern Sheridan and northern Garden
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Counties, where hundreds of lakes are scattered among the
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rolling Sandhills. Most of the lakes contain fresh
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water and are surrounded by prime grassland, but there are
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also many alkali lakes in the area, dead spots of brackish
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water ringed by sand and alkali crusts.
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Except for the brief period of the potash boom, these have
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always been considered worthless.
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SHO and Modicet found a wide range in the water quality of
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the Sandhills lakes, which would be critically important in
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locating profitable sources of potash.
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The amount of dissolved solids in the lake varied from less
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than 1% in fresh water to high of 19% in Jessy Lake.
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By comparison, seawater contains about 4% dissolved solids, the
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Great Salt Lake about 20%. Potash accounted for up to 35%
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of the dissolved solids in some Sandhills lakes during peak
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production years. Many lakes with lower
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concentrations were used, but production costs were
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proportionately higher. A lake with 5% solids, of which
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20% was potash, was considered a worthwhile source.
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After concluding their tests, Show and Modicet convinced
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several investors that valuable potash resources existed in the
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western Sandhills. They formed a small company in
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the spring of 1912 and built a plant on the shore of Jessie
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Lake, located about 3 miles north of Hoffland.
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At the time, only some cattle loading pens on the Chicago,
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Burlington and Quincy Railroad, about 200 lbs of potash could be
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produced each day by boiling lake water in large open pans,
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and in November the 1st shipments went to Omaha, to the
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Swift Packing Company in Chicago and to the General Chemical
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Company in New York. The partners confidently
8:00
announced plans to improve and expand the operation with an
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additional investment of $50,000.
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However, most of the money must have gone for operating expenses
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because the cost of production still far exceeded the market
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price. By August of 1913, the plant was
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closed and it is unlikely the owners expected it to reopen.
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After a hiatus of one year, SHO, Modicette and some of the
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original investors were back in business, perhaps anticipating
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the potash shortage is because of the war in Europe.
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The organization was formally named the Potash Reduction
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Company, but it was almost always referred to as the
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Hofland Company. While the early experiments had
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been a financial failure, new methods for increasing
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production and lowering overhead had been recognized.
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In 1915, the decision was made to locate a plant on the
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railroad and lay a pipeline to Jessie Lake.
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Although the initial cost was high, the pipeline was more cost
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effective than transporting coal to the lakeside plant and
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hauling the potash to the railroad.
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Similar pipelines would become standard to the industry and
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hundreds of miles of pipe were laid.
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When it became apparent that potash water corroded the iron
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pipes, they were replaced with pipe made of wooden slats sealed
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with tar. The early tests had shown that
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water in the sand under Jessie Lake contained more potash than
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the lake itself, so a network of Sandpoint wells was installed,
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connected by suction lines to a gasoline powered pump.
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When production peaked in 1917, there were 1200 wells in the
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lake, or about 10 per acre. Water was first pumped through a
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solar evaporating tower, which consisted of large stacked open
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pans where some of the moisture was lost to natural evaporation.
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From there, the weak brine was pumped to the plant and through
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a second tower, after which it would already be in the final
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evaporation process. This process was little more
10:03
than an expansion of the first one used in 1912 and 1913.
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It consisted of four concentration vats, each holding
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about 5000 gallons. To boil the brine, live steam
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was pumped through pipes in each VAT.
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The brine in the first VAT was brought to a boil, then piped to
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each succeeding VAT, where concentration advanced.
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When the brine reached saturation in the last VAT, the
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wet crystalline mass was shoveled into a boxcar for
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shipment. The system was used during the
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first year of operation at Hofland.
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The crew of 60 employees could produce about 7 tons of potash
10:40
each day, but the plant was very inefficient.
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The coal-fired boilers used huge amounts of fuel because of heat
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loss from the open vats. Because coal and potash were
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moved by hand, labor costs were relatively high.
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A third major expense was hidden in the shipping cost.
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The potash was shipped wet and contained 30 to 40% water,
11:02
increasing freight charges by about 1/3.
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While the vats were inexpensive and required little maintenance,
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they were not cost effective because of their low rate of
11:11
production. In 1916, the Hofland Company
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installed the first Swenson evaporators.
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These large airtight steel tanks, which were usually
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operated in sets of three, were expensive to install and
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required expert control and maintenance.
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Each set had the capacity to produce 10 to 12 tons of potash
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per day, and they were extremely efficient when compared to open
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vats. These evaporators were later
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used by all of the big companies.
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Brine taken from the last evaporator was an extremely
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concentrated liquid with the consistency of molasses.
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Crystallization began almost immediately after the brine
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exited from the Swensen evaporator, although a large
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amount of water was still present.
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A Rotary dryer was used to remove this remaining moisture.
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4 to 6 dryers were needed in each of the large plants.
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From the Rotary dryers, the potash now look like cinders of
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ash pass through a grinder where it was reduced where it was
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reduced to the size of granulated sugar.
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Finally, the potash was bagged in paper lined burlap sacks
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which weighed between 160 and 200 lbs.
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These were shipped by rail to fertilizer companies in the
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East. As production increased,
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attempts were made to reduce the amount of manual labor involved.
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Railroad cars of coal were emptied directly from the
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trestles into coal bins in the plant.
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From the bins, augers move the coal into the fire boxes in the
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boiler room. Augers were first installed at
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Hoffland in the spring of 1917. Though most of the systems
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designed to increase the efficiency of the potash
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reduction process were pioneered at Hoffland Plant, one of the
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most obvious relics of the era is not present there.
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All of the other companies built huge concrete reservoirs
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adjacent to the plant. The largest was 6 feet deep, 315
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feet long and 190 feet wide. These were usually referred to
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as spray ponds because of a system of nozzles that was
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installed over the portion of the reservoir.
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Heated lake water was sprayed into the air, and like the solar
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towers, this system used the wind and the sun for
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evaporation. At Hoffland, a natural pond
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South of the plant may have been used for this reservoir.
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Although each of the 10 large potash companies searched for
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ways to increase productivity, none ever achieved A
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technological breakthrough that resulted in the significant
13:34
advantage over its rivals. There were differences in the
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size and arrangement of the plants and the extent to which
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automation was used, but the process for evaporating water
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was similar at all of them. There were also a few notable
13:48
failures in the search for a more efficient production
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system. The Rotary dryers were a major
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concern. They quote kept one man
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constantly hammering the walls of the steel dryers to loosen
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the product from the sides and quote and as a result, potash
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dust was flying around the plant and out on the prairies to be
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wasted in the winds. The Nebraska Potash Company in
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Antioch and the Horde Company at Lakeside attempted to solve this
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problem with enclosed drying chambers.
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The concentrated molasses from the Swanson evaporators was
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sprayed into the chamber across huge oil burners.
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It was expected that the molasses would dry to the
14:27
consistency of flour, thus eliminated the need for
14:30
grinding. It was hoped that the enclosed
14:33
chamber would retain the potash normally blown away from the
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open Rotary dryers. Several months later, a local
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newspaper writer recalled that the quote newfangled notion of a
14:43
dryer proved to be an absolute failure.
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End Quote. The experiment cost one company
14:48
$75,000. The Western Potash Company at
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Antioch also invested heavily in an innovative dryer.
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It was described as looking like a merry go round, and although
15:00
the details of the system are not clear, the wet potash was
15:04
apparently loaded on a movable platform which revolved over a
15:08
coal fire. The remains of the western plant
15:11
clearly indicate that several Rotary dryers were used, so
15:14
perhaps the merry go round was not completely successful.
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Any brief description of a potash plant masks both its
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imposing size and its complexity.
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Although each plant varied in its configuration, there was an
15:28
overall similarity dictated by function.
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A main building covering at least one quarter of a city
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block and three to five stories tall, was constructed of brick,
15:40
concrete, and steel. The record of disastrous fires
15:44
in frame buildings convinced plant owners to use more
15:47
expensive fire resistant materials.
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The main building housed this Swenson evaporators, Rotary
15:54
dryers and grinders. Adjacent to it was a brick
15:58
engine room for the boilers and steamer engines which powered
16:01
the machinery and the plants electric system.
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Near the railroad siding was a frame warehouse where potash was
16:07
stored to await shipment. Nearby was an office building,
16:11
dormitories for up to 100 workers, small cottages for
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married workers, and spacious houses for supervisory staff.
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Nearly all of these were equipped with electric lights,
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steam, heat and indoor plumbing, conveniences seldom found in
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rural or small town homes of that era.
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The whole complex covered several acres.
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The planet Hofland was one of the largest, most productive,
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and most profitable in the industry.
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It had the triple advantage of an early start, rich lakes and
16:42
canny management. Nonetheless, it was not entirely
16:46
free of financial problems. Hoffland was involved in a
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costly lawsuit with a Nebraska potash company over control of a
16:53
small portion of Jessie Lake. Numerous reconstructions and
16:58
refinements were certainly expensive, but little is known
17:01
about the details. One newspaper writer grumbled
17:04
quote the Hoffland plant people refused to give interviews ever.
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End Quote. Improvements expanded the plants
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capacity to 200 tons per day with a full crew of 200 men.
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But early in January 1921 full scale operations ceased and for
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the next year there were intermittent experiments to
17:23
refine potash, which were costly but realized no income.
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There were hints that the company had succeeded in
17:30
extracting certain salable components of the crude potash,
17:34
but that was a false lead. On October 12th, 1922, the
17:38
Antioch News reported what may have been the last potash
17:41
transaction when the company shipped 5 car loads to be sold
17:45
at a loss. In the weeks that followed,
17:48
wrecking crews began their work on the foremost potash plant in
17:51
Nebraska and probably the nation.
17:54
Although the Potash Reduction Company in Hofland was the
17:57
pioneer, 9 more big companies in the 100 ton per day class were
18:02
organized. Hoard Alkali Products had an
18:06
operating plant at Lakeside by February of 1917, while the
18:10
American Potash Company began production at Antioch about the
18:13
same time. The Nebraska Potash Company's
18:16
plant at Antioch began production on May 1st, 1917.
18:20
The following summer the Alliance Potash Company, the
18:23
Western Potash Company and the ill-fated National Potash
18:27
Company opened at Antioch and the Standard Potash Company
18:30
began operations at Lakeside. In 1919 the Berg Potash Company
18:36
began production at Merriman and at Sutherland.
18:39
The Republic Chemical Works belatedly began to build a
18:42
plant. Most of the smaller, so-called
18:45
10 ton plants were erected during the summer of 1918.
18:49
A few waited another year and paid dearly for missing the
18:53
Crest of the boom. The American Potash Company was
18:56
the first to commence operations at Antioch, the town which would
19:00
become Nebraska's potash capital.
19:02
The American Company had the origins in Omaha Exploration
19:06
Company, organized in 1915. Omaha Exploration was
19:10
reorganized and incorporated on March 8th, 1916 as the American
19:15
Potash Company. Construction began almost
19:18
immediately, and the first plant at Antioch was operating by
19:22
February of 1917. Initially, the plant produced
19:25
about 17 tons of potash each day, but new machinery increased
19:30
production to an average of 60 tons daily in August of 1917.
19:35
About this time, the company accepted an offer from the
19:37
Western Potash Company to buy their plant for $825,000.
19:43
One area newspaper reported that America's investors received
19:46
$4.16 from the sale for each $1.00 invested.
19:51
This transaction undoubtedly gave credence to rumors that
19:54
potash investors were becoming millionaires.
19:58
At about the same time as Western was buying the American
20:01
company, it began construction of another plant to be the
20:04
largest and most expensive in the industry.
20:08
The plant, reported to have cost $524,000 with a total investment
20:13
exceeding 1.5 million, was ready for production by November of
20:17
1918. It was a monument to the owners
20:21
belief in the permanency of the industry, but despite the
20:24
enormous investment, the plant never produced any significant
20:28
amount of potash. Apparently the owners of
20:32
American Western were moving towards a monopoly, for in July
20:36
of 1919 they merged to become the American Potash Company of
20:39
Delaware. About the same time they
20:42
purchased the National Potash Company which had a plant in
20:45
Antioch since 1918. Losses from the disastrous 1918
20:50
fire have been a major set back for the National Potash Company.
20:54
Some of the rebuilding costs were covered by insurance, but
20:57
apparently the owner sustained A sizable loss.
21:00
Debts began to mount and the company was in receivership by
21:04
May of 1919. The monopoly minded American
21:08
Western had once offered to buy National but but later acquired
21:13
it at a receiver's sale for a mere $75,000.
21:17
New equipment was installed and the plant was renamed the Union
21:20
Potash Company. Despite its size and the backing
21:24
of reputable Nebraska businessman, American Western
21:28
was also beginning to face serious financial problems.
21:31
All of the companies were forced to close from February to
21:35
September in 1919 after fertilizer companies refused to
21:39
buy domestic potash. When the plants reopened,
21:43
neither Union nor Western was profitable, and proceeds from
21:46
the old American plant could not support them.
21:50
On December 3rd, 1920, President William E Sharp ordered the
21:55
plants closed. This action destroyed the
21:58
confidence of some of the creditors, who filed a petition
22:00
in US District Court asking that the American Western Company be
22:04
declared bankrupt. Soon afterwards Sharp and his
22:07
associates agreed to accept sole control of the company and the
22:11
reported indebtedness of $231,000 was paid to the owners
22:16
sustained heavy losses. By this time the plants were
22:20
worth only a salvage price. Another 100 ton plant was built
22:25
in Antioch by the Nebraska Potash Company.
22:28
Production began on April 29th, 1917, but during the first few
22:31
months averaged only about 20 tons per day.
22:35
Some of the company's lakes contained as little as 2%
22:38
solids, and it was necessary to evaporate huge amounts of water
22:42
to produce a ton of potash. In March 1918, Hofland purchased
22:47
a substantial block of the company stock, putting an end to
22:50
rumors that Hofland would build another planted Antioch.
22:54
After the merger, the Nebraska company began pumping from the
22:57
richer lakes owned by Hofland and daily production jumped to
23:00
an average of 40 tons. The end of the Nebraska company
23:03
came in December of 1920 when its production costs exceeded
23:07
the market price of potash. On July 3rd, 1921, a fire
23:12
completely destroyed a large portion of the main building.
23:15
The owners were probably delighted to receive the $50,000
23:19
in insurance settlement because it was more than what the plant
23:21
was worth. The Alliance Potash Company was
23:24
formed in the summer of 1917. Construction of a plant on the
23:28
east edge of Antioch began in mid August and production
23:32
started just nine months later. The speed with which the plant
23:35
was built reflected the owner's commitment to the industry.
23:38
Within four months after production commenced, work was
23:41
underway to enlarge the facility.
23:44
Near disaster struck in mid November.
23:47
A fire started in a coal bin and in the boiler room and destroyed
23:51
part of the plant at a loss of $45,000.
23:55
This was an insignificant set back when compared to other
23:58
major inadequacies of the company.
24:01
Its lakes contained a low percentage of dissolved solids
24:04
and as a result, operating expenses were high.
24:08
Low production and declining potash prices finally convinced
24:11
the owners that continued operations were futile.
24:15
The plant closed November of 1920.
24:18
After Hofland, the second company to enter the potentially
24:22
lucrative business of potash reduction was the Horde Alkali
24:25
Products Company. The corporation managed by the
24:28
Horde family company president Herber Horde controlled a vast
24:33
rangeland north of Lakeside, which included a number of lakes
24:36
containing commercial levels of potash.
24:38
Thus, the company did not have the added expense of buying or
24:42
leasing its potash source. The Horde plant was built at the
24:46
southwest corner of Lakeside and commenced operations on February
24:50
12th of 1917. For short periods.
24:53
It produced its maximum capacity of 100 tons daily, but averaged
24:57
only 50 tons a day during most of its life.
25:00
Like all plants, Horde closed temporarily in February of 1919
25:04
when fertilizer companies suspended purchases of Nebraska
25:08
potash. Just a few days after the plant
25:11
reopened on August 31st of 1919, a fire destroyed the plant and
25:15
nearly brought an end to the company.
25:18
The main building, along with costly machinery and 700 tons of
25:22
coal was a total loss. 6 houses, a garage, a bunkhouse,
25:27
warehouse, and the office were also consumed.
25:30
Company officials estimated the loss at $600,000.
25:35
The HORDE partners finally decided to rebuild.
25:38
Reconstruction began near the end of October with fireproof
25:41
materials, tile, brick and steel.
25:45
Although the potash boom ended in December of 1920, the Horde
25:48
plant continued full scale operations for another month,
25:51
closing around February 1st of 1921.
25:55
For the next 10 months there was some activity at the plant on an
25:59
intermittent and experimental basis, but the continued drain
26:02
of these operations on the assets of the company and the
26:05
fading hope of an increase in the price of potash finally
26:08
brought an end to all the activity.
26:12
The Standard Potash Company was incorporated on November 20th,
26:14
1917, and in slightly less than a year had completed the second
26:19
reduction plant at Lakeside. This corporation suffered from
26:22
the disadvantages common to all open stock companies.
26:26
In a business where timing was of critical importance.
26:29
The organizers had to convince the appropriate state agencies
26:33
that the company was not a fraudulent stock selling scheme
26:37
and that it had reasonable chance for success.
26:40
Then they had to convince potential investors of the same
26:42
things. This took valuable time.
26:45
The Standard plant began production on November 9th,
26:48
1918, just two days before the World War One Armistice.
26:53
Operations continued for about 3 months before the plant was
26:56
forced to close. During the suspension of potash
26:58
purchases to avoid bankruptcy, the board of directors asked
27:02
stockholders for a loan to pay outstanding debts and provide
27:06
funds to maintain the plant until the expected reopening.
27:10
By May, $90,000 had been borrowed at 10% interest, which
27:15
the company could I'll afford to pay.
27:17
Lenders were offered a chance to redeem their loans for new stock
27:20
certificates of equal value. The bait for this exchange was
27:24
the assumption that the stock would earn much more than 10%
27:27
once the plant reopened. The scheme was at least
27:30
partially successful, for the company survived and resumed
27:34
production again in September 1919.
27:38
Standard operated almost without interruption for the next 15
27:41
months. Although the plant was designed
27:43
to produce 100 or more tons of potash per day, it never
27:47
achieved this goal and averaged only about 35 tons per day.
27:52
This was enough to pay the company's construction costs,
27:55
operating expenses, and debts, but it left the stockholders
27:58
with only miniscule profits. The plant closed on Christmas
28:02
Day 1920. In Nebraska, there were two
28:06
attempts to produce potash on a large scale outside of southern
28:10
Sheridan County. Area 1 was at Merriman in
28:13
northwestern Cherry County and the other near Sutherland in
28:17
central Lincoln County. Both ventures failed primarily
28:21
because the companies were organized too late to capitalize
28:24
on inflated wartime prices of potash.
28:28
The William Berg Company began as a manufacturer of wagons in
28:31
Omaha, but it ceased operations in 1914 with the death of the
28:35
owner. Four years later it reemerged as
28:38
the Berg Potash Company, an open stock corporation.
28:42
In June of 1918, construction began on the plant in the 100
28:47
ton class. Production began on December
28:50
31st, 1918, and the next day the first of many misfortunes faced
28:54
by the Berg Company occurred. A ruptured oil line sprayed the
28:58
boiler room with crude oil, which immediately caught fire.
29:02
The fire was quickly extinguished and production
29:05
resumed in two days. If the investors could have
29:08
foreseen the future, they probably would have let the
29:11
plant burn. Even though by mid January it
29:13
was operating 24 hours a day, seven days a week, the peak
29:17
daily production had been 42 tons, far short of the plant's
29:21
capacity. The company was soon in
29:24
financial trouble. Production had not been
29:27
sufficient to pay construction and operating costs.
29:30
The Lakes had proved less rich than originally estimated.
29:34
The order to save the company, which was reorganized as the
29:37
Merriman Potash Products Company, and additional stock,
29:41
was issued. The plant remained closed during
29:44
the period when no potash was being purchased.
29:47
In September of 1919, the company announced a plan to
29:50
manufacture fertilizer at Merriman, bypassing reliance on
29:53
eastern companies to process the crude potash.
29:56
The new product, combining phosphates, organic muck from
30:00
Sandhills valleys and the plants potash was to be marketed under
30:04
the MPP label just as the production of fertilizer reached
30:09
full operation. The plant was idle due to a coal
30:12
strike When it reopened in February of 1920.
30:15
Operating funds were so short that the plant was forced to
30:18
close for good in May Stockholders had had enough and
30:23
the Merriman Potash Products Company's assets were sold at a
30:26
sheriff's sale in 1921 for $3624.25 The only other firm to
30:35
attempt potash production outside the primary Lake
30:37
District was the Republic Chemical Works.
30:41
In October of 1918, the company begins construction of a 100 ton
30:45
plant about two miles West of Sutherland on the Union Pacific
30:49
Railroad. By the next summer the plant was
30:52
nearing completion, At least 2 lakes released, and in June 1919
30:57
the wells were installed. The Sutherland plant was
31:00
probably ready to begin production at this time, but
31:03
there was no market for potash and it continued to stand idle
31:07
through the winter. Early in 1920, the facility was
31:11
sold to the Midwest Potash and Refining Company.
31:15
This firm seems to have been formed for the single purpose of
31:18
buying Republic and may have been only an internal
31:22
reorganization rather than a purchase by outsiders.
31:26
Despite the substantial investment, there is no evidence
31:29
that the Sutherland plant was ever operational.
31:32
Late in 1921, Midwest was sued by a creditor.
31:37
Bankruptcy proceedings followed and the sheriff's sale ended.
31:40
Another financial disaster of the potash boom.
31:44
In addition to the 10 large corporations, a number of small
31:48
companies built so-called 10 ton plants.
31:51
This was an optimistic description since few of them
31:53
could produce at this rate and none could sustain this level of
31:57
production for any length of time.
31:59
At least twenty such plants were built and nine others were
32:02
planned. The 10 ton plants relied
32:06
primarily on the open pan and solar evaporation system.
32:10
Some might have a small warehouse and two or three
32:13
shacks for employees. Living quarters, coal, and
32:16
potash were transported by truck.
32:18
Production from the small plants was usually sold to one of the
32:22
big potash companies. Owners of the 10 ton plants face
32:26
many of the same problems and financial opportunities as the
32:30
large companies, only on a smaller scale.
32:33
The same ingredients, an early start and a rich lake were
32:36
necessary for success, but most small plants were not built
32:39
until the summer of 1918 or later and were soon burdened
32:43
with debts of 5000 to $10,000. One group of small potash plants
32:48
did have an advantage. These were built by ranchers who
32:51
owned a potash lake and thereby saved the expense of lake
32:54
purchase or lease. Some of these plants were
32:57
operated as an adjunct to normal ranching operations, with labor
33:00
provided by ranch hands. The majority, however, were
33:04
financed by outside investors. In spite of the tenuous
33:08
foundation for the Nebraska potash industry, the public
33:11
believed that the industry would be able to compete successfully
33:15
with German producers after the war.
33:17
Certainly, the massive plants gave every appearance of
33:20
permanency. Newspapers bombarded readers
33:23
with assurances that the industry would last, and
33:26
although there were a few doubters, their voices were
33:29
rarely heard. Even the signing of the
33:32
Armistice did not create concern, but by January of 1919,
33:38
rumors concerning the demise of the industry began to circulate.
33:42
Editors of potash town newspapers denied the rumors and
33:45
explained away any action which might be construed as anti
33:49
industry. When the first reduction in the
33:52
workforce came, a local paper labeled these workers as
33:55
shiftless Drifters who were fired for incompetence.
33:59
Honest, hard working men were told they had nothing to fear
34:03
and that there was no reason for pessimism about the future.
34:07
The prediction proved wrong, for during the first week in
34:11
February, the Hofland, Western and American companies fired
34:14
nearly all of their employees and ceased production within a
34:19
few days. The other plants followed suit.
34:22
Newspaper writers forgot past predictions and offered a new
34:25
theme, assuring readers that the shutdown was only temporary.
34:30
Those who were patient would soon be rewarded with jobs in a
34:33
revitalized and permanent industry.
34:36
The shutdown of 1919 resulted from speculation about future
34:40
German imports rather than from any direct involvement by German
34:44
producers. Owners of Nebraska potash
34:47
companies knew that they could not compete with Germans in an
34:50
open market. They believed it would be months
34:53
or even years before the war-torn German companies could
34:56
resume operation. In the meantime, American
34:59
fertilizer companies would continue to buy domestic potash
35:02
at the inflated wartime price. The producers stored tons of
35:06
potash in rented warehouses without much consideration for
35:10
the cost. The fertilizer companies
35:13
appraised the same future but came to a different conclusion.
35:17
They believed the cheap German potash would be available not in
35:21
a few years, but in time to make fertilizer for the 1919 crop.
35:26
They refused to buy the high-priced domestic potash and
35:30
force the Nebraska potash producers to suspend operations.
35:34
Shortly after Armistice, the potash interests enlisted an
35:38
influential lobby to plead their case in Washington.
35:42
Nebraska Governor Elect Samuel R Mckelvey, Senator Gilbert M
35:46
Hitchcock, Congressman Moses P Kincaid, and George E Condra all
35:51
argued for an embargo on German potash in the House of
35:55
Representatives. Kincaid try to amend a bill to
35:58
place a duty on imported potash. Opposition to controls on
36:03
imported potash came quickly from Southern Congressman.
36:06
They pointed out that maintaining an inflated price
36:09
for potash injured not only the fertilizer manufacturers and
36:13
cotton growers, but ultimately the consumers of cotton goods.
36:17
Just as potash industry leaders must have been considering ways
36:21
to minimize their losses, assistance came from an unlikely
36:25
quarter and brought an end to the 1919 suspension of potash
36:29
purchases. It was the cotton farmers who
36:32
ultimately helped the American potash producers.
36:36
Because of the cost of domestic potash, fertilizer companies in
36:39
1919 had drastically reduced the potash content of their product,
36:44
and this fact did not go unnoticed.
36:47
By the end of the growing season, cotton planters
36:49
recognize the deficiency, and we're demanding better
36:53
fertilizer. Under pressure from customers,
36:56
fertilizer companies return to the American potash producers
36:59
with offers to buy their stored surpluses and more.
37:03
Some 33,000 tons of potash were in storage that were sold.
37:08
Plant shutdowns ended in mid-september of 1919 and local
37:12
newspapers announced the good news in banner headlines.
37:17
Just as the plants reopened, producers faced a new problem.
37:21
Labor unrest erupted in strikes in Wyoming coal mines.
37:25
By November of 1919, coal reserves were depleted and no
37:29
immediate settlement on the strikes seemed likely.
37:33
Some of the plants were converted from coal to oil, but
37:36
as many as 27,000 gallons per day were needed to keep the
37:40
Sheridan County plants in full operation on a standby status.
37:45
Full production of the plants did not resume until the
37:48
December of when the strike ended.
37:51
For 15 months, the potash towns boomed again.
37:55
The exodus of 1919 was reversed as workers were reemployed.
37:59
However, the general optimism for the future of the industry
38:02
was not shared by the plant owners because the market price
38:05
of potash remained dangerously low and there was not enough
38:09
support in Congress for a protective tariff.
38:12
By November of 1920, rumors about another shutdown began to
38:16
circulate when the Alliance Company admitted that a large
38:19
order had been cancelled. The Alliance Company closed its
38:23
doors about November 20th, and on December 3rd the American,
38:27
Western and national plants closed without warning.
38:31
The remaining companies followed in quick succession and by
38:33
February of 1921 Nebraska's potash boom was over.
38:40
The Nebraska industry could not have survived for any extended
38:43
period even had prices remained high or a protective tariff had
38:47
been enacted. Potash lakes were a finite
38:50
resource, and during the short life of the industry, the amount
38:53
of dissolved potash in the lakes rapidly diminished.
38:57
Certainly the companies realized this, but the results of
39:00
chemical analysis of lake water were closely guarded secrets.
39:05
A reliable clue to the diminishing lake quality is
39:08
revealed in the records of coal consumption at the plants.
39:11
It required more than a ton of coal to evaporate enough water
39:15
from a very rich lake to produce a ton of potash.
39:18
If a very weak lake was used, much more water had to be
39:22
evaporated. With the related increase in
39:24
coal consumption, the planted Hofland was undoubtedly one of
39:28
the most efficient, and Chesy Lake, their principal source of
39:32
water, was one of the richest lakes.
39:34
Prior to the temporary shutdown in 1919, an average of 1.22 tons
39:40
of coal was required to produce a ton of potash.
39:44
From the plants reopening in October until the final closure
39:47
over a year later, the average coal consumption rose to 1.55
39:51
tons per ton of potash. There was a similar increase at
39:55
the Nebraska plant over the same 2 periods.
39:59
Although the Nebraska plant was touted as being highly
40:02
efficient, the company lakes contain less potash than those
40:05
at Hoffland. It required 2.09 tons of coal.
40:11
To produce a ton of potash prior to the 1919 shutdown and 2.43
40:16
tons of coal during the last months of operation.
40:19
Statistics from other companies show a similar trend.
40:23
In less than five years, the most productive companies were
40:25
using 25% more coal to produce the same amount of potash.
40:30
At this rate, the cost of production alone would have been
40:33
prohibitive in a few years. While the industry had the
40:37
potential for very high returns on investment, you individual
40:42
investors had the luck or wisdom to time their investments to
40:45
realize such returns. Timing was the single most
40:48
important factor in determining profit or loss.
40:52
The price of potash had risen gradually from the beginning of
40:55
the war in Europe, and by December of 1915 it was
40:58
approximately equal to production costs.
41:01
During the next 21 months, the price doubled, held fairly
41:04
steady for 13 months, and then crashed.
41:07
After the 1919 shutdown, there was a slight revival, but this
41:11
recovery was brief. Maximum profits would have been
41:15
made by those who invested early in 1916 and who then sold out
41:20
near the end of 1918, just before the industry began to
41:23
falter, The owners of the original American Potash Company
41:27
very nearly achieved optimum timing.
41:30
The owners of the Hofland plant were also successful by virtue
41:33
of their early start. At the other extreme were
41:36
latecomers who invested after construction costs and operating
41:40
expenses had risen and the price of potash was ready to plummet.
41:45
There was no data relative to the number of winners and losers
41:48
in the potash gamble, but scattered bits of information
41:51
make it possible an estimate of the relative success or failure
41:55
of each major company and from that of the industry as a whole.
41:59
Unfortunately, there is little data on the exact profits or
42:03
losses of each company because very few records have survived.
42:08
Very incomplete records for the Standard Company and general
42:11
information from other sources make it possible to draw some
42:15
conclusions about the financial status of these organizations.
42:19
The Standard Company records, though fragmentally, are the
42:22
best available. They include various financial
42:25
statements, trial balance sheets, and lists of outstanding
42:29
obligations. Records of the Burlington
42:32
Railroad provide data of the plants potash production via
42:36
tabulations of car loads being shipped.
42:39
An examination of the physical remains of the Standard plant
42:42
show it to be near the medium size and there is no evidence of
42:46
rebuilding. The profits earned by Standard
42:49
represents slightly less than 4% per annum on the investment,
42:53
certainly far below the excessive profits the public
42:56
believe potash investors were making.
42:59
The profits or losses of other companies can only be estimated.
43:03
The standard company figures provide a basis, but other
43:07
factors must also be considered. The ratio of potash production
43:11
to coal used is a revealing clue to a plant's efficiency and or
43:15
the lake water quality, both of which were keys to financial
43:19
success. The length of time a plant was
43:21
in production and setbacks such as fires are other factors that
43:25
must be considered. The Hofland plant was clearly
43:29
the most profitable and early start.
43:32
Ownership of a high quality lake and the best coal to potash
43:36
ratio and the total production in excess of 90,000 tons are all
43:41
indicators of success. The Horde Company shared many of
43:45
these advantages, but a destructive fire curtailed
43:48
operations and limited production to 48,760 tons.
43:53
Nevertheless, the company must have realized a substantial
43:57
profit. The Nebraska company with a
43:59
production of 27,760 tons would have made a modest profit,
44:04
perhaps better than standards profit due to Nebraska's earlier
44:07
start. The original American Potash
44:11
Company was very profitable, producing 18,000 tons of potash
44:15
when prices were highest. The second owners of the firm
44:19
were not so fortunate as they paid a high price for the
44:22
company when the market was declining.
44:25
The same group built the Western plant, reportedly costing $1.5
44:29
million. After the boom was well passed,
44:33
American Western must be counted among the major financial
44:37
failures. The National Union plant with
44:40
its low production and major fire would have been another
44:43
failure. The Alliance company produced
44:45
14,040 tons of potash but would have had one of the highest
44:49
production cost in the industry as indicated by a potash to coal
44:52
ratio of 1 to 3.72. Alliance may have been at the
44:57
break even point. The plant at Merriman was in
45:01
constant financial trouble that led to bankruptcy while the one
45:04
at Sutherland was never completed.
45:07
Although the potash industry as a whole was a financial failure,
45:11
it's impact extended far beyond the company owners and
45:13
investors. The towns of Antioch and Hofland
45:17
were built, then raised in the seven-year boomed a bust cycle
45:21
of the industry. The resultant population shift
45:24
nearly caused a division of Sheridan County in the state
45:28
capital. Politicians and bureaucrats
45:30
became involved when lakes were discovered on state owned land.
45:34
While in Washington, they argued the merits of a protective
45:37
tariff within a year or two after pod ash production ceased.
45:41
The plants, the controversies, and even the towns, we're all
45:45
gone. Thank you for listening to the
45:48
Nebraska History Podcast. To learn more about the Nebraska
45:51
History Magazine, to listen to more podcasts, or to support our
45:54
podcast by becoming a member of the Nebraska State Historical
45:57
Society, go to history.nebraska.gov/podcast.
46:01
And don't forget to subscribe to the podcast and get notified
46:04
when we release new episodes on your favorite podcast platform.
46:08
Until next time, I'm Chris Goforth.