The reported capacity of domestic pulp mills is more than sufficient to supply domestic consumption in the case of ground wood and soda pulp but less than sufficient in the case of sulphite and sulphate. If the ground wood and sulphite pulp represented by imports of newsprint paper are taken into account, domestic capacity in the period from 1929 to 1935 fell considerably short of requirements of all three of the principal kinds of pulp, sulphite, ground wood, and sulphate. Additions to sulphate capacity in 1936 and 1937, however, have brought the capacity for producing such pulp to a point more nearly equal to requirements now than formerly.

TABLE 24.-Wood pulp: Comparison of United States capacity, production, consumption, and requirements 1

1 Requirements include domestic production, imports of pulp, and pulp represented by imports of newsprint paper. (See section beginning on p. 59.)

2 As of Jan. 1, 1936.

Source: Capacity: 1929-31, Bureau of the Census; 1933-35, as reported by United States Pulp Producers Association; production, Bureau of Census; consumption, see table 2, p. 49.

Used and unused capacity in different regions.

The Northeastern region, including New England and the Middle Atlantic States, has much the greatest plant capacity for producing sulphite, ground wood, and soda pulp, and although it has little sulphate capacity its total capacity for all kinds of pulp combined is

almost double that of any of the other three regions, which rank relatively close together. The Southern region accounts for about twothirds of the total sulphate capacity; the Lake and Central region has the next greatest capacity for this kind of pulp.

Table 25 shows the rated capacity of pulp mills producing the main kinds of pulp in the four producing regions of the United States in 1934 and 1935, and its relation to actual production.

TABLE 25.-Wood pulp: Rated annual capacity of United States pulp mills and 1 actual production by kinds and regions 1

1 Annual capacity based on 310 days of 24 hours each; regional production is based on adjusted data shown in table 14 and as explained in footnote on p. 68 the aggregate of the 4 regions in 1934 exceeds the census total shown in tables 23 and 24.

2 As of Jan. 1, 1936.

Total capacity includes soda and semichemical pulps, in addition to kinds shown separately; total pro duction also includes screenings.

Source: Based on data reported by United States Pulp Producers Association.

In recent years a greater proportion of the pulp-producing capacity has been unused in the Northeastern region than in any other of the main producing regions, and, disregarding sulphate, of which there is only a small capacity in the Northeast, ground-wood production has fallen farther short of capacity in that region, as in all others, than has the production of other pulp. The proportion of capacity unused has been next greatest in the Lake and Central region, and there the percentage of capacity unused in mills producing ground wood was approximately equal to that in the Northeast. The capacity of groundwood mills in the Northeastern region is, however, almost three times as large as that of mills in the Lake and Central region and well over half of that of the country as a whole. Over 50 percent of the total unused pulp-producing capacity of the United States in 1934 and 1935 was in the Northeast, although that region had only about 40 percent of the existing plant capacity. Of the unused capacity in the three other regions, the Lake and Central accounted for about half. The experience of the Lake and Central region in the sulphate industry was somewhat better than that in the production of other pulps.

The Southern region has had the lowest percentage of unused capacity although with regard to ground wood and sulphite, of which production is largely in the more northerly part of the region, the experience of the South has been similar to that of the Northeastern and Lake and Central regions. The capacity for producing sulphite and ground wood in the South, however, is small and the large percentage of unused capacity in these types of pulp had little effect on the percentage of total Southern pulp-producing capacity utilized. The figures regarding the extent of utilization of total mill capacity in the South are, of course, dominated by the large Southern sulphate industry, and in mills producing sulphate unused capacity has been low.

In the Pacific coast region the percentage of capacity unused in sulphate mills in 1934 and 1935 was greater than in either the Southern or Lake and Central region. A large part of the unused Pacific coast sulphate capacity, however, was accounted for by a single mill which was idle in those years but which has since resumed operation. In sulphite and ground wood the percentages of mill capacity utilized on the Pacific coast were greater than elsewhere.

The increase in production of sulphite and ground wood in 1936 (see table 3) probably has resulted in some increase in the proportion of mill capacity utilized in these kinds of pulp since 1935. It is unlikely, however, that in the Northeastern and Lake and Central regions there has been any substantial increase in the proportion of capacity utilized unless the dismantling of equipment has accounted for it.

There are several reasons why smaller proportions of pulpproducing capacity have been used in recent years in the Northeastern and Lake and Central regions than in the Southern and Pacific coast regions. The pulp mills of the two former regions are, on an average, considerably older than those of the South and the Pacific coast. Some of the older mills of the Northeastern and Lake and Central regions were originally integrated newsprint mills with smaller and less efficient paper machines than those which have generally been installed in modern newsprint mills. Such newsprint mills have found it difficult in recent years to meet competition from Canadian newsprint, which in the main is produced by mills built in the last 10 or 15 years. An even greater part of the capacity of such former newsprint mills would probably have been unutilized if some of them had not shifted

to the production of other papers in the manufacture of which the smaller and less efficient paper machines were not at such a great disadvantage. However, the shifting of older mills from newsprint to other products has not entirely overcome the disadvantage of their older and less efficient equipment.

Another and probably more fundamental factor responsible for the greater percentage of unused capacity in the Northeastern and Lake and Central regions than in the Southern and Pacific coast regions is the condition of wood supplies. Many pulp mills in the older producing regions have for several decades been drawing on pulpwood timber of their vicinities, and such timber was already limited as a result of the drain for lumber and related products and of the clearing of the timberlands for cultivation. As the supplies of timber readily accessible to the pulp mills were depleted the mills had to resort to more distant sources for their supply of wood, some of them in Canada. Restriction of the shipment of unmanufactured wood cut on Crown lands in Canada has contributed to the difficulty that mills in the older producing sections have had in finding economical sources of wood. At present the costs of pulpwood average much higher to mills in the Northeastern and Lake and Central regions than to mills in the Southern and Pacific coast regions (see table 35), and these high costs are only partly offset by the favorable location of the mills in relation to the large pulp and paper markets of the United States.10 If imported wood had not been obtained in considerable quantities in the Northeastern and Lake and Central regions, the experience of the pulp industries of these areas would have been still less favorable as compared with that of the Pacific coast and Southern industries. Further extensions in capacity.

The latest data regarding capacity as shown in tables 23 to 25 are computed as of January 1, 1936. In the production of sulphite, one new mill began operations on the Pacific coast in 1936, and further expansion of existing plants is being made in that area. Since the beginning of 1936, moreover, considerable increase in the capacity of mills producing sulphate has been made in the South and further construction there is projected. It is estimated that the mills installed in 1936 and those under construction or projected for completion by 1939 will provide additional capacity in excess of 1,250,000 tons, or about 69 percent of total domestic production of sulphate in 1936.

Considerable attention is also being given to the possible use of Southern pine for the manufacture of sulphite pulp and ground wood. Experiments and demonstrations as to the suitability of this species for pulp other than sulphate are being made, and satisfactory results are reported. One of the Pacific coast concerns which produces sulphite for rayon has announced plans for the construction of a pulp mill in the South for the manufacture of rayon sulphite pulp. Announcements have also been made, but definite information is not available, of a projected mill in Texas for the manufacture of newsprint paper using pulp made from Southern pine.

10 As indicated above, a large part of the capacity of the sulphate industry of the Lake and Central region has been used in recent years. In the production of this type of pulp in that region. jack pine and other wood not in the past considered suitable for the production of sulphite pulp and ground wood have been used.

ORGANIZATION OF THE UNITED STATES WOOD-PULP PRODUCING AND CONSUMING INDUSTRIES

Integration and affiliation of pulp mills with paper and board mills.

The bulk of the wood pulp produced in the United States, about 80 percent, is not shipped from the pulp mills as pulp but is converted into paper or board on equipment operated in conjunction with the producing pulp mills. Of the 154 pulp mills from which the Commission obtained information, and which in 1934 accounted for about 93 percent of the total wood pulp produced in this country, 126 were integrated establishments having equipment for the production of paper or board or both as well as of pulp.

In addition to the paper and board mills operated in conjunction with pulp mills, there are in this country about 550 mills which produce paper or board but no wood pulp. Their raw material requirements are supplied in part by domestic pulp but to a greater extent by imports, and in addition large quantities of cotton and linen rags, waste paper, bagging, straw, bagasse (sugarcane fiber), and other materials are used.

Some integrated mills scarcely ever ship pulp to, or receive pulp from, outside mills. Others regularly depend on outside mills (domestic or foreign) for certain kinds or grades of pulp which they do not produce at all or do not produce in sufficient quantities to supply the requirements of their paper and board operations. Some integrated mills in turn regularly produce an excess of pulp, or at least of certain kinds of pulp, over the requirements of their paper or board operations, disposing of the surplus to separate pulp-using establishments, principally those of the nonintegrated type.

Notwithstanding the fact that integrated mills frequently obtain some pulp from outside sources, such mills are usually equipped to produce in sufficient quantity the kinds and grades of pulp that are used most largely in their paper and board operations. As a result, an integrated mill frequently produces two kinds of pulp and sometimes as many as three or four kinds. For instance, newsprint is produced for the most part in integrated mills, and a newsprint mill usually has a ground-wood unit and a sulphite-pulp unit. In such cases the different kinds of pulp are produced in distinct departments, since the equipment is not interchangeable, and if each department is considered as a unit, there are many more pulp-producing units than there are pulp mills.

The 154 pulp mills reporting to the Commission represented 204 pulp-producing units; 111 of the mills reported the operation of one unit each and 43 two or more units each. Of the 43 mills, 38 reported the operation of 2 units each, 3 the operation of 3 units each, and 2 the operation of 4 units each. The most common combination in these mills was of sulphite and ground-wood departments; 30 of the 38 reporting mills operating 2 units each had these two departments and were principally newsprint mills. Of the reporting pulp mills not integrated with paper mills, each for the most part produces only one kind of pulp.

Some pulp mills not physically connected and integrated with converting mills are affiliated through common ownership or corporate relations with paper or board plants located in other places. Twelve of the twenty-eight nonintegrated pulp mills which have submitted information to the Commission are so affiliated. To be sure, some of