PARAGRAPH 406-WOOD PULP. Our experience is, as stated, that the American market is a dumping ground for the surplus production of other countries; that this surplus would still be brought in here almost irrespective of duties as long as they were not prohibitive. We would recommend this simplifying of the wording under Schedule M, paragraph 406, to read as follows: Provided, however, That if any country, or any dependency, province, or other subdivision thereof shall forbid or restrict the importation of mechanically ground wood pulp or wood used for the manufacture of wood pulp, the importation of mechanically ground wood pulp from such countries shall be forbidden or similarly restricted, or if it imposes any export duty, export license fee, or other export charge of any kind whatsoever, either directly or indirectly upon any mechanically ground wood pulp or any wood used in the manufacture of wood pulp, the amount of such export duty or export charge shall be added as an additional duty to the duties herein imposed upon all wood pulp when imported from such country. The same wording should also apply to chemical pulp and printing paper, and the value should be set at not above 2 cents per pound. Mr. HAMMOND. Will you give us the first two or three lines of that again? Mr. HASTINGS. We would recommend this simplifying of the wording of Schedule M, paragraph 406, which reads as follows: Provided, however, That if any country, or any dependency, province, cr other subdivision thereof shall forbid or restrict the importation of mechanically ground wood pulp or wood used for the manufacture of wood pulp. Mr. HAMMOND. That is meant to cover any province, subdivision, or dependency? Mr. HASTINGS. Any dependency, province, or other subdivision. We object to the administration of the present law. Finally, under a consistent policy of judicious consideration of the welfare of this industry, it can and will maintain the same rapid growth and improvement in methods. There are abundant water powers, an ample supply of suitable wood and other material to increase the production thousands of tons annually, and particularly in the South and West, where there are many undeveloped water powers, large supplies of suitable material for the manufacture of paper and pulp, in addition to thousands of tons of other material which are now going to waste, such as cotton plant and cornstalks, seed delint, flax, and many other fibrous plants. We point to the fact that in the State of Mississippi there has recently been erected a plant-which expects to be in operation in March-to produce some 10,000 tons a year of high grades of wrapping paper. These papers at present take a duty of 35 per cent ad valorem, which, at the present valuation, is $21 a ton. Texas, Louisiana, Georgia, North and South Carolina, Virginia, and West Virginia have plants producing large quantities of paper. The mills in this country making these grades of paper have not run their mills to capacity for several years, largely due to the importations and a productive capacity in excess of the consuming power of this country. We make no plea that we are an infant industry. Any manufacturing industry in this country that can show, as we do, that in 32 years the production in all kinds of paper has increased from 452,000 tons per year to 5,500,000 tons, and that the capital investment has PARAGRAPH 406-WOOD PULP. increased proportionately, is nearly a full grown, rather than an infant industry; but to continue the same rate of growth, or to live, we must have consideration and be put upon the same basis as to Government income as the people from whom we buy, and to maintain the standard of living our employees are accustomed to. In proof of our contentions that the activities of the American. Newspaper Publishers' Association is entirely along the line of overproduction, irrespective of the welfare of American institutions, inviting capital to invest in Canadian mills, we quote from their bulletin No. 2747, dated New York, September 21, 1912, as follows: "Paper has been offered in New York State at $2.10 delivered. The Canada Paper Co. of Windsor Mills, Quebec, has contracted with the Ohio Select List (which is a combination of papers) of 35 newspapers, for delivering approximately 3,000 tons of paper per annum, at $2.13 destination, net 30 days. * * * Freight rates varying from 13 to 15 cents, making the price vary from $1.95 to $1.98 f. o. b. mill. * * * One very large concern in the paper industry with an output approximately 200 tons a day, is averaging $1.95 f. o. b. mill for all of its output. "Before next April the total new production of news paper to be thrown on the market will approximate that of the International Paper Co., now making the figures of immediate and prospective developments exceed 3,000 tons per day, an amazing advance in volume." The total number of mills reported in this statement as above are 22, of which 7 only are contemplated in the United States, with a total capacity of 370 tons, or less than 12 per cent of the total estimated capacity of the new mills for 1912 and 1913. We quote again from the same bulletin: "The new mills already on the market have been adding 575 tons per day to the output. The summer decline in number of pages printed and in circulation due to diminished business is estimated as equivalent to 800 tons per day of reduced consumption in a total of 4,500 tons per day. The newspaper strike and boycott in Chicago have contributed somewhat to lessen the demand for paper." We are merely giving these extracts to show the attitude of supposedly American institutions by openly gloating over an increased production of paper in a foreign country, when it admits in another section that the home market at that time was oversupplied. The American manufacturers insist that their market is desirable, and that for this market some consideration must be given by the exporting country. This condition confronting them is more serious as it goes on, and we must have consideration at the hands of this Government. We quote from numerous editorials and articles in Canadian papers to prove that the only desire of the American publishers is to stimulate overproduction of paper, irrespective of where it is to be manufactured: PARAGRAPH 406-WOOD PULP. QUEBEC'S ACT ONLY A START THAT IS HOW UNITED STATES PUBLISHERS Regard REMOVAL OF EMBARGO OTHER CONCESSIONS MUST FOLLOW NOW-SUBSTANTIAL BEGINNING toward swEEPING AWAY EVERY RESTRICTION, THEY SAY. NEW YORK, January 4, 1913. Mr. John Norris, chairman of the committee on paper of the American Publishers' Association, said to-day that the action of the Provincial Council of Quebec in removing the restriction upon the exportation of pulp wood from the Crown lands of four large mills, viz, Laurentide, Belgo-Canadian, Price Bros. & Co., and Wayagamac, insures the admission into the United States free of import duty of all the products of those mills which have a producing capacity of 480 tons per day of news print paper and 50 tons per day of kraft paper. "It is inevitable," he said, "that the other and smaller mills in that Province will obtain a similar concession when they ask for it, and that the news print paper mills in Ontario will be forced by competition to obtain equal concessions from that Province. British Columbia removed its restrictions last summer for the Powell River mill. "The action of the Provincial Government is calculated to stimulate new production in Canada to supply the large and increasing market in the United States." Paper concerns' better profits. It is estimated as a result of the better conditions which will attend the export of paper from Canada because of the alteration in the policy of the Quebec Government concerning the export of pulp wood that the earnings of the Laurentide Co. will be increased by not less than $150,000 per annum, and those of Price Bros. (Ltd.) by not less than $100,000 per annum. Other concerns, such as the Belgo-Canadian Co., will realize much greater profits in proportion to their output. All like concerns in Canada, it is expected, will share in the prospects for greater trade extensions. Will keep wood for their own use.-As is natural, those Canadians who get their material from the lands where there is no embargo have no desire to see the removal of the restrictions on the Crown lands, and the policy which has been adopted is said to be due to them. By this it is thought that the limit holders will be enabled to get the free entry for their paper, but will, it is understood, see that no wood is exported from their holdings, and keep it for their own use, even though the restrictions are removed. During the last 12 months or so a somewhat critical situation has developed in the pulp and paper industry in Canada. The big profits made by some of the olderestablished concerns around 1910 created a boom in the following year, and as a consequence about 20 new companies with a capitalization of more than $40,000,000 were incorporated during 1911. * * * The result was overproduction and congestion of the market. So much was this the case that some of the newer firms had difficulty in finding a market for their product and had to sell at prices which only just about covered the cost of production. It is to avoid this surtax that the Couin government exempts the aforesaid paper companies from the prohibition which it decreed itself. These companies are not interested in exporting the pulp wood; on the contrary, their interest is, now that they are established here, to convert it into paper; but in order to have their production reach its maximum it is necessary that the American market be opened to them. We may note that the same policy was adopted in British Columbia. * * * The purpose of the exemption is to aid the paper industry in the Province. This was likewise the purpose of the general prohibition imposed two years ago to prevent the export of unworked wood. Far from being a restriction, the last act of the Couin government has for its object the same purpose as the decreeing of the prohibition itself. A few months before this agreement the government of Sir Lomer Couin, acceding to the pressing demand of Canadian manufacturers of pulp and paper, had prohibited the export of rough wood cut on Crown lands. The purpose of this prohibition was to force the American paper mills to come and establish in the Province in order to insure for themselves the raw material (pulp wood), and this purpose was attained, as about 15 pulp factories came to establish in our territory in consequence of the prohibition. * * *The objection was ventured that these companies could then sell their pulp wood instead of their paper. Their own interests is a guarantee that they will do nothing of the kind. Why should they sell pulp wood at a price of from $5 to $6 per cord, while they may sell it converted into paper at a price of $50 to $60 per ton? Upon this condition of affairs the Quebec Chronicle remarks: "It remains to be seen if the astute Uncle Sam is likely to be flimflammed by any such transparent device." PARAGRAPH 406-WOOD PULP. Mr. HARRISON. Section 2 of the Canadian reciprocity act is now in force, is it not? Mr. HASTINGS. Yes, sir. Mr. HARRISON. Under that, print paper made out of wood cut on freehold land is coming into the United States free of duty? Mr. HASTINGS. Yes, sir. Mr. HARRISON. Did that provoke a claim from any of the nations that under the most favored nation clause of our treaties with them they were entitled to free entry for their print paper into the United States? Mr. HASTINGS. Yes, sir. All papers of a value of 4 cents at the point of shipment. Mr. HARRISON. What were those countries? Mr. HASTINGS. Norway, Sweden and Germany, particularly. Mr. HARRISON. What was the decision of the Treasury upon that? Mr. HASTINGS. The decision of the Treasury was that they did not at present have that right, and they therefore refused. Mr. HARRISON. And upon what ground? Mr. HASTINGS. That has been tried yesterday or the day before in the Customs Court here, and I am not familiar with it. Mr. HARRISON. The decision has not been rendered? Mr. HASTINGS. There has been a decision rendered by the appraisers. but I believe leave has been granted for some further papers to be filed. I am not really familiar with it. Mr. HARRISON. Did that decision sustain the position of the importers? Mr. HASTINGS. No; it sustained the position of the Government, which was that they had no right to bring under those treaties. Mr. HARRISON. Now, what has been the actual effect of the enforcement of section 2 of the Canadian reciprocity act? Has it induced any of the Canadian Provinces to take off their export tax upon lumber cut on Crown lands? Mr. HASTINGS. It has had this effect. Four mills in Quebec have had released to them certain lands adjacent to their mills upon which they can cut wood and make their paper there, claiming they can bring it into this country without paying duty, and that is not only newspaper print, but paper with a value in the present market of 3 cents a pound. Mr. HARRISON. That refers only to the paper. They are only interested in getting the paper into our market? Mr. HASTINGS. The paper. I have already indicated, and given you extracts from Canadian papers showing what they expect to gain by this. Mr. HARRISON. What has been the effect upon the price of paper under 4 cents a pound in the American market by the importations under section 2? Mr. HASTINGS. It has been reduced no doubt. I should say, roughly, 10 per cent, due to overproduction in Canada. There are mills under construction and being financed, some 22 mills, to make 3,000 tons a day. The business is being driven out of this country into Canada. PARAGRAPH 406-WOOD PULP. TESTIMONY OF MR. MORRIS GINTZLER, OF NEW YORK CITY, REPRESENTING THE AMERICAN WOOD PULP COMPANY. The witness was duly sworn by the chairman. Mr. GINTZLER. Mr. Chairman, I am here before you gentlemen representing the Association of American Wood Pulp Importers, a membership corporation organized under the laws of New York State, as being importers of wood pulp. The importers, in turn, represent the interests of the American manufacturers who are dependent upon their supply of wood pulp from abroad. Strange as it may seem to be, it is a fact that this country does not manufacture sufficient wood pulp to accommodate the demand for it. There have been no new pulp mills erected in this country for some years, owing to the fact that existing woodlands are almost entirely in the control of the present owners of wood-pulp mills or lumbering interests, so that there is no room for any additional pulp mills. There are in this country approximately 800 paper-manufacturing plants, and of these about 500 use chemical pulp, technically known as "sulphite" pulp or "sulphate" pulp, there are altogether some 94 pulp mills in this country to furnish these paper mills with their raw material or chemical pulp, and of these 94 pulp mills some 76 have paper mills as a part of their own plant ånd do not dispose of the pulp to others who manufacture it into paper and sell the finished product, so that there are only a comparatively few pulp mills in this country that manufacture pulp for sale. Some of these pulp mills that manufacture pulp for sale also have paper mills in connection with their plants, and these paper mills do not absorb the entire amount of pulp. Hence, they have some surplus to sell. As a matter of fact, there are only six pulp mills in this country that are operating exclusively for the manufacture and sale of pulp; so that the attention of this committee is called to the fact that any increase in the duty on pulp, should it be contemplated, would be of benefit only to these six mills and would be at the expense of more than 400 paper mills that are obliged to buy their pulp in the open market. We also ask this committee in drafting the new bill embody the same tariff, whatever it may be, to apply to European as well as Canadian pulp. We imported from Canada last year about one-sixth of the total imports of unbleached pulp, and of this about one half was admitted free of duty and the other half paid the same duty as the foreign pulp. We contend that it is unfair competition and undue discrimination to have Canadian pulp admitted free of duty and the European pulp subjected to a duty. It is of no benefit to any American interests whatsoever, and on that account we recommend very strongly that the same rate of duty shall be imposed upon the European pulp and upon the Canadian pulp. Mr. FORDNEY. Then you suggest free trade on foreign pulp, do you, Mr. Gintzler. Mr. GINTZLER. No, sir. Mr. FORDNEY. To meet the free pulp coming in from Canada? Mr. GINTZLER. No, sir; I do not. There is the other alternative of levying the same duty on Canadian pulp and on European pulp. |