PARAGRAPH 406-WOOD PULP. Mr. FORDNEY. They get the pulp from deeded lands in Canada free? Mr. GINTZLER. Yes. Mr. FORDNEY. But there is a duty on the other because of Canada's restriction on the Crown lands? Mr. GINTZLER. Yes. Mr. FORDNEY. How, then, would you arrange the duty on foreign imported pulp to meet the Canadian pulp, one class of which is free and the other dutiable? Mr. GINTZLER. By placing a duty on the pulp which comes from deeded lands all over the world. Mr. FORDNEY. Would it not be better to put the pulp now coming in free from Canada, and the pulp now on the protected list--let it all be protected? Mr. GINTZLER. Yes, that would be better, fairer, and more equitable. During last year some 285,000 tons of unbleached pulp were imported in this country and 178,000 of bleached pulp, netting a revenue of about one and a quarter million of dollars. This duty has not proven to be any hardship, and it has enabled the American manufacturer to compete with the other mills that have chemical pulp mills. There is another phase of this tariff to which your serious consideration is invited. There has been some discussion given to the subject of an ad valorem duty. The duty at present on chemical pulp is on a specific basis, one-fourth of a cent a pound on bleached pulp, and one-sixth of a cent a pound on unbleached. The various grades of the different classes of pulp do not vary in market value more than 15 per cent, and the average on the foreign is only about 5 per cent. There is a very important factor to be considered in connection with the tariff on pulp, and that is that all paper manufacturers contract for their supply of pulp usually about a year in advance of their requirements; that is, during the spring they will contract for their requirements of pulp for the following year, and with an ad valorem duty and the fluctuations in the market the paper manufacturer here will never know where he is going to land. If the duty is made on an ad valorem basis, the duty to-day will figure a certain percentage on the value of the pulp, and in six months, if the market is high, the duty will be correspondingly higher, or if the market is down, it will be lower. Chemical pulps have fluctuated a great deal in value. They are to-day fully 20 per cent higher than they were two years ago, for instance. So that, unless the duty were retained, if it is to be retained on a specific basis, it would cause a great deal of unnecessary hardship, without bringing to the Government any corresponding benefit. The duty under the Dingley bill and under the Payne-Aldrich bill has been operating on a specific basis, and it has been satisfactory in its operations both to the Government and to the importers, and, indirectly, to the consumer of paper. The entire production of pulp in this country, the maximum possible production, is less than 5,000 tons a day. The importations of this article from Europe and from Canada have been about 25 per cent of the production in this country, and this 25 per cent represents PARAGRAPH 406-WOOD PULP. simply the amount which the American mills could not supply—that is, it was a physical impossibility to supply that additional quantity, and any additional tariff based on pulp would simply be a burden on the consumers of this pulp. The following brief was filed on behalf of the Association of American Wood Pulp Importers: IN RE SCHEDULE M. To the WAYS AND MEANS COMMITTEE, House of Representatives, Washington, D. C. SIRS: We, the Association of American Wood Pulp Importers, representing 75 per cent of the importations of chemical wood pulp, appear before you with reference to Schedule M, pulp, paper, and books, particularly with reference to section 406 of the tariff act of August 5, 1909. Paper manufacturing is one of the leading industries of the United States. there being 763 plants now in operation engaged in this industry. The raw material entering largely into the manufacture of paper is chemical wood pulp, generally known as sulphite, sulphate, or Kroft pulp. The present duty on this material is one-sixth of a cent per pound, dry, weight, if unbleached, and one-fourth of a cent per pound, dry weight, if bleached. There is, however, this exception to be noted: If imported from Canada, when manufactured from wood on the exportation of which there is no export restriction, it is now admitted free of duty in accordance with section 2 of the Canadian reciprocity act, which became effective July 26, 1911. Of the 763 paper mills now in operation in the United States, 538 paper mills use chemical pulp in their manufacture. There are in this country 94 mills manufacturing chemical pulps, having a maximum capacity of 3.363 tons of unbleached pulp per day and 1,155 tons of bleached pulp per day. Of these mills only 18 are engaged in the sale of pulp; the other 76 pulp mills have paper mills also, which use up their entire production of pulp. Of the 18 mills engaged in the sale of pulp, 12 have paper mills in connection with their pulp mills, and sell only such portions of their product of pulp as is in excess of their own requirements at their paper mills, so there are really only 6 chemical sulphite pulp mills in this country actually engaged in the exclusive manufacture and sale of their product. These 6 mills have a maximum daily capacity of 635 tons, of which 430 tons is bleached pulp and 205 tons unbleached pulp. It is impossible for our domestic mills to supply sufficient pulp for our paper mills, and, on account of the increased manufacture and consumption of paper in this country, the importations of chemical pulp have largely increased. No new pulp mills have been erected in this country since some years, owing to the scarcity of suitable woodlands in the United States. Existing woodlands are now owned or controlled largely by present pulp and paper-mill owners or lumber concerns, making it difficult for prospective pulp manufacturers to hope for any opportunity of profitable competition. We respectfully refer to the brief read before and filed with this committee at the hearing November 21, 1908, and printed in Tariff Hearings, Sixtieth Congress, 1908-9, page 6021. The conditions of the industry therein described are still prevailing. The cost of the production of pulp in Europe has greatly increased in the past five years owing to the increased scarcity and resulting enhanced cost of wood and higher cost of labor, coal, ocean freights, etc. Foreign pulps command a higher price than domestic on account of their higher quality. Under the present tariff the foreign manufacturer of unbleached chemical pulp is under an additional cost of about $10 per ton, and of bleached pulp about $12 per ton, on account of charges for packing, foreign inland freight, ocean freight, importer's profit and duty, of which the domestic manufacturer has the advantage; consequently the foreign pulp must be and is sold at a higher price than domestic, and the market to-day for foreign pulps rules from $3 to $4 per ton higher than for domestic. This comparatively small difference is made possible only by the economies of manufacture which are being taken advantage of so generally in Europe and so generally neglected in this country. For instance, with the exception of one mill here, all mills in PARAGRAPH 406-WOOD PULP. • this country burn sulphur to generate their sulphurous-acid gases used in cooking the pulp; but abroad the mills generally burn pyrites to get their sulphurousacid gases, resulting in a saving in cost of about $2 per ton of pulp. In spite of the reluctance of the American manufacturer of pulp to use the most modern methods, no chemical sulphite pulp mill has failed in business since the last 16 years. During the year 1912 some 285,000 tons of unbleached pulp, upon which about $900,000 duty has been paid, were imported, and during the same period about 78,000 tons of bleached pulp, subject to a duty of about $390,000, were imported, thus netting to the Government a revenue of over $1,250,000 for the year. From these amounts of importations 46,000 tons of unbleached pulp-about one-sixth of the quantity-came from Canada, and from this about onehalf was admitted free of duty. Of the bleached-pulp importations some 6,000 tons-about one-thirteenth of the quantity imported came from Canada, all free of duty. We ask that European pulps be placed on the same basis as the Canadian, as we consider the competition unfair and unreasonably discriminative, and at present of benefit only to the Canadian mills, without any corresponding advantage accruing to any American interests. Any additional burdens placed upon pulp may possibly be to the advantage of the very few pulp mills who manufacture their product for sale, but it would add a heavy load to the nearly 400 paper manufacturers in this country who are obliged to buy their pulp, and it would place them at a great disadvantage with the other paper mills having their own chemical pulp mills. We further desire to point out to your honorable body the importance of retaining the tariff on wood pulp, whatever it may be, on a specific basis instead of on an ad valorem basis. The value of pulp, whether bleached or unbleached, from the lowest grade to the highest of each class does not vary in the average more than 15 per cent, and in the majority of cases the variation in market values does not exceed 5 per cent. An ad valorem duty gives rise to differences in opinion as to market values, and exposes the importer to severe penalties for possible unintentional undervaluations, and gives the opportunity to unscrupulous importers to undervalue importations and thus cause unfair competition to others engaged in this industry. We venture the opinion that the operation of the tariff act on the wood pulp schedule on a specific basis, has been satisfactorily both to the Government and to the importer, and we most strongly urge upon you not to make any change in this respect. We have tried to make our brief short, and have not gone to any exhaustive length on any of the points to which your attention is called. However, for the purpose of bringing the matter still more clearly before you, we make herewith résumé of the questions involved: First. The tariff on pulp should not be advanced for reasons mentioned. Second. European pulp should be placed on the same basis as Canadian pulps. Third. The tariff, if continued, should be continued on a specific basis and not on an ad valorem basis. Respectfully submitted. ASSOCIATION OF AMERICAN WOOD PULP IMPORTERS. Members: J. Andersen & Co., Atterbury Bros. (Inc.), Ira L. Beebe & Co., Frederick Bertuch. E. Butterworth & Co., Castle, Gottheil & Overton, Alton Faunce, Rudolf Helwig, C. F. Hubbs & Co., Perkins-Goodwin Co., C. W. Rantoul Co., Felix Salomon & Co., E. M. S. Sergeant Co. STATEMENT OF F. L. STEWART, MURRYSVILLE, PA. Hon. OSCAR W. UNDERWOOD, MURRYSVILLE, PA., February 10, 1913. House of Representatives, Washington, D. C. DEAR SIR: It was thought proper by those who are interested with myself in bringing quickly into practical use an entirely new system or process of treatment for the production of paper pulp, that I should have the opportunity of a hearing before the committee at an appointed time. Unfortunately, it happened that the hearings on 78959°-VOL 5-13- 4 PARAGRAPH 406-WOOD PULP. the paper schedule were closed before we received word that the date fixed for them was already past and the hearings closed. In that case I felt free to adopt your suggestion that I submit a brief on the question for consideration by the committee. I beg to say that our motive in this matter is entirely unpartisan and without any desire at all to advocate any immediate modification of the pulp or paper schedule. But we realize that we are responsible for bringing into use this new system of pulp manufacture so as to supply it as soon as possible to the paper trade and the manufacturers of cellulose products. In its practical application, under existing circumstances, we feel justified in saying that this innovation means really a new industry, and one of such a nature as will enable the general public to largely share in all the benefits resulting from it. The great value of the new process has now been fully demonstrated, not only in its capacity to supply pulp or cellulose of superior quality at a very low cost, but in such abundance from otherwise waste natural sources as to make it certain that the supply will never fall short of meeting the existing need or the demand for it at any time in the future. At this time we simply wish to call attention of the committee to the fact that probably very soon after the incoming of the new administration it is our purpose to establish the business of pulp production under the new system throughout the country with the least possible delay. We recognize, as we think all do who have any acquaintance with the existing conditions which are limiting the supply, increasing the cost, and lowering the grade of paper as now produced, that a crisis is impending when a paper famine will exist without any visible means of relief. We take pleasure, however, in saying that in this handicapped condition of the paper trade we propose to provide the means of supplying the existing need and to prevent any misapprehension that at any time in the future the natural supply from this new source may be inadequate to meet the ever-increasing demand. In This might justly be regarded as an extravagant or incredible statement if it were not that it has been fully demonstrated that the fibrous cellulose, which is the principal constituent of all plant structure and is immeasurably the most abundant of all organic products the world over, is thus made directly available for this use. short, we have the whole vegetable world under our control for this purpose, and as long as plant life is maintained on the surface of the earth we have in that the guaranty that the supply of paper stuff will never be exhausted. At present paper, good and bad, is obtained almost entirely from only three sources -linen and cotton rags and wood. It is said that any one of the large American or London papers consumes each day fully 10 acres of an average forest. We hope to supply the newspapers with a much better quality of paper than the ordinary newspaper at a lower cost. That and the raw material from which a standard quality of book and writing paper is now producible will be supplied from the wild growths of reeds and coarse grasses of our marshes, the dense undergrowth of the forests in some of our Southern States, and the waste products of our fields. What remains of our forests can be put to a better use than for the production of mechanical wood pulp. It requires at least 30 years of growth before a forest tree can be made use of economically for that purpose. But the marsh and jungle and other waste products are the growths of a single summer, renewed for us without cost or care every year, and are practically inexhaustible. If the proper conservation of what is yet left of our forest resources has come to be just now a matter of much public concern, is it not equally important that we should now turn to practical account these other resources which we have been despising as worse than worthless by appropriating and devoting them to this newly discovered use? We respectfully submit for consideration by the committee the facts in this case as we know them to be, not asking for any modification of existing tariff rates affecting pulp or paper imports, but merely with a view to supplying the committee with information as to the results of this discovery, which of course the committee heretofore has not possessed, and which they are entitled to have in consideration of the subject now before them. I take the liberty of inclosing along with this a booklet just issued (on file), which explains the matter more fully than I have been able to do as above. Very respectfully, yours, F. L. STEWART. PARAGRAPH 406-WOOD PULP. BRIEF OF THE BATTLE ISLAND PAPER CO., FULTON, N. Y. Hon. OSCAR W. UNDERWOOD, FULTON, N. Y., January 10, 1913. House of Representatives, Washington, D. C. DEAR SIR: It would seem that a simple statement of facts regarding the chemical-pulp industry of the United States is all that is necessary to bring to the attention of your honorable committee to retain for the industry the same meager duties that it now holds. In looking over a brief filed with the Ways and Means Committee in 1908 I find some statistics which, as far as the total production of chemical pulp in the United States is concerned, have been very little changed; in other words, the business has not been attractive and very little capital has been invested in mills for the production of chemical pulp. There has been some development but it has been in connection with the completion of plants where the sulphite produced is used by the mills themselves in paper. In the meantime the importations of foreign pulp have enormously increased, as is shown by the following figures: Monthly importations for 11 months ending Nov. 30, 1912. Comparative table of imports chemical pulp into the United States from foreign It is a fact that while this enormous increase in importations is going on the domestic mills have been unable to operate their plants to their capacity. It is also true that the amount of revenue collected in the 11 months of 1912 would not have been allowed to the consumer of paper in this country if abolished by the Government. Here is an instance where the collection of duties is no imposition on the buyer of paper. There can be no doubt as to the lower cost of pro |