PARAGRAPH 406-WOOD PULP. Statement showing increase under Dingley Act of imports of paper and pulp into the United States, 1898-1911. [Compiled from the reports of the Bureau of Foreign and Domestic Commerce, Department of Commerce and Labor.] 1 Imported entirely from Canada up to 1908. This pulp comes chiefly from Canada, Norway, Sweden, Finland, and Germany. Estimated through 1908 at 21 per cent on dutiable imports on basis of collections of 1907; for 1909 computed at 17.85 per cent. Estimated for the full fiscal year of 1910 on basis of figures for 6 months. At present, as you are probably aware, a large proportion of the importations of paper and pulp are coming into this country absolutely free from Canada, and pulp from some other nations. While we do not concede that the interpretation of the Treasury is correct in allowing these importations to come in under this ruling, we desire to call to your attention to the facts as presented by the importations for the 11 months ending November, 1912. Under the Payne-Aldrich bill the duties accruing to the United States, if enforced on all importations, would for the year, on this basis, amount to $1,724,726.61, while, as a matter of fact, we are presenting to the exporters duties amounting to $575,110, due to section 2 of the reciprocity act. We, as an industry, are entitled to the same treatment as any other legitimate manufacturing industry in this country. We believe that when business is normal, and the demand equal to the supply, the tariff has little or no direct influence on price; that in times of depression it is a protection to the home manufacturer, but with the present tariff, under no conditions, are the rates so high but that foreign paper and pulp can, and is, imported into this country. The law of supply and demand governs the price of all our production, probably more exactly than in any other manufactured article. Our goods are bulky, and it is almost impossible to store any quantity of paper except at a prohibitive cost, the result being that, in time of general business depression, mills in order to keep their employees at work run their plants even to the extent of manufacturing an article that they know they are losing money on. When it comes to the time when their losses are more than they PARAGRAPH 406-WOOD PULP. can actually labor under, their plants have to be shut down, and every pound of paper and pulp imported into this country during such periods lessens the ability of the American manufacturer to keep his employees engaged. We point to the fact that the increase in capital invested in the United States has been very little since the agitation which was started by some of the publishers at the time of the co-called "Mann" investigating committee, at which time the manufacturers of this country freely threw open their mills and their books to this committee, who made as full an investigation as they cared to make. This committee recommended that one grade of paper only-news paper-was entitled to a duty of $2 per ton when made from unrestricted wood. The cost of manufacture, however, did not include the difference in the cost of the wood itself, which is the principal factor in the manufacture of the cheaper grades of paper. Under the Payne-Aldrich bill, which you are familiar with, the rate of duty on the different grades of paper was changed but little, except on news paper, where it was lowered from $6 a ton to $3.75, with a penalty attached of $2 a ton if the paper was made from wood that had been restricted. The Tariff Board made a most exhaustive inquiry into the cost of paper in the United States and in Canada, and unanimously reported that there was a difference of $5.35 a ton in the cost between this country and Canada, saying nothing of other countries. While our greatest competitor in this grade of paper is Canada, we wish to point to the fact that England, Germany, and Sweden are large producers of the lower grades of paper; that the principal export trade which is accessible to us is almost entirely held by those countries. For instance, the South American trade is largely held by Germany. If they were unable to compete with us we believe this trade would be held by our manufacturers. The present condition of the paper business in this country is that we are attacked in our home market by nearly every country in the world; that we are shut out from their markets by tariffs much higher than the ones existing here at present, the result being that we are the dumping ground for every paper and pulp manufacturing country. The many different grades of paper I understand are to be represented here to-day, and on behalf of their particular grade of paper, the plea of our association is that this whole matter should be treated in a serious and unprejudiced manner; that the pressure brought to bear upon Congress by one class of interested consumers should not weigh against the facts which are easily ascertained by any department of the Government. Taking up the questions in order as you have designated would say: Schedule M, we desire that none of the articles under this schedule be changed unless in your deliberations you should find, and we believe correctly, that a larger revenue could be obtained by an increase, in many instances, of the present duties. The increase in importations by a lowering of the tariff would amount to very little; a considerable increase in duties would result in a large increase in revenue without serious interference with the quantity imported. 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 hibition 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. * * * pro 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." |