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of $4.11 per ton, and you fixed a specific duty of $6 per ton, an increase of $1.89 per ton, or 46 per cent.

I understand that no one denies that the duty on mechanically ground wood or unbleached pulp was raised. However, it might be well to refer to the report of the Treasury Department, which proves that the mechanically ground wood imported in 1897 was valued at $11.55 per ton, thereby establishing the point that the ad valorem duty at 10 per cent in 1897 was $1.15, and that it was raised at that time to a specific duty of $1.67 per ton.

The duty on print paper did not produce any material revenue to the Government, the average collection of duties on news-print paper for ten years, since the passage of the Dingley bill, having been $9,365 per annum. The importations for each year were (see p. 880) as follows: 1898, no paper imported; 1899, no paper imported; 1900, 86 tons; 1901, 18 tons; 1902, 49 tons; 1903, 20 tons; 1904, 1,890 tons; 1905, 3.316 tons; 1906, 1,788 tons; 1907, 8,733 tons.

In six of the ten years it may fairly be claimed that news-print paper was not imported; and it is obvious that under such circumstances the duty on news print can not be regarded as a revenue tax. Practically no news-print paper has been imported into the United States except on emergency consignments.

Mechanically ground wood for the five years reported by the Treasury Department (p. 866) averaged 67,846 tons per annum, yielding an average revenue of $117.508 per annum.

Chemically bleached pulp was not imported (see p. 866). The importations of unbleached pulp for five of the ten years of which the Treasury Department furnishes a record averaged 31,000 tons, yielding an average revenue of $108.000 per annum. This importation of unbleached pulp carries with it a startling story of tariff demoralization.

Every result that was aimed at in the paper and pulp schedule, so far as it applies to the news-print business, has been reversed. The importations of mechanical pulp at the end of ten years are seven times as great as they were in 1898 (see p. 866), and our exports of news-print paper have diminished. The table furnished by the head of the export department of the International Paper Company (p. 1165) reveals a complete collapse of its foreign business because of conditions it had fostered at home. When you considered this paper schedule in December, 1896, Mr. Warner Miller told your committee that the primary purpose of any consolidation would be the exploitation of foreign trade. Subsequently, when the International Paper Company was formally organized, in January, 1898, Mr. Hugh J. Chisholm painted for the American Paper and Pulp Association a beautiful word picture of a proposed invasion of the world's markets. He counted $61,000,000 worth of paper business awaiting the American touch. He pictured the genius of our manufacturers, and he proposed to tap the golden hoard; but we find to-day that the International Paper Company has abandoned all the trade which years of effort had accumulated, and we are no nearer the foreign goal to-day on news-print paper than we were ten years ago. Our export trade of wood pulp has dwindled to half of what it was ten years ago; and a great part of that news-print paper export which now appears in the Treasury records represents, not a business based on the sound

principles of growth, but a purely artificial propagation, fostered by drawbacks and paid by the United States Government to the International Paper Company upon wood pulp brought into the United States and Canada and converted into news-print paper for export, with comparatively small advantage to American labor. The head of the foreign department of the International Paper Company estimated these exports at 17,000 tons, though the Treasury figures (see pp. 693 and 1005) failed to reveal that quantity. Those drawbacks for exportations were particularly grievous under the circumstances, because the company was taxing local consumers heavily for the paper it sold to them under the plea that it did not have enough paper to go around. To that extent the Government was placing a premium upon the paper famine, though a New York speculator was the principal doer of harm in that direction.

Turning to the study of the cost of production, we find a variety of material on which to base a comparison. On February 18, 1907, Mr. J. R. Booth, of Ottawa, sold paper to the International Paper Company at $33 per ton (p. 1157). The Laurentide Paper mill made apparent profits of $500,286.97 during that year on all its business, but this included lumber. Other Canadian mills sold at $35 per ton f. o. b. mill.

In the summer of 1897, shortly before I had bought 3,000 tons, to which I have referred in computing the raise of 46 per cent on duty, I bought from the Glens Falls mill, New York, 40,000 tons of newsprint paper for the New York World at $33 per ton, delivered in press room, New York, or $28.40 f. o. b. mill, which figure included mill profit. The fact that there were profits in the operation of that mill is shown by the millions bequeathed by the men who owned and ran it. I then estimated that the cost of production at that mill, at that time, was about $24 per ton.

On April 14, 1904, the International Paper Company sold 900,000 tons of news-print paper to the Hearst publications under a ten-year contract at a price of $37.60 delivered in New York, Chicago, and Boston. This price was equivalent to $33 f. o. b. mill, and included profit for the company.

In the years 1906 and 1907 the cost of production at the Hudson River mill of the International Paper Company was $27 per ton (p. 705). In studying cost, the point should be noted that the Hudson River mill supply of wood comes from Canada. It is brought by rail from preparing mills in the St. Maurice River at a cost for transportation of $3.50 per cord of wood or per ton of paper, whereas other wood of the same company cut in the Adirondacks is put into the Hudson River and is floated past this mill to other plants of the company at Glens Falls and Fort Edward with very little cost for transportation. Then, too, wood has been shipped by canal and Lake Champlain from Canada to those mills; but for some unexplained reason it has been sent entirely by rail to the Hudson River mill.

The annual reports of the International Paper Company (p. 1211) indicate earnings as follows:

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The output for the International Paper Company for ten years has averaged less than 450.000 tons per annum. According to President Burbank (p. 716) the company has been spending $1,000,000 per annum on "improvements." The company is including that expenditure for improvements in its cost of production total. After allowing for taxes and insurance as part of the cost, we find that the annual profit has averaged $8.79 per ton on a basis of 450.000 tons of annual production, and that the manufacturing profit has been 29 per cent on cost f. o. b. mill; that the average price for paper delivered has been $43.91 per ton, or $2.19 per 100 pounds, or $11.91 in excess of the price at which I bought paper when the Dingley bill passed. Further, that the average cost of production has been $35.12 per ton delivered, or $30.52 f. o. b. mill. The company's figures of cost are based on juggled bookkeeping, which added at least $3 per ton for cost of wood at many mills, and the figures are also based on the production of many mills which are antiquated and unfit for news-print paper purposes and upon a costly method of assembling raw material whereby 7 sulphite plants supply 15 news mills. A properly balanced mill should have grinders and sulphite digesters and paper machinery concentrated at one place.

In ten years the International Paper Company has shown a distinct recession in its position. That $C0.000.000 corporation has not displayed intelligence in its management. It has attempted to combat every law of trade and it has failed. A company whose business is run on the basis of secrecy and lying and deceiving its customers is doomed to disaster. The day will come when its bondholders will change its policies and methods and make paper at less than $24 per ton and meet all customers in the markets of the world on even terms at open prices, free of all combinations, doing business on a cash basis, standardizing its output, selling its undeveloped water power, cutting wood from its own lands, disposing of the acreage it does not need, encouraging trade schools, and revolutionizing the methods of its selling department.

When the company had an opportunity in 1905 to borrow $5,000,000 on bonds, it spent the proceeds, and it took another plunge promptly into a $5,000,000 floating debt. Its managers had put a premium upon competition because of their methods. They seem to be unable to take care of the property; and they beg the Government to help them maintain its impossible policies. It is a giant shackled by stupid servants; but may it not be that a corporation invites speculation with its possessions when it puts its officers in the atmosphere of Wall street?

The Great Northern Paper Company is selling to the New York World and to the New York Herald at prices which, including profit, net it about $31.40 per ton at the mill. I have been credibly informed that the Great Northern Paper Company, even with those low contracts on its books, was making a profit of $4,000 per day on an output of 400 tons per day, or $10 per ton profit. If we assume an average price of 2 cents per pound, or $40 per ton, delivered, on all of its contracts, and a cost of 23 cents per 100 pounds, or $4.60 per ton, for marketing its paper, we will find a production cost of $25 per ton.

American news-print paper sold in Sheffield, England, last year (p. 2020), on a basis of $39 per ton of 2,000 pounds, f. o. b. New York, while selling to New York customers at $50 per ton. In April, 1904, we called the attention of the Judiciary Committee of the House to the action of the International Paper Company in selling paper for London on a basis of $35 per ton f. o. b. New York while charging local customers $45 per ton; and when I told the Mann committee that that same corporation had been selling abroad at lower prices than it had sold to domestic customers, it cunningly evaded the point by furnishing, not its actual prices for special markets abroad at particular periods, but it gave an average price for each year (p. 1980). Even upon that table it admitted that in two years, 1903 and 1904, it obtained a lower price for foreign business than for domestic supply.

I have eminent authority for the statement that American mills can make paper cheaper than Canadian mills. I refer to Sir William Van Horne, the president of the Laurentide Paper Company, of Canada, which produces 160 tons of news-print paper per day, or double the quantity that all Canada uses. He said the advantage of the American mills over the Canadian mills was as follows: A supply of skilled labor, cheaper coal, adequate home market, cheaper mill supplies, cheaper first cost of machinery, cheaper repairs and maintenance, lower ocean rates for export, lower marine insurance on exports.

He omitted, however, the most important advantage which the American mills have. Canada is handicapped by excessively cold winters. In the north country it costs 25 per cent more to operate in winter than in other seasons.

The head of the export department of the International Paper Company, Mr. Chable (p. 433), is authority for the statement that Scandinavia, Finland, Canada, and the United States are the only countries that can make news-print paper profitably. American paper will command an advance of from 7 to 10 per cent over the European make. Sir William Van Horne furnishes an explanation for that difference in quality in describing the fiber of the Baltic product as "silvery and not making a feathery pulp like the American product."

It is obvious that the American paper maker is protected against the Baltic paper maker by the cost of transportation and by a difference of $1.50 or $2 per ton in quality, by better and therefore cheaper labor, and by many of the things in our favor enumerated by Sir William Van Horne. The one striking fact which stands out as the primary and conclusive evidence of the inability of the Scandinavian newsprint paper maker to enter this market is the point that in all the periods of high prices in the United States not a pound of British or Baltic or German news-print paper has ever been brought into the United States.

The mills at St. Croix, Millinocket, and Berlin, which are modern plants, can compete successfully with Canada or any other mills, and can make cheaper paper. This fact is just as true to-day as it was about the year 1897, when Mr. Hugh J. Chisholm sold paper in Toronto at an invoice price of $25 f. o. b. Otis Falls. Mr. Ballou, of Menasha, Wis., who buys pulp wood for 16 Wisconsin mills, indicated to the Mann committee (p. 2131) that America can manufacture news-print paper as cheaply or cheaper than Canada. It was the action of this single buyer in going 1,500 miles away from his western mills to purchase 50.000 cords of pulp wood that precipitated the hysterical performance in paper prices in 1907, though the most serious work of price-raising was done by a New York speculator.

The western mills had been suffering from the results of the imposition of the countervailing duty on paper. Their natural source of supply is Ontario; and when that Province prohibited export of pulp wood, you increased the cost of the raw material of those mills. The statement by him that American mills, presumably Wisconsin mills, can make cheaper paper than Canadian mills, has additional force because of this extra cost of wood. There is another disadvantage which the western mills overcame. The wood pulp furnished to them is small in diameter. Much of it is unfit for any other purpose. The spruce tree in that section does not grow much beyond 10 inches in diameter, and the material used for pulp grinding will not average 6 inches. Some of it is less than 3 inches in diameter, and makes extra waste and loss in barking the wood for the grinder (p. 2108). Some of the western mills are adjuncts of lumber establishments, and must take the leavings. Many of them are one-machine plants which can take only a proportion of the sizes which may be offered to them, and which lose a percentage of their production when they are unable to fully cover the wires of their paper machines. Notwithstanding this difficulty, the western mills have made money on prices of which they have complained. It required a corkscrew to extract from them any admission of financial gains. So far as I have been able to gather, the Mann committee has not been able to obtain the bona fide production cost of modern news-print mills; but I anticipate that the tariff committee of the American Paper and Pulp Association will deluge you and it with cost figures of machines that should have been consigned to the scrap heap, or turned to uses other than the manufacture of news-print paper in competition with the fast-running and finely appointed paper machines of recent construction.

It has been announced that the Committee on Ways and Means is to ascertain the comparative cost of production here and abroad. We are told that the American Paper and Pulp Association would submit such figures. May I deferentially ask how such figures can

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