be ascertained? What type of mill shall be taken? The antiquated type or the modern mill-the two-tour or the three-tour system-the mill that makes its own ground-wood and sulphite pulp or the mill that makes neither the mill that speculates in timber tracts or the mill that buys pulp wood at the market, owning no timber tractsthe machine mill that rents its power or the mill that owns its water rights the mill that can take only particular sizes that fit an unusual width or mills with enough machines to carry any sizes or orders? Shall we compare with Canadian mills or with British mills or with German mills? How shall the basis of comparison be established, and who shall establish it? Will you select a mill that is run as a news-print paper mill or one that is a by-product of a lumber proposition or one that is a consolidation of a number of antiquated plants half of which should be in the scrap heap?

Few of the western mills own any timber tracts. The Northern Paper Company, representing a pool of four mills, owns 40,000 acres in Wisconsin; the Kimberly Clark Company, producing 240 tons of paper per day, owns 30,000 acres; the Consolidated Company, of Grand Rapids, owns 20,000 acres. All the 21 mills scheduled to participate in the western merger owned 73,000 acres of timber land. These figures are in striking contrast with the 4,000,000 acres which the International Paper Company acquired with borrowed money. The western mills have managed to prosper in disregard of the assertion of President Cowles, of the American Paper and Pulp Association, that "nobody would go into the business today, build a new mill, who could not first secure an adequate amount. of timber lands to supply the mill permanently with wood."

Of news-print paper mills in this country, 50 have no sulphite adjuncts. Included in that 50 are 9 mills which have no groundwood attachments.

TARIFF KEPT UP AMERICAN PRICES.

Because of the tariff tax of $6 per ton we have not been able to buy for domestic use that Canadian paper which has been offered extensively at $1.75 f. o. b. mill within the last four months. The gentleman's agreement or combination which has controlled the American news-print paper market has maintained the domestic price at a figure just below the importing point, which was $2.05 f. o. b. mill. It did not seem right in July, 1908, a normal season, when there was no drought and no strike, that Canadian paper should be sent to London for sale at a price which was $5 cheaper than American newspapers could buy from American mills that had shut down parts of their plants and discharged their American labor rather than cut "agreed prices." The driving out, by threats, of 10,000 tons of Canadian paper which had been bought for this market by S. A. Cook, of Neenah, Wis., is conclusive evidence of the abuse of the tariff benefaction by American paper makers.

During the ten years which have passed since the passage of the Dingley bill there have been many periods when the tariff has forced an increase in the paper price. I calculate that in 1898, during the Spanish-American war, newspapers had been taxed fully $6 per ton because of the tariff; that in four years, from 1901 to 1904, inclusive,

the tax enabled local mills to add from $2 to $6 per ton to the cost of paper; and that in 1907 and 1908 the import duty has added from $5 to $6 per ton to the cost of paper.

When the Mann committee visited Grand Rapids, Wis., Mr. G. F. Steele, the general manager of the Nelsoosa-Edwards Paper Company, compared the conditions of American and German mills. He said the paper makers of America were slow to take advantage of possibilities in the manufacture of paper-that in some respects they showed the traits of the day laborer-that the paper business is primitive in many places and shows a lack of technical knowledge. The Germans have visited the United States. They have appropriated its ideas and have developed new methods because of their superior technical knowledge. In this respect the forces employed in American mills are lacking.

I commend to the earnest study of this committee the statement which appears at the end of report 29 of the Mann committee, wherein Mr. Steele describes with some elaboration the primitive character of the American mills as compared with the German mills; and that becomes quite important in connection with the matter of the raising of the duty on sulphite pulp.

In placing an import duty upon pulp and paper you have put a premium upon inertia. You have given the paper makers a false sense of security which has destroyed their initiative. You have unintentionally induced them to form pools and to arbitrarily raise prices and to open up the American market to an invasion which has put at least one branch of the business-that of sulphite pulp—in desperate straits. Germans obtained their help from the technical schools; and they have not only driven us out of foreign markets, but have undersold the American manufacturers in the home markets, and have displaced 57 per cent of the sulphite in the United States. The paper makers who are asking for protection have been buying sulphite pulp from the foreigner in preference to buying it from the domestic producer, and doing so to the extent of 57 per cent of the total consumption of sulphite pulp.

The men who have been trying for more than five years to hold up and tax every user of sulphite pulp and of paper, have wrought their own undoing. They now come to you and impudently ask you to increase the import duty in order that they may increase their exactions; that they may have a new license to despoil their customers, and that they may continue trade policies which are impossible-in short, that they may push water up hill. Visit the paper mills, as the Mann committee has done, and you will find some methods which are said to be traceable to the twelfth century. Our paper makers have gone to sleep. Imagine a sulphite mill without a trained chemist! And yet there are very few sulphite mills in America employing chemists. Out of 22 mills of all sorts which the Mann committee visited, only 4 may be said to be approximately up to date. The beneficiaries of your tariff favor have allowed the world's market to slip away from them.

Paper can be made more cheaply in America than elsewhere. It is possible to capture the markets of the world. We have the materials and we have the opportunity; but we can only do it by putting the American manufacturer on his own resources, and by withholding from him those tariff favors which have been an incentive to indo

lence. (I refer now to the paper business.) Withdraw your premium upon stupidity and ignorance, and the world is ours for the paper makers and the paper user. Put the spur of necessity upon American talent, and it will win its way; coddle it, and you weaken it.

A removal of the duty on news-print paper would make impossible any combination to raise price. It would place an automatic check upon monopoly. It would nullify the plan by which the International Paper Company and others have expended millions to acquire undeveloped water powers and desirable timber tracts, and to shut out competition. Free paper would steady prices rather than lower them. It would modernize the business, giving consumers the benefits of the latest methods and machinery. Existing duties have raised the price of paper and pulp by giving to the paper manufacturers a shelter behind which they could organize combinations. While the tariff does not account for the full advance in price, the tariff plus the tariff-engendered combinations do account for all of it.

Now I reach the last of my sections-combinations.

COMBINATIONS AND OTHER ILLEGALITIES.

A delegation of paper makers, headed by Mr. William A. Russell, appeared before the Ways and Means Committee on December 31, 1896, and urged the framing of the paper schedule to suit the purposes of a number of mill men who were then organizing the industry so that they might control prices. I appeared before the Ways and Means Committee at that time and charged that these gentlemen were then planning to form a combination of mills and to raise the price of news-print paper to 2 cents per pound, or $50 per ton. On page 1760 of the report of that proceeding you will find that Mr. Russell said:

I deny both that there is a combination formed, or practically formed, or that any combination or any consideration of this matter by the paper manufacturers which contemplates raising the price of paper at all.

Within seven months after the passage of the so-called "Dingley bill" the International Paper Company was formed from a consolidation of about 30 paper mills, and immediate steps were taken to mark up prices. We call your attention to this matter to show you that at that time the paper makers misled and deceived Congress.

Combinations to restrict production and to fix prices have been made in almost every one of the divisions of the American Paper and Pulp Association, as follows: News-print paper, book paper, fiber and manila, box board, sulphite pulp, tissue, writing, blotting paper, soda pulp.

Information relating to all these combinations was submitted to the Attorney-General in October, 1907, and was subsequently embodied in a formal letter to him under date of February 10, 1908. We gave to him data covering

Dates of meetings, allotments of output, fixing of prices, restricting of production, pool profits and payments, paying mills to shut down, refusal of quotations to particular brokers, limitation of periods of contracts, limitations upon jobbers, instructions to counsel to find a plan for conducting the affairs of the association in such manner as would defeat any attack upon it by Federal or State Government (I do not mean the American Paper and Pulp Association, but one of

these subsidiary associations), permission to members to bid on a prospective contract in competition with outsiders.

Up to date, the General Paper Company has been dissolved, and the Fiber and Manila Association has been indicted and punished. The Box Board Pool collapsed on April 1, 1908. The Sulphite Pulp Association dissolved and reorganized in December, 1907, as a Bureau of Statistics. The president of the American Paper and Pulp Association, David S. Cowles, resigned September 24, 1908, to make way for Arthur C. Hastings, of Buffalo, who has been employed to organize a so-called "Bureau of Statistics" for the paper trade.

The trade disturbances and price fluctuations in news-print paper, due to unlawful combinations, have been continuous since the passage of the Dingley bill. The creation of the General Paper Company in the West merged the news-print output of about 19 mills, and when the Federal Government dissolved it at the instance of newspaper publishers, one of its officers threatened publishers with the vengeance of higher prices, apparently ignoring the fact that the association had already helped to add $10 per ton to the cost of newsprint paper.

On December 1, 1906, 21 western mills signed a tentative agreement to merge (p. 1999) into a corporation with $18,000,000 of stock and $15,000,000 in bonds, and additional bonds for 73,000 acres of timber owned by the mills. A syndicate was also planned to "protect the value of said bonds against the effect of injudicious and premature sales, and the ultimate realization of their full worth." I quote the phraseology of the proposition. The participants in that deal declined to testify on that subject before the congressional committee, one witness explaining that while the committee might grant immunity against prosecution under federal laws, it could not protect him against the application of Wisconsin laws (pp. 2128 and 2133).

Mr. John A. Davis, who had been manager of the General Paper Company until its dissolution and who had been largely responsible for the methods which ultimately wrought its ruin, joined the firm of H. G. Craig & Co., of 261 Broadway, New York, February 1, 1907. His new venture was attended with the prompt acquirement of the selling agency of a number of mills which theretofore had been acting independently. He controlled an output of about 750 tons daily from the following mills:

St. Regis Paper Company, St. Croix Paper Company, Gould Paper Company, Taggarts Paper Company, West End Paper Company. Malone Paper Company, Le Ray Paper Company, De Grasse Paper Company.

Incidentally he also sold paper for mills like the Cliff. At a period when prices were hardening from some cause, Mr. Davis tied up over a million dollars in paper, representing more than 20,000 tons, so that when publishers applied to the International and Great Northern Paper companies they were informed that no paper was to be had from them, but suggested that a call be made on Mr. Davis. Within fifteen minutes, in one instance, Mr. Davis called on the long distance telephone and arranged to ship paper at a price of $2.65, equaling $53 per ton. The representatives of the large paper companies instead of exposing this manipulation of the market to the publishers and the

authorities, steered purchasers to him, and they were equally guilty. Mr. Davis's action explains the so-called paper famine of 1907. The testimony of Mr. H. J. Brown, of the Berlin Mills, indicates another phase of Mr. Davis's operations in paper (p. 1387). Again, in March, 1908, when the Belgo-Canadian Mill, of Shawinigan Falls, sold 10,000 tons of news-print paper to an American purchaser, Mr. S. A. Cook, of Neenah, Wis., president of the Alexandria Pulp and Paper Company, of Indiana, he was not permitted to dispose of all of it in this market and 2,500 tons were sold to Lloyd, London, and another slice went to England, the purchaser paying the difference in cost. Some of the mills had apparently planned in August, 1908, to create a paper panic by writing to applicants that the entire output for next year had been sold out, all of which was untrue, because in other places its output was for sale.

At present, with pulp wood a drug in the market, many of the mills being loaded up with more than a year's supply in stock, and with wages and supplies reduced in cost and with capacity nearly 1,200 tons per day in excess of demand, the paper mills are holding out for what seem to be agreed prices for future delivery.

They seem to have formed that kind of a gentleman's agreement which the Paper Trade Journal declared "would avoid legal pitfalls." Incidentally it may be noted that the minutes of the Parks Pool disclosed the fact that the paper-trade publications had been urged to a "conservative" policy.

At all times the methods of the paper makers have promoted secrecy and favoritism in prices. The International Paper Company in 1907 quoted a price of $52 per ton to Mr. Bass, of the Bangor (Me.) Commercial, who was within 7 miles of its paper mill, and it quoted $50 per ton to papers in Atlanta and St. Louis (p. 1178). In one town where three publishers of equal merit were buying paper, one paid $35 per ton and another paid $55 per ton to the same manufacturer for identically the same article. The testimony before the Mann committee showed that in the year 1908 a price of $37.60 was paid by the Hearst papers, against a price of $50 by other papers in the same cities to the same company. The paper makers have arrayed themselves against open prices and against open dealing. They have preferred to keep their mills idle and their labor unemployed and to allow Canada to sell paper here, to the advantage of Canadian labor and the disadvantage of their own labor, rather than sell paper f. o. b. mill. When I applied to the Remington-Martin Company for 100 tons of paper which it wanted to sell it refused to let me have it because I refused to tell the name of the buyer, the place to which it was to be shipped, and the contract relations of the purchaser to other companies. I applied to every considerable news-print paper mill east of the Rocky Mountains for paper on terms which insured cash in advance for the paper delivered on car at the mill, and I was not able to buy from more than two out of fifty mills. Many of them needed orders. Their labor was working part time; but they preferred to respect a "gentleman's agreement and starve the market to maintain a price. Recently I applied for a price for paper to be furnished to a western publication, and I then discovered that the paper makers not only interchanged information, but apparently kept an index of the expiration of each paper contract. Cases have been brought to my notice of applicants for paper