Mr. CLARK. You get $8 profit, according to your own statement? Mr. HASTINGS. Roughly; yes, sir. Mr. CLARK. How often do you turn your money over in this business; every twelve months? Mr. HASTINGS. In a year and a half on the average. Mr. CLARK. You turn it over once in a year and a half? Mr. HASTINGS. Yes, sir. Mr. CLARK. How much is your company capitalized for? You do not need to answer that question if you do not care to. Mr. HASTINGS. I have no hesitaney about answering the question; $100,000. Mr. CLARK. How much of that is money paid in and how much of it is water? Mr. HASTINGS. One hundred thousand dollars paid in, good, hard cash. Mr. CLARK. How much stock issued for the $100,000? Mr. HASTINGS. One hundred thousand dollars. Mr. CLARK. How much of a dividend do you pay? Mr. HASTINGS. We paid one year as high as 24 per cent dividend. Mr. CLARK. That is a pretty fair profit? Mr. HASTINGS. Yes, sir. We have more money invested than $100,000. You did not ask me about that. Mr. CLARK. That is what I want to get at. How much money have you got invested? Mr. HASTINGS. We have between $400,000 and $500,000. Mr. CLARK. And you make 24 per cent? Mr. HASTINGS. One year we did. Mr. CLARK. That would tide you over two or three bad years? Mr. HASTINGS. On $500,000 it is less than 5 per cent. The CHAIRMAN. The dividend was 24 per cent? Mr. HASTINGS. Yes, sir. The CHAIRMAN. On what amount? Mr. HASTINGS. One hundred thousand dollars. Mr. CLARK. The dividend was 24 per cent on $100,000? Mr. HASTINGS. Yes, sir. Mr. CLARK. How much have you invested? Mr. HASTINGS. Nearly $500,000. Mr. CLARK. What is it invested in? Mr. HASTINGS. Buildings and machinery. Mr. CLARK. The whole thing? Mr. HASTINGS. No, sir. Mr. CLARK. You do not own any timber lands? Mr. HASTINGS. No, sir. Mr. GRIGGS. Why did you capitalize the company at $100,000? Mr. HASTINGS. It is a sort of a closed corporation. A few people put up the original $100,000 invested. Then we went on and doubled the plant and paid for that out of our own pockets, paid ourselves back, and we still have $100,000 left. Mr. UNDERWOOD. You really acquired this additional surplus out of your earnings? Mr. HASTINGS. Yes, in twenty years or more. Mr. CLARK. You did get it out of the earnings? Mr. HASTINGS. We have. But there were a good many years that we did not pay a dividend. Mr. CLARK. You had some misunderstanding about what the basis is. As the basis of profit you ought to take the amount of money you paid in, ought you not? Mr. HASTINGS. Yes, sir. Mr. CLARK. Then you ought to mark off, if that is the proper term, whatever depreciation there is on your plant? Mr. HASTINGS. Yes, sir. Mr. CLARK. And then you ought to add the labor cost, and the cost of material, and the transportation charges, so as to get it f. o. b., and then you ought to subtract what that would cost you from what you get out of the stuff ultimately, and that is what you calculated or declared a dividend on? Mr. HASTINGS. I do not follow your bookkeeping exactly, but in a general way I think you have got it all in. [Laughter.] In a general way we charge off everything, and if there is anything left we call it a dividend. Mr. GRIGGS. You do not lay aside any property for the surplus fund? Mr. HASTINGS. In answer to the question, it is merely a question of so much money that we have got invested in that mill that we did not take out in profits, some that we were entitled to take out; and we were surely entitled to profits at some time. Mr. GRIGGS. You said you took out $24,000. Mr. HASTINGS. Yes; in one year. Mr. GRIGGS. And in addition to the profits you have taken out as dividends you have a surplus of $400,000? Mr. HASTINGS. Yes; but that is the aggregate of a number of years. That is not for one year. We did not accumulate that in one year. Mr. GRIGGS. I am not as big a fool as I look like. Mr. HASTINGS. I did not take you to be one. [Laughter.] Mr. CLARK. Have you any data as to any manufacturing concern in the United States engaged in any sort of business that is making more than 5 per cent? Mr. HASTINGS. Yes, sir. Mr. CLARK. I would like to know where it is. Mr. HASTINGS. I live in Niagara Falls part of the time and part of the time in New York. We have at Niagara Falls the Shredded Wheat Company: We make these hay biscuits [laughter], and I was fortunate enough to save a little money at one time, and I have got some stock in that, and I know we pay that. That is one concern that I know of. Mr. CLARK. I have been diligently searching among all these fellows that have come here to find one fellow who has made a reasonable profit. Mr. HASTINGS. I think the manufacturers of paper are entitled, as other manufacturers are, to a reasonable profit. Mr. CLARK. I know, but I have been searching, I tell you, since these hearings began to find some one who was making a reasonable profit. Mr. RANDELL. Did you say you make $8 a ton profit? Mr. HASTINGS. To-day from $8 to $9. 61318-SCHED M- -09 Mr. RANDELL. And you make 40 tons a day. That would be over 10,000 tons a year, or $80,000 profit a year, and at that you would be making 20 per cent profit. Mr. HASTINGS. No; you are taking one period and then jumping a number of months out of that period. Mr. RANDELL. If you were in the same condition as a year ago, my figures would be correct. Mr. HASTINGS. In two months from now the condition might be entirely different, possibly. The price of wheat to-day and the price six months ago and the price six months from now may be different you know. Mr: RANDELL. Were the conditions favorable in 1906? Mr. HASTINGS. Yes, sir. Mr. RANDELL. How much less did you make then? Did you make $7.50 or $8.50? Mr. HASTINGS. No. Mr. RANDELL. Six dollars and fifty cents? Mr. HASTINGS. No. Mr. RANDELL. Five dollars? Mr. HASTINGS. I do not think so. I think my report, however, shows exactly what we did make, which was proven by figures. There are no secrets about it. If you gentlemen, as I suppose you will, are going to run over these figures which are given from time to time in the different investigations of the select committee, you will get information that I swear we did not know ourselves about our neighbors. Mr. GRIGGS. I do not intend to confine you to a day or an hour or a week or a particular month. How long have you been in the paper business? Mr. HASTINGS. About twenty years. Mr. GRIGGS. And you have made in twenty years $400,000 surplus. That makes $20,000 a year on $100,000. That is 20 per cent, because you must admit that that is property, is it not? Mr. HASTINGS. No, sir. It is on leased ground, this plant is. Mr. HASTINGS. No, sir. Mr. GRIGGS. You say you have $400,000 or more invested? Mr. GRIGGS. It is in there? Mr. HASTINGS. Yes; it is in there, but we could not get it out. would say frankly to you we are on leased ground. It is on one of the great power companies there. It is on a very low-priced water power-lower than we could get it ourselves. Otherwise we are handicapped there by being away from the forest, and as a matter of fact it is doubtful at the end of a ten or fifteen year lease what shape it will be in. Mr. GRIGGS. When is your lease up? Mr. HASTINGS. In 1926. It is not very far off. Mr. GRIGGS. Whether you have gotten your money out or not, you have made that money and put it in it? Mr. HASTINGS. Yes; but we have not got it out. Mr. GRIGGS. That is a question of business judgment, not of tariff. Mr. HASTINGS. I do not know about that. We would not have accumulated that if we had not had a tariff. Mr. GRIGGS. And you accumulated, in addition to that, as I believe you told Mr. Randell, an average of 5 per cent? Mr. HASTINGS. No. I do not think I said that. I said I did not think we have made an average of 5 per cent. Mr. GRIGGS. I did not mean what you have made, but what you had paid in dividends. Mr. HASTINGS. I said in answer to Mr. Clark that it was less than 5 per cent of the money we have invested. Mr. GRIGGS. You are not counting the $20,000 you made every year and put in this, which in itself is 20 per cent. Then in answer to Mr. Ĉlark you said you have made 5 per cent-" probably 5 per cent," to use your exact language on the money you had invested, which was $500,000. Mr. HASTINGS. That was the year we paid that dividend. Mr. GRIGGS. What is your average on your investment? Mr. HASTINGS. I could not tell you offhand. I have brought my books down here and given them a transcript from them. Mr. GRIGGS. You put a little in that Havenner Biscuit Company, did you not? Mr. HASTINGS. No, sir. I got out of that and put it into the shredded wheat. I am county treasurer up in that county. Mr. BOUTELL. How many paper mills, Mr. Hastings, are there in the country, altogether? Mr. HASTINGS. There are, roughly, of all classes something like 600. Mr. BOUTELL. How many of these are in the organization of which you are president? Mr. HASTINGS. I think the last report I had was 157 mills and individuals. Mr. BOUTELL. So that there are 443 mills or manufacturers that are not in the association? Mr. HASTINGS. Yes, sir. Mr. BOUTELL. Of these 443, are any of them in any other association? Mr. HASTINGS. There is no other paper association except this, except that of the stationers. Mr. BOUTELL. How is it as to the International Paper Company and the American? Mr. HASTINGS. They have one membership in it, just as I might have. Mr. BOUTELL. They are one of the 443? Mr. HASTINGS. No, sir; they are one of the 157. They are members of this association. Mr. BOUTELL. You have given the entire domestic production of paper. Can you tell by a proportion of the paper output how many of these mills own their own lands from which they get their materials? Mr. HASTINGS. No, I could not. They make no report. Mr. BOUTELL. Do you know if that appears in any of these papers? Mr. HASTINGS. I believe the paper that will be read by Mr. Lyman, who replies for the International Paper Company, will have a lot of information in it that I have not got, but of course they own a good many mills and woodlands. Mr. BOUTELL. You have to go into the market to buy your pulp wood and your wood pulp? Mr. HASTINGS. Yes. Mr. BOUTELL. You do not know how many mills are in that position? Mr. HASTINGS. No, sir. Mr. BOUTELL. You do not know what proportion it may be by ratio of output? Mr. HASTINGS. No, sir. Most of the mills up near Watertown own their own timber lands, whereas at Niagara Falls there is no timber land within easy reach, and we could not operate to advantage with the small amount of wood that we would get, and therefore it is cheaper for us to buy in the open market. Mr. BOUTELL. What I hope will be brought out in this hearing is the ratio between the paper output and the ownership of stumpage. Mr. HASTINGS. If anybody could answer that, Mr. Lyman could, who will follow me. Mr. BOUTELL. Do you know how many of these paper mills there are in Canada? Mr. HASTINGS. Roughly, I know of the news end of it, because that has always been my business, and I understand it is something like 450 tons of news paper produced there under normal conditions, of which the home market of Canada used 90 tons and the other is 360 tons of export news out of the country, and that is practically all the amount that is raised. There may be other grades used at home in Canada, like wrapping paper and board and things of that kind. Mr. BOUTELL. So that with the falling off of supplies in this country there will be an increased demand in this country, or if we repeal this duty the natural source of supply of the United States would be Canada! Mr. HASTINGS. There is no question about it. Mr. BOUTELL. When we repeal this duty on pulp or paper Mr. HASTINGS. When you do repeal it [laughter] Mr. BOUTELL. Put it that way. When we do, or if we do; supposing that the duty be repealed on the paper or the pulp, would we receive importations from any other country than Canada? Mr. HASTINGS. Yes, sir; you would. You would receive shipments from Norway and Sweden, and inside of three years you would receive shipments from the Baltic, in Russia, where at present they are building sulphite mills to use their immense forests with pauper labor. Mr. BOUTELL. In direct competition with the paper of Canada? Mr. UNDERWOOD. On that line I would like to ask you a question. A while ago you answered that if the price of paper to-day was $55 a ton Mr. HASTINGS. Of course, a great deal of paper is being sold for less than that on contract. Mr. UNDERWOOD. Across the line, what is the same kind of paper selling for in Canada? Mr. HASTINGS. I do not know. Mr. Marcuse may tell you. Some Canadians bought some of us at auction. I think they got $2.25 for it. That is $45 per ton. Mr. UNDERWOOD. There is a difference in the price of paper to-day or any other day of from $10 to $25 a ton. If the duty was removed |