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REPORT
OF
?HE FEDERAL TRADE COMMISSION
ON THE
NEWS-PRINT PAPER
INDUSTRY
LIBRXFY
SCHOOL OF BUSINESS^
JUNE 13, 1917
WASHINGTON
GOVERNMENT PRINTING OFFICE
1917
rm.
LIBRARY
School of Business
REPORT
OF
THE FEDERAL TRADE COMMISSION
ON THE
NEWS-PRINT PAPER
INDUSTRY
JUNE 13, 1917
WASHINGTON
GOVERNMENT PRINTING OFFICE
1917
\
J
^
\
F. !
I
SENATE RESOLUTION NO. 87.
(Reported by Mr. Smith, of Arizona.J
In the Senate of the United States,
ResnlvP^ TKof fi. June 19 {calendar day June 20), 1917,
Attest :
James M. Baker,
2 Secre tary.
3
f/
r
^
^ ^
CONTENTS.
Letter of Bubmittal ^
Chapter I.— INTRODUCTION.
Sec. 1. Origin of investigation
2. Petition of news-print manufacturers * -,«
3. Cooperation of publishers' associations ' ' * * ^r
4. Scope of investigation
Price inquiry
Cost inquiry
Supply and demand factors -.«
Activities of manufacturers and jobbers ......*.*.*.'.*" 19
Conclusions and recommendations \ •«
5. Efforts for immediate relief of publishers *.'*.' .*.'*.'.'.' 19
Chapter II.— GENERAL DESCRIPTION OF THE NEWS-PRINT PAPER
INDUSTRY.
Sec. I. Introduction
2^
Daily newspapers
Weekly newspapers ^o
2. Development of the news-print industry oq
Rank of industry
Period prior to 1910
Period subsequent to 1910 ^ ^4
S. Process of production
Mechanical pulp _.
Chemical pulp ^
Paper making
4. Domestic and Canadian companies " * nr^
Production and shipments «,
Equipment „.
Consumption of raw materials " " 07
5. News-Print Manufacturers Association " * 4^
6. Paper jobbers and sales agents ^
7. Imports and exports of news-print paper * * 43
Imports .*.!!!!!.!!.... 43
Import duties 4-
Exports 4-
3
' CONTENTS.
Chaptbr III.-PRICES OF NEWS-PRINT PAPER.
Sec. 1. Introduction
2. Open-market pri^'/.V '.'*'' ***'*'**'*"
Range of open-market prices of roil news
^ge of open-market prices of sheet news../.*
Prices of ready-print sheets
S. Contract prices '
Provisions of contracts
Range of prices on contracts for 1,000* ions or over
Range of prices on contracts for 100 to 999 tons
Range of prices on contracts for less than 100 tons
Pnces on contracts covering deUveries in 1917
Low high, and average prices on contracts for 100 tons or'over * *
Contracts in force, September 1,1916
4. Average receipts per 100 pounds at mill . ..'.'" .".*.'
6. Effect of contract system on prices *
6. Additional cost of paper to publishers in 1917
7. Disparity in prices among publishers '.". * .'**.'''*.''*
Chapter IV.-JOBBERS' COMMISSIONS AND MARGINS OF GROSS
PROFIT.
48
51
51
52
54
55
56
58
61
63
63
64
65
67
69
69
71
Sec.
1. Introduction
2. Margins of profit on contracts
3. Margins of profit on open-market sales'
Margins on sheet news, 1915-1916.
Prices and margins in 1917
4. Jobbers' cost of doing business
i. Conclusions
Chapter V.-OOSTS AND PROFITS OF MANUFACTURE.
Sec. 1. Introduction
Items eliminated from costs * *
Readjustment of depreciation
Miscellaneous readjustments ] *
2. News-print paper costs, 1913-1916
Average costs for second half of 1916
Percen tage of cost _\
Cost of news-print paper, by groups of mills .. ....,
Cost of news-print paper by individual mills
S. Sulphite costs, 1913-1916
Average costs for second half of 1916.....!..
Percentage of cost
Cost of production of sulphite, by gi^oups of miils
4. uround-wood costs, 1913-1916
Average costs for second half of 1916
Percentage of cost
^^^.'^f^^to^ producing ground wood, by groups oVmdlis*
6. News-pnnt paper profits, per ton. ^ s i^ uuiia
Average profits of United States mills, by groups
o. iTonts on investment
7. Conduedons.
73
75
77
77
77
79
80
82
82
83
84
85
89
90
91
93
96
98
98
99
100
102
103
103
104
107
110
113
CONTENTS. 5
Chapter VI.— SUPPLY AND DEMAND FACTORS.
Sec. 1. Introduction j^
2. Causes of domestic demand jig
Increase in circulation 1 1 g
Increase in advertising -^20
Effect of panic conditions 121
3. Causes of foreign demand j22
4. Causes of limited supply \ * ' ^03
5. Prospective supply and demand for 1917 125
6. Conclusions * -loe
Chapter VII.— EVIDENCE OF VIOLATIONS OF THE ANTITRUST
LAWS.
Sec. 1. The News-Print Manufacturers Association 127
2. Allotment of customers ^28
3. Prorating and absorbing tonnage of new mills 129
4. Curtailment of production [ ^29
6. Canadian joint selling agencies jon
6. Other activities i«q
Chapter VIII.— SUMMARY OF PRINCIPAL FACTS WITH CONCLU-
SIONS AND RECOMMENDATIONS.
Sec. 1. Principal facts j^g
Costs of production jon
Present conditions serious jo*
Causes of existing conditions jgj
2. Conclusions ^q^
3. Efforts of the Commission to afford relief 135
Proposal of manufacturers 135
Action of publishers 107
Action of jobbers -loo
Findings of the Commission as to fair prices i3g
4. Recommendations j^
I)
'H
LIST OF TABLES.
Page.
1. Production and shipments of news-print paper by principal United States ^
and Canadian companies, 191^-1916 "^ ' " * V.
2. Equipment of 16 United States manufacturers and 11 Canadian manu- ^
facturers of news-print paper in 1916 / -
3. Percentage of sulphite to total pulp for 12 principal United States compamefl
and 9 principal Canadian companies, 191^1916 (first half) ■•'•., ^
4. Importe into the United States of printing paper valued at not above 2.5 ^
cents per pound, 1911-1916 - • • - ' • • ^
5 Exports of news-print paper from the United States, 1911-1916 «
6. Range of open-market prices to publishers on purchases of 18 tons or over,
of news-print paper in rolls, by States, 1915-1916 ..........
7. Range of open-market prices to publishers on purchases of 1 to 17 tons, in-
elusive, of news-print paper in sheete, by States. 1915-1916 - - - . . M
8. Prices of the Western Newspaper Union for ready-print Bheete per quire of
six-column quarto, 30^ by 44-50-pound paper, August 1, 1913-August 1, ^^
1916, inclusive • '
9 Range of prices on contracts with publishers for 1,000 tons or over of news-
print paper in rolls, by cities, 1912-1916 (first half) .•■■•-■.•■ ^^
10 K«.ge of prices on contracts ^-ith publishers for 100 to 999 t«ns, mclusive.
of^ews-print paper in rolls, by States, 191^1916 (first half)...... ^^^ 62
11. Lowest, highest, and average prices on contracts ">»!' P"bl"bers for 100 tons
or over of news-print paper in rolls, by cities, 1912-1916 (first half)...-- 64
12. Dates of signing contracts with publishers for 100 tons or over of news-print
paper, in force on September 1, 1916 -• ■; •■
13 Average receipts per 100 pounds of news-print paper at miU on shipments,
by districts, 1913-1916 (first half) ••"••1
M Jobbers' commi«rions and margius, in percentages of cost pnce, on contracto
with publishers for 18 tons and over of news-pnnt paper in rolls, 191i- ^^
1916 (first half) ," '.' " i' .1
15. Jobbers' margins, in percentages of purchase price, on open-market sales to
publishers rf 1 to 17 tons, inclusive, of news-prmt paper m sheets, by ^^
eroups, 1915-1916 (first half) ; ' ' U ' '."j'cjV V '
16 Av^coet of manufacture per ton of news-print paper for Umted States
and Canadian milU, 1913-1916 (first half). .^. ; • ■ - • - - - - - - - • ■ ■
17. Percentage of t»tal cost of producing news-pnnt paper attribuUble t» JMi-
ticularitems-United States and Canadian mills combmed-1913-1916 ^
18.ci^p.!^uctionofnew^printpaperinUra;edSto^^^^
investigation, arranged by groups according to cost per t»n, 1913-1916 ^^
19. C<^ ^'ufacturepeVionof ne;s.p;in;paper for^inapai Uniteistat« ^^
mills, 1915-1916 (first half) ,* : " V " Vt * -'rj gIIII^ "o«\i
20 Averag^ cost of manufacture per ton of sulphite for Unit^ States and
Canadian mills, 1913^1916 (first half )
LIST OP TABLES. 7
21. Percentage of total coat of producing sulphite attributable to particular
items— United States and Canadian mills combined— 1913-1916 (first
J^«) : 99
22. Cost of production of sulphite in United States mills covered by the investi-
gation, arranged by groups according to cost per ton, 1913-1916 (first half). 100
23. Average cost of manufacture, per ton, of ground wood, for United States
and Canadian mills, 1913-1916 (first half) iqI
24. Percentage of total cost of producing ground wood attributable to particular
item*— United States and Canadian mills combined— 1913-1916 (first
1^^ 103
25. Cost of production of ground wood in United States mills covered by the
investigation, arranged by groups according to cost per ton. 1913-1916
(first half) 20^
26. Average sales, costs, and profits per ton of news-print paper for United
States and Canadian mills, 1913-1916 (first half) 105
27. Variations in the profits per ton of news-print paper sold by United States
mills covered by the investigation, by groups, 1913-1916 (first half) 108
28. Rates of profit on net investment of 15 United States companies, 1915-1916
(first half) jYY
29. Statistics of production, imports, exports, and stocks of news-print paper,
in the United States, 1915-1916 ' hq
30.. Average daily circulation of 114 newspapers in English and 10 in foreign
languages with a circulation exceeding 50,000 copies, 1913-1916 119
31. Average daily circulation of 114 newspapers printed in EngUsh, grouped
according to circulation, 1913-1916 120
32. Increase in the columns of advertising of 40 large daily newspapers, first half
of 1916 over preceding half-year periods 12I
LIST OF EXHIBITS.
1. Petition of the News-Print Manufacturers Association to the Federal Trad<
Commission , ^^
142
2. The Federal Trade Commission's suggestion of smaller Sunday papers. . ." .' 143
3. Tariff duties on printing paper ^ .«
4. Tariff duties on wood pulp ,c^
5. Contract forms for the sale of news print ' " * jci
6. Circulars sent out by jobbers in regard to the high prices and scarcity of paper ! 154
o
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ACKNOWLEDGMENT.
w^
The Commission desires to mention as especially c< intributing to
the preparation of this report Messrs. E. O. Merchant, Le Claire
Hoover, and William T. Chantland. Messrs. F. L. Hawes, W. K.
Bendz, W. W. Bays, J. K. Arnold, H. L. Anderson, W. P. Sterns,
J. H. Bradford, and A. E. Peterson also rendered valuable assistance.
LETTER OF SUBMITTAL
Federal Trade Commission,
Washington^ June 13^ 1917.
To the President of the Senate :
The Federal Trade Commission has been engaged upon an inves-
tigation of the news-print paper industry pursuant to Senate reso-
lution 177, Sixty-fourth Congress (Senator Owen), adopted April
24, 1916, and there is submitted herewith its complete report. A
preliminary report was submitted on March 3, 1917, which con-
tained a summary of the Commission's activities and findings in
connection with the investigation and which recited the efforts of
the Conmiission through processes of accommodation and arbitra-
tion to restore competitive conditions in the industry and to insure
a fair price to consumers of news-print paper while the processes
of restoration were going forward. This preliminary report, with
some revisions, has been incorporated in the complete report and
will be found in Chapter VIII, which contains the conclusions and
recommendations of the Commission.
INCREASED PAPER COST.
The consumption of news print paper in the United States in 1916
amounted to about 1,775,000 net tons, valued at more than $70,000,000.
At the prices now prevailing this tonnage will cost news-print con-
sumers in 1917 more than $105,000,000, an increase of $35,000,000,
or 50 per cent. Most of this increase will fall upon newspaper pub-
lishers. If the average increase in cost of manufacture in 1917 over
1916 is estimated at $10 per ton, which is liberal, one-half of the
$35,000,000 increase in paper cost represents additional profits to the
manufacturers.
lAILURE OF ARBITRATION AGREEMENT.
The efforts of the Commission to restore competitive conditions in
the news-print industry expeditiously and to arbitrate and effectively
project a fair price for news-print paper have failed. Since the ar-
bitration agreement referred to in the preliminary report was en-
tered into with some of the manufacturers of news-print papea* and
since the award of the Commission fixing a fair price for news-print
U
12
REPORT ON NEWS-PBINT PAPER INDUSTRY.
iJ)
paper was announced a Federal grand jury for the southern district
Of JVew York, partially upon evidence furnished by the Commis-
sion has found indictments against four of the signatories to such
arbitration agreement for violations of the Sherman antitrust law
and the said indictments are now pending for trial. From the time
the arbitration agreement was signed and the award made, and prior
hereto the Commission has bent every effort to bring about some prac-
tical relief to this situation. The plan failed for several reasons, the
principal reason bemg that the arrangement was voluntary and the
Commission had no power or warrant under the law to make it
effective. Several of the manufacturers signatory to the agreement
subsequent to the finding of the indictment in this matter notified the
Commission that they would not proceed under such arbitration
agreement, The result has been that news-print paper has been
billed and sold at the same exorbitant prices that obtained in many
instances theretofore. ^
PRESENT SITUATION SERIOUS
The news-print paper situation is very serious, not only to the
consumers of paper but to the pubHc generally and to the Govern-
ment of the United States, which is itself a large consumer of paper.
Ihe Commission has reason to believe that this situation will be still
more aggravated and serious in the ensuing months. In normal
tunes competitive conditions would have been gradually restored
through the proce^es of law, but it would have required some time
to translate the effect into the prices of paper. The demand for
news-print paper is constantly increasing and gives promise of still
greater mcrease with the continuance of the war. The supply of
news-print paper available to meet this demand is dependent upon
mills already m existence. This supply will probably not exceed the
quantity produced last year and may be less owing to disturbances
that may result from the war. Under normal conditions it takes
from twelve months to two years to bring a new paper mill into
operation. Under present conditions it would take much longer
It seems probable, therefore, that with the demand for news-print
paper mcreasmg and the supply remaining constant or possibly
dimmishmg there will be a repetition of the panic market of la^
year and the exaction of prices that are entirely out of measure with
the cost of production. The consequences to thousands of smaller
newspapers and to many of the larger ones, and through them to the
reading public, will be most serious.
WAR EMERGENCY MEASURE RECOMMENDED.
By reason of this condition, and because of the vital interest to
the pubbc of an efficient dissemination of news in this crisis, the
LETTER OF SUBMITTAL.
13
Commission recommends as a war emergency measure that Congress
by appropriate legislation provide :
(1) That all mills producing and all agencies distributing print
paper and mechanical and chemical pulp in the United States be
operated on Government account; that these products be pooled in
the hands of a Government agency and equitably distributed at a
price based upon cost of production and distribution plus a fair profit
per ton.
(2) That pursuant thereto some Federal agency be empowered and
directed to assume the supervision and control thereof during the
pendency of the war.
(3) That, by reason of the fact that approximately 75 per cent
of the production of news-print paper in Canada comes into the
United States, proper action be taken to secure the cooperation of
the Canadian Government in the creation of a similar governmental
agency for the same function, which shall be clothed with power
and authority to act jointly with the governmental agency of the
United States for the protection of the consumers and manufacturers
of print paper and the public of the United States and Canada.
(4) That, in case the Canadian Government shall not join in such
a cooperative enterprise, then importation of paper and mechanical
and chemical pulp into the United States shall be made only on Gov-
ernment account to or through the Federal agency charged with such
supervision and distribution.
In this connection the Commission desires to point out that such
a plan contemplates the operation of mills under their present man-
agement and the use of the present distributing agencies, but that
such use and operation shall be for the public good, directed by a
disinterested public agency to secure equitable distribution and a
price that is based upon a fair cost of production and a fair profit
per ton to be determined without regard to the panic market created
by unusual and abnormal conditions. This plan has the virtue of
being analogous to those plans which have been tried and success-
fully operated in Great Britain. It will also insure the maximum
production and greatest facility in transportation and distribution
and will adapt itself readily to a return to normal competitive con-
ditions upon the conclusion of the war.
Respectfully submitted.
William J. Harris, Chairman,
Joseph E. Da vies.
William B. Colver.
John Franklin Fori;
I
I '
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CHAPTER L
INTEODUCTION.
Section 1. Origin of investigation.
The investigation of the news-print paper industry was made by
the Commission pursuant to the following resolution of the Senate
of the United States:
Resolved^ That the Trade Commission is hereby requested to
inquire into the increase of the price of print paper during the
last year, and ascertain whether or not the newspapers of the
United States are being subjected to unfair practices in the sale
of print paper.*
During the first session of the Sixty-fourth Congress complaints
from publishers resulted in the introduction of various resolutions
in both Houses of Congress calling for an investigation of the rise in
prices of news-print paper. These complaints came mainly from the
smaller publishers not protected by contracts, who were the first to
feel the increase in prices.
Trade papers early in 1916 pointed out a probable increase in con-
sumption on account of the demand for advertising space, and
warned publishers of a possible scarcity. On April 5, at the instance
of the News-Print Manufacturers Association, a conference was held
in New York between representatives of the manufacturers and pub-
lishers to discuss the paper situation. The purpose of the manu-
facturers in seeking this conference was afterwards set forth by the
secretary of the association in an interview appearing in the Editor
and Publisher, October 7, 1916, as follows:
We were approaching a crisis, and, unless something was done
to curtail the demand, to conserve the supply, we could see that
there would be a shortage that would seriously affect newspapers,
not only with regard to the quantity they might desire, but as
to the price, for it must be perfectly apparent to any reasonable
man that where there is a shortage of material — a demand in
excess of the supply, with first one and then the other bidding
at a higher rate to get what the other fellow wants and must
have — that increased prices naturally result.
Nothing was accomplished by the conference.
^ S. Bes. 177, 64th Cong., Ist sess., adopted Apr. 24, 1916.
15
-Tjpfs.^wi-'TPI^'''''^'
16
BEPORT ON NEWS-PRINT PAPER INDUSTRY.
Section 2. Petition of news-print manufacturers.
On May 6, 1916, shortly following the adoption of the Senate reso-
lution above referred to, the News-Print Manufacturers Association
made formal appearance before the Commission by its secretary and
attorneys, who presented a petition signed by the executive commit-
tee of the association,* and asked that —
as soon as it can be done an investigation be had by your body
into this question in accordance with the Senate resolution above
set forth; and these petitioners respectfully state that the^ will
consider it a privilege to furnish this Commission any informa-
tion within its power.
Under date of May 9, 1916, the secretary of the association reiter-
ated the desire of both Canadian and United States members to
cooperate with the Commission in the following statement :
It is our earnest desire that this investigation of the news-
print paper manufacturing industry shall be so thorough and
complete that it may not be necessary to make further investiga-
tions of this sort for some time to come, and to that end we
tender you all the facilities of our organization, and hope that
our assistance may facilitate the investigation both in point of
time and expense.
The cooperation of the members of the association and also of sev-
eral domestic companies not belonging to the association, all of which
voluntarily opened their books to the Commission's accountants and
agents and furnished all the information desired, greatly expedited
the progress of the investigation, and also made it possible to study
the industry in Canada as well as in the United States.
Section 3. Cooperation of publishers' associations.
The American Newspaper Publishers Association, National Edi-
torial Association, Association of Pennsylvania Dailies, and others
have cooperated with the Commission in this investigation. Their
representatives attended the various hearings called by the Commis-
sion to discuss the news-print paper situation, and their officers were
active in urging members to supply information called for by sched-
ules of questions which the Commission sent to newspaper publishers.
Very commendable work has also been done by the officers of these
associations in urging members to disallow the return of unsold papers
by newsdealers, to eliminate waste, and to curtail consumption.
Early in March, 1916, the manager of the American Newspaper
Publishers Association called the attention of the members to the re-
duced stocks of news-print paper and higher current prices, and sug-
gested serious consideration of economy in the use of paper. A month
later a bulletin was issued declaring that reserve stocks were '' at or
« For foU text see Exhibit L
INTRODUCTION.
17
about the danger line," and urging that "every economy should be
made in the use of news print until the mills have had an opportunity
to replenish their reserve." In subsequent bulletins publishers were
continually urged to eliminate waste and curtail consumption. This
association has also inaugurated campaigns for saving waste paper
and wrapping paper which have had important results.
The propaganda spread by publishers' associations, trade papers,
etc., has apparently accomplished much good. Reports from all
parts of the country indicate that since about the middle of 1916
many publishers have been working individually and in cooperation
to eliminate wastes and to reduce their consumption to the minimum
required by the news and advertising matter.
In a bulletin issued by the American Newspaper Publishers Asso-
ciation, dated October 21, 1916, it was announced that 54C papers
bad reported that they no longer allowed papers to be returned.
Moreover, 90 had increased their selling price and 21 had advanced
advertising rates.
In response to its letter of October 14, 1916, encouraging and
urging economy of news-print paper, especially in Sunday editions,
the Federal Trade Commission received within two weeks over 100
responses from publishers announcing their adherence to the pro-
posed policy and stating in nearly all instances that they had
already instituted some economies.^
In this connection attention should be called to the success of the
New York Globe in meeting increased paper costs by the introduc-
tion of various economies and the adoption of- more efficient methods
based on a knowledge of costs. The publisher of this newspaper
issued a pamphlet in February, 1917, giving the results of his expe-
rience and study of methods to meet the abnormal news-print
situation.*
Section 4. Scope of investigation.
Owing to the importance of reporting its conclusions as quickly as
possible, the Commission limited its inquiry in this investigation to
the subjects especiaUy pertinent to the determination of the causes
of the present increase in price. In Chapter II, however, are pre-
sented some data of a general nature regarding the news-print in-
dustry which will be of value to the reader in reaching a better
understanding of the price question.
Price iNQuiRY.-The first inquiry of the Commission was to deter-
nune to what extent prices of news-print paper had risen in different
localities. For this purpose agents of the Commission collected a
88569**- -17-
>Por extracts from these letters, see Exhibit 2.
•Newspaper Efficiency, by Jason Rogers.
schedule of questions sent out .^^y^^^^^lTe presented in Ch- ap-
tained by this branch «t '^^^::'^':;,Z'r^.et prices to pu ^b-
ter III, which shows the contract »" P • j^ .^i^us years. ^ ^ .
Ushers in different localities in 1916 ''^ ^f^* ^^led the Commission \U
The price ^^^^^^^'^^^J^^^:"::! matins of gross profit >^
t STcor^dtith p" ears. These data are presented in
Chapter IV. imnortant questions involved in this
Cost i«Q^^--0««^/1 '^^ ^fse in prices was justified by the
investigation was whether the m^^ease P^^^.^^ ^^.^ ^^^.^^ ^^^
increase in the cost of 'n»''^**?*"'t ^^^ „f ^^^t of the manufacturers
Commission sent its agents to f/ "fj^ "^ °he cost figures from
in the United States and Canada and obtained «^ ^^^ ^^^
January 1,1913, to June 30 1916 d^re^^^ ,1,, method of
panies, together with *«" "^^^^'^^.J^ belonging to the News-
handling costs. The Canadian manufa»be^P g ^^^^^^ ^^^
Print Manufacturers ^^«'^*7't *^°"^ts was furnished by the
Commission with the ^^ ^^aTe ^ L^lured f or a part of
United States companies. Costs nave u
the second -^ ^^^^^^^^^^^ experienced in this phase of the in-
considerable ditticuity wab ^ . • ^ systems of dif-
.estigation owing ^^^ ^lasL thfreS.1 o* the companies were
ferent companij^ {^^^ l*Tmp5ble to ascertain their costs,
so incomplete that it was imp ^^^ one-half
in addition to obUining -f ^^J^ ^,,,^ information re-
years ending June 30 1916, the Co ^^^ ^^^.^ investments in
garding the profi^ of the man .^^^^^^^ .^ ^
plants and woodlands, inis was ^^ ^^^
Lcertain whether prices P^-J" *f JJ^ rXrn upon the invest-
- was claimed, -/^^^''J^^J^^t^^^^ accouL of the char-
ment in the business. " ^»^J^^ ^^^^ ^^^ conducting the inves-
acter of the records and the l^inited *ime ^ ^^^ ^^^g.
tigation,to de^mnne J-ra^ly ^e -1^^^^^^ ^^^^ ^
. Sr^iir^S^bel'^se'S inflations gr<;wing out of amalgamations,
reorganizations, etc. presented in Chapter V.
The data regarding costs and P^^^*^^^^^ ^, -^ conclusions re-
Sx:pp.t ... --- V;;^^\"n pXrs ft was necessary for the
garding the causes of f^^J^^^^^ taken place in the relation
Commission to ascertain ^^^^.^^^^f %. . p^^ this investigation of
of supply to demand during the year 191b. i? ori;m
INTRODUCTION.
19
economic causes production, shipment, and inventory figures were
obtained from the manufacturers for the years 1913 to 1916, in-
clusive. Inventory figures were also obtained from jobbers, 'xhe
publishers of daily papers were asked to furnish figures showing the
receipts of paper and inventories for different dates, and most of
them furnished such figures as they could. Circulation figures were
^ obtained from the sworn returns of publishers to the Post Office De-
partment and statistics of advertising were obtained for the prin-
cipal newspapers in several of the largest cities.
The information collected by the Commission relative to the supply
and demand factors is presented in Chapter VI.
Activities op manufacturers and jobbers.— For the investigation
of alleged unfair or illegal activities of manufacturers and jobbers
the Commission's agents not only examined the contracts of all of the
principal manufacturers, selling agencies, and jobbers, but also the
correspondence files of the News-Print Manufacturers Association
and some of the more important members. Publishers also furnished
a considerable amount of valuable information relative to this
matter.
The findings of the Commission regarding this phase of the inves-
tigation are presented in Chapter VII.
Conclusions and recommendations.— The conclusions of the Com-
mission were contained in its preliminary report to the Senate dated
March 3, 1917, and are repeated in Chapter VIII of this report.
The Commission's recommendations for the protection of publishers
during the continuance of the present abnormal conditions resulting
from the war are contained in the letter of submittal above and
also in Chapter VIII.
Section 6. Efforts for immediate relief of publishers.
An important fact brought out by the news-print paper investiga-
tion was that most of the output of low-cost mills was sold under
annual contracts to the large publishers of the country, while many
of the 2,000 small dailies and some 14,000 weeklies depended on the
open market or on high-cost mills for their supplies of news print.
In the latter part of 1916 these smaller papers in many cases had ex-
treme difficulty in obtaining a supply of paper except at prices which,
if maintained, would have driven them out of business.
The public hearing of the Commission on December 12, 1916, made
this situation so clear that at the opening of the afternoon session,
the manufacturers through their attorney requested suggestions from'
the Commission as to some method of distributing their available
product that would take care of the small publishers. The willing-
ness of the associations of small publishers to forward some such
, scheme of distribution was at once made evident. At the same time
F- - ?N 1^ 1 "f"
^«
*
20
REPORT ON NEWS-PRINT PAPER INDUSTRY.
their representative said " We do not believe we can get this help or
this assistance unless it be through the cooperation of the Federal
Trade Commission as a mediary in this particular emergency."
In accordance with its established policy in cases where its as-
sistance is requested in cooperative efforts of business men to im-
prove competitive conditions, the Commission in pursuance of the
above suggestion arranged for conferences of committees represent-
ing publishers, manufacturers and jobbers. As a result of these
conferences the Commission at the close of the year instituted a
thorough canvass, which revealed very completely the immediate
needs of newspaper publishers without contracts. The manufac-
turers and large publishers, however, were unable to come to any
agreement through which a supply of paper could be secured for
distribution to small publishers under the supervision of the Com-
mission. As the Commission had no legal powers through which
the necessary paper could be obtained it was compelled to abandon
this effort to furnish immediate relief.
On January 26, 1917, a conference between manufacturers and pub-
lishers was held in Chicago at which the suggestion was made that
the Federal Trade Commission should arbitrate the question of what
was a fair and reasonable price for the sale of news-print paper.
Adopting this suggestion, several manufacturers in February, re-
quested the Commission to determine what was a fair price for stand-
ard news for the six-month period beginning March 1, 1917, and
agreed to abide by its decision. After conferences with publishers
and jobbers the Commission decided to undertake this task, and on
March 4, 1917, announced the prices which it had determined in a
report to the Senate of the United States.* Subsequent to this an-
nouncement, various complications arose which caused the plan to
fail. The details of these later developments are given in Chapter
VIII. (See p. 140.)
A Senate Doc. No. 3, 65tli Coi%-., special session.
CHAPTER n.
GENERAL DESCRIPTION OF THE NEWS-PRINT PAPER INDUSTRY.
Section 1. Introduction.
There are some 2,500 daily and Sunday and about 14,000 weekly
and semiweekly newspapers in the United States. The daily papers,
according to Census data for 1914, had a circulation of about 30,000,-
000 copies, the Sunday papers about 17,000,000, and the weeklies and
semiweeklies about 24,000,000. These newspapers range from the
largest metropolitan daily, with an average circulation for the six
months ending October 1, 1916, of more than 800,000 copies per day,
to the smallest country weekly, with a circulation of a few hundred
copies each week. These dailies and weeklies together furnish the
cheapest and most serviceable means of disseminating information,
general and local, to the 100,000,000 people in this country. Practi-
cally every town of any size in the country has at least one publica-
tion devoted especially to local affairs. For this reason the great
reading public has a special interest in whatever affects the welfare
of these publications.
Daily newspapers.— The 2,500 daily newspapers, nearly 600 of
which have Sunday editions, have nearly 60 per cent of the total
circulation of all newspapers and consume the great bulk of the news-
print paper produced and imported.^ There are 119 daily news-
papers in 32 of the 50 cities having 100,000 population or over, which
have an average daily circulation in excess of 50,000, according to
sworn statements to the Post Office Department for the six-month
period ending October 1, 1916. These 119 dailies have a total circu-
lation of 15,649,634 copies. The following tabulation groups them
according to circulation :
Group.
Number cf
publications.
Combined
circulation.
400,000 and over
6
6
9
35
64
300,000-400,000
2,914,fi26
200,000-300,000.
1,887,568
100,000-200,000.
1,979,432
50,000-100,000.
4,431,209
4,436,739
TOUI
119
15,649,634
» More than 1,000 daUy newspapers also have weekly or semiweekly editions.
i
1 i
1 i.
(?
22 EEPOBT ON NEWS-PRINT PAVEB INDUSTET.
These 119 daily newspapers represent about 50 per cent of the
total cTrculation of dailies. There are 430 other newspapers in the
Std S^ai having an average daily f^^^^f^^^^ZTZZ
whose combined circulation is estimated at ^'^OO'^J'^f ^^
1,900 dailies having less than 10,000 circulation with an estimated
t^tal of 9,000,000. . ^
One hundred of the daily newspapers in the United States or 4
n«r cent are published in the two cities of New York and Chicago
Td hav; a LSlned circulation of nearly 6,500,000, or about 20 per
*^\alSiraU of the daily papers use roll news, most of which
^^^LtxT™iKS.-The 14,000 weekly and -i-ekly -w.
papers use sheet news largely and purchase i in the open mM
On account of the large expense necessary to *e gathering of news
and miscellaneous matter for the make-up and printing of such papere,
abourrOOO of the smaller weekly newspapers make use of what is
Sown i "ready print service." They buy t^- paper a^^ady
printed on one side or on two or more pages, and pnnt the rwt of
the paper themselves, using local news items m addition to th^
Z r.^r,t «>rvice manv of them use what is known as plate
::^tce'CLris news matter furnished in the form of metal type
prteTcast in column lengths which may be cut up and arranged at
^^Thet at^veStncerns which make a business of furnishing
Jdy prSTorplate services to publishers. The most ™Port«nt ^f
Zi arHhe Western Newspaper Union, Omaha Nebr.; the Amen-
irPrllssociation, New York City; and the American Type
Founded Co., Jersey'city, N. J. Other i^-J-t ones are th^
Pnblishers Press Association, Toledo, Ohio; United Weekly Press
2SSn, "Grand Kapids, Mich.; ^^f .^^ff:^^^:^^SZ
Co Chicago The Western Newspaper Union has 30 branch ottices
Sited iTas many cities of the United States, extending from Boston
tToSv^r and Minneapolis to Houston. It suppli^ more than 90
L^Tof the papers using ready print and in addition furnish^
WeTuanti ii of plate service to other publishers. At each of ite
large quanxi f . ^j „| ^g^kly newspapers, trade ]our-
rn^SST for other publishers. At the Chicago office alone
"Si72rsucTpubl cations a^re printed. In addition to being the
tit Snsumer^f sheet news print in the United States it is also
l^Tmportant factor as a paper jobber, carrying stocks o^ pn«
paper at nine of its branch offices and doing some jobbing busmess
fn Tee news at each of its other branches. The Pbbing^siness at
Smaha is conducted under the trade name of Western Paper Co.
GENERAL DESCBIPTION OF NEWS-PEINT PAPER INDUSTRY. 23
Section 2. Development of the news-print industry.
The manufacture of paper from wood pulp dates back to the
sixties, when the first machine for grinding wood was installed in this
country. Prior to this time the paper used for printing newspapers
was made of rags, straw, and other vegetable fibers. Poplar was
the first wood used for making pulp, and then spruce. The latter
has been found the most satisfactory of all of the woods for making
news print and is at present the most extensively used.
With the use of wood pulp for making news print there came a
rapid development in the industry. The estimated daily capacity
of domestic news-print mills increased from about 400 tons in 1880
to about 4,700 tons in 1916. According to the United States Census
reports, the quantity manufactured in domestic mills since 1899 and
the value of the product has been as follows :
Year.
Tons pro-
duced.
Value ©f
product.
Year.
Tons pro-
duced.
Value of
product.
1899
569,212
912,822
$20,091,874
35,906,460
1909
1,175,554
'1,313,284
$46,855,560
52,942,774
1904
1W4
» This figure includes about 30,000 tons of paper not classed by manufacturers as news print. The Com-
mission's production figure for 1914 was 1,282,934 tons.
The production of news-print paper in the calendar year 1916, De-
cember being estimated, was 1,355,196 tons.
Rank of industry. — ^The United States Census reports for 1914 rank
the paper and wood-pulp industry of the country as twentieth in total
value of products. News-print paper constituted about one- fourth of
the total paper tonnage shown, and somewhat less than one-sixth of
the total value. Other important grades of paper manufactured are
book, writing, wrapping, tissue, kraft, bag, etc. The total production
of the 45 United States companies making news-print paper in 1916
was found by the Commission to be 1,355,196 tons, valued at more
than $50,000,000. Of this paper about 75,000 tons were exported and
most of the remainder was used by newspapers. In addition, they
also used nearly 468,000 tons of Canadian paper, which was about 75
per cent of the total production of that country. The commercial
uses of news-print paper are largely for catalogues, telephone direc-
tories, railway guides, school tablets, handbills, wrapping paper, etc.
Period prior to i9io. — ^In the decade prior to 1900 the rapid
building of paper mills led to overproduction and a decline in
prices. In 1898 the International Paper Co. was organized. It
absorbed most of the mills east of the Mississippi River, with the
control of from two-thirds to three-quarters of the domestic output.
For two or three years after the organization of this combination
24
REPORT ON NEWS-PRINT PAPER INDUSTRY.
prices were firmer, but new mills were being built, and by 1901
prices again began a downward movement, which reached the lowest
point in 1906. The net earnings of the International Paper Co.
fell from $3,961,657 in the year ending June 30, 1901, to $1,623,616
in 1906-7. A representative of the company testified that the aver-
age gross receipts per ton on its sales had fallen from $42.52 in
1901 to $39.90 in 1906. The following year the average receipts per
ton advanced to $41.
In the latter part of 1907 and early in 1908 a great effort was made
to advance prices further. It was to some extent successful, and the
increase in the cost to some newspapers was very considerable. This
resulted in the appointment of a committee of the House of Rep-
resentatives, which, after a very full investigation beginning in the
spring of 1908, made its final report to Congress in February, 1909.
This report emphasized the scarcity of spruce in the United States
and the need for its conservation. It recommended that ground
wood should be admitted free from territory in which there was no
restriction on exports and that the duty on news print be reduced
to one-tenth cent per pound. On this point the report reads as
follows :
It can not be expected that Canada or its Provinces will re-
move the present discriminations as to the exportation of pulp
wood to the United States or cease from adding additional
discriminations unless we also lessen the tariff on the cheap
paper, which is made mainly from spruce wood.
The committee held that the duty of $2 per ton recommended by
it would offset the high cost of production in the United States.
Period subsequent to 191o. — Since 1910, although prices remained
above the 1906 level, the news-print industry in the United States
has barely held its own, only one large mill having been built.
On the other hand, several mills have been changing machines over
from news print to other grades, especially since 1913, the aggre-
gate loss to news-print production since 1910 probably amounting
to 500 tons a day. As a result there was a decline in the output
in 1914 and 1915, and prices also showed a downward trend. (See
pp. 61 to 68.)
In 1916 some revival occurred in the development of the domestic
industry. Prices rose and production increased more than 100,000
tons over the preceding year. Before the close of 1916 the Inter-
national Paper Co. completed the installation of two new machines
with a combined capacity of about 62 tons per 24-hour day, and
three additional machines with a combined daily capacity of 140
tons began operations in other mills during the first half of 1917.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 25
In marked contrast with the stationary condition of the news-
print industry in the United States during the last five years has
been the phenomenal development of the industry in Canada. Be-
tween 1910 and 1916 six new mills operating 10 machines were built,
with an estimated daily capacity of more than 500 tons. This in-
creased output of news print was largely exported to the United
States. One new machine with a daily capacity of 50 tons began
operation in November, 1916, and several new developments are
under way which will begin operations in 1917 and 1918.
According to a report of the American Newspaper Publishers
Association of March 24, 1917, the new tonnage expected in the
United States and Canada during 1917 and 1918 is as follows:
New tonnage, 1917 (revised Mar. 22) : Tons per day.
Hawley Pulp & Paper Co., now running 50
Great Northern Paper Co., now running 50
Spanish River Pulp & Paper Mills-
New running gg
November . qq
St. Maurice Paper Co. —
Now running 5Q
April """"" 5Q
Pacific Mills (Ltd.)—
July 6Q
October qq
Price Bros. & Co.-^
November ^5
May ^ """I 50
Northwest Paper C3o., April 59
Brompton Pulp & Paper Co., December 50
Ontario Paper Co. —
Now running 5Q
November 5Q
Abitibi Power & Paper Co., December 175
Mill organizing, December 59
945
Tonnage for 1918 (revised Mar. 22) :
BSfturentide (3o. (Ltd.), Grand Mere, Province of Quebec, November__ 200
Price Bros. & Co., Kenogami, Province of Quebec, November 175
Lake Winnipeg Paper Co., November 2(X)
Mill organizing, November 2OO
775
Future tonnage (uncertain as to time and quantity) : ~
International Paper Co., Three Rivers, Province of Quebec 200
Pic River and Nipigon Power 150
Kenora, Ontario (E. W. Backus) 2OO
550
i J
MM
0.
l!i;
26
REPORT ON NEWS-PRINT PAPER INDUSTRY.
The St. Maurice Paper Co. at Three Rivers, Quebec, is a subsidiary
of the Union Bag & Paper Co. The Pacific Mills (Ltd.), at Ocean
Falls, British Columbia, is a subsidiary of the Crown Willamette
Paper Co.
There is some doubt whether the mills reported as beginning op-
erations in November and December, 1917, will be completed by
that time. They represent a daily capacity of 440 tons.
Section 3. Process of production.
The basic material in the manufacture of paper is cellulose, which
is obtained in the form of plant fibers. In the case of news-print
paper the fibrous material is obtained from certain kinds of wood.
Spruce is most generally utilized, though hemlock, balsam fir, and
other kinds are used in some cases. The wood is cut usually in
winter and transported to the mill, when practicable, by floating the
logs down a stream. Shipment to the mill by rail and water also
is employed extensively.*
The first step in the process after the logs have arrived at the
mill is that of removing the bark if this has not already been done.
This is accomplished by one of two types of machines. The first
type is called the tumbler, which consists of a large cylindrical drum.
Into this drum the logs, in 2-foot lengths, together with a suitable
quantity of water, are introduced. The drum is then caused to re-
volve, and the friction of the logs against the side of the dnun and
against one another removes the bark. The second type is called
a barker, or rosser, and consists of a heavy iron disk, provided usu-
ally with three knives fixed to its surface and projecting about half
an inch from it. The disk is rotated rapidly and when the logs are
pressed against its surface the bark is shaved oflF by the knives.
The second is the more thorough method but is less economical,
because of the loss of the wood which is cut awav. Sometimes the
logs are barked before they are shipped to the mill in order to save
freight.
After being barked the pieces of wood are converted either into
" mechanical " pulp or into " chemical " pulp. The former is. not
suitable alone for paper making because it contains only about 55
per cent of cellulose and the fibers are too short and stiff to felt
or interlace together properly; hence it is mixed with a certain
quantity of chemical pulp which is pure cellulose with fibers of
greater length.
Mechanical pulp. — Mechanical pulp or ground wood is produced
by applying the pieces of wood by hydraulic pressure to the face of
a large grindstone, usually about 54 inches in diameter and 27 inches
1 For a description of the process of the production of paper, see the Pulp and Paper
Magaalne, Jan. 4, 1917, pp. 11-28.
GENERAL DESCRIPTION OF NEV7S-PRINT PAPER INDUSTRY. 27
thick. This grindstone rotates at a high rate of speed within a cas-
ing, which is provided with pockets into which the pieces of wood
are introduced and pressed against the stone. If sufficient water is
introduced into the pit of the grinder the temperature can be kept
about at normal, but the usual practice in this country is to limit the
quantity of water admitted, so that the friction brings about high
temperatures. Experiments are reported to have been successfully
carried out with the lengthwise grinding of logs in order to obtain a
longer fiber in the ground wood. An important improvement in
ground wood equipment is the magazine grinder now in use in one
mill in the United States and one in Canada. This grinder feeds the
wood in automatically from above and not only economizes in floor
space but also in labor costs. The wood grinders are operated almost
exclusively by water power, the grindstones frequently being at-
tached directly to the turbine shaft. In other cases they are pro-
pelled by electricity.
The ground wood comes from the grinders in the form of slush,
which is then screened in order to remove the coarser particles. In
the older mills this screening is done in small troughs with fine
screen plates in the bottom. Rotary screening is now coming into
general use. The slush is run into a revolving cylinder with screen
plates in its surface. The centrifugal force throws the finer parti-
cles of slush through these screens. One great advantage of this sys-
tem is that the installation requires much less room than the older
one.
After the slush has been screened it is ready to be used for paper
making. Where the ground wood mill is a part of the paper mill or
not too far distant from the paper mill the ground wood slush is
piped in without converting into pulp. Where it is necessary to ship
the ground wood by rail it is compressed until from 30 to 50 per
cent of the water is squeezed out.
Chemical pulp. — Spruce wood, in addition to cellulose, contains a
considerable amount of nonfibrous material, which is dissolved and
separated from the cellulose by cooking the wood under pressure with
a solution of bisulphite of lime. This is known as the sulphite proc-
ess. The wood is first chipped up into small pieces by a machine
which consists of a massive iron or steel disk about 84 inches in
diameter with two or three steel knives projecting from the surface
of this disk and radiating from the center. This disk is caused to
revolve rapidly, and the logs are applied to the surface of the disk,
usually at an angle of 45°. The knives then chip off flakes of wood
from the end of the log at that angle.
There are two methods of preparing bisulphite of lime for use in
the sulphite process, designated, respectively, the "tower" system
and the " tank " system. In the tower system, which is in most gen-
mm
.. „ II mtm»
H
I
I
I
Hfcr
28
REPORT ON NEWS-PRINT PAPER INDUSTRY.
eral use, sulphur is burned in specially constructed ovens with a
limited amount of air so as to form sulphur dioxide gas. This is
run out through pipes, which enter into a tank of water to cool the
gas and then into tall towers, usually of wood, with a lining of lead.
These towers may be considerably over 100 feet in height and from 6
to 10 or more feet in diameter. The towers are filled with blocks of
limestone, and a continuous stream of water is introduced from the
top of the tower. As the gas passes upward through the limestone it
enters into combination with the water and lime, so that the liquid
flowing out at the bottom of the tower is a solution of bisulphite of
lime.
In the tank system, otherwise called the " milk-of-lime " system,
water and lime are mixed in a large vat, and the sulphur-dioxide gas
IS forced into the mixture to form bisulphite of lime. The process
varies in detail, of course, from plant to plant. An amount of sul-
phur approximating from 300 to 350 pounds is required in the pro-
duction of a ton of air-dry pulp.
The chemical process of making sulphite is conducted in large
boilers, commonly called "digesters." These may be of varying
type, but the one in almost universal use is a tall cylindrical vessel,
sometimes bein^ of sufficient size to produce from 11 to 16 J net
tons of pulp. The digesters are constructed of boiler plate and are
lined with acid-resisting brick or tile set in acid-proof mortar. This,
of course, is to prevent the acid developed in the process from corrod-
ing the metal of which the digester is constructed, but has also the
further advantage of effecting a considerable saving in steam, because
of the fact that this lining acts as a heat insulator. The digesters
taper to a cone at the top and bottom ends.
The process of cooking varies considerably in different plants. In
general, after the chips of wood and the bisulphite of lime have been
introduced, the manhole is closed, and steam is gradually forced in
at the bottom. This is continued until the steam pressure reaches
about 80 pounds and the temperature about 365°.^ The process of
cooking is continued about eight hours. At the end of the cooking
process the outlet at the bottom of the digester is opened, and the
steam pressure quickly forces the material out into a large bin with a
screen bottom, through which the liquid drains off. At this point the
pulp usually is washed for about three hours by means of water de-
livered at the top of the bin. The ligneous and resinous portions of
the wood, being in solution, to great extent are washed away. Spruce-
wood pulp obtained in this manner contains about 88 per cent of
cellulose, while imtreated spruce wood contains only about 55 per
cent.
>Dept of Com., Bur. of For. 4 Dom. Com., Special Agents Series, No. 110, p. 47.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
29
Following this the chemical pulp is screened to remove coarse
fibers, knots, slivers, and the like, in much the same manner as the
mechanical pulp.
Paper making. — The paper-making process proper begins in the
"beaters," where the various component substances of the finished
product are mixed.
The beaters are large receptacles of various types, the important
common characteristic of which is a cylindrical roll fitted with steel
or bronze blades, which revolves over a stationary concave bedplate
equipped with similar blades. The pulp is caused to circulate in
the vat so that all of it will pass under this roll about an equal
number of times. At the beginning of the operation the roll is raised
slightly above the bedplate and then gradually lowered as the opera-
tion is continued, until the fibers have been sufficiently torn apart,
and the various ingredients have been thoroughly mixed.
In the case of news-print paper the proportion of mechanical to
chemical pulp varies according to the quality of the paper desired, type
of machines, etc. On the average about 80 per cent of mechanical
pulp is mixed with about 20 per cent of chemical pulp. Various
other ingredients are also introduced, such as talc or china clay
which is used as a filler to render the paper more opaque, and to give
it a smoother surface, and liquid rosin, which is used to "size" the
paper so that the printing ink will not be absorbed and thus cause
the impressions to become blurred. Red and blue aniline dyes are
added, when obtainable, to make the paper white. Alum is also
added to precipitate the rosin and the coloring matter upon the fibers.
Owing to the greater cost of sulphite ordinarily only a sufficient
quantity is used to give the news print such tensile strength that it
will run through the paper machines and the printing presses without
breaking.
In some plants the beating process is shortened somewhat by the
use of the so-called Jordan refining engine. This machine consists
of a hollow cone equipped on its interior surface with blades and
another smaller cone with blades on its exterior surface. The
smaller cone revolves within the larger one, and the pulp is reduced
to the desired consistency by the action of the blades against each
other.
After the beating process has been completed the pulp, very much
diluted with water, is run into a so-called stuff chest, in which it is
kept in constant motion to prevent the pulp from settling to the
bottom. From this chest the pulp or slush passes through a strainer
and into a long narrow box placed at the head of, and across the full
width of, the paper machine. Thence it overflows onto a wire-screen
! i
30
REPORT ON NEWS-PBINT PAPER INDUSTRY.
belt consisting of fine copper wires, woven with 60 or 70 meshes to
the inch. The length of this screen is often 75 feet and the width
150 or more inches. This belt moves forward on a series of 3-inch
rolls, and also has a lateral shaking motion. The pulp settles down
upon this screen in the form of a wet sheet, much of the water
draining through the mesh of the screen. Toward the farther end
of the screen it passes over several vacuum boxes, which cause still
more moisture to be sucked out through the screen. The speed at
which the screen is run is as high in some cases as 680 feet per
minute.
When the slush is run onto the wire screen difficulty is caused by
reason of the fact that the speed of the slush is less than that of the
screen. This has a tendency to cause ripples in the sheet to be
formed. This difficulty has been obviated for the most part by
the use of a new principle of operation known as the Eibel process,
patented in 1907, in accordance with which the screen is inclined,
so that the sheet is carried in a downhill direction. The action of
the force of gravity thus causes the sheet to maintain the same speed
as the screen, and the screen merely supports the sheet.
At the end of the screen the sheet passes between two rolls called
the couch rolls, the upper one of which is covered with a felt
jacket. From the screen belt the sheet runs onto a woolen belt.
Thence it passes between a series of so-called press rolls, the purpose
of which is to squeeze out further quantities of water. Finally, the
sheet is run over several large hollow cast-iron cylinders 3 or 4 feet
in diameter, heated internally by steam. These rolls dry the paper
thoroughly. The sheet then passes through the calendar rolls, which
polish the surface, and is wound upon a roll. The rolls of paper
later are removed and rewound upon cores, the paper being trimmed
and cut to the proper width at the same time. They are then re-
moved to the finishing room, where they are wound with heavy wrap-
ping paper to protect them in shipment.*
Section 4. Domestic and Canadian companies.
There were on January 1, 1916, about 45 companies in the United
States engaged in the manufacture of news-print paper, which to-
gether operated 63 mills, and 15 companies in Canada, which to-
gether operated 17 mills. Ten of the United States companies did
not have sulphite plants and four did not have either sulphite or
ground-wood plants. All of the Canadian companies but one had
Uound-wood mills, but four did not have sulphite plants.
* For a description of the parts of a paper machine, see Paper, Apr. 26, 1916, pp. 1^-16.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
31
The International Paper Co., which is the largest manufacturer in
the United States, has 9 mills which are operated almost entirely on
news print and 2 or 3 mixed mills, making other grades as well as
news. These mills are located in Maine, New Hampshire, Vermont,
Massachusetts, and New York.
The Great Northern Paper Co., which is the next largest manu-
facturer in the United States, has 2 news-print mills located at Mil-
linocket and East Millinocket, Me., and 1 mixed mill, which makes
some news, located at Madison, Me.
The Minnesota & Ontario Power Co. operates a large mill at Inter-
national Falls, Minn., and controls the P^'ort Frances Pulp & Paper
Co. (Ltd.), in western Ontario, Canada. The Crown Willamette
Paper Co. operates 2 mills located at West Linn, Oreg., and Camas,
Wash., and also controls the Pacific Mills Co: (Ltd.), which has a
new mill about ready to begin operations at Ocean Falls, British
Columbia.
These four large companies in 1916 produced about 55 per cent of
the total domestic output.
The largest Canadian manufacturer is the Spanish River Pulp &
Paper Mills (Ltd.), which controls the Lake Superior Paper Co.
(Ltd.). The combined companies have 3 mills making news print,
located at Sault Ste. Marie, Sturgeon Falls, and Espanola, Ontario,
Canada. The next largest Canadian manufacturers are the Lauren-
tide Co. (Ltd.), at Grand Mere, Quebec; Powell River Co. (Ltd.),
at Powell River, British Columbia; Price Bros. & Co. (Ltd.), at
Kenogami and Jonquiere, Quebec; and the Abitibi Power & Paper
Co. (Ltd.), at Iroquois Falls, Ontario, which did not begin operation
on news until the middle of 1915.
Production and shipments. — The tons of news-print paper pro-
duced and shipped by the principal companies in the United States
and Canada and the total production and shipments of all mills in
each country are shown in Table 1 below for the calendar years
1913, 1914, 1915, and 1916. The figures for the companies shown in
detail and for some others were obtained directly from their books.
Some of the figures included in the item " all others " were obtained
by correspondence with the manufacturers. The companies are
arranged in order of tons produced in 1916. Every company known
to have produced any news print during the 4-year period has been
included in the total figures.
'..immmtm
&mmm&SM:.
m^^
32
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Tablk l.-PRODUCTION AND SHIPMENTS OF NKWS-PRINT PAPER BY PRINCIPAL
UNITED STATES AND CANADIAN COMPANIES, 1913-1918^
Companies.
United States:
International Paper Co ,
Great Ncxthem Paper Co ,
Crown Willamette Paper Co
Minnesota & Ontario Power Co
Remington Paper & Power Co
De Grasse Paper Co
Berlin Mills Co
• St. Croix Paper Co
Pejepscot Paper Co
Consolidated Water Power & Paper Co.
Finch, Pruyn&Co. (Inc.)
St. Regis Paper Co
Tidewater Paper Mills Co
Gould Paper Co
All others (31 compames)
1913
Production
Total United States.
Canada:
Spanish River Pulp & Paper Mills (Ltd.)
Powell River Co. (Ltd.) 1
Laurentide Co. (Ltd.)
Price Bros. & Co. (Ltd.)
Belgo-Canadian Pulp & Paper Co. (Ltd.)
Fort Frances Pulp & Paper Co. (Ltd.) >
J. R. Booth
Donnacona Paper Co. (Ltd.)
All others (6 companies)
Tons.
402.763
150,082
86,343
65,181
44,9Si
35,146
62,334
37,042
35,000
29.439
32.250
36.009
26,848
19,217
241,987
Shipments.
1,304,595
Total Canada.
> 109,000
43,959
62,269
26.369
36,380
Tons.
423,106
147, 242
78,190
65,435
43,074
35.196
62,880
37.626
35,000
29.577
32,367
37,720
27,338
18,497
240,015
1914
Production.
1,313,263
Tons.
379. 810
169,082
75,779
64,124
45,914
40,872
51,583
40,311
23,406
30,428
30,677
41,512
27,492
23,666
238,278
Shipments.
1,282,934
35,355
37, 115
350.447
Total » United States and Canada.
1,655,(M2
1105,000
39,140
61,919
24,602
36,392
34,313
37, 115
118,894
44,767
64,260
42,808
36,465
16,067
37,015
7,480
47,236
338,481
414,982
1,651,744
1,697,916
I Estimated.
•Subsidiary of Minnesota & Ontario Power Co.
• Th«w totals may include a very small tonnage of paper other tb
Great Northern Paper Co
Crown Willamette Paper Co. . ., .
Minnesota & Ontario Power Co. .
Total.
Tons pro-
duced.
373,263
197,533
94,089
87,042
751,927
Percentage
of United
States
output.
27.6
14.6
6.9
6.4
65.5
Percentage
of output
of North
American
Continent.
19.0
10.1
4.8
16.4
40.3
« Including 39,430 tons of the Fort Frances Pulp & Paper Co. (Ltd.) of Canada, a subsidiary of the
Minnesota & Ontario Power Co.
The Spanish River Pulp & Paper Mills (Ltd.), which was the
largest Canadian manufacturer in 1916, produced 130,436 tons of
news-print paper, or 21.5 per cent of the total Canadian output and
6.6 per cent of the total output of the North American Continent.
Domestic production decreased about 65,000 tons during the years
1913 to 1915. The production for the whole year 1916, December
being estimated, exceeded that of 1913 by about 50,000 tons and that
of 1915 by 116,000 tons. This was accomplished in spite of an actual
decrease in the number of mills in operation.
Canadian production increased about 138,000 tons during the
years 1913 to 1915, and the 1916 production, December being esti-
mated, was about 120,000 tons greater than for the preceding year.
This great increase in production was accomplished chiefly by build-
ing new mills and adding new machines to old mills. More than 75
per cent of the Canadian output finds a market in the United States.
The total production for United States and Canada in 1916,
December being estimated, was nearly 1,964,000 tons, or an increase
of more than 235,000 tons over 1915. This increase is equivalent to
nearly 760 tons a day, allowing 310 working days a year.
Shipments showed movements similar to those of production. In
general they were slightly larger than the tonnage produced, owing
in part to some duplication caused by companies buying from one
another, which could not be eliminated, and in 1915 and 1916 to a
decrease in stocks on hand.
Equipment. — Table 2 below shows the equipment of the ground-
wood, sulphite, and paper mills of the 16 largest United States news-
print manufacturers and the 11 largest Canadian manufacturers on
January 1, 1916. These figures were compiled from Post's Paper
Mill Directory, Lockwood's Directory of the Paper and Stationery
Trades, and from information obtained directly from the companies.
The figures for the maximum 24-hour capacity of grinders, digesters,
and paper machines are estimates. The ratings for the paper
machines are those used by the News Print Manufacturers' Associa-
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 35
tion in its statistical reports. The ground-wood and sulphite equip-
ment of most of the companies shown is in excess of the news-print
requirements, some of these materials being sold or used in making
other grades of paper. The Fourdrinier paper machines, on the other
hand, are those running wholly or partly upon news print.
Table 2.— EQUIPMENT OF 16 UNITED STATES MANUFACTURERS AND 11 CANADIAN
MANUFACTURERS OF NEWS-PRINT PAPER IN 1916.
Ground wood.
Sulphite.
News print.
Companies.
Mills
Grind-
• ers.
24 -hour
capac- Mills
ity.
! Digest-
ers.
. 24-hou]
capac-
ity.
Mills
Paper
ma-
chines.
24 -hour
capac-
ity.
United States:
International Paper Co
Great Northern Paper Co
Crown Willamette Paper Co. . .
Minnesota & Ontario Power Co.
De Orasse Paper Co
23
4
6
1
1
1
1
2
2
3
1
273
102
81
24
24
30
22
26
24
36
20
Tons.
1,276
410
366
168
125
150
175
140
60
180
137
8
2
4
1
1
1
1
1
4A
17
16
4
4
4
2
4
Tons.
470
200
205
120
35
120
60
35
12
3
2
1
1
1
1
2
2
3
1
1
1
1
1
1
50
14
8
2
4
3
3
4
4
5
3
2
4
3
2
2
Tons.
1,500
604
250
220
175
160
Berlin Mills Co
St. Croix Paper Co
Pejepscot Paper Co
161
132
120
158
106
Consolidated Water Power &
Paper Co
Remington Paper & Power Co.
Finch, Pruyn & Co. (Inc.)
1
3
42
Tidewater Paper Mills Co
02
St. Regis Paper Co
3
4
2
1
33
20
17
11
200
114
93
60
2
1
1
6
3
2
90
45
50
145
84
62
55
Gould Paper Co
^ Northwest Paper Co
Wisconsin River Paper &
Pulp Co
Total, 16 U. S. companies . . .
54
743
3,654
24
109
1,472
34
113
3,994
Canada:
Spanish River Pulp & Paper
Mills (Ltd.)
3
1
1
1
3
1
1
1
1
2
1
60
37
20
24
36
26
22
15
12
41
12
390
250
250
220
240
160
160
100
75
240 .
50 .
2
1
1
1
1
1
1
4
4
2
2
2
4
2
135
110
60
50
60
125
50
3
1
1
1
2
1
1
1
1
1
1
10
6
4
4
4
3
4
2
1
1
1
444
200
225
225
180
135
127
150
60
Laurentide Co. (Ltd.)
Abitlbl Power & Paper Co.
(Ltd.)
PoweU River Co. (Ltd.)
Price Bros. & Co. (Ltd.)
J. R, Booth
Belgo-Canadian Pulp & Paper
Co. (Ltd.)
Fort Frances Pulp & Paper
Co. (Ltd.)
Donnaoona Paper Co. (Ltd.) ..
Brompton Pulp & Paper Co.
(Ltd.)
1
1
30
Canada Paper Co. (Ltd.)
40
Total, 11 Canadian companies
16
70
305
2,135
9
21
620
14
40 1,831
Total, 16 United States and
11 Canadian Companies..
1,048
6,789
33
130
2,092
48
153
6,825
^^^'
I
36 EEPOKT ON NEWS-PRINT PAPEB INDUSTEY.
The 16 largest domestic manufacturers, whose combined output
represents more than 85 per cent of the total production of the United
States, together operated 54 ground-wood mills equipped with 7«
grinders, 24 sulphite plants equipped with 109 digesters, and 34
paper mills having 113 Fourdrinier machines running on news print.
Some of these companies had other mills and other machines not
running on news print. Three of these large companies did not have
sulphite plants, and one did not have either a sulphite or ground-
"" The 11 Canadian manufacturers operated 16 ground-wood mills
equipped with 305 grinders, 9 sulphite plants equipped with 21
digesters, and 14 news-print mills equipped with 40 paper machmes.
Three of the companies did not have sulphite plants, but all were
eauipped with ground- wood mills.
The 24-hour capacity of mills shown in the table is considerably
in excess of the actual production of news print, since this is a max-
imum figure and also since some of the machines are only run part
of the time on this grade. For instance, in 1916 the International
Paper Co. produced at the rate of 1,200 tons per day, allowmg 310
working days in the year, although shown in the table as havmg a
capacity of 1,500 tons. . j^i. * i, * :„
The speed, in feet per minute, and the maximum width of sheet in
inches, of the 113 paper machines operated on news print by 16
United States companies, is shown by the following tabulation:
SPEED PER MINUTE AND MAXIMUM WIDTH OP TRIM OP 113 PAPER MACHINES OP 1.
SPEED PtK Ml«u UNITED STATES COMPANIES, 1916.
Speed per minute.
300 to 399 feet.
400to424 1eet.
425 to 449 feet.
450 to 474 feet.
475 to 499 feet.
500 to 524 feet.
525 to 549 feet.
650 to 574 feet.
675 to 599 feet.
600 to 649 feet.
660 to 699 feet.
Number of
machines.
11
4
7
15
10
14
5
22
9
14
2
Width of trim.
70 to 79 Inches —
80 to 89 Inches....
90 to 99 Inches —
100 to 109 Inches..
110 to 119 inches..
120 to 129 Inches.,
130 to 139 inches.
140 to 149 inches.
150 to 159 Inches.
160 to 169 inches.
170 to 179 inches.
Number of
machines.
14
10
13
15
10
6
S7
8
6
1
Eleven of the machines of the 16 principal domestic companies had
a speed of less than 400 feet per minute and 36 otliers had a speed
less than 500 feet per minute. Fifty had a speed between 500 and
600 feet and 16 a speed above 600 feet. Thirty-three of the ma-
chLes had a maximum trim of less than 100 mches, 71 machmes
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
37
had a maximum trim between 100 and 150 inches, and 9 machines
had a trim above 150 inches.
The newer machines, as a rule, have a wider trim and higher speed
than the older machines, so that the above figures are a good index
of the character of the equipment of the principal manufacturers.
For comparative purposes the speed of machines and width of
sheet are given in the tabulation below for the 40 Fourdrinier ma-
chines operated on news print by the 11 principal Canadian manu-
facturers :
SPEED PER MINUTE AND MAXIMUM WIDTH OF TRIM OF 40 PAPER MACHINES FOR 11
CANADIAN COMPANIES, 1916.
Speed per minute.
Number of
machines.
Speed per minute.
Number of
machines.
47fi to 490 feet
1
3
1
575 to 599 feet
6
JifiO to .S24 feet
600 to 624 feet
19
Ria to MQ feet
625 to 649 feet
4
fiSO to 574 foet
650 to 699 feet
7
Width of trim.
Number of
machines.
Width ol trim.
Number of
mactiines.
^ tn RQ inohfts ..........
1
1
4
7
2
140 to 149 inches
u
on tn QQ itipVi A<5i
150 to 159 inches
s
inn tm 1A0 iTiphAJ?
160'to 169 inches
llA ti\ 110 iTif»}iA.'^ - - -
170 to 179 inches
6
\0t\ tft 190 inohA!%
180 to 189 inches
1
130 to 139 inches
190 to 199 inches
2
The tabulation shows that 30 of the 40 machines operated by Cana-
dian companies have a speed above 600 feet per minute, and 25 of the
40 machines have a trim above 140 inches. These figures do not in-
clude the new machine of the Donnacona Paper Co., which began
operations on November 1, 1916. This machine is said to have a speed
of 600 to 625 feet per minute and a maximum width of sheet of 148
inches.
Consumption or raw materials. — ^Information obtained from 12
principal United States companies and 9 principal Canadian com-
panies shows that in 1915 they used the following quantities of sul-
phite and ground wood in producing news-print paper :
News
print
pro-
duced.
Ground wood as«d.
Sulphite used.
Percent-
age of
sulphite
to total
pulp.
Companies. .
Total.
Quantity
per ton
of paper.
Total.
Quantity
per ton
01 paper.
12 United States comnanies
Tons.
954,892
416,207
Tons.
767,458
328,302
Tons.
0.804
.789
Tons.
224,652
109,445
Ttns.
0.235
.263
22.6
9 Canadian com nanies
25.0
Total, 21 companies combined
1,371,099
1,095,760
.799
334,097
.244
23.4
I
38
REPOBT ON NEWS-PRINT PAPER INDUSTRY.
The 12 United States companies produced 77 per cent of the total
domestic output of news-print paper in 1915 and the 9 Canadian
companies more than 85 per cent of the total Canadian output.
United States companies used on the average 0.804 of a ton of ground
wood and 0.235 of a ton of sulphite in making a ton of paper. Cana-
dian companies used 0.789 of a ton of ground wood and 0.263 of a
ton of sulphite, and United States and Canadian companies com-
bined used 0.799 of a ton of ground wood and 0.244 of a ton of
sulphite in a ton of paper.
The average percentage of sulphite to total pulp used for United
States and Canadian companies combined was 23.4 per cent. The
average for domestic mills was 22.6 per cent and for Canadian mills
25 per cent. Applying the proportions of the two raw materials
used by the principal companies to the total production of news-
print paper in the United States and Canada, a fairly close estimate
is obtained of the total quantity of ground wood and sulphite used
by all companies in both countries in making news-print paper in
1915. This is shown by the following tabulation:
Companies.
All United States companies.
All Canadian companies
Total United States and Canadian companies combined
News
print
produced.
Tons.
1,239,122
488,621
1,727,743
Ground
wood
used.
Tons.
995,897
385,375
1,381,272
Sulphite
used.
Tons.
291,521
128,487
420.008
The wide variation existing in the percentage of sulphite to total
pulp used by different companies is shown by Table 3, which presents
the data for 12 principal United States companies and 9 principal
Canadian companies for 1915 and the first half of 1916.
Tablk 3 -PERCENTAGE OF SULPHITE TO TOTAL PULP FOR 12 PRINCIPAL UNITED
STATES COMPANIES AND 9 PRINCIPAL CANADIAN COMPANIES, 1915-1916 (FIRST
HALF).
United States companies.
1.
3.
4..
6..
6..
7..
8..
9..
10.
11.
12.
1915
Average.
33.4
28.4
26.4
28.4
24.8
22.0
22.2
21.3
18.9
19.9
S3.7
13.3
First
half
1916.
22.6
34.5
31.2
28.5
27.6
23.1
21.3
20.6
20.3
19.5
18.7
14.9
12.8
Canadian companies.
22.4
Average
Average for 12 United States
and 9 Canadian companies
1915
27.2
24.9
25.9
25.8
25.3
23.9
23.7
23.9
2L3
First
half
1916.
28.3
27.4
25.0
23.4
25.3
24.7
24.0
23.7
23.4
23.8
25.0
23.8
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
39
The table shows that the percentage of sulphite used by the 12
United States mills in the first half of 1916 ranged from 12.8 per
cent to 34.5 per cent with an average of 22.4 per cent, and by the 9
Canadian mills from 23.3 per cent to 28.3 per cent with an average
of 25 per cent. The percentage of sulphite necessary to make paper
is affected by the method of treating ground wood, the character of
the equipment, etc. The paper must have sufficient tensile strength
to run through the paper machines without breaking, otherwise the
daily output of the machines will be reduced. This fixes a minimum
below which it is not economical to reduce the percentage of sul-
phite used.
The 12 United States mills taken together used slightly less sul-
phite in the first half of 1916 than they did in 1915, while the Cana-
dian mills used the same proportion in each period. Information ob-
tained from some of the United States companies for a part of the
second half of 1916 indicates that there was a further decrease in the
percentage of sulphite used during that period.
From data collected by the Commission an estimate has been made
of the average quantity of rough wood used by news-print companies
in making sulphite, ground wood, and news-print paper in 1915.
Peeled wood and rossed wood have been converted to the rough-wood
basis by using the best estimates available. Reports from the 12
United States companies and the 9 Canadian companies show the
following results:
Companies.
12 United States companies
9Canadian companies
Total, 21 companies combined
Cords used
in ton of
ground
wood.
l.OS
1.16
1.10
Cords used
in ton of
sulphite.
2.12
2.15
2.13
Cords used
in ton of
news-
print
paper.
1.S6
1.48
1.40
If the percentages shown in the preceding tabulation for 21 com-
panies are applied to the total production of ground wood, sulphite,
and news-print paper for all companies in the United States and
Canada, the total cords of rough wood used would be as follows:
Companies.
All United States companies
All Canadian companies
Total Unitod States and Canadian companies combined
Cords of
wood used
in ground
wood.
1,073,834
447,497
1,521,331
Cords of
wood used
in sul-
phite.
Cords of
wood used
in news-
print piH?er.
•17,170
276,135
893,305
1,601,004
723,632
2,414,696
40
KEPORT ON NEWS-PRINT PAPER INDUSTRY.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 41
i.
i|il
Considerable variation exists in the quantities of wood used by
different companies in producing a ton of paper. For instance,
reports from companies in the United States show that considerably
over half of the paper included in the tabulation above was produced
from about IJ cords of rough wood per ton, although one company
which produced a little over 8 per cent of the paper used about 1}
cords per ton. In this connection it is important to note that the
use of a large quantity of wood does not necessarily mean a high
wood cost per ton of paper, because, as a rule, the cheaper the wood
the more freely it may be used. For example, the detailed figures
for two of the large producers show that in 1915 one used 42 per
cent more wood than the other, while the cost of its wood per ton of
paper was only 15 per cent greater. In the first half of 1916 it used
mo.-e than 42 per cent more wood, while the cost of its wood per ton
of paper was only 6 per cent greater than that of the other producer.
Both companies produced their paper at a very low cost.
It is to be noted also that if th^ present high prices of wood con-
tinue, processes of manufacture that economize wood will probably
be adopted. The possible economy in wood through such processes
is indicated by the following excerpt from the Paper Trade Journal
of November 30, 1916, which relates to a recently invented but well-
tested process :
The quantity of final rejection is very small, 200 tons of fin-
ished paper showing a yield of sand, knots, bark, etc., of about
200 pounds, when using 140 cords of peeled spruce to produce
the 200 tons of paper.
By this process apparently a ton of paper can be produced from
0.7 of a cord of peeled spruce (about 0.8 of a cord of rough wood)
as compared with 1.40 cords shown above.
Section 5. News-Print Mamifacturers Association.
The News-Print Manufacturers Association is a voluntary asso-
ciation organized April 1, 1915, and composed of nearly all the im-
portant news-print and hanging paper manufacturers on the North
American Continent. Prior to 1915 these manufacturers constituted
a division of the American Paper & Pulp Association.
The secretary of the association is George F. Steele, whose princi-
pal duty is to accumulate and disseminate to members information
concerning materials, processes, machinery, improvements, etc., and
statistical data covering stocks on hand, quantities produced, and
quantities shipped.
The News-Print Manufacturers Association is managed by an
• executive committee of five members, who represent 51 per cent of
the total output of all its members, which in 1916 represented about
82 per cent of the total production of news print in the United
States and Canada. The members of the executive committee and
the 1916 output of news print represented by each are shown in the
tabulation below :
Members of executive
committee.
PhlUp T. Dodge
George H. Mead
J. H. A. Acer. . .
E. W. Backus..
Q. H. P. Gould.
Name of company.
Position in
company.
International Paper Co
Spanish River Pulp & Paper Mills (Ltd.)
The Lake Superior Paper Co. (Ltd.)
The George H. Mead Co., Dayton, Ohio
Sales agent for the above and also for the
Abitibi Power & Paper Co. (Ltd.)
Laurentide Co. (Ltd.)
Minnesota & Ontario Power Co
Fort Frances Pulp & P^per C!o. (Ltd.)
Gould Paper Co
St. Regis Paper Co.i
Donnacona Paper Co. (Ltd.)
President.
do....
-do.
.do.
Treasurer and
sales mana-
ger.
President
.do.
-do.
.do.
-do.
Total represented by executive committee .
1916
production.
Tons.
373,263
130,436
62,071
63,037
87,042
39,430
25,767
31, 116
18,242
830,404
»This company was sold in December, 1916.
The total production of news-print paper on the North American
Continent in 1916, as shown by Table 1, above, was 1,963,172 tons.
Of this tonnage, 1,616,307 tons, or more than 82 per cent of the total,
were produced by members of the association.
The principal companies outside of the association, and their
production in 1916, were as follows:
Companies outside association.
Companies connected with newspapers: '
Ontario Paper Co. (Ltd.), (Chicago Tribune) ... .
DeGrasse Paper Co. (New York World)
News Pulp & Paper Co. (Ltd.), (Montreal Star) .
Other companies:
GreatNcnthem Paper Co ,
Tidewater Paper Mills Co
Alexandria Paper Co
Inland Empire Paper Co
Nine other small companies
Total.
Produc-
tion in 1916b
Tom.
82,741
197,533
28,798
14,971
11,113
10,709
346,865
'The Itasca Paper Co., Grand Rapids, Minn., was purchased by the St. Paul Dispatch and Pioneer
Press in September, 1916.
The organization of the News-Print Manufacturers Association and
the concentration of control through the executive committee has led
42
REPORT ON NEWS-PRINT PAPER INDUSTRY.
I
to less competition in the industry. For further information on this
point see Chapter VII. This result has been aided by the existence of
several selling agencies and jobbers who handle the output of various
mills. For instance, as shown above, the George H. Mead Co. in 1916
handled 192,507 tons of Canadian paper. H. G. Craig & Co., another
selling agency, in 1916 represented 9 different mills, being the ex-
clusive agent of several of them. The aggregate tonnage thus con-
centrated amounted to more than 100,000 tons. The Manufacturers
Paper Co. also sold the output of several mills. Neither of these
last two concerns is directly represented on the executive conmiittee
of the News-Print Manufacturers Association.
In 1916 there was formed the Canadian Export Paper Co., the pur-
pose of which was to pool the export business of several Canadian
companies.^ This group will be represented on the executive com-
mittee by the Laurentide officer, at .present on the conmiittee, and will
probably control one-third of the entire Canadian output of news-
print paper.
Section 6. Paper jobbers and sales agents.
There are two kinds of middle men handling news print — jobbers
and sales agents. The distinction between the two is that the jobber
usually buys and resells, while the sales agent chiefly sells on com-
mission. The three largest sales agents on the North American con-
tinent are the George H. Mead Co., Canadian Export Paper Co.,
and H. G. Craig & Co. Each of these concerns represents several
mills, and together they handle several hundred thousand tons of
news-print paper annually. Their sales are largely to the daily
papers and jobbing trade. There are several other sales agents
which handle the output of a particular mill, such as W. H. Parsons
& Co., which sells for the Pejepscot Paper Co., both the manufac-
turing and the selling company being controlled by the same interests.
The jobber handles many grades of paper and often does a com-
mission business as well as buying and reselling on his own account.
The conmiission business is usually for sales of news-print and
book paper on contracts with publishers. When such contracts are
made the jobber covers them by making similar contracts, either
direct or through selling agents, with the manufacturer, who makes
shipments direct to the publisher.
Almost every city of any importance has one or more jobbers or
wholesale paper houses which carry various kinds of paper. Often
such a house makes a specialty of some particular grade, such as
high-grade printing paper, bond paper, writing paper, kraft or
wrapping paper, building paper, paper bags, twine^ etc. While
> For detaUs see Chap. YII. p. 180.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 43
practically all the jobbers handling printing paper handle some
news print, very few make a specialty of it. The reason given by
a number of jobbers is that there is little or no profit in it, and
they only carry it, as a grocer carries sugar, to attract trade for
other kinds of paper. A few of the very large jobbers, however,
do a considerable business in news print, both in rolls and sheets.
Ten of them perhaps handle more than 75 per cent of all the news
print sold by jobbers. None of these depend on a single mill for
their supply of news, although several have allotments of a certain
portion of the output of a particular mill.
A considerable proportion of the sales of news print by jobbers
is for miscellaneous purposes, many of them selling very little, if
any, to publishers. The jobbers making a specialty of news print
in addition to their contract business handle large quantities of
both roll and sheet news on current transactions. Part of this
business passes through the jobbers' warehouses, especially purchases
in ton lots or less. Carload shipments are usually made direct
from the mill. Lots from a ton up to a carload may be shipped
either direct from the mill or from the jobbers' warehouses.
The principal advantage a publisher has in buying his require-
ments of news print through a jobber instead of direct from the
manufacturer is in the matter of service. The jobber normally
carries a stock of roll and sheet news, and, being more conveniently
located with respect to shipping facilities than the manufacturer,
can tide the publisheij over in case of a sudden shortage due to such
causes as failure of a car to arrive promptly, freight embargo or
congestion, strikes, fires, etc. This is especially true of publishers
not located in the large cities where the manufacturers keep stocks.
Another advantage is in the matter of extension of credits. A cus-
tomer with a good credit standing can usually secure from the jobber
extensions of credit, especially if he is an old customer, whereas
purchases direct from the manufacturer are usually cash or net 30
days. A third advantage for less-than-carload lots is the saving in
freight. The jobber pays the carload rates for the long haul on
his warehouse stock and the less-than-carload rate is charged only
for the short haul.
Section 7. Imports and exports of news-print paper.
Imports. — In 1901 the United States imported less than a thousand
dollars worth of news print. In the fiscal year 1906 such imports
amounted to only $64,382. Since that year the increase has been
rapid and uninterrupted. In the fiscal year 1910 the quantity im-
I"- IT ^ -jr
I,
44
REPORT ON NEWS-PRINT PAPER INDUSTRY.
ported was twenty- five times what it had been in 1906.^ In the
calendar year 1916 the output of domestic mills supplied only about
70 per cent of the total consumption, practically all the remainder
being imported from Canada.
The steadily increasing dependence of the United States on Canada
for supplies of news print is shown by the following table :
Table 4.— IMPORTS INTO THE UNITED STATES OF PRINTINO PAPER VALUED AT NOT
ABOVE 2.5 CENTS » PER POUND, 1911-1916.
Fiscal year ending June 30 —
1911
1912
1913
1914
1915
1916
Six months ending-
June 30, 1915
Dec. 31, 1915
Twelve months, 1915. .
Six months ending-
June 30, 1916
Dec. 31, 1916
Twelve montlis, 1916. .
Monthly:
July, 1916
August, 1916
September, 1916
October, 1916
November, 1916
December, 1916
Canada.
Total
Quantity.
Tmt.
53,118
55,563
14C,733
274,842
329,314
438,212
165,644
201,276
366,920
236,935
231,017
467,952
40,106
40,806
36,360
38,562
38,737
36,446
Value.'
$1,968,385
2,101,023
5,646,289
10,634,926
12,742,743
16,646,891
6,418,291
7,657,843
14,076,134
8,989,048
9,525,109
18,614,157
1,534,795
1,625,010
1,491,007
1,614,178
1,655,815
1,604,304
Quantity.
Tons.
54,022
56,854
147,479
278,071
332,782
438,746
166,842
201,567
368,409
237,179
231,051
468,230
40,106
40,806
36,360
38,562
38,737
36,480
Value."
$2,010,502
2,155,501
5,681,109
10,765,108
12,883,452
16,670,604
6,467,864
7,670,787
14,138,651
8,999,817
9,527,931
18,527,748
1,634,795
1,625,010
1,491,007
1,614,178
1,655,816
1,607,126
> Since Sept. 8, 1916, 5 cents per pound.
* These figures do not represent accurately the cost of this news print to the American publisher as most
of the paper is entered at an officially established v>iluation of 138 per ton.
Fiscal year imports increased from 54,022 tons in 1911 to 438,746
tons in 1916. Since 1912 the annual increase has not fallen below
50,000 tons, and in two years it has exceeded 100,000 tons. In the
fiscal year 1916 these imports were over eight times as large as in
1911. They increased from 368,409 tons in the calendar year 1915
to 468,230 tons in 1916.
1 Import statistics never have carried a news-print classification, and the classification
by value, used here, was shown only under " Imports for consumption " prior to 1911.
Since that date it is also shown in the regular import returns.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 45
Canada's rapid progress as a factor in the situation is illustrated
by the increase in the proportion of the total supply of the United
States imported from that country. Ten years ago Canada fur-
nished but a fraction of 1 per cent of the news print used in the
United States; in 1909, less than 4 per cent; in 1916, about 30 per
cent. The imports from Canada amounted to about 75 per cent
of the total Canadian production in the calendar year 1915 and
about 78 per cent in 1916. In the latter year Canada's over-sea
exports amounted to about 53,000 tons, or 9 per cent of the total
output, leaving about 81,800 tons or 13 per cent for home consump-
tion.
A very large part of the imports from Canada come in over the
northern border, but since 1913 entries at Pacific ports have usually
run from one to one and a half million dollars annually. These
figures, of course, take no account of the exchange arrangement be-
tween a United States and Canadian company referred to on page 47
below.
Import duties. — For 124 years prior to 1913 duties were imposed
upon the importation of news-print paper into the United States.
The tariff law passed in 1909 reduced the duty to three-sixteenths
of a cent per pound, equivalent to $3.75 a ton, upon news print
valued at not above 2J cents per pound, and the Canadian reciprocity
law passed in 1911 removed the duty entirely on imports of news-
print paper and pulp from Canada, except where the Canadian Gov-
ernment imposed an export duty. The tariff act of 1913 put news-
print paper from all countries valued at not above 2^ cents per pound
upon the free list. If valued at above 2J cents per pound a duty of 12
per cent was imposed. About 60 per cent of the Canadian paper
came in free in 1912. In 1913 over $1,000,000 worth of the Canadian
paper was still paying duty, but since October 3, 1913, no duty has
been paid on printing paper valued at not over 2^ cents per pound
in the country whence exported. The rise in price in 1916 led
to the enactment of a provision in the revenue law approved Septem-
ber 8, 1916, raising the minimum of 2J cents per pound to 5 cents.
This was done in anticipation of the market price in Canada going
above 2^ cents, which would cause the 12 per cent duty to be imposed
upon imports into this country. For further details see Exhibits
3 and 4.
Exports. — Prior to 1911 export figures were not shown separately
in our foreign- trade statistics. Since 1911 they have run as Table 5
indicates:
'''^"!WWI««i»*' a -^ *«B^f<^ t,-i>t*-iM. ^
1
46
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Table 5.— EXPORTS OF NEWS-PRINT PAPER FROM THE UNITED STATES, 1911-1916.
Periods.
Quantity.
Total
value.
Value per
ton.
Fiscal year ending June 30—
1911
Tons.
49,755
51,787
50,213
44,483
62,841
63,634
$2,434,964
2,501,529
2,450,520
2,177,483
3,079,137
3,119,364
148.93
1912
1913
48.30
1914
48.80
48.94
48.98
49.02
1915
1916
6 months ending—
June30,1915
25,752
29,409
1,307,732
1,399,894
M.78
47.60
Dec. 31, 1915
12 months, 1915
55, 161
2,707,626
49.09
6 months ending —
June 30, 1916
34,212
42,115
1,715,917
2,378,858
60.16
56.48
Dec.31, 1916
12 months, 1916
76,327
4,094,775
53.64
Months:
July, 1916
7,454
11,636
6,597
4,941
6,618
5,870
422,486
599,354
370,704
316,061
311,183
359,070
56.68
61.61
56.19
63.97
55.39
61.17
August, 1916
September, 1916
October, 1916
November, 1916
December, 1916
ti £..
The smallest quantity exported during the last six fiscal years was
44,483 tons in 1914 immediately preceding the outbreak of the Euro-
pean war. In the calendar year 1916 exports had increased to 76,327
tons, which was 5.6 per cent of the domestic production for the same
period.
The increase in exports in 1916 was in considerable degree due to
shipments to various countries such as France, Portugal, Greece,
China, etc., which prior to the year 1916 imported little or no news
print from this country.
The only domestic manufacturer that has developed an export
trade of considerable importance is the International Paper Co. That
company supphes foreign publishers under contracts similar to those
used in the domestic trade. Aside from the International's business,
news print exports are apparently made up of odd lots handled by
trading companies. That there was a considerable increase in this
odd lot business during 1916 is indicated by the fact that the Inter-
national Paper Co.'s proportion of total exports fell from 85.6 per
cent in the first half of 1915 to 61 per cent in the first half of 1916.
Prior to 1915, so far as information is available, that company's pro-
portion of the total had never fallen below 75 per cent
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 47
•
The records of the Bureau of Foreign and Domestic Commerce
show a considerable variation in prices on news-print paper ex-
ported during a given month. For example, shipments to Australia
in August, 1916, varied from less than 2 to over 5 cents per pound.
The low price which was on shipments from Portland, Oreg., was
due to an exchange of paper between a Canadian and a United
States company, the latter exporting for the former, in exchange
for Canadian paper delivered in other Pacific coast ports. This
arrangement was made because the Canadian company could not
obtain shipping facilities in Vancouver or Seattle. Export figures
for later months in the year indicated that this exchange arrange-
ment was still in force. These shipments probably amounted to over
5,000 tons during 1916.
i
■ W^M^.!^!;pit:.;
' I^.'fiit^y^,'i^^lim*jy:'-M^^!'. y*»-'°^:: "■■/i^lll^- ■■i -
PRICES OF NEWS-PBI-NT PAPEB.
49
CHAPTER in.
PRICES OF NEWS-PRIin: PAPEE.
Section 1. Introdnction.
The great bulk of the news-print paper output on the North
American Continent is bought by publishers of the larger dailies on
contracts which provide for the delivery of a certain tonnage at a
fixed price. The contracts usually run for one year, but on the
Pacific coast the prevailing term is five years. These larger pub-
lishers use roll paper, which is shipped to them in carload lots
directly from the mill, though frequently purchased from a jobber
or selling agent.
The large number of the smaller dailies, weeklies, and semiweeklies,
which depend upon the open market for their supplies of paper, use
a relatively small part of the news-print output. Most of these
publishers use sheet paper, which is purchased in less than carload
lots from jobbers.
The detailed price data presented herein show the open-market
prices paid by the smaller publishers and the contract prices paid
by the larger publishers in 1916 and prior years. To show what
effect the increase in prices to publishers which occurred in 1916 had
on the receipts of news-print manufacturers, the average receipts
per ton f. o. b. mill have also been computed for mills in different
years.
Price statistics were obtained from the original contracts on file in
the offices of the various paper mills and jobbers visited by agents of
the Commission, from the sales records of these companies, and from
data furnished by newspaper publishers in response to schedules
sent them by the Commission.
Prices paid by different publishers vary widely during the same
period. These differences depend partly upon distance from mills,
method of purchase, size of purchase, quality of the paper, and
credit standing of the purchaser.
The chief cause of the variation in prices between different sec-
tions of the country is the wide range in freight rates due to the
localization of the news-print industry in the spruce timber regions
of northern United States and in Canada. The relatively high
48
freight rate on news print in comparison with its value at the
mill makes this an important factor. As compared with freight rates
of 12 to 15 cents per 100 pounds on carload shipments to New York
City, for example, the rates on similar shipments to certain cities of
the Southwest are more than $1, representing at the prevailing
market price during the year 1915 approximately 30 per cent of the
total cost to the purchaser. The cost to the publisher of the East,
the North, and the Pacific Northwest was accordingly 15 to 25 per
cent lower than the cost to purchasers in the extreme South and
Southwest.
Variations in prices paid by different publishers in the same
locality are due to the method of purchase, the size of purchase, and
the quality of the paper. Contract purchases ordinarily average a
lower price than market purchases, and transactions involving large
quantities a lower price than those involving small quantities. Small
purchases are made through jobbers, as a rule, and must bear middle-
men's profits and commissions. Instances have been noted where
paper has passed through as many as three middlemen's hands before
reaching the publisher.
Even when the quantities of paper purchased are the same and
the publishers are in the same locality there is a variation in prices,
due to the fact that some of the mills are able to get a higher price
than others on account of the quality of their paper, greater ability to
deliver on their contracts, etc.
The price statistics have been assembled as far as possible in a
manner to bring out the effect of the various factors which govern
the price of news print in different localities and among different
classes of purchasers. This has involved a separation of contract
prices from market or current prices, and the grouping of the data
by quantity sold, and by localities having the same general level of
freight rates.
In order to facilitate a comparison by localities the country has
been divided into six groups of States, as follows :
(1) Eastern. — This group includes the New England States and
the States of New York and New Jersey, Delaware, Pennsylvania,
Maryland and Virginia. The news-print paper consumed in these
States is a product of the mills of the eastern United States and
Canada. Freight charges on paper shipped in carload lots from
Canada average about 20 cents per 100 pounds to localities north of
the Potomac River as compared with about 30 cents to Virginia. In
the case of shipments from domestic mills the freight rate on carload
lots is about 14 cents to New York City as against about 17 cents
to localities in Pennsylvania and about 20 cents to points in Virginia.
885e9'— 17 4
p ^HpjI^^'^PJ^WIJP'
I
50
REPORT ON N^EWS-PMNT PAPER INDUSTRY.
(2) Middle W estem.- -T\n^ group includes the States of West
Virginia, Ohio, Indiana, Illinois, and Kentucky. News-print paper
used in this territory is obtained in some cases from centers of pro-
duction in the eastern United States and Canada, but to a large
extent is the product of the paper mills in the States bordering on
the Great Lakes and the adjoining Canadian Province. Within this
group freight rates on carload lots vary from about 10 to 20 cents
to points in Ohio and northern Illinois and Indiana, with an average
of about 20 cents to points in West Virginia and Kentucky.
(3) Southern.— This group includes the territory south of Vir-
ginia and Kentucky and east of the Mississippi River. The news
print consumed in this territory is largely the product of the paper
mills of New England and the States bordering on the Great Lakes,
and in the case of the smaller papers, is usually purchased from
jobbers in the South and Middle West. The freight rates per 100
pounds on news print shipped in carload quantities to cities within
this group range from a minimum of about 26 cents to a maximum
of about 45 cents. t.,. ,-
(4) North Central.— This group includes the States of Michigan,
Wisconsin, and Minnesota, each of which contains one or more news-
print mills. The freight rate on paper consumed within this group
is relatively low, averaging about 13 cents per 100 pounds in the
case of carload shipments from domestic mills. On shipments from
Canadian mills the freight rates average about 18 cents.
(5) Western.— This, group includes the territory between the Mis-
sissippi River and the States of the Pacific coast, with the exception
of Minnesota. News-print paper sold in this territory is drawn
from as far east as the Province of Quebec, Canada, and as far west
as British Columbia. On account of the distance from the centers
of production, the price of paper in this territory is relatively high.
The freight rates on carload shipments range from about 15 cents on
deliveries in Iowa to $1.07 on shipments to localities near the south-
western border of the United States.
(6) Paci-flc coast.— ThQ States of California, Oregon, and Wash-
ington are included in this group. Most of the important daily
papers in these States obtain news-print paper under contracts with
miUs in the Pacific Northwest. The newspapers of smaller circu-
lation purchase paper, as a rule, through jobbers in Seattle, Port-
land, Los Angeles, and San Francisco. Contract prices in this group
show a wide variition. The range in freight charges on carload
shipments is from a rate of about 7.5 cents in Oregon to a rate of
about 62.5 cents to southern California.
PRICES OF NEWS-PRINT PAPER.
51
Section 2. Open-market prices.
There was a large increase in prices paid by publishers purchasing
their paper on current orders as needed during 1916. This increase
was much greater than for contract purchases, which are considered
later. Only a small proportion of the total sales of news-print paper,
probably not more than 10 per cent, is sold on current orders. Under
ordinary conditions most of this is sheet paper which is bought in
small quantities by country weeklies, while some of it is roll paper
bought by publishers of small dailies whose requirements do not
amount to more than a car or two a year. During 1916, however,
considerable quantities of roll paper were purchased in the open
market by publishers of the larger dailies whose contracts did not
cover their entire requirements on account of increased consumption,
or who were unable to renew their contracts.
The open-market prices of roll paper in carload lots or over in
1915 were generally less than $2.35 per 100 pounds f . o. b. destination,
while during the third quarter of 1916 the minimum prices in prac-
tically all the States for which prices were tabulated were more than
$3, and by December, 1916, the price had advanced to more than $5
f. o. b. mill.
Open-market prices for sheet news showed an even greater increase
in 1916. For current orders of from 1 to 17 tons, inclusive, the
maximum prices in the third quarter of 1916 were in many cases
higher by $2 to $3 per 100 pounds than the maximum prices in 1915,
while in December, 1916, the prices were sometimes $4 per 100 pounds
higher than in 1915.
Range of open-market prices of roll news. — Table 6 below
shows the range in prices paid by publishers on market purchases
of not less than one car, or 18 tons of news-print paper in rolls for
the year 1915 and for each of the first three quarters of 1916. Ow-
ing to lack of time it was impossible for the Commission to obtain
complete data for the third quarter of 1916 from all of the com-
panies represented in the tabulation for the earlier periods. The
figures for this quarter should therefore be accepted with caution.
Information received from publishers shows that sales were made in
a number of instances during the third quarter of 1916 at materially
higher prices than are shown in the table.
52
REPORT ON NEWS-PBINT PAPEB INDUSTRY.
Table 6 -RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 18
TONS OR OVErIoF NEWS-PRINT PAPER IN ROLLS, BY STATES. 191^1916.
tDellvered f. o. b. destination.)
Group and State.
Date of order and range of prices per 100 pounds.
1915
1916
Eastern group:
Massachusetts
Rtiode Island and Connecticut
New York
New Jersey
Pennsylvania
Middle Western group:
West Virginia
Ohio
Indiana
Illinois
Kentucky
North Central group:
Michigan, Wisconsin, and Minnesota.
Western group:
Iowa
South Dakota
Nebraska and Kansas
Missouri and Arkansas
$2.10-12.35
1.98- 2.61
2.05- 2.35
2.0O- 2.25
2.02- 2.15
1.92- 2.15
2.05- 2.25
1.94- 2.41
2.04- 2.18
1.95— 2.15
2.10- 2.21
2.32
First quar-
ter.
S2.10-S2.35
2.00- 2.52
2. 10- 2. 80
2. 20- 2. 50
2.00-2.35
2.15- 2.35
1.92- 2.39
2. OO- 2. 44
2.00- 2.50
2.13- 2.49
2.11- 2.28
2.15- 2.49
Second quar-
ter.
2.33- 2.35
2.75
S2. 55-J3. 50
2.41
2.20- 3.50
2.30- 3.50
2.05- 3.37
2.02- 3.50
3.14-4.00
3.60- 4.00
2.23- 3.76
2.50-3.49
4.(B
2.25- 4.20
8.60
Third quar-
ter.i
S3.21-S3.91
3.41-3.51
2.75-3.56
2.23-4.25
8.75
3.50-3.80
3. 14- 4. 50
3.27-3.49
4.83-5.00
4.06- 6.36
t Prices for the third quarter are not complete, especially for September.
Comparing the year 1915 with the third quarter of 1916, the great-
est increases in prices, as shown by the ranges in the table, were
as follows: Michigan, Wisconsin, and Minnesota, from a range of
$1 95-$2.15 to $4.83-$5 per 100 pounds; Indiana, from a range of
$2 05-$2.25 to a range of $3.50-$3 50 per 100 pounds; Massachusetts,
from a range of $2.10-$2.35 to a range of $3.21-$3.91; Kentucky,
from a range of $2.04-$2.18 to a range of $3.27-$3.49; and Pennsyl-
vania, from a range of $2-$2.25 to a range of $2.23-$4.25.
During the last quarter of 1916 open-market prices continued to
advance. In December, 1916, roll news frequently ranged from $5
to $6 per 100 pounds f. o. b. mill as compared with a range of $1.92
to $2.61 per 100 pounds f . o. b. destination in 1915.
Range of open-market prices of sheet news.— The price of news-
print paper in sheets is influenced by a number of factors which tend
to increase the cost to the consumer above the price level of roll paper.
The cost of manufacture of paper in sheets is somewhat greater than
in rolls owing to the additional labor involved in its preparation for
market. The f . o. b. mill price, as a rule, is from 10 cents to 20 cents
more per 100 pounds for sheet paper than for rolls.
PRICES OF NBWS-PBIKT PAFBS.
53
Paper finished in sheets usually reaches the consumer through job-
bers, and is delivered in less-than-carload quantities to a much
greater extent than roll paper. Freight and jobbers' profits are ac-
cordingly higher as a whole on sheet paper than on roll paper.
Table 7 below shows the course of market prices paid by publishers
for sheet news in quantities varying from 1 to 17 tons, inclusive, for
the year 1915 and for each of the first three quarters of 1916. The
figures given for the third quarter of 1916 represent only a small
percentage of the total sales and are not fully representative of price
fluctuations during that period.
Table 7.— RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 1 TO
17 TONS, INCLUSIVE, OF NEWS-PRINT PAPER IN SHEETS, BY STATES, 1915-191&
IDeliveries f . 0. b. destination.]
Group and State.
Eastern group:
Maine and New Hampshire
Massachusetts and Connecticut
New York
New Jersey
Pennsylvania
Delaware and Maryland
Middle Western group:
West Virginia
Ohio
Indiana
Kentucky
Illinois
North Central group:
Michigan
Wisconsin
Minnesota
Southern group:
North Carolina
South Carolina
Georgia
Tennessee
Alabama
Florida
Mississippi
Western group:
Iowa
Missouri
North Dakota
South Dakota
Nebraska
Kansas
Date of order and range of prices per 100 pounds.
1915
2.20-3.00 2.37-3.20
2.30-2.80 2.17-4.15
2.40-2.93 2.50-3.50
2.65- 2.86 - 2.70-3.25
2. 52- 2. 95 2. 18
2.50-3.10 2.50-4.15
* Prices for the third quarter of 1916 are not complete, -specially
$2. 40-f 2. 75
2.1^-3.50
2.08-3.00
2.20- 3.30
2.15- 3.00
2.35- 2.75
2.10-2.60
2.30-2.70
2.15- 2.80
2.35- 3.10
2.20- 2.95
2.05-3.00
2.10-2.85
2.30- 2.75
2.35-2.65
2.30- 3.15
2.40-2.75
2.60- 2.90
2.40-2.50
3. 50- 3. 75
2.30-2.65
1916
First
quarter.
$2.40-$2,75
2. 45- 3. 75
2.20-3.05
2.35-3.60
2.45- 4.50
2. 75- 3. 41
2.35-2.85
2.45-3.25
2.26-3.50
2.60
2.34-3.50
2.25-3.00
2.40-3.00
2.40-3.00
2.50-3.25
2.50-3.28
2.40-3.00
2.25-3.75
2.55-2.85
4.00
2.50- 4.00
Second
quarter.
S2.75-$3.50
3.0O- 4.50
2.35- 5.00
2.35- 4.10
2.75- 4.50
3.21
2.75- 4.95
3.00- 4.15
2.60- 4.00
2.60- 4.50
2.63-5.00
2.53-4.65
2.75-4.45
2.5&-4.50
3.25- 4.50
2.55-4.00
2.95- 4.25
8.75-4,40
2.70- 4.63
4.00- 4.50
3.00- 4.00
2.90- 4.50
8.32-4.65
3.2»- 4.78
3.26-4.51
4.00- 4.95
3.15-5.05
for September
Third
quarter.*
$3.40-S4.65
3.62- 6.00
3.39- 5.50
3. 66- 5. 25
3.6ft- 6.00
4.50
4.00-5.00
4.tO-5.M
3.25-5.5i
4.50- 5.60
4.22-6.09
3. •5- 4.75
5.50-6.00
4.00-5.75
3.50
3.84-4.20
3.90- 4.50
4.70
5.00
4.00- 4.50
4.70-6.00
4.43-6.07
5.00-5.28
3. 83- 6. 75
4.25-6.35
i
54
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Table?.— RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 1 TO
17 TONS , INCLUSIVE OF NEWS-PRINT PAPER IN SHEETS, ETC.— Continued.
Date of order and nngfi
of prices per 100 pounds.
Group and State.
1915
191«
First
quarter.
Second
quarter.
Third
quarter.
Western group - continued.
Idaho
S3. 60
$2.95-3.10
2.50- 3.81
2.55- 3.15
3.76
3. 25- 4. 10
3.00- 4.14
2.70- 4.04
2.60- 4.50
13.50
S2. 95- 3.65
3. 15- 3. 91
3.0O-3.50
3.75
8.25-3.75
3.15- 4.50
3. 10- 4. 18
2.84- 4.60
t4. 75-S5. 00
Oklahoma
$3.60-$4.50
3.91- 5.75
3.25- 5.00
4.60- 5.50
Montana
4. 60- 6. 25
Texas
5.00- 7.00
Utah
4. 50- 5. 29
New Mexico and Arizona
3.25- 4.65
3.50- 4.93
3.64- 4.86
3.25- 6.50
5.00- 5.75
Pacific coast group:
Washinsrtou.
4. 00- 6. 14
Oregon
4.60- 6.68
California
3.26- 6.00
This table shows that there was a rapid increase in prices on orders
of from 1 to 17 tons of news-print paper in sheets during 1916. In
fact, the minimum prices were higher in all but two States — Washing-
ton and California — during the third quarter of 1916 than the maxi-
mum prices of 1915. In many cases they were more than $1 per 100
pounds higher. The maximum prices in the third quarter of 1916
were in many cases higher by $2 to $3 or more per 100 pounds than
the maximum prices in 1915.
The greatest increase in the general level of prices, as indicated by
the ranges, was in the western group, which includes the States west
of the Mississippi River, except the Pacific coast group, while the
smallest increase was found in the latter group.
In the last quarter of 1916 open-market prices on sheet news con-
tinued to advance. In December, 1916, prices for less- than -carload
lots often ranged from $6.50 to $7.50 per 100 pounds, as compared with
$2.20 to $4.20 at the beginning of the year. In some cases sheet paper
in less than ton lots sold for $8 or more per 100 pounds.
During the latter part of February, 1917, the open-market price
on sheet news in ton lots decreased to a range of from about $5 to $7
per 100 pounds. For jobbers' sales prices of roll and sheet news see
pages 78 and 79.
Prices of ready-print sheets. — More than 90 per cent of the ready
print used in the United States is furnished by the Western News-
paper Union. The price of ready print varies according to the size of
sheet and quantity purchased and whether with or without advertis-
ing. It is issued in folios (two pages printed and two pages blank)
and in quartos (four pages printed and four pages blank). The siz-
PRICES OF NEWS-PRINT PAPER.
55
column quarto, size 30J by 44 — 50-pound paper, is the one most used.
The prices of the Western Newspaper Union for this size of ready
print from August 1, 1913, to August 1, 1916, inclusive, are shown in
the table below :
Table 8.— PRICES OF THE WESTERN NEWSPAPER UNION FOR READY-PRINT SHEETS
PER QUIRE OF SIX-COLUMN QUARTO, 30J BY 44— 50-POUND PAPER, AUG. 1, 1913, TO
AUG. 1, 1916, INCLUSIVE.
(Eight pages, four printed and four blank.]
Quantity.
Under 20 quires . .
20 to 29 quires
30 to 39 quires
40 to 49 quires
50 to 50 quires
60 quires and over
Aug. 1, 1913, to
July 31, 1916.
With ad-
vertising,
SO. 14
.13
.12
.11
.10
.09
Without
adver-
tising.
$0.22
.21
.20
.19
.18
.17
Effective from
Aug. 1, 1916.
With ad-
vertising.
SO. 17
.16
.15
.14
.13
.12
Without
adver-
tising.
SO. 25
.24
.S
.B
.n
.ao
These prices are f. o. b. the nearest branch office of the Western
Newspaper Union. About 97 per cent of the papers supplied by this
company use ready print with advertising already printed on it.
There was no change in prices between August 1, 1913, and July
31, 1916, while the increase, effective August 1, 1916, was 3 cents per
quire. On paper with advertising this amounted to an increase of
from 21.4 to 33.3 per cent, according to the quantity ordered.
A circular letter to ready-print customers guaranteed that the
rates effective August 1, 1916, would not be increased during the
next 12 months, and that when market conditions become normal and
former paper prices are restored the rates will be reduced accord-
ingly.
Section 3. Contract prices.
There was a slight decrease in the prices at which contracts for
news-print paper were made during the period from 1912 to 1915,
inclusive. There was a continuous increase, however, in the prices
on contracts made during 1916. On most of the tonnage contracted
for during the latter part of 1916 this increase was about 60 per
cent. In some cases the increase was more than 100 per cent.
About 90 per cent of the total shipments of news-print paper is
sold under contract. Most of this is roll paper and is used by daily
papers. Most of the daily papers in the larger cities use more than
1,000 tons of paper per year. In some cases they use as high as
30,000 tons or over. On the other hand, the daily papers in the
smaller cities ordinarily use less than 1,000 tons per year, and in
many cases 100 tons or less.
V^J
■■ 'laiiimiBiSiiiaiBaB******'!
tAH^,i^3asciik,.:^..,:jt. ■
56
REPORT ON NEWS-PRINT PAPER INDUSTRY.
PRICES OF NEWS-PRINT PAPER.
67
Provisions of contracts. — Daily papers obtain news print as a rule
under contracts direct with manufacturers or through large whole-
sale companies, which provide for the delivery to the purchaser of a
certain tonnage of paper at the price, on the terms, and for the period
stipulated in the agreement.*
Three common forms of tonnage specifications existed prior to
1917: (1) provision for the entire supply with an estimate of the
tonnage required; (2) a maximum and minimum tonnage specified;
and (3) a given tonnage specified, with a leeway of from 5 to 10 per
cent. The present standard contracts provide for a fixed tonnage.
In the territory east of the Mississippi River comparatively few of
the existing contracts cover a period of more than one year, and in
some recent cases they are limited to shorter periods, while on the
Pacific coast contracts with the larger dailies usually cover a period
of five years. Where contracts were made shortly after the inception
of the upward trend in prices, they were in some instances limited
to a period of not more than six months. Most of the contracts made
to begin during the last half of 1916 were drawn to expire with the
end of the calendar year. Some of the contracts which expired
during that period were not renewed, the publishers being placed on
a current market basis.
The prices paid by publishers for news-print paper in some cases
include the cost of delivery at the city of publication, and in others
are f. o. b. mill, transportation charges being collected from the
customer by the transportation agencies. In contracts between news-
print manufacturers and the large metropolitan dailies the price,
until recent months, has usually been for delivery at the pressroom
of the publisher, the payment of both freight and drayage charges
being assumed by the manufacturer. As a measure of protection to
the purchaser in the case of an interruption of traffic, such contracts
have usually contained a stipulation requiring the manufacturer to
keep in storage at all times in the city at which the paper is delivered
a sufficient quantity to meet the requirements of the publisher for a
specified period, usually not less than 10 days to 2 weeks' require-
ments.
In connection with the marked advance in the price of news-print
paper in 1916, a new policy was announced by many news-print
paper manufacturers in both the United States and Canada, namely,
the discontinuance of sales for delivery at the pressroom or railroad
delivery station and a substitution of delivery to the purchaser at
the mill. This policy was reflected in the sales records of a number
of the large eastern mills for the months of July and August, 1916,
and has been adopted in almost all of the contracts made since then.
By selling f. o. b. mill, instead of sidewalk or pressroom, the man-
> S«e ESxhlblt 5 for forms of contract.
ufacturer is relieved of the necessity of carrying a supply of paper
in storage in various cities in which his customers are located, of
providing cartage facilities for sidewalk delivery, and also of the
trouble of collecting damages from the railroads for injury to the
paper in transit. Any increase in the freight rates and cartage
charges must now be borne by the publisher.
In the territory north of the Potomac and Ohio Rivers and east
of the Missouri River the freight rates to most points range between
7.6 and 25 cents per 100 pounds with an average of about 15 cents.
South of the Potomac and Ohio Rivers and east of the Mississippi
River the freight rates range between 20 and 45 cents per 100 pounds.
In the Southwest the rates range from 40 cents to over $1 per 100
pounds.
In 1916 the cartage charges in various cities ranged from 2.5 cents
to 6 cents per 100 pounds, and storage charges, in cases where the
paper was stored, were about 2.5 cents additional. Cartage and
storage together generally amounted to about 5 cents per 100 pounds,
although in some cases they were as high as 8 or 9 cents per 100
pounds. However, the individual publishers are now paying higher
cartage and storage charges than were paid by the manufacturers in
1916 for deliveries to the same publishers.
All new taxes that may be levied upon news-print paper are also
to be paid by the publisher. The contract form of one large manu-
facturing company contains the following clause on this point:
Any new tax of any nature which may hereafter be levied by
any Government, State, or municipality increasing the cost of
all or any portion of the said paper or any of the materials used
in the manufacture thereof shall be added to the said price to be
paid by the purchaser.
No leeway is allowed in the tonnage. The publisher must order a
definite tonnage to be taken during the contract period in equal
monthly installments, although the consumption varies at different
seasons of the year.
It is clear that these changes in the terms of contracts must increase
the actual cost of the paper to publishers. A traffic specialist em-
ployed by a great manufacturing corporation is in position to reduce
actual costs of transportation and minimize the chances of damage
in transit. A single stock in any one locality from which a number
of publishers draw their supplies does not need to be nearly so large
as the aggregate of the stocks that are necessary if each publisher
stores his own reserves.
These and other similar additions to the burden of the publishers
under the present form of contract together constitute an economic
loss to the country as a whole, which will be found to be very con-
siderable in amoimt.
sm^mmmn
I
58
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Range of prices on contracts for 1,000 tons or over. — In the fol-
lowing table is shown the course of prices from 1912 to 1916 in 32
large cities on contracts involving not less than 1,000 tons of paper.
The figures include the highest and lowest prices on contracts made
in each period for paper delivered in the city of publication, either
at the railroad station or on the sidewalk at the pressroom of the
publisher. In the case of contracts based on delivery at the mill,
destination prices were obtained by adding to the mill price the
freight rate to destination. Where this rate was not shown by the
records of the jobber or manufacturer, rates were obtained from
tariffs filed with the Interstate Commerce Commission. The side-
walk prices differ from destination prices by the inclusion in the
former of drayage and storage charges, which range from 2.5 to 5
cents per 100 pounds.
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