In a letter to the members of the News-Print Manufacturers Association
Mr. G. F. Steele ably refutes the charge that the recent advance in the
price of paper were arbitrary measures.
The writer was unavoidably absent from New York when the monthly report
of production and shipments for the month of August was sent out from
this office on September 19th.
You have doubtless observed the decreased production in August as
compared with the month of July. This was largely caused by the
difficulties encountered by one of the large Canadian mills by a
terrible forest fire, which decreased operations for several weeks. It
will doubtless occur, however, to every one of our members that due to
the terrific pressure which has been placed on the operation of the
mills during the past eight months, that it is a great wonder that
production keeps up to the present high point. Machines are running
at a much greater speed then they were ever expected to run, and
ordinary shut downs for repairs and replacements have not been made
this summer. It is usually the custom for most news-print mills to shut
down at the end of the summer before freezing weather occurs, to run
their screening and tailings into wrappers. I do not know of a single
mill which has indulged in this desirable practice this year, and in
order to get a supply of wrappers for the coming six months it may be
necessary for some mills to stop making news-print paper temporarily
and run out their wrapper stock.
During the months of June, July and August in normal years production
drops down materially, and stocks are accumulated for the great Fall
demand. During the months of June, July and August of this year,
instead of accumulating increased stocks, you doubtless have observed
from the statement submitted to you that total stocks at hand at
all points, including stocks on hand at mills, in transit, and at
destination points, decreased 7,316 tons or 10.6 per cent.. It was
thought by those who are best posted in the industry that stocks
were at danger point on June 1st, and that unless these stocks could
be replenished there would be grave danger of the necessity of some
papers suspending publication temporarily because of the inability of
the mills to get paper to them in time for their requirements during
the coming Fall and Winter. During the three months of June 1st to
September 1st, 1915, storage stocks increased as much as they have
declined this year.
During the past few weeks the newspapers have been full of violent
outcries, uttered by publishers, regarding the high price of news-print
paper. There have come to my desk during a period of two weeks over
1,500 radical and abusive articles, making all sorts of baseless and
unfounded charges against the manufacture of news-print paper. It is
quite evident that these newspaper publishers are more scared than hurt
up to this time, for owing to the peculiar nature of this business
and the fact that the great bulk of the business is contracted for
the calendar year in the fall months of the preceding year, it is the
belief of those who are best posted in the industry that on the average
the price of roll news-print paper which is sold on contract has not
advanced up to this time more than 5% or $2.00 per ton. Many newspapers
have taken advantage of the situation to raise subscription prices and
to raise their advertising rates, when these same papers are paying no
higher price for their supply of news-print paper than they were paying
a year ago.
So much has been said about the price of news-print paper, and so
little has been said about the rise in price of other commodities, that
I have endeavored to make up a list gleaned from responsible commercial
publications regarding the rise in other commodities.
Just as soon as the price of news-print paper advances, no matter how
little, the newspaper publishers promptly outdo the Prophet Jeremiah
with their lamentations and demand an immediate investigation on the
part of the government. We do not see the same demand when the prices
of other commodities advance.
The selling price of the raw materials entering into the manufacture
of news-print paper has increased to a very remarkable extent during
the past year. Many mills now making news-print paper are paying a
very much enhanced price for the cost of raw materials which they
have to purchase. Other mills purchasing the chemical and ground wood
pulps entering into the manufacture of their products are operating
on old contracts which expire with the calendar year. There is every
indication at the present time that the price of these two commodities
after January 1st, 1917 will be practically double the price which
ruled a year ago, and perhaps in the case of chemical pulp three or
four times the price which ruled a year ago. The mills which are forced
to make news-print paper from these high priced raw materials will
necessarily have to charge what would seem like an inordinate price to
operate at a profit.
Consider, for example, a paper mill which is dependent on the market
for its supply of raw material. Sulphite pulp, of which news-print
paper contains approximately 25%, is now selling around $100.00 at the
sulphite mills and the mill which converts it into news-print paper
will pay $25.00 per ton of paper for this item. Ground wood, which
constitutes 75% of news-print paper, is selling at $30.00 per ton
F.O.B. ground wood mill, and the converting mill pays $22.50 per ton of
paper for this. As it takes approximately 110 pounds of pulp to make
100 pounds of paper, this brings the total cost per ton to $52.25 for
the raw materials alone. Add to this a freight rate of 12c per hundred
pounds for pulp, 40% dry, and the cost per ton of raw material comes
to $58.85. Add to this the manufacturing costs which, according to the
Tariff Board figures in 1911 amounted to $10.14 in the United States,
and a larger figure in Canada. These costs have easily increased 50%
since 1911, which makes a total cost of the paper $74.06 per ton.
The majority of paper mills make one or both grades of pulp, in which
case increased expenditure is dependent on the increased cost of
pulpwood, coal, labor, machine clothing, repair materials, chemicals,
etc., but the mills dependent on the market for raw materials have to
obtain large prices to operate at a profit.
In the year 1914, the average price of news-print paper was
approximately $2.00 per hundred pounds F.O.B. cars at mill. The largest
producer of news-print paper in the world, is now charging for renewal
of contracts $3.00 per hundred pounds F.O.B. mill or an increase
of 50%. Compare this increase with the increases in the following
commodities, taken from such authorities as:
R. G. Dun & Co.--“WEEKLY REVIEW”.
“THE ANNALIST”.