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The Pulp and Paper Industry

Published online by Cambridge University Press:  07 November 2014

E. A. Forsey
E. A. Forsey*
Affiliation:
McGill University
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Extract

The pulp and paper industry has fallen on evil days since 1929. It is still our largest manufacturing industry both in value of output and amount of payroll, and still ranks second only to wheat among the export staples on which our economic life is built: in the calendar year 1934, wheat provided just over 20 per cent, of the value of our exports; pulp and paper, 17¼ per cent, a gain of 4¼ per cent, since 1930. Unhappily it is also second only to wheat in the calamities which have overtaken it. In 1933, its salary payments were barely 68 per cent, of the pre-depression figure, its wage bill not quite 50 per cent., its bond and debenture interest payments less than 15 per cent., its dividends about 9 per cent. Mr. C. P. Fell, in his valuable chapter in The Canadian Economy and its Problems, says that “mills having 58 per cent, of the total Canadian [newsprint] capacity are in bankruptcy or receivership, or are passing, or have recently passed through, some form of reorganization; … they include five out of eight of the larger newsprint manufacturers in North America.”

The general decline in prices and consumption will explain only a small part of the disaster. It is tempting to dismiss the rest as no more than an instance of the common plight of all export industries; especially as the only section of the pulp and paper industry in a reasonably satisfactory financial position is the small group of firms producing fine paper and specialty goods for the protected home market. But this explanation also is hardly adequate. The Canadian wheat grower has had to contend against the vagaries of nature, against foreign tariffs, quotas, and other such restrictions, against a considerable expansion of home production in his chief markets, and against the formidable competition of exporters from countries with depreciated exchanges. The Canadian newsprint manufacturer, on the other hand, faces no such obstacles. On the contrary, he has free entry into the United States market, and, until the worst of the depression was past, enjoyed the advantages of a depreciated exchange, netting him at times as much as $8.00 a ton, and an average of $3.00 in 1933. It is necessary, therefore, to look deeper to discover why the industry has suffered such exceptionally severe losses.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 1 , Issue 3 , August 1935 , pp. 501 - 509
Copyright
Copyright © Canadian Political Science Association 1935

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References

1 “The Newsprint Industry” (The Canadian Economy and its Problems edited by Innis, H. A. and Plumptre, A. F. W., Toronto, 1934, pp. 50–1).Google Scholar

2 In 1934 this had become a loss of 50 cents to $1.25 a ton, but increased sales, with correspondingly lower overhead per ton, helped to offset this (Financial Post, Sept. 29, 1934).

3 Minutes of Proceedings and Evidence, Select Standing Committee of the House of Commons on Banking and Commerce, 1934, p. 890; Reports of the Dominion Bureau of Statistics.

4 The explanations of the Anticosti purchase, offered to the Banking Committee of the House of Commons by Mr. J. H. Gundy and Mr. C. R. Whitehead, are not altogether convincing (Minutes of Proceedings and Evidence, Select Standing Committee on Banking and Commerce, 1934, pp. 759-62, 838-9, 844-5). Although Sir Herbert Holt seems to have done his best to prevent Port Alfred Pulp and Paper from getting started, he nevertheless became a director (ibid., pp. 879, 883).

5 Total investment, Dominion Bureau of Statistics; other figures compiled from Moody's Manuals and Financial Post Surveys of Corporate Securities.

6 Dominion Bureau of Statistics. Prices quoted by Mr. Gundy to the Committee on Banking and Commerce suggest that this figure is a conservative one.

7 Cf. table in Financial Post, Sept. 29, 1934, and see ibid., March 2, 1935.

8 Financial Post Surveys.

9 Cf. a speech before the Empire Club of Toronto, March 28, 1935, by Mr. Charles Vining, President of the Newsprint Export Manufacturers' Association of Canada (reported in Montreal Gazette).

10 Canadian Annual Review, 1928-9, pp. 256-7, and 1929-30, p. 267, and various numbers of Pulp and Paper.

11 Financial Post, Sept., 29, 1934.

12 Canadian Annual Review, 1928-9, pp. 256-7, and 1929-30, p. 267, and various numbers of Pulp and Paper.

11 Financial Post, Sept., 29, 1934.

12 Canadian Annual Review, 1932, p. 489.

13 Mr. Charles Vining's speech, already cited.

14 Financial Post, almost every issue from Oct., 1934, to March, 1935.

15 Quoted by Fell, in “The Newsprint Industry”, p. 49.Google Scholar

16 Pulp and Paper, 12, 1934, p. 669.Google Scholar

17 Cf. Financial Post, Sept. 29, 1934, March 2, 1935; Pulp and Paper, 12, 1934, p. 669.Google Scholar

18 Ibid.

19 For efficiency ratings see Fell, , “The Newsprint Industry”, pp. 51, 53.Google Scholar

20 Financial Post Surveys.

21 Minutes of Proceedings and Evidence, Select Standing Committee on Banking and Commerce, 1934, p. 924.

22 See cost figures in Pulp and Paper, 05, 1935, p. 260.Google Scholar