NEWSPRINT

Hawera & Normanby Star, Volume XLI, Issue XLI, 12 February 1921, Page 5

NEWSPRINT

DOMINION'S SUPPLY OF PAPER

REPORT BY BOARD OF TRADE

A report has-been furnished by the Board of Trade to the president (the Hon. E. P. Lee) on the subject of newsprint supplies for the Dominion. The report, which is as under, has been prepared at the request of the Prime Minister:—

It has been represented that the newsprint position in New Zealand is most serious, and. it has been alleged by representatitves of the newspaper proprietor® of the Dominion that the causes of the present* position are — (1.) That one firm has. a monopoly of * the paper supply for the Dominion. (2.) tThat the Canadian mills are exploiting the New. Zealand Press proprietors as compared with prices charged to the publishers in (3) That advantage is being taken the adverse exchange rates with America by clearing credits through the United States instead of Canada.

(4.) That more than the actual freight to New Zealand is being charged. ■•'■?''

An examination into the position certainly tends to confirm that a very serious state of affairs exists. There appears to be practically a monopolistic control of the supply for the Dominion. In ©utlinihg the position from their point of view, the newspaper propri-' etors represented that the pre-war price of newsprint paper ranged from £11 10s to £12 a ton, whereas the price fixed for paper for 1921 from the same, source (Canada) ranges from about £67 to £70 a ton. Even sine 1919 the price of paper has increased by over. 100 per cent. The acuteness of the position can be best illustrated by a few figures. Below is given the pre-war and the present day costs of three metropolitan newspapers for paper alone :—

Pre-war Present-day Tonnage cost ' cost - used. £ £. " '500 ... 6.000 ... 34,000 750 ... 9,000 ... 51,000 2000 ...24,000 ... 136,000 The pre-war price is taken at £12 a ton and the present day £68. In actual fact as much as £96 a ton has been paid for paper within the past few months,- and there is stiir paper on order at prices ranging from £80 to £100 a ton. What the enoraious advance in price means may be.best shown by comparing the amount realised from sales of-the daily newspapers with the cost of the paper itself. For the purposes \ of simple computation it may be taken that the average metropolitan daily paper in New Zealand runs about 4* copies to the pound weight ot print paper. These papers are sold to the public at 2d each, but the cost, exclusive oi .paper, amounts to about fd a copy. The net return ranges from ljd to about! l-3d a* copy, though it is doubtful if any papers actually receive a clear 1 l-3d net if all publishing and distributing costs are taken into account. However, it is here assumed that papers do show a return of 1 l-3d on sales. The ton of paper as supplied to-day from Canada is a gross ton weight—that is, packing and core are included. Allowing for this, and spoils-, waste and unsolds, the net yield from a ton of paper is about 20001b. weight of printed paper. Allowing 41 papers to the pound gives 9000 papers from a ton of paper. The c<^t of paper is £68. The sale of 9000 papers (yield per .ton; 1 l-3d each, £50. Loss per ton, £18. This loss has been largely compensated for by the boom in advertising which aas existed up till recently. It cannot be properly said that the Fact of the monopoly existing is solely responsible for the present state of affairs or for the extortion of such exorbitant prices by the Canadian mills. They are to some degree contingent on sonclitions prevailing in America j particularly the increased demand due to the boom in advertising that was rife in the United States towards the end of 1919 and the beginning of 1920. It ;.t interesting to note "that the output of print materials for the past twelve months in the United States has.been 80.000 tons less than the consumption. The increased production in 1919 in that country over 1918 was 185,000 tons, and .the facilities for further production are increasing each year, j at' despite this the demand exceeds the supply,'thus calling for considerable importations. The question, of exchange has considerably affected the position, not by taking advantage of clearing through the United States, instead of Canada, but rather the influence -due to the position of the United States in relation to exchange with the rest of tho world. "The balance of trade with Canada is in favour of the United States, •>nd this has resulted in exchange being forced to a premium which in February last was 15 per cent. Because of this inducement to export products to the United States, Canadian paper and pulp manufacturers, being able to' make a handsome additional profit by the sale of "their drafts on the United States at a premium, are able to quote American buyers at a lower price than they are prepared to offer, to Australasian buyers. In fact, had it not been tor the pressure brought to bear by the Canadian Government at the instance of the Trade Commissioner (Mr Beddoe), there,would have been a.complete diversion of the trade, as the mills were not at all anious to export to Australasia. As they were supplying practically under prea*nre, it is but natural that they would demand a price that would bring a return on a parity with the returns of the sales to the United States. This premium is very probably the explanation of the difference in the quotations that have been cited m the magazine "Paper" in the issue of .October last, wherein newsprint paper, was quoted at 6 dollars 50 cents r'.o.b. mills, as against 8 dollar 30 cents for local supplies. Allow, say 20 cents for freight to seaboard, and it will be observed that the difference between this price and that demanded for local supplies is accounted for by the premium on exchange that would be obtainable on sales to the United States. During the six months ended June 30, 1920. the New Zealand price actually netted 3 dollars less a ton at the mill than the price to United States customers (96 dollars against 99), and overseas shipments also required additional (lacking and inspection at seaboard. Concerning the belief that New Zealand is practically at the mercy of a monopoly, the report states that the j three companies supplying New Zealand, and which are generally regarded as controlled by one corporation are represented in Australasia by Messrs Carmichael and Co., Ltd- a company registered in Australia. This firm now has substantially a monopoly of the news-print supply of the dominion, and as the newspaper proprietors of the Dominion -allege, it can practically exact its own conditions in contracts, although the; monopoly is not quite exclusive, as the Canada Paper Company, a company outside the trust, contributes a small proportion of the Efominion's requirements at a priice considerably below the trust prices. The headnuarters of the firm of Carmichael and Co. are in Sydney, the Auckland %-<inch being merely a clearing agency The contract prices are quoted direct from Sydney, and the Auckland manI »<rer has no authority to vary thefo. ' Cnrmichael and Company invoice to the I different consignees at the mills invoice : price plus a small loading for commission, and ahe ruling rate of exchange for a month's sight draft hrough London. The Canadian Bank of Com-

merce, either at Vancouver or Montreal, negotiates the drafts through London. Carmichael and Company have no record of any complajnt that the New York rate of exchange had, been* used for the conversion, rate. Tlie method of conversion followed is fully in accordance with business usage, and the suggestion that Carmichael and Co. are taking advantage of the rate of exchange through. New York is unfounded.

On consignments' from the West Coast freight at the rate of £7 10s per ton dead weight or £3 15 per ton measurement i§ collected by the Union Steam Ship Company from each consignee, and if the consignment is from the eastern seaboard the freight is prepaid andi collected by Carmichael and Co., who'attach the debit to the local invoice. The last rata v as £3 15s a tori. The suggestion that a great deal more has been charged than the actual rate of freight between this country and Canada is not borne out by investigation. It would appear that" the only profit.that Carmichael and Co. secure out Of the sales is the commission, and, as this is a flat rate irrespective of any variation in the original invoice the phenomenal.increase in price would not appear to be an advantage to them Carmichael and Col deal only with the larger newspaper proprietors, and distribution to smaller firms is effected 1 through sub-agents, whose practice is to add 7\ to 10 per cent, on the landed cost. '

The report states, also, that it will be observed that owing to the methods m which the operations are conducted —viz., the fixation of prices and contracts beyond New Zealand—the question of profits is outside the jurisdiction of the Board of Trade Act. In regard to the question of duty, it was pointed out that there is a great similarity between newsprint and other low ' grade paper, and that the removal,of the impost, coupled with the present desire for advertising and printing at ■as low a rate as possible, will be conl ducive to illicit attempts to bring in other low grade papers as newsprint and to cut such paper into block sizes m .New Zealand for purposes of general printing. Representatives of British houses contend that this will seriously affect their position, and are anxious tnat no further concessions be made It is added that every effort is being? made to develop and (encourage the P*Pei\ industry in Japan. Any removal ot duty would be an- : invitation to competition from that .source, arid it is a uestion of policy whether this is to be encouraged.