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In considering how far this latter movement was due to European competition, the data both as to imports and as to contracts for imported pulp must be weighed carefully. Imports from Europe tend normally to increase in the third quarter of each year but the increase in the third quarter of 1931, before depreciation began, was much more marked than during 1929 or 1930. The increase in imports in the fourth quarter of 1931, partly due to seasonal causes, was less marked than that from the third to the fourth quarter of 1930. Much the largest contracts reported during 1931 were in the second and third quarters, and these had much to do, no doubt, with the larger importations of the fourth quarter. The contracts during the fourth quarter of 1931, although less than during the second and third quarters, were greater than in the fourth quarter of 1929 or of 1930. The largest importations from Europe shown during any recent period were in the first quarter of 1932 (mostly in January and February). The large imports of January and February may have been influenced by the anticipation of a strike in Sweden, which in fact took place in April.

With regard to prices, the most significant facts are set forth in Table 41 (p. 69); this deals only with foreign pulp but naturally the prices of similar kinds of domestic pulp must be substantially parallel. It is, of course, impossible from the mere facts of the changes in prices to determine whether they were initiated by the importers or by domestic competition, or sometimes by one and sometimes by the other.

This table shows in a general way that the average import values of pulp from Sweden, which substantially dominates in the imports of European pulp, follow, with some lag in time, the prices made in contracts for European pulp. The most important kinds of pulp imported from Europe are unbleached sulphite and unbleached sulphate. Both have tended downward for two years or more, but the movement of their prices is by no means parallel. The prices for unbleached sulphite have fallen somewhat more rapidly since depreciation set in than before, but no such relation can be traced in the prices for unbleached sulphate. There was a sharp decline in the contract prices for European unbleached sulphite from the second to the fourth quarter of 1930 and again from the second to the fourth quarter of 1931 with some accentuation of the movement in the fourth quarter, which again is reflected in the unit prices of imports from Sweden in the first quarter of 1932. On the other hand, contract prices for European unbleached sulphate were fairly steady after the fourth quarter of 1930 and showed no decline in the fourth quarter of 1931; the average import values of unbleached sulphate from Sweden have also been steady for the last three quarters covered by the table (July, 1931, to March, 1932).

The European countries have long been gaining at the expense of Canada and have continued to gain since depreciation set in. The Canadian dollar is down only 10 or 12 per cent, whereas the currencies of the European pulp-producing countries are down 25 per cent or

more.

The general question whether the domestic industry should be protected, independently of the effect of currency depreciation, was of course before Congress when the tariff act of 1930 was passed. The present report shows that the United States has for many years been

largely and increasingly dependent upon foreign sources for woodbase paper, through imports either in the form of pulpwood or of wood pulp or of paper itself. Those paper mills which do not have their own affiliated domestic pulp mills have long used much more imported pulp than domestic pulp. This trend is commonly attributed to the partial exhaustion of our forests of wood especially suitable for papermaking, except on the far distant Pacific coast. The trend as regards the sources of supply of paper and paper-making materials during the last two or three years has been in line with previous trends.

The domestic pulp industry is undoubtedly suffering severely but the greatest source of its difficulties is the general business depression. The industry as a whole has lost much less in output during the depression than many other manufacturing industries and the prices have declined not much more than those of other commodities.

PULPWOOD

The problem with respect to pulpwood is much simpler than with respect to pulp. Canada has always been our principal source of imports, supplying about one and one-half million cords annually in 1929 and 1930 as compared with an average annual production in the United States of between five and six million cords. The importation is extremely seasonal, and any advantage which Canada might conceivably gain from depreciated currency would not be expected to show in the actual imports during the winter of 1931-32. The imports in the winter are always relatively small, but those in the last quarter of 1931 were very much less than in the same quarter of 1930, and there was also a marked drop in imports during the first quarter of 1932 as compared with the same period of 1931.

There is no statistical information of value with regard to the prices of pulpwood, but it is commonly stated that they have fallen greatly during the last two or three years and perhaps most of all during the present winter. The demand for domestic pulpwood is affected, of course, not merely by the imports of pulpwood but also by the imports of pulp. The increasing consumption in the Eastern States of pulp produced on the Pacific coast has been an important factor in lessening the demand for pulpwood in the Northeastern States.

WOOD PULP AND PULPWOODS

UNITED STATES TARIFF COMMISSION,
Washington, April 20, 1932.

INTRODUCTION

HISTORY OF THE INVESTIGATION

This investigation was instituted on December 18, 1931, under the provisions of section 332 of the tariff act of 1930, pursuant to Senate Resolution No. 95, Seventy-second Congress, adopted December 16, 1931. The resolution reads as follows:

Resolved, That the United States Tariff Commission is directed to make a thorough investigation of the effect of the depreciation in value of foreign currencies upon the importation into the United States of mechanically ground wood pulp, chemical wood pulp, unbleached or bleached, and pulpwoods, and to report to the Senate as soon as practicable the results of such investigation.

DATA OBTAINED IN THE INVESTIGATION

The commission examined a large body of general statistical data on production, sales, imports, exports, prices, and general development of the pulp industry in the United States and the principal foreign pulp-producing countries. Specific data on the domestic industry were obtained by questionnaire from (1) consumers of pulpwood and producers of pulp, and (2) consumers of pulp as represented principally by the so-called converting paper mills-mills which buy most or all of their pulp in the general market and not from affiliated plants or concerns. The commission sent questionnaires to 165 domestic manufacturers of pulp, the majority of whom produce paper also, and received 145 returns. To the paper mills the commission mailed 265 questionnaires and received 201 replies. Data relative to the quantities and prices of imported pulp, and the markets to which distributed, were obtained direct from the books of record of the importers by agents of the commission. The information thus obtained covered approximately 90 per cent of contracts made with domestic paper mills during 1929, 1930, and 1931 for the purchase of imported pulp.

Wood pulp is generally of two classes-that produced by (1) chemical processes, including "sulphite," "sulphate," and "soda" pulp and (2) mechanical methods known as ground wood. Pulp is sometimes bleached to obtain a maximum whiteness and purity.

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I. GENERAL EXCHANGE AND PRICE SITUATION IN FOREIGN PULPPRODUCING COUNTRIES

EXCHANGE RATES

At all times, past and present, the great bulk of the importation of wood pulp and pulpwoods into the United States has been from countries whose currency is depreciated. The only country from which significant imports of pulp are received and whose currency has not depreciated is Germany. The principal sources of our pulp imports from depreciated currency countries are Canada, Sweden, and Finland, and smaller quantities come from Norway. Canada is the only important source of pulpwood.

The depreciation in exchange of all four of the countries just named began in the latter part of September, or in October, 1931, and was connected with the action of the United Kingdom in suspending the gold standard. Table 1 shows the monthly average exchange rates for these countries from August, 1931, to March, 1932. Data are also given for Germany, the exchange of which during September and October was slightly below par.

The exchange of each of the four countries under consideration dropped rather sharply in the latter part of September or during October. In each country it was still lower in December. The exchange of Canada, Sweden, and Norway rose slightly in January, but that of Finland fell still lower. Since January the exchange has risen in all four of these countries.

TABLE 1.-Trend of exchange rates and wholesale prices in principal foreign pulpproducing countries

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