it should once more be emphasized that only technically are we dealing with an international issue. In actuality, a large part of the newsprint trade between Canada and the United States is between Americans north of the border line and Americans south of the border line, the Canadian newsprint industry being in considerable degree a northward extension of the American newsprint industry, made with the help of American capital.

The present condition is quite similar to competition between two sections of the same industry, such as might exist between two geographical sections entirely within the United States, one of which has an average lower production cost than the other. In times of depression the low-cost section is naturally able to do the better business, both in its domestic and in its overseas sales.

Neverthless, even though our relation to the Canadian newsprint industry is not one that easily lends itself to adjustment through the tariff, it is fraught with great significance as regards the future of the industry. The Canadian industry is bound to become increasingly important, for the American industry is becoming more and more remote geographically from the main sources of pulpwood supply, and Canada is determined to make the most out of her possession of large pulpwood forests, keeping them as far as possible for her own industry to the exclusion of the American industry. American newsprint companies must manufacture increasingly in Canada, or at least establish their pulp mills there, even if access to Canadian Crown-land timber is made freer.

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The fact is that, except for certain companies in the United States which have adequate pulpwood holdings in Maine and certain companies near the Canadian border which foresightedly provided themselves early with large tracts of freehold pulpwood lands in Canada and because of their comparative nearness to these supplies can transport their pulpwood reasonably cheaply, the American newsprint industry, as far as it is confined to the northeastern portion of the United States, has seen the end of expansion for many years to come. Canada will almost inevitably soon produce more newsprint than the United States. In time Alaska and perhaps the western part of the United States will develop newsprint production on an important scale. But they will always be handicapped by the fact that they are farther distant than eastern Canada from the main consuming markets.

Significance of transportation factor. So it is that the factor of transportation together with the economies of integration of both the process of pulp making and the process of paper making are the ultimate factors determining the order of development of the pulpwood areas of the world and the dates of moving on to new areas. Factors like sudden changes in tariff, for example, putting Canadian newsprint imported into the United States on the free list in 1911, and excluding the main pulpwood supplies of one country from its more highly industrialized neighbor, though exerting much influence on geographical shifts in the industry, are of minor importance in the long run.

The high cost of transportation of logs always causes the wood-pulp industry to be located near the pulpwood forests; naturally the forests nearest the newsprint-consuming centers are chosen. The newsprint

mills themselves are then located close to the wood-pulp mills because of economies achieved thereby in the process of manufacture, and because it costs less to transport the finished newsprint than it does to transport the pulp. As the forests recede from the mills the tendency is for the wood-pulp mills to follow them. Artificial national influences, such as tariff measures and pulpwood embargoes, tend to accelerate this movement, as they did beginning about 1910 in the case of the movement of American capital into Canada. As the pulp mills move toward the receding forests, the newsprint mills, though much more slowly, follow in their turn. They tend to stay near the pulp mill and yet the economy gained thereby is so much less proRortionately than that gained through the pulp mill being near the pulpwood that the tendency is much less clearly defined.

Of course the above tendencies toward migration of the industry are never carried to the full because of the fact that the pulpwood in any section is seldom completely cut out, and tends to grow in again, or is replanted. The demand for newsprint and other papers made of sulphite pulp and ground wood ordinarily is strong enough to insure such a return to pulp mills which get their pulpwood from the partly exhausted areas near them or else bring it at a heavy expense from a distance or to insure such a return to paper mills which bring their pulp from distant pulp mills, that it is not worth their while to tear up their costly immobile plants and move nearer the virgin forests.

Consequently we may expect the greater part of the present newsprint and pulp mills in the United States to remain, but not to increase substantially in number nor to install much new modern machinery. It is highly likely that agitation for reforesting and the present realization of our great need for pulpwood supplies will result ultimately in some such crop system of pulpwood planting as is practiced in certain European countries. But even then a material advantage will remain with Canada. How vigorously later developed regions, such as Alaska, having the advantage of virgin pulpwood stands and the disadvantage of a long haul for the finished product, will be able to compete with regions near the eastern cities having the advantage of a short haul for the finished product and the disadvantage of a high price for pulpwood, is now dependent on too many uncertain factors to permit of prognostication. But as long as Canada has large virgin stands, and until her forests reach the present state of exhaustion of the American forests, the newsprint industry of the United States must grant first place to that of Canada.

BOOK PAPER.

Inasmuch as book-paper imports amounted in the calendar years 1920 and 1921 to one-fifth and one-tenth of 1 per cent, respectively, of domestic production, there can hardly be said to be a pressing tariff problem in the book-paper industry. Even in the fiscal year 1914, when imports were at their highest, they amounted to only one-third of 1 per cent of domestic production.

1 Calendar year.

• Small amounts of sheet newsprint for Maine and Minnesota included in "All other States."

• Included in "All other States."

♦ Machine finish and sized and supercalendered. Plain book paper constitutes about five-sixths of total book-paper output.

[From Senate Documents Nos. 49 and 79, 65th Cong., and Federal Trade Commission Bulletins.]

1 Includes plain book paper, coated, cover, and plate, lithograph, map, wood cut, etc. December production estimated.

Production in United States, by months, 1919, 1920, and 1921.

Production in United States, by months, 1919, 1920, and 1921—Continued.

1 From Commercial Report No. 13 of the Imperial Royal Austrian Trade Museum, by Franz Krawany.

1 Includes "printing paper for books and newspapers" valued at not above 2 cents per pound up to and including Sept. 7, 1916; at not above 5 cents per pound from Sept. 8, 1916, to Apr. 23, 1920; and at not above 8 cents per pound from Apr. 24, 1920, où. Data for different countries for 1910 not separately reported.

* 161 pounds.

Less than one-half of 1 ton.