"If Payne makes that threat (to take the duty off lumber) good; he will be hurting the East, and not the West."-J. W. Babcock, February 4, 1902.

THE LEAD TRUST.

AMERICAN LEAD A CENT A POUND LESS IN ENGLAND THAN HERETHE GOVERNMENT A PARTNER IN ALL TARIFF TRUSTS.-DOES NOT SHARE PROFITS, BUT KEEPS OFF COMPETITORS, AND IS A POWERFUL AND VALUABLE PARTNER.

BY GEORGE A. MACBETH.

The most of the combines of today, created for the purpose of extortion in price, could not and would not exist if it was not for the part the United States takes in them.

Here is one example, and the same is true of several commodities managed by combines. This quotation is from the New York Commercial, March 6, 1900:

"Lead.-Was steady and unchanged at $4.70 per pound spot to March. In St. Louis the market was firm, with scant offerings at $4.572@$4.622, according to brands. Soft Spanish was unchanged at £16 11s. 3d. in London. Arrivals at this port were 1,000 tons bullion from Tampico; exports from this port, 650 tons to Hamburg. Imports of lead during the week ending March 2, were 2,806 tons; exports for the week, 1,794 tons."

Few see these quotations. Very few understand them. The great mass do not now anything about them whatever. Figure out the pounds, shillings, and pence, the London quotation for a long ton of 2,240 pounds, and it makes the price of lead in London $3.60 per 100 pounds, as against $4.70 in New York-$1.10 more in New York than London, or a difference of $22 per ton of $2,000 pounds.

Yet some is exported, and must go at the price in London. Please note, some is imported, also. This is brought here, and re-exported without payment of any duty.

The kernal of it all is that about twenty men are managing the matter of price of all the lead consumed in the United States, and have been doing so for some time-with the aid of the government.

Not a pound is sold without the concurrence of these men, and it held as firmly and nicely as could be. It is managed with consummate skill.

Most likely many will say, at first thought, "It is nothing to me if there is a duty on lead." Such people do not know how this material enters into the cost of so many things. Thousands of men are working with this material, which costs 30 per cent. more than it should-30 per cent. artificial value. We pay this artificial price, but the government does not get it. (It amounts to about $5,000,000 a year extorted from the American people.) It enters into the cost of every house built, and of a thousand

NOTE.-Mr. Macbeth is at the head of the Macbeth-Evans Glass Co., the largest manufacturers of Glass chimneys in the world and one of the largest consumers of lead. Since Mr. Macbeth wrote the above letter in March, 1900, American lead has sold in England at about 2 cents per pound below the American price, which has usually been from 4 to 42 cents per pound.

and one things which people do not know that lead has anything to do with.

This lead combine has arisen, and is a result of the tariff on lead. It could not exist without this tariff. It is the very perfection of a trust or combine brought into existence by the government's action.

The same may be said of lumber and of many other articles manufactured by trusts.

Truly it may be said the commercial element is predominating in affairs of government in an unwonted degree.

Evidently, there is some reward for the "fat frying" process in the past and a keen eye on the future.

If the actual effects of protective tariff legislation were known, it would be swept out of existence quickly, and our Congress would be confined to its true constitutional functions. Its hands would then be kept off from all attempts at fixing values of commodities.

THE PRINTING PAPER TRUST.

BRIEFS OF AMERICAN NEWSPAPER PUBLISHERS' ASSOCIATION PRAYING FOR FREE PAPER AND PULP.

The briefs of the American Newspaper Publishers' Association covers the case of the Printing Paper Trust so well that further comment is unnecessary. The following extracts are from the briefs presented to the United States and British Joint High Commission, December, 1898, and January, 1899:

ABSURDITY OF TARIFF ON PAPER AND PULP.

The directors of the American Newspaper Publishers' Association, representing 157 daily newspapers of the United States, and representing the bulk of the total consumption of print paper, respectfully request the American members of the Joint High Commission to advocate the inclusion of free paper and free pulp in the adjustment of our relations with Canada, and in support of this request submit the following reasons therefor.

"The present tariff rates on printing paper, unsized, sized, or glued, suitable for books and newspapers, valued at not above 2 cents per pound, is three-tenths of a cent per pound, or $6 per ton. The tariff rate on mechanically ground wood pulp is one-twelfth of a cent per pound, or $1.67 per ton.

"During the year ending June 30, 1898, the paper manufacturers of the United States exported 53,718 tons of printing paper (news and book), valued at $2,702,351, an average of 1,000 tons per week. No paper for news printing is brought into the United States.

"The total importations of wood pulp in twelve months, ended June 30, 1898 (according to the Paper Mill of August 11, 1898), were 28,846 tons, valued at $601,642, against 41,707 tons in 1897, valued at $800,886.

"The entire revenue received from the importation of mechanically ground wood pulp last year was $41,842, and as no news paper was imported, therefore no serious question of national economy or threatening deficits could be urged in opposition to free pulp and free paper.

"The tariff on paper is prohibitory and the rate for wood pulp is excessive. The American paper manufacturers need no protection, because they can manufacture paper cheaper than is done in any other part of the world. The American manufacturers are protected to the extent of $1.60 per ton by reason of their proximity to their customers. The difference in the cost of transportation to market is their great guaranty of security against Canada or any foreign country. They are also protected by their ability to obtain cheaper and more convenient supplies of coal and chemicals, which as yet are not obtainable in the Canadian forests. American manufacturers are now supplying the Australian and

* There should be a sweeping repeal of protection, which is made the opportunity for such merciless exactions as the Print-Paper Trust has laid on the newspapers of the United States."-Rockford Republic (Ill.), January 29, 1900.

Japanese markets, and are underselling the British, Sweden and
German manufacturers in the British market.

TRUST FORMED IN 1898.

"In January, 1898, all the big and profitable paper mills in the United States, with a few unimportant exceptions, were merged into the International Paper Company, a combination that absorbed 24 mills, producing about 80 per cent. of the entire American output. This corporation or trust was capitalized upon a basis of $55,000,000, divided as follows:

"Bonds....

"Preferred stock.

"Common stock..

$10,000,000

25,000,000

20,000,000

"The organizers of the trust frankly admitted at the outset that its common stock represented only good will, yet a quarterly dividend of 1 per cent. on the common stock was declared in November, payable December 31, 1898. This common stock is now selling on Wall street at 60. A circular issued by Hatch & Foote on July 15, 1898, and based upon information 'furnished by offi. cers' of the International Paper Company, showed that it was making a profit of $10 per ton on its output. The same authority states that the trust handles 143,500 horse power; that it owns 450,000 acres of spruce lands in New York, New Hampshire, Vermont, Maine and Michigan, and holds Government licenses for 1,132,000 acres in Canada.

"The capital represented by the annual rentals of $196,000 per year for water power and by other fixed charges paid by the trust would increase the total capitalization represented by that combination to $65,000,000. The entire output of this corporation, representing 1,420 tons per day for theoretical capacity, could be reproduced by a present investment of $15,000,000, so that the American consumers of newspapers are forced to pay dividends upon an inflated and wholly fictitious valuation of at least $40,000,000.

MONOPOLY PRICES FOLLOWED.

"This combination of 24 mills, while embracing many inferior and worthless mills, also included practically all of the locations in the United States where cheap and ample water power, cheap and good spruce wood and cheap rates to market can be obtained for a mill of 100 tons daily capacity.

"Immediately after the organization of the trust it raised the price of paper wherever possible. In three cases it raised the price $10 a ton, and has averaged an increase of $5 per ton on its daily output of 1,420 tons, equaling an increased tax of $2,130,000 per annum upon the newspapers of the country, which now pay a total exceeding $20,000,000 per annum for their paper supply. "A reciprocal arrangement with Canada for free paper and free pulp is advisable to insure the continuance of the present supply of free logs from Canada. The threatened retaliatory export duty upon logs to be imposed by Canada would ultimately fall upon the newspaper consumer. The present consumption of pulp wood by the pulp and paper mills of the United States, including manila, book and writing, is stated, upon authority of the Paper Maker, a paper trade journal, at 2,000,000 cords per annum, which consumption requires the entire stripping of pulp timber on 625 square miles per annum.

"Our spruce wood supply is limited. We therefore urge that the Commission should take advantage of the present opportunity and immediately secure a sufficient supply of spruce freed from tariff complications.

"The trust, in furtherance of its policy of stifling competition and controlling prices, has increased its timber holdings since this Hatch & Foote statement of July 15 was issued, and that ownership is more than sufficient to give it a wood supply for a long period of years on present production. There are no considera1

water powers beyond the control of the trust which can be utilized to operate large plants in competition with the trust, so that all that might be done in the United States toward the enlistment of capital, the development of new enterprises, or the conversion of manila mills to news, or the extension of pulp or sulphite mills to news production, would be inconsiderable in comparison with the wiping out of the duty on paper and the opening of Canada to our relief.

FREE TRADE IN PAPER WOULD PROTECT OUR FORESTS

"The enlightened policy of New York and other States in protecting forests should be encouraged by putting Canadian pulp and paper on the free list. If consideration be given by the Commissioners to the inflated securities issued upon the trust paper mills, then consideration should also be given to the capital invested in newspapers, which represents at least twenty times the capital actually invested in paper mills. If the Commissioners feel that the labor employed in the paper mills ought to be protected, then we submit that the labor employed in the newspapers affected by this tariff, numbering forty times the force employed in the paper mills, should also be considered.

A MONOPOLY OF WOOD AND WATER POWER.

"Every increase of a quarter of a cent per pound in the price of news paper adds $34,000,000 to the value of the trust securities. While the enlistment of capital in American enterprises may exercise a slightly deterrent influence on the Paper Trust, the effect cannot be material, because the trust owns the largest and best powers in localities where spruce wood is cheap and from which transportation is prompt and cheap. A successful and energetic competition cannot be maintained within the United States. The outside mills that do or can make paper are not equipped for the economical manufacture of news paper. We must look to Canada and the foreign countries where ground wood can be produced at a cost of $7.50 per ton and where news paper can be produced for 1 cent per pound. Free paper is, therefore, the only strong and permanent assurance of protection from this combination. The Commissioners should consider whether they are justified in furnishing protection to a combination organized in restraint of trade and intended to extort excessive prices from a representative industry.

"The question of protection and free trade has nothing to do with the question of free paper or free pulp. The tariff duties on these articles have been availed of by a monopoly to obtain an unfair advantage, and the issue is not one of revenue. The duties are not needed to protect any paper or pulp mill in competition with foreign rivals.

TAKE THE TAX OFF INTELLIGENCE.

"The duty on paper stops cheap books and cheap newspapers. It taxes intelligence, because the newspapers are the people's school and their library. All taxes upon paper are taxes upon reading, upon knowledge, upon the dissemination of information. Under any government such a tax would be oppressive and proscriptive. In a government based, as ours is, upon the intelligent and resultant virtue of the people, it is anomalous and monstrous. To make newspapers artificially dear is wantonly to restrict the number of readers and so increase the sum of ignorance. When this is done or proposed to simply add to the profits of a monopoly, the injury to public interests becomes a matter demanding the intervention of the Government."

TRUST PRICES.

In regard to prices, Mr. John Norris, the business manager of the New York Times, testified before the Industrial Commission on April 12, 1901, as follows:

"The news print paper mills received an average of about 1.75 cents per pound, or $35 per ton, under the old form of contract for paper prior to the consolidation, and they are now receiving, I am told, an average of $41 per ton for paper under the new form of contract. One of the officers of the International Paper Company,

in a statement to the paper trade, issued November 1, 1900, said 2.25 cents per pound, or $45 per ton, was a low price for paper. The difference between the two forms of contract, equaling $2 per ton, when added to the $6 difference of average quotations, makes an increase of $8 per ton within three years on an estimated output of 600,000 tons per annum, $4,800,000 per annum, which is the additional price now paid for news print paper by American newspapers. The International Paper Company shares in this gain to the extent of about 66 per cent., or three and a half million dollars per annum. I know of two newspapers that are paying an increase of $150,000 per annum for their paper supply, or $300,000 per annum for the two.

"The daily output of the various producers of news print papers may be enumerated as follows:

Tons per Day.

"International Paper Company...

1,300

"Great Northern Paper Company, with a present output of..
"Nine outside mills in the East, average..
"Eight Western companies...

225

280

250

"Average total......

2,055

"In this computation I have omitted a few Pacific companies and Southern paper mills which are not factors in this computation.

"The Western paper companies are practically united in the General Paper Company, and an offer was recently made to unite all of the outside mills of the East in a scheme to maintain prices at the figure quoted by the International Paper Company. Sufficient evidence to show collusion is not forthcoming, but publishers who apply for quotations realize that in some intangible way the source of their supply has been predetermined for them, and that the price they are to pay has been prearranged for them. In each case the publisher finds that all bids but one are at a prohibitory price. He also finds that he has no remedy against the supply of inferior paper.

"You ask if the consolidation of the mills has curtailed consumption. I can say that as a result of the increased price of paper many newspapers have reduced in size. At one time the New York daily newspapers curtailed 80 tons per week in their consumption. I am told that Philadelphia newspapers took similar steps. * * *

"The present excessive price of paper was made possible by four incidents: First, the Spanish-American war, which created an extraordinary demand for news print paper; second, the South African war, which deflected the Canadian output of wood pulp to Great Britain; third, the phenomenal drought of 1899 and 1900; fourth, the adoption by the International Paper Company of the policy of attempting to check competition, and thereby marking up the price of wood upon itself and upon all other mills."

SUMMARY.

"The duties on wood pulp and paper are indefensible from any point of view.

"In the first place, the duties on pulp and paper compel the 20,000 newspapers of this country to use paper made from our limited supply of wood, instead of from Canada's practically unlimited supply. The effect is to devastate our forests, injure and destroy many industries dependent upon cheap wood and a steady rainfall and water supply, and to injure the health of millions living along our streams, which now overflow in spring and dry up in summer and fall.

"The duties produce no revenue worth considering. They simply foster a monopoly, or trust, which is not an infant, but is now exporting paper to Great Britain, Australia and Japan, at the rate of 1,000 tons a week. To the extent that these dutie senable the trust to charge American consumers higher prices for paper, they injure those consumers, who are forty times greater in numbers than are the producers. Because paper is used as a medium for conveying news the taxes upon pulp and paper are taxes upon knowledge, and injure the whole American people."