Paper & Power

Swift rivers tumble through the Canadian forests on their way to the mighty St. Lawrence. Between them, covering vast stretches of the provinces of Ontario and Quebec, lies a great area of choice timber land. Its potential wealth defies estimate. Year after year, an army of men with axes and saws invades it, levies tribute for the busy mills dotting the rivers. But when they have finished, the woods rise stately and tall as before, seemingly an endless source of profit to their owners.

Much of this immensely valuable land belongs to the Crown. But it would be neither seemly nor practicable for the Crown to build its own mills, manufacture its own pulp and paper. Wisely, the Crown has leased its rich timber limits to private companies, allowing them to draw on Canada's inexhaustible resources to supply paper of all sorts to U. S. and Canadian consumers. Of these private companies, the greatest is International Paper Co., operating more than 30 pulp and paper mills, holding timber lands in fee or under Crown lease larger than the combined areas of Connecticut, Rhode Island, Massachussetts and Long Island.

Chief product of International Paper Co. has been newsprint. In 1927, its mills produced more than 800,000 tons of paper and pulp. Each year the newsprint demand, particularly in the U. S., rises higher (7% more in 1928 than in 1927), yet so prolific are the mills of the paper companies that the supply always exceeds the demand. Last spring, mills were operating at only 84.4% of capacity. An artificial combine to keep the price of newsprint at $65 a ton collapsed when some members of the combine made a slick deal with Publisher William Randolph Hearst. A price-cutting war followed.

But paper is not the only source of income for Canadian paper companies. Closely linked with paper mills is water power. And last week, when International Paper proceeded with plans to form a holding company for its properties, observers noted the new International Paper and Power Co. would hold about 90% of the common stock of the New England Power Association, covering an area of 9,000 square miles, carrying light and power to communities with over 2,500,000 population.

Nor will the influence of International Paper Co. stop with this sizeable unit. Also forecast, last week, was a further pool of power resources in New England. Only the approval of directors was lacking to consummate a combine between New England Power and Edison Electric Illuminating Co., a utility company serving Boston and 37 other cities and towns, reaching 1,265,000 individual consumers. Through this pool, the new Edison-New England Power combine ranks as one of the chief links of the intricately chained U.S. utilities "trusts," target of many a bitter political attack. And the controlling force of the combine, International Paper, will own power developments of 1,500,000 h.p., capable of being increased to 3,000,Gigantic as this combine appears, International Paper considered, last week, yet another merger of giant proportions. To the already great capacity of its 30-odd mills, it contemplated adding the resources of the rival Abitibi Power and Paper Co., Ltd. Abitibi Power holdings, developed and in reserve, amount to 700,000 h. p. Timber resources approximate 55,000,000 cords. Its mills can turn out 650,000 tons of newsprint yearly. Should Abitibi merge with International Paper, the resulting company would in effect dominate the world's newsprint production, would be one of the major power units of North America.

At the head of International Paper is 43-year-old Archibald Robertson Graustein, Harvard graduate, onetime Boston lawyer. Lawyer Graustein rose to sudden fame by so guiding the affairs of the insolvent Riordon Co. (Canadian pulp concern) that bondholders emerged after four years without loss. This extraordinary achievement took him to International Paper in 1924 as president. One of his first acts was to buy the Riordon Co., merge it with International Paper. His directorships, besides New England Power, include the Corn Exchange Bank, Missouri Pacific Railroad, American Surety Co., Manville Jenckes Co.

Close friend of President Graustein is President Frank D. Comerford of New England Power. Last week, New England's Comerford came to the board of directors of International Paper, joining a group of potent New York and Boston financiers. Among them: Frank N. B. Close (vice president, Bankers Trust Co.) ; H. C. Phipps (New York Trust Co.); Ogden M. Reid (president, New York Tribune, Inc.); John R. Macomber (president, Harris, Forbes & Co.).