Climbing Paper Costs

Congressman Wayne Hays, Chairman of the Joint Committee on Printing, has been watching the fast-rising price of paper used by the Government Printing Office. As millions of Americans who order government reports and pamphlets know, GPO’s prices have been going through the roof in the past two years. One reason is that the paper companies have raised their prices almost 100% during this period.

Asked about these price increases, Cong. Hays told my associate, Frank Warner, that they were unwarranted. “My judgment,” said Hays, “is that it is collusion in the paper industry.” Would an inquiry by the Justice Department be helpful? “Let me put it this way,” he added, “an investigation couldn’t do any harm. And there’s a far-out possibility it could do some good.”

At the Justice Department, William Hudgins, senior trial attorney at the Antitrust Division, is concerned about “how that [paper] shortage came about all of a sudden.” He thought it would be a good idea for the Justice Department to look into the problem and get the facts. “The only sure way would be a grand jury,” he said. Traditionally, the Antitrust Division has waited for complaints from businessmen before moving to act.

There is no lack of private complaining by smaller non‑integrated paper companies who rely on the large integrated firms for their raw materials, especially pulp. The integrated companies are using most of their own pulp for their own paper‑making operations and selling more abroad where world prices fetch a higher return than domestic levels.

Paper “converters,” squeezed by shortages of raw paper, are laying off employees. One Philadelphia “converter” said his paper prices were up 40 to 50% over last year. His business, which involves buying large rolls of paper and converting them into various sizes of printing paper, has laid off nearly 40% of his workers. Has he complained? “I’m afraid to,” he replied, “afraid of losing 100%… It’s bad, but it’s self-preservation.”

Others were similarly apprehensive. Six out of seventeen Washington, D.C., area printers told Mr. Warner they were willing to sign a complaint to the Justice Department’s Antitrust Division. There were generally the smaller firms (with less than 30 employees); some called the situation “outrageous,” “a crisis in capitalism.” Seven other printers were reluctant to com­plain publicly because they were concerned that their supply and price problems would worsen. The remaining four, relatively larger firms, were satisfied with their position in the market.

One of the few non-integrated companies willing to act the Patrician Paper Company in New York City. In a lawsuit filed against the Scott Paper Co., an industry giant, Patrician alleges that Scott is violating the antitrust laws by selling its private label tissues and towels at drastically reduced prices to supermarkets in order to drive smaller companies like Patrician and its private label products out of business. Scott denies this charge, of course. Patrician claims that the consequences of heavy paper exports, and the pricing and selling prac­tices of the integrated giants toward smaller paper companies,is setting up this double squeeze at the retail stores that portends bankruptcy for small businesses. Already, it claims, some companies have either gone out of business or sod out to larger companies.

Looking to the future, the large paper companies say that expansion of facilities and new sources of pulp are needed the Department of Agriculture has completed a study of the Kenaf plant leaf which concludes that it is a “promising new annual source of raw material for paper pulp” and can grow in heavy tonnage-per-acre quantities in some parts of the South. These are future expectations and should not be used as diversions to ignore real problems of the present. Super paper price inflation does more than raise the cost of living; it can further monopolization of the paper economy by a few giant firms, put magazines out of business, strain school budgets and disrupt the public’s rightful access to information because of prohibitive cost barriers.

It is reflective of the lack of leadership in Washington that no official analysis of what is going on throughout the paper economy is available. The defunct Cost of Living Council did not produce such a study for the public; nor has Congress. When Congressman Harley Staggers was asked about the need for his Investigations Subcommittee to look into the paper industry, he replied: “It would be fine.” Re said, “We can check to find out what’s going on.” consumers will be hoping that something is done while they go about paying prices that some day may make money worth the paper it’s printed on.