396. There is no re-afforestation, the Company relying on natural growth to replace those areas which have been cut. The growth of the Black Spruce varies according to its situation, but the tree usually takes 70-80 years to reach maturity. The Balsam Fir has a quicker growth and often reaches maturity within 60 years. With its 7,400 square miles of forests the Company is satisfied that with careful management these will continue indefinitely to meet the requirements of the Mill on the basis of the present output of 500 tons of paper a day. The need for careful management is emphasised since the danger from forest fires is a very real one. The Company has instituted an efficient fire-patrol service, and every precaution is being taken to conserve what are not only its own interests but the interests of all that portion of the population which looks to Grand Falls for a livelihood.

  397. The timber cut annually amounts on the average to 162,500 cords or 83,200,000 feet board measurement. It is the practice of the Company to enter into contracts for the cutting of timber with some 97 contractors; these in turn enter into sub-contracts with individual workers. The low price of paper has compelled the Company to reduce the rates offered to contractors, and this in turn has led to a reduction in the piece prices paid by contractors to the men or sub-contractors. In former years the piece price or rate paid to the men averaged $2.00-$3.00 a cord; last season the average price was $1.50 a cord. The output per man varies from ½ a cord to 3 cords a day; the average is said to be 1.4 cords a day. Out of his earnings each man is called upon to pay 60 cents a day for his living expenses in the lumber camp and to make a contribution of 40 cents a month towards the services of a doctor. In addition he must provide his own transport to and from his home at the beginning and the end of the operations. At the former rates per cord, he could make a comfortable living; at the present rates, his margin is small.

  398. The paper produced at Grand Falls is used in England: the depreciation of sterling, therefore, placed the Company at a serious disadvantage. Now that the value of sterling more nearly approximates to parity with the Canadian dollar, the economic position of the Company has been improved. Elimination of oppressive overhead charges has been achieved by the recent reconstruction of the Company on a new basis, and it may be expected that the recent rise in world commodity prices will extend also to the price of paper. These factors encourage the hope that the most difficult period at Grand Falls has been safely passed; and that, even if a general trade recovery should be delayed, the Company will find itself able to embark on a policy of the gradual restoration of wages and contract rates to the levels formerly in operation.
  Reference is made in paragraphs 459-464 to the Company's shipping port at Botwood.


A. Capitalisation.

  399. The Mill at Corner Brook, now operated by the International Power and Paper Company of Newfoundland, Limited, has had a chequered history. The timber lands contiguous to the Mill, and the rights to the water-power on which it is dependent, were formerly the property of the Newfoundland Products Corporation, a subsidiary of the Reid Newfoundland Company. After the War the owners succeeded in interesting Sir W.G. Armstrong, Whitworth and Company, Limited, in a paper-making enterprise. As the result of an agreement made between the two Companies, a new Company, the Newfoundland Power and Paper Company, Limited, was formed in 1923 to take over the property, construct a mill and develop the power. The shares were held between the two Companies, the Newfoundland Products Corporation contributing the property and Sir W.G. Armstrong, Whitworth and Company, Limited, a large part of the cash.

Mill Humber Arm, International Paper Co.'s Mill, Corner Brook, n.d.
Photographer unknown. From the album of photographs furnished to the Newfoundland Royal Commission, August 1933. Courtesy of the Centre for Newfoundland Studies Archives (Coll-207), Memorial University of Newfoundland Library, St. John's, Newfoundland.
Larger Version (58 kb)

  400. The cost of the necessary construction work was estimated at $20,000,000 or about £4,000,000, and this was financed by the issue of two series of debenture stock of £2,000,000 each, known as the "A" and "B" Stock respectively. In order to assist in the development of Newfoundland, which was then suffering from unemployment, and acting under the powers of the Trade Facilities Act, 1921, the United Kingdom Treasury guaranteed the interest and principal of the "A" Stock. This stock was secured by a trust deed giving the trustees a first mortgage on the fixed assets of the Company. The "B" Stock was similarly guaranteed by the Newfoundland Government and was similarly secured by a trust deed giving the trustees second fixed and floating charges. The agreement with the Newfoundland Government was confirmed by, and embodied in, an Act of the Newfoundland Legislature known as the Newfoundland Power and Paper Company Limited Act, 1923.

  401. The work was put in hand early in 1923 and was, unfortunately, hurried too rapidly to completion. It was soon found that the first estimate was much too low. Not merely did certain parts of the work, notably the excavation of the nine-mile canal from Grand Lake to the power plant at Deer Lake (see Map No. 1), prove more difficult and costly than anticipated, but radical changes in the original plan were made. It had been intended to establish both power house and Mill at Deer Lake and to carry the paper by rail to Port-aux-Basques. It was, however, decided, in order to take advantage of the excellent shipping facilities at Bay of Islands, to place the Mill at Corner Brook (see Map No. 1). This necessitated the erection of a transmission line of some forty miles in length, as well as other minor adjustments. Finally, the original plans for housing the staff and workmen of Corner Brook were considerably enlarged and a town-site was laid out, involving the erection of dwelling houses, buildings, waterworks and other undertakings of an expensive nature.

  402. These alterations had the effect of materially increasing the estimated cost of construction. An additional sum of £4,000,000 was provided by Armstrong, Whitworth and Company, Limited. The transmission line, waterworks and buildings at Corner Brook, apart from the Mill buildings proper, were built out of this money, and for that purpose another company, the Newfoundland Power and Paper Corporation Limited, was formed, which owned these assets and afterwards utilised them by agreement with the Paper Company.

  403. Notwithstanding the provision of so much additional capital, it was still found, early in 1925, that a further sum of £1,000,000 was needed to complete the construction. With some difficulty, and after the consent of the existing stockholders had been secured, a sum sufficient to cover this liability was raised by the issue of first mortgage debenture stock, ranking in priority to the "A" and "B" Stock. An important point to be noted in this connection, since it still exists, is that the transmission line, waterworks and some other minor units, which are an integral part of the manufacturing plant, were by this arrangement added to the assets forming the security of the stock issues. Up till then, as the property of the Utilities Corporation, they had not been included. It will be seen that the position of the bondholders was thereby greatly improved.

  404. The Mill was opened, and the first paper produced, in August, 1925. It should here be explained that still another company, the Newfoundland Export and Shipping Company, Limited, was formed, through which the sales of paper were from the beginning, and still are, made.

  405. It will be seen that by the time the Mill was opened the bonded capitalisation of the whole enterprise had grown to the large total of about £9,000,000 or $45,000,000. Besides carrying that heavy burden, the undertaking was handicapped by the difficult task of building up suitable markets for its paper. For these and other reasons, which need not be detailed, it was found, after a year or so, that business could not be continued with such an overhead cost. It was accordingly decided to dispose of the Mill to an established undertaking possessing first-rate selling facilities.

Image description updated May, 2004.

Partnered Projects Government and Politics - Table of Contents Site Map Search Heritage Web Site Home