CHAPTER VII.--PROSPECTS FOR THE IMMEDIATE FUTURE.
1. THE ANGLO-NEWFOUNDLAND DEVELOPMENT COMPANY. (continued)
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
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.
2. THE INTERNATIONAL POWER AND PAPER COMPANY OF NEWFOUNDLAND, LIMITED.
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.
||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.
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
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.