INDUSTRY: Expensive Appetite

In Chicago, Daily News Editor-Publisher James S. Knight yelped: "Gouge!" In Quebec City, Emile Castonguay, Canadian Daily Newspaper Publishers' Association president, snapped: "No justification!" The outcry on both sides of the border was caused by the fact that Canada's St. Lawrence Corporation, Ltd. had increased newsprint prices $5 a ton, topping (by $2) the alltime high of $130 charged after World War I. Other Canadian newsprint mills were expected to follow suit, as they have in the past.

U.S. publishers, who spend nearly 80% of their newsprint budgets in Canada, protested that the boost will add $32 million a year to high operating costs, may actually squeeze some newspapers out of business. They pointed out that five Canadian newsprint producers showed profits of $25 million after taxes on $120 million in sales in the first half of 1955—up 21.6% over last year's first-half profits.

Behind the price boost lay the voracious U.S. appetite for newsprint, whetted by growing newspaper circulation (up 1,300,000 since 1950) and a 10% upsurge in advertising linage over 1954. U.S. demand for newsprint in the first nine months of 1955 has run 7.8% ahead of last year's level, highest in history, even though newsprint prices have soared since World War II from $50 to $127 a ton. Some smaller publishers have been forced to pay $50-a-ton premiums for newsprint on the flourishing grey market.

Canadian newsprint producers argued that they have had to earmark a high percentage of profits for costly mill expansion to add 900,000 tons to Canada's annual capacity, as well as pay out 15% wage increases in the three years and three months since the last price hike. Even though St. Lawrence profits for the first half of 1955 were 37.3% ahead of the 1954 level, President P. M. Fox said: "We have gone beyond [our] ability to absorb increasing costs." At week's end the Justice Department, which has no jurisdiction over Canadian producers, asked U.S. newsprint manufacturers to confer with its trustbusters, warned pointedly: "Every effort will be made to prevent any joint efforts to increase prices" of domestic newsprint.