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Canadian Newsprint, 1913–1930: National Policies and the North American Economy

Published online by Cambridge University Press:  03 March 2009

Trevor J. O. Dick
Trevor J. O. Dick
Affiliation:
Department of Economics at the University of Lethbridge, Alberta, Canada, and is currently a Visiting Scholar in the Department of Economics at Harvard University, Cambridge, Massachusetts 02138.
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Abstract

This study uses supply and demand analysis to interpret the expansion of Canadian newsprint production and exports after World War I. Canada and the United States played complementary roles in this expansion, and by 1930, 90 percent of Canadian production based on relatively abundant natural resources went to satisfy U.S. demand. At the same time, U. S. tariffs against Canadian newsprint were relaxed, and Canadian provinces imposed a manufacturing condition on Canadian pulp and paper producers prohibiting the export of pulpwood cut from Crown lands. The analysis shows that the growth of U.S. demand and Canadian supply conditions can account for almost all the Canadian newsprint expansion, whereas policy initiatives generated at most two years of growth.

Type
Articles
Information
The Journal of Economic History , Volume 42 , Issue 3 , September 1982 , pp. 659 - 687
Copyright
Copyright © The Economic History Association 1982

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References

1 See sources for Table 2, footnote 65.Google Scholar

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51 See Guthrie, “Price Regulation and the Paper Industry,” pp. 214–15,Google Scholar and Forsey, E. A., “The Pulp and Paper Industry,” Canadian Journal of Economics and Political Science, 1 (02 1935), p. 506. All contract prices were made subject to a provison that the price shall not be higher than that charged to any customer by any mill with an annual capacity no less than 100,000 tons, a provision highly conducive to price cutting.CrossRefGoogle Scholar

52 See Guthrie, The Newsprint Paper Industry, chapter 8. While International managed to hold onto its position as dominant firm, its share of the market was reduced over the sample period from about 25 percent to about 10 percent.Google Scholar

53 See footnote 35.Google Scholar

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56 An elaboration of this type of model in different contexts is pursued in Fogel, Robert W. and Engerman, Stanley L., eds., The Reinterpretation of American Economic History (New York, 1971), pp. 98–115. The symbols used in equations (1) to (6) and in all equations henceforward are listed and defined in Table 1.Google Scholar

57 See Guthrie, The Newsprint Paper Industry, chapter 12.Google Scholar

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66 See Guthrie, The Newsprint Paper Industry, chapter 13.Google Scholar

67 All the data for wages, raw material prices, and capital stock are expressed in dollar values or index form in the sources used. The series in Table 4 derived from these data are deflated to a Canadian dollar base of 1926=100 using the same deflators employed in constructing the series in Table 2. See footnote 65. The underlying series for Canadian wages is from Dominion Bureau of Statistics, The Pulp and Paper Industry (Ottawa, annual),Google Scholar and for U. S. wages, see Stevenson, The Background and Economics of American Paper-making, pp. 62–63. For Canadian pulpwood prices, see Dominion Bureau of Statistics, The Pulp and Paper Industry, and Guthrie, The Newsprint Paper Industry, chapter 9. For U. S. pulpwood prices, see Kellogg, Newsprint Paper in North America, p. 64. For a Canadian hydroelectricity price index, see Series J-132 in Urquhart and Buckley, Historical Statistics of Canada, and for the United States, see Series S-116 in Historical Statistics of the United States. The capital series are, in principle, stock values from the U. S. manufacturing census and from Dominion Bureau of Statistics The Pulp and Paper Industry. For productivity change, Canada and the United States are assumed to have followed the same path in the absence of discriminating studies.Google Scholar The benchmark figures provided by Kendrick, John, Productivity Trends in the United States (New York, 1961), p. 471,Google Scholar were interpolated using times series of patents taken from Schmookler, Jacob, Invention and Economic Growth (Cambridge, Massachusetts, 1966), p. 225.CrossRefGoogle Scholar

68 See Learner, Edward and Stern, Robert M., Quantitative International Economics (Boston, 1970), pp. 8–17.Google Scholar

69 It might be argued that a domestic (United States) supply variable ought to be included in equation (30) on the grounds that it properly belongs in (19) under the current interpretation. In defense of the estimators sought in (30), it should be noted that they are designed mostly to deal with the problem of simultaneity raised by Orcutt, G. H., “Measurement of Price Elasticities in International Trade,” Review of Economics and Statistics, 52 (05 1950), 117–32.CrossRefGoogle Scholar In this case, recognition is also given to the excess demand property of import demand by treating simultaneity within a closed North American economy where Canadian output and exports expanded for precisely the same reasons that U. S. output did not, namely, the substitution of a low- for a high- cost producer of newsprint. Deriving export supply and import demand curves using domestic elasticities presents a problem with the current sample since the consumption and production shares to be applied change radically over the years of the sample. Fortunately, a reasonably stable outcome can be obtained by this method for the Canadian export supply elasticity in the neighborhood of 3.

70 These actual rates of change are the result of regressing the logarithms of the variables on time.Google Scholar

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73 See Kellogg, Newsprint Paper in North America, p. 64.Google Scholar

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75 See Guthrie, The Newsprint Paper Industry, chapter 12.Google Scholar