1942: Paper And Pulp Industry

General Situation.

In 1942 the pulp and paper industry in common with all other manufacturing industries was faced with the conditions which inevitably must develop under a wartime economy. Conversion of civilian industry to manufacture of war materials became the watchword of the day. Where conversion was not possible, the War Production Board formulated plans for curtailment and/or concentration to whatever extent necessary of the production of non-convertible industries. Unable, in general, because of the nature of its equipment, to convert to other products, the pulp and paper industry nevertheless found itself in a strong position to maintain its operations at reasonably satisfactory levels. Paper and paperboard as 'service' commodities are essential to the conduct of all business and to the operations of the armed forces and the government.

Statistical determinations of the minimum quantity of paper and paperboard necessary to the war effort have been impossible because of the nature of the product. In view of the danger of restricting production below the required but unknown minimum, few real obstacles were actually placed in the path of the pulp and paper industry by the War Production Board during 1942.

While it is now evident that the industry is currently capable of meeting all short-run pulp, paper, and paperboard requirements, the steadily growing labor and transportation shortage, and the problem of obtaining repair and maintenance supplies and equipment are forcing rapid action on the part of the War Production Board to plan for reduced but balanced production in order to assure adequate supplies for the war effort. Such planning has been under way for some time and the pattern for the future operations of the industry is already apparent in the action taken by the War Production Board. The more important government regulations which affect pulp and paper are described below.

Operations During 1942.

Orders received and production during 1942 were in marked contrast with those of 1941. Whereas orders and production climbed steadily through 1941, the trend reversed itself in 1942, and a steady decline was apparent throughout the year. Instead of being hard-pressed to fill new orders for paper and paperboard, mills were forced to reduce operations as new demand failed to materialize.

In view of this record, it is hardly necessary to discuss the elements which created the paper shortage 'scares.' These 'scares' were largely the result of widely publicized but unofficial estimates by the War Production Board that 26,000,000 tons of paper and paperboard would be required in 1942 against a maximum available supply for consumption of 21,000,000 tons.

Actually, demand fell far short of the potential maximum supply. Preliminary estimates indicated that paper and paperboard production for 1942 would total approximately 16,000,000 tons compared with the all-time high level of 17,300,000 tons achieved in 1941. Including net imports, apparent consumption in 1942 totaled approximately 18,400,000 tons compared with 19,800,000 tons in 1941.

Wood pulp production in 1942, on the other hand, was somewhat higher than the previous record of production achieved in 1941. Twelve month data are not yet available but production of wood pulp for eleven months totalled 9,416,429 tons and 9,110,352 tons for 1942 and 1941 respectively. Net imports of wood pulp were also somewhat greater in 1942 than 1941. (Government regulations do not permit publication of figures.) The supply available for consumption declined materially, however, as a result of the almost complete depletion of the inventories which were carried through 1941 and part of 1942. The narrow margin between supply and requirements caused the War Production Board to allocate the supply and to limit individual inventories of wood pulp.

Other raw materials, including waste paper for paperboard mills were plentiful. At the request of the war agencies, large inventories of coal and chemicals were accumulated early in 1942 when adequate transportation was available.

Wartime Regulation.

The pulp and paper industry was one of the first placed under the immediate jurisdiction of specially created branches of the War Production Board and the Office of Price Administration.

The first important action was the issuance of General Order M-52 directing the allocation of wood pulp production for the first four months of the year. This became necessary when a substantial portion of the pulp production of certain contract producers was diverted from their paper mill customers to the manufacture of nitro-cellulose explosives for the military forces and to lend-lease for England, Australia, and New Zealand. M-52 was followed by General Order M-93 issued on Mar. 14 and effective May 1 which directed the permanent monthly allocation of all wood pulp produced for market.

Standardization and simplification of book and writing papers was initiated on July 4 by Limitation Order L-120 which limited the size, weight, and color of the sheets. This action was followed in other grades later in the year.

Paper production control was not actually undertaken until Oct. 30, 1942, when the so-called paper 'freeze' order was inaugurated. Beginning Nov. 1, paper production was limited each month to an amount not in excess of the monthly average production of each individual mill for the six-month period April to September 1942. The order also restricted consumers' inventories to a ninety-day maximum supply and forbade mills which had not operated since Aug. 1, 1942 from resuming operations on any basis. This order actually meant that average industry operations after Nov. 1 could not exceed approximately 87 per cent for paper and 78 per cent for paperboard.

General Preference Order M-251 issued Oct. 19, 1942, authorized the War Production Board to control the nation's pulpwood supply upon declaration by the Director of Industry Operations of an emergency situation in any area. This order was applied to the Puget Sound area effective Oct. 26, 1942, in order to assure an adequate supply of pulpwood to mills producing wood pulp for munitions. All pulpwood supplies were 'frozen' and were entirely withheld from three mills in the area, thus closing down their operations; apparently for the duration of the war. A considerable diversion of pulpwood logs was effected to the nitrating pulp mills and the operations of those mills producing wood pulp for the paper industry were simultaneously sharply curtailed.

A critical area has also been declared in the Columbia-Willamette River area but no diversion of supplies was undertaken in 1942.

All paper prices were brought under regulation by OPA at an early date. With the exception of kraft, tissue, and certain specialty papers, for which specific price ceilings were named, price regulation was entirely on a date basis under the General Maximum Price Regulation.

It seems exceedingly likely at this time that the War Production Board will order a definite per cent limitation of paper and paperboard production, and prohibit the production of certain non-essential end paper products early in 1943. Considerable differences of opinion exist with regard to the extent to which this program should be carried in view of the aforementioned difficulty of determining the minimum requirements of paper for the war effort. Shortages of pulpwood, labor, and transportation equipment will, however, undoubtedly curtail production automatically regardless of government action.