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Sudden Change in the Picture

Reference has been made to the sudden change in the picture of undeveloped resources that was brought about when the International secured control of the Riordon interests a little over four years ago. There were at that time in operation under the former control, two bleached sulphite mills at Kipawa and at Hawkesbury. There were owned also by the old company timber limits tributary to the two mills; undeveloped water power sites on the Rouge and Gatineau Rivers, and some 10,000 square miles of pulpwood limits along the Gatineau, with lumber mills. The pulpwood, however, was inaccessible for use by existing pulp and paper mills; it required a mill to be brought to its door at an expenditure that under the circumstances was out of the question. When International secured control of these properties, its operations in Canada were limited mainly to a newsprint mill at Three Rivers of about 340 tons daily capacity.

Huge Resources and Credit for Canada

At once the huge resources and credit of the International Paper Company-coupled with the outstanding constructive and imaginative qualities of Mr. Graustein and his associates-were thrown behind the Canadian situation, and the whole scene changed almost overnight. Dormant and non-earning properties-eating their heads off with interest and capital payment obligationswere to be transformed to great industries that were to earn a return on the investment, interest for bondholders and dividends for shareholders. The wasting water powers were to be harnessed ; the newsprint mill was to be brought to those pulpwood limits that otherwise were of little worth; and beside these were hydroelectric plants to be developed. Within a period of the past two years by far the largest part of the credit provided by the Company for all purposes, through bonds and debentures, and preferred and common stock issues,-an amount in the neighbourhood of $80,000,000 of "new" money-was earmarked for expenditures in connection with the Canadian programme.

What has this included? First of all, an increase in the efficiency of existing operations. By painstaking research the bleached sulphite pulp of the Kipawa mill at Temiskaming was brought up to a quality adaptable for the manufacture of Rayon. This met with an immediate response, - for a newly erected mill in Canada, Courtaulds; for rayon mills in England, France, Italy and other countries. The capacity of the Kipawa mill was increased by nearly 50 per cent. to 250 tons daily, and to-day pulp for rayon manufacture produced at the Kipawa mill constitutes almost one-half the total bleached sulphite mill output of the whole world for this purpose.

Power was needed for that newsprint mill that itself was needed to give a utility and value to the Gatineau pulpwood. The

Gatineau Power Company was formed and with the support of the credit of "International" some $37,500,000 was provided from Gatineau bonds and debentures. Work was begun on two power sites Chelsea and Farmers Rapids, within a mile of each other, and a short distance north of Ottawa. Huge storage facilities were provided far up the Gatineau.

But the first with a designed capacity of 170,000 H.P. and the second with 120,000 H.P.-a total of 290,000 H.P. -a total of 290,000 H.P. was not enough. There existed a third power farther up, at present undeveloped, Paugan Falls, the property of the Hull Electric Company, which itself was controlled by the Canadian Pacific Railway Company. Negotiations for the purchase of Hull Electric were undertaken, and after some keen competitive bidding "International" carried off the prize at a cost of $4,750,000. In the background for the fortunate possessor lay a long-term contract with the HydroElectric Power Commission of Ontario. Soon this was a reality and development started at Paugan Falls which will have an installed capacity of over 270,000 H.P., to meet a contract with the Ontario "Hydro" for an ultimate amount of 260,000 H.P.-on a basis that guarantees bond interest by a considerable margin, and gives the Gatineau Power Company (after purchase of a small concern) the entire control of the power sites on the Gatineau, with a designed generating capacity of 560,000 H.P., and undeveloped sites of over 100,000 more, and a definite earning power that will look after the chief financing, in the "Hydro" contract and the furnishing of power to the Gatineau newsprint mill, the Canada Cement Company's Hull plant, and other industries contained in the area covered by the Gatineau Power Company's operations. To round out the Company's system, it recently acquired by purchase the Ottawa-Montreal Power Company and the Quebec Southern Power Company, which provide it with a wholesale and retail field that stretches along the north shore of the Ottawa River, and portions of the south, from Ottawa and Hull to Vaudreuil and Ste Anne de Bellevue, north to St. Jerome, and to many other centres. These transactions illustrate the comprehensive and far-reaching plans that have been drawn up for operations in Canada.

Canadian Resources not Mortgaged

The newsprint operations of the Company carried on in Canada are rapidly becoming not only an important factor in the pulp and paper industry of Canada, but its industrial life in general. As the management has stated, "The policy of concentrating newsprint activities in Canada is in accord with the trend of economic developments." American newsprint mills which cannot compete with the cheap wood supply and continuous water power of Canadian mills are being diverted from newsprint to higher grade papers. The developments in Canada in pulp and paper have been financed without placing a mortgage on any but an infinitesimal portion of the Canadian properties concerned.

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Interior of powerhouse of Chelsea Hydro-Electric development of Gatineau Power Company, showing three units operating. The
powerhouse is designed for five units of 34,000 h.p. each. Chelsea is on the Gatineau River, six miles above the City of Ottawa,
and is one of three developments of the Company on the Gatineau River, the others being at Farmers, 7,000 feet below, and at
Paugan, 26 miles above Chelsea.

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