The Paper Trade
( Originally Published 1920 )
The distribution of paper is cared for in part by direct sales from the mills to consumers, such as large publishers of newspapers, magazines, and books, and manufacturers of paper commodities, such as tags, boxes, stationery, toilet accessories etc.
The sale is also conducted to some extent by brokers, who operate principally in a few of the larger cities, especially those located within easy shipping distance from the mills, where the handicap of not carrying a large warehouse stock is at a minimum.
The broker carries no stock as a rule, with the exception of a supply for regular contracts. Occasionally the mills will carry a stock for the broker. A few firms specializing on contract business have made distinct successes in this branch of the paper business, but the broker is not an important figure in the paper trade, taking the country as a whole.
The most important distributing factor to the printing trade, is the paper merchant, who with his large purchasing power, accumulates ample and varied stocks, at minimum cost having the advantage of carload prices and freight rates), and stands ready to distribute in large or small quantities, whatever is required. He also helps in a considerable measure to finance his trade by extending credit.
There is a distinct tendency toward "chain stores" one of the more prominent of which now comprises eight warehouses and seventeen branch offices, covering practically the entire country. These large factors frequently control the entire output of several mills, and sell to the smaller jobbers, as well as to the printers and consumers.
Statistics on distribution are apparently lacking, since the Government has never regularly compiled them, and the National Paper Trade Association, composed of paper merchants was unable to furnish any. The only estimate the author has obtained, comes through the President of the American Paper & Pulp Association, (The Manufacturers' Association), who wrote on Jan. 22nd, 1914-
"In writing paper I should estimate that 95 per cent is sold through the jobbers.
In book paper I should say not over 33 1/2 per cent is sold through jobbers.
In news paper probably not over 10 per cent is sold through jobbers.
In wrapping paper I should say about 95 per cent is sold through jobbers.
In box boards probably not over 25 per cent is sold by jobbers.
Tissue paper, perhaps 25 per cent is sold through jobbers.
(The balance is sold direct to manufacturers who re-manufacture it, like toilet paper manufacturers)."
The indications therefore are, that the very large consumers of printing papers buy direct from the mills, as do many of the large manufacturers of commodities composed largely of paper.
The printers who in the aggregate consume large quantities of writing, catalog, and miscellaneous printing paper, but whose orders are composed principally of many small items, buy almost wholly from the paper jobbers. In localities far removed from the Mills, the jobber very naturally occupies a more conspicuous position than elsewhere, and his superior facilities for handling the business make him a stronger factor than in the markets adjacent to the mills, and enable him to handle much of the largest business to advantage.
In the New England Letter issued in January, 1913, by the First National Bank of Boston, the following interesting statement was made in regard to paper.
"The Paper trade is essentially a hand-to-mouth trade in all branches except the news print department. In general, purchases are made only as required, and fluctuations in price effect but slightly the demand. In short, an analysis of the production of the Paper Mills of the country, taking into consideration stocks on hand, is specially significant as an index of current trade conditions.
The situation is shown by the following table which gives an idea of the paper output, the stocks on hand, and the number of days' supply available for November, 1912.
It is noticeable from this table what the merchants' service means to the Printer, for in the lines that are sold very largely, direct on making orders from the mill to the consumer, the number of days' supply on hand is small, whereas among the items most often used in the average print shop, anywhere from two to seven weeks' supply is carried in stock.
The Jobber unquestionably occupies a permanent and important position as the distributor of paper, not only because he affords a centralization of information and stocks, which is more economical than if every manufacturer had to maintain separate channels of distribution, but also because he relieves the Printer of the necessity of tieing up a large amount of money in paper. In earlier times, when there were but few kinds and a small consumption of paper, the situation was very different, and there was no need for the middle man.
Today the elimination of the merchant would mean the elimination of the majority of Printers, for it is inconceivable that the printing industry, in which according to Government Statistics, 86% of the establishments do a yearly business of less than $20,000, and 52% less than $5000, could finance itself without the aid of well organized Jobbing Houses.
Certainly the Printers are in the total, large and important from the merchants' viewpoint, but there exists a strong inter-dependence, which both should realize and recognize, as a most natural basis for cooperation, in the expansion and increase of the demand for printing.
Having considered the channels of trade we come to the methods of merchandising.
Mills that sell their products direct to consumers necessarily maintain a sales organization at their main offices, and as circumstances may require local representatives, in the larger markets, such as New York and Chicago, these men keep in personal touch with the customers, furnishing samples, making contracts, following up shipments and adjusting claims. Knowing the possible customers, this direct method suffices without any accessory effort, such as advertising.
Their business is as a rule, strictly a wholesale proposition. It happens in some instances that the same mills which sell some classes of paper direct, manufacture other grades for distribution through the dealer. While other mills rely entirely upon the merchant for their distribution.
Formerly the paper resold by the merchant, was with few exceptions handled under the private brand of the merchant. A grade of paper so handled would be called by as many different names as there were merchants selling it.
Frequently the manufacturer conceded the exclusive sale in given territory to one merchant, but in other cases the same paper has been handled by two or more merchants in the same City, sold under different names, but not invariably at the same price. Such a condition is not unusual, even today, but it obviously works to perpetuate the "Caveat emptor" theory, which standard advertised brands in all branches of merchandising is steadily eliminating.
Paper sold in this way is usually advertised at the entire expense of the jobber. If the grade is a stock article it is listed in the price book and shown in the sample set.
The competition between merchants has extended to their methods of sampling, and no important dealer today is without a well arranged Catalog and price list, giving complete data as to the standard sizes, weights, and grades, etc., and also substantial sample cabinets, which are distributed to paper buyers.
A comparatively recent development in the paper business, is the exploitation of "mill brands." That is to say, a mill manufactures and stocks in the most merchantable sizes, a grade of paper. This is marked with the mill brand. Agencies are established as far as possible with a desirable chain of paper merchants, usually restricted to one for each City. The mill prepares sample books at its own expense, which are either mailed direct or divided among the appointed agents for distribution. The agent lists the paper in his price lists, and gives his salesmen the necessary information about it.
This represents the simplest form of merchandising mill brands. It has been elaborated however, until most mills with connections of this sort, do more or less advertising to assist in creating a demand for their brands. They can afford to do this on a scale which would not be warrantable for the individual dealer with a more restricted market. Hence it has come about that many handsome specimen books, far more elaborate than any the merchants had usually issued, have been put out by the mills.
It is generally admitted that the influence on printing has been good, and an appreciation and demand for better printing, especially on the part of advertisers, has resulted.
A few mills have carried their campaigns beyond the field of direct advertising, which includes the mailing of samples and printed circulars, and the dissemination of printed samples in trade journals, such as The Printing Art Suggestion Book, The Pacific Printer & Publisher, or the direct mailing of folders or specimen books.
They also take advertising space in the Printing Art, Inland Printer, The American Printer and other printing trade journals. Outside of these has come the use of such class magazines as System, Printers' Ink and Advertising & Selling, and some have even extended their appropriations to include national magazines, notably The Saturday Evening Post. In one campaign a Chicago newspaper was among the media selected; but the use of newspapers for paper publicity is pracally nil.
General Magazine advertising of paper has been principally devoted to writing paper. This is natural, since of all paper products this commodity has the largest number of buyers, and the matter of taste is not so over-shadowed by technical considerations, as in the case of printing papers.
The specifications for general printing, involve more knowledge of printing processes than most people possess, hence the final decision rests in a majority of cases on the printer's judgment, so that logically the printer is the most necessary individual to convert.
Although there has been a marked increase of late in the exploitation of mill brands, there is no indication of the disappearance of jobbers' brands. A consumer today may fill nearly every requirement at will from either class, and this condition will probably continue indefinitely, although the tide seems to be setting for the moment toward the mill brands.
This condition is not, confined to the paper trade, and is probably due largely to the aggressive advertising of manufacturers. Such promotion work is still in its infancy, and a continuation of a growing demand for mill brands may safely be predicted for sometime to come.
There are two principal trade associations in the paper business, one composed of manufacturers and the other of jobbers.
The American Paper & Pulp Association, composed entirely of manufacturers was organized in 1877. Its purposes were described by its President at the Annual Meeting of 1914, as "entirely educational." It collects and distributes statistics of production, and consumption, among its members, aims to develop cost systems, agrees upon trades customs, and seeks to bring about uniformity in these respects. Technical education has been the subject of much study by the Association, and it is hoped will lead to the establishment of trade schools.
A labor bureau is maintained, which helps manufacturers to find help, and laborers to secure work.
The Association is separated into divisions; News, Wrap-ping, Boards, Tissue, and Writing. A Book division was formerly included, but the manufacturers of book paper recently formed a separate organization solely concerned with their special branch of the industry.
The Association has also played a prominent part in representing the industry in tariff matters. The membership represented in 1915—246 mills.
The National Paper Trade Association was organized in 1903. Membership consists of jobbers and includes the following subsidiary associations; Baltimore & Southern Association, Central States Paper Dealers' Association, Empire State Association, New England Paper Jobbers' Association, Northwestern Paper Dealers' Association, Pacific Coast Paper Association, Paper Association of Philadelphia, Paper Association of New York City, Western Paper Dealers' Association. The total membership in 1916 was 236.
The work of the Association has included credit organization for the exchange of information as to credits; the study and installation of cost systems; consideration of the relations between jobbers and manufacturers.
There are a number of standing committees which have special details assigned to them. They make regular reports at the annual meeting.
The existence of both associations is of distinct benefit to their members, and to the trade in general. The establishment of standard trade customs throughout the country facilitates the conduct of business upon an equitable basis. Copies of these rules are to be found in the price list of most paper jobbers, and as they are subject to occasional changes it seems inadvisable to reprint them here.
A third organization known as the Paper Makers Advertising Club, consisting of 15 Mills, was organized in 1914. Its purpose is to develop the growth of printing by disseminating information about the purpose and uses and planning of "direct-by-mail" advertising. Its membership is open to any paper mill which sells its product in whole or in part under its own brands.