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LORNE Mf-GIIIBUN UANAUEK, THE LAf.'RENTIDE PULP CO., LTD., Ghand MkHK, P.Q., Canada. PAPER UlVtN AT tANADIAN FORBSTHV ASSOCIATIOX CONVEMTION, MaiiihTTH, 1902, AT OTTAWA, ONT. MONTREAL GAZETTE PKINTING COMPA.VY, 1902. h2 TIIK PULP liNDUSTRY IN CANADA Mr. C'lmirinnn and GDiitloiiicn : — Vim will notice l>y rcfrn-inj; i.. v..iir iiiMgniiiiriu' that tlii' titl^ of the (liiiMT whicli I iiiii til jjivf V..U i- " Tli.. I'l '<, In- iliistrv in C'liniula." Tlic iiulp inilu.ttry in Canuilii iinln'iiro SI) nilli'li niattiT, that wen I tn HttiMu|it Id cnvcr it in all its (li'tails, I wiiiuil ('iiii.snnR' .sci imirli nf yiiur valnahli' tirni' an. I atti'iilion, that I frcl snri' vim wimld iii'vcr want In ln'ar llii' wnrd ' Pulp"' nicntidiu'il a;rain. When ycmr wnrth.v Assistant Sicntarv first rii|iH-tc4 me ti) give a paper before this Cnnvuntlnn, he iniiti mcd the faet that .\Ir. J. ('. Lungeller. Snperlntemlent <f'nilin/i for the i^aurentide Pulp Company, and asked nie for : paper dealing with the system and organization of the op.-'.-ation of oiir .iinber limit-, as well as the system pnrsned fur the preser -a- tion of our forests. In reply to this reipiest I stated that I thought a paper on the subjeets he mentioned would be su- perfluous at this present time, owing to thi' faet that euor- nions quantities of pulp wood were allowed to leave C'aiiada with a very small - .\port charge, and that in the proeuriiig of |iiil|i u'.inil fnr cxiHirr m.iri' riitlilra* ciillinn, ilaiiiaKc to fooNts uihl |iriTijitinii „f till' ,nmv t....k plm-^ animullv tliuii l\w riirf.tr.v .V»»i«'iiiti m <'..ii|.| 1„,|h. t.i iiffxct In- the prricr- viitinii ,,(• limit iitn.lli.l mill imin .1 liy tli<> ('poun nr Cii- iimliBii iimiiuf.i.-tiiPfM. At tlii' aanu' tliiic \ Miontiniii'.l the fiift tn -iiiir Ap.i| into pulp, t'heiiiieal or sulphite piiTp is a very iiiueli more intricate process of manufacture, ami consists in treatinp the wooil by cheiiiical process, ami thus scpur: ting the fibres of the wood by the extraction of resi- nous material. In the manufacture of paper 70;^ to7r);< if the pulp used is iiicchanice', ai the balance, 25;^ to iiOf, is chemical. Pa|X'r imidc altoguhcr from mechanical pulp would not be .nntisfactory for newspaper or any of the liner grades, as the fibres of the pulp are too short to give tlio paper sufficient strength, so that it is necessary to use a ]iroportion of sulphite pulp, which by its process of nianu- facturc retains t!;c long fibres of the wood, and thus gives the strength to the pnjier. Th.' first consideration, therefore, to the maniifaeturep of pulp in his raw material and power. An enormous qu.intity of water power, on account of its cheapness, is necessary f .'r the manufacture of mechanical pulp, and therefore it U iKsual for a pulp manufacturer to locate his mill at a point where there is good water [lOwer and where hi^ source of Mijildy of pulp wo^d h close at hand. A pulp nianu- f«.'liir.v, haviiiK hi. (..it,.r |K,H-,.r ji. n.l nii.l hi. .,.iir>r of •iipplv ..f pulp w.,.mI f„r hi. raw iiuirirlnl |,„.|ii,.,l, thi'ii Hkii- re* <>n the .|iiniitlt; -,{ raw iiiiiKThil hr ivill rcpiir.^ f,.r ii wiwni, , „|«.nili.iiis. K..I- thi' luaniifu.tiirc vt u In,, .•( uu- v\,m,„-u\ pulp it t«k.., „ triHi. ..v.T „ ...r.! „f ,pni.... «-....|, Mii.l t.,r the u.miiitWturc. nf „ t„„ „f ,.|,,.|„i,.„l pulp ii i„|<,„ "''"""' •" 'I- "f «1'""'" I'lilp »• i. If, th.T..' , .. t|,„ piilli niH.iMfn, Hirer hiin „ ,.,,p,i,.iiv „f „, „„„„. ,„ ,, , ,,,„.|, kiiHl if pulp |KT (hiv, it i.. v,.rv ca.v for lii I'l t ,-,. ih,. pxmt ,„„„unl of pulp woo,| |„. will rnpiirr for ih,. op,.r,ili ,ii f hw iiiilU for 11 vciir. If he »h>.ul.l hiiv,. |>i. own IJM.it., Hrnt »lcp ill prol•llrill^ hin pulp «„o,l i, to know .s.ic-tlv wlint hix liiiiilH raiiiHi.t of ninl the mil xiiit of nviiihil,!,' spriii' lo;;.. thnt iirc coiitiiinr.l in s, A» the (i.ivinii.iint n- giihitc the sizi. of n tree to li|. ,.|it, hi' ninsi thcrcfon- onl.v %1MV on .•nttin^- trees in ii.eor.hii with fhene r-nhitioni. '" ''"' '•' '' • • I."nrenti,l(. I'nip Coinpunv who o«n niieli n hir^'.. urea ir iiiher limits, we hue foniel it mon. pr.u- tiealile t.i ilivido tliew limit, im,, three ,li,triet.. Ii.niii^- a snperinteiiilent over eaeli .li.triet. We hnvi^ al... fonnJ it iimeh more praetieahli. for eaf ', i,f these MipiTititen liiit., Iv nivint hi. whole time an.' 'c-iition to hi. ili.tric^t, t,! heeome tlii.ronj{hly iie.piainted -li all riveis. .tream. 'ami lakes III same, anil where the he.f points are to proenre loj.. to ailvimtage, rather than have one or two men for the en- tire limits, whieh l>v their I.M-p. are.i woiiM onlv per nit them, to »nv the least, to have a snp.Tfieial kn .wh.,l^r,. „f it nil. Having, then, iletermineil the ipnintitv of pnlj. wooil to get out in a season, ami having vonr limit, iliviile.l into ili,- triets, with a man th.ironghlv familiar with tlie eoii.litiom of I .eh ilisti-iet, yon iletermine th;. ipiuntitv von will get from eaeh district. As a pulp mannfaetnrer want. t.. en- snrc a uniform cost of his raw material for vears, it is there- fore hcil policy for him to attempt to pi<.k ont the easiest 8|K,ts to get ))Hlp wood one year, and leave the har.ler and more e-^iMnsive places for a followiii!.' venr. Kniler tin! circumstances it is necessary for hi u t .' aver.ig;. thi. u]). taking sdiijo policy of most jiiilp iiiainifiic'liirirs to piMiMire tlifir jralp wood, or, at least, II Inryc iNirticpii of it, liy k'ttiiig; contracN to joblicrs or emi- trtictors. This to my luiiid is a vcrv clieaj* way tct procure pii]|i wood, ijiit from ni,v I'xpcricneo the results of this method are but temporHry. It has lieeu the practice iu the jiast to iiliot a ciTtaiu territory to a contractor and fiive lii.ii a c'Utr.u't for a certain ninnber of loijs. As far as I can learn, tlie territory allotted to a jobber in the past has been much too large for the ipiantity of logs that his contract calb- for. As a natural conseipu'uee this jobber, wlio has only one aim, viz. : — to make money out of his contract, picks out tlu' easiest spots iu lii< territory, and no matter whethi'r there are si.me large tine spriu'e logs iu hi< terri- tory that should be cut, but which would cost him a trittc more to get out, he will leave these standing. The I blow- ing year, therefore, when a contract is let in the same terri- tory a higher ju'iee is dcnunuled owing to the timber being scattered and only the hard places left to lumber iu, and it usually eiuls up with the result that no contractor will go into this KM-ritory except at an excu'bitant price, ami it there- fore falls to the lot of the pulp uuuiufacturer to establish his own camps ami get out the remaining availaljje logs at ii very high cost. 'I'his point I wish to emphasize more par- ticularly, and that is, when a contract is let for a certain quantity of logs the area of territory should be limited, and so thoroughly explored that it can be cleared systematically of the logs that should be cut. As contractors for logs are more or less men of moderate means, and who, if a bad season sets in and a possible loss iu fnltilling their contract staves them in the face, either fall far short of their con- trait or al>audon it, it is therefore necessary for a pulp iiumufacturer, in order to be safe regarding his raw mate- rial, to establish some of his own eampa which will get the log,.i out no matter what the set-backs are. It has been aui]dy ilemoustrated that a camp, or camps, operatetl by a eomiiany camiot get logs out as cheaply as a jobber or con- tractiir, at least in the I'niviiu'c nt Quclx'c where the ti:nlier is seiittereil iniii the eiuiitrv verv niciinit iiii..u-, lint thi' result obtained by openiting eani|i,s .lireet are in the hiiic run very iniii'li re benetieial than fnini efintracte that these jobbers ih> not waste the timber nor break the C.ivernnient regulations. Ife also sees that all lo;;s are stamped and propi-rly eulied. and when he finds anythinfr out of the way, hi' reports it direct to the nian:ifi;ement of the C.iiipauy. The inspector .)f the camps acts in a similar capacity, but reports on the f;eneral < liitions of the camps in addition to the above. Another bad feature of frivinf; contracts to jobbers for logs is, that, it is usual to '/wf a contnict for a certain ipuintity of lops to be of a uniform length. Suppose, for example, that a contract has been let fm- ."lO.IKid spruce lofrs i:i feet in h'Uf;th. T inches at the snndl end ami up. .\ contractor, if he cuts down a tree, will only rLiake frou] this tree logs of i;i feet in lenfith. and I have found fro ii persomd exper- ience that a larfte proportion of these trees would permit of another loj; beine cut fneu S to 10 feet in length, and still not b;- under 7 inches in diameter at the small end. This part of the tree is just as pood for nuikiiip p\dp as anything else, but, as you know, the cost of bandlinp and (Irivinp a - iinll hip is almost as pr.'at as a lirpe lop and if a manufacturer only c insiders his imme.li it-.' circum- stances, and his immediate cost of raw mat'Tial, he will not bother with these ends of a tree, but, if h:' considers the fact that his raw material is worth money, and that by leavinp these ends of the trees in the woods he is simjily throwinp away a part of his assets, and in addition to this is enhaneinp the danper of forest tires, he will, even at a slight extra cost, have them taken t) his mills with the 8 larger loga. In the case of a company operating its own camps this should be done in any case. In the case of the logs being cut for export to the United States, these ends of trees are not considered of any value. The ne.^t step in the cost of raw material is the handling and driving of these logs to the pulp mills, and this is a pomt I wish to emphasize very particularly. The cost of pulp is determined largely by the quantity produced, as the fi.xed charges of a pulp manufacturing concern are al- most the same whether a larger or smaller quantity of pulp 19 manufactured. It, therefore, is apparent that a large piJp mill has an advantage over a smaller one, and this refers more particularly to the cost of handling and driving the logs to the mill. As you are all no doubt aware, it costs very little more to drive a larger quantity of logs than a smaller quantity, and therefore if a pulp manu- facturer has a large quantity of loga to handle, it pays him to make permanent improvembnts on his streams, lakes and rivers, so as to lessen the cost of driving operations as well as ensure the safety of the logs. The cost of manufacturing pulp is determined largely by the cost of the raw material, viz. : pulp wood, and it is na- tural therefore for a pulp manufacturer to endeavor to olv tain his supply of raw material at the very lowest possible coat. In doing this, however, it seems to me that in the past, at least, it has been done at the expense of his prime asset, viz. : his pulp wood limits, and he will find that each year his cost mil grow greater ; whereas by systematically getting a proportion of expensive wood each year mth the chea]) wood, and eliminating all aources of waatefulness in the cutting of logs, and by making improvements so as to lessen the expense of driving operations, he will in the long run make more money and b^ better off than the manu- facturer who simply looks one year ahead. The raw material, or pulp wood loga, having arrived at the booms in front of the mills, their conversion into pulp is an entirely different business from the loggin:. opera- tions. I do not intend to go into the details of manufac- 1 tiiring pulp wood into pulp, except to say that so far ns the pulp wood is concerned, it should be as carofnllv watched as coal or any other article that costs moncv. 'l fear however, that a great deal of waste is incurrcil in preparing the pulp wood for manufacturing. In the case of the Laurentide Pnlp Company, we allow nothing to go to waste, and even if a block of wood should come along with a certain amount of rot in it, instead, as is the usual cus- tom, of using it for fire wood, the rot or im|)erfcction8 in the wood are extracted and the balance used for manufac- turing pulp. In Canada there are more mills manufactur- ing mechanical pulp than anything else, and as this is a comparatively easy matter and requiring less capital, it is bouud to grow considerably. The uianufacture of chem- ical p\ilp is very much more intricate, entailing more ex- pert labor, and therefore has not grown to the extent of mechanical pulp. As stated previously, the manufacture of pulp is only a step in the manufacture of paper, and the object of mv paper is more for the purpose of showing what Canada is losing by not manufacturing this pnlp into the finished product of paper than anything else. As an example of what this means to Canada, we will commence with a cord of wood. We will say, for convenience sake, that a cord of wood is worth $3.50. When this is exported out of the country all the benefit Canada derives from it is the amount of labor expended in cutting this cord of wood, and the stumpage, if any, which is paid the Govern- ment. Hy converting this cord of wood into mechanical or ground wood pulp, it means an extra expenditure in Can- ada of at least $7.00 per cord for both labor and material, and all of which can be obtained and produced by Canada. By converting a cord of wood into chemical or sulphite pulp it means that an extra expenditure of at least $1.5.00 per cord is made for both material and labor. All of this, with the exception of the sul])hur, which has to be imported fro}n Sicily, can be produced in Canada. In the conversi.in of these pulps into paper, it means that a cor ' of wood, origin- 10 ally costing *:J..-,|), i., i,i,miifacfm-(..l inf.. „ finish..,! nr..,ln..t worth about »40.00 por .■„r,l, all of which i. f„r .'.afrial and labor, tho most of which c.uld bo protlncml nn.l niann- factiirod in Cana.h. if tlip business were sufficiently Inrge At the present rinic there are over one million cor.ls of pulp wood exportc.1 into the Unite.l States annually, worth we will say, f.ir conyenh-nce salie, three an.l a half to Tour milium dollars. If this f|nantity of one million eonls of pulp w..od were converted into pnlp, nn.l then into paper in ( ana.la, if w.,„l,l mean that an esiu.n.lituro for lab.,r and material in Cann.la wonl.l tak,. jilacc, .,f oyer thirty millions of dollars aiinually. For the manufacture of this large quantity of pulp and paper it woul.l require howev.T several times this amount f.u- pcrman..nt investments i-i tho limits water power, mills and machinery, and this in itspll would mean a huge thina for Canada. It therefore seems to me that the principal questi.).. be- fore tho nonunion an.l Proviiu^ial Governments is, first how to accomplish the manufacture of this large quantity of paper in Cana.la ; and, sccon.llv, how to dispose of it after it is manufactured. At the present time the Fnited States exact .a duty of $l.(iT per t.m for mechanical, or ground wood pnlp, and $3.33 p..r ton for chemical, or sul- phite pulp, ami have a duty on newspaper that is prohibi- tive. The effect of this poli,.y i, apparent on the surface as it provides the manufacturers in the Tnitcil States with their raw material in a partly manufactured state at a low cost, an.l prohibits the competiti.m of foreign paper In addniou to this, Canada seems to be the ally and friend of tlie L. S. manufacturers, as it all.nvs then, to come into ( anada ami procure their raw material, in the shape of pulp wood, with little, if any, charge, an.l the U S Gov- ernment allow it to enter i'lti the Tnitcd States free of any duty. The effect of this p.li..y om Canadian manufactur- ers is, to say the 1 .st, very unf.iir. Th,. Canadian manu- facturer of both kin.ls of pul|. lias t-i compete with the Am- erican manufacturer of both kin.ls of pulp at a disadvantage by the amount of .jutv imposed by the United States Gov- erniuent on tlii> |iul|i. This coiupetioii iit cortaiii times liii^t hi't'ii ruinous tn the Canailiiin luanufncturer. As nn exam- ple, lUiring the summer of IflOl, tlip paper market was very (lull, and, as a consecpience, the amoutjt of pulp consumeil bv pni)er mauufaclurcrs iliminisliecl consiiierably. The over-proiluction of pul|)a in Canailii ami the Uniteil States \v88 very large, and the priees dropped until the.v reaelied a point where a loss was incurred. Tin- over-])rodnetion was caused absolnfel;/ In- the Anu-rican pulp mills that pro- cured their 9U))ply of pulp wood from Cauaila, and. as a eonseipienco, owinp to the protective duty the I'nited States ]udp manufacturers had. the Caiuidinu pulp manu- facturers were ohlijied to curtail their manufactnrinj; opera- tions until such time as prices reasserted themselves. This state of affairs would not have happened had not Can- ada allowed her pulp wood to po out of the country for a mere soup;. As I mentioned hofore. the over-jirodnction of pnlp was caused bv the pulp manufacturers in the T'nited htates who procured their supply of wooii in Canada. If these mills had been out of the market , it would not have been necessary for Canadian manufacturers to have cur- tailed their operations last smumer. Tt is true people say- Canada has the world for its markets in pul|) and paper, but I am afraid too many people hazard this opinion with- out givinj; it the consiileration it deiminds. In England, where onr principal market at present for both pulp and paper lies, we have the serious competition of Xorway and Sweden, and it is no mean coiniictition. Whilst I ort from the I'nitcd States the greater liortion of his machinery and the clothing of his paper m«- chmes,--c„n8,stiug of felts an.l wires,-whi,h amount to many thousand dollars a year ; he has to use coal that is protected by the Canadian Ciovemment to the extent of fiOc per on ; he has to import his china clay from Kngland, and the best grindstones also from the same place : he has to bring his sulidiur from Sicily, an,l his cho,nicals from various coiiutr.cs of the world ; he has to employ his ex- pert labor from the fnited States, and which is controlled by a union which curtails hi. production, and which union while enforcmg this rigi,lly „n Oana,li,m manufacturer, makes exceptums in the fnited States. We arc also handi- capijcl ,p our export trade during the winter months bv the long haul to our winter pi>rts. To sum up the whole matter, ,, appears vcrv much as if the Canadian Government did not want t , increase the manufacture of pulp an.l paper in Canada, but rather would prefer to supply American manufacturers with their raw nmterial, and be satisried with a small ...v-enue derived from the same. In conversation with a cnpitalist in Xew York bvo or three weeks ago, and who is largely interested in Canadian fmd.er lunits, I used the argument that if Can- ada prohibited the exportation of pulp wood until such time as the Amencan Ciovemment abolished or diminished its duty on pulp and paper, the American manufacturers would in a very short while remove their mills to Canada. This gentleman, after arguinc; this point for a long time said — _^ I believe that wh,t you say is correct, but I cannot understand why you, representing a large mauufacturing 13 '•concern should wish to make this fact iiromincnt, as it •' would only invite comiiftition lor the Conipuny you re- " present" ily answer to this was, that we would prefer all the competition that wouhl take place, and having the United States market open to u», rather than have less com- petition and our present markets. In conversation with another United States manufacturer within the last few days, he made the same statement, and from my own per- aonal knowledge, I feel quite certain that it would not be long before a certain proportion of the United States manu- facturers would be obliged to remove their mills to Canada if they wished to comiH'tc with Canadian manufacturers when the United States market was open to them. It is true that the United States is not wholly dependent upon Canada for its supply of Pulp Wood, as is evident from Ex-Governor Powers' remarks at the Paper Trade Banquet in New York two or three weeks ago. Ex-Uo- ■ mor Powers made the statement that in ilaine alone they had 12,000 square miles of territory, containing five hun- dred nullion feet of spruce, and which, in his judgment, if properly handled, would be an ine-:haustible supply for American paper manufacturers. I do not agree with Ex- Governor Powers in this statement, as five hundred million feet of spruce is a mere bagatelle to United States manu- facturers of pulp and paper. In addition to this, the Canadian (iovernment sa- it, a short while ago, to reduce the duty on newspaper ci cuag into Canada. The Canadian market is so small that this only interferes with the smaller mills who are dependent on the Canadian trade for their existence, but it certainly seems unfair that the Canadian Government should do this, as it will enable the United States paper mills, when thoir production is greater than the demand, to dump their sur- plus in Canada. As long as the United States have a pro- hibitive duty on paper, Canada should do the same, but an abolishment of both would be the best. I ask you also, why is it that American capitalists have to- day invested in Canadian timber limits and Canadian water u 1H.VV.T- witliuut ili.v,.l„i,i„g the i,„H(.r, uiicl cutting the liiims < W 1,^- i.s it, I .,„v, l„,t u, prc-jmrc. f..r the ti,m. „Uoii ( unuda will i^nmu to hur htiiBis uud tlicj will by ubiigcl to iiiuniifaeture in Caiiadu, or othcrHTse get out of busiiitaa. I'luou iiion nro not shortaightcd, and althoiigli they dM pro- c'uro a promisu from the (Quebec Uoverument that uo extra Btuiiipago over and above J5e. per cord would be eliarged hy them for the next ten years, they still feel that it is neee»»ary t,. look still further ahead than this. I ask vo.i also, why it is that the (Ju,.bee (Jovi'rnnjent, a shor, while ag , rais.'il the stunipiige on pnlp wood cut from Crown timber 'i- mits for exjicrt into the United States to $ 1.90 per cord, th s giving a i)referenco to the Canadian manufacturer of $1.50 per eord— why is it that they re Canadian m.inufacturcs of pulp and paper, and which would necessitate their purchasing further timber Hunts frojii thi Quebec Government, and in the development of these, the stumpage to the Quebec Cfovemment would increase and bo a regular source of revenue, rather than to continue its pre- sent i)oIicy ? The Laurentide Pulp Company to-day manufacture about 100 tons of paper and cardboard per' day. — li.'. tons of Ground wood pulp per day,— VO tons of Sulphite pulp per day, and cut ten or fifteen million feet of pine lumber each year. To do this, it has reipiired an investment of nearly four ndllions of dollars,— the annual payment in wages of about one iiiillion dollars, and as a result of this, the town of Grand Jlere, wholly and absolutely dependent upon the Laurentide I'ulp Company, has simmg into existence, and to-day has a population close on to 5,000. In addition to this, the villages adjacent to Grand Jtere have all grown, ami the rural population in the vicinity of Grand Mi'.re is IS tliriving and doing well. Cuiiu.lu oould hiivu twu.ity ,ufli mills a» tl"wc in u »li..it timu, if shu «,.iild i-ouiu to her «t.i.»es and adoi.t tl.o i-ropt-r imVu-y. Would it nol bu bettiT for C'uniidmns to liuvc a iH.Tiiiaiieiit advmiceiiient of iIiIm kind, oven tliongi, it did take a few years to obtain ( i'o»»ibly the iinestiou might arise as to the Canadian farmers who dispose of their pulp wood at the present time. ]hc80 fanners would have a better nuirket, with just us goo taking advantage of this. Xothing in this world is gained without a struggle, and a struggle cannot take place nidess the [lartics are determined. Cim- ada should be determined to get thi' most out of her tindier assets, and should not fear to take a decided step in tins con- nection. The trouble is that Cnnadian pidilicians do not study the question sufficiently, and arc too easily swayed by outside influence. I do not say it w..uld bo a wise tUng for Canada to always have an export duty on her pulp wrod but I do say that there sliouhl be a sufficiently high cvport 16 .liit.v on pulp w.HHl ,o a. to ,„«k<, it practk-ally proliibitivo untiUueh time a. the I'nito,! State, Oovrmn.ent open their market for the fini.ho,! product to Canadian manufacturer.. lhi« » only f«„ and just, and I cannot ,ce why any hooi- tat.on shoul.l take place in adopting „. Cana.h, ha. an opportunity now «hi,.l, sl,„„l,l be taken advantage of If Mhe .loe» not do ,o ,|„i,.kly, i, .i,,,,,],. ,„p„„, „,„, ^,,p j^ ^^^ only lo.,„K an opportunity, but is lo>,in„ time that cannot l)e recalled. 1 trust, Mr. Chairman and (.entlemen, that I have not in- truded on your time too long, and that I have not deviated fron> the subject of my paper too much. Your A.«.ciation would be inany times more valuable to Canada's interest, than If ■. If the development of the forests wa. .lone by ( nnaduin .unn-.ifacturcrs, and the material taken from vour forests uonufnctured into the tinislir 1 product in Canada rnfher than ns it is at present. I thank you one and all for your very kind itteution. t'^\