Newspaper is cheap disposable paper with loads of acids, formaldahyde, etc., and no good for preservation of antiques. the chemicals which yellow and embrittle the paper might affect an antique.
I would recommend stuffing the knapsack, if done, with cotton fabric (cheap), or procure museum style buffered paper tissue.
Gaylord/buffered tissue paper.
These original knapsacks are frequently pretty stiff and brittle due to the composition of the waterproofing. The leather parts might be treated with a leather treatment to prevent further deterioration.
Gaylord/museum leather care.
University: leather restorer
Most of the above are principally marketed for thin leather (the companies can confirm). Some folks prefer to use Pecards' Leather dressing for similar purposes.
Pecard's antique leather dressing.
If you put anything on the leather parts, try not to get it on the thread at the sewing.