Vol. XLVII 



CHICAGO, JUNE 25, 1919 



No. 5**r. 



General Market Conditions 



OUTSIDE OF CHICAGO there is an e.xteiisive and popular 

 amusement park which boasts a variety of amusement features, 

 including numerous roller coasters and other nerve-tingling con- 

 trivances. Each year sees an effort to beat the best speed made 

 by these coasters in previous years, and the park's announcement 

 for the 1919 season says, "You don't know what speed is until 

 you have ridden the Jack Eabblt." It would take the speed of 

 the "Jack Babbit" multiplied by ten to keep up with the present 

 trend of hardwood markets which are being forced by urgent 

 demand to figures that no one considered even a possibility a few 

 months ago. As a matter of fact, the upward rush of hardwood 

 values is really not a healthy matter at all, but the situation 

 seems to have gone just as far beyond the control of lumbermen 

 as it is when prices are going just as rapidly in the other direction. 



There is nothing at all imaginary or difficult of understanding 

 in the present price level. The whole thing is a straight-out expo- 

 sition of the effect of supply and demand. Fa.ctory buyers had 

 not for many months back taken on any quantities of lumber and 

 in the early months of uncertainty after the war no one was dis- 

 posed to attempt any stocking up, even though it might have been 

 possible. The great increase in demand for all kinds of goods has 

 caused a remarkable stimulus in many woodworking lines, such as 

 furniture, automobiles, talking machines, pianos, etc., and the result 

 is that these woodworkers found themselves confronted with an 

 excessive demand for their goods without their having made ade- 

 quate provisions for manufacturing. At first, raw material pur- 

 chases were made only when absolutely necessary, the buying trade 

 having made one common error in judging that prices would come 

 down materially. Thus a lot of necessary purchasing was dammed 

 up awaiting this drop, and this on top of the naturally stimulated 

 buying that must follow excessive sales of wood products has been 

 the main reason for the present situation in that it came about 

 during the same time that the production and stock on hand of 

 hardwood lumber were rapidly striking new low levels. 



Today buyers frankly abandon any idea of buying lumber in 

 the near future for less than they are now paying. In fact, the 

 general desire is to cover up before prices get much higher. It is 

 true that in the last two or three weeks there has been a slight 

 letting up on shipments, but this is in no way reflected upon the 

 price situation, as generally speaking, orders are in excess of sup- 

 plies, and with 50 to 60 per cent production last winter and con- 

 tinued radical curtailment, there is no hope of supply catching up. 



Supporting that contention are numerous facts which are too 



plain to be misinterpreted. Careful analysis of European conditions 

 shows beyond dispute not only that the demand for lumber of all 

 kinds is immediate and extensive, but that other sources of supply 

 than America are practically out of the running and thus American 

 forests must supply the major portion. The only reason this great 

 exodus of American lumber is not already started is that shipping 

 space has been unavailable and freight rates prohibitive. The news 

 as it comes now shows considerable improvement in shipping room 

 and the tendency to buy regardless of rates. This may be expected 

 to continue and thus the quantity of American lumber taken out 

 of domestic markets for foreign use will be expanded accordingly. 

 Hardwood men are doing everything humanly possible to insure 

 their ability to manufacture a maximum amount of lumber as soon 

 as increased output is possible. They are still just as badly ham- 

 pered by weather conditions in the South and by poor labor con- 

 ditions in the North as during the winter months and the possibility 

 of increased production is not within the control of anyone. But 

 even with most favorable developments in this direction, it is an 

 apparent fact that this increased quantity of production will for 

 the first six or eight months merely serve to make up time already 

 lost and in making good on the stocks that are not now deliverable. 

 Thus a more normal output will not have any immediate tendency 

 to stabilize present market levels. Furthermore, the export demand 

 and the facilities for taking advantage of this demand will be so 

 greatly increased as to make the foreign shipments of American 

 hardwoods two or three times as large as under normal conditions 

 prior to the war. When these things are considered, bearing in 

 mind also that many wood-using industries of the United States 

 are now operating to capacity; that the building industry is rapidly 

 getting on its feet; that the whole trend of industrial and welfare 

 development is in the direction that will bring to the small wage- 

 earner a greater buying power, so far as luxuries are concerned, 

 and will enable him to get for himself and his family many things 

 formerly considered unattainable; there can be very little ground 

 for argument that the future of the industry is not good. As a 

 matter of fact, very few lumbermen are pleased with the present 

 crazy actions of hardwood markets. They would rather see a good 

 price level established on a basis that will make a fair profit and 

 know that that valuation is going to maintain, than to view the 

 situation as it now is. It is impossible to figure from day to day 

 what the value of any hardwood stock might be and at the same 

 time the lumbermen are entirely helpless in the matter, as quota- 

 tions which in many cases are made merely to scare away orders 

 in excess of what should be taken, are snapped up by wire. Every 

 •item but the low grades is feeling this impetus. The end of high 



