November 10, 1916 



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•^ Expect Results From Memphis Meeting -Jj^ 



While it will probably be some time before anything tangible will 

 result from the hearing held in Memphis October 30 before Federal 

 Trade Commissioner Parry and other representatives of the United 

 States government, the feeling prevails among those who attended 

 and who participated on behalf of the hardwood lumber industry 

 that the foundation was laid during one brief day for a far better 

 order of things so far as hardwood lumber and products made there- 

 from are concerned. There were five officials from Washington who 

 participated in the investigation of practically every phase of the 

 hardwood lumber business whUe there were about forty lumbermen, 

 representing virtually every organization of importance identified 

 with the hardwood trade, who either read papers, made brief talks 

 or answered the questions propounded by the gentlemen vested with 

 authority to afford some relief from conditions regarded as unsound 

 and as wholly unjustifiable. Altogether it was a great day and lum- 

 bermen are looking forward to the solution of many of the prob- 

 lems presented with great pleasure and with much confidence, an 

 attitude on their part growing directly out of the intense interest 

 displayed by the government representatives in the questions dis- 

 cussed. The scope was a very broad one and the amount of informa- 

 tion and data supplied the commissioners will keep them busy for a 

 long time in digesting it and putting themselves in position to sug- 

 gest something lielpful. 



Commissioner Parry opened the hearing promptly at the Hotel 

 Gayoso at 10 a. m. and it continued until about 4 p. m., when ad- 

 journment was taken in order that he and his associates might take 

 the train for New Orleans. The only break came during the luncheon 

 hour and in order to save time luncheon was served in the' assembly 

 room of the Hotel Gayoso by the Lumbermen 's Club of Memphis, the 

 Southern Hardwood Traffic Association and the Gum Lumber Manu- 

 facturers' Association. 



James E. Stark, representing the National Hardwood Lumber As- 

 sociation, very frankly told the commissioners that lack of interpre- 

 tation of the Sherman law was one of the greatest stumbling blocks 

 in the' way of organizing selling agencies and taking steps through 

 united efforts with a view to reducing expenses in every direction_^ 

 He said that lumbermen were law abiding citizens and did not wish 

 to run afoul of the federal authorities, and expressed the belief 

 that if tliere could be free discussion of cost of manufacture and 

 methods of marketing, the situation from the standpoint of lumber 

 interests would be incomparably better than under jircsent conditions 

 of uncertainty as to the attitude of the Department of Justice. 



Mr. Stark also dealt with the shortage of cars but said this had 

 comparatively little to do with prices except insofar as it resulted 

 in an accumulation of stocks. He said that prices at present were 

 about normal and that no very great change was anticipated unless 

 the car shortage extended over a very considerable period. He made 

 it quite clear, however, that prices on hardwood lumber are too low 

 to offer a fair return on the investment and that they are failing to 

 keep pace with the ever increasing cost of manufacture and stump- 

 age. In many instances, he said, stumpage h.nd gone up 200 to 300 

 per cent whereas lumber is selling for less than in 1906 and 1907. 



Mr. Stark gave the commissioners valuable information regarding 

 ■competition of American hardwoods with Japanese oak. He said 

 the latter was making large inroads on Pacific coast business and 

 that Japanese interests were able to compete successfully as far east 

 as Salt Lake City and Denver, owing to favoring transcontinental 

 freight rates. 



Geo. D. Burgess, president of the National Lumber Exporters' 

 Association, said the Japanese not only are encroaching upon the 

 American field, but have taken the most desirable foreign trade by 

 lowering their prices on oak. 



' ' I wouldn 't be surprised if, after the war, we find we have lost 

 33% per cent of our foreign trade," said he. 



George C. Ehemann, chairman of the river and rail committee of 

 the Memphis Lumbermen 's Club, gave a brief history of the hard- 



—18— 



wood industry, to show that from a crude beginning the southern 

 branch of the industry had grown to international magnitude. 



' ' By co-operation among the lumbermen, ' ' said he, ' ' the industry 

 is gradually passing from disorganized individual effort to concerted 

 action on questions involving the interest of all. It is to this end 

 that we wOl welcome any aid the government can lend us in the solu- 

 tion of some of the problems that confront us. ' ' 



One of the strongest papers read at the meeting was that of taxa- 

 tion presented by S. M. Nickey, president of the Lumbermen's Club 

 of Memphis. He showed that the states are encouraging gross waste 

 rather than conservation of the forests by assessing exorbitant taxes 

 against standing timber. He presented figures proving that taxes 

 on timberlands owned by his companies in Tunica, DeSoto and Quit- 

 man counties, Mississippi, have increased from 300 to 500 per cent 

 within six years despite the fact that the value thereof has increased 

 comparatively little, and that taxes on one tract in Columbus county, 

 Arkansas, have increased 900 per cent in seven years. He said that 

 these high taxes resulted in lumbermen hastening to clear off market- 

 able timber, without any thought whatever of conservation, to get 

 rid of tlie land as soon as possible. 



' ' We believe that sentiment should be created against increasing 

 taxation on standing timber, ' ' Mr. Nickey said. ' ' We; believe that 

 the ideal way is the Canadian way — taxes on timber of whatever 

 kind or wherever located are due and payable when the timber is 

 cut and made use of. 



' ' Of all the states in the Union, Indiana alone, after her forests 

 had practically l)een depleted, recognized and passed proper laws 

 regarding the taxation of standing timber. Standing timber in In- 

 diana, when set aside and designated as such, is not taxed. This 

 is real conservation." 



Elliott Lang of Memphis corroborated Mr. Nickey 's figures on the 

 increased rate of taxation in Mississippi. On top of other taxes, 

 he said, owners of Mississippi timber lands are required to pay levee 

 taxes. 



"Officers of the Yazoo & Mississippi Levee Board have told me 

 if the government would do its part toward confining the Mississippi 

 river to its banks, our levee tax would be negligible, ' ' said Mr. Lang. 

 ' ' We are required to pay for the drainage of about 30 or 40 states 

 with little assistance from the United States government." 



F. S. Chariot, of the' Cooperage Industries, declared that no indus- 

 try showed the effect of unrestricted competition any better than 

 that with which he was identified. He pointed out that there are 

 four lean years and one good year out of every five in this line and 

 that so many people go into this business during the one good year 

 that over production and low prices follow each other in quick suc- 

 cession and an unusually high percentage of failures is established. 



Walker Wellford, president of the Cooperage Industries and secre- 

 tary of the Chickasaw Cooperage Company, Memphis, presented th,- 

 situation from the standpoint of tight cooperage manufacturers 

 as follows: 



At present business is good in Ihc tight Inilustr.v. This is due largely 

 to the demand for containers to carry petroleum and other commodities 

 to the war torn countries of Europe. The export is the principal end 

 of the trade just now. 



The tight cooperage industry is over crowded, prices are low and very 

 close. It takes a large volume of business to maltc a good profit. We 

 have an association that meets to talk over labor conditions and kindred 

 topics, but wo always feared a possible violation of the law. 



To me it looks as though the only way to make the industry profitable 

 is to have an association or selling organization to control the output. 

 Closer co-opoiation is necessary, for now it is a case of the survival of the 

 fittest. 



Mack Morris of the Harlan-Morris Manufacturing Company of 

 Jackson, Tenn., suggested that if there could be government super- 

 vision of the cooperage industry to enable coopers to realize six per 

 cent on their investment they would be very happy. 



H. B. Weiss, president of the Gum Lumber Manufacturers ' Asso- 

 ciation, told how the united efforts of manufacturers of the Memphis 



