18 



HARDWOOD RECORD 



April 



1921 



able eonimodity. If the proiluciT failed to deliver, then the user 

 was left with his jiroduction crippled or stranded. That this lias 

 been no uneoninion happening in the past every party at interest 

 can testify from costly experience. 



The Answer to the Problem 



The answer to this problem is STANDAKDIZATION! By this 

 we do not moan the standardization of an individual plant, but 

 the standardization of the requirements of the various wood using 

 industries. If a lumberman knows that the production of his 

 dimension mill is standard for an industry, or several industries, 

 instead of merely being the requirement of an isolated plant, he 

 will have no hesitation in undertaking to manufacture against any 

 orders he may secure, and, in a conservative way, to manufac- 

 ture against the probable requirements of the industry as a wliole. 

 On the other hand, the wood fabricator will not hesitate to place 

 his requirements with certain mills when he knows that he is 

 protected by a lumbering policy which is producing the exact stock 

 he uses in otlu'r mills than his contract source. 



Standardization will serve also to eliminate another grave evil 



altogether too common in the past. Beference is made to disputes 

 between producers ami consumers as to whether the stock fur- 

 nished is according to s|)ecification. Sometimes these disputes 

 have not been a fair question between the parties. They have 

 been unfair attempts by one of the parties to void a responsible 

 contract. With standardization in effect such disputes can be 

 settled by a neutral third party or otherwise authoritatively dis- 

 posed of. 



In a single phase the standardization program rests on the two 

 fundamentals of making it as safe to manufacture or buy dimen- 

 sion stock as to manufacture or buy merchantable lumber. The 

 Committee on Standardization proposes to press this program not 

 only because of its great economic benefits to both lumbermen and 

 wood users, ))ut also as a conservation measure, second to no other, 

 in the great patriotic enterprise of saving our forest resources. 



In succeeding studies it is the writer's intention to state as care- 

 fully as possible the special problems of both lumbermen and wood 

 users in connection with the standardization program. An attempt 

 will be made to show our method of procedure, and to exhibit 

 results already obtained by the application of this method. 



Some idea of why price and other conditions in the lumber in- 

 dustry are so frequently misrepresented in the bulletins of the 

 business statistical bureaus of the country, is in some measure 

 disclosed in two letters recently sent by one of the leading hard- 

 wood manufacturers of the South to one of the best known of these 

 bureaus. This hardwood manufacturer took exception to a com- 

 parison of composite prices of hardwood lumber for the months of 

 January, 1921 ; December, 1920, and January, 1920. The report 

 made by the economic service indicated that compositely the price 

 of hardwood lumber in January, 1921, was practically no lower 

 than in January, 1920. The lumber manufacturer in question knew 

 that the practical facts of the lumber price situation would not 

 bear out this report, and he conceived that the bureau making the 

 report must have used an erroneous basis of calculation by which 

 to arrive at its glaringly incorrect conclusion. Reasoning from 

 his familiarity with the economic factors of the hardwood lumber 

 industry, the manuf.acturer concluded that the bureau, in making 

 its calculations, failed to reckon with the lower grades, which 

 would have enabled it to picture the true general average price of 

 hardwood lumber, but had dealt solely with the Is and 28 grade. 

 This kind of calculating inevitably resulted in a conclusion far 

 above what the hardwood lumber industry was really receiving in 

 January, 1921, for the log run of its product. 



In his first letter to the bureau the hardwood manufacturer stated 

 wh.-it he believed had been the nature of the mistake made by the 

 bureau, and before enough time had elapsed to enable him to get 

 a reply from the bureau, the latter published another bulletin in 

 which an explanation of its methods of calculating was given. 

 This revealed that the calculations, as the manufacturer had 

 assumed, had been made on Is and 2s only. 



ITowever, the manufacturer addressed another letter to the 

 bureau in which he very carefully explained what he conceived to 

 be the only fair and accurate method of arriving at average general 

 prices of hardwood lumber. He did this in order that he might 

 preclude the possibility of further misrei)resentation of the lumber 

 industry by this particular bureau at least. He realized the 

 damage that such erroneous reports cause to the industry, and 

 assumed that it was worth while to do what he could to protect 

 the industry from further injury. 



Roth of the letters contain statements that should give a cle.ir 

 understanding of the factors that must be considered in estimating 



h.ardwood lumber prices and judging whether they are high or 

 low, fair or unfair. They might well serve as a guide to all who 

 undertake to form an opinion on prices and price levels of hard- 

 wood lumber. In part they are as follows: 



Correct Price Estimation 



We have before us your trade bulletin. General Coinniodity Section, of 

 January 10, 11)21. and we note in your ijrioe list of basic coininodities that 

 you show the following composite prices ou hardwood lumber : 



.January, 1921 December. 1920 January. 1920 



$ll.'>..sn $127.20 $116.00 



In other words, your price comparison shows the price in January, 1921, 

 to be practically on the same level as that of a year ago. 



We do not know the basis of your calculations, or just what grades, 

 or kinds of lumber are included therein, but based on our own experience 

 covering actual sales, your price comparison would seem to be erroneous, 

 for whereas you show the price in January, 1921, to be about the same 

 as that of January. 1920. our figures show an average decline of well 

 over (iO per cent, with a materially greater decline from the peak prices 

 of about March or April. 1920. 



We are eni-Iosing herewith a price comparison compiled from our own 

 sales made within fifteen days from the dates for which the tigures are 

 quotecl. The prices named are f. o. b. mill point ; 



Per Cent of 

 Decline 



Qtd. lied (ium Jan.. 1920, Peak Jan.. 1921 Jan., 1920, Peak 



Is and 2s 165 220 100 39.4 54.5 



No. 1 Common 150 ISO 50 G6.7 72.2 



Plain Red (Jum 



Is and 2s 160 210 SO 50 01.9 



No. 1 Common 125 105 45 64 72.7 



Sap Gum 



Is and 2s 85 120 40 56.,"} 66.7 



No. 1 Common 70 100 20 71.4 SO 



No. 2 Common 42 45 12 71.4 73.3 



No. 3 Common 32 35 7 7S.1 80 



Qtd. White Oak 



Is and 2s 280 325 125 54.4 61.5 



No. 1 Common 190 225 75 60.5 06.7 



No. 2 Common 100 125 40 60 68 



Plain Oak 



Is and 2s 170 220 75 55.9 65.9 



No. 1 Comntou 110 160 * 40 63.6 75 



No. 2 Common 75, 90 20 73.3 77.8 



No. 3 Common 33 40 9 75.8 77.5 



Lower Grades Ignored 



It would seem to us from the average figures that you quote that your 



calculations must be based entirely on the higher grades, probably solely 



on Is and 2s, and perhaps you have only included some of the higher 



priced wooils. If this assumption Is correct, it would seem to us that 



