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HARDWOOD RECORD 



June 10. 1921 



The Department of Justice will institute action against trade 

 associations which engage in the so-called "open price" practices, 

 according to an announcement made by Attorney General Dauglierty. 



Investigations of many of those associations have been conducted, 

 and while the Attorney General said that it was not the policy to 

 institute a general dragnet, those which are thought to be violators 

 of the law will have proceedings brought against them in the courts. 

 Practices and plans of associations wliich gather trade information 

 are being inquired into for possible violations of the Federal 

 statutes, the Attorney General explained. 



The Hardwood Lumber case, pcn<iing iu tlie United States 

 Supreme Court and the Yellow Pine case in St. Louis, are results 

 pf proceedings begun under the Wilson administration, the Attorney 

 General said, adding that decisions would be reached soon as to 

 whether action would be begun against another organization for 

 alleged violation of the antitrust laws. 



The policy of the Department, Attorney General Dauglierty 

 stated, was to call iu the officers of an association which investiga- 

 tion has disclosed to have violated the anti-trust laws and to make 

 an effort to persuade them to discontinue their practices. There 

 was no intention on the part of the Government to attack business 

 associations, he declared, but there was considerable doubt, due to 

 conflicting court decisions, as to how far business men could go in 

 their organizations without violating the laws. 



The object of the movement on the part of the Department of 

 Justice, Mr. Daugherty stated, was to have the law definitely 

 determined so that both the government and the business men would 

 know where they stand. 



Associations collecting and disseminating trade information 

 co-operated with the Government during the war as a necessity, the 

 Attorney General said, but now the data was distributed among the 

 members, but not given the Government, and it was to be determined 

 whether the acquisition and use of this information might be turned 

 to price-fixing and providing territories to concerns iu violation of 

 the law. 



Formation of the association he likened in some cases to a spider's 

 web, with no particular part contrary to the law but with the whole 

 put together and focusing down on the spider in the center, result- 

 ing in price fixing. In some instances, he said, the distribution of 

 trade information within an industry made for uniformity of prices, 

 which stifled competition and, while there might not be definite 

 agreements, "a wink of the eye and a nod of the head" were suffi- 

 cient to accomplish the results desired. 



The Attorney General said that he had discussed the matter with 

 Secretary Hoover, who is holding a series of conferences with the 

 representatives of the leading industries in an effort to obtain their 

 co-operation in the publication of comprehensive trade statistics by 

 the Government, and that information and advice on the subject 

 Jiad been exchanged. 



In connection with Mr. Hoover's proposal for the formation of 

 combinations of exporters to compete in foreign trade with their 

 rivals abroad, Mr. Daugherty said that he thought such organiza- 

 tions could be reconciled with the anti-trust laws as long as there 

 was nothing effected which would cause the fixing of prices in this 

 country. 



Immediate Rate Reduction Urged 



An immediate reduction in freiglit rates on lumber from all sec- 

 tions of the country was urged at a joint conference between Rail- 

 way Executives and lumber manufacturers and consumers, held in 

 Washington on June 2 in the offices of Lincoln Green, vice president 

 pf the Southern Kailvvay Company. 



J^nmberuien from virtually all sections of the country, represent- 

 ing both the hard and soft wood industries, expressed the belief to 

 the railway heads that a reduction in rates on lumber would aid 

 in stimulating business. The lumbermen stated that they had 

 deflated prices, taken their losses and that today they are selling 

 their lumber at or below cost of production. 



It was developed at the meeting that over 80 per cent of the 

 hardwood mills of the south, southwestern and Appalachian regions 

 were closed and that owing to the tremendous increases that had 

 become effective on inbound logs and o-utbound manufactured lum- 

 ber, these mills would not be able to operate until the freight rates 

 liad been adjusted so as to enable them to compete with lumber and 

 substitutes produced at the very doors of the consuming trade. 

 Representatives of the Michigan hardwood territory stated that 

 when the logs they had on hand were manufactured, the mills would 

 close as they could not afford to cut at a continued loss. 



In reply to a direct inquiry from the railroad executives as to how 

 present prices of hardwoods compared with those of 1916, the lum- 

 bermen stated that current average prices were in some instances 

 as much as 30 per cent lower than prices prevailing in 1916. A. E. 

 Pope, purchasing agent for Dodge Brothers, Detroit, and E. C. 

 Swift, representing the International Harvester Company, and 

 other large users of hardwood, testified that they were compelled to 

 abandon the use of hardwoods from the south and substitute steel 

 or the lumber produced in the immediate vicinity of their plants. 

 It was also shown that No. 3 common oak, which was selling around 

 .$4 f.o.b. mill, was being burned as fuel wood, which under a rail- 

 road readjustment of rates, the mills would be able to ship to the 

 consuming markets. It was shown that in some instances hardwood 

 lumber was paying the railroads over $75 per day per car for trans- 

 portation. In other words, the total freight charges on a car of 

 hardwood lumber for the number of days in transportation, averaged 

 about $7-5 per day. 



The hardwood representatives did not seem adverse to a ver\- 

 higli minimum weight, provided they could arrange substantial 

 reduction in their rates. 



Softwood lumbermen testified that under tbe present freight rates 

 they were only able to move their highest grades, the cream of the 

 lumber production; that they were forced to sell the lower grades 

 at such prices as would hardly pay for loading into the cars. It is 

 necessary for lumbermen to move all of their product to operate 

 successfully, it was stated. The stocks of low grades are now double 

 what they have been and cannot be absorbed at point of production. 

 The freight alone on low grade redwood boards to eastern territory 

 is $25, and the mills would have to contribute part of the freight 

 in order to move this product. 



To the inquiry from the railroad executives as to how present 

 softwood prices compared with those of 1916, lumbermen stated 

 that the current prices of softwoods were in some instances as low 

 as they were in 1916, and on the average were only 20 to 25 per cent 

 higher.. Testimony from all the lumbermen indicated that lumber 

 prices have been reduced to a rock-bottom level. 



Some of the carriers indicated a willingness to reduce rates if 

 they could be convinced that increased tonnage would result. The 

 lumbermen could not state that a reduction in lumber rates at this 

 time would result in any considerable increase in tonnage in the 

 immediate future, but asserted the effect of a reduction in rates 

 made at this time would soon be felt. Lumbermen believe that 

 the present level of rates is too burdensome and must be reduced 

 and that the announcement of a reduction at this time would 

 encourage the resumption of buying. 



