October 10. 1921 



HARDWOOD RECORD 



19 



Testify to Rate Strangulation 



Hardwood Operators of Lower Mississippi Valley Ask I. C. C. to Restore Rates 



Prior to August 25, 1920, Permitting Them to Market Their Lower 



Grades and Resume Logging and Milling 



With the declaration made by the hardwood lumbermen that their 

 plea for lower freight rates should be regarded as an emergency 

 case, and that the situation in the hardwood lumber industry now 

 is as bad as the condition faced by the railroads a little more than 

 a year ago, the Interstate Commerce Commission on October 4 

 began the taking of testimony in the case of the Southern Hard- 

 wood Traffic Association against the Illinois Central and other 

 railroads for the rates jirovailinK ]iri(ir to the increase of August 

 25, 1920. 



J. V. Norman, counsel for the lumber association, asked that 

 argument be heard immediately following the taking of testimony, 

 declaring the condition of the hardwood industry to be critical as 

 a result of the increased freight rates. 



C. S. Humburg, representing the Illinois Central Railroad Com- 

 pany, made no objection, but C. B. Northcutt, representing the 

 Southern Railway Company, said he doubted if this would be satis- 

 factory. Henry Thurtell, attorney for the N. C. & St. L., demurred 

 that he was not prepared, in advance of the introduction of any 

 testimony, to agree to be bound by such an agreement, proposing 

 that the request of Mr. Norman should be postponed until the 

 attorneys for the railroads, of whom there are a dozen or more, 

 had the opportunity to confer. 



Disagreement among the attorneys of the carriers in the method 

 of handling the ease created the impression that the Southern lines 

 were willing to consider the complaint of the hardwood interests, 

 but that the Eastern and Northern lines are opposed to making any 

 reductions because, according to their own information, the hard- 

 wood lumbermen of their sections have derived some benefit from 

 the disruption of rate relationships by the percentage increases 

 established in August, 1920. 



Townshend Testifies 



.1. H. Townshend, the first witness called by Mr. Norman, and 

 secretary-manager of the Southern Hardwood Traffic Association, 

 stated that the cause of the complaint was Ex Parte 74, and par- 

 ticularly the application of the percentage increase. Mr. Towns- 

 hend described attempts begun last March to bring about a read- 

 .iustment in rates by negotiations between the shippers .and the 

 carriers. 



Normally the complainants shipped about 500,000 cars a year, he 

 said, whilt at present, he estimated they are shipping not more 

 than 40 per cent of normal. 



"The situation next year will be worse because no logging opera- 

 tions are being carried on now," he said, "and this is the time of 

 the year that logging should be going on. The rates on logs are so 

 high that they increase the cost Of lumber $3 per 1,000 feet. Fifty 

 cents per 1,000 feet will turn a sale. The Commission knows that 

 to be a fact in a number of cases. 



"The negotiations concerning which Mr. Townshend testified to 

 were continued until September 22 when shippers and carriers met 

 with Commissioner Cox, but no agreement was reached. He said that 

 early in the year the railroads advised the lumbermen to take their 

 time, and said that if the Labor Board reduced wages or traffic 

 increased, they would get the benefit of the changes in the cost of 

 railway operation. 



"The effect of the percentage increase has been to stifle business 

 and put the hardwood operators out of business and decrease the 

 tonnage of the railroads," Mr. Townshend declared. "At least 

 75 per cent of the Southern mills are shut down, consumers in the 

 northern markets being supplied from short haul points. In the 

 case of a lumber manufacturer at Bloomington, 111., I know that 



in six months of this year he shipped 2,212 cars. There has been 

 no such reduction in his business as there has liecn in that of the 

 Southern Hardwood lumbermen." 



Confiscatory Rates 



Referring to the relation of the new freight rates to the prices 

 obtained by the hardwood lumbermen, Mr. Townshend said that in 

 the case of J. M. Milner, of Leesville, La., ho had shipped two 

 carloads of No. 2 sap gum to the Illinois Glass Company, at Alton, 

 111., receiving ,$17 per 1,000 feet. The mill paid him $558.65 and 

 the freight bill was .$557.59 and the net profit on the two carloads 

 was $1.06. He referred to another shipment on which the dealer 

 made $7.67 on a carload. During a trip through the hardwood pro- 

 ducing region he said that he had seen large quantities of No. 3 

 oak piled for burning. The mills must destroy tonnage which 

 carriers would receive but for the destructive freight rates, he 

 concluded. 



James E. Stark of Memphis, an officer in two lumber companies 

 and other companies that use hardwood, testified that his companies 

 have four mills but only one in operation. That one mill is operat- 

 ing because he had a term contract requiring the removal of logs 

 from a particular piece of land by a certain date, he said. He 

 stated that they are cutting only the best of the timber and that 

 only few of the logs are brought to the mill and after three inspec- 

 tions only the best are finally put upon the cars and the others are 

 left in the forest, to be destroyed by worms. 



In reply to a question of Mr. Norman as to where the witness 

 sells his lumber, Mr. Stark said: "We are not shipping much now 

 but normally we ship to all parts of the United States and some to 

 Canada and other export points. We meet competition now with 

 our high-grade lumber but we are stacking the low grades, hoping 

 to sell it before the worms eat it or before we have to burn it. We 

 can and do sell and ship our high-grade stuff but there is no market 

 for the low grade. The northern competitive woods are coming 

 south of Chicago because our increase in cents per 100 pounds has 

 been higher than theirs. The prices on all grades on an average are 

 lower than they were in 1916. We are leaving 50 per cent of the 

 stuff in the woods, some of it cut and some standing. That which 

 is left standing will be girdled to enable the owners of the land 

 to clear it. Therefore it will never be brought out and marketed. 

 It will be a total loss to the railroads. They will have less tonnage 

 next year because no logs are being produced now. If the log 

 rates were reduced to the level of those of August 25, 1920, we 

 would start our mills because we did business on those rates and 

 we believe we could do it again." 



"Even if there were no reduction in the rates on lumber out- 

 boundf" asked Examiner Quirk. 



Log Rates Heaviest Load 



"The log rates are the big stumbling block," replied Mr. Stark, 

 "and when I spoke I meant the rate on logs as well as on outbound 

 lumber. The increase in the log rate causes an increase of $3 per 

 1000 feet in the cost of lumber. We could do business on the rate 

 prior to Ex Parte 74. J. M. Nelson, of Pottsville, Penna., recently 

 h.ad inquired for mine door material," continued Mr. Stark, "and 

 said that he could ^o-y $23.50 at Pottsville. The rate from Mem- 

 phis to Pottsville," Mr. Stark said, "is $20.92i/. per 1,000 feet. 

 That rate on a carload would make the freight $315 and the price 

 quoted would net the seller only $37 or $38 per car, which would 

 not be enough." 



W. B. Foley, general manager of the Chickasaw Cooperage Com- 

 pany with 41 mills for the manufacture of tight barrel staves and 



