October 25, 101 S 



HARDWOOD RECORD 



19 



A Birdseye View of the Effect of Lumber Embargo 



The Full Seriousness of the Situation Is Beginning to Be Understood 



It is now possible to gauge with some degree of accuracy the 

 effect on the hardwood lumber industry of the embargo order 

 recently issued by the ear service section of the U. S. Railroad 

 Administration. 



According to those in position to speak with authority, the situa- 

 tion may be briefly summed up as follows; 



First : Not more than ten per cent of the commercial lumber already 

 sold is being moved to destination for the reason that permits making 

 such movement possible are coming through so slowly. 



Second : Not more than 25 per cent of southern hardwoods of all 

 kinds, including both government ami commercial requirements, is moving 

 for exactly the same reason. 



Thiud : Orders placed for harilwood lumber in the southern lield dur- 

 ing the past two weeks have shown a decrease of approximately 50 per 

 cent compared with average expectations for this time of the year. 



Fourth : There is quite an increase in iflle box cars and other standard 

 equipment because of the slowness with which orders are being placed for 

 southern hardwoods and because of the delay with which permits are 

 coming through for lumber actually sold and ready to go forward. 



It is regarded as probable that part of this accumulation of idle 

 equipment is the result of the embargoes against compresses at 

 Memphis and other larger centers in the valley territory which are 

 seriously interfering with the movement of cotton into and out of 

 compress points. Still, the lumbermen are looking at the proposi- 

 tion from their own standpoint and believe that the small move- 

 ment of lumber, resulting directly from the slowness and irregu- 

 larity of permits, is the paramount influence in bringing about this 

 unusual and unparalleled increase in the number of idle cars. 



The foregoing has to do solely with the placing of orders and 

 with the movement of lumber. On the production end of the 

 proposition, the situation may be summed up in this way: 



First: Production is already substantially below nornuil. 



Second : Logging operations are not exceeding 50 per cent of the aver- 

 age for this time of the year. 



Third : Indications point to a further substantial decrease in logging 

 operations and to a far more material loss in hardwood manufacture. 



Labor scarcity, accentuated materially within the past fortnight 

 by the influenza epidemic, is a factor in restricting hardwood lum- 

 ber manufacture. Very few mills are able to operate at capacity, 

 even where the management so desires, because full forces cannot 

 be secured. But it has been clear, ever since the embargo order 

 was issued, that there would be considerable voluntary curtailment 

 of hardwood lumber production and this is beginning to be realized. 

 This voluntary decrease in hardwood manufacture is the direct re- 

 sult of conditions created by the embargo order, conditions which 

 are wholly new to the southern hardwood trade and conditions 

 which are not well understood, generally speaking, by those in- 

 terests which have to secure permits before they can have lumber 

 forwarded to them. 



Officials of the Valley Log Loading Company suggest, on the 

 basis of information they have, that loading of logs for November 

 will show a decrease of approximately .50 per cent compared with 

 accomplishments for the current month. They point out that the 

 mills have practically cpiit buying- logs and that those who get out 

 timber to sell to the mills have to suspend operations close on the 

 heels of the stoppage of buying by the mills. These officials attri- 

 bute the heavy loading under way at present to the desire of mill- 

 men to draw in all the logs they have on rights of way of the rail- 

 roads before they are damaged in any way. But they point out 

 that this stoppage of logging will mean a heavy decrease in the 

 quantity of logs offered for loading in the near future and that 

 this will mean a further restriction in hardwood manufacture. 



Hardwood interests cannot stop their mills as suddenly as can 

 furniture manufacturers or other interests whose raw material is 

 not subject to deterioration. They are forced to cut up the logs 

 they have made ready for shipment because, if they do not, the logs 

 will deteriorate so badly that they will be practically worthless. 



Therefore, the curtailment of hardwood production is a process 

 that must extend over several months and that must grow in in- 

 tensity as this period advances. In other words, a considerable por- 

 tion of the production of hardwood lumber in progress at the mo- 

 ment is forced production, forced by the desirability if not, indeed, 

 the necessity of saving values which would otherwise be lost. 

 When these logs have been converted into lumber, the greatest de- 

 crease in production will be experienced. 



And, in this connection, it may be noted that this stoppage of 

 logging must have serious influence on the production of hardwood 

 lumber some months hence. It is the expectation of the trade that 

 there will be improvement in permit-issuing machinery and that 

 there will be a gradual gain in the number of orders placed for 

 southern liardwoods. Indeed, indications are that this increase in 

 the placing of orders and in the movement of hardwood lumber will 

 take place at a time when production of hardwood lumber and 

 logging operations are on the decrease. And, if this view is borne 

 out by actual developments, there will be a period in the not far 

 distant future when stocks of hardwood lumber, whatever may be 

 their tendency immediately, will show notable decreases, decreases 

 which cannot be readily made good because of the small quantity 

 of logs coming out as a result of the curtailment of work in the 

 woods. 



As to prices: 



The average hardwood lumber manufacturer is convinced that, 

 whatever may happen, prices will have to remain firm unless lum- 

 ber on hand, as well as that now being placed on sticks, is to be 

 sold at actual loss. Cost of production is steadily increasing and 

 members of the trade here insist that, if there is to be any profit 

 whatever in their operations, prices must work upward instead of 

 downward. Indeed, inability to make a profit out of hardwood lum- 

 ber under present and immediately prospective conditions is largely 

 the cause of the slowing down in both logging operations and hard- 

 wood lumber production. If present stocks cannot be sold at a 

 profit or on an even basis, they point out that it is the height of 

 commercial folly on their part to put more lumber on sticks to be 

 disposed of on such terms. 



Prospects Better for Flat Scale of Rates 



J. H. Townshend, secretary-manager of the Southern Hardwood 

 Traffic Association, announces that Judge Prouty, director of the 

 U. S. Eailroad Administration, to whom the subject was personally 

 referred some time ago, has requested the association to formulate 

 a scale of flat rates into milling points on logs, bolts, billets and 

 other rough material without regard to refund when finished prod- 

 ucts have been shipped out. 



The association has already begun preparation of this flat scale 

 and will have it ready to forward in a short time. Request for 

 the compilation of the scale of rates does not mean that it will be 

 acceptable but just such a development is expected. If it meets 

 with the approval of Judge Prouty and other members of the 

 Railroad Administration, it will apply to the South and Southwest. 



The flat scale will have two important results: It will eliminate 

 tying up of large sums of money belonging to the lumbermen in the 

 hands of the railroads pending refund, and it will facilitate the 

 movement of outbound lumber and lumber products because it will 

 make it possible to use any railroad that is in position to furnish 

 cars and motive power. 



Under the scale of gross rates, large sums of money have to be 

 put up with the Eailroad Administration pending refund when 

 finished products have been shipped, and, in order to obtain this 

 refund, it is necessary to ship finished products over the road 

 originating the logs, lumber or other rough material. 



