18 



HARDWOOD RECORD 



December 10, 191S 



and influencing the public mind to conclude that they are unseaworthy 

 and almost worthless. Some of the wildest, most absurd rumors have 

 been circulated about them. 



"Only three of the government wooden ships have been lost. The wooden 

 ships have been used with success in the transatlantic and coastwise trade. 

 Whether they have heen operated economically and make a good business 

 showing I have no complete data to prove. I complain of the efforts to 

 stifle or destroy an important industry in this country when there is no 

 reason or sense in such a course. We should build more wooden tonnage 

 tor American and foreign account and remove all unnecessary war restric- 

 tions upon operation." 



Adjustment of Contracts 



The War Department authorizes the following statement by Bene- 

 dict Crowf'll, director of munitions, as to methods of contract adjust- 

 ment : 



The armistice has come when American industry was reaching the peak 

 of its production. There are therefore thousands of contracts outstanding 

 on which commitments for raw material for the future have been made. 

 on whicli much raw material has been received, on which there is a large 

 amount of work in various stages of completion or its way through the 

 shops. 



The department has first to determine as to each of these contracts 

 whether it is to be carried through, whether the rate of amount of pro- 

 duction is to be so reduced that the manufacturer can gradually taper. off 

 and get into his accustomed civilian work, or whether the contract is to 

 be terminated at once. These questions have to be decided with due regard 

 to the conditions of the particular industry and the importance of pre- 

 ser\"ing the continuous employment of labor. When decided there remains 

 a very serious problem of how to arrive at a just and prompt determina- 

 tion of what is due the contractor as a result of much reduction or 

 termination of the contract. 



The War Department recognizes that it is highly important to make 

 provision for cases where contractors have such a considerable part of 

 their working capital tied up in expenditures for labor and other disburse- 

 ments on unfinished work that without a speedy repayment to the con- 

 tractors of at least a part of this sum they cannot make that prompt 

 return of the plants to commercial w^ork essential to prevent a break in 

 their continuous operation and employment of labor. In many such cases, 

 while it is practicahle to determine readily a minimum sum which will be 

 within the figure of ultimate settlement, it will frequently be difficult to 

 fix with exactness the ultimate sum without a delay which will lose to the 

 government and the country the advantage of a speedy return of such 

 plants to commercial work. Where this situation exists and to meet it 



it will be the policy of the department to stand ready to enter into sup- 

 plementary control with such contractors by which a sum not to exceed 

 seventy-five per cent of the amount which it is certain will ultimately 

 be paid by the government on the agreed basis of adjustment will be paid 

 immediately to the contractor upon his consent to a termination of the 

 original contract and a release to the government of its obligations there- 

 under, the department agreeing to pay subsequently such additional sum 

 as it may determine will complete payment to the contractor on the agreed 

 basis of ndjustment. The machinery outlined above will be availed of in 

 arriving nt the terms of final settlement. 



This plan will make it practicable for contractors to secure almost imme- 

 diately a very substantial part of their working capital for use in switch- 

 ing back to Commercial work, even where the circumstances are such that 

 the final determination of the compensation to be paid cannot be so speedily 

 arrived at. 



The construction division has been authorized by the director of 

 operations to abandon the following projects: 



The construction work at Locomobile Company of America's plant. 

 Bridgeport, Conn. 



The construction work in connection with the erection of the necessary 

 building for the plant of the Hero Manufacturing Company. Philadel- 

 phia, Pa. 



The enlargement of Camp Lee. Va. 



The construction of a hospital at North Camp Jackson, S. C, approxi- 

 mately 631 beds. 



The necessary alteration to make the state school for deaf at Columbus, 

 Ohio, suitable for a 1,500-befI hospital. 



The construction of the Elizabethport. N. J., proving grounds. 



The enlargement of Camp Custer, Mich. 



The construction of a bomb loading plant in the vicinity of Delaware 

 City, Del., known as the Marlin-Rockwell plant. 



The construction of an extension to Camp Sherman to house 9,185 men. 



The construction of an extension to Camp Grant, III., to house 14,520 

 men. The construction of an officer's training camp. 



The construction of Clear Springs proving grounds. 



The conversion work to make the Sea View Hospital, Staten Island, 

 N. Y., suitable as a general army hospital. 



The installation of a permanent bakery at Camp Beauregard. Ala. 



The construction of a delousing plant at Camp Fremont, Cal. 



The construction division has been authorized to proceed with the con- 

 struction of a central officer's training school at Camps Gordon and Han- 

 cock, where the buildings are over sixty per cent completed, or where 

 the buildings are so far advanced as to necessitate their completion in 

 order to save material loss to the government. 



\^^;;; ^^;5^:;^l!i;^;;^^^ 



The communication below was recently sent to manufacturers of lumber 

 by R. B. Goodman, chairman of the bureau of lumber economics of the 

 National Lumber Manufacturers' Association : 



The consensus of opinion held by leaders of the lumber industry who 

 attended the Congress hotel meeting November 22 and 23 was that pros- 

 perity is conditional first upon world relations; second upon the intelligent 

 course that American business takes in the reconstruction ; third upon 

 the intelligent cooperation of the entire lumber industry in all its branches, 

 and finally upon the wisdom displayed by each individual manufacturer 

 <tf lumber in conducting bis operations. Faith was expressed that the 

 individual manufacturer of lumber would meet the situation adequatelv 

 and intelligently. 



Assuming this faith justified, what will your profits be for 1919? The 

 profit on your operation for the coming year depends upon how you indi- 

 vidually meet the rapidly changing conditions that will confront you. Will 

 you be able to maintain your production on a par with that of "your com- 

 petitors? What are your natural advantages with respect to your com- 

 petitors? Are you taking steps to discount these handicaps and to realize 

 these advantages? Are you utilizing the stumpage you consume so as to 

 derive from it the greatest Income? Are you wasting man-power to con- 

 serve raw material or are you wasting raw material to conserve man- 

 power? Is your selling organization in line to obtain at fair prices orders 

 that will move your entire product? Is it an organization that will enable 

 you to dispose of each particular item to the consumer who needs that 

 item most? Are you spending money in any department that brings you 

 no return or are you failing to spend where the expenditure would increase 

 your profit? 



Questions like these indicate the problems, whose solutions will' largely 

 determine the lumber manufacturer's profits. It is evident that the pros- 

 perity of the reconstruction period is not of a character that will be auto- 

 matically pro rated to the individual operator. While prices will undoubt- 

 edly continue for some time im high levels and the demand for lumber will 

 be good, the individual operator must exercise his best intelligence to move 

 his stock intelligently nnd to produce his stock efficiently. 



Although the market for his product exists, this market will be eagerly 

 sought not only liy his competitors in the industry )mt by the strong com- 

 petition of the products of other industries; and while" high prices will 

 rule, the margin between cost atid selling price will diminish. The 

 increased cost of lal>or and supplies and the decreased volume of produe- 

 tion that we are now experiencing have not exercised their full effect on 

 costs, as reflected in the manufacturers' accounts. Man.v of these cost 

 reactions are remote. Salary increases, increased traveling expenses, post- 

 poned renewals, maintenance that has been skimped during the war. 

 replenishment of depleted supply stocks at higher prices will affect next 

 year's costs. 



It will be necessary to install new machinery, revise methods of work, 

 and readjust operating programs to a relatively higher cost of man-power. 

 All of these things call for more skillful management ; and for manage- 

 ment to exercise its skill it requires correct premises on which to base 

 its decisions. This means that the past experience of the operation and its 

 experience from month to month must be reflected on its books in such 

 manner as to keep the management fully informed as to the essential 

 facts of the operation, and in such manner that the management of one 

 operation may compare its results with those of other similar operations 

 in the industry. 



It was in view of the foregoing that a conference was held at the' Chicago 

 meeting for the purpose of promoting an interest in better methods of 

 accounting. There were present Secretary-Manager Wilson Compton ; 

 P. M. Rickey, comptroller of the Long-Bell Lumber Company ; Robert 

 Rickey, special accountant for the Southern Pine Association ; E. T. Allen, 

 and myself. 



Plans were discussed for forming a committee on accountancy as a 

 part of the bureau of economics of the National Lumber Manufacturers' 

 Association, which will be submitted to the members of the economics 

 committee for approval and then passed on to the executive committee 

 of this association. 



Accountancy is an exact science. There is nowhere any difference of 

 opinion as to the principle of accounting; and the methods of accounting 

 have been improved and developed so as to fully meet modern business 

 conditions from the smallest to the largest operations. It is proposed to 

 create a department of lumber accountancy within the bureau of economics 

 that will give each operator the benefit of the best practice in adapting 

 principles of modern accounting to lumber operations, provided the manu- 

 facturers of lumber generally are inclined to make use of such a service. 



It is evident that the value of such a service will depend upon the atti- 

 tude of those in control nf the lumber manufacturing operations. There 

 must be an awakening to the importance of correct accounting jvist as there 

 has been in recent years an awakening in the industry to the importance 

 of salesmanship. Correct lumber accounting is not a venture into new 

 and untrorlden paths. The development of salesmanship has consisted 

 almost entirely of the individual manufacturer adopting the methods of 

 his successful competitor. In like manner, the manufacturer whose 

 methods of accounting are inadequate, out of date and inefficient must 

 realize his disadvantage. In addition to this realization there must be 

 the willingness to employ the right methods that are new, in place of 

 wrong methods that are of such hmg stJiniling as to have become habits. 

 The delisihtful old-fashioned custom of fooling one's self must be given 

 up. If the operation, or a particular part of it really makes a profit, that 

 profit should not be diverted or concealed ; and conversely, if the operation 

 as a whole, or any department of it, makes a loss, the loss should be recog- 

 nized with red ink, for it is evident that the first requisite of good 



