20 



HARDWOOD RECORD 



February 25, 1019 



Sweeping Victory in Vehicle Stock Suit 



Judge F. F. Heiskell, Part 1, Cliancery Court, this (Shelby) county, 

 handed down a decision February 13 that the Gayoso Lumber Com- 

 pany, Memphis, was entitled to recover $21,000 from the Kelsey 

 Wheel Company, Detroit and Memphis, on the ground that the latter 

 had breached its contract with the former. This amount represented 

 the difference between the cost of manufacture of 700,000 feet of red 

 and white oak, not taken on a contract for 1,000,000 feet, and the 

 average contract price for approximately 325,000 feet actually taken 

 by the company. 



The cost of manufacture, it developed during the trial, amounted to 

 $38 per thousand, as based on the experience shown in the case of the 

 stock actually delivered, while the average contract price, owing to 

 difference in grades, amounted to $67.10. The contract for 1,000,000 

 feet of 2%-inch stock for the manufacture of wheels for army escort 

 wagons was made January 12, 1918, at prices ranging from $85 to 

 $60 per thousand, according to grade and character. The Gayoso 

 Lumber Company actually manufactured 300,000 feet of 2%-inch 

 stock, of which the Kelsey Wheel Company took 125,000. The Kelsey 

 Wheel Company also accepted 150,000 feet of 3%-inch stock, making a 

 total of approximately 300,000 feet of the original amount of 1,000,000 

 feet. 



In view of the fact that the 3%-inch stock was used for the manu- 

 facture of wheels on a cost-plus contract with the government, the 

 Gayoso Lumber Company contended that the 3% -inch stock delivered 

 to the company should not apply on the 1,000,000 foot contract and 

 that it should recover the difference between cost and contract price on 

 875,000 feet, the discrepancy between the 125,000 feet of 2%-inch 

 stock and the contract for 1,000,000 feet thereof. The court ruled 

 against the complainant on this point, however, and assessed damages 

 on the basis of 700,000 feet. 



This is the largest judgment ever given a lumber company in this 

 centre and the case has attracted considerable attention on this ac- 

 count. But, what is far more important, the ruling of the court vin- 

 dicates lumbermen of Memphis of the charge of "profiteering against 

 the United States in a time of national peril," a charge contained in 

 the answer of the Kelsey Wheel Company to the original bill of the 

 attorneys for the complainant. The lumbermen holding this and sim- 

 ilar contracts went to Washington last spring and, through Caruthers 

 Ewing, their attorney, offered to sell lumber for the manufacture of 

 army vehicles at any price the government designated provided the 

 government got the benefit of the reduction. It was developed at 

 that time, however, that the contracts in question were straight con- 

 tracts with implement manufacturers and that the latter would have 

 been the beneficiaries of the reduction in price and that the govern- 

 ment would have received no benefit whatever therefrom. 



The ease gains additional importance from the fact that other lumber 

 firms held similar contracts with the Kelsey Wheel Company, some of 

 whom reduced their prices from $85 and $60 to $70 and $50 and some 

 of whom refused to cut their selling figures just as did the Gayoso 

 Lumber Company. It is possible that those who did not cut their 

 prices and who were therefore unable to effect delivery in full to the 

 Kelsey Wheel Company may have recourse to the courts for a settle- 

 ment of the issues involved. 



One of the points of peculiar interest, developed during the trial, 

 was the admission on the part of A. E. Mahannah, manager of the 

 Kelsey Wheel Company, Memphis, that he did not overlook any op- 

 portunity of increasing diflSculties of delivery of lumber on the part 

 of those who refused to cut their prices in accordance with the alleged 

 instigations of the Vehicle and Implement Committee at Washington. 

 In the language of Caruthers Ewing, one of the attorneys for the 

 Gayoso Lumber Company, Mr. Mahannah admitted that he "rewarded 

 the righteous and punished the wicked." 



This is, for the time being, the final chapter in a case which has 

 attracted attention all over the United States. It had its innings in 



Chicago and also in Washington when a special committee from Mem- 

 phis found it necessary to investigate certain phases of the relations 

 between the government and the socalled "vehicle committee" with 

 respect to prices for lumber for army escort wagons and other equip- 

 ment. These investigations were made through General Goethals, Col. -i 

 W. S. Wood, of the quartermaster 's corps, A. B. Thielens, chairman of i. 

 the Implement and Vehicle Committee, and other prominent men in 

 the national capital and the results of these investigations attracted 

 vride if not somewhat sensational attention when they were made 

 public in pamphlet form. 



Inspection Rules Committee to Meet 



The ofiice of the secretary of the National Hardwood Lumber Asso- 

 ciation has sent out the announcement that the inspection rules com- 

 mittee will meet March 22 for a one-day session. The date originally 

 set for this meeting was March 19 and 20, but because some members 

 could not conveniently be present at that date, the time was changed. 

 The committee meeting will be fully ninety days before the annual 

 meeting of the association, which will be held June 19 and 20. Sug- 

 gestions relating to changes in the inspection rules can be presented at 

 the committee meeting and still be in time for consideration at the 

 annual convention. 



Only 3,000,000 Feet of Logs for Memphis— 

 50,000,000 Feet Normal Supply 



Hardwood manufacturers at Memphis and throughout the valley 

 territory are facing the most acute shortage of logs in their entire ex- 

 perience. This statement finds ample confirmation from the Valley 

 Log Loading Company, which loads a large percentage of the logs on 

 the main lines of the Yazoo & Mississippi Valley and the Missouri Pa- 

 cific roads, and from Col. A. H. Egan, general superintendent of the 

 y. & M. v., with headquarters at Memphis. Here is the statement 

 of J. W. Dickson, president of the Valley Log Loading Company: ■ 



There are less than 300 cars of logs awaiting loading on the main line 

 of tlie Yazoo & Mississippi Valley north of Vicksburg, and there are also 

 less than 300 cars on the Missouri Pacific. This means that the quantity 

 of logs on these two roads is less than 600 cars or approximately 3,000,000 

 feet. At this time last year, when there was about an average quantity, 

 there were 30.000,000 feet on the main lines and approximately 20,000,000 

 feet on the spur tracks on which the various manufacturing Arms did their 

 own loading, a total of 50,000,000 feet. 



We have already tied up two of our loading machines for the reason 

 that we have no loading to do, and we will tie up the remainder of our 

 equipment by the first of March. This is due to the fact that there is so 

 little timber going into the ditches along the railways. The ground has 

 been so wet during the past several months that practically no progress 

 in cutting and hauling of logs has been possible. Last year approximatelj 

 5.000.000 feet of logs were coming out each month. This year almost 

 nothing Is coming out. As a result, when we complete loading of the 

 logs already awaiting that process, there will be nothing for us to do, 

 pending further progress in logging operations. 



This situation is the worst in the history of this territory. The majority 

 of the mills are either closed down or are running on short time. The 

 period of the year is appro.iching when more favorable weather is to be 

 logically expected, but we desire to emphasize the fact that it Is going 

 to reciulre a considerable amount of time to cut enough logs to put us in 

 position to load on anything like a normal basis. We do not anticipate 

 free loading again until the middle of .\pril and perhaps until the first 

 of May. In the meantime, mills will necessarily have to continue to operate 

 on a somewhat limited scale. 



"There are not 1,000 cars of logs awaiting loading on the entire 

 Yazoo & Mississippi Valley system from Memphis to New Orleans." 

 This is the statement of Col. Egan, superintendent of that road, who 

 is in position to speak authoritatively. This means that, on a liberal 

 allowance for each car, there are not more than 5,000,000 feet on that 

 entire system which is one of the principal log carriers in the southern 

 hardwood field. 



