16 



HARDWOOD RECORD 



October 25, 1921 



In the meantime, though, Habdwood Record feels justified in again 

 stating that, in its opinion, hardwood lumber has passed its low point 

 and is good property for any buyer having the funds and the nerve 

 to invest. 



"Forward to Normalcy" 



WA. BABBITT of South Bend, general secretary of the National 

 . Association of Wood Turners, has contributed to the hardwood 

 trade, both producing and consuming, many a thought, sound in 

 principle and well expressed, which if universally heeded would prove 

 invaluable. But no attempt of Mr. Babbitt 's to express his personal 

 philosophy through the press has quite equalled his intelligent and 

 energetic handling of the present economic situation in an article 

 under the above heading appearing in this issue of Hardwood Eecord. 

 The battle cry of the world today should be not ' ' Back to Normalcy 

 and 1914 Price Levels," but "Forward to Normalcy and 1921 

 Prices." Characterizing as a liar and an ass, the buyer who arbi- 

 trarily refuses to consider a quotation because it is not parallel with 

 1914 figures, Mr. Babbitt vividly pictures the position in which this 

 country and the world finds itself as contrasted with 1914. The asks, 

 ""What went with normalcy and 1914 price levels? Universal stagna- 

 tion. General Unemployment. One great financial crash after an- 

 other! * ♦ ♦ What particular item of the economic history of 

 1914 appeals to you, outside of a low tax rate? Ton know that the 

 country was nearer a great panic then than now." Mr. Babbiitt 

 states most emphatically that "that normalcy which business must 

 attain or perish is not behind us, but ahead of us. It will have to 

 rest upon a new series of economic conditions of which 1914 knew 

 nothing." 



Without enumerating all of the points of difference developed in 

 Mr. Babbitt 's article, the following most pertinently and vividly con- 

 trast the two eras. He says that Federal taxes have increased from 

 $8.75 per capita in 1914 to $46 per capita in 1921, to say nothing 

 of state, county, city and other taxes. The cost of transportation has 

 advanced 8.5 per cent and the cost of financing operations is double 

 pre-war basis. 



The present tendency to follow the cry ' ' back to normalcy ' ' is due, 

 according to Mr. Babbitt, to a mob psychology which rallied behind 

 this slogan with a will and a vengeance. The announcement of ' ' re- 

 strictive measures by the Federal Reserve Bank and its branches and 

 members was enough to secure deflation at the highest possible speed 

 consistent with safety," says Mr. Babbitt in referring to the begin- 

 ning of the present conditions, but at this critical juncture came 

 "Back to Normalcy and 1914 Price Levels." The slogan was 

 "touted from every possible angle of fact and fancy. The public 

 accepted the slogan as truth and stopped buying. Though they had 

 forgotten the hard times that went with 1914 prices, they remembered 

 the prices which looked good on the basis of 1920 wages." The 

 collapse of industry followed immediately. Production slumped down 

 to twenty per cent of normal and with this result came unemployment 

 and then the last hope of orderly deflation was destroyed by the mob 

 psychology and its "Back to Normalcy" slogan. 



Mr. Babbitt 's article is full of live facts as well as philosophy. 

 For instance, in referring to the relentless policy of buyers of con- 

 tinuously hounding for lower prices, he states that last November the 

 " total- realization-f rom-sales " dropped below "cost-line" and has 

 stayed there ever since. Indicating an average loss for all business 

 done of fifteen per cent of the total cost not including losses due to 

 inventory writeoff. He refers to the chart shown with his article, 

 which brings this fact out in clear perspective. 



The writer's philosophy does not merely point the sin of which we 

 have all been guilty, but points the way out through a clear-sighted 

 exposition of the fallacy of the present state of mind of our popula- 

 tion. His assertion that we must either follow the slogan "Forward 

 to Normalcy, ' ' or perish, is supported by a clearly expressed answer 

 to that question which has lieen uppermost in the minds of our busi- 

 ness executives ever since it became apparent that the ' ' Back to 

 Normalcy and 1914 Prices" principle was builded on columns of 

 sand, viz., "What is Normalcy?" 



Mr. Babbitt supplies a line of reasoning which if applied in general 

 would prove a panacea for the present difficulties. According to his 

 logic, "Normalcy is a balanced condition of supply and demand, 

 relative to the current economic situation. The proof or index of 

 normalcy u a price level which encourages bona fide traffic in com- 

 modities. ' ' 



No more convincing proof of the entire wisdom of this statement 

 is needed than the history of production during the past six or eight 

 months. Nor is it necessary to go beyond the sawmilling and wood- 

 working industries to gain the required illustration. Hardwood prices 

 have been pounded down lower and lower despite the protests of 

 producers that they would soon be selling at less than cost. When it 

 was demonstrated to the trade at large that that position had been 

 reached, production immediately became restricted untU today it is 

 doubtful if more than fifteen per cent of possible operation is under- 

 way. It is a well known fact that some prices on certain grades of 

 hardwoods represent a practically nil return on the net mill basis. The 

 same thing unquestionably holds in the production of certain fabri- 

 cated products made from hardwood, and there is little reason for 

 believing that in either instance the policy has materially contributed 

 toward righting the economic situation. It little behooves anyone to 

 try to force the hand of business destiny. In business the course of 

 events is regulated by the time honored balance of supply and demand. 

 Apparent supply has been greater than apparent demand, thus pro- 

 duction has been restricted. Surplus supplies have through this 

 means been gradually worn away until now in some industries it is 

 more nearly related to visible demand. Slight improvement in values 

 has resulted and if buyers at large, one after another in the endless 

 cycle through which the raw material passes in its various processes 

 of fabrication would realize that any general buying policy which 

 demoralizes the source of supply ultimately reacts against the best 

 interests of his own business, those units of new business wisdom 

 would soon link themselves together into a chain through which to 

 again connect business with true normalcy, which as Mr. Babbitt 

 strikingly proves, lies ahead and not behind. 



Table of Contents 



REVIEW AND OUTLOOK: 



General Market Conditions 15 & 16 



"Back to Normalcy" 16 



SPECIAL ARTICLES: 



Forward to Normalcy 17-18 



Hardwood Counsel Makes Strong Appeal 19-20 & 23 & 30 



"Elephints a-Pilin* Teak" 35-36 & 48 



Grand Rapids January Market Will Be Huge 38 & 40 



WHO'S WHO IN WOODWORKING: 



Carle C. Conway 21-22 



Charles E. Rigley 21-22 



CLUBS AND ASSOCIATIONS: 



MiscoUaneous 31-32 



Michigan Hardwood Producers Meet 24 A 27 



Northerners Will Put Few Men in Woods 26-27 



Appalachian Loggers Hold Congress 28 & 30 



HARDWOOD NEWS 33-34 & 51-54 



HARDWOOD MARKETS S4-58 



CLASSIFIED ADVERTISEMENTS 60-62 



ADVERTISERS' DIRECTORY S9 



HARDWOODS FOR SALE 62-64 & 66 



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