18 



HARDWOOD RECORD 



October 2.j. 1921 



and despair. With the collapse of industry came the curse of unem- 

 ployment, and the last hope of orderly deflation was destroyed, by the 

 "mob psychology" of this "Back to Normalcy'-' slogan. This status 

 has now lasted for nearly a year. 



Nevertheless, buyers have relentlessly kept up the policy of con- 

 tinuous pounding for lower prices, when every known danger signal 

 of business has long been set against such a course. Last November, 

 the "Total-realization-from-sales" line dropped BELOW the "total- 

 cost ' ' line, and has stayed there ever since, indicating an average loss 

 for >all business done for the above period to date to be over 15 per 

 cent of the total cost. This loss does not include losses due to inven- 

 tory write-off. Reference to chart herewith brings this fact into 

 clear perspective. It will be noted that in February, total returns 

 were less than manufacturing overhead. Direct labor and materials 

 had to be paid for out of capital. 



"We Have All Sinned" 



We have common responsibility for this economic catastrophe. We 

 all fell, as buyers, for the lure of "1914 Price Levels." We are all 

 buyers as well as sellers. As buyers, we have pounded our sources to 

 death, just as our customers, as buyers, have pounded us to death, and 

 are iu turn being pounded by their customers in like fashion. We 

 have been "whipping each other around the stump," as tho' each 

 were the Devil himself. And for what purpose? Because of our silly 

 faith in the proven fallacy that 1914 price levels will bring back nor- 

 mal business. And with what result ? What we wanted was business ; 

 what we have is WRECKAGE. What more proof do we need that 

 the farther back we go for normalcy, the farther we get into the 

 slough of despond? 



Forward to Normalcy 



Wen, what is NORMALCY? 



We shall undertake a definition, not being able to find one in the 

 dictionary that fits the case. Normalcy is a balanced condition pf 

 sujjply and demand, relative to the current economic situation. The 

 Proof or Index of Normalcy is a price-level which encourages bona- 

 fide traffic in commodities. The outstanding feature of the boom 

 period was that it did not encourage 60/10 fide traffic in commodities. 

 The same observation applies to the present slump. A half-price 

 offering of lumber discourages not only tho production of lumber, but 

 also the manufacture of every article into which that lumber would 

 normally be manufactured, all theories to the contrary notwith- 

 standing. 



Our fikst big fight for Normalcy: Business men know that the 

 crystallized opinion of the buying public is that all present prices are 

 unfair and unjust. Public faith in the .justice and integrity of 

 American business methods is badly bent. The hypnotism of "1914 

 Priv Levels" stUl holds undisturbed sway. We believe that every 

 effort ought to be made by every business organization to re-establish 

 in the popular mind a sound faith in the necessity and justice of price 

 levels related to our current economic condition and to a burden which 

 is only equaled by that of the Kingdom of Great Britain and Ireland, — 

 in the world's lon/j history. There is no comparison between the 

 economic situation in 1914 and 1921. Our Army and Navy tax for 

 tho current year is more than double the entire amount of Federal 

 tax of 1914. It is ten per cent more than d-ouble the entire amount 

 of the German Reparations payment for the same period, — which Ger- 

 man financiers say mil ruin Germany in tlie payment of it. The 

 insane "Mob Psychology" involved in the slogan, "Back to Nor- 

 malcy and 1914 Price Levels" must be unseated, and in its jdace estab- 

 lished the sane, constructive ' ' Mass Psychology ' ' of 



Forward to Normalcy and 1921 Price Levels 



.Tust look for a moment at the new factors in the present economic 

 situation as compared with 1914. 



Taxes: According to Ex-Secretary of the Treasury David F. Hus- 

 ton, the Federal per capita tax in 1914 was $8.75. In 1921 the amount 

 had risen to over $46.00 for every man, woman and child. In terms of 

 family, this means a rise from $43.50 to $230.00 as the cost of the 

 Federal Government to each family unit. Local and state taxes have 

 heavily increased. 



Tkansportaticn : The cost of this unit has advanced 85 per cent. 



we are told by statisticians. Right now there are 2,000,000 men in 

 battle array to prevent any real reduction of this huge burden on 

 the people. • 



Housing: Satisfactory data in the form of actual figui-cs were not 

 available for the purpose of this pajjer. But increases have been and 

 are a public scandal. Furthermore, the whole army of the building 

 trades is solidly lined up to prevent the building of homes on terms that 

 will permit rentals which will alleviate this situation. It would be 

 a moderate estimate to say that rentals, especially in industrial cities, 

 have more than doubled. 



Fuel: Like Transportation, the cost of fuel is entrenched against 

 deflation by government cooperation, as some call it: by official med- 

 dling with private business as others believe. At all events, the Coal 

 Mining Companies are actually conducting an advertising propaganda, 

 claiming that a 10 per cent profit on turn over, with all the "emi- 

 nently satisfactory ' ' write-offs allowed by government accountants, 

 and the utterly uncontrolled matter of salaries and bonuses, is an 

 amount which any ' ' fair-minded ' ' consumer will admit to be reason- 

 able! The moment government support to the fuel situation is with- 

 drawn, deflation w-iU not only come quickly, but jirobably disastrously. 

 The basis of practically all profiteering is an inflated wage scale, 

 which is uniformly enforced, with government approval. 



Capital: Another most vital and burdensome feature of the new 

 economic situation is the high cost of capital. Because these high costs 

 are stabilizeil for long periods in the form of bonds, it is evident that 

 until the entire group of post-war financing operations is retired, we 

 must carry a permanent increase of production cost. It cannot be 

 deflated. It is reliably reported that the net cost of these financing 

 operations is over ten per cent per annum, or nearly double pre-war 

 basis. 



No attempt is made herein to go farther than to refer summarily to 

 the high spots of the new economic situation which is rapidly stabiliz- 

 ing; and to point out the epochal difference between the old era — 

 only seven years distant — and the new new era of 1921. 



There is no question that all these matters must be deflated, and 

 brought in line with the bases of the new economic status. But owing 

 to the strongly intrenched positions of the groups involved, this defla- 

 tion will be no short or easy task. These conditions are with us, and 

 have to be accounted for in the normalcy toward which all men are 

 striving. American folks have got to exist, and American Industry 

 has got to function, in the face of conditions as they are. We cannot 

 wait until these last strongholds of war inflation are captured. And 

 when they are captured we .shall still have a tax load that makes any 

 thought of 1914 price levels futile. What answer is there but to "Go 

 Forward?" Let's go! 



Forward to Normalcy! 

 Let 's face the reassuring possibilities of the New Era as our goal. 

 Let 's have faith in America, and in our father 's God. Let 's organize 

 our sales propaganda on truth and justice, that the people may recover 

 their faith in American business. Let 's quit treating our business con- 

 nections as a pawnbroker does an unfortunate customer, or else print 

 tho pawnbroker's sign on our stationery. Let's join in spreading this 

 true cfduomic slogan, which moans life and health to all America. 



Forward to Normalcy! 



We know that the world is sick unto death with the deadly ptomaine 

 poison of war. We know how sorely America is infected. To us it 

 seems to be a task of moral as well as economic rehabilitation — of faith 

 and prayer and work on the part of all. Shall we not be doing ' ' our 

 bit" in this greater World War if we work, with common purpose and 

 rectitufl" of its business institutions? Let's dig in here and win our 

 unceasingly, to establish once more a National Faith in the moral 

 first battle for the NORMALCY of NOW ! 



Rates to Gulf Parts Reduced 



The Cincinnati offices of the Southern Ilardwooil Traffic Association an- 

 nounce reductions of 3 to 5 cents per hundred pounds In lumber rates to 

 gulf ports for export, effective Nov. 1, 1921. The new rates, including cost 

 of delivery to sbipslde, are: From Cincinnati, 31'/.; Lexington, SlVi; 

 Louisville, 31% ; East St. Louis, 33 !4, and St. Louis, 33 H. 



