20 



HARDWOOD RECORD 



October 25. 1921 



control. The buyer was unhampered at all times and was free to 

 patronize any of the many thousand mills outside of the association 

 at any time. 



Justice Brandeis' curiosity was excited on this point and he 

 sought an explanation from Government counsel, but Government 

 counsel seemed to have small success in making clear to him, just 

 how the producers of less than one-third of the country's hardwood 

 output could have successfully exercised the remarkable control 

 charged against them. 



Questions From the Court 



Arguments in the rehearing were opened by Gen. Boyle and he 

 was followed by Attorney J. A. Fowler, special assistant to the 

 attorney-general. Each side was allowed two hours for argument, 

 and as the case was called at 1:30 p. m., and there was a half 

 hour luncheon recess at 2 o'clock. Government counsel was inter- 

 rupted by the adjournment of the court for the day. His argu- 

 ment was resumed on the next day, October 13, and the arguments 

 were closed by G. Carroll Todd, co-counsel for the lumbermen, in 

 the half hour of appellants' time, which Gen. Boyle had reserved 

 for him. 



At the outset of that portion of the argument which Gen. 

 Boyle presented, he was interrupted by members of the bench, who 

 wanted to bring their conception of the case up-to-date. Chief 

 Justice Taft asked several questions during this short process of 

 review. But after this Gen. Boyle was permitted to continue the 

 argument in his own way, with comparatively few interruptions. 

 The few of these that did occur, however, brought out interesting 

 facts. 



The Chief Justice wanted to know about the "agreement" to 

 fix prices, stressed in both the Government 's original and supple- 

 mental briefs. Gen. Boyle explained that the Government did not 

 charge that an actual agreement existed, but that through a tacit 

 understanding, or in effect, the members of the plan conspired to 

 eJichance and maintain prices at high levels. 



The next interruption was from Justice Brandeis, who, among 

 other things, wanted to know if the members of the plan were not 

 to give their last month 's production and say what they expected 

 to produce in the future. Gen. Boyle replied that this was correct, 

 but that the statements as to future production were merely pre- 

 dictions as to output for the next sixty days and were invariably 

 inaccurate; that everj-bodj' now concedes that the mills at all times 

 were producing all the lumber they could — a fact clearly shown by 

 the record. 



Justice McReynolds desired to know what obligation was as- 

 sumed by the members of the Open Competition Plan and was 

 advised that "the only obligation was to furnish the data on sales 

 if they received the sales report. Every member was free to react 

 to the information as he saw fit," Gen. Boyle explained. "The 

 record shows there was a wide difference in the prices charged by 

 members and that the average received by members of the plan 

 was substantially the same as the average received by hardwood 

 mills in other sections of the country, which did not receive the 

 sales or other reports." Gen. Boyle here complained that at the 

 very beginning of the reargument the hardwood men were faced 

 with the charge that the collection and distribution of market 

 information is in and of itself unlawful. He desired to make plain 

 to the court how seriously this would affect trade association activ- 

 ities generally if the court should subscribe to so extreme a view. 



In reply to another question from Justice Brandeis, Gen. Boyle 

 said that copies of the Open Competition Plan reports were filed 

 with the Federal Trade Commission and the Department of Justice, 

 adding that there was nothing surreptitious about any of the 

 activities of the plan. 



Plan is a Practical Necessity 

 In order to make clear the practical necessity of the plan. Gen. 

 Boyle explained the merchandising methods which long custom 

 have established for hardwood producers. The mills largely market 

 their product through wholesalers and these buyers have facilities 

 for keeping informed as to market conditions, which the producers 

 can only match with a system such as the Open Competition Plan. 



Without such reports, or plan, the mills must deal blindfolded with 

 wholesalers whose eyes are wide open. Eighty-five percent of the 

 mills in the group, he said, sold their products at the mill door and 

 would be so handicapped. The operator of a sawmill without reli- 

 able market data w'ould be in the same situation, he explained, as 

 the live stock farmers were before central markets were established, 

 when they were entirely at the mercy of informed buyers. But 

 while central markets have been established for live stock and 

 enable the stock farmer to deal on equal ground with the buyers, 

 there is no central market for lumber, there is no Government or 

 other agency for keeping the hardwood producer adequately in- 

 formed, and without he gather his own statistics he must merchan- 

 dise his products more or less in total darkness. 



The hardwood producer mnsr take an inventory of his stock every 

 thirty days, said Gen. Boyle, because it takes six months, in the 

 majority of the cases to cure the lumber to a shipping dryness. 

 Only a comparatively few of the larger of the mills have kiln 

 drying facilities, which enable them to proceed more rapidly than 

 with the general system of drying with sun and air. Thus arises 

 the necessity of having reports showing condition of stocks. The 

 stock reports distributed to members in the group attacked, were 

 nothing more than multiplied inventories of stock throughout the 

 producing region. He wanted to know, "Who was hurt by the 

 distribution of that information? The lumberman profited by it 

 and the public also, because the buyers could always be sure of 

 having their wants supplied if the producer knew what grades to 

 cut." 



Submitting proof that the Open Competition Plan did not curtail 

 production. Gen. Boyle called the court's attention to the fact that 

 during the period of high lumber prices new tracts of timber were 

 opened up, new railroads built and new machinery bought to facili- 

 tate production of hardwoods, in a volume never before equaled. 

 "It would have been monumental folly for the members of the 

 group to have curtailed production under existing conditions," he 

 asserted. "Mills representing 28 per cent of the hardwood pro- 

 duction, if they entered into an agreement to curtail, would simply 

 turn over their business to their competitors. Some mills did not 

 produce any lumber. They were under water. Others produced 

 40 to 50 per cent of capacity because they could get no more under 

 existing conditions. Those producing none made no complaint 

 against those whose mills were on high ground and were running 

 up to full capacity. ' ' 



At the first trial at Memphis, Gen. Boyle told the court, the 

 members of the plan exposed their books on the witness stand, 

 while nonmembcr producers did likewise. "And there was not a 

 word of contradiction from any of them," he said. "The Govern- 

 ment would have these producers blindfolded. The need of knowl- 

 edge of market conditions hardly admits of argument. The dis- 

 semination of such information could not be otherwise than helpful 

 to the public as well as to the manufacturer, who has no other 

 means to avoid the over-reaching of the buyer, from which the 

 public receives no benefit." 



Fowler Discloses Lack of Hardwood Wisdom 



When it came the turn of Attorney Fowler, the attorney-general's 

 special assistant, to speak he labored under the same glaring lack 

 of knowledge of conditions in the hardwood industry that had dis- 

 tinguished the arguments of his predecessor, Mr. Mitchell, in the 

 original hearing of the case at Memphis. 



But this lack of familiarity with the hardwood industry, and 

 even the case itself, did not dampen the ardor of Mr. Fowler's 

 attack on the American Hardwood Manufacturers' Association 

 and the Open Competition plan. After laying down a promise by 

 quoting from the original purpose of the plan the statement that 

 it was proposed to eliminate the low price mill, which fixed the 

 market for hardwood lumber, he began to lay on valiant blows. 



But the strident flow of his oratory was interrupted by Justice 



Holmes who desired to know if the Government contended that the 



public benefited by having the price fixed by the low price mill. 



Without hesitation, Mr. Fowler answered in the affirmative. "Well, 



(CMitinued on page 23) 



