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Enthusiastic Meeting at Milwaukee 



The NortluTii Hcniloi'k & rianlwood Maiuifactiircrs" Association 

 held ail entluisiastie aiul profitable meeting at the Hotel Pfister, Mil- 

 waukee, oil Kriilay, Octolier 26. 



Presiileiit Lingle's aililresa, wliieh he refrained from reading as it 

 was printed in tlu' Imlletiu, touched on many subjects pertinent to the 

 effect of war ilevelnpinent on the lumber industry. He stated that the 

 one object before all'.\inericaiis now is to win the war, and further 

 said that to accomplish this object will entail individual ami national 

 sacrifice. He urgeil a policy of public and national economy, which, he 

 maintained is vastly more vital than individual economy in the home. 

 He said: 



"We should advocate and work for a temporary suspension of all 

 work of a public nature except what is absolutely necessary and 

 urgent, ' ' 



This would inchido rciad building, road maiiiteiuiuce beyond the point 

 of actual safety recpiirements, retreuehment in municipal improve- 

 ments such as parks, playgrounds, libraries, etc. Mr. Liugle's idea 

 is that the capital ami labor which wouM thus be released could he 

 innied directly into war production. 



E.vdorSe New Terms of S.\.le 



Kilward Hines of Chicago then presented for discussion and con- 

 sideration terms of sale recently adopted by the National Lumber 

 Manufacturers' Association. These terms and what they mean are 

 discussed on page '.iii in this issue. Mr. Hines presented some inter- 

 esting figures in support of the adoption of commonsense terms by the 

 lunitjer trade at large. 



Referring to the buyer's practice of delaying settlement until arrival 

 of the car, when cash discount is allowed, he said that it has become 

 common practice to withhold remittance for ten days beyond the date 

 of arrival ami still make discount reduction. He said on this score: 



We conlcnd that tlic delivered price is sinijJl.v a gu.Trantee so far as 

 the amount of frci^lit is concerned, and is simpl.v to show the customer 

 what the slo<-k will cost Iiiin when delivereil. In no sense does it carr.v 

 with it the ;;uarant«'e that the shipment will reach destination within au.v 

 specified time. Th^- sldpper lias no jurisdiction over the transportation 

 apcncics to coiiipei deliver.v within a cert-iiin time. 



Mr. Hines presente<l the following table in support of his conten- 

 tion that the cash discount is simply a matter of interest allowed for 

 the prepayment of an account before it becomes due net : 



He then enumerati'd definite benefit which will accrue through the 

 tise of acceptances in closing accounts. They covered such points as 

 admission of the correctness of the account; common abuses in settle- 

 ment; economy and convenience of collection; lessening losses on bad 

 accoimts; li(|uidating what would otherwise be dead capital; lessening 

 of necessary working cajiital and elimination of petty abuses. 



On a roll call vote it was unanimously decided, to endorse the reconi 

 mendation. 



The principal matters referred to in the report of the traffic and 

 legislation committee read by Chairman A. L. Osborne had to do with 

 new traffic legislation at Washington an<l the proposed publication 

 of a traffic book by Traffic Manager V. M. Duck'cr of the Association. 

 The Washington matter is in the form of an amendment to the Act 

 to Regulate Commerce. This jirovides that until January 1, 1920, no 

 increased rate shall be filed after approval thereof by the Interstate 

 Oonunerce Commission, with or without hearing. Thus the carriers 

 need but file memoranda of freight proposals and the shippers who 

 have no notices have as their only recourse formal complaint, through 

 the commi.ssion, after the rates have gone into effect. 



Mr. Osborne referred earnestly to the developing car shortage in 



the North and strongly recommended co-operation with the Southern 

 Pino A.ssociation to insure more cars for association shippers. 



W.Mt LkoISLATIO.N and the LlTMBEK Bl'SI.S'ESS 



Then, following report of Cliairmnn George H. Chapman of the 

 bureau of gra<les, R. B. Goodman, acting president of the National 

 Lumber Manufacturers' Association, delivered an able aildress on war 

 taxes. The following is the essence of his address: 



The Kevenue .Vet (II. II. 42SO) of Oct. :!. lUl". the new war tux. Is 

 easii.v tile most important ta.x lev.v lu the hlstor.v of all li^Klslallon. It Is 

 estimated that It will produce a revenue In i-xce.-is of $2,0UO.0oo.(i00 per 

 annum. 



The coinple.\lt.v of the uccountluiu' lnvolve<l and It.s wide variance from 

 our own liookki^eplng are matters of much iiinceru. In the absence of 

 specilie instructions from the Treasur.v Iiepartment few of UR who have 

 given this liili careful stud.v feel that we would be able to make our 

 returns without great danger ot inaccuracy. 



I have been advised that the Treasur.v Is at work on a pamphlet which 

 will state full.v its regulations and instructions regarding the making of 

 returns under this law; but it Is not expected that this pamphlet will be 

 read.v until some time in Decemlier. It docs not sceui to me that we can 

 get ver.v far until we have these regulations. 



The particularl.v new and striking feature of this act is the war excess 

 profits tax. The general principle underi.vlng this tax is that If war con- 

 ditions have enabled us to make excess profits. It Is eminentl.v fair that 

 these profits lie heavii.v tjixed to help finauie the war. 



To deterndne the amount of the excess profits due to war conditions the 

 law proposes to set up as normal profits of the corporation its net earn- 

 ings for the .years 1911, 1012 and 19i:!, limited to from 7 per cent mlnl- 

 iiium to 9 per cent maximum return on the invested capital, and the 

 amount of tax on the 1917 earnings In excess of such normal pre-war 

 earnings is heavll.y graduateil with respect to the relation betwec^n this 

 excess and the amount of invested capital for the taxable .year — this tax 

 var.ying from 20 per cent to (id per cent, so that the deterndnatlon of the 

 amount of invested capital is of as great importance in calculating the 

 tax as the net income Itself, and it is particularl.y witli respi'ct to the 

 definition of invested capital that most iumliermen are particularl.y con- 

 cerned, and in this definition which we have ail read and speculated about 

 fliere appears to lie a need of Trcasurj- regulations for our guidance. 



In this the lumber industr.y Is particularl.y concerned because of Its 

 peculiar character where the ownership of timber and the manufacture 

 of lumber are carried on li.v the same corporation. 



-NlIT INTKXTKIX TO WdllK IN.HSTKK. 



I am sure that in the Treasur.y regulations a distinction will be made, 

 as it should lie made, lietween the land and the tlmlier on the land. While 

 tile timber is te^-hnicatl.v real estate it is to ail practical purposes personal 

 proiiert.w Kconomicall.y it c<imes in the same categi)ry as the manufac- 

 turer's stoclt of raw material. 



Then' Is no question in in.y nnnil or .yours that we have each of us, 

 by cur foresight, li.y our industr.y and l>.y our cooperative elTorts, truly 

 ejirncil \yhateyer increase in value there is toda.v In our stuuipnge over 

 the price we paid for it five, ten or even twent.v-flve .years ago. We have 

 earned this increase in value. We have paltl taxes on It and we l>elieve 

 that Its present value In excess of Its cost and accrued cnrr.vlug charges 

 is earned surplus invested in the business. 



So in inventorying his stock of raw material the lumberman Is Inllu- 

 I'liced not onl.v b.v tile price orlgliutlly paid for it. but b.y (he inarki't prices 

 at which he could replace It. .Mtho timber Is dittlcuit to inventor.v and 

 altho he may not have been in the liabit of re-Inventorying It from 

 .year to year, It is obvious that he can make no true accounting of his 

 actual financial condition without revising hls^ stuinpage estimates and 

 his stumpage vahies. 



While it will lii" diflicuit or impo.s.slliie for us to lietermlue and report 



the actual amount of our ear i surplus Invested In the business for 



specific years, still I believe lliat with reasonable regulations from the 

 Treasury iH-partment we will be able to furnish this Information to the 

 satisfaction of the (iovernment authorities. Hut we should vigorously 

 Iirotest against any Implication from any source that any part of i>ur 

 surplus growing out of our operating as timber hobling and manufactur- 

 ing corporations is unearned. The chairman of the legislative committee 

 of the Nathmnl association Is in ccmference with .Indge Hoyle on this sub- 

 .lect and I feel confiilent that it Is the ilesire and Intention of the Trea.s- 

 ury Department to treat the lumber Industry fairly In this respect. 

 I>KTi-:UMixi.Mi THE Xhrr Ixeo.Mt;, 



.\s to the determination of net income as prescribed under the amended 

 act of 191(!, we an' concerned not with the arbitrary stumpage rates that, 

 for one reason or another, we have used In our aeconnling. but we are 

 required to make a careful and honest appraisal of the true average 

 stumpage values as of March 1, 1»l.'t. If at the present time the stumpage 

 values as deterndned by conversion Into lumber are greater than the 

 values of 19i;i, the dllTi'rence Is clearly income since March 1, 1111.'!, and 

 accrues In the year In which the timber Is cut. 



—21— 



