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HARDWOOD RECORD 



February 10, lOlS 



In order to secure the beneflt of tills ileduetloii suih corporations must 

 set up on their books as of March 1, 1913, the fair market price en bloc, 

 of all the timber then owned by them, and then, by dividing this en bloc 

 value by the estimated numl>er of feet (board measure) In the entire tim- 

 ber holdings, the per unit value or price as of March 1, 1913. will be ascer- 

 tained, which per unit price or value will be the basis for measuring the 

 amount which may be added to the cost of manufacture, or deducted from 

 gross Income, until the en bloc value of the entire holding as of March 

 1, 1913, shall have been extinguished, after which no further deduction 

 on tills account shall be allowed. 



The same rule will apply In the case of timber or timber lands pur- 

 chased subsequent to March 1, 191.S, the only difference being that actual 

 cost — that is. the gross purchase price — shall, in making the computation, 

 be substituted for en bloc price or value as of that date. If the entire 

 market price or value of both timber and lands as of March 1, 1913. or 

 the entire cost, It acquired subsequent to that date, is extinguished 

 through a deduction from gross Income for timber used, or through a per 

 unit charge to cost of manufacturing Innilier. then the entire amount 

 realized from the loggod-ofT lanils or for other salvage will be returned as 

 income of the year in which such lands are sold or tlisposcd of. 



If the timber or timber lands are sold en bloc, the gain or loss will be 

 ascertained on the basis of the difference between the fair market price, 

 or cost, and the selling price, according as the property was acquired 

 prior or subsequent to March 1, 1913. 



The fair market price or value of timber or timl>er lands as of March 

 1, 1913. is the price at wliich the property in its then condition, and with 

 the circumstances then surrounding it, could have been sold for cash or 

 its equivalent. This value must not be speculative, hvit must be deter- 

 mined without taking Into account any prospective profits that may result 

 from the manufacture of the timber into lumber. It must he. as the law 

 contemplates, a fair market value and, once determined, must be set up 

 on the books, and, as the measure of a stumpage deduction for income- 

 tax purposes, must remain constant and can not be increased except as 

 new purchases are made at a higher average cost. The value so set up as 

 of March 1. 1913. will be subject to the approval of the Commissioner 

 of Internal Revenue. 



Government Building Policy 



Secretary McAdoo has authorized the following statement: 

 Because of the interest of the Treasury Department in the conservation 

 of capital and credit during tlie period of the war. I liave received several 

 inquiries as to whethi'r building operations of one kind and another should 

 be discouraged. With regard to plans for public buildings under the con- 

 trol of this department. I have stopped letting contracts except in cases 

 where they are absolutely necessary. Home building is an excellent thing 

 in normal times, but at present, unless there is a real shortage of houses 

 for war-workers, I strongly advise that materials, valuable labor and 

 credit be not utilized for this purpose. Whether homes should be built 

 should be determined strictly by th.' urgency of the need. 



Excess Profits 



The excess profits regulations were on Saturday finally approved by 

 the secretary of the treasury and sent to press. The provisions which are 

 of most general interest to the public are those which deal with the 

 definition of invested capital of corporations and partnerships, and with 

 the treatment under section 210 of cases in which the capital cannot be 

 satisfactorily determined and under se<'tion 1109 of rases of nominal capital. 



The provisions of section 210. which permit the deduction to be com- 

 puted by reference to the deductions as determined in the ordinary way 

 in the case of representative concerns engaged in the same trade or busi- 

 ness, are held to apply to a number of classes of exceptional cases. 



Gains or profits from transactions entered into for profit but which 

 are Isolated, incidental, or so infrequent as not to constitute an occupa- 

 tion, and Income from property arising merely from its ownership, includ- 

 ing interest, rent and similar income from investments, are in the case 

 of an inclividual not sul>ject (o the excess profits Tax. except in those cases 

 where the management of such investments really amounts to a trade or 

 business. 



Other provisions of interest to individuals are those which provide that 

 the profits of the taxable year may, if put back into the l)usincss, be 

 included as invested capital, and that a member of a partnership who 

 receives a salary from the partnership is also entitled to a deduction of 

 $6,000 in computing his excess profits tax upon the salary. 



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Thinks Commission Will Fix Rates 



J. H. Townshend, secretary manager of the Southern Hardwood 

 Traffic Association, announces that he lias received information from 

 Washington that the railroad bill will undoubtedly have a section in 

 it, when finally enacted, leaving the rate-making power in the hands 

 of the Interstate Commerce Commission, as at present, instead of 

 granting this to the director-general of railroads. The association 

 has, through both its officials and its members, recently kept the 

 wires hot between Memphis and Washington urging that no such 

 power be conferred on the director general, and it would seem that 

 their efforts are about to be crowned with success. 



The association has also received from Washington a new demur- 

 rage ruling cancelling that which was scheduled to become effective 

 January 21, and which provided for the elimination of the "bunch- 

 ing clause" in the old rule. It is expected that the new ruling will 

 become effective within the next few days, and it is pointed out 

 that the bunching clause is restored so far as nearby shippers are 

 concerned, btit that it will still operate against the man who puts a 

 lot of cars in shipment and has long hauls from producing points. 

 The association appealed for restoration of the bunching clause and 

 this was granted following a letter written by J. H. Townshend, 

 secretary-manager, to Thetus W. Sims, chairman of the house com- 

 mittee on interstate commerce, which the latter turned over to 

 Director-General McAdoo. 



The embargo situation is described as slightly worse by F. B. 

 Larson, assistant secretary of the association, who has charge of 

 this particular feature. He says that the only points which can 

 be reached in Eastern Trunk Line territory are those on the Dela- 

 ware, Lackawanna & Western and on the New York Central lines 

 west of Syracuse, though lumber for export or for the government 

 may be shipped through Greater New York if a permit is obtained 

 from the authorities in control of traffic regulations for the eastern 

 seaboard. The only points which can be reached in Central Freight 

 Association territory are some in Indiana and Illinois, those in 

 Michigan served by the Wabash and a few in Ohio on the Big Four, 

 the Lake Erie & Western and one or two other roads. 



The association has shown an increase of eight new members 

 since the annual held here January 1.5, bringing the total to 159. 

 Mr. Townshend says that this organization aims at an increase of 

 more than fifty members during the year. Its members already ship 

 more than 250,000 cars of lumber and forest products annually. 

 The new members are: Maley & Wertz, Evansville, Ind.; Hemphil 

 Lumber Company, Kennett, Mo.; Bradly- Lumber Company, Green- 

 wood, Miss.; Perkins Brothers, Kelso, Ark.; H. W. Darby Hardwood 

 Lumber Company, Grenada, Miss.; Jefferson Lumber Company, 

 Allport, Ark.; G. W. Allport, Allport, Ark., and Atlas Lumber Com- 

 pany, Cincinnati. 



Mr. Townshend says that the southern and southwestern carriers 

 will, he is informed, petition the Interstate Commerce Commission 

 for an advance of approximately 2 cents per hundred pounds of 

 hardwood lumber shipments from all points in southern, south- 

 western and southeastern territory to destinations in eastern trunk 

 line territory. He also says that it is rumored that the Canadian 

 roads will shortly demand the full Ohio river combination which 

 will, if granted, mean an advance of 5 cents per hundred pounds on 

 lumber shipments from southern producing points, bringing the 

 Memphis-Toronto rate from 26 to 31 cents. 



Ostrich Leather for Furniture 



Experiments are being made with leather from tanned ostrich 

 skins, and it is recommended for leather upholstering of furniture. 

 It is said to be very handsome and can be prepared in artistic 

 colors, particularly in greens and browns. Since ostrich feathers 

 went out of style, the ostrich farms of South Africa have been 

 unprofitable, and it is to find other markets, to take the place of 

 feathers, that the skins of the birds are being tanned. Markets 

 arc likewise being sought for the eggs in England. They sell in 

 local markets in Africa at from $1.68 to $2.16 a dozen. A dozen 

 ostrich eggs are equal in bulk to twenty-five dozen hen eggs. An 

 ostrich skin is more than twice as large as a sheep skin. 



