July 25, 1915. 



HARDWOOD RECORD 



31 



The commission questioned Mr. Watson closely on various points 

 suggested in his address. 



J. H. Kirby Tells of Export Troubles 



At the request of Mr.Downman the comnussion called upon John H. 

 Kirby, Houston, Tex., who is a prominent e.\|iorter of yellow pine 

 lumber, for information covering this phase of the pine business. 

 Mr. Kirby maintained that the southern pine industry has been 

 seriously handicapped by laws prohibiting condjinations for export 

 isales, thereby losing immense volumes of trade to foreign competitors 

 because those competitors are permitted to combine interests for the 

 purpose of selling. He referred particularly to Canadian competi- 

 tors. The question was raised by Commissioner Rublee as to the basis 

 of lumbermen 's fear of selling combinations. As to the foreign trade, 

 the commissioner suggested that it is questionable if the Sherman law 

 would prevent selling organizations to meet competition abroad. In 

 reply Mr. Kirby maintained that the conse(|ueMces of past action in 

 this country have been so rigorous that lumbermen are not willing to 

 take any chances in any direction. He also stated that such pooling 

 of selling interests are directly against legal advice. 



Commissioner Davies wanted to know if it would be possible to 

 secure the benefit of such combinations of foreign trade without 

 affecting the domestic conditions and balance of supply and demand, 

 to which Mr. Kirby answered that there is no question in his mind 

 on this score as while such combinations might effect an increase in 

 export price of from $:? to $4 a thousand, it would in no way affect 

 the domestic trade or result in higher prices for lumber sold in the 

 United States. He maintained that it is necessary to have a large 

 number of manufacturers and a large and variegated stock in order 

 to cater to foreign trade in a practical manner. Mr. Kirby here 

 maintained that Canadian manufacturers are given the privilege of 

 effecting just such pools for the purpose of fostering .the best inter- 

 ests of their industry and that because of legislation the interests in 

 this country have never had the proper chance for going after foreign 

 trade. Mr. Kirby, on being questioned, said he got this information 

 from a source which he considered altogether reliable. 



The Commissioner here adjourne<l for the day. 



TUESDAY'S SESSION 



Mr. Downman referred in his opening remarks at the session 

 of Tuesday morning to recent action taken by the Canadian au- 

 thorities authorizing Chief Forester McMillan to organize a gen- 

 eral publicity campaign for the benefit of the lumber interests, 

 this to be carried on at the expense of the state. 



Regarding the effect of bonding on the timber industry he 

 suggested it be taken up with bankers who will be heard at 

 subsequent hearings. Mr. Downman maintained that the inroads 

 of substitutes have effected a reduction of fifty feet per capita 

 in consumption in the last few years. In speaking regarding 

 attempts to effect co-operation for the purpose of regulating prices, 

 Mr. Downman referred to the recent talk by an Australian timber 

 merchant, in which he maintained that a combination for this 

 express purpose has been in effect in Australia for ten years. 



Edward Hines Asks Government Assistance 

 Edward Hines submitteil a statement at the request of Mr. 

 Downman. He reviewed the tremendous importance of the lumber 

 industry, the manufacturing plants involved, the number of people 

 employed, the number of people directly dependent upon it, and 

 affiliated industries. He went on to show the importance in the 

 respective states, maintaining that it is the leading industry in 

 twenty-five states and the chief industry in fifteen states. He 

 maintained that the 48,000 sawmill institutions in the country 

 should be entitled to a reasonable operating profit, adding that 

 the business is, more than any other, pioneering in every sense, 

 involving large expenditures of money in advance, causing much 

 personal hardship and the exhibition of much pluck, courage 

 and application. He then traced the effect the present business 

 depression has had on lumber business in the respective lumber- 

 ing districts of the country. He maintained that the lumbering 

 industry under normal conditions stands first as a purchaser of 

 farm products, that as a consequence whatever effects this indus- 



try necessarily effects the farmers and other producers of the 

 country. 



Referring to transportation; It uses the greatest number of 

 cars of freight of all industries, and is second only as to coal in 

 the actual tonnage. 



Other facts stated by Mr. Hines were that lumber furnishes 

 normally the largest amount in freirht value of all commodities; 

 eighty per cent of the gross price of lumber delivered to any of 

 the great central consuming districts of the United States, taking 

 Buft'alo to Chicago as a basis, goes to labor, farm produce and 

 transportation. Hence, adverse conditions in lumbering directly 

 affect the whole nation. 



Mr. Hines spoke of the direct effect of increasing depression 

 upon prices and the effect of internal competition on same. He 

 reverted to Canadian competition as affecting the American in- 

 dustry and the result of peculiarly advanta eous conditions under 

 which Canadian manufacturers operate. He maintained that 

 Canadian manufacturers have a strong advantage in being placed 

 in a position to ship to all our large markets, particularly in 

 transportation of its products and the very low water rate of 

 freight, operation under cheap labor, the availability of farm 

 products at low cost, and comparatively no taxes. "Thus on lum- 

 ber coming by water from Canada to the great gateways of the 

 middle west, largely manufactured in Georgian Bay, directly ac- 

 cessible by cheap water transportation, the average cost of trans- 

 porting Canadian lumber by water to these cities is about two 

 dollars per thousand feet. The average cost of transporting the 

 same character of lumber from Minnesota and Wisconsin by rail- 

 road, which states today are the closest markets to this territory, 

 is twenty-two to twenty-six cents per hundred pounds, or $5.50 to 

 .$6 per thousand feet, or about 200 per cent greater than from 

 Canada. From the South the shipping cost on yellow pine, aver- 

 aging .3,000 pounds, would be .$8.50 as compared to $2 from Canada, 

 or 300 per cent greater. On lumber from the Inland Empire to 

 Chicago the cost would be $12.50 or 500 per cent in excess of 

 water freights from Canada on the same character of lumber." 

 This freight paid to American railroads goes directly to Amer- 

 ican labor and hence directly to the consumers. Mr. Hines esti- 

 mated that Canadian labor is ten to fifteen per cent cheaper than 

 labor at American mills; that Canada has a great advantage in 

 the mode of taxation, absolutely free personal property tax being 

 granted in most sections. The Canadian operator does not have 

 to invest large amounts of money in advance for timber, which 

 is mainly granted by the government, thus eliminating interest 

 and tax charges, fire risks, wind falls, etc. He also maintained 

 that horses and all food stuffs are much lower in Canada and 

 that the standard of living there is also lower as compared with 

 the standard of living in America. 



From all of these he deduced the argument that the present 

 low price of low-grade lumber in the United States, which is a 

 tremendous factor in the aggregate, is largely influenced by the 

 large importation of low grade lumber from Canada; that the 

 Canadian manufacturer can cut and market this low-grade in this 

 country because of conditions abov'e noted. He maintained that 

 the Canadian manufacturer can utilize a much larger percentage 

 of his timber, therefore can conserve his forest at the expense of 

 American forests. 



Mr. Hines continued: "It would seem, therefore, that the 

 American people through a body like the Federal Trade commis- 

 sion, after carefully considering the condition of this great indus- 

 try at the present time, would be warranted in recommending to 

 the Con'iress of the United States that an adequate import duty, 

 which as shown from the past could properly be classed as a 

 revenue duty, be put upon the statute books of this country as a 

 part protection, not only to this industry directly, but to labor 

 in general and the many diversified interests that depend for 

 their livelihood upon this industry. ' ' 



He went on further in touching upon the navigation laws of 

 the United States to show that the American lumber manufac- 

 turer is compelled to ship lumber under trying conditions, which 

 inflict a great hardship upon him. As a consequence the Canadian 



