22 



HARDWOOD RECORD 



July 20, 1915. 



manufacturers ruu sui-oe!<sfully ship lumlior from Ciiiindian ports 

 on eitlior the Atlnntio or rm-ifie to any Ainorii-nn port, boinfr (jivon 

 an udvantaK^' "^ npproxinmtoly two ilollurs a tliouonnd feet on 

 shipments from Pacilic ports in Canada to Atlantic ]>ort8 of the 

 United States, through the canal or otherwise. He predicted that 

 when normal conditions are restored in Tniiaila followinf; tho close 

 of the war, tho Canailiun manufacturers will undoubtedly take 

 advantage of this situation. 



Mr. Hines Is Questioned by the Commissioners 

 In response to the i|ue8tiou as to the loss directly due to neces- 

 sity for lenvin.; logs and trees in the woods he said this would 

 reach about 15,000,000.000 feet. He maintained that this should 

 be manufactured in the I'nited States and that the railroads lose 

 in the neighborhood of $105,000,000 freight as a result of the in- 

 ability to manufacture. Ho said further that sevcnty-fivo per 

 cent of the lumber used in Chicago conies from Texas, Louisiana 

 and Mississippi. 



Mr. Uines in reply to a question said that he figures that the 

 reduction in lumber consumption as a result of substitutes is not 

 over ten to fifteen per cent. He maintained that the greatest loss 

 lias been the substitutes for wooden boxes. 



In reply to further questioning, Mr. Hines stated that the loss 

 in consumption is due more to poor business conditions than to 

 the encroachment of substitutes. 



E. B. Hazen Outlines West Coast Difficulties 



E. B. Hazen of Portland, Ore., rcprosonting tlio I'acitic coast lum- 

 ber interests, presented a jiaper which he claimed presented only his 

 individual opinions. He gave statistics of timiier supplies, lumber 

 output, and business conditions, and then offereil suggestions concern- 

 ing remedies for certain evils, among his suggestions being the fol- 

 lowing : 



Devise means for securing minimum selling price not less than 

 cost of production. 



Establishment of merchant marine, so we can compete with ton- 

 nage under other flags. 



Consideration of Canadian competition. 



Withholding of government stumpage from the market as much as 

 possible. 



Favorable recommendation for co-operative exploitation and selling 

 of lumber both at home and abroad, through sales companies. 



Mr. Hazen spoke in substance as follows: 



The govcrnipcnt investigator, now on tbc Pacific Coast, finds that 

 lumber must bring $14 to S15 per thousand feet average at the mill to 

 return six per cent and taxes and fire patrol on the raw materl.il invest- 

 mint in the tree, and twelve per cent on tlie investment in equipment, 

 Btocks. etc. Lumber Is now selling for $9 to l$10..50 per thousand feet 

 at the mill. If the sale of the product at no less tban .?15 could be 

 accomplished through compulsion, or even perhaps through co-operation 

 In the Interest ol not only the lumbermen, but of labor, which represents 

 eighty per cent of the cost ot lumber at the mill, and in the Interest of 

 the public, because of the fact that a natural resource is being dcstro.ved 

 without a just return to the community depending upon it. What would 

 be the practical result? The minimum price would be the price at which 

 luml>er would be sold, and the dealer would have a stnble market, which 

 he desires. The factor of speculation with him would be eliminated. 

 Then there would be a scramble for existence among manufacturers, 

 Just as today, and the fittest would survive, but the scramble would be on 

 a different basis entirely. At present the fittest is the one who can 

 stand to lose money in the largest quantities, or he who buys out the 

 l>anivnipt at fifty cents on the dollar, but with n loss to the entire 

 community of the producing zones of both the fit and the unfit, because of 

 reduced wages, operating short time or not at all, and resultant com- 

 munity suHering. 



Resclt op Seixikg Minimum Trice 



With the cost as a compulsory minimum price there would be a 

 stimulation at once in merchandising activities. The lumber maker 

 would have to develop into a merchant manufacturer. In order to 

 develop trade in the field, he would have to place high type, energized 

 salesmen out to sell goods not only to dealers and large industrial trade, 

 but they would be forced to broaden the scope of their efforts to include 

 stimulation of consumption of lumber. They would interest themselves 

 in securing fair building codes, in silo use, in wood block pavements. 

 in mill constructed buildings, in the frame type of bouse construction 

 in the newly platted suburlian additions. They would be fortified by 

 literature from their home offices. 



It would still be the survival of the fittest, but the fittest would be the 



most cfllclcDt. liut before thU Nort of activity could l>c undertaken, the 

 producInK unltH would hnve to be Inrev or «cll throuKh one Hource, bc- 

 cnuKc a nnuill output cannot nuNiiiln kucIi merchnndixlni; elTorl. A com- 

 pulsory price would force the coniiolldation of Kninll. Independent pro- 

 ducers Into ownenihlpH, making from throe hundred to five hundred 

 million per year, or into co*operfitlvc ngenclen, ho that they crtuld engage 

 In the iHittle for uurvlvnl, and the bnttle would be one of elllelency, not 

 price cutting. Ot course, If the minimum price arrived at is baswl upon 

 the average cost of stumpnge, then the uinnufacturerH now owning the 

 lowest cost of stumpage would hnve some advantage, but they would 

 have to hold their own In the elTlclency fight and the higher cost 

 stumpnge owner would be stimulated to greater elTort to hold his own 

 Id selling the product. When It cnme to overproduction nnd neces- 

 sary curtailment, the low cost stumpnge owner could outproduce the 

 highest cost owner, provided be was as able as his competitor In market- 

 ing. Would not this process of ellminntlon be more equitable nnd fair 

 than the griiidlug of wheels now in progress? 



Of nearly as great Imporlnnce as the necessity of belter selllne 

 methods Is tbc necessity for more scientific mnnufncturlng, logging nnd 

 wnste utilizing. Now, fully fifteen per cent of the logs of lnw grnde 

 arc left upon the ground. Large scale producing units would accomplish 

 this also through modern depnrtmentlzlng In charge of highly skilled 

 department heads, as contrasted with the now usual one-bead small 

 operation. 



The evolution of the lumber business Is going to be along these lines 

 regardless of government assistance, but without that assistance In the 

 establishment of a minimum price, it spells a long drawn-out, cruel process 

 of elimination via the sbcrllT's ofilce, with the survivors consisting of the 

 lowest cost stumpage owners, the large acreage owners, nnd those of 

 the long pocketl)Ook variety, through the slow process of losing prices 

 until the weak ones are exhausted. 



The other route would save many because intense merchandising, 

 made possible through scale producing ownership, would Increase the 

 consumption of material. 



Some contend that a guaranteed price would invite establishment of 

 many more operations, and thus Increase production. Possibly so, but 

 they would have to be large and efilcient, and would require heavy invest- 

 ments. They could not be opened up on every 100 acres with small 

 plants, because they could not merchandise or compete In producing 

 or utilizing. 



The stumpage must get Into competent ownerships which are not 

 obliged to realize at once. Small ownerships should pool with larger 

 so that stumpage can be held and not forced upon a market which 

 cannot absorb It. Tlie plan outlined above would have a tendency to 

 bring about such a condition. 



WiTHnoLDiNG Government Stdmpage 

 One-quarter of the trees In this nation are within government reserves. 

 The practice of selling timber to manufacturers on the present s.v8tem 

 where the operator has no large Investment In raw material and no 

 interest accumulating makes the mill operators under these conditions the 

 hardest competitors we have. The system simply places our own govern- 

 ment In competition with us. 



Co-operative Foreign Selling 



No one company has sufficient lumber to warrant cost of maintaining 

 direct representation, nor of carrying the large accounts abroad In all 

 foreign countries. 



rractlcally all lumber exported from tho Pacific Coast today Is bought 

 by brokers who arc interested only in It as a speculation. Thoy do not 

 do creative work In building up demand, but simply fill the required 

 demand. It will be necessary for the producer to do the market develop- 

 ment work. An effort Is being put forth now to organize a corpora- 

 tion under the title ot the Douglas Fir Lumber & Exploitation Company. 

 It is intended to he a co-operative effort to not only sell, but actively 

 exploit the woods In foreign countries through direct representatives. 

 A similar plan for marketing the product domestically. If permitted, 

 might serve as a solution of our problem, nnd we would urge your 

 consideration of this also. 



Mr. Keith said that he has computed that tlie present average 

 I)rice of $13 for pine lumber must be increased to $18 within the 

 next twenty years to cover carrying charges for timber. 



M. B. Nelson Advocates Export Sales Combination 

 M. B. Nelson of the Long-Bell Lumber Company of Kansas City 

 told of former efforts on the part of southern pine manufacturers 

 to pool their interests for the sake of selling abroad, savin-; that 

 the plan as arranged was not approved of by lawyers who feared 

 its cncroaehmoiit upon the anti-trust law. Mr. Nelson had per- 

 sonally investigated conditions abroad and concluded from his 

 investigations that it was necessary to maintain a constant supply 

 of lumber at the mills in this country with an office abroad to 

 successfully carry on foreign trade, as operators must have per- 

 sonal representation abroad in order to locate new markets, and 

 to show the proper adaptability of certain kinds and grades of 



