July 25, 1915. 



HARDWOOD RECORD 



23 



lumber for certain purposes abroad. He maintaiued that the im- 

 porter who is not interested in anything more than his commis- 

 sion will not put forth this effort, and that it is because of this 

 very condition that the American exporters should be allowed to 

 form a comprehensive selling organization that would pool their 

 stock and their selling interests, thus working out to the advan- 

 tage of the consumers on the other side as well as to the manu- 

 facturer on this side. 



He stated that if the lumber interests could secure permission 

 to organize for this purpose, they could in five years double the 

 foreign consumption of lumber under normal times. 



In reply to a leading question, Mr. Nelson said that just pre- 

 vious to the beginning of the war, the export shipments were from 

 eighty to eighty-five per . cent of normal. He further said that 

 under normal conditions the entire yellow pine log could be manu 

 factured for export shipments, but now only the upper grades. 



H. C. Hornby, representing the manufacturers in Idaho and 

 Montana, requested that he be given permission to make a state- 

 ment before the commission at Seattle or Spokane. 



The meeting then adjourned for luncheon. 



TUESDAY AFTERNOON SESSION 

 C. H. Worcester Presents Able Statement 



C. H. Worcester of the C. H. Worcester Lumber Company of 

 Chicago and upper Michigan, presented some strikingly pertinent 

 facts having to do with general conditons of the lumber business 

 in this country. 



C. H. Worcester, of the C. H. Worcester Co., Chicago, was invited 

 by the commission to state his views concerning the competition 

 from which his interests as well as other lumbermen are asking 

 relief. His statement was in substance as follows: 



My original thouglit, as to the unfair competition section of the anti- 

 trust law was that Its scope was confined to those business practices 

 which, for a long period of time, we have classified as unfair competitive 

 methods, such as price discrimination, tying contracts, etc. The Clayton 

 Bill, Sections 2 and 3, defines certain things as coming within the con- 

 demnation of the act. The things condemned are within the scope of 

 unfair competitive methods. 



The Trade Commission Act goes much farther and brings within its 

 scope all unfair competitive methods that are hurtful to the public. The 

 resultant effect on the public is the touchstone to be used. It Is clear 

 that if the yellow pine people, for instance, with a view of crippling 

 hemlock interests, were to come into the territory of the latter and sell 

 its products at less than cost, doing this with design and for a selfish 

 purpose, such conduct would surely come within the pervicw of the act, 

 th.Tt is, if it could be further shown that as a result of this situation 

 public welfare was involved. 



Assume, however, that as a result of market conditions, due to over- 

 production, the yellow pine people were compelled to sell their product 

 at less than cost, and under such circumstances invaded hemlock terri- 

 tory? No unworthy purpose is involved. .\nd further assume that this 

 competitive condition is destructive of hemlock interests, to the same 

 extent as if unworthy ulterior motives were back of yellow pine interests. 

 That as a result of these conditions public welfare was touched. Would 

 not such a situation come squarely within the act? In other words, it is 

 a question as to the effect and not the Intent which would be the decid- 

 ing factor? 



The hypothesis last suggested represents the exact situation at the 

 present time. The hemlock people are subjected to unfair competitive 

 conditions, and this is due to the fact that yellow pine interests are 

 selling their product in hemlock territory at less than the cost of manu- 

 facture, with the result that hemlock is being driven from the field. 



It is indeed not diSicult to reduce a public interest touching a situation 

 of the kind indicated. It is not our purpose to urge that the situation 

 as here outlined is due to motives of unfairness on the part of the yellow 

 pine people. We realize that over-production and uncontrolled competi- 

 tion are responsible ; but whatever may be the cause, the result to the 

 hemlock people is the same. 



We, therefore, urge that if the commission should conclude that under 

 Section 6 that it has insuflicicnt power to remedy the evils outlined at 

 this hearing, then we urge that the commission investigate the unfair 

 competitive conditions involved and advise with business Interests that 

 are so touched, as to a remedy. 



The Lumberman's Human Side 



A letter from a prominent northern manufacturer was filed in 

 this connection. 



He said that many companies are continuing to operate beyond 

 that point which determines operations to be financially a loss 



rather than cease to operate, this point being defined as that at 

 which the loss on operation covers the carrying charges and fixed 

 overhead charges. He said further that this continued operation 

 results because they are not financially ingenious enough to com- 

 mand the necessary credit for carrying them over a period of idle- 

 ness, and because they are living in such close proximity to their 

 employes that they are morally bound to maintain their payrolls 

 to the extent of a complete sacrifice of all stumpage values. The 

 letter said: 



We feel keenly the waste of our forests in unregulated and wasteful 

 over-production. We feel more keenly still the danger of forced sus- 

 pension on account of lack of reasonable regulation and what this forced 

 suspension means to the 3,000,000 men, women and children in these 

 little pioneer mill towns. 



Attorney Boyle Sums Up 



Attorney Boyle, in what might be called a summing up of the 

 evidence, called special attention to the part the "consumers" 

 have in industrial conditions. He maintained that 3,750,000 peo- 

 ple directly feel the effect of present conditions in the lumber 

 business and its divergent branches. He said that the forests, 

 but not the lumber industry, can be conserved by shutting down. 

 In speaking of yellow pine Mr. Boyle maintained that forty per 

 cent of it must be marketed when cut, and what is left in the 

 woods is lost forever, stating that this illustrates that the troubles 

 confronting the lumber industry are different from the troubles 

 confronting other industries, because while others are affected 

 temporarily by temporary and changing conditions, in lumbering 

 the raw material can never be replaced which is wasted during 

 periods of depression. Hence, the whole country is adversely 

 affected. He said: 



It the commission should find that there is a need for substantial 

 assistance and should further find that there is no present law that 

 would make possible relieving the situation, it should be passible to say 

 to congress that this Industry should be given the necessary assistance ; 

 that through no fault of Its own it is wasting the resources of the 

 country to the lasting detriment of all of the people. 



He said that in his opinion as a lawyer, there is nothing in 

 present laws to prohibit combinations for the benefit of the indus- 

 try, biit that the lumbermen do not in the absence of specific, 

 definite assurance to this effect, dare to get together for this 

 purpose even though their business is jeopardized by not doing 

 so. He promised to abstract the records of all the testimony pre- 

 sented at this hearing before the next general meeting, and that 

 he would do everything within his power to help the commission 

 make a fair, helpful decision. 



A. M. Rockwell of Chicago showed through various citations 

 the effect which the substitutes for lumber through their publicity 

 and general propaganda are having upon the lumber business. 



Capt. J. B. White of Kansas City reviewed past conditions. He 

 said as long as he has been in the lumber business he has heard 

 as a slogan that the business will have three years up and seven 

 years down. That any right to control or regulate the fundamen- 

 tal principles of the business will equalize this situation during 

 ordinarily normal times. 



W. E. Greelej", assistant ITuited States forester, said that the 

 government now controls in its holdings 590,000,000,000 feet of 

 stumpage; that the cut at present is not sufficient to be a factor 

 in the general lumber market. 



He said that the present situation in the lumber business is 

 shown by the fact that the demand for government timber has 

 fallen off considerably during the past two or three years, and 

 that extensions on contracts have been granted to operators, and 

 that also in a few cases, it has taken contracts off the hands of 

 those who have made them. 



At the close of the hearing the commission announced that the 

 subsequent hearings would be held at Spokane about August 6; 

 Tacoma or Portland about August 10, and San Francisco in the 

 neighborhood of August 21. 



Some wise folks are now pointing out that the difference between 

 a mistake and a blunder is that a blunder consists in making the 

 same mistake more than once. 



