• Copyright, The Hardwood Company, 1920 



Published Jn the Interest of the American Hardwobd Forests, the Products thereof, and Logsing^, Saw 

 Mill and Woodworking Machinery, on the lOth and 25th of each Month, by 



THE HARDWOOD COMPANY 



Edwin W. Meeker, Vice Pres. and Editor 

 H. F. Ake, Secretary-Treasurer 



Seventh Floor Ellsworth Building 

 53 7 So. Dearborn St.. CHICAGO 

 Telephone : Harrison -8087 



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Vol. L 



CHICAGO, NOVEMBER 10, 1920 



No. 2 



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Review and Outlook 



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General Market Conditions 



CHANGES CUBING THE PAST TWO WEEKS have been well 

 defined, though occuring mostly in the direction laid down 

 previously. That is, the movement to reduce operations, and if pos- 

 .sible, to shut down, has been accelerated just as the growing stagna- 

 tion of buying has become more pronounced. Three or four weeks 

 ago there were many important manufacturing units in the hardwood 

 fields who were still uncertain in their policy for the immediate 

 future. Their decisions to reduce, or more frequently to discontinue- 

 operations, has been induced by continued falling off in demand, 

 by consistent further reduction in price and by the example everj'- 

 where seen around them. 



Today it is doubtful if more than 40 per cent of the producing 

 capacity in the Southern regions is active. This percentage would 

 probably be higher in the North, though there too activity is becom- 

 ing more and more restricted, and the desirability of further curtail- 

 ment is impressing itself on the operators. This general policy of 

 closing down has, of course, been spontaneous, and reflects a (Rouble 

 purpose. First, to refrain from cutting up valuable timber to bo 

 sold probably at less than cost; second, to rebuild operating organiza- 

 tions on a reduced log and wage basis, making possible a lower plane 

 of necessary selling prices. 



The sincerity of the hardwood meu who deplored last year's 

 excessive price tendencies has been questioned, but the man ques- 

 tioning that expression was very likely in the same boat. His selling 

 prices were borne irresistably upward on the ever-swelling wave of 

 extravagance, which now has receded. That such prices were a 

 menace was too evident to require argument. Stabilization was 

 sought then, and stabilization is equally desired today; therefore, 

 in order that hardwood values may eventually reach a level con- 

 sistent with the cost of good manufacturing, the producers' ener- 

 gies are now being bent in the direction of arbitrarily reducing 

 those costs to a more consistent and sensible figure. 



The lumber consumer should bear in mind that hardwood stocks 

 in general are still in strong hands, and that the hardwood men 

 have not been averse to the general shutting down policy. In fact, 

 they realize that it is probably the only way to bring about a 

 definitely lessened cost basis. Mill yard inventories would proba- 

 bly show a normal stock at present, but from now on the difficult 

 and almost impossible logging season maintains. The Southern mill 

 men are coming into this period with a practically nil log sppply, 

 therefore, they will approach the spring activity with only what 

 stock is on their yards. This, during the intervening months, will 

 probably be broken more or less, and before new logs can be brought 



in and the resulting green lumber reduced to proper shipping condi- 

 tion, it is not at all improbable that an even modest demand might 

 greatly strain the supply. Hakdwood Eecoed is convinced that 

 hardwood stocks in general are about as low as they can reasonably 

 go. This belief is strongly supported by the general shutting down 

 of production, which signifies refusal to further sacrifice timber, 

 and by the conviction that hardwood lumber cannot go lower with- 

 out bringing ruin. Hardwood Record believes that buyers would 

 be justified in here and there picking uj) stocks for future use when 

 such deals can be made on a favorable basis. 



Consider the Ways of the Chairmen 



PERHAPS THE MOST SIGNIFICANT FINDING of the recent 

 meeting of the National Association of Chair Manufacturers 

 could be described in the following excerpt from the official report 

 of this meeting: "For the better part of two days the meeting 

 considered ways and means by which chair values can properly 

 reflect cost of manufacture and secure for the producer a satis- 

 factory margin of profit. It was considered by all that any reduc- 

 tions now effected would utterly fail to stimulate buying, and that 

 for the rest of 1920 no volume of business will be received by chair 

 factories, hence the time in the interval until January 1 should be 

 employed in analyzing the costs in each grade and type of chairs 

 produced." 



Marketing values in all industries have now approached that 

 point where cost of production regulates selling price. The psy- 

 chology of falling prices is directly against the possibility of any 

 stimulation to sales through arbitrary reductions. The man who 

 has been buying under a high market immediately becomes con- 

 vinced by price reductions that still further reductions are im- 

 minent. 



It is a matter merely of common sense to concede that no business 

 can long continue to sell products at less than cost of production. 

 The manufacturer who knows his cost of production can more quick- 

 ly arrive at the proper selling policy than can he whose production 

 costs are undetermined. The latter knows he is facing trouble only 

 when it has arrived, and when it is too late to remedy his condition. 

 The other man can foresee trouble and change his course accord- 

 ingly. 



Since it is conceded that cut prices will not sell any product, and 

 that accurate cost knowledge is indispensable, the pertinence of this 

 conclusion by the chair men is manifest. 



It has long been felt that the election would mark a gradual 

 return of confidence, especially as the result was generally con- 

 ceded. It has been equally apparent that no great increase in orders 



