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Copyright, 1 he Hardwood Company, 1920 



Published in the Interest of the American Hardwood Forests, the Products thereof, and Logging*. Saw 

 Mill and Woodworking Machinery, on the 10th and 25th of each Month, by 



THE HARDWOOD COMPANY 



Edwin W. Meeker, Vice Pres. and Editor 

 H. F. Ake, Secretary-Treasurer 



Seventh Floor EUswortK Building 

 53 7 So. Dearborn St., CHICAGO 

 Telephone : Hariison '-8087 



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Vol. L 



CHICAGO. DECEMBER 10, 1920 



No. 4 



ibi e nARY 



Review and Outlook 



NEW YORK 



BOTAMCAl. 



'sARUBN 



General Market Conditions 



TXDICATION8 ARK THAT TH K GKEAT COMEDY of iU'll:it.ion, 

 1 wliieh is being played out upon the stage of the world is nearing 

 its climax and that we may soon arrive at the period of the happy 

 ending. Some may think, now that we are embroiled still in tlic 

 painfnl development of the plot that this play is a tragedy, rather 

 tlian _a comedy, but we use the word, comedy, because comedy is 

 that ])roduction whose denouement is pleasing rather than sorrow- 

 ful; and certainly tlu> final outcome of deflation will be a pernmnent 

 happy prosperity. 



Business and industry expanded until it became top-heavy and 

 threatened to jiull down the whole economic structure of the coun- 

 try, in fact, the world, if tlie swelling process were not arrested. 

 It is a subject for universal congratulation that the descent to a 

 normal basis is being accomjilished without a genuine crash. 



Bnt the economic bases of the country are still sound and liquida- 

 tion has been largely accumplished. Credit is revealing easier 

 tendencies and the bankers promise a real improvement soon after 

 tlie turn of tlie year. ■ President Wilson called attention, in his 

 message to the second session of tlie 66tli Congress, that the Gov- 

 ernment treasury has been progressively withdrawing "from the 

 domestic credit market and from a position of dominant influence 

 in that market'' for a year. In other words, the Government is 

 daily comjieting less and less witli private enterprise for the funds 

 available for the condnct of commerce and industry, giving these 

 latter larger opportunities for financing their projects. If the 

 Government maintains that poliC\- of economy which the President 

 urged in his message, and to which the Republican Administration 

 is pledged, more funds will continue to become available for private 

 business, as time goes on, 



Tliere is every reason to believe, also, that the excess profits tax, 

 which has been glutting itself upon the capital of the country, will 

 be repealed soon after the new Congress convenes March 4, giving 

 further elbow room for the healthy functioning of business. 



Then there is much happy promise in the proposed foreign financ- 

 ing corporation, which if organized according to tentative jilans 

 will make possible the extension (under the Edge Law) of $1,000,- 

 000,000 in credits for our export trade. As the preservation of large 

 and healthful foreign markets is necessary to the continued pros- 

 perity of our industry, and the danger of over-production and unem- 

 ployment are lessened thereby this huge financing project is an 

 augury of improvement in general conditions. 



There is no gainsaying that there is a vast unfilled potential de- 

 mand for commodities, especially the basic commondities, such as 

 lumber, which needs only confidence and stability to draw it into 

 the markets. Therefore, these evidences of the approach toward 

 confidence and stabilitj' are potent with encouragement. 



All this examination of broad general economics leads naturally 

 to the particular field of hardwood lumber, which is one of the 

 characters in the drama of deflation above referred to. Already 

 there are unmistakable evidences of a stirring toward reaction in 

 the hardwood market. There is the large export order, cited in the 

 last previous General Market Conditions; and in addition, some far- 

 sighted consumers, who have been drawing conclusions from the 

 steady and enormous decrease in hardwood production, have begun 

 to buy to cover their needs. They sense the danger of a lumber 

 famine, should there be a sudden rush of consumers into the market 

 in the spring, and they do not desire to take a chance of suffering 

 unnecessarily from this probability. They believe that this is a 

 favorable time to buy, because of the indications that hardwood 

 prices are near production costs, below which they can not go in any 

 general movement. .Their opinion is that the present posture of 

 tlie market is a bargain one. 



Reports are that over eighty per cent of the mills in the South 

 are closed down and this percentage is being further augmented 

 every day. Many mills in the Northern territory have closed or 

 have substantially cut their operating hours. In the South many 

 logging operations have been abandoned for the winter. It is very 

 obvious that all of this means that the replacement of stocks no\V 

 moving is practically nil, and that even should conditions warrant 

 a resumption of operations, many of the mills could not have addi- 

 tional lumber available for the market for months. 



This leads to the thouglit that there may be a point beyond which 

 it will be decidedly hurtful to all concerned for the buyers' strike 

 to be carried. If it was the purpose of the buyers to depress prices, 

 this purpose has now been extensively accomplished. But it seems 

 that it will do little good to force further curtailment of production 

 or to compel a long continuation of the period of low production. 

 In the long run, low production inevitably means higher prices, not 

 only because it reduces the ration of supply to demand, but because 

 it costs substantially more to produce small quantities of any com- 

 modity than it does large. A normal steady production of hard- 

 woods at "live-an-let-live" prices is what we all want — what is 

 best for producer and consumer alike — and the sooner we bring 

 about that condition tlie better. 



