January 10, 1921 



HARDWOOD RECORD 



News from the National Capital 



Hearings ou the Snell bill for a national forest policy, which 

 includes fire jirotection for the forests, will probably take place 

 very soon, according to Charles L. Pack, president of the American 

 Forestry Association. • 



"This measure," said Mr. Pack, "is one of the most important 

 pieces of legislation ever presented in Congress. It has the back- 

 ing of the newspaper publishers, the wood users and every cor- 

 related industry and organization. 



"With the forest fire loss around $30,000,000 a year, and the fact 

 that we are using the forests about four times faster than we are 

 producing them, prove this is the time for action. We must put 

 our idle land to work. Hearings on the Snell bill should be called 



at once." 



* * * 



The Interstate Commerce Commission announced that the pro-- 

 posed increase of one cent per 100 pounds on lumber, logs and other 

 forest products from certain jjoints in Virginia and North Caro- 

 line to Norfolk and Portsmouth, Va., is not justified. The proposed 

 tariff was filed by the Seaboard Air Line Eailway Company, the 

 Atlantic Coast Line and the Norfolk Southern Eailway Company. 



Lumber dealers and manufacturers protested and the schedule 

 was suspended previously until January 28. 



* * * 



Representatives of manufacturing and producing interests of the 

 country are in Washington and will remain here uutil the middle 

 of February to help in the making of the new tariff law by the ne.xt 

 Congress. 



Hearings have already been begun before the ways and means 

 committee. "First aid information" is what the committee says 

 it wants from these witnesses on the various schedules as they are 

 taken up. The purpose of the bill to be prepared, after all the 

 facts are elicited, is to enact a tariff which will protect American 

 industries, foster them and provide employment for labor at wages 

 commensurate with the American standard of living, as contrasted 

 with conditions of workingmen in other countries. 



* S S ~ 



Attorney General Palmer announced the appointment of William 

 Rand- and Isidore J. Kressel of the firm of Jerome, Rand & Krussel 

 of New York City as special assistants to the attorney general to 

 take charge of all cases, civil and criminal, which may develop 

 from investigations now proceeding both in New York and else- 

 where. 



w * * 



The House banking and currency committee favorably reported 

 the McFadden bill, permitting Federal reserve banks to discount 

 paper for member banks in excess of 10 per cent of their capital 

 and surplus, but not in exce.ss of 20 per cent, when Liberty bonds 

 are given as security. The bill was amended to restore the 10 per 

 cent limit after October 31, 1921. 



* * * 



The Ignited States is legally bound under the treaty with Ger- 

 many to return the property of German citizens seized in this 

 country during the war. Representative Charles P. Caldwell, Demo- 

 crat, of New York, declared in introducing a bill providing for the 

 restoration of tliis property by the alien property custodian. This 

 property' amounts to approximately $500,000,000. 



* * * 



The Department of Justice has taken official recognition of the 

 developments in the investigation of the building trades in New 

 York and is preparing to thoroughly inspect all evidence produced 

 which mav indicate violation of Federal statutes. 



The House, following the lead of the Senate, overrode the Presi- 

 dent's veto of the resolution directing revival of the War Finance 

 Corporation by a vote of 250 to 66. Of those who voted to sustain 

 the President, 49 were Republicans and 17 were Democrats. 



Eugene Meyer, Jr., former chairman of the corporation, said that 

 he believed the Secretary of the Treasury would revive the cor- 

 poration immediately. No additional legislation is necessary, he 

 said, nor will new appropriations be necessary. 



Lumbermen Gain Inventory Decision 



The lumber industry is very much gratified at the decision made 

 by the Internal Revenue Bureau on Dec. 30 that tax returns for 

 the year 1920 are to include inventory returns based on "cost or 

 market prices," whichever is lower, without the specific permis- 

 sion heretofore required. 



The decision provides that the term "market" means the cur- 

 rent bid prices of the goods being inventoried and that this method 

 of valuation may be applied (a) "to goods purchased and on hand, 

 (b) to the basic elements of cost in goods in the process of manu- 

 facture (materials, labor and burden), and (c) to finished goods 

 ou hand; exclusive, however, of goods on hand or in process of 

 manufacture for delivery upon firm sales contracts at fixed prices 

 entered into before the date of the inventory, which goods must 

 be inventoried at cost." "Where no open market quotations are 

 available, the taxpayer must use such evidence of a fair market 

 price at the date nearest the inventory as may be available, such 

 as specific transactions in reasonable volume entered into in good 

 faith, or compensation paid for cancellation of contracts for pur- 

 chase commitments," says the decision, and continues: 



"Where, owing to abnormal conditions, the taxpayer has regularly sold 

 such merchandise at prices lower than the current bid prices as above 

 defined, the inventory may be valued at such prices, and the correctness 

 of such prices will be determined by reference to the actual .sales of the 

 taxpayer for a reasonable period before and after the date of the inven- 

 tory. Prices which vary materially from tlie actual jjrices so ascertained 

 will not be accepted as reflecting the marlcet and the penalties prescribed 

 tor filing false ami fraudulent returns may be valued for purposes of the 

 inventory on the lowest of the following bases ; 



(1) The replacement or reproduction cost prevailing at the date of the 

 inventory; or (2) the proper proportionate part of the actual finislied 

 cost; or, under abnormal conditions, (3) the projier proportionate part 

 of the sales price of the finished product, account being taken in all case-s 

 of the proportionate part of the total cost of basic elements (materials, 

 labor and burden) represented in such goods lu process of manufacture 

 at the stages at which they are found on the date of the inventory. The 

 inventories of taxpayers on whatever basis takem will be subject to investi- 

 gation by the Commissioner, and the taxpayer must satisfy the Commis- 

 sioner of the correctness of the prices adopted. He nmst be prepared to 

 show both the cost and the market price of each article included in the 

 inventory. It is recognized that in the latter part of 1918, by reason 

 among other things of governmental control not having been relinquished, 

 conditions were abnormal and in many commodities there was no such 

 scale of trading as to establish a free market. In such a case, when a 

 market was established during the succeeding year, a claim may be filed 

 for any loss sustained in accordance with the provisions of Section 214 

 (a) 12 or Section 234 (a) 14 of the statute. See articles 261-268. 



General L. C. Boyle, chief counsel for the American Hardwood 

 Manufacturers' Association, who was on the taxation committee 

 which held the conferences with the Internal Revenue Bureau, in 

 commenting on the new ruling said: 



"The lumber industry Is covered fully by paragraph "C" of the new 

 ruling which means, briefiy, that the lumber men may take their inven- 

 tories at cost or market, whichever is lower. It is just as they feel 

 about it. 



A similar interpretation of the new ruling was made by Carl 

 Stevens, new chief of the Timber Section of the Internal Revenue 

 Bureau. 



