October 25, 1920 



HARDWOOD RECORD 



15 



Supreme Court Hears Hardwood Appeal 



{Special Dispatch) 



The United States Supreme Court Wednesday aud Thursday heard 

 arguments in the now famous hardwood lumber ease known as the 

 ease of the American Column & Lumber Company et al., against the 

 United States of America, but definitely is connected with the activi- 

 ties of all trade associations. 



The case is an appeal from the final decree of the district court at 

 Memphis, Tenn., in a proceeding brought by the United States under 

 the Sherman Anti-trust Act to enjoin an alleged combination to en- 

 hance the price of hardwood lumber. The case involves the legality 

 of the practice of members of an industry interchanging with each 

 other at regular intervals reports showing past sales and prices and 

 stocks on hand; generally referred to as the "open competition 

 plan ' ' or the ' ' open price plan. ' ' 



The defendants in the proceeding are corporations and individuals, 

 members of the American Hardwood Manufacturers' Association and 

 E. Gadd, manager of statistics of the association. 



General L. G. Boyle and G. Carroll Todd are attorneys for the lum- 

 ber association. 



The essence of the charge made by the bill and sustained by the 

 court below. Judge Boyle told the court, is that from January, 1919, 

 down to the time of the filing of the bill, the defendants were en- 

 gaged in a conspiracy to maintain and enhance the price of hardwood 

 lumber, first by substituting agreements as to price in place of com- 

 petition; and second, by curtailing production, and that the principal 

 means employed to bring about such agreements as to price and such 

 curtailment of production were "stock reports" and "sales reports" 

 and ' ' production reports, ' ' issued by the association. 



Charge Not Sustained 



Judge Boyle told the court that the evidence in the case fails to 

 establish that the defendant lumbermen conspired to maintain or 

 enhance the price of hardwood lumber by substituting agreements as 

 to prices in place of competition or by curtailing production. ' ' The 

 market rise in the price of hardwood lumber which occurred in the 

 latter half of 1919 and the early months of 1920," said Judge Boyle, 

 "whOe the defendants were associates in this interchange of reports 

 of stock on hand and past sales and prices is on its face the most 

 serious aspect of the case." 



' ' The record shows, however, ' ' he continued, ' ' that the rise in prices 

 which occurred during this period was brought about by natural 

 causes, as f oUows : First, by low stocks due to enforced inactivity 

 of the sawmills during the war; second, by the final breaking loose, 

 in extraordinary volume, of the pent-up demand which had accumu- 

 lated during the war when the industries using hardwood lumber were 

 under Government restriction, and during the period of hesitation 

 which followed the armistice; and third, by reduced production due 

 principally to abnormal rainfall in a large part of the hardwood sec- 

 tion of the southern and southwestern States. 



"The result of this conjimction of causes was literally a frenzied 

 market in which buyers bid against each other and in which the sellers 

 were able to obtain whatever prices they were pleased to ask. ' ' 



Judge Boyle pointed out his argument that since the charges have 

 been made against the lumbermen by the Government and since the 

 case has been decided by the District Court, The Forest Service, after 

 a careful study of the conditions, officially has reported that the rise 

 in the price of hardwood lumber during the period being considered 

 in the case was due to natural causes. The Forest Service made this 

 report in answer to a Senate resolution. 



IjOgic Urged FuU Output 



He argued that it is fanciful to suppose that the defendants in this 

 case, controlling less than a third of the output, would agree to curtail 

 their production when the undisputed evidence is that there was a 

 demand for full production at high prices. It is still more fanciful, 



he said, to suppose that there could have been any such agreement 

 when there was the greatest disparity in the rate of production of the 

 parties, some producing to the limit of their capacity, others at less 

 than half, owing to varying conditions of the weather. 



In taking up the Government's attitude relative to the meetings 

 of the lumber association Judge Boyle pointed out in determining the 

 weight to be given to what took place at these meetings as evidence 

 of an unlawful conspiracy, it must be remembered that the attendance 

 was small and that the meetings were not secret. He said they were 

 not even confined to members of the association, but were open to the 

 public and were attended by lumbermen not m the association and 

 by representatives of the press. 



Judge Boyle pointed out that the absence of complaint by custom- 

 ers or competitors as to prices, which the Government alleged were 

 too high, is a relevant circumstance in this case. It has not been 

 shown, Judge Boyle said, that the alleged combination had the power 

 to bring about an advance in prices, which the Government charged 

 against it. 



In connection with the market reports involved in this case and 

 emanating from the statistical division of the lumber association, 

 Judge Boyle told the court that it probably is true that the large 

 lumber manufacturers could take care of themselves if this plan were 

 abolished. The large lumber manufacturers would be able to keep in 

 touch with market conditions, he said, through their various agencies, 

 but the small manufacturers depended on these reports to keep in- 

 formed as to market conditions. 



' ' We dispute the proposition, however, that because accurate knowl- 

 edge of market conditions may enable producers at times to realize 

 higher prices, it is, therefore, unlawful to associate for the purpose 

 of obtaining such knowledge, ' ' said Judge Boyle. 



Henry S. Mitchell, acting assistant attorney general, told the court 

 that the Government contends in this case that the defendants con- 

 spired together, agreeing to conduct their co-operative activities, 

 ' ' with the purpose of suppressing competition and maintaining and 

 enhancing prices and in such manner as to effectuate that purpose. ' ' 



According to Mr. Mitchell, Judge Boyle's brief does not deal 

 directly with the evidence, showing that the purpose was to suppress 

 competition and to maintain and enhance prices, but seeks, indirectlyj, 

 as Mr. Mitchell argued, to avoid the effect of such evidence. 



Northern Manufacturers Pledge to Open Shop 



One of the most important actions taken at the quarterly meet- 

 ing of the Northern Hemlock and Hardwood Manufacturers' Asso- 

 ciation, in Milwaukee, Wis., October 14, was the adoption of a reso- 

 lution placing the association on record as "in favor of the open 

 shop plan at all times and under all conditions." 



The members promised and pledged themselves "at all times to 

 maintain an open shop." And further, they urged the Labor 

 Adjustment Board, created by the Esch-Cummins Act "to stand 

 firmly and squarely for the open shop in all matters coming before 

 the board for adjustment" and "in the adjustment of future wage 

 disputes, that the rights of the public to transportation expense 

 based on reasonable labor costs be considered paramount." 



The resolution stated that "prior to government control and 

 operation of railroads, management had to meet only four or five 

 organized brotherhoods of labor employed by railroads," but 

 "during government operation railroad labor organizations were 

 increased to seventeen in number." As a consequence "pressure 

 through all these unions is being brought to bear on the Labor 

 Adjustment Board ... to unduly advance wages and to 

 bring about virtually a closed shop." 



The resolution was proposed by A. L. Osborn, chairman of the 

 bureau of transportation and legislation. 



