20 



HARDWOOD RECORD 



March 10. 1921 



The Southern Situation Improves 



Here are some of the fundamental features of the hardwood situa- 

 tion at Memphis and in the Memphis territory as gathered from 

 representative members of the trade during the past few days : 



1 — Inquiries are more numerous and of better character than they 

 have been at any time since the present depression in the industry 

 began to make itself felt late last summer and early fall. 



2 — These inquiries are leading to a somewhat larger volume of 

 business, though the total turnover of hardwood lumber still represents 

 but a mere fraction of what it normally is at this time of the year. 



3 — Many consumers and distributors are remaining out of the mar- 

 ket because of the fear that prices may work lower and that, in such 

 an event, their competitors will be able to secure their requirements 

 on a better basis. 



4 — The conviction is rapidly growing among owners of lumber that 

 prices are practically as low as they will go and that they are 

 becoming stabilized around the present level. It may be pointed 

 out, in this connection, that, while there was frequently a variation 

 of $40 to $50 in prices at which different owners were willing to sell, 

 immediately after the downward trend of the market became so 

 pronounced last fall, there is now a very small variation in quotations 

 as between different ovraers. This is only another way of saying 

 that the trend of prices, which was very jagged and irregular at 

 that time, is now rapidly approaching a straight line. 



5 — The higher grades of oak, gum and other hardwoods are bring- 

 ing prices well above the pre-war level, while the common grades 

 are selling at somewhat less than the level prevailing in 1913 and 

 1914. 



Log Run Below Cost 



6 — Hardwood lumber, log run, is selling at considerably less than 

 its replacement cost, even after taking into consideration the de- 

 crease in the cost of putting it on sticks as compared with last year. 

 Taking oak as a basis, it is conceded by manufacturers here that 

 this cannot be converted into lumber and sold at an average price 

 of less than $45 to $50 per thousand feet for log run if due considera- 

 tion is given to the appreciation in the value of stumpage, to the high 

 interest rates for money, to the increased freight cost on logs to the 

 miUs, to the increased freight cost of every other item that enters 

 into the manufacture of lumber, to the restriction of outlets occasioned 

 by the unprecedentedly high freight rates on the outbound product, 

 to the smaller percentage of high grade lumber secured from logs 

 now being worked, to the longer distances which logs must be trans- 

 ported because of the working up of the supply available at close 

 range, and to a fair profit on the investment which every lumberman 

 must carry. There is naturally difference of opinion as to the cost 

 of manufacture. Conditions are different for every operation and 

 it is therefore difficult to strike a fair average of production costs. 

 It may be stated in this connection, however, that there is scarcely 

 a lumberman in this territory who is willing to concede that it is 

 possible to put lumber on sticks and sell it at current prices with- 

 out involving actual loss. 



7 — Production, under this condition, is necessarily very much 

 restricted and will doubtless fail to show increase of importance until 

 the man who makes the lumber is able to see something beyond a 

 loss in the stock he is piling up. Inquiry among prominent pro- 

 ducers here develops the fact that some are planning to remain idle 

 until conditions show substantial improvement, even if they have 

 to keep their plants closed down for an entire year. Two of the 

 largest manufacturers here are quoted elsewhere in this issue of 

 Hardwood Record as declaring they do not propose to manufacture 

 any lumber during 1921, except such as may be incident to the saving 

 of logs already on hand, and another is quoted as saying he will not 

 begin operating until Sept. 1921, if then. Generally speaking, it 

 appears to be the plan of the vast majority of manufacturers here 



to take care of the logs they now have on hand and leave their 

 timber standing in the woods until conditions are more favorable 

 for its conversion into lumber. There are a few manufacturers who 

 are proceeding as if conditions were normal, but they can be counted 

 on the fingers of one hand and represent but a mere fraction of the 

 total producing capacity of this territory. The average owner of 

 standing timber is unwilling to convert his iirincipal asset into a 

 product that must be sold at a loss. He prefers to conserve his re- 

 sources and to get away from pursuit of a policy that is so econo- 

 mically unsound and so wholly untenable from every possible stand- 

 point. He is confident that no commodity such as hardwood lumber 

 will continue indefinitely to bring less than the cost of production 

 for the reason that the time would soon come when there would be 

 no production because there would be nobody left with enough 

 money to continue that process. 



No New Stocks Promised 



8 — With production on such a limited scale and with incentive to 

 the manufacture of hardwood lumber entirely lacking, it is quite 

 apparent that stocks of lumber now on hand must to a very large 

 extent, be relied upon by consumers during 1921. Shipments of the 

 higher grades are now somewhat larger than the quantity being pro- 

 duced and there is probably not much difference between sales and 

 production of the lower grades. Slightly more than two months of 

 1921 have already passed and, if conditions today justified opera- 

 tions on a normal scale, these would not be possible under 60 days. 

 There are very few logs available for the reason that so little timber 

 has been cut during the past six or eight months. Furthermore, the 

 time of year is at hand when, because of rainy weather and flood 

 conditions, very little progress can be made with logging over a very 

 considerable part of the southern hardwood producing territory. 

 But it is conceded that it may be six months before the market rights 

 itself to a point where normal production is justified, and, if this 

 view proves correct, it will be around the first of September before 

 normal hardwood output may be expected. Add to that date the 

 two or three months that are required for the drying process and 

 there is very little time left in which consumers may obtain lumber 

 from the 1921 cut. 



9 — Holders of southern hardwoods are far less willing than they 

 have been during the past few weeks to sell at "any old price" just 

 for the sake of keeping their stock moving. One Memphis firm yes- 

 terday declined a telegraphic order for 500,000 feet of common gum, 

 delivered at Kansas City, Mo., and it has turned down orders for 

 a number of single cars because the price offered did not meet with 

 its approval. Other firms, too, are pursuing a similar course and 

 buyers are not finding as many offerings on the bargain counter 

 as they were able to find a short time ago. Owners are coming to a 

 realization of the fact that it is far wiser to take care of the stocks 

 of lumber they have on hand than it is to dispose of these at less 

 than replacement costs and be without lumber with which to take 

 care of orders when business does improve. If they are not produc- 

 ing now and if they do not propose to begin producing until con- 

 siderably later, they will have nothing but their present stocks to 

 sell and just now they are more disposed to protect these than to 

 sacrifice them. The present tendency toward rejecting current offers 

 is regarded by members of the trade as the most wholesome develop- 

 ment of the past month and is doing more than any other single 

 factor to strengthen the conviction that the market is "scraping 

 bottom. ' ' 



Consumers' Needs Urgent 



10 — Consuming interests, in some cases, have recently placed orders 

 for considerable quantities of lumber in the most casual way and 

 have, after the acceptance thereof, sent telegraphic inquiries for car 

 numbers and other data by which such shipments might be traced. 



