SIDE LIGHTS ON DISCOUNTS 

 A well-known hnnlwno.i man. «liii doi'sn 't ovorlook ninny of the 

 niveties of Iho buHinoiis, rocently ciilloil iittontioii to the fact thnt, 

 ' <'ntii<l<<r<<it as a linnkint; operntion only, lie makes money on the 

 i.'.tes that are tendered him in payment of lumber in lieu of the 

 ...<h. 



"If the customer had decided to pay cash in ton days from the 

 arrival of the car." he pointed out, "he would have taken off two 

 per cent. When ho sends me his 90-day note, however, taking 

 advanta(;e of the full time limit. I can take it to the bank and 

 di.soount it at the regular rate of (> per cent per annum, or one 

 and one-half per cent for three months. That makes a net proGt 

 to mc on the transaction of one-half of one per cent." 



He admitted, however, that he would much rather have the cash 

 than the note, for the reason that no matter how gilt-edged a 

 concern may be, there is no telling what may happen in ninety 

 days, and a note that looks like United States currency today may 

 appear very undesirable three months hence. But at the same 

 time it is well to have the other fact in mind, if only for the 

 purpose of emphasizing to the customer the desirability of taking 

 the discount. 



THE END OF THE LIMIT 



Speaking of discounts and trade customs in the matter of 



credit, a hardwood concern recently ran across a Tartar who was 



blessed both with unlimited gall and a sublime sense of bis own 



worthiness. 



He failed to settle in any form for his lumber until the ninety- 

 day limit was up: and then he tendered in payment a note due in 

 ninety days, but bearing no interest. In other words, after taking 

 the full time allowed in which to pay the face of the invoice, he 

 demanded ninety days more without anj' charge. The interest 

 on the money for that period was a mere matter of .$18, or 1% 

 jier cent of $1,C00, the value of two cars of hardwoods. The buyer 

 didn't seem to think that there was any reason why he should not 

 have this little gratuity; or, to put it differently, he appeared to 

 helieve that the lumberman, for the sake of dealing with him, 

 ought to be willing to act as his banker without money and with- 

 out price. 



For the good of the trade, it is well to know that this concern 

 hail gumption enough not to stand for this kind of graft; and 

 promptly returned the notes, insisting on gottiiiL' paper which pro- 

 vided for interest at the rate of six per i.nt. 



BE FRIENDLY WITH YOXJK BANKER 

 How well do you know your banker? 



He may be a hard man to get money out of, and you may think 

 that his rules and regulations are stricter than necessary; but 

 it's best to know him well, to have his good-will, and to advise 

 bim as to the condition of your business. 



The reason is that the banker who is familiar with your situa- 

 tion is much more likely to go the limit in time of need than the 

 concern which is extending accommodations merely as a matter 

 of business. There is something more than business to be con- 

 sidered, and the value of a little sentiment now and then has 

 frequently been demonstrated. 



There was once a big and powerful concern — whether it was in 

 the lumber business or not it is unnecessary to say — which con- 

 cluded that its business was so large that there was no use giving 

 it to the local banks, who charged 6 per cent interest, rain or 

 shine; so, money being easy, their account went to the big cen- 

 ters, where a nice little saving was made by buying the use of 

 all the money needed at 4 per cent. 



• There came a spell of rough weather for everybody in the finan- 

 cial world, however, and this concern was called on to liquidate 

 its obligations. It asked for renewals, more time, in the free and 

 «asy w.<iy it had been accustomed to do at home; but the big banks, 

 —34— 



the concern was nold out, lock, utock and bnrryl. 

 Wherefore, make your banker your friend. 



HOW CLOSELY DO YOU BEAD? 



The trade journals are constantly full of a varied and accurate 

 mass of information which every lumberman can use in his busi- 

 ness. The chief question of interest is, how many lumbermen 

 actually do make use of it, or read their papers closely enough even 

 to have any adequate idea of the fact that the information is there, 

 and may be had on demand? 



This point was suggested recently by a discussion which came 

 up in a group of hardwood manufacturers regarding a cortnin 

 feature of sawmill operation. Kveryboily had an idea on the sub- 

 .iect, but few could say anything definitely. As a matter of fact, 

 however, this uncertainty was unnecessary, for the reason that a 

 recent issue of Hardwood Becord had covered the whole question 

 thoroughly, accurately and statistically. 



These lumbermen all get and read Hakdwood Record; but that 

 they don 't study it the way they shouhl is evjileut. 



HOW MUCH MORE FOE DRYING? 



In figuring the cost of drying lumber, which has to be done 

 frequently by the lumberman who has a customer who requires the 

 stock to be kiln-dried before delivery, it is well to remember that 

 there is not only likely to be a loss of grade, which can usually 

 be protected by having the lumber inspected and certified before 

 being put in the kiln; but an actual loss of measurement, which 

 should be provided for in the price quoted. 



Just how much this shrinkage amounts to depends, of .'ourse, 

 on the character and age of the stock. Oak, on an average, will 

 lose from 2% to 3 per cent in the kiln, while one case recorded 

 not long ago involved a loss of 96 feet on a lot of 2,117 feet of 

 plain oak, the shrinkage here being 4^n per cent. The lumber had 

 been left in the kiln longer than usual, however, so that this is 

 probably the reason for the apparently excessive shrinkage. 



Rut it is certainly plain that the hardwood man who expects to 

 make money on a shipment of this kind should make a due allow- 

 ance for the loss of measurement which will be suffered in the 

 kiln, a loss which cannot be offset merely by protecting the grade 

 through certification. 



ANOTHER MEASUREMENT KINK 



Another little point involved in the measurement of lumber which 

 is often overlooked is that the loss involved in "calling back" 

 boards which are under the mark is much greater than would be 

 supposed at a casual glance. Occasionally a customer who insists 

 that he cannot use lumber unless it is the full width called for 

 gets the concession of having the stock measured on the basis 

 noted, so that if the board is over 6 inches wide, but under seven, 

 it is measured as 6. Ordinarily, of course, there is an even break 

 between the lumberman and the customer in measuring, as a 

 board which is over 6 but under 6% is measured as 6 inches wide, 

 while over 6^ it is called up to 7. 



That there would be a considerable loss in measurement result- 

 ing from the agreement to "call back" everything under the 

 full width is plain; but that it is as great as it has turned out to 

 be where careful check has been made of the tally is not gen- 

 erally supposed. One hardwood man who tried the experiment 

 reportoil recently that the loss was close to ten per cent. 



If this seems high to the reader, it may be added that this par- 

 ticular lot of stock happened to be quartered oak, which runs 

 narrower than plain, resulting in a greater number of pieces and 

 consequently greater opportunity for loss. But even in plain 

 oak it runs high, and the man who sells on the basis indicated would 

 do well to add a liberal margin to the regular price in order to 

 avoid loss. 



