Another Kind of Mi/i Insurance y^^ 



A.u.u„^i, ilio >.uii»tru< tiuu ui I'X^ii'iifiivc hu»iiiilli> ui (liu i^uucrutu 

 anil iitecl type that arc l<ocoming common in many portions of 

 the har<lwoo<l belt has ceased to be a matter for comment, in and 

 •f it.ielf, there is nevertheless a proposition conncctoil with the 

 "I'oration of such mills that is (|uite different from that involved 

 .11 the manufacture of hardwoods in the old-fashioned plant. 



The sawmill man of the old type put up a mill which, while solid 

 in.l substantial, was not intended to bo absolutely permanent. 

 When ho finished sawing out a particular lot of timber, he could 

 :i'<mantle his machinery without much trouble and ship it to a 

 •.. w point, leaving behind him a building which represented a 

 \ cry smoU investment, compared with the total value of the 

 product which it had turned out. He could afford to charge it off 

 his books entirely, provided he kept books and had an expert ac- 

 countant to tell him just how the thing ought to be handled in 

 black and white. 



Today, to borrow the well-worn phrase of the cypress men, the 

 hardwood manufacturer builds for keeps. There are numerous 

 sawmills involving an investment of from .$150,000 to $250,000 — 

 quite a pile of money, if one stops to examine the matter. They 

 are handsome buildings, with reinforced concrete floors and walls, 

 brick curtain walls, perhaps, and fireproof, massive, permanent 

 material everywhere in evidence. The machinery is installed in 

 concrete, which makes an excellent foundation, though hardly one 

 adapted for a machine which the owner expectes to move about with 

 him from time to time. Decidedly, the concrete mill with all its 

 equipment is meant to stay where it is put. 



Many concerns with mills of this kind carry no fire insurance, 

 figuring the mill to be proof against flames, by reason of the kind 

 of construction, and having their lumber yards suflaciently dis- 

 tant to be out of harm's way. But there is another kind of in- 

 surance for the mill which is even more necessary than indemnity 

 in case of fire loss, which is more or less remote in a case like 

 that suggested: it is insurance against lack of timber on which 

 to operate. 



If the mill is established permanently, and cannot be moved, thb 

 timber must be brought to it, for it obviously cannot be moved to 

 the timber. Does the owner of such a mill have insurance, as well 

 as assurance, that he will have a continuous and permanent supply 

 of timber, with which to keep his costly mill running at full 

 efficiency, which means at capacity, for enough years in the future 

 to enable the big investment to be gradually charged off? He 

 needs something more than the owner of the mill which i? in <i 

 shuck of more or less modified form from the temporary, hastily 

 thrown-togethcr quarters where the little country mill of olden 

 days operated. 



It may be thought that the suggestion that a mill would be 

 put in operation on an investment basis of the kind noted, with- 

 out having plenty of timber, is a bit wild-eyed; but occasionally 

 an example, of the truth-stranger-than-fiction kind, bobs up to 

 suggest that human beings are definitely limited in their capacities, 

 and that the power to see ahead is given only to few. Here is 

 an instance which may be illuminating: 



This particular mill cost its owners about $150,000, complete. 

 About $50,000 more was spent in building lines of railroad into 

 the timber which the company had bought in the southern state 

 where it was operating. That was a right tidy little sum of 

 money to put into a sawmill property; but the company is big and 

 strong, and it Vas assumed that it knew what it was about. 



It had a good deal of hardwood timber to start with, and there 

 ■was plenty more available, members of the concern said. So the 

 mill started cutting, and made a fine showing, both in production, 

 and as it happened, in the quality of the timber cut. It was all 

 big, clear stock, and the percentage of good lumber turned out 

 was unusually high. 



Just about the time the operation got well under way, the super- 

 intendent wrote in to headquarters, suggesting that the company 



—36— 



cuuiplutu itb pliuih lor u.:iiuiriuj{ udjuiuiii); liinln-r properly, ho •• 

 to have an anchor to leeward, and to insure the profitable opera- 

 tion of the plant after the timber already purclinsed was uacd up. 



For some reason or other, the company did not take any steps 

 immediately to carry out its plans along the lines indicated. The 

 head of the concern was going to Europe for a few months' pleas- 

 ure trip, and he probably concluded that the timb<'r he wanted would 

 bo there when he got buck. At any rote, the superintendent's letter 

 ■vns ncknowledged, and that was aljout all. 



When the owner of the plant got back, he received further ad- 

 vice on the subject, to the effect that rumors had been in cir- 

 culation of new mills to be established near them. That pointed 

 out the necessity for immediate action, so the timber buyer of 

 the company, who was expert both in appraising the value of a 

 tract of hardwood, and also in getting said tract at a reasonable 

 price fromfits lawful owner, was gent post-haste to the mill coun- 

 try to close up for the adjoining property. 



He came back in a few days, and walked into the office of the 

 head of the company with a doleful expression on his face. 



"What's the matter?" inquired the lumberman, jocularly. "Did 

 they try to hold us up on that other timber?" 



"Worse than that," replied the timber buyer. "They won't 

 even take the trouble to hold us up." 



"What do you mean?" he was asked. 



"To say it quickly," he replied, "wc seem to be well bottled up. 

 The Smithers Cooperage Company has bought 40,000 acres of tim- 

 ber just east of us, and extending beyond us in each direction; 

 and the Northern Hardwood Company, a new concern which has 

 just been organized, has taken in 75,000 acres which adjoins the 

 other tract at both ends. Our holdings are now right in the cen- 

 ter of theirs, and we're absolutely cut off." 



Things happened pretty rapidly after that. The owner of the 

 expensive sawmill got on the train and spent his own valuable 

 time in going over the situation. He found that what his buyer 

 had told him was true — that while his company had rested on its 

 oars, his competitors had been busy buying timber, and that he 

 was as tightly bottled up as a Mexican president in the midst of 

 a particularly busy band of rebels. 



He tried to buy part of the holdings of the other companies, 

 but they were already busy erecting their own plants, and could 

 spare none of their timber they said. They even refused to give 

 their consent to the construction of the railroad of the other con- 

 cern into timberland on the other side of theirs, holding, quite 

 properly, perhaps, that it would not be good policy to make such 

 an arrangement. 



The big mill continued to saw lumber, and it lasted about aa 

 long as had been figured. The day came, however, when the last 

 log was cut up, and as soon as the lumber was put on sticks the 

 career of the mill was ended. It was closed down "for repairs," 

 and though the owners of the plant have been cudgeling their 

 brains for some time to find a way to get their money out of that 

 proposition, they have not yet succeeded. 



Recently, however, they made a deal with another concern some 

 distance away, to buy its timber. The other company, however, 

 had a mill of its own, and this also had to be bought and paid for. 

 The question now is whether the new owners will manufacture the 

 lumber in the newly acquired plant, or, in order to save their 

 faces, ship the logs to the old, expensive mill and give it a chance 

 to earn its salt and pay interest on the investment which has 

 been made in it. Either way, however, it appears to be a losing 

 venture; and it seems to be as hard to unlock an investment of 

 capital unfortunately made, as in this case, as it is to unscramble 

 the famous eggs of politics. 



Perhaps this example is of an isolated type which has few com- 

 panion-pieces; but at all events it seems to prove the point that 

 mill insurance of this kind is desirable, if not absolutely necessary. 



