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HARDWOOD RECORD 



of twenty- eight per cent per annum, but for the sake of quick figuring, 

 say it will be only twenty-five per cent per annum, under good 

 management the government should have an annual gross income 

 from its ten million dollar investment, of two million five hundred 

 thousand dollars. This is a sum sufficient to pay for administration, 

 protection and constant improvement of the property, and leave a 



remarkably handsome margin of profit besides. Eecall the fact that 

 this is outside of the purposes for which the park is being created. 

 As a business venture it looks like one of the best enterprises 

 that was ever entered upon by this country. Congress has actually 

 and unwittingly blundered into a remarkably wise and profitable 

 piece of legislation. 



Lumber Marketing Possihilkies 



A recent issue of Hardwood Eecokd contained an interesting dis- 

 cussion of the place of the wholesaler, which endeavored to prove 

 that the millman should attend to his knitting and devote his ener- 

 gies to manufacturing, letting the wholesaler solve his sales prob- 

 lems, to which he in turn is giving his entire attention. The argu- 

 ment was logical and in many respects convincing. 



As a matter of fact, the wholesaler has been able to maintain a 

 place in nearly every business chiefly for that reason, as well as the 

 fact that he is a convenience for the consumer. The middleman is 

 not being kept alive by the producer and the consumer merely 

 because they are anxious to increase the sales price or lessen the 

 profit to the manufacturer. It is only because he is performing 

 a service which is worth while to everybody concerned that he is 

 permitted to play a part in the business drama. 



If the consumer could get exactly what he wanted as quickly and 

 as conveniently from the producer, the chances are that the jobber 

 would cease to be as important as he now is. However, the facts 

 that he establishes himself in the consuming markets so that users 

 are closely in touch with him and he with them, and his ability to 

 draw from many sources so as to be able to supply the needs of the 

 user more quickly than if the latter were compelled to deal with 

 each individual millman, and his knowledge of credits, which en- 

 ables him to sell with less likelihood of loss than if the producer, 

 attempting long distance analysis of credit ratings, were to handle 

 the business, are responsible for the wholesaler being in the busi- 

 ness, and suggest that he will continue for a long time to come. 



Probably the biggest single reason for his existence and the 

 strongest support of his permanence is the financial weakness of 

 many small concerns which are operating mills. The wholesaler is 

 frequently big enough to finance such operations, and it would be 

 folly for the sawmill man to endeavor to go out into the markets 

 and sell to consumers. He cannot wait to sell; someone must come 

 to him and buy, so that he may have the necessary resources upon 

 which to draw in the operation of his plant. In the same category 

 falls the small mill which does not produce enough lumber of one 

 dimension or grade to be able to sell in sufficient quantities to 

 interest the purchaser. The wholesaler buys his entire output, 

 yarding it and sorting it so as to meet the needs of the market. 



This does not mean, however, that the wholesaler is indispensable 

 to everyone, and that the function of manufacturing should be 

 divorced from that of selling in every instance. If the producer is 

 strong enough and big enough to take care of the demands of the 

 consuming trade, there is no reason why he should not do so. As a 

 matter of fact that is what is being done, and the mere fact that 

 the wholesaler is already in the field, prepared to solicit business 

 of the user and to enable the millman to move his stocks more 

 quickly, possibly, than he is already doing, is not necessarily a final 

 argument in deciding a matter of policy. 



Such a manufacturer not infrequently must sell at the price paid 

 by the consumer, and eliminate the margin which goes to the whole- 

 saler, in order to conduct his business profitably. Having a large 

 organization, with overhead expenses much greater, proportionately, 

 than those of the small millman, his lumber must seU at the top 

 price if he is to pay dividends on his stock. And the wholesaler, on 

 the other hand, is looking for the cheapest lumber, quite naturally, 

 inasmuch as only by getting the cheapest can he meet the price of 

 the manufacturer who sells direct and who has the initial advantage 



of having reduced the number of hands involved in the distribution 

 process. By cheapest one does not necessarOy mean the poorest 

 lumber, but lowest in price. The little mill, which is paid for its 

 lumber as soon as it is made, can and does sell at a lower price 

 than the big fellow, and this is the class from which the wholesaler 

 must draw, in most cases. 



Most of the expenses of the wholesaler are duplicated by the 

 manufacturer who sells direct. Keeping a man on the road these 

 days is a pretty expensive proposition, and maintaining a salesman 

 in every large market, as some of the larger houses have found neces- 

 sary, amounts to selling through a wholesaler in each market, the 

 expenses and salary of the direct representative taking the place 

 of the wholesaler's profit. Those which prefer this method evidently 

 believe that the expenses of their own men are less than the amount 

 which would be absorbed by selling through the jobber or the broker. 



As pointed out, the wholesaler necessarily looks hard at price, 

 while the consumer is directly concerned with quality, and can be 

 won as a permanent customer by the mill which gives him the 

 kind of lumber he needs. Thus the mill which sells direct 

 has the opportunity to build up trade of a stable and permanent 

 nature, which is more desirable than sales to wholesalers, which 

 almost inevitably must be made on the basis of price. 



Getting back to the real question, though, there are many con- 

 cerns which are neither small enough to be classed with those who 

 require the services of the wholesaler as a clearing-house through 

 which to move their product, nor yet are large enough to organ- 

 ize an efficient sales department, which can study the markets 

 closely and dispose of the production in the most efficient and eco- 

 nomical manner. The wholesalers can buy more cheaply than they 

 are willing to sell, and the larger manufacturer can sell to better 

 advantage than they can, because he is moving a bigger volume 

 with a smaller average expense. 



A manufacturer whose company is capitalized at $150,000, and 

 who believes that he falls in between the two classes referred to, 

 proposed not long ago that a central sales office be created by his 

 own company and three others in his city. He is producing plain 

 oak exclusively; another manufacturer specializes in quartered oak; 

 the third is a large manufacturer of poplar and the other has a mil) 

 which manufactures gum almost exclusively. Each had a man or 

 two on the road at intervals, and was trying to reach the con- 

 suming trade independently. All had found this course expensive, 

 because of the relatively small output, and difficult, because the 

 salesmen were trying to cover too large a territory and had in- 

 adequate knowledge of the consumers' wants. 



"Let us get together," he suggested, "and put our sales in the 

 hands of one man, who shall be selling agent for us all. He will be 

 on salary, of course, and will sell my plain oak. Smith's quartered. 

 Brown's poplar, and Jones' gum. He can go into the office of the 

 consumer and offer him a big block of anything he wants. Unlike 

 our salesmen, he will not have to confine his efforts to one item, 

 nor frequently, on account of stocks being low, be unable to fill an 

 order for anything except his specialty, but he can take care of any 

 business which offers itself. We will be able to get better results^ 

 because we shall have somebody handling sales who will be studying 

 selling and sales methods only; and we ought to be able to sell 

 more cheaply than at present, because we will have one set of 

 expenses instead of four." 



