Industry Head Opposes Lumber Freight Rate Increase

Washington, Dec. 11.-Asserting that a general increase in lumber freight rates now will retard home-building, will reduce lumber tonnage and will in the long run produce less revenue for the railroads, Dr. Wilson Compton, secretary and manager of the National Lumber Manufacturers Association, today appeared before the Interstate Commerce Commission to ask that body to deny the application of the railroads to sanction a general increase in lumber rates. Speaking for 11 participating groups of lumber manufacturers representing over 90 per cent of the total lumber carried by the railroads, Dr. Compton in his testimony brought out that there had been a substantial and continuing loss of rail lumber traffic during the last 15 years.

Admitting the need of the railroads for increased revenues and a prompt and substantial strengthening of their financial structure and financial q,ondition, Dr. Compton added: "The lumber industry needs more volume just as the railroads need more traffic; and its need is just as acute. The railroads have submitted to you a proposal intended to secure more revenue from lumber traffic. We think it will not do so."

Commenting especially onthe probable effect of such proposed rate increases on building, Dr. Compton called attention to the present Government program to stimulate low-cost housing and pointed out that 87 per cent of all single family houses and nearly 90 per cent of low-cost houses are lumber-built or are of lumber frame construction. Holding that increased freight rates will materially add to the. cost of house construction, he estimated the likely direct increase in lumber costs alone would range between 12 million and 16 million dollars annually on the home-building program recently outlined to Congress by the President.

"The President," he said, "has now called upon Congress for appropriate legislation to facilitate home building of the very type in which cost is the decisive factor. Likewise, he has called upon the building industries and building labor to implement the nation-wide resumption of home building. A movement by public authority on the one hand in the direction of a general increase in building costs is, we think, scarcely compatible with the movement on the other hand to encourage more building at lower costs. A general increase in costs rvill retard building at the very time when, in the national interest, it ought to be stimulated.

"The President has just addressed Congress in terms of an annual building of 600,000 to 800,000 units. In 1936 were built about 160,000 units, and in 1937 evidently a few more, perhaps 200,000. But in this matter the real problem for the building industries and for the country is the great expansion of home building volume. So far as building materials are concerned, and especially lumber, the principal material for the small home, the real problem is-and I should think it is for the railroads a5 v,'sll-net to collect higher rates on a shrinking volume, but to convert the present 200,000 units of housing into the potential 600,000.

"The railroads have, we think," concluded Dr. Compton, "been generally inclined to regard their lumber traffic as though the lumber industry was only a temporary in.dustry, its timber resources limited and approaching exhaustion, and its products available only in declining volume. Lumber rates based on such a conception seem to us to have fallen far short of fostering a dependable, permanent lumber traffic. Lumber is not a declining industry, nor only a temporary source of traffic. At least, it will not be unless we make it so. The national timber supply is adequate to sustain permanently a volume of lumber traffic more than fifty per cent greater than it is today. There is no lack of producing capacity and in the long run there is no lack of markets for lumber if rve can reach them."