Lumbermen Advise Railroads to Seek Traffic Volume Instead of High Rates

Portland, Oregon, January 17, 1938-Douglas fir lumberrnen, appearing today before Interstate Commerce Commissioner William E. Lee, who is hearing testimony on the higher freight rates proposed by all the railroads in the United States, freely admitted the needs of the carriers for greater revenue. They asserted, however, that-in the case of West Coast lumber-the proposal for uniform increases in all tariffs, limited only by a maximum of 6 cents per hundred pounds, is the wrong way to increase earnings.

Ihis assertion was based upon the fact that nearly half of the domestic sales of West Coast lumber move to markets like California and the Eastern states where shipment by rail is highly competitive with shipment by water. Increases in costs of rail transportation will defeat their purpose, by diverting the traffic to water carriers.

In support of this contention, the representatives of the West Coast Lumbermen's Association introduced many exhibits showing how the railroads had greatly increased their traffic volume and earnings under the competitive rate to the Eastern states, adopted in 1935. This rate, finally set at 78 cents per hundred pounds to all territory east of Chicago, requires minimum carload weights of from 50,000 to 60,000 pounds, depending upon the size of the equipment furnished. As the result of its adoption, the lumber exhibits show that the weight of the average car has increased nearly 11,000 pounds; the earnings on the average car have increased over $50.00, and that the annual movement has increased by 11,000 cars. Before this rate was established in 1935, the railroads weri hauling only 12 per cent of all the West Coast lumber marketed in the states east of Chicago. As a result of the rate, they are hauling 30 per cent of the total movement. After making all due allowances for the increased traffic that would have come anyway from economic recovery, the lumber witnesses asserted that the adoption of this rate has brought the carriers $3,680,000 of additional revenue per year, which otherwise they would not have had. On the basis of detailed comparisons of delivered costs at typical destinations in the Eastern states, it was asserted that the freight advance now requested would throw the competitive movement of Western lumber into the Eastern states back into substantially the same situation which prevailed before the lower rail tariff was adopted; and that the large gains in traffic volume would quickly disappear. This would cost the railroads, the lumbermen allege, more in earnings than the entire gain computed under the proposed advances, on the assumption that the volume of movement worrld remain unchanged.

The lumbermen also testified that water carriers now handle three-fourths of the West Coast lumber shipped to California; and that under the highly competitive conditions existing in this traffic, the increased rates to California would defeat their own purpose by diverting more of the movement to coastwise shipping, supplemented by truck hauls inland from the California harbors.

Colonel W. B. Greeley, Secretary-Manager of the West Coast Lumbermen's Association, drew a parallel between the competitive movement of West Coast woods by rail and water and the competitive movement of citrus fruits from Florida to their principal eastern markets. The railroads have asked to have the citrus fruit movement exempted from the proposed increase in order to hold a fair share of this extremely competitive traffic. The same principle, Greeley asserted, applies no less to the competitive movement of western lumber.

Many exhibits were also introduced by West Coast Association witnesses designed to show the very heavy burden of transportation cost upon the lumber manufactured in Western Oregon and Western Washington in relation to the value of the commodity. One exhibit diagramed an average Douglas fir and hemlock log, showing a yield of 2l per cent of Clear, $hop and Industrial grades-as against 79 per cent of Structural and Common grades. The average rail shipment of today, paying a tariff of 57.7 cents per hundred pounds, takes 45 per cent of the mill value of the upper grades; but 93 per cent of the mill value of the Structural and Common grades. In the case of No. 3 Common, transportation eats up 154 per cent of the mill value. Transportation costs, said this witness, increases heavily in adverse ratio to the value of the lumber qualities moved.

This situation was cited as showing why the West Coast lumber industry has been forced to move its common production largely by wpter; and why there is a tremendous wastage of low-grade lumber and low-grade logs which cannot be manufactured and shipped to any market within reach at a cost of transportation which the product will bear. A tremendous volume of additional traffic is ready for the carriers, according to the lumber testimony, if they will devise tariffs, like the present competitive rates to the Eastern states, which are constructed on the principle of heavily loaded cars, volume movement and a reasonable rate per hundred pounds. This, the lumbermen held out as the real solution of the business problem of increasing railroad earnings in the movement of West Coast lumber. The West Coast Lumbermen's Association also specifically recommended that the water-competitive rates to the Eastern states and to California be exempted from any increases which may otherwise be held necessary.

The witnesses for the West Coast Lumbermen's.Association were J. H. Bloedel, president, Bloedel Donovan Lumber Mills, Bellingham, Washington; J. D. Tennant, vice-president, The Long-Bell Lumber Company, Longview, Washington; George T. Gerlinger, president, Willamette Valley Lumber Company, Dallas Oregon; and Colonel W. B. Greeley, secretary-manager of the West Coast Lumbermen's Association. Attorney W. C. McCulloch of Portland represented the Association in the hearing.

FHLB Pays $2,369,360 in Dividends lor 1937

Washington, D. C., Jan. 20.-The payment of $2,369,360 in dividends for 1937 by the twelve Federal Home Loan Banks, the highest for any year since their establishment in 1932, was announced by Preston Delano, Governor of the System, today.

This makes a total of $9,173,110 paid in dividends by the banks since their creation. Of this, the United States Treasury has received $7,316,133, and member thrift and home financing institutions $1,856,977 in direct proportion to their respective investments in the banks. Of the 1937 dividends, member institutions received $502,478 and the Treasury $1,865,882. In addition, the System added $1,788,056 to its surplus and undivided profits during the year.

Governor Delano also announced that outstanding advances of the banks reached an all-time high of $192,905,878 on December 25, last. This brought the cumulative figure of advances to $395,9O4,fu6, ol which $n2,998328 has been repaid.

As of December 31, members orvned $34,833,725 of the capital stock of the banks and $124,741,000 had been invested by the Treasury. The present membership of the System consists of.3,932 institutions, including Federal and state-chartered savings and loan associations, homestead associations, cooperative banks, savings banks and life insurance companies, with combined assets in excess of $4,000,000,000.

San Francisco Lumbermen's Club

Jack Dionne, publisher of The California Lumber Merchant, was the speaker at the regular weekly luncheon meeting of the San Francisco Lumbermen's Club held at the Engineers'Club, San Francisco, Monday noon, January 24. C. C. Stibich, president of the club, presided. Thirtytwo lumbermen attended.

The speaker discussed some of the problems confronting all business men at this time, and concluded his 30-minute talk by telling some humorous stories in characteristic fashion.

The weekly luncheon of the club is held at 12:15 p.m. every Monday. All lumbermen are invited to attend. There are no dues.

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