How Shalt We Stabilize The West Coast Lumber Industry

Bv w. Secretary-Matwger, Wal B. GREELEY Coast Lumbermen's Association

The Declaration of Independence staits out with the statement of certain truths held to be self-evident. We may likewise state briefly certain well recognized conditions in the lumber industry of the West Coast, which set forth the problem of putting this industry on a prosperous footing.

The Conditions With Which We Deal

First. The West Coast lumber industry norv has a normal producing capacity at least 2O/o in excess of the present consumption of its products. The maximum. or possible, producing capacity of its mills is considerably greater.

Second. Our industry is moving steadily toward more efficient machinery and operating practice, which tend to increase its normal producing capacity.

Thircl. The inherent tendency of the West Coast lumber industry is to run full time, or as near full time as the conditions at each plant permit. Furthermore, the prevailing policy of the mills is to keep their lumber moving at the market, which usually means at whatever prices are necessary to move it.

This, of course, is not true of all West Coast mills. Some of thern have adhered to stable prices for considerable periods ; and many have reduced their output in the face of adverse markets. But thinking of the West Coast lumber industry as a whole and the conditions and conceptions which have governed it, particularly since the increase in production after the World War, I believe I am describing its inherent tendencies correctly.

Over-Production Has Been Chronic

Fourth. The combination of excess capacity, full time operation, and selling at the market has kept the West Coast lumber industry in the more or less chronic condition rvhich we describe as "over-production," or a "buyer's market." This condition results in unstable prices for lumber, which return little or no profit to most of the mills and do not return the cost of production to many mills.

Fifth. The markets for West Coast lumber have a fairly definite seasonal variation; and the effect of rvhat we call "over-production," or "selling at the market," is most serious during the customary periods of slack demand, particularly in the winter months.

Sixth. In our rail trade, the speed and efficiency of modern transportation have resulted in "hand to mouth" buying by many lumber users and distributors. We must accept this as a permanent condition. It means playing the market .from day to day through innumerable small purchases and constantly testing the selling front of the mills for weak spots.

Price Structure Demoralized

Seventh. The forcing of lumber upon slow markets by cutting prices, especially during normal seasons of inactive buying, rnay draw out an artificial or speculative demand in advance of real consumption; but in the end simply demoralizes the price structure without increasing the total sale of lumber. The price fluctuations and price cutting on the

West Coast since 1923 have reduced the annual returns tr.r this industrv bv thirtv or fortv million dollars, but they have not inireased the total sale of its products by a single board foot.

Of course, there are limits beyond which higher prices for lumber vi'ould result in a decieased consumption through resort to other materials. Rut the West Coast lumber industry has not reached those limits, at least at any time within the last five years.

Eighth. Too much lumber has been manufactured on the WesI Coast during the last five years to maintain satisfactory prices. Anot-irer fundamenial rveakness running with over-production and largely resulting from it is the weakness in selling-the effec1 oi the dominating idea of keeping lumber moving at the market. The producers have surrenrlered control of their market-not to the real consumers of their products-but to distributors rvho stand between them and their customers. In fact, the policy of keeping lumber moving has often forced distributors to lorver prices for sheer self-protection.

West Coast Woods Competing With Themselves

Ninth. It is true that the low prices on West Coast r,voods in the last five years or more have forced them into new markets as cheap lumber, particularly on the Atlantic Coast. But as far at least as our domestic consumption is concerned, that process of market expansion is about over. The pathetic result of the rveakness in selling West Coast lumber today is that it does not increase the volume of our products that is sold or strengthen their competitive position in relation to other woods. The reverse is largely true' In many of our markets, West Coast rvoods are now competing only with themselves. Their lorv prices do not increase the volume of consumption. In some regions their very cheapness deters their use. The unstable prices for West Coast rvoods today prevent some distributors from handling them. I presume u'e have all received pleas from distributors, such as frequently come to the office of the Association, to stabilize the price of West Coast lumber so that the dealer can afford to carry it without the risk of having a depreciated commodity on his hands.

One of the best informed men on the Association staff, on returning from the East, told me recently that the outstanding thing in his mind is to get across to our members the wish of many retail lumber dealers, wholesalers, and lumber manufacturers in other regions, that we place our prices on a reasonable level and keep them stable.

Tenth. Let me refer frankly to another condition illustrating the weakness of the industry in selling, brought about by the dominating idea that lumber must be kept moving. This is the common practice of reducing prices on particular items on which a certain mill is over-stocked at the time. It is constantly coming to my attention-one mill is dumping this item on which it is long;another mill that item. The result may be to create weak spots all through the price structure. The fact that particular mills are long on particular items seldom means that the current market for those items is weak but the practice of dumping long it-ems rather than balancing stocks through adj-ust-ments in production or aggressive salesmanship G very apt to start a weakening of the market that may become widlspread in its ultimate effects.

Balancing Production With Demand Fruitful

During the past year, the West Coast lumber industry has -seen tangible proofs of the results of controlling iti production. Tle reduction in output on the part of a Large number of mills appreciably strengthened the markit through the information whiih weniabroad in the trade that the West Coast industry was not making as much lumber. Between the first of May and the thirtiith of November the West Coast lumber piices reported to the Davis Statistical Bureau reflected an lnerage increase of arouncl $1.90 per thousand board feet. The mlrket still remained a b.uyer's market, however, because the adjustment in produc- tion was not backed up by a sufficiently strong selling pollcv.

bur goaL is to place the West Coast lumber industry orr a basis of profitable operation; and on that basis to uiilire the -productive capacity of the industry to the extent our markets will absorb its products. That goal can be attained and a seller's market cieated only by sluch adjustments in current production or in the production of individual items as the business and inventory of each mill require and by a firm price policy on the part of each West Coast manufacturer. A firm selling policy, in other words, must go hand in hand with the control of production.

Once we establish a firm price irolicy among the West Coast mills we would-set up in aciurate gauge or measur- ing stick for controlling pioduction. Tlie v=olume of the total cut, and the volirme of the cut by items should be that at which stable prices, mill by mill-each acting on its own set-up-can be maintained. Without firm price policies, we have no accurate gauge of the amount of lumbei we shoul<l produce. The stability- and profit we are seeking can only be..achieved by -combining a ?ational control of p-roduction, mill. by mill, with a firm price policy in merchandising its products.

Situation Not Temporary

I -appreciate full well that many men will say: ,,It can't be done." Overhead costs and Carrying charges on capi- tal investments, the weight of timber taxes, cirrent needs for cash, and the meeting of current banking obligations, are regarded by many mills as factors whichlompil them to run full time and to keep their lumber moving at such prices as will move it. The limited facilities for stoiing lumber at many of our cargo mills is a difficult factor to"overcome in maintaining firm prices. But the situation we are dealing with is not a tempbrary one. It is rather one that we must live with for years-either until there is a verv marked decrease in the production of softwood lumber in othe_r _porti_ons of the United States or until mill capacity on the West Coast passes its peak and begins to decline. Then, and not until then, if we leave matterJto their own "orrr.. can we expect a well established seller's market.

f -would not, of course, assume to prescribe the right business course for every operation. B;t if my conviction is sound that the West Coasf can sell substantiilly the same volume of lumber as atpresent at a substantially higher return, through the adoption of firm price policies,iher"e is not a. company in the region -which would not gain more by this course than by continuing to push its-lumber on -a buyer's market, thereby. frequently incurring a steady and cumulative loss of capital assets. And this will still be true under any probable reduction of output necessarv. mill by mill, to maintain its own price poliiy

Another common objection would be that ail of the mills would not adopt a firm price policy; and that those who did

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Lincoln

No one can explain Lincoln.

Reared on the soil of "Old Kentucky," he came out of the invisible, walked uf to his task, performed it, and went back into the invisible again. Humble, he never realized that he was great. It is now a lmown fact that for days after he delivered his Gettysburg Address-now admitted by the entire world to be the most sublime short utterance of any strictly human being in this world's history-he considered that his words had been a failure. They so deeply impressed his audience that when he finished delivering them there was not a sound of applause. He had uttered something that made human applause seetn totally unworthy. But he did not realize that fact, and was again bowed down with a sense of his own inability. The great Russian, Tolstoi, called him "A Christ in miniature." And he WAS. And so is every man who refects the spirit of the Galilean-humility, lovingness, tolerance, pitY, under' standing, helpfulness, sympathy.

SALUTE TO THE TREES Henry Van Dyke

Many a tree is found in the wood And every tree for its use is good; Some for the strength of the gnarled root, Some for the sweetiress of flower and fruit; Some for a shelter from the storm, Some to keep the hearthside warm; Some for a roof, some for a beam, Some for a boat to breast the streamIn the wealth of the wood since the world began The trees have offered their gifts to man.

She Knew

The little girl was on the witness stand and was being examined to see if she knew the meaning of an oath.

"Do you know the meaning of an oath?"

"Yes, sir.tt

"Do you know what will happen if you tell a lie?"

"Yes, sir."

"'What?"

"We'll win the case."

Lincoln Anecdotes

Here are two favorite Lincoln anecdotes. And it should here be observed that he was the most famous teller of stories in all history, never failing to dig up a humorous one to illustrate his points. Ranking next to him in this respect was Benjamin Franklin, himself a wonderful story teller.

Secretary Stanto'n was very angry with an officer who had disobeyed an order. "I have a mind to write him a letter that will blister him-take the skin off," he said to Lincoln. "Do it," said the gaunt one, "do it now while you are in the mood; cut him up." So Stanton wrote it, and filled it with fire, and read it to Lincoln, who highly approved. "Who shall I send it by?" then asked Stanton" lsend it !" said Lincoln in surprise. "Why, you mustn't send it at all. Tear it up right away. You've got it off your mind by writing it. Now destroy it. It's all right to write those things but never send them."

"What did Stanton say?" asked Lincoln of an officer by whom he had despatched a very unexpected message to Stanton. The ofEcer hummed and hawed. "What did Stanton say?" persisted Lincoln. "Stanton said you were a d-n fool," admitted the officer in trepidation' A grim smile came over the ruggd face of Lincoln' "Well," said he finally, "I've known Stanton a long time, and I find he's usually right, so he probably is in this case'" And that was all of that.

An Argument Against Drink

It is poisonous and doesn't taste good and leaves me with an awful head and a thick tongue and a dark brown feeling and it is futl of lye and ether and worse and it is against the la,ur and I don't like it and it costs too much and I don't know what's in it and the police are very strict and it makes my breath bad and bootleggers can't be trusted and you can't tell what you arre getting and all of it is cut and the last I had tasted like rubbing alcohol and I haven't recovered yet and if I drink :rny more it'll probably kill me and I have a lot of work to do and rrly famibl doesn't approve and you say that it is real Scotch and you know it is good because you got it from a bootlegger who is almost a personal friend and he wouldn't tell a lie and a little shot will pick rne up and you have a new way of mixing it with sugar to kill the poison and-well, if you insist !