V.gabond Editorials

Bv Jack Dionne

I asked Gus Russell of San Francisco to tell me how things were doing in Northern California. He said between the dock strike and trying to follow the flip-flops of the lumber code, he was reminded of a fellow in the insane asylum at Stockton. This fellow, says Gus, used to be a football player before he lost his mind. And now all he does all day long every day frorn breakfast until dark is just kick a football around the asylum yard. He hasn't any football, but that makes no difference to him; he kicks it eternally anyway. "And," says Gus, "about another month of this and I'll be over there CATCHING THAT FOOTBALL."

Surely the lumber industry has had its dog kicked around during the last few weeks in utterly foolish fashion. On June 9 every news agency in the country headlined the story from Washington that all price fixation in codes had been cancelled. Everyone in the United States who can read was given that story. The very next day the wires brought to industry everywhere a cotrection. The new rule, it said, did not apply to codes already in force and effect; only to new codes.

Unofficial reports n".r" 1a *", ,n" first report was genuine; that they DID decide to cancel all price fixing under NRA, and that for some reason they did a flip-flop. The apparent inco,nsistency and unfairness of applying price fixation to part of the business of the country, and issuing a blanket denial to all others, lends rnuch color to this report. But be that as it may, NRA the day aftei the papers announced elimination and cancellation of price fix. ing notified industry directly that prices already fixed continued to apply.

The trouble was that the FIRST report, announced by all the press of the country, REACHED THE CONSUMER; THE SECOND DID NOT. Did such a botch help the poor old lumber industry? It did NOT, my inquiring friend-it did NOT! It gave the industry a fit! How could it do otherwise? The public, notified that price fixing had terminated and knowing that with very little demand for lumber prices could not by the wildest stretch of the imagination be expected to hold, decided that this would be a good time to put aside any thought of lumber buying. It MUST come down, they naturally assumed. The SECOND announcement never reached the newspapers at all. It hasn't done so yeL So the lumber folks knew the day after the cancellation announcement that fixed prices were to continue; but the folks to whom they looked for business didn't know it, and don't know it yet. Hurt? I'll say it hurt!

But that was only the start. On the last day of its recent session Congress passed the new Housing Act. So far as direct help to prospective builders is concerned I'm afraid that Act is only a gesture. I'm not sure yet, but I suspect so. But the immediate aftermath of its passage was another gut-shot for the lumber industry. Out of the publicity-cursed city of Washington came another spreadeagle piece of news that the eager public was quick to grasp. It said that in conformity with the new Housing Act and to help the effectuality of the new law, lumber prices would immediately be cut ten per cent. Fine! Cried everybody. But unfortunately they forgot to tell the lumber industry.

I lmew one city where ;":"i"r" got busy and the very next day joined in a loud announcement to the public that in order to help the President put over his new Housing Act, get building started and get people to work, and in conformity with the announcement rnade from Washington, they were ofrering the public lumber at an immediate reduction of ten per cent from prevailing minirnum fixed prices. They expected, of course, that the formal instructions would be immediately forthcoming. They urere wrong. They haven't come yet. ***

I know other cities where the newspapers, seeing the announcement of the lumber folks in the city referred to in the preceding paragraph, called on their local lumber people and suggested the same sort of announcement for them; and refused to be convinced when the lumber folks assured them that all the news they had so far received concerning reduced lumber prices was from the pages of the newspapers. What a nice mess that put them in ! :t*:l

Soon the retail division of the lumber industry received instructions permitting them to reduce their retail markup about ten per cent. This put them out on a vety fine limb. And did they bellow? No price reductions on the stuff they botrght-only on the stuff they sold. "Oh, Yeah?" came the cry from the retail camp. !f**

Naturally bedlam broke loose in the industry during the days immediately following the press announcernents of price reductions. The wires to Washington and to and from the various code offices were kept literally hot with eager query, and with negative answer. "We don't know" was all the answer anyone could give. Then came the formal announcement from General Johnson of NRA advising the rnanufacturing end of the industry that prices that had been fixed early in June and dated until July first would remain in effect until further notice. And that's how it is now' ri:F*"

First the public was told that fixed prices would be abandoned, and it has never been told otherwise. Then it was told that lumber prices would be cut. They never have, unless some dealers here and there may have made the mark-up reduction. They don't have to, you see. The lumber price is a fixed MINIMUM; NOT a fixed sales price.

To show how swell ,. Jorir,l".'" "r.,r-e that the price of an item of lumber was $20 a thousand, and the mark-up in that locality was 40 per cent for gross retail profit. Then came the permissable reduction from 40 to 36 per cent. 40 per cent of $ZO is $9. His price under the old mark-up was $28 on that item. If he puts in the reduced rnark-up the price is $27.2O, or a little less than 3 per cent retail price reduction. But the customer has read in the paper that the price has been reduced 10 per cent, and he thinks this particular dealer is skinning him. So he doesn't buy.

Of course, the mill price of lumber IS corning down. No doubt about it. As this is written the mill folks are meeting in many places throughout the land, and within a few days reduced mill prices are apparently certain to be announced. They are expected to be about l0 per cent off preient mill prices. When THOSE mill prices go into effect, THEN the reduced retail mark-up will'make the total price reduction to the public the l0 per cent the public has been told about. But in the meantime the lumber folks, particularly the retailers, have been placed in a very uncomfortable and embarrassing position by reason of tooardent publicity coming out of Washington, causing the public to look for things that have not yet taken place.

*rt:f

Personally I think the reduction in lumber prices very, very wise. There is no question but that people here, there, and everywhere have held-and loudly voiced-the opinion that lumber prices are too high. Whether or not they ARE too high is not of the least consequence under the circumstances. If the public is sold on the idea that lumber is too high, it will also hold tightly to the opinion that they must and will come down. So those who have lumber to buy-rivait. Few building projects are ever of emergency character. It is usually very easy to postpone a building or improving idea. I am entirely convinced that all over the United States there are millions of people who need lumber and know they need lumber, who have been waiting for lumber prices to come down. d.**

And a large part of this belief has emanated fro'm the lumber folks themselves-not from outside sources. All over the country the retailer quotes his code lumber price, and then adds, apologetically-"That's the price the Code makes me charge; I dare not sell for less." No use contradicting it,folks. THAT has been the attitude of the MAJORITY of those who sold lumber. The other day a retailer whose family has been in the business for two generations told me that he was sticking tight to the Code and would continue to do so, but that he didn't blame people for not buying. He said that one of his other interests needed some building done, and he had himself advised them to wait until lumber got lower, as it was bound, in his judgment, togo. Under such conditions as those f cannot help believing that lumber prices-regardless of the fact that compared with other building materials and other useful commodities lumber is fair in price and NOT rapacious-have been the cause of preventing much building in this country. :t**

And I don't mean to imply that the dealers have been done in spreading this innuendo against lumber prices. I have heard big mill people say that before the price was fixed they were selling more lumber and making a generous profit, and that when the Code raised their prices it cut ofr their volume and made their business really less

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