Statement of A. W. Clapp Belorc Lumber Code Authority Meeting in Bchalf of Weyerhaeuser and Shevlin Interests

(Continued from Page 20) invoiced as green, or all three. About the same condition as in the West Coast rail market exists in Ponderosa Pine. Of the other divisions I will not speak, because I cannot do so authoritatively, other than to say that we hear of countless violations and complaints. With respect to Southern Pine, perhaps a fair inference may be drawn from the fact that, although in the competitive territory the average market price of West Coast fir is at least two dollars under Code prices, Southern Pine has nevertheless marketed a much larger percentage of its quota than has the West Coast.

4. It has been quite generally agreed that reasonable compliance with and enforcement of minimum prices was impossible unless the wholesalers were brought under the Code. This is true. About one-half of our lumber is marketed through wholesalers. Wholesalers are no better and no worse than manufacturers. But so long as the rules and machinery necessary to enforcement are inapplicable to one-half of the sale transactions, the difficulties of obtaining compliance or enforcement are insurmountable. For months we have been trying to get wholesalers under the Code-a definition of wholesalers, a definition of wholesale trade. We are just where we started from, perhaps a little farther back. It is unnecessary to fix the blame for this failure of our plans. Certainly ure cannot place the blame on the wholesalers. The only pertinent fact is that our plans have failed, and that we are in a greater state of uncertainty than ever about these necessary correlatives of any price maintenance system,

5. A great deal has been said about enforcemeut and lack of enforcement and a great deal of criticism has been leveled at the NRA. I should like to make a distinction between compliance and enforcement. Compliance cannotes voluntary cooperation.. In this, with respect to price maintenance, our industry has signally failed. My own personal belief is that lack of enforcement has had very little to do with this. At any rate, we were allowed to have a Code under.which the industry itself was for the first ten months permitted to fix its own minimum prices. We had always said that if our industry could be freed from the restrictions of the AntiTrust laws and permitted to make fair voluntary agreements we could rescue it from the depths to which it had sunk. I think it has been fairly well proven that this is not true. I do not believe that there would have been or would be any more compliance with a voluntary agreement than there has been with the code provisions. At any rate I do say that there has been and is such a lack of the spirit of compliance that no amount of enforcement could now possibly save the situation. I have heard it stated from an authoritative source that President Roosevelt's attitude with respect to fixed prices, including those in the natural resource industries, is substantially this: That he witl not interfere'with them so long as they are fair in the sense that they do not impose on the consuming public, and so long as they are acceptable to and proven workable by the industries themselves, but his own personal judgment is that they cannot possibly be made workable. I say that our industry has not only failed to prove that fixed prices are workable, but they have pretty definitely proven that they are not. We have done pretty nearly everything imaginable to n: the first place instead of adopting price pretty i the of make them unworkable. In attempted to remove the prices which might have been minimum prices as distinct from market prices, we made our system artificial in the extreme. Then we efiects of this artificiality by hundreds and thousands of difierentials, rulings and exemptions, and got some of our divisions in such a maze that the average lumberman on some classes of business actually does not know how to quote. Then we turned on to this artificiat patchwork barrier a pressure of overproduction which it could not possibly stand. Then we had our relatively large proportion of chisellers who speedily made it impossible for a much greater number to be honest and sell their lumber at the same time.

It is true that there was no enforcement at all for nearly a year, but at least up to July of this year this cannot be charged to the NRA or the Government. Whatever legal difficulties there were in enforcing prices not approved by a governmental agency. we made it doubly sure that they could not be enforced by failing to follow the price formula of the Code. This failure was not deliberate. It was just impossible to follow the formula to the extent which would make the resulting prices the basis for legal action. Since these conditions were removed what actual price enforcement have we had against the real chiseller? I put it to you that we have had substantially none; and that again I do not think can be charged to the NR.A or the enforcement omcers. There are so many ways of selling below code prices without leaving a record of it, so many ways that are absotutely undetectable; that substantial enforcement never can be attaincd. It would cost more to make the attempt than the cost of the attempt to enforce the prohibition law, and the results would be much the same. and the National Industrial Recovery Act gives to ample power, if that there is no mutual agreement dustry, to prescribe hours, rates of pay and other employment. the President within an inconditions of

The situation has become absolutely impossible, By attempting to retain price control we are penalizing the honest, or those who desire to be honest, beyond all endurance. You cannot enforce a sumptuary law in the wisdom of which a majority or even a large minority of the people do not believe, and which they do not desire. It is too much to ask the federal government to try to enforce in the West Coast Division, for instance, a law which is repudiated by the majority. It doesn't seem feasible to put the ma- jority of people in jail by any system of enforcement with which I am familiar. There is one thing that can be done, one kind of enforcement that can be used, not to secure general compliance with the code, not to punish chisellers, not to do justice, but to obtain glorification of enforcement as such. An illustration of this is presented on the West Coast. Most of you lumbermen knew Mark Reed, knew his solidity, his honesty and his independence. He was one of the few real leaders of our industry. He left an organization at the lead of which are sons of the same calibre. At a meeting late in August of the Trustees of the West Coast Association, in spite of a fairly conclusive showing that the majority of the industry was not observing the price features of the Code, and that a majority (though not entirely the same individuals) no longer wished to continue the price provisions, the Trustees nevertheless voted to do so. I think that no one will question that up to that time the Reed organization and the mills whose selling policy was guided by that organization had been in compliance with the Code. But after that action was taken, apparently despairing of a situation and policy which put dishonesty at a premium and directly and eftectively penalized honesty, these mills announced that they would sell on the market. If they did sell .below Code prices, it would be in the open and they might have been punished under the penal provision of the Code. Was that course followed? No. Instead, there came, to the intense gratification no doubt of most of those who were selling below the Code, but I take it from what I hear, to the intense disgust of the most honorable opera- tors, this glorified and publicized attempt-the injunction against the Reed Mills-to serve the cause of justice by doing an injustice. Reed had been selling on the Code, with perhaps a few others, and thus limiting the amount by which the chisellers had to go below the Code prices; very well, let him continue to sell on the Code! Tie his hands and don't permit him to sell his lumber, so that the rest of us may the more advantageously violate the Code. The majesty of the law must be vindicated! And how much sweeter is the vindication when it becomes a shelter for the chiselters and those who from necessity must follow them below code prices. I say, shame upon those who would prostitute law enforcement machinery and personnel to such ignoble uses!

But it is said that to abandon minimum prices means that it will be impracticable to administer or enforce the remainder of the Code. This we vigorously deny. During the past several months when compliance with code prices has been more or less negligible there have been few instances of failure to comply with control of production or the labor provisions of the Code. Except in extreme instances, it is impossible for operators to chisel on production or on wages and hours without immediate detection, and we have not the excuse that it is impossible or even difficult to .enforce these provisions of the Code. We are in favor of continuing the administration by the industry itself of all portions of the Code except Article IX. To fail to do so would be a confession of the inability of the industry to cooperate in its responsibilities to labor and to the public, and in measures advantageous to itsetf.

If you will permit me I will review as rapidly as possible the major provisions of the Code other than Article IX.

The provisions of the Code relating to labor are those in Article V, VI and VII. Article V is nothing more than a prescribed incorporation into the Code of certain of the provisions of the National Industrial Recovery Act. Article VI, as you know. relates to hours of labor, and Article VII to minimum wages. Obviously our industry cannot, any more than any other, avoid the impact of the general labor provisions of the National Industrial Recovery Act. We could not even if we wished avoid the provisions expressed of Article V of our Code. Those provisions even with the abrogations of the Code as whole, would still exist as law applicable to this industry. When this is once understood, I think it is vain for us to talk of the possibility of abandoning those provisions in the Code which relate to maximum hours of tabor and minimum wages, Article V of the Code provides that "employers shall comply with the maximum hours of labor, minimum rates of pay and other conditions of employment approved or prescribed bf' the President."

I wish to go further, however, and discuss briefly the question as to whether the labor provisions in the Code should be voluntarity agreed to by the industry, whether they should be still accepted and administered by ourselves as provisions advantageous to the industry. All of these provisions, of course, have social as well as economic implications. While I cannot personally concur in all of the labor provisions of the Act as interpreted, I do think that all industry, including ours, had failed in its relations with its employees to effect that social justice which must necessarily be a condition of the perpetuation of an industrial system which recognizes the rights of capital as well as those of labor, I think that our failure in this respect grew more pronounced as we entered into the depression and increased as the eftects of the depression became more acute. It may be said that no one industry by itself, especially if its product was in competition with that of other industries, could have done much better by its labor than the lumber industry did. I will be frank to say, however, that as the combined effect of lack of demand and over capacity exerted its pressure and from necessity or otherwise we permitted prices to tumble, some members of the industry did take too much out of labor, To express this thought in a difierent way, I am afraid that when some of the industry members thought they could sell their bulging stocks only by cutting substantially under competitors' going prices, one of their first moves was to cut the rates of pay of their workmen and pass that cut over to their customers. This was not only wrong from the social standpoint but from the economic standpoint. I venture to say that there has been no factor so disturbing in price competition within our industry, and that nothing has contributed so much to cut-throat competition, as the fact that wages were not maintained at a fair level, and particularly the fact that there was no common rate of wages even within the regional divisions of the industry. If we are by cooperative eftort to save ourselves in the future, whether under a Code or without a Code, I should say that the most valuable element of any mutual agreement between lumbermen would be the maintenance of fair rates of wages at a uniform level within each of the various producing regions. And so without saying that we are in agreement with all of the labor provisions in our code, we do say that it is better for the industry not only from social but from the economic standpoint that there be a con-