Ethical Relations

By Will Goddard" Secretary-Manager, Alameda County Branch, Millwork Institute of California.

Address delivered at the Annual Convention of the California Retail Lumbermen's Association

It is a pleasure for me to be *'ith you today, and help to instill within the grind of business, and the turmoil of industry, the spirit ot goodwill.

Looking back over a period. of years, it is surprising to see the changes that have taken place, not only in our own especial industry, but in all other industries. The mode of travel, the transmission of correspondence. the advance of the air over land and sea, the replacement of manual labor by the rnachine, are alf iinstances of change on the one hand and decay on the other.

What a revelation it is to be able in a few short minutes to transmit a message, say from Los Angeles to New York, when comparatively only a few years ago it would have taken menths. And yet, Gentlemen, the changes enumerated are no greater than the methods of conducting our industry today in comparison with the methods of yesterday.

I can well remember the day, when as a salesman, I was sent out to get orders. "Get them honestly if you can, but if not, get them. Lie to your customer, defame your competitor, but get orders---or get out." But today? The spirit of cooperation was never in such evidence as it is today. Today the communit5r that is without its business organization is as much trehind the times as a horse and buggy is out of place on Spring.Street, Los Angeles, or Market Street, San Francisco.

The man who is operating a lumber yard in such a community and under such conditions is on an equality with the man who operates a livery stable in Detroit. I am told, however, that we have many such localities in this glorious state of ours. And yet we have our state organization, and let me tell you that your state organization was. never so influential as it is today.

There never was a time when its influence for good was more recognized than it is today. Captains of the irtdustry are talking of its activities and admit it is the one concern that has the power to obliterate unfair practices and cut-throat competition, and establish such ethical relations as would not only raise the status of the industry, but might even make it possible for a firm to break even at the end of the year.

And the majoritv of the lumbermen throughout the state will be tickled pink if they do break even. What a tragedy!

Millions of money invested throughout the state, and practically every lumbernan knowing that on December 31st he is bound to show a loss.

Gentlemen, it is one of the world's greatest mysteries why lumbernren should be the only ones who seem consistentlly to be satisfied to take a loss. It has been so since Cain followed Abel with a 2x4. How long, Oh Lord, how long is this going to last? Just so long as lr'e are content to sit and let George do it. Just so long as we are crazy enough to think we are just a little smarter than our competitor. Just so long as u.e think we can bribe our customers with a 5 per cent discount without our competitor knowing it. Just so long as we are willirrg to finance our customers by extended credit when we know the bank has refused to make a loan. Just so long as we think it costs nothing to make an estimate. Just so long as we are content to accept returns, the ma- joritl'of which are damaged, and all de-graded, and still credit the full amount of invoice price. Just so long as we are satisfied to sacrifice price for volume. Just so long as we are foolish enough to go it alone. Just so long as rve remain just plain damned fools!

What is the remedy?

Who is the doctor?

The state organization is the doctor, and believe me the doctor has got a pretty bad case on his hands. But it is far from hope- less. In fact, with careful treatment a speedy recovery should be made. The remedy is cooperation.

What is necessary today is the formation of local organizations in every city and community where lumberlnen are competitive.

Uniform costs and standardized selling prices must be put in force.

The tendency of all business-banking, railroads, steamship, oil, electricity, is toward standardization, either through public or private control or trade associations. Can you borrow money at one bank on much better terms than at another bank? Can yod get a telephone rate lower than your neighbor for the same amount of service? Can you buy power at a better rate than your competitor? Then why should lumber be an exception to the rule?

No progress has ever been made by competition.

All permanent advance of the race has been made by cooperation. The triumph of mankind has been the triumph of organization. The local organizations will be the very foundations of the state associations, and it is up to the state association to take that step if it ever expects ethical relations to be established and unfair practices stopped. A committee should be appointed to consider ways and means of organizing state-wide local associations, tying in with each other from North to South and East to West. We have actual records from some localities, where cooperation is the vogue, showing results which are almost unbelievable, especially so during a time of great depression. These records prove conclusively that cooperation has solved the difficulty. They show an increase in the seling price, which is the difference between a profit and a loss. They show that competitive bidding is reduced to a minimum, and that the practice of substitution, rebates and free deliveries, is not only unnecessary but a detriment. These records show that the number of salesmen now required is about one-half of hereto- fore. The business of the community has been kept in the channels where it belonged.

, Gentlem.e.n, without _control, based equitabty to all concerned, it is impossible to establish any code of -ethicj that will amount to a hill of beans. It is useless to consider unfair practices. It is useless to discuss ethical relations. It is useless to estabtish any pre- cedent whatever, unless we have a controlling hand that iari at any time step into any breach that may arise, that can straighten out any argument, or adjust any misunderstanding between par- tres operating in the same neighborhood.

Ethical Relations. Unless ethical relations are established in every spot where a lumber yard exists, the retail lumber indus- try of California is destined to become a by-word and a laughing stock, Unfair Practices. What does it matter whether so-called unfair practices exist or not, provided there is no contr.ol of a legitimate selling price? Notice that I say legitimate selling price because I am a strong believer in giving to the consumer value for money received, but I am just as adanrant in seeing that the dealer gets his value for goods supplied, There is no material difference whether a man sells his product, in the first place at a price where no profit exists, or whether he sells at a profit and afterwards gives a rebate to eat that profit up.

Is there any difference betv/een selling No. 3 Com. M&D at $20.00 per M. or selling at $22.00 and giving a rebate of 92.00? None whatever.

Then what is the use of trying to eliminate a so-called unfair practice without first finding out what isa fair selling price, and controlling same. The one is absolutely valueless without the other. Unfair practices are born of unfair selling prices.

We. have here today a crowd of lumbermen representatives of the State of California, Yorir very presence here denotes that there is a necessity to stabilize the lumber industry. You are here to try and correct the evils of a trouble ridden industry. Each local territory has its own peculiar worries, and it is only that particular territory that can work out its own salvation.

Can we not, as a state organization, start the ball rolling and line up the different members into committees in their respective communities? With the object of perfecting local associations.

That is the only cure for the present condition of the lumber business. We have got to cultivate the spirit of co-operation.