Lumber Code Authority Approves Cost Protection Prices and Fair Trade Practice Rulesr-r Allocates Production

Washington, D. C., Nov. 4.-The approval of minimum cost-protection prices and rules of fair trade practice and the eitablishment of production quotas for November and December are the three outstanding achievements of the Lumber Code Authority session rvhich began here October 16 and which ended November 2nd.

The ,cost-protection prices established by the Authority's action become effective ten days after publication' Although all prices are listed on f.o.b. mill bases, a formula prescribing for each branch of the industry the method by which delivered prices or prices including freight to destination shall be computed is included. These adjustrnents of the freight factor which is a constant are necessary to preserve the competitive relationships existing within the industry, so that forest products rnay continue to reach their competitive markets without restriction'

The cost-protection prices, however, do not "fix" the prices of lumber. They merely attempt to establish minimum market levels which will effect a return to the pro- r ducers sufficient to pay Code rvages and rvork Code hours' While the Code authorized prices that rvould prote'ct the full cost of production, it lvas decided to forego a measure of this protection rather than disturb present market relations. In a great many items the prices are predicated upon no return at all for stumpage values, in othet cases only slight return. Some of the figures will not returu any sttlmpage or any depreciation. The cost-protection prices will average ab'out the same as Present rvhole-sale prices -in se11g cases a trifle lower.

This putting into efiect of Article IX is the culmination of the r.r'ork of the Cost Advisory Committee, r'vhich bodl', after exhaustive preparation in their respective regions, assembled in Washington Octobet 2 for the coordinating of their figures and remained in session continuously until their reports were approved by the Authority.

The all-imp,ortant rules of fair trade practi'ce resulted from recommeindations by the various divisions and subdivisions which were ,collated and arranged by a committee of experts under the chairmanship of Harry T. Kendall, who has for a long time been chairman of the National Lumber Manufacturers Fair Trade Practice Committee' Several amendments to Schedule B rvere proposed and rvill be submitted for the approval of the Administration, but the great bulk of the work was 'concerned with additions and exceptions offered by the various divisions under paragraphs (a) and (b) of Section 2, S'chedule B. The effect of this work of amending and amplifying S'chedule B will be to codify the business ethi'cs of the industry. This is a development which has been sorely needed for years and which will be commended by practically every manufacturer under the jurisdi'ction of the Code.

In presenting the report of his committee Mr. Kendall declared the members recognized the fact that there are certain servi,ces performed by wholesalers, in addition to or,dinary selling-such, for instance, as financing sarvmill operations-for which it was felt that additional allowan'ces should be provided in Schedule B. IIe recommended that a committee be appointed to consider this matter. Max Myers then made a statement to the efiect that the schedules of wholesale discounts as submitted were unsatisfactory in that they did not even approximate the costs of wholesale lumber distribution.

In approving allotments of produ,ction for final quarter of the year, the Authority exceeded the United States Timber Conservation Board's estimates of consumption for the quarter by approximately one-third. "In my opinion", declared John D. Tennant of Longview, Wash., Chairman of the Lumber Code Authority, "there is going to be a greater use of lumber next spring than consumption estimates for the final quarter of this year indicate. The industry must be prepared to supply any demands made upon it. For that reason, I heartily recommend authorized production of over 4,800,000,000 feet of lurnber for the final quarter."

"It behooves this industry", said C. Arthur Bruce, executive officer of the Authority, "to take into ac'count its responsibility to an army of employes and those dependent upon them. We must make assurance doubly sure that these employes are provided with work during the coming winter."

The follorving table shorvs the manner in w'hich the authorized production rvas allocated :

It was understood that the Northeastern Softwood Division and the Southern and Appalachian Subdivision would agree on a division of the 106,400,000 of the allotment for

Appalachian Softrvoods and Northeastern softwoods combined.

In considering the application of Article VIII, the Authority granted permission to the following divisions and subdivisions to apply the Interim Article during November and December: West Coast Logging and Lumber Division, Cypress Division, Northeastern Softwood Division, Northern Pine Division, Southern and Appalachian Hardwood Subdivision.

The Western Pine Division lvas also authorized to allot production quotas to persons subject to its jurisdiction under Article VIII in accordance rvith paragraphs 1,2, 3, 4 and 5 of Section (c), according to the following formula; hourly capacity, 40 per cent; past performance, 40 per cent; number of employes, 5 per cent; taxes paid, 5 per cent ; timber owned, 10 per cent.

The northern Hardwood Subclivision was authorized to use item 2, Section (c) of Article \IIII as the basis for allotment of its quota of production.

The Northern Hemlock Division, Northeasfern Softrvood Division, Northern Hardwood Sul>division and the Northeastern Hordw,ood Subdivision were authorized to allocate to eligible persons conducting seasonal operations production allotments for periods longer than three months. This allocation, however, is subje'ct to the discretion of the respective administrative agencies and to the approval of the Authority.

After discussing the proposed plan of the Hardwood Division to allot production quotas on a pro rata basis in accordan'ce with Census Bureau reports of hardwood lumber production for 1927,1928 and 1929, the Authority concluded that the Hardwood Coordinating Committee could proceed along these lines without the necessity of a Code amendment. It was also the sense of the Authority that in the case of Philippine or imported hardwoods, the subdivision having jurisdiction should submit import quota requisitions for the approval of the Hardwood Coordinating Committee.

In response to the Maple Flooring Association's request for a November and December quota, the Authority fixed their production for two months at 800,000,000 feet. The Division was authorized to allot persons under its jurisdiction on the basis of 80 per cent for past average yearly production and 20 per cent for average number of employes.

The face veneer subdivision of the Veneer and Plyrvood Division r,vas allotted 90,000,000 {eet of production for the months of November ancl December and was authorized to allot this quota to eligible mills in the subdivision on the basis pres'cribed by paragraph 2, Section (c), Article VIII, using shipments of 1927, 1928 and 1929 as a basis. For mills not in operation during this period the subdivision was authorized to apply a method conforming to paragraph 3, Se'ction (d), Article VIII.

The Plywood Package Subdivision was granted a production quota of 90,000,000 feet, surface measure, for the period covered by the months of November, Decernber and January and was authorized to allot this quota to eligible persons under the formula prescribed by Article VIII (c) (2), although where it is impossible to determine' allocation under this paragraph Article VIii (d) (3) rvill be used.

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