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The Commoner
VOL, 21, NO. 5
CURES ALL THE ILLS OF MAN OR BEAST
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From the New York World.
Federal Trade Commission Scores
Lumber Industry
(Issued by the Federal Trade Com- is designated by the word- "orders "
mission Washington, Feb. 19, 1921.) the second by the word "production,'"
Pursuant to the request of the and the third by the word "ship-
nonoraoio wuiiom M. Calder, Chair- ""-" - snouia oe stated that while these
iimu ol tue vjommittoe on Housing : w4 ma.n.u mo mtormauon UU1 l'm-uaes were removed, there
and Reconstruction, that informa- Played by the barometer striking still remained beneath the barometer
tion in regard to the lumber inrlus- r? tn. QyQ red colors are used in the following landmen-
tion in regard to the lumber Indus
try which the Federal Trade Com
uuuaiuu uuuins to service do lor
warded from time to time to said
committee, there are herewith trans
mitted certain documents and letters,
together with this summary of mat
ters therein contained. The sum
mary, however, rests in part upon
data transm tted to the committee
bn January 10th and to a small ex
tent upon certain documents still re
tained in this commission's flies. The
commission also has large quantities
of supporting data which it is un
necessary to now transmit to the com
mittee. The letters without signa
ture were carbon copies from the fllea
of the lumbermen who wrote them,
and who can be idontifled if the com
mittee so desjres.
The letters and documents relate
chiefly to the activities of the South
ern Pine association, of New Orleans,
La.,. which represents a larger pro
duction than any other association,
and comprises mills in Oklahoma,
Arkansas, Texas, Lousiana, Missis
sippi, Alabama, GeoTgia and Florida.
The operations of the Southern
Pine association center around the
use of a device known as a trade
barometer, by which, through con-
i-onau uui-uu, me association in
to tho eye, red colors are used in
.no uuiu uuu tunes.
Whenever the members see that
the red in the middle tube entitled
production" stands higher than the
red m the first and third tubes known
as orders" and "shipments," they
see at once that production must be
decreased, on the thedry that if it
is not, there will ho n Q , .
in the market which will force down
, IJ .?owev,er- the barometer shows
that the red of the middle tube, in
dicating production, is below the red
in the other twd tubes, indicating
orders and shipments, then the mem
S sQJh?; fPPly below demand
tained P 8S cau be ob"
This device for restricting produc-
fw HaS ltad in 1915. At
that time there was printed on the
upper left hand corner of the baro
meter and just outside of the "order
tube the words "Market Advancing
Directly opposite in the upper rilht
"sahinmr, iand 3ust 0US the
shipment" tube appeared the words
Jft 0leCrodUCtioU a the Tower
'Market nZT? Tre the words
or the words "nfinrQO "air.a.?orn.:
BtruotB its membership how to it !n T1US hei of the red color
strict nrodnnHnn nn,i tu..i,-. t n the resnectlvA ti,i .. -..L01.?r
. crease the price of lumberT by an !nd,caftod1 which the i InstructkS
artificial control of supply as . bau we to. applied. instctionB
anced against current demand. Hn1 Ul?ory ot tho device was de-
Thls barometer is issued to the nreaftnnf f UuarlGs S. Keith,
Bmbera of the association weekly Urlf &lW? a let
Kirbv. ;r?Xn 1U15 to J- H,
members of the nRnnntnn ,..-.i.,.(
It is portrayed on tho right haS T?.Fif SePteber
side of a sheet of naner !" ? Ki Allows:
U..lt wA o i it . vmoieia
UL U UUIU uu
perpendicular
which meets with their approval. This
t,n.AmntDK win niitnmn.tically fore
mast market conditions, and it is
based on orders received and ship
ments made. Where the shipments
exceed tue oraers, it muiuiitea u,u ad
vancing market, and whenever the
reverse is true It indicates a railing
market. Then once a month we win
get out another barometer based on
the production, which will indicate
an advancing market when shipments
are in excess of production, and a
falling market when the reverse Is
true, advising increase of production
when tho orders and shipments are
in advance of production and a de
crease in production when the pro
duction is in excess of orders and
shipments. This will give the infor
mation graphically."
Shortly after the barometer was
circulated among the association
members, Mr. W. H. Bissell, presi
dent of the Wausau-Southern Lumber
company, wrote to Mr. Charles S.
Keith. nrp.Rldfint. anrl Mr. .T. Tl.
TCIirrloa aanrAfiirir nn1 mntintrntt riJ
the Southern Pine association, advis
ing that the words "increase pro
duction," be taken off,' stating that
"this is just the condition that we
wish to avoid." Following this he
said, "is it not possible that some, or
our members might construe your
weekly letter, bearing this label, as
advice from our association, to cut
loose and resume night sawing with
their mills?"- and again, "Some
cautionary adyice should be inserted
bringing home to our members the
truth of the old adage, 'Do not kill
the goose that lays the .golden eggs.' "
Mr. Bissell's advice was followed
and the four phrases, "market ad
vancing," "increase production," and
"market declining," "decrease pro
ductiop," were removed. Mr; Keith
informed Mrr-Bissell in a letter or:
November 1st, 1915 as follows:
"In preparing the barometer, the
attorneys thought that if we were
going to show 'decrease production'
thereon, 'increase productions-ought
tO KO On tOOT Srt Wllilo rtro, .
advising our people what to do, the
barometer itself will tell the story."
the following language:
"TRADE BAROMETER"
"Whenever shipments or orders
are below production, experience in
dicates an over-production, with con
sequent lowering of values.
Experience indicates that when
ever shipments or orders are abovu
product on, values increase, provided
production does not increase at a
greater ratio than shipments or or-
beneaV trhTing qutation appeared
S"oUctobeer,bir9lTter COntittuou
It should be noted in resnect tft
the date, October, 1919, thS ! a ; thte
time the commission was preparing
hr iS9 1n investISation of he lum
ber industry as requested by the de
partment of justice but had not JS
ofy begun. However? tSe fac
of tWa request had been ascerLimTrt
and had been spread through the in
dustry. Shortly after this i
language just quoted was removed
fSreatheBhaoT6aatitZ T'
amount of orders on ? i ! toca
orders received ' durinir ?h?' the, total
total shipments til thl JefK the
then by subtractinc JhS WSSk aQd
from the orders, sSf wed thSfthiPmGnts
of orders on hand! he balaQce
The Statomonf V.,41 .
percontaces. wwi "' ""! "owed, iu
ffi5f!!!SL- oxoecri?.
"grease in
orders compared with the last report
There was also other pertinent in,
formation tending to inform tho
members how to read the barometer
In the early barometers, the assc
elation took as a base the actual pro
duction and compared the orders ana
shipments with it. Subsequently, the
orders, shipments, and actual pro
duction were compared with an as
sumed normal production. This nor
mal production was arrived at by
taking the production for a certain
number of months.
In addition to the barometer there
was a continual correspondence car
ried on between various members
stressing the idea of decreasing pro
duction and the beneficial results
that would accrue to the members
of the association by such action. Tho
activities of the association were also
supplemented by trade journals
which gave out information such as
were portrayed by the barometer and
through editorials urged the mem
bers to regulate their production ac
cording to the barometer.
Finally to enable the membership
more effectively to secure the fruits
of their system of curtailing the pro
duction, representatives of the lead
ing concerns held frequent meetings
at which market conditions, includ
ing the supply and demand as re
flected in the barometers, were dis
cussed, and harmonious action' on
prices arrived at. At one meeting in
particular, as evidenced by corres
pondence hereto attached, "the con
sensus of opinion on price" was
"that conditions justified an advance,
V and thaj; new price lists
would "be out the first of next week
carrying these advances."
As disclosed in the ddcuments sent
to the committee, the plan is for each
mill to regulate its- current.produc
tion in accordance with the current
total demand, as shown by the orders
and shipments of all mills, and to cut
down production immediately and
proportionately to any excess in the
total production over total orders
position of any individual ,mill. At
one meeting the members took a
rising vote unanimously to the effect
that each would regulate his own
individual production according to
the common Ulan, and Irp.on if within
the limits of demand las shown by
the association. This theory was ex
plained and urged upon the member
ship at groat length by association
leaders during 1915 and 1916, during
which time two pronounced curtail
ment movements were organized and
carried out. The barometers were
inaugurated and are now Tised for
the purpose of securing the more
effectual execution of the plan.
For more than a year during tho
war, the Southern Pino association
restricted the circulation of its baro
meters to the membership. This was
for the purpose of preventing the
puyers of lumber securing market
information which would lead them
to reduce their purchases .in the ex
pectation of lower pricesV At tho
"mo such action was taken, the pro
auction was exceeding the sales. This
action was taken over the protests of
association leaders who had warned
that such restriction would consti
tute an admission of manipulation.
iJtea8 Marcb, 1920, Mr. Chas. S.
Keith, for four years president of the
bouthern Pine association, referred
mL h,e friction "of the barometers'
circuiatiWi as being evidence of mani
pulation under such circumstances,
i, m , e t0 tlme since the forma
tive period of 1919-191G, the asso
wi? I?aaers nave urged tho mem
n?n i? to. regulate their production
according to th riamnwi irtt
-by the barometer, so that prices could
iw; ,,a or at loast prevented
from receding. A striking instance
1 tnJs occurred early In 1Q18, when
riLTJ war was approaching its
SSSm The president of the South
2L?ine as??CIation, addressing tho
members, said:
w Y!ln y.u see Preductlpn exceed
ing shipments and afooksof l lumber
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