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The Commoner
MAY, 1921
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emulating you should know be-.
nd doubt the ultimate effect of
ich a situation is price recossron.
When conditions demon-
trated by the barometer show pro-
iction in a dangerous condition, we
tould apply the remedy individually,
Ithout consulting our neighbors anu
Ithout discussing it with our
lends, trusting to their business
mmea and good sense to do like
Hie."
Phis anneal by the president of the
jociation was published and circu
ited in an official association pampb-
itll.j imi. .A Dnt nHam '
this time there was outstanding
ittblic appeal by the president of
ie united states lor tne greatest
issible production as a war meas
ure.
There is also evidence herewith of
ibsequdnt efforts by association
tders to keep the membership
Ewake to the importance of restrlct-
ig their individual production pro-
rtionatoly to any excess of tne total
Loduction over the total demand, as
Falcated by the barometer. In a let-
ir or June zu, iyxu, mr. unaa. s.
feith, in discussing the general dis
tribution of the barometers, stated
Bnat when "the public might expect
recession in values," the manu
facturer "should ouickly see the con-
gjtion and apply the only corrective
iremeay, to wit, instead or normal
(production while the public is buy-!
ig less, tne manufacturer snouia
woduce less lumber." Mr. Keith
ited that if this were done the buy-
were welcome to the. information
Gained in the barometers, espe-
lly sinc the mills had knowledge
the barometer information four
Iflye days in advance of the public.
VAb shown by the association baro-
sters. the production of southern
the has been below "normal" ever
Knee 1916, and with the exception of
Six or seven scattered months the
rders placed during the same period
lave also been below "normal." It
rould seem to follow that the high
(prices obtained for southern pine
llumber have not been the result or
unusual demand as such, but becausa
ghe demand has almost constantly
Exceeded a less than normal supply.
The continued shortage of produc-
Kion as compared with the demand
mas been reflected in prices and prof-
Its. For the year 1918, 39 southern
Ksine companies paid excess profits
(taxes averaging 43.5 per cent on their
Rr combined sales, 13 of them paying
jlxnore than 50 per cent each, as re
ported by them to an official of their
f8sociation. These profits were made
rhile an average price of $28.00 per
"thousand feet or less was in jeffect,
that figure being the government
maximum price during the last six
I months of 1918. The excess profits
taxes for 1919, when the average
price realized was $35.00 per thou
sand, and for 1920, when the average
price at times reached from $55,00
to $59.00 per thousand, ,are not avail
able to the commission.
The documents show that besides
regulating the production to the de
mand, the Southern Pine .association
I lias been the medium for direct and
K concerted action on prices, both be-
fore and since the war. The associa
tion, however, has been less open in
its dealing with the price question
than many of its sister associations.
Several of its prominent members
had been found guilty and Taeavily
fined by the Supreme Court of Miss
ouri in 1914 for having conspirea
among other things, for the purpose
of curtailing production and fixing
prices through the medium of the
old Yellow Pine Manufacturers asso
ciation, as reported in 2 CO Missouri
Reports, page 212.
As a result of this . decision, the
present association was formed in
1915, an dwithln a few months after
Its. formation its leaders were busily
engaged in a movement not only to
curtail production but to advance
prices. As the result .of a meeting
on April 20, 1915, the southern pine
manufacturers put advanced prices
into effect and also began to curtail
production. In September, 1916, Mr.
Chas. S. Keith invited four of his
principal competitors, who had con
trol of the bulk of the stocks on
hand, to raise their prices. This
group had led in curtailing produc
tion and had accumulated heavy
stocks in an effort to hold the mar
ket. Mr. Keith's invitation was ac
cepted. In April, 1917, the same month
war was declared, prices were ad
vanced at a meeting held in Memphis
in connection with a meeting of the
association directors as shown by
correspondence of Mr. Edward Hines,
who was prominent in the delibera
tions of this meeting and described
the advances made in a telegram sent
to his Minnesota mill, urging the
Minnesota manufacturers to advance
their prices correspondingly. In
October, 1917, conferences were held
at Chicago and Memphis as a result
of which prices wore advanced, . as
shown by letters, including those of
Mr. Hines, "Who was active in these
conferences and described the results
secured.
In 1918 commercial orders were
being favored by the manufacturers
in preference to government orders
because the commercial prices were
higher. The government, for its own
protection fixed maximum prices on
southern pine, for commercial as well
us government purposes. The manu
facturers took the position that the
government maximum prices should
be treated as a minimum and not in
frequently exceeded the legal maxi
mum. On November 22, 1918, fol
lowing the Armistice, the manu
facturers held a national conference
in Chicago. In this the southern
pine manufacturers were prominently
represented. The manufacturers ex
pressed themselves as a unit to the
effect that the government maximum
price should be adhered to as a mini
mum basis until government control
expired on December 23d, 1918.
A few days before the expiration
of government price control, a meet
ing of southern pine manufacturers
was held at St. Louis, Mo., under the
auspices of the association's commit
tee on sales and -distribution. As a
result of this meeting, documents
evidence that prices were radically
over the government maximum ana
that the 'market was held firm at the
advanced figures in the face of a
weak demand for several months.
Government requests through the in
dustrial board of the department of
commerce for a reduction of prices
In the spring of 1919 were refused
by resolutions adopted at New
Orleans, one ground given for the
refusal being that concerted action to
reduce prices would be a violation
of the law. Yet by their concerted
refusal, they ratified and confirmed
their concerted action of several
months previous in advancing prices.
At the New Orleans meeting, Chas. S.
Keith, gave notice of his right to sue
for triple damages under the Sher
man Law, those manufacturers who
might join together to accede to the
industrial board's request for a reduc
tion in prices.
During the same period the south
ern pine manufacturers conducted a
campaign to induce the fir manu
facturers of the west coast to raise
their prices so that the advanced
prices on southern pine might be
maintained and further advanced.
The fir manufacturers concertedly
raised their prices in April, 1919,
and the opportunity was thus given
for southern pine to make further
advances. This was followed by rapid
advances in the price of fir and jail
other competitive wooas. Aboarthls
time the "build a home" campaign
brought the public into the market,
and prices went through a sky-rocketing
proces, which put them, in the
words ofv& prominent lumberman,
In a letter herewith submitted, "far
boyond anything the present genera
tion over dreamed of."
A review of the conditions obtain
ing In the manufacture and sale or
southern pine since the close of the
commission's formal investigation in
June, 1920, is of Interest.
When the market showed signs ot
weakness last Juno and tho recession
from the abnormally high prices thoh
current began, the mills generally
curtailed their production as shown
by the association baromoters issued
since that time. That curtailment
has continued to tho present. It ap
pears that tho southern pine mills as
a whole have lately been curtailing
to the extent Of nearly 50 per cent
of their normal output, that the
downward price tendency has already
been checked as the supply has been
brought below the demand, and that
prices have again started upward.
While the wholesale prices ot
southern pine receded materially
from tho unprecedented figures of
last spring, tho average price ob
tained by a representative manu
facturer during December, 1920, was
about $7 per thousand feet in excess
of the government maximum of $28,
under which the industry made largo
profits. Item prices on substantial
portions of tho production are szill
far in excess of those obtaining under
the government maximum. An in
creased demand would seem to be all
that is lacking to bring about mucn
higher prices.
As indicated by current trade news,
the Southern pine,, manufacturers
are prominent in a campaign jiow be
ing organized to induce the public
to believe that prices will not ana
cannot be further reduced owing to
the costof production and that they
should not further delay any contem
plated building operations. In this
connection, the cost of production has
been enhanced by the continued oper
ation of the mills far below their
capacity and normal output.
This campaign is being conducted
under the ausrlces of tho National
Lumber Manufacturers association,
and special assessments have been
and are being voted by tho various
affiliated regional associations, to
raise a large fund for the expense
Of the campaign. Tho National Manu
facturers association has also re
quested tho retail lumber dealers of
the country to contribute to this fund
and to join in this movement to stim
ulate buying.
A similar campaign was success
fully carried out in 1919. Many
thousands of dollars were spent for
advertising purposes and tho retail
lumber dealers and leaders of pub
lic opinion in each community were
enlisted in tho "build now" and
"own our homo" movement. As a
results prices advanced so rapidly and
radically that in a few months ttnfo
tho retailers began to criticize the
manufacturers. A representative of
tho manufacturers reported the feel
ing of the rotailors in 'June, 1919, in
part as follows:
"Very wise dealers said to mo.
'The mills got us to start these build
ing campaigns, and they were a groat
mistake, because as soon as we got
them well started the prices began
to jump, and wo had to raise our
prices every week, and now our cus
tomers think we got the town lined
up in a building campaign just so
that wo could raise the price. The
townspeople don't know whether
lumber has really gone up or not.
They simply know that we lined
them all up from school teachers and
children to the preachers in their
pulpits, and then jumped the prices
on them.' "
As Indicated by the documents
sent to tho committee on January
10th, it appears that the manufact
urers of every important kind ot
lumber in the country are organized
into associations for the purpose of
compiling and distributing informa
tion as to each element entering in
to the supply and demand. This en
ables the members to take advantage
of all favorable market condition
either by concerted action or by
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