Richmond Palladium (Daily), Volume 42, Number 191, 23 June 1917 — Page 8

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THE RICHMOND PALLADIUM AND BUN-TELEGRAM, SATURDAYJUNE 23, 1917 Tie United States Government Authorities Show by Exhaustive investigation That the Price ot Lumber Has Not Advanced in Proportion to Other Commodities or Other Building Materials Herewith arc Excerpts from the Official Report Just Issued by W. B. Greeley of the National Forest Service, With a Straight , Talk To Home Builders by J. R. Moorehead, Secretary-Manager of The Southwestern Lumberman's Association.

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ARE YOU A HOME OWNER ?j If you are a farm or a home owner,5

you have ever bought any lumber

or ever expect to buy any, you cer- , tainly should be interested in the

contents of this page.

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of the lumber consumed ln the building of new homes and barns, and in

repairs, and for general purposes, is

sold through the retail lumbermen. The purpose of this advertisement Is to show that lumber Is not sold by the retailer at an exorbitant price, and we offer the Government Forest Service report herewith quoted to prove the statement. Upon the broad conclusions of the report herein quoted the Federal Trade Commission Is also In agree-merit.

To get lumber from the manufacturer to the consumer at the lowest cost, it should come with but one freight .paid. Manufacturers being unable to furnish all kinds of wood used in the average building, the local retailer Is the only agency through which this service can be rendered to .the consumer. This retailer is, therefore, in position to render a service . possessed by no other agency. He Is always In position to furnish what the consumer is unable to obtain In mixed shipments.. , .

HOW LUMBER IS DISTRIBUTED Remember 80 per cent of all of the lumber sold in the average community is sold in wagon loads or less, not in carlots. It is possible for a lumber yard to do a fair amount of business and not sell as much as a carload to any one consumer in a whole year. If it were possible for all consumers of lumber (which it is not) to buy it in straight carlots it would cost less per thousand feet to sell it, as a matter of fact, but not 10 per cent of the lumber consumed in' the average community can be sold in car lots, and no mill either North,

Read These Verbatim Excerpts From The Government Report; RETURNS IN LUMBER MANUFACTURE. "Competition in manufacturing is not only keen, but often destructive." Ups and downs have been the portion of sawmills. Occasional years of high earnings have been followed usually by longer periods of small profits or losses 1914 and 1915 being the most extreme of these." "The prices received for lumber at the mill in each of the four regions studied during periods of from 8 to 27 years prior to 1916 are indicated by comparative curves. The fluctuations reflect similar market conditions at the same time practically the country over. In general, 1906 and 1907 were years of high prices ; then followed 4 years of comparatively low prices; a rising market for 12 months in 1912 and 1913, and a sharp and continued slump from the middle of 1913 until late in 1915. During 1916 lumber prices have traversed a complete cycle, approaching the 1912-13 levels in the early spring, depressed in midsummer, and again rising toward their former mark in September and October."

LEARN THE FACTS FOR YOUR OWN PROFIT It v will profit directly every man and woman to learn the facts about lumber its cost, its adaptability and its intelligent use. The Forest Service report has spoken the last word and we invite your critical examination of the facts and figures as set out in the center of this page. It has remained for the National Government to prove to you the utter untruth and insinuations concerning a " Lumber Trust" ; that on the contrary, competition has been so keen that these products have been marketed at a small profit, and frequently at a loss during a greater part of the time in recent years past. The Government' did not compel or demand of the manufacturers or retailers of lumber that they furnish information for the Forest Service report herein quoted. On the contrary, they requested it, and the Government officials were overwhelmed with offers of the lumbermen to furnish information. The lumbermen were more than gratified that the Government intended to publish the facts about the Lumber industry. A volume has been compiled, and some of the essential facts are set out in the center of this page. We ask of you your candid judgment. You have been led to believe that every time you went to a local lumber yard you paid an exorbitant price. Do you believe it is possible to assemble lumber, in your community from the South, North and West and distribute it to the consumer, from a fence picket to a house or barn bill at a lower cost to do business, or at a less profit? We believe the consumer never objects to paying a fair and reasonable profit- on what he buys when he knows it. You now have the unbiased facts and statement of the Federal Government, and it is herewith submitted to you with the belief that it will be accepted as the truth, which it is.

METML PROFITS

The government report covered an investigation of 1,000 operations (one operation being one full year's business) of line yard companies doing business in Missouri, Kansas and Oklahoma during the years 1912, 1913, 1914 and 1915, and shows a net profit of $2.08 per thousand feet, or seven and fifty-three hundredths per cent (7.53) on the investment, which is seven and two-hundredths per cent (7.02) on total sales. $2.08 profit per thousand feet is two and two-tenths (2.2) of a cent profit on a 2x4 sixteen feet long. Returns were obtained also from eighty-eight town and country yards operated by independent retailers on the business transacted in 1914. Their net profit averaged seven and forty-six hundredths per cent (7.46) on investment, and seven and thirty-one hundredths per cent (7.31) on total sales. "One of the objects of our inquiry was to clear up misunderstanding about the lumber industry on the part of the public, by giving the public the straight facts as far as we could get them, and so lay the basis for better understanding and co-operation in the future. Our investigation has shown that in the regions where the study was conducted the lumber business for the most part is competitive; and that its restraints upon trade are localized and restricted rather than general in their scope. The changes and recent development in the business, including various phases of lumber distribution, during the past few years have tended to increase the intensity of competition within the industry." W. B. Greeley. ? We submit these facts as an answer to all the charges that exorbitant profits are made by retail lumbermen.

"Their operating costs (108 Southern pine mills) in 1914, including depreciation and an average charge for timber of $4.11 per thousand feet, lumber tally, totaled $14.54, whereas the average price received for their cut was $13.68. The book loss of 86 cents per thousand feet represented 5.8 per cent on the investment in plant and operating capital No interest is included in the figures of cost "The year 1915 was no better than 19 14 for manufacturers of Southern Yellow Pine Lumber. General data obtained by the Forest Service indicate that the average profits on manufacture in that region were good in 1912 and 1913, amounting to something over $1.50 per -thousand feet in the first year, and $2.00 in the second; and low in 191 1 , with an average return of about 50 Cents per thousand feet of lumber. The years 1908, 1909 and 1910 brought loss or low profit to the average operator in the southern pineries; 1906 and 1907, on the other hand, were years of high profits, exceeding $3.00 per thousand feet." ' . ' "Lumber manufacture in 1913 netted some profit to the majority of Douglas fir operators above the market value of timber, which averaged about $1.50 per thousand feet. "A contrast is found in the conditions during 1914 and 1915. Lumber production was 20 per cent under that of 1913, and prices shrank so heavily that, regionally considered, lumber was sold at less than cost of production. Operators of exceptional ability or location made a small profit; others lost money or incurred the cost of shut-downs. Numerous concerns about worked out their operating capita and without earning interest on borrowed funds invested in manufacturing." Freight The Largest Single Item of Cost in The Distribution of Lumber. "A fifth or more of the cost of lumber to consumers is eaten up in railroad freights . and rising costs of transportation as timber shortage has moved the mills farther and farther from the bulk of consumers is an important factor in the increasing cost of lumber. Other causes lie in the greater demands made upon the retailer by the public, in higher labor costs, and in the decreasing purchasing power of money. At that, the rise in lumber prices, though very marked during the 10 years before 1908, has not been greatly different from that of most commodities; and since 1907 lumber has fallen behind." "Since lumber freights are uniform for all grades and based on weight, the railroads obtain a much larger part of the retail price on lumber of low value than in the case of the higher grades." "The large part of the price paid for lumber by consumers in the Middle West which is eaten up in transportation stands out strikingly." Following Tabulation Shows The Average Price of Several of The Leading Items in Lumber For the period from 1912 to 1916 and a comparison with present prices and against this a comparison with the farm products for the same period:

1912 to 1916 Shingles ... . .$4.00 Barn Siding .. 2.75 B. and Bet. Sidings and Floorings . . 3.25 Dimension, 2x4, etc 2.40

Average

Now. $6.00 4.25 4.75 4.00

Corn . Wheat Hogs .

Average

1912 to 1916 Now. $ .82 $1.80 .97 3.00 7.30 15.95

During 1912 to 1916 .10 bushels corn would buy 2,000 shingles. 10 bushels wheat would buy 300 ft. B. arid B. fig. 300 pound hog would buy 900 ft. of dimension.

NOW

10 bushels corn will buy 3000 Shingles. 10 bus. wheat will buy 600 ft. B. and B. flooring. 300 pound hog will buy 1200 ft. dimension.

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IT IS CHEAPER TO BUILD NOW THAN IT WILL BE FOR YEARS TO COME. Why Lumber Will Be Higher and Why It Is Not Going to be Cheaper Supply, demand and waste are the reasons. The demand today for lumber for immediate Government wants is far beyond the capacity of the mills. ' v, . ' Lumber for wooden ships, thousands of them, something that has not been extensively used for years. Lumber as a substitute for steel in building new railroad cars to overcome the car shortage. 'Lumber for army, camps, aviation fields, millions and millions of feet and thousands of other used in equipment of war, and always remember that this material used decreases the supply tremendously and everyone interested in lumber knows that the supply is becoming less every year, even with normal conditions of demand. , - ......... DEDUCT THE WASTE OF WAR. How can you replenish this supply at lower prices when it takes 50 years to grow a stick of timber and no organized effort is being made towards reproduction. v The transportation cost of lumber is an enormous item, and a further argument against lower prices. Every year our supply of timber is being drawn from points farther from center of population, which adds to the transportation charges, It is said that the railroads shortly will be granted a 15 increase in freight rates and up goes the delivered prices of lumber again. AFTER THE WAR- There has been comparatively very little lumber exported for the past few years and export trade will again open up and the enormous foreign tlemand is expected to exceed all previous records. a . There is more money in the country today than ever before. Better wages paid than ever before and there never will be a time in years to come that you can build cheaper. . NOW IS THE TIME TO BUILD. Rents are due for a big advance on all old and new investments. Rents are the same as interest on borrowed money and as the investment increases the returns must increase. When new houses cost more, old houses are worth more.'

South or West can fill an order for the average house even if a carload is required, for the reason that the average home today contains from two to six or eight species of wood, all growing in and manufactured in widely different parts of our country. Lumber must come direct from the manufacturer to the nearest point of consumption to- be economically distributed. The retailer assembles it in his yard in carlots and distributes it to his customers. He can buy in carlots as cheap as the cheapest. He buys it direct from the manufacturer. He only pays one freight and one profit (your information to the contrary notwithstanding) and that to the manufacturer. Lumber is a heavy, bulky and comparatively cheap product. Freight adds largely to the cost for even a short haul. You cannot ship it twice any more than you can ship coal twice and distribute it economically.

Dent be deceived by statements to the effect that you pay four or five profits when you buy lumber from retailers. Most large mills have their own selling force and sell their lumber to the retailer direct. Many smaller mills which cannot maintain their own selling force sell their entire out. put to the wholesaler who sells It to the retailer in competition with the large manufacturer who setls his own lumber through his own office. Thelarge manufacturer and the wholesaler are active competitors for the retail trade. Low price and good quality always get the business.

WHY HOUSES COST MORE A recent comparison made between the present cost of a modern home and the cost of that same home had it been erected without modern improvements and conveniences, shows the following result: The present cost of this modern seven-room house, with all conveniences installed, was $3,450.00. The deductions for full excavated basement, with concrete floor, hot water heat, sewers, gas. water and electric light connections and fixtures, paving, bath room and fixtures, closets, etc., etc., were $1,550.00 of this cost, which shows that in order to install these modern improvements 82 per cent was added to the first cost of this house, and that 44 per cent of the total cost of this modern house was in improvements and conveniences, very little of which was due to the use of lumber. It is not a question of the high cost of building, but the cost of high building. This does not refer to sky scrapers, but is due to the greater buying ability of

The small town enjoys the same freight rates as the large city, and is, therefore, at no disadvantage in buying on account of a higher freight rate or on account of the quantity purchased. The carload is the economlo unit in the purchasing of lumber always, and the country dealer can buy a carload, or two carloads, or five car loads as low as the large or city buyer.

the public, and a demand for better lining conditions made possible by modern improvements, about most of which our fathers knew nothing. When your father built the house in which yon were born he not only did not include these now considered necessities, he absolutely knew nothing about them. Instead of adding these to the 1 cost, and making them a part of the house, he went to the hardware and furniture stores and bought his heating plant In the form of stoves; his lighting plant In the form of a coal oil lamp, and his closets and pantries in the shape of wardrobes and kitchen cabinets. There was a time when most people slept in the bouse and had the bath room in the shape of a tub in the kitchen, and the children fought for the first chance at the. hot water. The toilets were in the back yard. We have now reversed this order. We have the toilets in the house and sleep out- of doors.

A consumer In North Missouri recently paid $165.00 freight on a single carload of lumber shipped from Michigan. This was money thrown away because he refused to give his home dealer an opportunity to save It for him.

YOUR OPPORTUNITY All the consumers of lumber in the Missouri and Mississippi Valleys have a greater choice of building woods than in any other section of our country. They also enjoy greater competitive conditions among these several woods, and a difference of two to five cents in the freight rate often determines the species of wood used or sold.

If there Is a better way to manufacture and distribute lumber than from the manufacturer through the local retailer to the consumer. American brains will find it out and adopt It. As yet, there Is no other method offering equal service and economy to take its place. Build with Wood, because it is the least expensive, the best appearing, and the universal all-purpose building material now as in the past INDIANA RETAIL LUMBER DEALERS ASSOCIATION