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felt reasonably sure of losing the $1 which had been reported by
the committee. Indeed, Mr. Fordney and our other friends in
the House, mostly Democrats by the way, gave up hope, and it
looked as though an amendment for free rough lumber would
carry by three to one. At the suggestion of Representatives
Hughes, of West Virginia, Humphreys, of Washington, and
Gaines, of Virginia [West Virginia], a caucus was called late
Saturday afternoon, the 2nd, and we spent nearly all night round-
ing up Democrats with whom we could make trades. These
covered everything from short-staple cotton and fertilizers to
celluloid poker chips and leather-bound bibles, and delivered
us 23 votes. We got 18 of the Ohio delegation of 20 on a trade
on wool, and this was the stroke that broke Mr. Tawney's faith
in humanity, as he counted Ohio as safely within his hands, and
has been trying ever since to find out how he lost out. It was
a square and open fight, and no tactics were used other than
those generally recognized as proper in such cases.

1 The Bureau does not vouch for the accuracy of this and other similar statements made in the corre-
spondence quoted in this chapter. There is no way of determining definitely whether or not the various
claims made by Mr. Rhodes as to the effectiveness of the efforts of the lobby were justified by the facts.

25030°— 14 5



66 THE LUMBER INDUSTRY.

In the Senate the lumber interests used their influence to secure the
substitution of the corporation tax for the income tax. They claimed
that they assisted the Senate organization in carrying through other
schedules and secured its cooperation in return. In a letter of May
26, Mr. Khodes wrote as follows :

We have succeeded in getting in very close relations with the
members of the Finance Committee because of the work which
we have been able to accomplish in helping them carry out their
program. We were able to assist Mr. Aldrich in carrying the first
vote which was taken, being that on the lead ore schedules, by
having seven Democratic Senators absent during the vote.

The lumbermen realized the importance of having tariff legislation
considered by committees friendly to their interest. It was expected
that if Mr. Cannon were reelected Speaker most, if not all, the members
of the Ways and Means Committee of the Sixtieth Congress who were
reelected would occupy the same positions in the Sixty-first Congress,
and that there would be few changes in the personnel of the Senate
Committee on Finance. Representative Bonynge, of Colorado, a
member of the Ways and Means Committee in the Sixtieth Congress,
was not reelected, and a letter under date of March 3 indicates that
Mr. Bonynge's successor on the committee was a matter of some con-
cern. This letter was addressed to Edward Hines by J. E. Ehodes
and was in part as follows :

I called on Gen. Grosvenor at the "Dewey" yesterday, and
find him in touch with the powers. He says the House will not
close amendments on the tariff bill, as there is such a strong
insurgent element that the Speaker is afraid to shut them off.
It is now planned that only the Ways and Means Committee
shall be appointed at the next session, which is a special one for
the express purpose of taking up the tariff bill, and providing for
revenue, hence the other committees will have nothing to do.
The General said he thought Mr. Cannon intended to appoint a
far Northwest man in place of Mr. Boygne [Bonynge], which I
take it would mean Mr. Cushman.

Mr. Cushman was later appointed the new Kepublican member of
the Ways and Means Committee just as the lumbermen desired and
expected. Under date of March 18 Mr. Rhodes, in a letter to C. A.
Barton, of Minneapolis, Minn., said :

_ Mr. Cushman of Washington was appointed as the new Repub-
lican member of the Ways and Means Committee, and every-
thing has turned out as we had expected.

That there was more or less general interest in the selection of the
new members of the Ways and Means Committee is further indicated
by a sentence in a letter from Mr. Rhodes to Victor H. Beckman, of
Seattle, Wash., under date of March 18, 1909, as follows:

Mr. Defebaugh wired you that Representative Cushman had
been appointed as the new Republican member of the Ways and
Means Committee.



PBODUCTION AND WHOLESALE DISTEIBUTION. 67

The bill as it passed the House carried a rate of f 1 per thousand
feet on rough lumber. This was not satisfactory to the lumbermen,
but they had faith in getting more in the Senate and finally in con-
ference. The attitude of the Senate Committee on Finance was
apparently satisfactory, but it was important to have as many
friendly members of the conference committee as possible.

On March 22, Mr. Ehodes wrote H. C. Hornby, of Cloquet, Minn.,
a letter in which he said :

The matter will really be settled by the Conference Committee,
to consist of three Republicans and two Democrats from the
Finance Committee of the Senate, and the same from the Ways
and Means Committee of the House. As this Committee is now
proposed we will have a majority in favor of at least $1.50 and
probably S2.00 under some kind of a compromise.

Again, on April 8, Mr. Rhodes wrote J. T. Barber, of Eau Claire,
Wis.:

We have had a confidential hearing with Senators Aldrich,
Burrows and Penrose, who will be the three Republican mem-
bers of the Conference Committee. The three House members
will be Payne, Dalzell and Boutell of whom the first two are in
favor of $1.00 and Mr. Boutell will stand for $2.00.

A further indication of peculiar interest manifested by the lum-
bermen in the selection of members of the conference committee is
shown in a letter addressed to Edward Hines, of Chicago, 111., by Mr.
Rhodes on May 27, 1909, in which, among other things, he said:

Mr. Skinner took up with Mr. Aldrich the matter of the Con-
ference Committee and the Senator stated that it would probably
consist of four Republicans from each side, he said that if
McCall of Massachusetts was selected it would be with the promise
that he would stand for $1.50 on lumber.

Under date of May 27 Mr. Rhodes wrote Edgar Dalzell, of Minne-
apolis, Minn., a letter in which he said:

We are now working on the membership of the Conference
Committee, which will probably consist of four Republicans and
three Democrats from both the Finance and the Ways and Means
Committees. We have gotten in right with Senator Aldrich and
have placed him under great obligations to us by assisting him
in carrying out his plans. I might say incidentally that we have
been instrumental in electing Lorimer United States Senator
from Illinois, who will be here in time to vote on the tariff bill.

In a letter under date of June 3 Mr. Rhodes stated :

The Conference Committee will consist of five Republicans
from each side and the House Members will be Messrs. Payne,
Dalzell, Boutell and Fordney and we are using every possible
pressure to have Mr. Cushman made the fifth Member and have
enlisted the support of the cotton, woolen, leather and steel men
to this end.



68 THE LTJMBEB INDUSTRY.

Before the bill went to conference Mr. Cushman died, and since it
was practically settled that he would have been a member of the
conference committee, the lumbermen were concerned about a man
to succeed him.

On July7, 1909, Edward Knight (probably an operator's error and
should be Edward Hines) sent a telegram to J. E. Rhodes, who was
then in Portland, Oreg., in which he said:

Account Cushman's death trying get friendly man conference.

On July 10 Edward Hines sent a telegram from Chicago to J. E.
Rhodes at Seattle, Wash., in which he said:

Got Cannon increase House conference members to six put
Fordney on Senate five Cullom fifth member he all right.

The lumbermen were not content to confine their activities to
influencing Members of the Congress. They tried to reach officers
in the executive branch of the Government by pointing out the politi-
cal aspects of the lumber schedule. In a long letter from Mr. Rhodes
to F. E. Weyerhaeuser under date of March 9, 1909, the general
situation was gone into quite fully. In reference to the peculiar
political aspects of the situation he said:

Mr. Upham went in alarm to Mr. Hitchcock, who is to run the
politics of the administration, and succeeded in getting him
considerably worried about the political significance of the fight
over the lumber schedule. Mr. Hitchcock appealed to Mr.
Blodgett, the Michigan member of the National Committee, for
full information as to what the Republicans in Congress might
offer the country that would satisfy the popular clamor for tariff
revision, and at the same time satisfy the lumbermen. Mr.
McCormick, the Washington National committeeman, has also
been able to arouse Mr. Hitchcock on this matter. * * *
Mr. Blodgett has been a guest of Senator Burrows, next on the
Finance Committee to Senator Aldrich, and the two senators
have been sufficiently interested to also take the political phase
of the matter up with Secretary Hitchcock.

Prior to this time, namely, on March 6, Mr. Rhodes in a letter to
Edward Hines said:

Secretary Ballinger, of Washington, is of course with us,
although his influence will not be great in legislation.

The influence of railroad officials and bankers was earnestly sought
to aid the lumbermen in their fight to retain a duty on lumber.
Under date of January 29, 1909, Edward Hines wrote J. E. Rhodes
stating that he inclosed a copy of a letter he had written the traffic
manager of the Northern Pacific. He also mentioned the inclosure
of a letter written to President Harahan of the Illinois Central and
stated that he had seen him personally, and he also mentioned writing



PRODUCTION AND WHOLESALE DISTRIBUTION. 69

Capt. J. T. Jones of the Gulf & Ship Island. In the same letter he

said:

I am pleased to advise you that through one of the railroad
interests in Chicago we hope to reach the Indiana representative
on the Ways & Means Committee.

Under date of February 3 J. E. Rhodes wrote a letter from Chicago
to J. E. Defebaugh, who was then in Washington, D. C, in which he
stated that a committee had been appointed to wait upon the Mil-
waukee bankers and that he was to meet Mr. Hines in Chicago the
next day and that they would spend two days in Chicago seeing
clearing-house associations and railroad presidents. The following
mimeograph letter was found in Mr. Rhodes's files:

February 6th, 1909.
Messrs. J. T. Harahan, J. M. Johnson, H. R. McCullough, W. B.
Biddle, J. H. Hiland, G. T. Nicholson, F. B. Bowes, M. C.
Markham, W. L. Ross, G. H. Ingalls.
Gentlemen: I was requested by a number of the gentlemen
who were present at the conference in relation to the Lumber
Tariff this morning, to dictate the principal arguments which
the Lumbermen have to present in favor of the reduction [reten-
tion ?] of this duty, for the purpose of giving your Committee data
upon which to prepare the articles which were suggested for
publication by the newspapers, showing particularly the relation
which the admission of free lumber from Canada would have to
the revenues of the railroads.

I have dictated the enclosed articles, — one being a summary of
our principal arguments, which your Committee can use in any
way they may see fit, and the other a straight statement which
may assist them to some extent in preparing their article.

It was arranged that! should send this matter to you, and I
take pleasure in so doing, and would be glad to give you any
further assistance which you may request.
Yours very truly,

J. E. Rhodes,
C/o Mr. Edward Hines. Secty., Lumbermen's Association.

End.

The official positions of the persons appearing at the head of the
above letter at that time were as follows, in the order named: Presi-
dent, Illinois Central Railroad; vice president, Missouri Pacific Rail-
way; vice president, Chicago & North Western Railway; vice presi-
dent, Chicago, Rock Island & Pacific Railway; vice president, Chi-
cago, Milwaukee & St. Paul Railway; vice president, Atchison, Topeka
& Santa Fe Railway; vice president, Illinois Central Railroad; vice
president, Illinois Central Railroad ; vice president, Chicago & Alton
Railroad; vice president, Big Four Railway.

It is doubtful if in recent years there has been in Washington a more
earnest and insidious lobby than that maintained by the lumbermen



70 THE LUMBER INDUSTRY.

during the consideration of the tariff bill at the special session of
Congress in the spring and summer of 1909. The correspondence
between the lumbermen during this time indicates an industrious
endeavor to accomplish their purpose. The House and Senate,
particularly the Senate, were closely canvassed and the attitude of
Members and Senators toward the lumber duty was freely and fully
discussed. Suggestions were freely made as to how and by whom
various members might be influenced. The extent to which votes
on this measure were influenced by the activities of the lumbermen,
of course, is not known. Whatever the real influence of these
activities may have been it is clear from the correspondence that Mr.
Rhodes believed his efforts in Washington were largely responsible for
the retention of a duty on lumber at that time.



CHAPTER III.

SOUTHERN YELLOW PINE.

Section 1. Introduction.

There are six varieties of yellow pine in the Southern States, in a
territory which reaches from Virginia southwestward into eastern
Texas. Western yellow pine is a distinct species. In the figures
of production of southern yellow-pine lumber given in Forest
Products for 1912, 1 no distinction is made between the different
varieties. The Bureau, in its treatment of prices, has found it
desirable to distinguish between what is commercially known as
North Carolina pine and the rest of the southern yellow pine, and
in this connection has considered the production of yellow pine
reported for Virginia, North Carolina, and South Carolina to repre-
sent approximately the production of "North Carolina pine." It
has not been found necessary to distinguish between long leaf and
short leaf pine in the matter of prices, and they have been treated
as one under the head of yellow pine.

YELLOW PINE.
Section 2. Production.

Excluding the States which produce what is commercially known
as "North Carolina pine," the States which produce most' of the
southern yellow pine reported cut in 1912, are as follows:



M feet.

Georgia 799, 370

Oklahoma 122, 685

Tennessee 94, 159



Total 11, 117, 212



M feet.

Louisiana 2, 928, 632

Mississippi 2, 029, 276

Texas 1, 833, 902

Alabama 1, 214, 994

Aikansas 1, 133, 459

Florida 960, 735

Section 3. Competition met by yellow-pine producers.

Competition among themselves. — The nulls which produce yel-
low pine are of a great diversity of sizes. In the trade papers
there is frequently a reference to the difference in price policy fol-
lowed by the small mills from that of the large mills.

Price-depressing effects are often attributed to the lack of capital
of the small mills and their necessity for early realization on the
lumber they produce. This is frequently referred to in the lumber
journals. Following are a few typical extracts:

A few of the small concerns have been shading prices lately,
but their output and ability to handle business are not great

1 Forest Products, 1912, p. 11.

71



72 THE LTJMBEB INDXJSTBY.

enough to cause any alarm, and the large operators claim to be
holding as closely to the regular list as they have been. (Kan-
sas City news in American Lumberman, Aug. 3, 1901, p. 41.)

The solid front that the mill operators are maintaining in
. their insistence on firm prices at the December advance renders
the picking up of lumber at concessions in prices next to an
impossibility. It is claimed that some cutting is being done on
finishing lumber, but manufacturers are slow to admit such a
thing. This can be said, however, there are a lot of small mills
that cut timber and small dimension, and make a quantity of
sides in the operation which they convert into finishing stock.
Having no general yard trade to absorb such lumber in that
and other forms they are inclined to dispose of it at any price
they consider fair. Many of these small mills are not under the
influence of the manufacturers' associations. If any finishing
stock is being sold under regular prices it probably comes from
these small mills. A large amount of finishing is being done,
which causes a good demand for lumber adapted to that work.
(Chicago news in American Lumberman, Jan. 13, 1906.)

The chief trouble with the yellow pine market now is the
anxiety of a great many of the small mills to place their lumber
on the market even at a considerable sacrifice of values. Many
of the large concerns, in fact it is safe to say the majority of
them, refuse to accept orders upon a price basis which, at the
present stumpage and manufacturing cost will not yield a rea-
sonable margm of profit. The little mills, however, are writing
urgent letters to possible buyers and offering their stock at low
prices. Whether a sale is made or not this naturally has the
effect of depressing the market. (Chicago news in American Lum-
berman, Aug. 31, 1907, p. 98.)

A large number of the southern pine mills are still shut down,
while many are limiting their output by running part capacity
and on short time. Many of the small mills which derive their
logs by purchase from others' lands, and must pay for them as
- they saw, and are thus bound by contracts, are running and
placing their lumber on the market at the best prices they can
obtain. It is the product of such mills that is being shipped in
transit, is being sold by brokers in the large markets at a variety
of prices, and is causing a large part of the prevailing demoral-
ization. The large concerns are pursuing a more conservative
course, many of them refusing to accept orders on standard sizes
and qualities below a steadily held range of prices. They can
see no object in selling lumber below cost, while at the same
time they waste their stumpage. (General market news in
American Lumberman, Mar. 21, 1908.)

The following extracts from letters in the files of the Yellow Pine
Manufacturers' Association bear on the relation of large to small
mills. The first, dated May 8, 1909, was written to Secretary George
K. Smith by one of the officers of a mill which bears on its letterhead
the statement "Daily capacity 50,000 feet."

Replying to your favor of the 6th inst would say that there
is not a single member in the entire association that has done
more for the advancement of the lumber industry than the King



PRODUCTION AND WHOLESALE DISTRIBUTION. 73

Lumber Co., last year when the larger mills were running night
and clay (and at the same time crying "Curtailment" "that is
the only thing to do" etc.) we were closed down — for a period of
just one year we never turned a wheel and that was just after
getting in operation too — since starting up last Fall we have run
only about £ time and have not shipped sufficient stock to pay
our running expenses, have furnish[ed] all reports promptly and in
fact have given you our cooperation in every possible way and
we feel Mr. Smith the amount of service and benefit received
from the association has in no way anything near justified the
expense we have been put to. The Association idea is a good
one and should be productive of beneficial results but one thing
sure — it has not materialized in our particular case. It is not
the output of the smaller mills that is cutting the ice in over-
production but a most decided misrepresentation on the part
of the larger mills in attempting to dictate the policy to be pur-
sued and at the same time they are running, in a good many
instances night and day. It is not nor has been a square deal
and we naturally are quite disappointed after our conscientious
efforts to further the interests of the lumber business — in our
small way — for the past two or three years, to see matters
terminate in the way they have.

The second is a letter dated March 20, 1911, from W. M. Beebe,
Manager Y. P. Sales, of the Long-Bell Lumber Co. to Secretary
George K. Smith :

You will remember a few days ago I stated to you at lunch
that I thought it would be a good idea if the Yellow Pine Manu-
facturers Association would make greater effort to thoroughly
post the small mills as to what the market price of lumber really
is, as they would in turn try to secure a better price for their
product than they do when they are left to the mercy of the
jobber or the commission man.

I have put this matter up to Capt. J. B. White and Mr. R. A.
Long, and they both look at it from my standpoint, and think it
would be a mighty good thing to take some concerted and
systematic action to give this class of mills information.

I suggested] that I did not think there could be anything better
than your weekly summary of prices as secured in St. Louis,
Kansas City and Houston.

Mr. Long and Mr. White both suggested that I write you, and
state that they thought this would be a good idea.

Competition with other woods. — The kinds of wood with which
yellow pine principally enters into competition are North Carolina
pine, hemlock, fir, "northern" pine, and cypress. In all these woods
the competition is chiefly confined to certain uses common to yellow
pine and its competitors.

The nature of the competition between yellow pine and hemlock
from the Lake States is shown in considerable detail in connection
with the discussion of the latter species, and that of the competition
between yellow pine and fir, in connection with the discussion of fir.
The competition with "northern" pine is principally confined to the



74 THE LUMBER INDUSTRY.

dimension and the lower grades of boards and is discussed in connec-
tion with white and "northern" pine. A similar competition exists
between yellow pine and the lower grades of cypress.

Section 4. Conditions in production of yellow pine.

The wide area from which yellow pine is obtained and the great
diversity of conditions between the many points of production, as
well as between the various consuming centers, make generalizations,
which bear on the relation of such conditions to prices, of little value.

Many of the mills on tidewater, or so near as to have a low rail
rate to it, export to foreign countries nearly all of their product.
Others ship most of their lumber, rough, by water to the North Atlan-
tic ports, which are of themselves important consuming centers as
well as distributing points. Still other mills, situated at a distance
from the seaboard, hav e to confine themselves to an all-rail trade and
ship little besides dressed lumber, which is delivered over a wide range
of interior-consuming territory.

The foregoing conditions have thus far prevented any such cen-
tralization of control over production and prices as is evident in some
other species.

Attempted mergers. — There seem to have been various attempts
to form large mergers of the yellow-pine producers, but these at-
tempts have been uniformly unsuccessful. The following from the
Kansas City correspondence in the New Orleans Lumber Trade Jour-
nal of February 15, 1899, page 16, apparently refers to such an
attempt:

The yellow pine situation has cleared perceptibly since the
first of the year, and the conditions are now all favorable for a
money making season for the producers of Southern pine. The
plan for consolidating the yellow pine business into one huge
company has not materialized, and it is doubtful that it will, but
all of the respective manufacturers have come to the conclusion
that they can make and maintain a list at good prices this year.
The most of them have issued the list as formulated and adopted
at the Memphis meeting in January, and they are doing their best
to see that it is maintained.

It was at this time, also, that the first important attempt to merge
the North Carolina pine producers took place. (See p. 254.)

Apparently the most important attempt to form a merger took
place about the middle of 1908, at a time when the yellow-pine prices
hadf alien to thelowest point for several years. This attempted merger
was widely commented upon in the daily press at the time as well as
in the lumber- trade journals. According to the accounts published
in the New York Lumber Trade Journal (May 15, 1908, p. 11, and
July 15, 1908, p. 13), Nelson W. McLeod, a prominent yellow-pine
manufacturer issued a call for a meeting, held in May, at St. Louis,



Online LibraryUnited States. Bureau of CorporationsThe lumber industry .. → online text (page 11 of 119)