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The form of organization appears to have been a loose one down to
1909, when the present Spruce Manufacturers' Association came into
being. Nevertheless, according to statements in the trade journals,
the spruce manufacturers not only agreed on prices but usually lived
up to their agreements. Particular attention may be called to the
numerous references to meetings of manufacturers at which price
lists were promulgated, and the subsequent comment on the manner
in which these prices were actually obtained.

Similar trade-journal statements in regard to manufacturers
actually living up to their lists are also found for other kinds of wood
thati West Virginia spruce, especially in the years previous to 1906;
but a comparison of actual prices collected by the Bureau with the list
prices of those woods shows that they only occasionally agreed. In
West Virginia spruce, however, for the period prior to 1908, as will be
seen by reference to Diagram 24 (opposite p. 71 2) , there was a close cor-
respondence between list prices and actual prices. The records of an
important dealer in New York were compared with his price lists, and
it was found that from April 23, 1902, to October 1, 1907, there was
hardly a sale of the millions of feet of West Virginia spruoe handled
during that period, that did not agree with his list prices. His price
lists agree, both as to date of issue and prices, with the so-called " offi-
cial" lists referred to in the trade journals. The prices for New York
shown by the Bureau for the years 1902-1907 do not include any
sales from this firm, so it is evident that other dealers as well were
following the "official" lists at this time. A member of a prominent
firm in Philadelphia, in commenting on price data obtained from his
records, stated that the uniformity of the spruce prices during that
period was due to a trade agreement.

The correspondence between the list prices of West Virginia spruce
and the actual sales is too close and covers too long a period of time
to be attributable to a mere coincidence. The West Virginia spruce
price lists were lived up to in a manner equaled by no other species
investigated by the Bureau, and lumber was either sold at the prices
fixed by the agreement or no sale was made, and the intending pur-
chaser bought some substitute for spruce.

As has been repeatedly pointed out, it is not contended here that
the organized price activities of the lumbermen have been the chief
cause of the remarkable rise in lumber prices since 1897. It is clear,
however, that such price activities have contributed in some measure
to that rise, and that the close agreement of list prices and actual sale
prices of West Virginia spruce, just described, is due to the organized
action of the manufacturers.

During the last quarter of 1907 prices were falling, and it was
reported that price lists were not observed. The general business



702 THE LUMBER INDUSTRY.

situation at this time was responsible for a slackening of demand, and
West Virginia spruce was forced to meet severe competition from
other woods, especially from yellow pine and North Carolina pine and,
in the New York market, eastern cargo spruce. It was stated by
several informants, also, that a disagreement in regard to business
policies between two of the chief producers contributed to bring about
the wide price differences. The following statement, made to an
agent of the Bureau in August, 1911, by a man connected with one
of the chief concerns producing West Virginia spruce, throws con-
siderable light on the price conditions :

Beginning about 1902 and continuing probably through 1905
the spruce manufacturers had an agreement on prices and main-
tained it. At a meeting in Philadelphia, during the time that the
prices were being maintained, some one got up and suggested
that the only way to maintain prices was to have a $5,000 deposit
by each manufacturer and impose a fine for any cut made in the
price-list. I do not know whether this suggestion was carried out..
A little later, the manufacturers began to fear the Sherman law,
and instead of having these hard-and-fast agreements as to prices,
they had gentlemen's agreements. I remember at one time we
met in Philadelphia and there was absolutely no organization
of the meeting, so that they could not be held under the Sherman
law. They merely met as individuals and discussed the situation.
I think it was at this time that Robert Whitmer got up and
stated, in substance: "We manufacturers of spruce must adhere
to the list price. My spruce is worth that much money and I
am going to get it, regardless of the price asked by other manu-
facturers." Whitmer went right out of this meeting and cut the
price from $4 to $5 a thousand and is supposed to have billed
orders for several months before the other manufacturers woke
up to the fact that the spruce market had been slaughtered.
Since that time, the manufacturers have not been able to maintain
their price list.

This account differs in some respects from that given to an agent
of the Bureau by another informant:

Wm. Whitmer & Sons entered into an agreement with other
wholesale lumber dealers to maintain a fixed price list upon
spruce. At the time of entering into this agreement, Wm. Whit-
mer & Sons held large contracts for future deliveries of lumber,
the filling of which contracts consumed most of their supply of
spruce lumber. As soon as the other dealers who had entered
this agreement became aware of this condition, they immediately
undersold the agreed price list, and Wm. Whitmer & Sons were
forced to cut the price. I am of the opinion that the price list
agreed upon was not maintained longer than a period or three or
four weeks.

At any rate, for several months the former close correspondence of
prices which the Bureau obtained from the different dealers no longer
prevailed. While there is evidence that the " official " price lists of
1909 and 1910 have been more closely followed than those of 1908,



PRODUCTION AND WHOLESALE DISTRIBUTION-. 703

yet conditions in this respect are far from what they were before the
break in 1907.

In 1909 the new spruce association was organized. In the accounts
of its formation published in the American Lumberman and the New
York Lumber Trade Journal stress was laid on the fact that in the
agreement signed there was the following clause: "No action shall be
taken by members tending to obligate any manufacturer to sell at a
fixed price."

The comment in the trade journals at this time shows, however,
that the new association was expected to have a definite influence in
steadying or raising prices. The following examples of this style of
comment are taken from the Pittsburgh news of the trade papers:

Buying remains stationary and prices remain firm. The
organization of the spruce manufacturers' association the last
week it is hoped will stimulate matters considerably in this
line. (American Lumberman, May 8, 1909, p. 96.)
_ Spruce is stronger, and with the spruce manufacturers' asso-
ciation meeting in Philadelphia this week, the outlook for a
better regulated output and price is much more favorable.
(New Orleans Lumber Trade Journal, June 1, 1909, p. 34.)

At a meeting of the United States Spruce Manufacturers'
Association in Philadelphia this week president E. V. Babcock
of this city will preside. The influence of this organization is
already felt in the betterment of the spruce trade. E. V.
Babcock & Company report mills running steadily in hemlock
and spruce districts. (American Lumberman, June 26, 1909.)

In the American Lumberman of July 23d, 1910, the statement
was made, in an article headed "West Virginia spruce," that spruce
was so handled that there was no price competition in spruce;
that it merely had to meet the competition of other species. This .
statement, however, does not seem to have been borne out by the
comment from various markets at this time. As early as Novem-
ber, 1909, it was reported from the New York market that there
was considerable competition among shippers in West Virginia
stock. In Pittsburgh the lists were then said to be strictly followed,
but by September, 1910, the Pittsburgh market was reported to show
cutting from the list, and from that time on both Pittsburgh and
New York comment on the wide variations in prices which are
obtained. In 1911 an informant, who handled the product of one
of the most prominent firms producing West Virginia spruce, in
one of the most important markets, stated to an agent of the Bureau :

At the present time the spruce price list of the manufacturers
is not adhered to. You will find that probably no two whole-
salers would give the same discount on a given item, unless it
would be 2 x 12's, which are held firm, owing to the fact that
there is a big export demand for this dimension. The export
trade calls for 1 x 12, 1£ x 12, and 2 x 12, and the list price on
these dimensions is usually maintained. At the present time



704 THE LUMBER INDUSTRY.

we are really asking a little more than the list price for these
items. However, for other sizes of spruce the amount of dis-
count will vary probably from- $0.50 to $3.50 per thousand
from the list price.

Section 10. Extracts from lumber-trade papers relating to West
Virginia spruce.

Note. — The Bureau does not vouch for the truthfulness of the

statements appearing in the extracts from the lumber trade papers.

Extracts have been taken from many of the leading trade journals.

Not only have several trade papers been used, but news items from

various cities have been selected. The fact that several different

trade papers give an account of an action of some association, and

that the news items from various cities will refer to the action and

for several weeks or months will comment on its effect adds to the

credibility of the extracts.

1898.

New York Lumber Trade Journal, November 15. 1898, page 10. — Owing to the conditions surrounding the
sales of spruce timber in some localities, the writer desires to call attention to what appears to be unfair
treatment with reference to the West Virginia operators.

As is well known, a very large percentage (probably ninety-five per cent) of the outputs of the mills in
that section is handled by three well lcnown firms, who, by their absolute compliance with association rules,
eel themselves entitled to the fullest confidence of the trade and, especially, association dealers.

It is not necessary to discuss theconditions laid down with reference to who may or who may not be enti-
tled to be classed as free trade, for the reason that they are accepted as satisfactory to the manufacturers.

What we refer to particularly has more reference to New Jersey than to New York dealers. Prior to
the summer of this present year, the three operators above referred to acted under a tacit arrangement as
to the price of their output, delivered at stated points. Competition among themselves, in such a staple
article as they handled, appeared to be unnecessary, and we know of only one period, covering about
thirty days, when the prices varied to any appreciable degree.

That period of unsettled values, however, awakened the operators to the folly of such competition among
themselves, and it resulted in an agreement, with a view ofsustainrng prices, thereby protecting not only
themselves, but the trade. When they entered into this arrangement, however, they relied upon the
hearty support of organizations whose success was, in a great measure, assured by the compliance of these
operators with their regulations.

This agreement was deemed the more necessary by reason of Adirondack, Eastern and Tide Water
lumber, with which they could not and did not desire to compete. With these entangling surroundings,
in the hands of a great number of operators, no good reason could be advanced why these few manufac-
turers should not agree that they would stand together before the trade. If it is proper for New York
and New jersey to associate, to protect their trade against unfair methods, it is, beyond question, right
for these few manufacturers to agree among themselves not to disagree, and, at the same time, obligate
themselves to sustain the associations in their efforts.

Under association agreements in the Metropolitan District of New York, buyers of spruce lumber obligate
themselves to purchase only of regular wholesale dealers who are members of that association, for and in
consideration of which those wholesale dealers agree to sell to none but association members, parties to
the agreement, for deliveries within certain stipulated boundaries. This so called Metropolitan District
extends beyond the boundaries of New York State into the State of New Jersey as far west as the Hacken-
sack River (this last named territory being included in the trade agreement above referred to).

So far as New York dealers are concerned, we believe that they are using every effort to maintain both
sides of the agreement, and we are cognizant of instances where infractions have been promptly discon-
tinued.

Outside of the Metropolitan District in New Jersey, however, no such mutual agreement exists between
buyers and sellers, but, quite to the contrary dealers exercise their own discretion in making purchases—
the wholesalers accepting their association regulations by declining to sell only to acceptable trade dealers.

In certain sections of New Jersey, dealers agreed among themselves to maintain a regular schedule of
prices, covering the sale of this commodity within certain described limits. The same condition prevails,
and always has obtained, in the Metropolitan District of New York.

While causes of complaint have arisen in New York under this agreement on certain occasions, we are
advised that the New York Association members are well pleased with their efforts. In the section of
Jersey referred to, however, we understand that their agreement has been abrogated— the benefits sought
and the right to combine to maintain prices not at all entering into the discussion — resulting in abrogation.

We have thus outlined the basic principles underlying the association structures erected thereon— not
for the purpose of criticism or comment, but simply as a preamble, on which to bring about a discussion
as to whether or not the West Virginia operators are censurable for combining to sustain prices on their
product, surrounded as they are by vast Eastern Tide Water, Pennsylvania and New York State compe-
tition.

Eastern manufacturers have frequently made agreements, covering the prices of their outputs, which
have always failed, owing to the vast number of operators engaged in the traffic.

Writing as a believer in the rights of New York, New Jersey or any other section to organize for their
mutual protection against unfair competition and discrimination, not as a stockholder, selling agent or
manufacturer, but as one interested in West Virginia spruce (accepting as binding all of the conditions
imposed by the different agreements of associations), the writer desires to submit that, in his opinion, it
is only right and proper for the West Virginia operators to agree to maintain prices, and that it is not right
or equitable for association dealers to assail such agreement to any extent, much less the arbitrary position
assumed by a minority of such dealers.



PRODUCTION- AND WHOLESALE DISTRIBUTION. 705

(We are very glad to print the above communication. It would hardly seem possible tbat such an
arrangement as the West Virginia spruce people have should meet with any disfavor fom any orSn zation
?-I r w Ue ^- ™ ? l0Urnal wlthm 1* 3 own ^owledge, knows that, with one or two untaportan^ S™
the West Virgmia sprure manufacturers are backing up Eastern Associations in a mosSrtv and thorS
manner. We do not believe that any of the West Virginia spruce people who are in thespru™ agFeement
would under any conditions sell lumber for delivery to a consumer or a scalper in any of tteElste^ tod-
tones covered by associations, if they knew it For this reason, they deserve the heWty support ™evefy
associat on. If they have organized to get a fair living price for their spruce timber, no reSrshouS
find fault with such organization and, we believe, every^retailer should'do his best to give SS proper
and adequate support to accompish what they have set out to accomplish in this direction AsTociatFon
matters are not atf one sided, and when they become so.they can only result in failure The lumber bus?
ness must be run on the basis which has so often been promulgated bv the Journal- that h minnnrt tw>
who support you. We are well aware that scalpers and their allies^scofl a?TiTp SZ "ft is tfe
only principle upon which Eastern Associations can stand, and unless the members of Eastern Association!
individually and coUectivelysupport those who support them, then they cannot long expect su^h support
We sincerelyhope that our West Virgmia friends may have no further cause for complamt from anybody '
whether in New Jersey or elsewhere.— Ed.) !/•<*•**<■ "«"* ouj uuuy,

Price list Issued, effective November 28, 1898.'

New York-New York Lumber Trade Journal, December IS, 1S98, page W.-At a meeting of the West
Virginia spruce operators, November 26, an amended schedule of prices was agreed upon, taking effect
November 28. There are no material changes, except on large timbers, nine inch and over wide in which
an advance was made of $1.00 a thousand, all other timber remaining as heretofore.

1899.

Price list Issued, effective April 25, 1899; lists also issued In July, August, September, and October,

Philadelphia— New York Lumber Trade Journal, October 18, 1899, page 19.— Spruce having reached the
figures of $18.00 to $20.00. * * * 12-inch stuff is very scarce, and, in some cases, has brought $1.00 more
to eld list prices.

1900.

Price lists issued In December, 1899; June, 1900; November, 1900; and December, 1900.

1901.

Philadelphia— New York Lumber Trade Journal, September 1, 1901, page 24.— Spruce remains firm at Quo-
tations which are as strictly observed as the laws of the Medes and Persians. Whyshould theynot be?
All mills are busy for the present and running some time into the future.

1902.

Price list Issued, effective April 2$, 1902.

New York— New York Lumber Trade Journal, May 1, 1908, page 13.— On April 23 the West Virginia
spruce manufacturers advanced prices for spruce based on New York rate of freight.

1903.

Philadelphia— New York Lumber Trade Journal, May 1, 190S, page 26.— Owing to the demand for spruce
more than the list is being gotten in several items.

New York— New York Lumber Trade Journal September IS, 1903, page 22.— West Virginia spruce is in
good demand, owing to the eastern situation, and the price list with $19.50 as a basis for 8-inch and under
20 feet and under is well maintained.

Philadelphia^- New York Lumber Trade Journal, October 1, 1903, page 26.— Spruce prices hold firm to the
list, and there is every indication that the good trade and prices will continue.

1904.

Philadelphia— New York Lumber Trade Journal, February IS, 1904, page S3.— The price, however is hold-
ing strongly to the list.

Philadelphia — New York Lumber Trade Journal, July IS, 1904, page 27.— Spruce is just as strong as it has
been all along and there has been no attempt on the part 01 the manufacturers to get away from the list.

1905.

Price lists issued, effective March 17, 1905, and June 2, 1905.

New York — New York Lumber Trade Journal, June 15 } 190S, page 11.— Announcement was made on
June 2 of a slight advance in one or two sizes oi West Virginia spruce, to wit, 2 x 4, 2 x 6, and 2 x 8, 18
and 20 feet, were advanced $1.

A 50-cent advance was also made for every 2 feet over 26 feet in length. On the other hand a decrease
was made of $1.50 on 1 x 10-inch merchantable boards.

Pittsburgh — American Lumberman, July 15, 1905. — The steady advance in demand has been such as to
affect the price materially and during the year the list has been raised from $1 to $3 according to sizes and
has been accepted with little or no protest.

Philadelphia— American Lumberman, July 28, 1905, page 29.— The spruce manufacturers to keep up a
demand and steady the market agreed among themselves that no advance would be made without the
consent of the others, therefore practically controlling the market in every respect. Buyers were assured
that it was impossible to get any better quotations from any other dealer. From 1897 until 1902 the spruce

1 The price lists noted here are those referred to in the lumber-trade papers as "the West Virgmia spruce
list," or "official" list.

25030°— 14- — 45



706



THE LUMBER INDUSTRY.



business was In the hands of a few conservative men who made very few and slight changes in the prices
either way, their belief being that if the product warranted an advance it should be a reasonable one and
not one that would slide back. Under these circumstances no knifing was done among thehandlers. Since
1897 the mills have been increasing their output from 70,000,000 feet a year to 110,000,000 feet in 1904.

Sales Manager Charles A. Blake, for A. Thompson, substantiates the foregoing in regard to general facts
and output.

Price list issued, effective August 8, 1905.

New York— New York Lumber Trade Journal, August 15, 1905, page 10.— The basic price of spruce was
advanced 81 August 8 by the West Virginia manufacturers. This makes the price of 8 x 8 and under, New
York delivery, $21.50; 9, 10 and 12-inch, $23. That is, on the usual basis of twenty-foot lengths and under.

Philadelphia — American Lumber, August 26, 1905, page 65.— The advance of $1 on practically all grades,
made August 8, is being adhered to closely and so far as can be observed has not affected the call for spruce
in any degree. Stocks are light and arrivals do not equal the call. Prices are not likely to change for at
least sixty days.

Price list Issued, effective October 25, 1905.

Pittsburgh — American Lumberman, October 28, 1906. — Spruce is selling above list prices and has been for
some time. The spruce association has been conservative in changing prices, but the dealers are advancing
the list independently.

Philadelphia— American Lumberman, November 4, W05, page 70.— October 25 the price of spruce was
advanced $2 on the entire list. It has been selling over base for some time and this action was not unex-
pected. The market continues firm in spite of the advance and more orders are offered than can be
accepted.

Pittsburgh— American Lumberman, November 4 X 1905, page 66.— Notices have been issued by the Spruce
Manufacturers' Association of a general advance in prices of $2 flat, making $3 during the past six months.
In spite of this fact it is announced that most of the dealers in this grade of lumber have not been adhering
to the list but have been getting considerable advance for some time.

The action of the spruce manufacturers in advancing the list has caused no surprise. The demand for
this lumber has been increasing for some time and the larger number of dealers are holding out what stock
they have for better rates than the list offers, while most of them declare that they have no difficulty in
getting higher prices. The new rate will, therefore, not be particularly noticeable.

New York— New York Lumber Trade Journal, December 15, 1905, page 1 7.— The official list of the West
Virginia manufacturers is more than well held, and in many instances buyers are paying above the list as a
bonus for prompt execution of orders.

1906.

Price list issued, effective January 3, 1906.

New York — American Lumberman t January 13, 1906, page 64. — S. E. Slaymaker & Co. report another
advance in the West Virginia spruce list; 2 x 2, 2 x 6, 2 x 8, 14 feet and under, are listed at $22.50, an advance
of $1 over the list issued about six weeks ago; 8x8 and under, 20 feet lengths and under, bring $25.50, an
increase of $2; 9 x 10 and 12 inches, 20 feet and under, sell for $27; 14-inch, $29; 15-inch, $30, andl&-inch, $31.
These last four items represent an advance of $2 over the old list.

New York — New York Lumber Trade Journal, January 16, 1906, page 11. — At a meeting of the West
Virginia spruce manufacturers in this city on January 3 prices of West Virginia spruce for delivery in this
market were advanced from $1 to $2, coupled with an announcement that the mills within the association
would take orders, for shipment within the next four to six months, at the new prices.



Online LibraryUnited States. Bureau of CorporationsThe lumber industry .. → online text (page 87 of 119)