The men who lumber the hardwood forests of the Appalachian hillsides and the Mississippi Valley have a code which, as codes go, is a good one. The mill owners lived happily under it for nearly a year. Among other things it provides for production control, cost protection, hard & fast minimum prices. And for an industry which has no less than 5,800 members in its trade association and code authority, the Hardwood Manufacturers’ Institute, there was surprisingly little chiseling.
But chiseling there was, particularly on prices, and enough to annoy the responsible lumberman who lived up to the code. Prices were revised in July, some up, some down. The upped prices hit the hardwood men’s best customer, the automobile industry.
Last week in the Hotel Peabody in Memphis, 500 hardwood lumbermen assembled in a hot session of their Institute to hear not their best customer but the lumbermen themselves attack price-fixing. More notable, the meeting was largely concerned with a single order— some 30,000,000 to 50,000,000 ft. of hardwood for Fisher bodies.
General Motor’s Fisher Body Corp. is the largest consumer of hardwood in the U. S. It requires between 300,000,000 and 400,000,000 ft. annually. With furniture and building in the dumps, a small slice of an order by Fisher will keep an average mill operating for months. Yet the Hardwood Code allows no discount on even the whopping Fisher orders.
As every one should know, GM made $1,000,000 less in the second quarter of 1934 than in the same period of 1933 although its sales were $100,000,000 more. President Alfred Pritchard Sloan Jr. flatly announced that costs must be cut. In August when Fisher Body was ready to buy lumber, its purchasing agents told the hardwood manufacturers something like this: “We cannot afford to pay $66 per thousand ft. of oak. We know that is the minimum price established by your code authority but we can pay only $60. We know and you know that $60 will leave a profit. If you accept the order you will be violating the letter of your code but you will not be violating the spirit, which provides for protection of costs. In any case we request you to report the order to your code authority.”
Knowing that they could indeed make a profit at the Fisher figures, 62 concerns gladly divided the huge order. Bartlett C. Tully of Anderson-Tully Co., one of the biggest hardwood units in the hardwood capital of Memphis, made haste to resign from the code authority because he shared in the Fisher order. Recruiting hundreds of allies the 62 defiant companies then asked the code authority to abolish price-fixing. Last week after the Memphis pow-wow their petition was flatly denied. NRA Deputy Administrator E. A. Selfridge threatened to crack down, declaring that the Department of Justice was ready to start suits against each & every one of the 62 dissenters.
GM’s President Sloan has let it be known that he hoped he would not have to enter the lumber, glass, steel or other businesses which supply GM, but that if prices rose unreasonably GM could and would. Having Henry Ford’s excursion into steel right before their eyes, the 62 manufacturers have no intention of forcing GM into steel, thus eliminating hardwood in the building of Fisher bodies. What GM was really doing, they thought, was attempting, in a carefully matured plan, to force the Administration to make up its mind once & for all on the stubborn problem of price-fixing.
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