Government Adopts Lumber Purchase System Simifar to Industry's Original Recommendation

Washington, March 3.-After five months, in which the Government has forced the price of lumber skyr,vard by bidding against itself, the Quartermaster General has finally adopted the original suggestion of the National Lumber Manufacturers Association, made last September, to "accumulate a reaso.nable reserve of lumber." (See release from OPM below.)

In a letter to the Quartermaster General, dated Septem- .ber 25, 1940, the lumber manufacturers urged that an artificial stimulation leading to a possible sharp rise in .lumber prices could be avoided if the Government .ivould, "in addition to asking bids for specific authorized camps, also accumulate gradually, as promptly as they can be bought at reasonable prices (and for delivery over a period of time to specific projects as they may later be authorized) a reasonable reserve of lumber and timber products of the various species eligible under the approved specifications, making such products available to contractors as may from time to time be necessary or desirable.',

Last rveek, for the first time since the start of the emergency, the Quartermaster asked for bids on lumber for future delivery that will result in the accumulation of an extensive lumber stock pile by the Army at a fair stabilized price. For example, one day last week the Government contracted for 95,000,000 feet of lumber at an average price of $26.4I per thousand feet, f.o.b. mills. This price seems to average considerably less than the prices which the Government has been paying for spot-delivery lumber. A leading lumber spokesman offered this comment on the new purchase system:

"I{uch of the adverse publicity to which the industry has been subjected during the past two months could have been avoided and the complaints of Government agencies automatically eliminated, had the Government realized that the industry was best equiprped to suggest an efificient means of lumber procurement."

General Somervelle, assistant to Quartermaster General in charge of the Construction Division of the Quartermaster Corps, testifying before the Subcommittee of the Committee on Appropriations of the House, explained to the members just exactly what happened. "One contrac- tor," General Somervelle said, "would call the rnill and ask for quotations on siding, for example, and be told the mill had already sold out its supply. He would ask what the price r,vas and they would say: 'Well, $32.' He would say: 'Well, I will give you $34 for it.' They would say: 'Well, we have these commitments and we cannot furnish this lumber at that price.' And about that time he would say: 'Well, I will give you $36 for it', and by that time the resistance of the sales force had gone and it went for $36."

Following is copy of the release from the Office of Production Management, Division of Purchases, of February 28:

"An important ste'p to stabilize lumber prices at a fair level through acquisition by the Army of an extensive lumber stock pile was announced today by Donald M. Nelson, Director, Division of Purchases, Office of Production Management.

"lfis announcement followed meetings of southern and west coast lumber manufacturers rvith the Construction Division of the Quartermaster Corps. The plan is endorsed by the Division of Purchases and the Price Stabilization Division of the National Defense Advisory Commission, whose representatives attended the meetings.

"The stock pile will be built up with the cooperation of lumber manufacturers, who have agreed to make and carry the necessary stock until the Army calls for it. Prices were established by competitive bidding, and the lumber will be invoiced and paid for at the time of shipment.

"The Army will continue to buy lumber in the usual way for current needs, both under the existing construction program and under any new ones r,r,'hich may be started. The stock pile will be drawn on lvhenever there are unexpected demands for immediate deliveries; thus the Army will not have to come into the market suddenly with large rush orders, and will not have to face a possible shortage.

"This should have a steadying effect on the market, Mr. Nelson pointed out, and will benefit lumber manufacturers and dealers as well as the Army. He added that the reserve stock is being acquired at very fair prices."