DO YOU KNOw??!

Scolping is lhe ocl, peculiqr to North Americon tndisn wqrfqre, of portly culling, portly teoring ofi d piece of the skin of the heod, with the hoir qttoched; whether the victim is olive or deqd qt the line does not offect the operqlion.

The lndions, wifh whom scclps ore ihe lrophies of victory, hove olwoys left o long lock or tuft on the scclp or o choltengc. Bounties hcve, in Americon hislory, more lhon once been ofiered for scolpr: in 1724 $50O wos oftercd by i/lcs3achusett. for lndisn scolps; in 175{, during the French ond lndion wor, o bounly wos ofiercd by the French for British scolps, ond by the colonios for Indion scclps; in 1755 tflosrqchusetb offcred $200 for every scolp of s mqle Indisn over 12 ycorr old ond $l0O for scolps of wornen ond childrcn. ln 1855 Hobbs Wqll storied their lumber compony in the rough, rugged ond primitive country of Del Noile County.

other cars, and high medical and-hospital fees and high awards wherr persons are injured. Exclusive of the employees ll'elfare insurance we paid in 1952 on the same yards two and one-half times w'hat u'e paid in 1941 for insurance. As you knorv, we are all saddled u'ith additional expense for health and welfare insurance for all our employees amounting now to $4.00 per person per month. I hear by the grapevine that $+.OO ls a very modest and unsatisfactor)' amount for us to pay in each month, $11.65 a morrth would bul'much more and take in the rvhole family. Maybe it u''ould be nice for us to pav the gas and electric light bill too.

I hesitate almost to rnention the increasing cost of taxes as an item of your expense. There is little that I can say that you don't know already, and if you are not acquainted with taxes just turn on youl radio Lr television set almost any time. You rl'ill hear all about Federal income taxes and why they should be reduced. So I rvill talk briefly about City and Countl' taxes, unemployment taxes and social securitl' taxes. You pay these whether 1'ou do any good or not, and.like- the other expenses they are growing all the time. Due to the gro*'th of the city and county partly, but due to pressure groups nlostl)', citl' and county taxes gladuatty' increase. The politicians make a big play in the pipers about the rate of tax but do not mention the increase in ascs6ssment, I picked :rt random five pieces of property we orvn in tlte county. '1 he tax rate slnce ly4l has tncreased l1/o b$ tlte assessmelrt increased 39/o, and our taxes on these properties increascd 19/o' But the taxes on your stock of goods has doubled. For example, on N{a-rch lst, l94l a ihousand feet of 2x1's $l Common laid dorvn in Los Angeles Harbor cost $30.00 and u'as assessed at 15%, or $13.50, and thiJ at $5.73 per $100.00 amounted to 77 cents per \1. On llarch lst, 1953 a thousand feet of 2x4's #l Common laid down in Los -\ngeles Harbor cost about $83.00 and w'ill be assessed at 13%, or $37.35, and this at about $6.27 per $100.00 will amount to $2.31 per M. The taxes on your 2x4's are fhree times as much. Unemplyoment taxes in 1950' 1951 and 1952 were very high due largell' to the unenrplo]-ment reserve rness the state got into on account of liberality of application of the laws and the rates were based on the emergenc't' schedule. The state reserve has now been replenished and rates for l9-i3 reduced substantially. The Federal Unemployment (or Excise) Tax of 3/10 of llo is a constant exl)ense. Social Securit)' tax at ltl% on the 6rst $J600.00 for each emplojec has increased 50%. I u'ill not du'ell on the nuisance taxes, such as sales tax, transportation tax and the unfair city license taxes based on sales. I lvill not dtvell on the Excess l)rotits tax; feu' retail lumbermen are iuterested, as feu' of them have done as w'ell in 1952 as they did in the best three I'ears out of four-19'16 to 19'19. I am opposed to the Excess Prolits tax, it is often very lniair, and it should bi repealed, but I am opposed to repealing it and then increasing the general corporation rate to offset it.

All items e4tering into cartage expense have increased over the 1'ears, for example in 1941 gasoline in tank loads per gallon cost 14 cents, now 72.1 cents; 9.00 x 2O-12 ply tire and tube including tax in 19-ll cost $68.37, now $97.90. Stake body Ford truck in l94l cost $1,193.'lJ and now $2,n0.N, and truck license for same u'as $33.78 in 1941 and now is $62.00 Cartage expense is hard to compare, it depends on wlrat kind of trucks you have and what kind of hauls, etc. Aat one of our supply yards we keep a complete record on each truck, nunber of miles per day, amount of footage hauled, arnount of gas, oil, repairs, tires, men's time, depreciation, payroll taxes and other taxes, insurance, etc. We reduce the expenses to the rate per \I feet mile and it cost us in 1952 4l%% more per M ft. mile than it did in 191. As a matter of interest, we have consolidated the monthly relrcrts for a certain number of monihs ending December 31, 1952. These trucks traveled 1,226,103 miles round trip, used 249,823 gallons of gasoline, or 4.90 miles to the gallon, and cost us 4 cents per mile; used 5,559 quarts of oil, or 143 miles to the quart, or l/10 of I cent per mile; parts and grease cost us l% cents; tires cost us %. of I cent; garage labor ll cents per mile; driver's wages including time spent eating breakfast and pay -for overtime diesease was 163/a cents per mile; depreciation ll cents a mile; and payroll taxes, compensation and accident, public liability and property damage, fire insurance and license taxes u'as 2/3 cents per mile. This makes a total of 8tl cents per mile, and if 1'ou divide this b}' the average footage hauled per trip you get the cost per \I ft. mile. in our case about 4 cents per M ft. mile. We hauled in thr period of months we chose 158,718,110 ft., or an average cost of $2.19 per M. The time consumed was 98,670 hours or $3.52 per hour. Figures cornpiled in the same manner for twelve months in l94l cost us 18t1 cents per mile' or about 2.6 cents a M ft. mile. Each company's record u-ould be difterent due to the kind of trucks, length of haul, and other factors' and I cite these figures only to show how the cost of cartage has increased, but our charge for cartage stays just the same.

The item of expense which vitally affects every industrl', including our industry, is wages and salaries. Outgoing *'ages and salaries amount fo 64% of the expenses of the industry according to the Association expense survey. The wages and salaries of the people working for our company in 1941 (the last year before the war) was $1,817.13, and in 1952 was $4,086.83 or an increase of 124.9/o. But this does not show the full percentage increase because all our wage earners lvork about ten days less per year due to liberalized vacations and pay for six holidavs not worked. It does not include additional old age pensiorr payments and health and t'etfare pa)'ments. A ferv straight time labor items might be .of interest: Yard labor, Los Angeles, April 194l-681 cents, nor' $1.671-increase 115/o; Orderman, .\pril l9ll--{l)/, cents, now $1.871 cents-increase 133/o; Stickerman, -{pril l9fl--$1.05, norv $2.O7tl-increase 98/o; 26 M lb. and under truck driver, .\pril l9l79 cents, now $1.80--increax l4/o: 26 M to 52 M lb. tmck driver. April l9l-88 cents, now $l.Lincrease 1167o;,52 M lb. and over truck driver, April l9l-91 cents. no*' $2.00-increax ll7/c: Carrier driver, April 19-ll-85 cents, norv $l.93lj-increase l27lc; and in addition, liberalized overtime, vacations, holidal's, health and rrelfare, etc. The cost of living index of the Department of Labor for Los .\ngeles, Old Series for April, l94l sas 103.2 and the latest for Los Angeles on same base is 192.0, or an increase oi 6:O/o. -\ surrel' of yotrr \\'age and Hour Department salaried ernployees will shorv practicalll' the same increase. I will not cite further figures on this matt€r: ]'ou are all fulll'aware of it and what it is doing to )'our rearlv record. We all w'ant our help to get as good r,r'ages as possible, and particularll' enough to more than offset their increased cost of living, and the record shorvs this has been more than done. Can any lumberman tell me hos' this industry in the light of its record in 1951 and 1952 and so far in t953 can stand another ruage increase? This matter u'ill be coming to an issue in another month or so, and it *'ill dep€nd largell' on 1'ou and your attitude as to what the final result $-ill be. I srrppose that some defense plants in excess profits rvill put us behind the eight ball before our negotiations even start.

Enorrgh has been said about the increased costs of all operations of 1'our business. \\'hen increased costs are mentioned before labor negotiators they will sa1', "Yes, but 1'orr ltave put up )'our prices to such an extent that the increased costs are more than offset," and I nright sa1' that most of 1'our os'n emplol'ees think likervise. This is an effective argument unless you knon'1'our facts. The facts are that dollar sales volunre in our nidustry has not kept up *'ith increased exlxnses over the past ten or twelve 1'ears. I anr using l94l as a comFrriion because it rvas the last 1'ear of an open economy before the rsar. It is m)' opinion that the expense per dollar of sales in l9't2 s'as 16.9/o more than 19{1. The cost sun'ey of the association s'ill shos' tltat expens€s in 1952 per dollar of sales hale increased 7.69/o even since 1950.

It nright be interesting to discuss at this point rvhat has happened to the gross margin on sales over the past ten or t*-elve 1'ears rvhile tfie expenses of doing business have been climbing. \\'ill an1' labor negotiator or )'our own employees believe 1'ou rvhen you say that the margin per dollar of sales has been going don-n, in view of your high prices, rvhile your expenses per dollar of sales have been going up? \A'ell the facts are, that that is true. The average going sales price on normal jobs of a 2x4 in 1952 rras 2.4 times s'hat it was in 1941. and incidentall;-, the average ex-sessel price of a 2x.[ in 1952 was 2.6 times rrhat it was in l9,ll. It is m1' opinion that the gross margin per dollar of sales in 1952 u'as 17.98/o less than it *'as in l%1. You are all rrell anare of *'hat happens to your net profit before Federal income taxes rrhen your nrargin reduces 18/o per dollar of sales and your cost of doing business increases l7/o per dollar of sales. The Association cost surve!' of l95l substantiated this fact clearll', and it is m;- opinion that the cost survey Ior 1952 will do likewise.

\\rhat has caused the gross margin on sales to reduce in the last ferr' 1'ears? \\'ell, there are a ferv direct or visible reasons, and then there are the indirect or invisible reasons. The operation oI your mill is an addition to purchases and affects the margin on your goods. I rtill not belabor the labor problem, 1'ou all knorv how it has afrected the cost of operating your mill and the cost of surfacing and milling 1'our goods. A feu'other items of milling cost might be of interest A 20 HP motor 1750 RPII 3 phase cost $195.00 in l94l and now costs $278.0; an increase of 43Vo; steel knives 15 x lll x rA'costZTl ents an inch in 1941 and now cost 50 cents an inch, or an increase of &y'o; copper transmission wire fOOT\\/ cost $175.00 per M ft- in l9ll and no$' costs $i66.00, or an increase of llo%: roller chain has increased 50%; sprockets 100/o, and most all electrical supplies about 5O/c. \'ou are all familiar with the great increase in any machine shop repairs. How many of 1'ou have increased your selling prices to take care of this? Then there is the increased cost of unloading cars, and sorting and piling a*'ay lumber r*'hich has reduced ]'our gross margin. Again labor is the most important item. A fes- other items might be of some interest. A Ross Carrier lS-ton capacit]' cost $5,551.70 in l94l and the comparative size now costs $9,fl0.0: a long heavy }ton fork lift cost about $6,250.00 in l9-ll and norv costs $9,258.56.

I am franlily astonished at the prohts before taxes'made by large manufacturers, seven steel companies l7/o on sales in 1950, autos fr/o, chemicals 33%, electric companies 16/o, farm machinery l1/c, wp 15y'o, business machinse A%, and. so on. Of course, statistics on the various retail industries do not shorr an1' such profits, but thel- do show difterently than our industry in Southern California. I have looked over cost sun'eys of retail lumher 1'ards in other states and almost invariably their gross margin is larger, and also the net before taxes.

\\Ihy is it that our industrf in Southern California has to be content rvith a lorv gross margin, and consequently a low net income on sales?

\Vell, there are a good man)' reasons, some of them hare been rvith us for twenty-five or more 1'ears, and some of them are nerv. I cannot clrange any of these long time reasons, and if I state them I must of