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,OSTO.P0BUCUB-S;,

9999 0631 '

NATIONAL RECOVERY ADMINISTRATION

DIVISION OF REVIEW

EVIDENCE STUDY NO. 32

OF

THE RETAIL LUMBER INDUSTRY

Prepared by W. E. YOST

June, 1935

PRELIMINARY DRAFT (NOT FOR RELEASE: FOR USE IN DIVISION ONLY)

THE EVIDENCE STUDY SERIES

The EVIDENCE STUDIES were originally planned as a means of gathering evidence bearing upon various legal issues which arose under the National Industrial Recovery Act.

These studies have value quite aside froin the use for which they were originally intended. Accordingly, they are now made available for confidential use within the Division of rieview, and for inclusion in Code Histories,

The full list of th-^ Evidence Studies is as follov;s:

1. Automobile Manufacturing Ind, 23.

2. Boot and Shoe Mfg. Ind. 24.

3. Bottled Soft Drink Ind. 25.

4. Builders » Supplies Ind. 26.

5. Chemical Mfg. Ind. 27.

6. Cigar Mfg. Industry 28.

7. Construction Industry 29.

8. Cotton G-arment Industry 30.

9. Dress Mfg. Ind, 31.

10. Electrical Contracting Ind. 32.

11. Electrical Mfg. Ind. 35.

12. Fab. Metal Prod. Mfg., etc. 34.

13. Fishery Industry 35.

14. Furniture Mfg. Ind. 36.

15. Generax Contractors Ind. 37.

16. Graphic Arts Ind. 38.

17. Gray Iron Foundry Ind. 39.

18. Hosiery Ind. 40,

19. Infant's £: Children's Wear Ind. 41.

20. Iron and Steel Ind. 42.

21. Leather 43.

22. Lumber & Timber Prod. Ind.

Mason Contractors Industry

Men's Clothing Industry

Motion Picture Industry

Motor Bus Mfg. Industry (Dropped)

Needlework Ind. of Puerto Rico

Painting ?■ Paperhanging & Decorating

photo Engraving Industry

plumbing Contracting Industry

Retail Food (See Wo. 42)

Retail Lumber Industry

Retail Solid Fuel (Dropped)

Retail Trade Industry

Rubber Mfg. Ind.

Rubber Tire Mfg. Ind.

Silk Textile Ind.

Structural Clay Products Ind.

Throwing Industry

Trucking Industry

Waste Materials Ind,

Wholesale & Retail Food Ind. (See No.

Wliolesale Fr^sh Fruit & Veg, 31)

In addition to the studies brought to completion, certain materials have been assembled for other industries. These LLfi-TZRIALS are included in the series and are also made available for confidential use within the Division of Review and for inclusion in Code Histories, as follows;

44. Wool Textile Industry

45. Automotive Parts & Equip. Ind.

46. Baking Industry

47. Canning Industry

48. Coat and Suit Ind.

49. 50. 51. 52. 53.

Household Goods & Storage, etc, (Drop- Motor Vehicle Retailing Trade Ind, ped) Retail Tire & Battery Trade Ind. Ship & Boat Bldg. & Repairing Ind, Wholesaling or Distributing Trad3

L. C. Marshall Director, Division of Review

CONTENTS

Page

CHAPTER I - THE NATURE OF THE INDUSTRY 1

Size of Industry 1

Sales and Employment by States 1

Capacity 1

Number of Failures 1

CHAPTER II - LABOR STATISTICS 2

CHAPTER III - IIATSRIALS 3

CHAPTER IV - PRODUCTION AND DISTRIBUTION 4

CHAPTER V - TRADE PRACTICES 5

CHAPTER VI - ORGANIZATIONS 6

-oOo-

8320 -i-

TABLES

Page

TASLE I - STOHES, SALES, E1£PL0YEES, AIID

PAYROLLS, BY STATES: 1329 7

TABLE II - STORES, SALES, EtJLOYEES, AIJD

PAYROLLS, BY STATES: 1933 8

TABLE III - FAILURES lil RETAIL LILIBER AIID

BUILDING l.LATERIAL LlilES 9

TABLE IV - COLiPARISCK OF HOURLY EARillllGS

IN 1929 Alffi 1933 10

TABLE V - STORES, SALES, EMPLOYEES AlTD PAYROLLS TU TWENTY- TWO i.iETROPOLITAl>I DISTRICTS: 1929 11

TABLE VI - STORES, SALES, KJLOYEES AND PAYROLLS IN F:.'ENTY-TI70 METROPOLITAN DISTRICTS: 1933 12

oOo

-11- 8320

-1-

RETAIL LlJl'.IBER Iin)USTRY

(Evidence)

CHAPTER I

THE NATURE 01? THE INDUSTRY

The handling of lumber by the retail dealer is an oatgrowth of the early raill. As the timber v.'as cut out in each section, the lu"ibernan became a re- tail distributor acquiring his product from distant sources to fill local de- mands .

Sise of Industry

In 1929 there vere 26,377 establisliments employing 134,483 persons and doing an annual business of $1,918,284,000. In 1933 there were 21,015 estab- lisliments employing 64,613 persons rrith an annual business of $603,416,000,17 The Administration has been furnished by the Code Authority ^.Tith names and addresses of 23,531 retail lumber dealers in 1934. Reta.il lumber dealers generally handle many items competing nith lumber, but such materials as bric^ tile and steel give the most serious competition.

Sales and Em-ployment by States

Tables I and II recapitulate for a representative cross section of the country the number of establishments and volume of business in each state in 1929 and 1933, together '-'ith a comparison of the number of employees and the payrolls in each state.

Ca-pacitv

The shift of production centers of materials has not affected to any ex- tent the retail business, for, as explained later, retailers draw uiDon the resources of the entire United States and their capacity is limited only by the supply available. There is no doubt but that the retailers could handle any demands r'hich the Construction Industrjr might malre.

Number of Failures

According to information from Dun and Bradstreet reports, shoTm in Table III, there xrere 168 failures in 1933 viith total liabilities of $9,655,146 and 82 failures in 1934 \7ith total liabilities of $1,571,591.

1/ The above fi,;;;ures include the entire volume of business done by retailers grouped in the Census of Retail Distribution as follows:- Lumber end. building material dealers; lumber and hardware dealers; roofing dealers and other retailers of building materials (brick, stone, cement, etc.). They do not, therefore, represent the amount of lumber sold at retail. Such figures, if available, would be considerably lower than the figures ■presented here.

8320

-2-

CHiPTFil II

LABOn STATISTICS

In 1929 there \7ere 134,483 full-time employeeG in this Industrj'' and 15,- 076 part-time employees. The total annual payroll r/as $222,854,000, In 1933 there were 64,613 full-time employees and 19,589 part-time. Their total an- nual earnings amounted to $87,222,000. The details of employment and payroll-, by states are shoTm in Tables I and II,

As illtistrative of the waf^e decline, Table IV, furnished by the National Retail Lumber De&lers Association, shors that the niomber of erroloyees at 50 cents per hour or over declined from practically 100,000 in 1929 to approxi- mately 43,000 in 1933. At the sf'jne time the number of employees paid 15 cents per hour or less increased from 2,132 in 1929 to 3,734 in 1933.

Practically all establishments worked 60 hours per week prior to the Code which established a maximum of 40 hours.

There are no figures available giving the employment of minors in this Industry, but it is the opinion of the writer that this -oractice has not de- veloped to any serious extent.

8320

-3-

CHAPTER III

IvLiTERIALS

The principal materials handled Ly retail Itunter dealers are luralier of all sizes, grades and species, A retail dealer in any city purchases his material from practically every state in the Union. Douglas Fir dimension and finish come from Oregon and Washington; rednood from California; Ponderosa pine, Idaho white nine, sugar nine, i"'hite fir, snruce, larch nud cedar from the Western Pine Region consisting of llontana., Idaho, ¥/yoning, Utah, Nevada, Colorado, Arizona and New Mexico; hardwoods from practically all states east of the abT3ve; Southern pine from all the southern states; maple flooring from Wisconsin and iachigan; and spruce and hardwoods from the northeastern states. The species overlap in the various states to such an extent that it is im- possihle to determine the amount of any product going to any particular sec- tion.

An aiialysis of costs of retail dealers, made by the Division of Research and Planning, ITRA, showed tha,t the cost of goods sold was about 72 per cent of total sales for 1934.

8520

-4-

CHAPTER IV

PRODUCTION AND DISTRIBUTION

?or the purpose of de terra in in.^; the value of products distributed by retail dealers in interstate commerce, figures have been compiled in Tables V and VI for a nuanber of raetro-oolitan districts for 1929 and 1933, Trhich show the ver- centage relation which sales in these districts bear to the total national sales, With truck transportation making points 250 miles or more from origin easily accessible, all dealers near state lines compete and obtain business within a radius of 500 miles, whicli makes the cross-state-lines movement of lumber a matter of moment, and the price in any section vitally affects all territories.

It has been estimated from fi;!rures compiled by the Forest Service 1/ that in 1932 approximately 64 per cent of the lumber produced in the United States moved in interstate commerce.

Most of the advertising is of a local chara.cter throu^^^h newspapers and to some extent by radio.

As far as the writer knows, there is no e:cporting done by retailers.

ly U, S. Department of Agriculture, Forest Service, Lumber Distribution and Consum-ption. 1932. (1934), pp. 2-7.

8320

-5- CHAPTEE V

TRADE PRACTICES

The practices of long term credits, excessive discoujits, price cutting and substitution were prevalent among retail lurater dealers prior to the Code. In addition it was considered unfair for mills and wholesalers to sell direct to consumers. The retailers attempted to legislate through the Code a provision to outlaw dealers who sold other than from producer to wholesaler to retailer and then to consumer. This unfair trade practice, however, the Administration would not recognize holding that it was an economic necessity to provide for the movement of lumlier to the consiimer ty the cheapest possible method.

The statistics show that the volume of business declined from $1,918,234,000 in 1929 to $603,416,000 in 1933. This enormous decline in the volume of business brought about extreme competition and com- petitive methods which forced sales below actual cost and resulted in lowering wages, reducing employment, bankruptcy and general depletion of resources. This situa.tion has been further accentuated by the fact that producers suffering greatly curtailed volume of business have found it necessary to enter the retail field in sales direct to consumers. The raandatorj^ mark-up provision in the Code stopped this loss to some extent, but the volume has not increased appreciably.

8320

-6-

CIIJiP'rEH VI

OnGALIIZjiTIOlTS

The rets.il Iviuter trade is a local Industry employing practically all conLion lator, and it ha,s never ercperienced any serious laToor troLioles, Ho lal)or unions e::ist aaong employees in this Industry so far as the Tvriter lmo\7s.

Gradually the dealers hp,ve ''oeen drann together in \7ell organized group>s or associations. Under the Code there r;ere 32 divisions handled "by well organized and functioning trade associations.

8320

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TABLE III PAILUHES III BETAIL LmffiE?. AHD BUILDING- I14.TEIIIAL LIKES a/

Lia'bility Year llnm'ber Involved

1933 168 $9,655,146

1934 82 1,571,691

Source: Dim and Bradstreet's Llonthly Reviews.

a/ Lijm'ber and Building Material Lines include "building

materials and satr, planing, sash, and door mill ■oroducts.

8320

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-11-

TA3LE V

STOKES, SAIES, ELiPLOYEES Aiff) PAYROLLS IIT TTffil-ITY-TWO IvIETHOPOLI TAiT EISTHICTS: I929 a/

IJumb

er of

Interstate

ITuinter of

K

et Sales

Errol

oyees

Total

Metropolitan

I\ill

Part

Payroll

Districts

St

ores

( thouoriids)

Time

Time

( thousands)

Chattanooga

11

$

1/^37

I7H

1

$ zko

Chicago

259

Us, 733

3,173

135

7,363

Cincinnati

65

S,563

SGh

6

1,117

Ilv.venvoTt

20

7,SU2

63 s

6

1,000

Dalutii

30

2,5S2

ISI

IS

367

Evan svi lie

22

1,630

21s

5

329

Huntington

9

575

71

h

9S

Kansas City

lOU

11,S13 U;0954

9S6

67

1,735

Louisville

Ui

375

6

514

Menphi s

37

5,056

US6

s

711

Nev; York

650

10s, 13U

5,S79

127

12,290

Onalia

5U

6,605

U96

60

912

Philadelphia

171

17,2146

1,^27

Us

2,U22

Portland

61

2,505

23 s

30

3S2

Providence

S5

11,260

579

3^

1,619

St. Louis

135

11,535

1,056

57

1,791

Springfield

20

2,621

175

7

330

Trenton

IS

3,03s

185

2

U20

Washington, D. C.

31

U,59S

3'46

S

5S1

Wheeling

Ik

S39

99

6

195

ITilnington

9

2,691

235

11

365

Young stonn

50

5,U6o

I152

20

SU9

Total

1

,S96

$

269,602

13,533

666

$ 35,632

Total United Stat^

es

1929

26

,377

$1

,915,2SU

13U,US3

15,076

$ 222, S5U

Per Cent Total Districts of Total United States

7.19

IU.05

13.7s

k.kz

15.99

Source: Areas included in Iletropolitan Districts froii Fifteenth Census of United States: 1930, Iletropolitan Districts. Other data from Fifteenth Census of the United States, Census of Distrihution, Volui.ie I, lletail Distribution.

a/ Includes luifoer and "building naterial dealers,* luinoer

and hardr/are dealers; roofing dealers; and other retailers of "building Wiaterials.

S3 20

-12- TAP.LS VI

STOHES, SALES, EMPLOYHIES Ai© PAYEOHiS III Ti;ZEiJTY-TT70 lETEOPOLITM DISTRICTS: 1953 a/

ll-umber

of

Interstr,te

ITumher of

i'et Sales

Ern-oloyees

Total

Metropolitan

Rill

Part

PajToll

Districts

Stores

(thousands)

Time

Time^/

(thousands)

CliattajLoo^a Chicago 'bj

9

$ 464

114

46

$ 118

233

15,280

759

390

2,581

Cincinnati

61

2,451

Oii2

86

452

Davenport t/

7

200

26

8

33

Duluth t/

14

614

100

41

139

Evansville

9

281

37

12

44

Huntington ^/

17

579

110

6

107

Kansas City

64

2,903

361

147

524

Louisville

25

1,248

163

59

224

Liemphis

28

1,270

205

79

220

He'7 Yorl: ;b/

522

21,535

2,096

468

3,573

Omalia ^

31

2,456

2G3

101

383

Philadelphia ;b/

93

2,972

363

150

550

Portland

42

1,190

139

93

199

Providence h/

36

2,015

237

68

414

St. Loris Id/

62

2,608

331

77

448

Springfield

22

839

129

25

181

Trenton

4

101

9

8

18

Washing-ton, D. C.

23

2,260

247

51

359

Uheeling h/

5

295

42

15

50

T/ilmington

12

402

45

53

85

Youngs to-.7n h/

18

393

61

16

89

Total 1, 342

Total United States

1933 21,015

Per Cent Total

Districts of

Total United

States 5.39

$ 52,355 6,174 1,999 $10,801 $605,415 64,513 19,589 $87,222

10.33 9.55 10.20

12.38

Source: Areas included in Hetropolitan Districts iron Pifteenth Census

of United States: 1930, I.ietropolitan Districts. Other data from Census of American Business: 1933.

a/ Includes lunher and huilding material dealers; Iranher and hard-

TTDxe dealers; roofing dealers; and other retailers of huilding

materials. h/ Incc:Tplete, Do not include all cities reporting in these

districts for 1929. _c/ ITumher of part-time employees for each district computed

■oro-oortionately from state totals.

8320 #

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