THE IMPORT TRADE

Only a very small proportion of the lumber needs is obtained from native sources, and the United Kingdom has become the largest of all import lumber markets, with nearly every producing country shipping supplies to it.

The bill for these imports is a heavy one, as will be seen from the following statement of imports of unmanufactured wood; and efforts are being made by the British Government to encourage a greater quantity being purchased within the Empire, and also, by means of afforestation in the United Kingdom, to increase timber supplies and by research to effect closer utilization. This latter work not only has the object of reducing the import bill but also of supplying the country's imperative needs in time of war or other emergency, thus releasing ocean tonnage which would otherwise be required for carrying lumber.

NOTE. From Apr. 1, 1923, the above figures include the trade of Great Britain and Northern Ireland with the Irish Free State. From the same date the direct foreign trade of the Irish Free State has been excluded.

CHARACTER OF IMPORTS

Apart from such items as pit props, telegraph and scaffolding poles, and "roundwood" used for box making and staves, most of the wood imported is semimanufactured, either square hewn, rough sawn, or dressed in the form of flooring, matching, and other planing-mill products. With the exception of small quantities of ash, hickory, mahogany, oak wainscot billets, and fancy woods, which are imported in the log either from lack of manufacturing facilities in the country of origin or for some particular reason (such as the wider widths and longer lengths obtainable, selection for figure, panel matching, or veneering) the British lumber trade prefers to buy either lumber or timber. As a consequence, the remanufacturing industry in this country is of very small proportions and confined almost entirely to resawing.

It might be added that, with the great increase in transportation and handling charges since the war, there has been a growing tendency toward the import of more highly refined stock, such as squares, and the demand for them will doubtless show a steady increase from now on. (Imports of wood manufactures are discussed in detail on pages 298 to 323.)

RANK AS MARKET FOR AMERICAN LUMBER

In point of value the United Kingdom is the most important foreign market for United States woods; during 1926, according to official figures issued by the Department of Commerce, exports to that country valued at $20,625,372 amounted to 326,456,000 feet. Not only is it an important outlet for softwoods, such as southern pine, Douglas

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fir, and Sitka spruce, but a little over one-half of the exports of hardwoods are sold in the British market.

Of the total exports of hardwood lumber, amounting to 352,538,000 feet, valued at $24,995,453, during 1926, no less than 185,366,000 feet, or slightly more than 52 per cent, valued at $13,640,699, went to the United Kingdom, it being easily the greatest foreign_market for American oak, yellow poplar, gum, ash, and mahogany, and second only to Canada for walnut; in fact, with very few exceptions, every American commercial hardwood finds a sale in that market.

In addition, it is an important foreign market for American wood manufactures, such as cooperage, hardwood flooring, and doors, handles for tools, and agricultural implements, there being no tariff to limit their import as in many other countries.

The following statistics published by the Bureau of Foreign and Domestic Commerce, showing the principal American exports of lumber, timber, and logs, in thousands of board feet, to the United Kingdom during 1926, indicates the importance of the British market as an outlet for American wood:

America's share of the British wood import trade increased on the basis of value from 15.25 per cent in 1913 to 15.92 per cent in 1925, and was third in importance as a source of supply, being exceeded (only slightly) by Finland and Sweden in point of value.

This situation is the more remarkable when it is remembered that this increase has taken place in spite of the severe industrial depression from which the United Kingdom has been suffering since the collapse of the 1920 postwar boom, and depreciating exchanges favoring the central European hardwood-producing countries which compete with American lumber.

ORGANIZATION OF THE TRADE

The import trade has been well organized for many years and is carried on under well-defined lines, any departure from which is considered unethical. The various sections into which it is divided are agents and brokers, importers, and merchants or dealers, a brief explanation of their functions being as follows:

AGENTS AND BROKERS

Firms who describe themselves as wood agents are understood to act as representatives of foreign shippers, being the medium through which sales are transacted between them and the British importer; they must not act as principals. Agents must also confine their sales to recognized importers. Brokers act as agents for only designated importers and shippers. There are firms operating as both agents and brokers.

1 Oak logs and hewn timber included in "other species."

2 Logs included in "other species."

2a Detailed figures for United States exports of wood to the United Kingdom in 1927 appear in the appendix.

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Most of the lumber imports are handled through these agents, who charge a commission for selling and handling the documents; it is also customary for them to guarantee the solvency of the buyer or carry the del credere, as it is called, for which an extra payment is made. The two-commission and del credere-are usually combined and a single rate charged.

Local brokers.-There are firms who act solely as local brokers between importer and importer or between importer and merchant. The customary commission charged for this service is usually 1 per cent. For this they merely buy or sell; the invoicing and delivery orders are all made out and forwarded by the firms for whose account the goods are sold. Some of the larger agents who transact this kind of business have a "brokerage department" and describe themselves

as "agents and brokers" because, besides acting as sales representatives for foreign shippers, they will also sell for the local trade if asked to do so, but their commission is usually more than 1 per cent.

IMPORTERS

The question of what constitutes an "importer" has been debated. for many years, and although attempts from time to time have been. made, no solution has been arrived at so far that is satisfactory to everybody. There is, however, a list of firms dealing in north European softwoods that has been drawn up and approved in joint conference between the Timber Trades Federation of the United Kingdom and the Swedish and Finnish lumber exporters' associations, at which it was agreed that sales on an import basis should be restricted to those whose names appear on it. This list is held confidential and is said to contain between 600 and 700 names; it includes some large consumers who, by virtue of past business or importance, have been able to have themselves recognized as importers and entitled to buy on the most advantageous terms.

It can not be said that it has given entire satisfaction, many complaints emanating from both the agents and the larger importers who state it is far too large; also from others who, having been left off, claim they are entitled to be included. What constitutes a hardwood

importer is even more

difficult to define but, broadly speaking, the term may be applied to firms who regularly deal in wholesale quantities on a c. i. f. basis. Here again, there are some large consumers who buy their requirements on importers' terms.

MERCHANTS AND YARD KEEPERS

Firms designated as merchants may also be importers, the description "importers and merchants" frequently being used to describe merchants who buy on importers' terms.

Apart from the "importer-merchant," the name "merchant" may be said to describe any firm that deals in lumber, either in wholesale or retail quantities.

Last of all are the yard keepers; these do a business similar to that of the merchants except that the individual transactions are much smaller. The term "retail trade" as used in the United States is seldom heard in the United Kingdom, "yard keeper" being the nearest equivalent.

AMERICAN BRANCH OFFICES

Two large American lumber manufacturers have established their own selling organizations in Great Britain. The cost of such branches, however, is such that a large business must be done to justify them; and besides, the profits made by such an office are liable to the British income tax, which is not payable on business done through regularly established wood agents.

AMERICAN REPRESENTATIVES

According to British law, foreign firms are liable for income tax on profits accruing from trade exercised within the United Kingdom through an agent. The distinction between a broker (business through whom is not liable) and an agent (whose business is taxable) has ever been clearly defined in British courts. The Division of Commercial Laws, Bureau of Foreign and Domestic Commerce, Washington, has on file the latest information on this matter furnished by the office of the commercial attaché, London, and obtained by a member of that division who has made a study in England of such matters. American lumber exporters who contemplate appointing a direct representative to look after their interests in the United Kingdom would be well advised to communicate with the Commercial Laws Division before taking any action.

WARNING TO AMERICAN EXPORTERS

American lumber exporters are warned against having direct dealings with importers. While by doing so a little commission may be saved, should troubles over payment of drafts or claims arise, it would be difficult to obtain the services of any responsible agent to protect their interests. Exception is here made with respect to sales to a few firms definitely recognized as "direct importers" by the British lumber trade.