This section is from the book "Let's Whittle", by LeRoy Pynn, Jr.. Also available from Amazon: Let's Whittle.
Proper preparation of the wood surfaces is of first importance in finishing wood carvings. Coats of varnish or shellac will not cover defects; rather, they tend to magnify them and reveal as ugly spots scratches that seem slight in unfinished wood.
The cardinal principle in the use of sandpaper is that all sanding must be with the grain, except on the end grain, where it must cross. Otherwise, never make circular, cross-grain, or oblique strokes, as scratches will result.
A good grain of sandpaper for use on many kinds of woods for the first sanding is No. 1 or No. 1 1/2. For the finer-grained woods, use the former and for very fine grained, No. 1/2 or No.00.
Beauty and clearness of grain can be attained by sponging the wood with water. This is done in order to dampen and raise the grain on all surfaces that are to be finished and may be accomplished with a wool sponge, ordinary sponge, or a large, soft brush that holds water well.
The wood should be dampened enough to cover all the surface, yet not enough to leave a coating that takes considerable time to dry. The fuzziness on the surface of moist wood can largely be removed by resanding with No. 0 or 00 sandpaper.
Staining is usually the first operation in applying a transparent finish on sanded wood. The finisher is allowed considerable latitude in the selection of a stain because there are hundreds of types and colors.
A convenient classification can be made by grouping the stains according to the solvent used in their manufacture, which is either a water, oil, alcohol, or lacquer thinner.
The stain pigment may be purchased either in dry powder form or in ready-mixed liquid. Water stain, because it is solvent in water, is sold only as a powder.
Some finishers prefer to use five straight colors -red, orange, yellow, blue, and black-mixing these in varying proportions to produce any desired stain color.
Water stain is cheap in price, brilliant, and nonfading. It has deep but even penetration and makes the most even and clear of all stains.
Water stain may be sponged or brushed on. Since the water in the stain raises the grain of the wood, a previous sponging is advisable. This raises the grain just as the water stain does, but with the difference that the wood surface can be sanded smooth after drying, whereas the sanding of a stained surface usually results in variation of color.
Do not slop the water on. Simply dampen the wood, sanding with No. 3/0 paper when it is dry.
Apply the stain freely and rapidly. After the surface has been stained, wipe it dry with a cloth to prevent darkening the end grain. Water stain will dry in twelve hours, and a light sanding will remove traces of raised grain.
 
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