itn Sth sine SS {s ‘ i Cer) } satatit betes ite a! sate ts iH ifethegeeseenteyte SSeS ee : a — ee 4 Se See REE See +: 5 i He ictinet ct iach Sinai a. aI a ; iB " his ~*~ n ive = m *. J , a! 44 ne Le a 7 ~ : ¢ > { i e] Z fi - : Y i 17 i <7 ; i ’, = U. S. DEPARTMENT OF AGRICULTURE FOREST SERVICE WILLIAM B. GREELEY, Forester TIMBER DEPLETION, LUMBER PRICES, LUMBER | EXPORTS, AND CONCENTRATION OF TIMBER OWNERSHIP REPORT ON SENATE RESOLUTION 311 (SECOND EDITION) By THE FOREST SERVICE U. S. DEPARTMENT OF AGRICULTURE JUNE 1, 1920 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 U.S. DEPARTMENT OF AGRICULTURE J FOREST SERVICE WILLIAM B. GREELEY, Forester TIMBER DEPLETION, LUMBER PRICES, LUMBER EXPORTS, AND CONCENTRATION OF TIMBER OWNERSHIP REPORT ON SENATE RESOLUTION 311 (SECOND EDITION) By THE FOREST SERVICE U. S. DEPARTMENT OF AGRICULTURE JUNE 1, 1920 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 TABLE OF CONTENTS. Metterspor transmittal. en ee ee ee ee Effe resentative industries Abn prices cts of scarcity and high prices of forest products General building and construction_-~ Farming The /railroads |) ==2====== The furniture industry_— The veneer industry--_~ Thehandlesindustrys. oe ee ee ee The vehicle and agricultural implement industries_— The newspapers The sitaation summarized ormal conditions in relation to present scarcity and high Steady progress of forest depletion____-__-____-----__ == forest depletion and migration of the lumber industr = DE ENGS ES aie pov PaT Es = a pn pe a era a me, New England The growth and decline of the lumber industry Original and remaining forests______________ The annual drain upon the forest__ - Thesannvial ‘erowth=.o-=——s- oa. = Growth compared with cut_ = The iferorether industry. see ee ee Present and future consumption of lumber in New Englandh 22s =e ee eek Sse New York Pennsylvania ~~~ PERCU DAKE Sta tess aa een ee Growth and decline of the lumber industry—~ White pine Hemlock The northern hardwoods Original and remaining stand and rate of cut Lcower Peninsula of Michigan-__-________--_ Wisconsin and Upper Peninsula of Michigan_ Minnesota Condition of the remaining supplies-_---__------- The annual drain upon the forest-_~~-__ Lumber cut compared with total cut Deterioration of the forest— The apr-ual growth_____________ Growth compared ‘with’. cuti2222-=— = 5 a= Theilifevot the -industry—=— — 2 ae os SOL ea eee Erevent and future consumption of lumber in the Lake tates The: southern: yellow-pine region —-_-£===_—=- 5-35 sess ese The growth and decline of the yellow-pine industry__- The original and the present pine forests of the South__ Total merchantable\‘stand=s-= 8 =) = ae ee Annual drain upon the forests___ Tievannual ‘growth==———=——-=s 22 Cut and growth contrasted Deterioration of the forest-_____ Change: toinferior specieshao a 22828 8 oe ee The lesson of the South Atlantic States Life of the yellow-pine industry_________ Reductiontofsthexoutpu tae a eee ee ee ee ee Present and future consumption of lumber in the South_ Gypressii regions) eee The Rocky Mountain region_____-__ Development of the lumber industry_ Original and present stand The annual drain upon the forests__ Annual growth!=—_ = esas Sas =a Cut compared with growth =ae2 Locali “needs! 2-32 S— = See ee The future of the lumber industry Paciicmcoaste en ee eee Growth of the lumber industry___ Original and remaining forests____ Growth and depletion-___-_______ life of themindustry= = e=— = sane Southern Appalachian hardwoods_ Growth and decline of lumbering__ The (original |forest=2 2 aes The remaining stand____ Lumber cut and total cut-______ Deterioration of the forest__________ The duration of the cut of old growt Effect of depletion upon selected industries___-._-___ Thevannuall sero wth] eee TSN Growth ‘compared-withi(cut=- se nee ee eee Importance of the Southern Appalachians in the Jumber'isupplysot ithe (conuntry=— eee Sa as eee Hardwoods of the lower Mississippi Valley Areamand: stand: === Ss SoS eee eee Development of the lumber industry_ Growthvandsdepletion=== ="=" eee The tuture of thererione ss ean oe 2 eae ee The Lumber exports and timber depletion________ Forest depletion and lumber prices_____.__ Steady progress of forest depletion—Continued. Newsprint. supplies=2=—=—==- aes The facts as to depletion____ Alaskan supplies of pulp wood The movement of prices____-_ Naval stores supplies__---_-_____ Development of the industry__ Remaining supplies__________ Methods) of \exploitation=—="s= Sees seeaee Depletion andiipriccs=so 22s sss eases Original and present forests of the United States_ Original forestsacea=2 a ee ee Present forest area___ Saw-timber stands_ Totalstand 226 a ee eS Se Location of requirements with reference to production and Supplies=— 52202 Se ee eee Future trends in requirements ~-____ Depletion tand: growth ae ee = Present depletion and growth__-__ Possible (growthisioS2=s=s ees" Price changes and regional depletion.____-______ Eastern softwood markets__ Middle western markets_ Eastern hardwood markets__ Plentiful"and depleted! species] 22 "22 == s5e ase se ess Prices in depleted or nonforested versus forested re- Plons 2 eee eee eS eee F Prices and costs of production and distribution__ Mill prices and production costs_____--_---- Paciiics cOaSt=s =e ee Inland Empire Southern pine States __ Wholesale costs and profits ~_ Transportation==——===——==— Retail prices and costs_-___-_ The upward movement of p Distribution of price increase Retail -profits=— = ee ee eee eee Lumber prices unjustified by production and distribu- tion casts Price) controli= 2-2 =s==== ees Some specific effects of regional depletion on prices_ Summary of principal price conclusions_______--__ Lumber exports before and during the war Probable developments in lumber exports__--~--~ Effects of exports upon domestic timber supplies. Imports of forest products Export trade policy Concentration in timber ownership, manufacture, and marketing_ Concentration of timber ownership in 1910__--_-----~______ Timber ownership in the Northeast-________--_--~- Ownership of softwood timber in the Southern States Ownership of hardwood timber__-__-_--___________ Timber ownership in the Lake States__ Timber ownership in Idaho-______-__=--_~_ Timber ownership in Washington and Oregon Timber ownership in California________________ Changes in timber ownership from 1913 to 1918__--______ A summary of the present situation as to timber owner- ship Concentration tendencies in lamber manufacture and mar- VERB NB OFS ee See Sete aos The creation of large operating groups of affiliated Sawiills2=— "== 22 ee eee Greater financial strength of the lumber industry_ = Concentration of lumber marketing--_-_--__~~- Development of trade associations__________ = Effects of timber depletion upon concentration_____-______ Forest depletion the fundamental problem___--_____-__-______ » The Cumulative effects of timber depletion_ Timber depletion and lumber prices_-~ Jdle’ forest Jand_—--_—====—--__== A national forestry policy-__-_---- The Federal legislation needed_____--__-____ ee ee Cooperation with States in fire protection and forest renewal The extension and consolidation of Federal forest hold- ings The reforestation of denuded Federal lands_ = A study of forest taxation and insurance___ The survey and classification of forest resources = Current appropriations for forest research_____-_ = State Jegislation=needed. 2 es —_ 2 seen eh oe eae Fire prevention and reforestation of private lands____ Statevand municipal forestso= eee sa ee Taxation) of forest Wands===— oan a eee ee Ps LETTERS OF TRANSMITTAL. June 1, 1920. The PresipeNT oF THE Unitep States Senate. Sir: I have the honor to submit herewith a report on forest depletion in the United States, prepared by the Forest Service in this department pursuant to Senate resolution 311. This resolution requests information on: 1. The depletion of timber in the United States. 2. The effects of timber depletion upon the high cost of materials. 3. The effects of lumber exports upon domestic industries. 4. The effects of depletion upon the concentration of timber ownership and manufacture and the relation of such concentration to the public welfare. The outstanding facts reported by the Forest Service are: (1) That three-fifths of the original timber of the United States is gone and that we are using timber four times as fast as we are growing it. The forests remaining are so localized as greatly to reduce their national utility. The bulk of the population and manufacturing indus- tries of the United States are dependent upon distant supplies of timber as the result of the depletion of the principal forest areas east of the Great Plains. (2) That the depletion of timber is not the sole cause of the recent high prices of forest products, but is an important contributing cause whose effects will increase steadily as depletion continues. (3) That the fundamental problem is to increase the production of timber by stopping forest devastation. The virgin forests of the United States covered 822 million acres. They are now shrunk to one-sixth of that area. All classes of forest land, including culled, burned, and cut-over areas, now aggregate 463 million acres, or a little more than one-half of our original forests. Of the forest land remaining and not utilized for farming or any other purpose, approximately 81 million acres have been so severely cut and burned as to become an unproductive waste. This area is equivalent to the combined forests of Germany, Denmark, Holland, Bel- gium, France, Switzerland, Spain, and Portugal. Upon an enormous additional area the growth of timber is so small in amount or of such inferior character that its economic value is negligible. The merchantable new timber remaining in the United States is estimated roughly at 2,215 billion board feet, something less than three-fourths of which is virgin stumpage. The rest is second growth of relatively inferior quality. About one-half of the timber left is in the three Pacific Coast States, and over 61 per cent is west of the Great Plains. A little over one-fifth of the timber left in the country, or 460 billion board feet, is hardwoods. There is now consumed or destroyed annually in the United States 56 billion board feet of material of saw timber size. The total yearly consumption of all classes of timber is about 26 billion cubic feet. Our depleted forests are growing less than one-fourth of this amount. The United States is not only cutting heavily into its remaining virgin forests every year, but is also using up the smaller ma- terial upon which our future supply of saw timber depends much more rapidly than it is being replaced. The two striking effects of timber depletion already apparent are: (1) The injury to large groups of wood users and to many communities resulting from the exhaustion of the nearby forest regions from which they were formerly supplied; and (2) The shortage of timber products of high quality. Less than 5 per cent of the virgin forests of New England remain, and the total stand of saw timber in these States is not more than one-eighth of the original stand. New York, once the leading State in lumber production, now manufactures only 30 board feet per capita yearly, although the requirements of its own population are close to 300 board feet per capita. The present cut of lumber in Pennsylvania is less than the amount consumed in the Pittsburgh district alone. The original pine forests of the Lake States, estimated at 350 billion feet, are now reduced to less than 8 billion feet, and their yearly cut of timber is less than one-eighth of what it used to be. These four densely populated regions, containing themselves very large areas of forest land, are now largely dependent upon timber grown and manu- factured elsewhere and are becoming increasingly dependent upon timber which must be shipped the width of the continent. The bulk of the building lumber and structural timbers used in the Eastern and Central States during the last 15 years was grown in the pine forests of the South. The virgin pine forests of the South Atlantic and Gulf States have been reduced from about 650 billion board feet to about 139 billion feet. The production of yellow-pine lumber is now falling off and within ten years will probably not exceed the requirements of the Southern States themselves. The United States at one time contained the most extensive temperate zone hardwood forests in the world. One region after another has been cut out. The production of hardwood products on the past scale can not be long continued. The scarcity of high-grade oak, poplar, ash, hickory, walnut, and other standard woods is now placing many American industries in a critical condition. The depletion of forest resources is not confined to saw timber. Since 1909, the country has ceased being self-supporting in newsprint paper and now imports two-thirds of the pulp, pulp wood, or newsprint which we require. This condition is due in part to timber deple- tion, in part to failure of the paper industry to expand in our western forest regions as the lumber industry has expanded. In 1919 the production of turpentine and rosin had fallen off 50 per cent. Within ten years the United States will lose its commanding position in the world’s market for these products and may in time be unable to supply its domestic requirements. The termination of the war found the lumber-industry with depleted stocks. Production during the war had been much less than normal on account of shortages of labor and equipment and embargoes on transportation. A large part of the lumber produced had been taken by the Government for war purposes. During the same time, the normal construction of dwellingsand industrialstructuresand the use of lumber in many manufacturing industries had been greatly curtailed. Following the war, these pent-up demands were released. They caught the lumber industry not only with its stocks short and broken from war conditions but unable, on account of labor difficulties, 3 4 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. ‘ lack of freight cars, and bad weather in important producing regions, to respond rapidly with increased production. Aside from the general causes affecting prices of most commodities, the expansion of credit accompanied by currency inflation and the wave of speculation and extravagance, an “auction” lumber market would no doubt have resulted from the frenzied competition of buyers to obtain the limited Stocks available, wholly inadequate to satisfy current demands. Under the combined influence of the general conditions making for high prices and this situation in the lumber industry itself, prices rose to unprecedented limits. In March, 1920, average mill prices in the South and West had increased 300 per cent and more over the prices received in 1914, and average retail prices in the Middle West showed increases ranging from 150 to 200 per cent. In the case of high quality hardwoods and other specialized products, the average advance in eastern wholesale markets was from 200 to 250 per cent, and the demand at this advance was still unsatisfied. The timber market has been more unstable than ever before in our history. Many industries have been unable to secure their supplies of timber at any price. The output of certain entire industries has been reduced as much as 50 per cent. Middlemen and manufacturers of wooden commodities have been able to pass on to the consumer and even augment any price they might pay. Necessities have fared worse than luxuries. The ramifications of lumber shortages and high prices are limitless and have affected seriously practically our entire population. Obviously these lumber prices bear no relation to the cost of production and distribution. While the costs of production in the lumber industry have at least doubled as compared with 1916, lumber prices have much more than doubled and have become wholly disproportionate to operating costs. Excessive profits have been made by the industry. The division of these profits between manufacture and distri- bution has varied in accordance with circumstances and the ability of the various elements in the industry to dominate the situation. That prices have been too high is recognized by the best thought in the industry, and some manufacturers have sought to stabilize the market. The depletion of timber in the United States has not been the only cause of these excessive prices on forest products, but has been an important contributing cause. It has led to the migration of both the softwood and hardwood lumber industries from region to region and each is now cutting heavily into its last reserves. The exhaustion of timber in near-by forest regions has compelled many large lumber consuming centers to import their supplies from greater and greater distances. The wholesale prices on upper grades of softwood lumbet in New York were from $20 to $25 per thousand prior to 1865 when mills in the same State supplhed this market, from $35 to $45 between 1865 and 1917 when most of the supply came from the Lake States and the South, and are now entering a general level of $130 a thousand feet with a large part of the material coming from the Pacific coast. In the Middle West, the building grades of white pine lumber cut in Michigan, Wisconsin, and Minnesota, retailed at $15 to $20 per thousand feet prior to 1900. As lumber from the Lake States became exhausted and southern pine took over this market, the retail prices rose to a level of $25 to $35 per thousand feet. The replacement of southern pine by West Coast timbers now in progress is initiating a new price level of about $80 to $85 per thousand feet. The increased cost of transportation is but one factor in these new price levels, but it isan important one. The freight bill on the average thousand feet of lumber used in the United States is steadily increasing as the sawmills get farther and farther away from the bulk of the lumber users. Much information is available to show the disadvantages of the lumber consumer in regions whose near-by forests have been exhausted Retail prices in the Ohio Valley, for example, on certain grades exceed retail prices on the identical grades in Oregon in some instances by as much as $50 per thousand board feet after allowing for all transportation costs. The curtailment of lumber output in the eastern regions not only has compelled the average consumer to pay more for freight but has enhanced the effects of congestion in transportation and of climatic and other factors limiting the production in regions which still support a large lumber industry. It has restricted oppor- tunity for competition and thereby increased the opportunity of the lumber manufacturer or dealer to auction his stocks for higher prices. In other words, the effects of forest depletion can not be measured in terms of the total quantity of timber remaining. Its injury is felt particularly through the steady process of regional exhaustion. Our remaining timber is so localized that its availability to the average user of wood is greatly reduced. Particularly does such a restricted location of the timber supplies assume a serious national aspect in the face of transportation congestion and inadequate transportation facilities such as the United States is now experiencing. Had the forests and forest industries of the Eastern States still existed, the opportunities for regional competition in supplying the lumber markets and the wider distribution of lumber transport undoubtedly would have afforded a curb upon rising prices which did not exist in 1919. The export trade in lumber does not have a serious bearing upon timber depletion from the standpoint of quantity, but does have an important bearing upon the duration of our limited supply of high-grade timber, particularly of hardwoods. The exports of high-grade oak, walnut, hickory, ash, and other woods essential to many industries in the United States which now seem probable will further enhance the shortage of such products for the domestic market and the tendencies already evident toward sustained high prices. On tne other hand, the United States imports from Canada about two-thirds of its total consumption of newsprint or newsprint materials. The effects of our export trade in lumber should be considered from the standpoint of the specific timber grades or products whose depletion is most imminent and threatening to American industries. The concentration of timber ownership has not changed materially since the exhaustive report made upon this subject by the Bureau of Corporations in 1910. One-half of the privately owned timber in the United States is held by approximately 250 large owners, the ownership of the remaining timber being very widely distributed. The tendency toward the acquisition and speculative holding of timber beyond operating requirements has been checked, and the present tendency is toward the manufacture of large timber holdings. At the same time the lumber industry, particularly in the Western States, is going through a partial reorganization into larger operating and marketing groups. In this there is a tendency for small mills to disappear and small timber holdings to be blocked into larger ones adapted to extensive lumber manufacture. While there is still a large number of individual timber owners and of sawmills operating as separate units, the larger interests are acquiring a more dominant place in lumber manufacture in the West. It is to be expected that these large interests or groups will maintain, as time goes on, a fairly constant supply of timber for their manufacturing plants by acquiring smaller holdings. No information is at hand which would justify a conclusion that monopolistic conditions on any general scale have grown out of this situation. There are many instances to the contrary. On the other hand, the degree of control of the timber remaining in the United States exercised by a comparatively small number of large interests will steadily increase as timber depletion continues, approaching a natural monopoly in character, and this control will extend particularly to the diminishing supply of high- grade material. In 1918 our per capita consumption of lumber was about 300 board feet. The homes and industries of the United States require at least 35 billion feet of lumber yearly, aside from enormous quantities of paper and other products of the forest. A reduction in the current supply of lumber below this figure would seriously curtail our economic development. Appreciable increases in lumber imports are not possible except at excessive prices. We can not afford to cut our per capita use of lumber to one-half or one-third the present amount— TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 5 to the level of European countries where lumber is an imported luxury. We must produce the great bulk of the timber which we need ourselves and we have the resources for tloing so. The solution of the problem presented by forest depletion in the United States is a national policy of reforestation. Increased and widely distributed production of wood is the most effective attack upon excessive prices and monopolistic tendencies. Depletion has not resulted from the use of forests but from their devastation, from our failure, while drawing upon our reservoirs of virgin timber, to also use our timber-growing land. If our enormous areas of forest growing land, now idle or largely idle, which are not required for any other economic use, can be restored to timber growth, a future supply of forest products adequate in the main to the needs of the country will be assured. I therefore most earnestly request your consideration of the practical measures proposed in the accompanying report for putting a stop to forest devastation and restoring our idle land to timber production. I would emphasize especially the immediate urgency of legislation (1) which will permit effective cooperation between the Federal Government and the several States in preventing forest fires and growing timber on cut-over lands, and (2) which will greatly extend the National Forests. Enlargement of the National Forests offers immediate relief. On these publicly administered areas high quality timber can be grown and utilized to the maximum advantage; regrowth will follow cutting; and, under the regulations of the Forest Service, the disposal of timber will foster competitive conditions in the lumber industry. These steps are the foundation of an effective national policy for insuring a permanent and adequate supply of timber. Concurrently with these measures, a comprehensive survey of the forest resources of the United States should be made. Respectiully yours, E. T. Merepirs, Secretary. JUNE 1, 1920. The honorable the SEcRETARY OF AGRICULTURE. Sir: I transmit herewith a report on forest depletion and related questions which has been prepared by the Forest Service in response to Senate resolution 311. The existing quantities and current growth of a resource so great in extent and so widely distributed as wood can not be stated in exact terms. To obtain strictly accurate and final data on these subjects would require an exhaustive field study covering at least two years. In order, however, to present the situation as clearly and concretely as possible, I have felt it desirable to use the best quantitative data available, recognizing that much of it is but tentative or approximate in character. A large number of men in the Forest Service have participated in assembling and compilation; but the report is principally the work of Assistant Forester Earle H. Clapp, in charge of the Branch of Research. Respectfully, W. B. Greevey, Forester. PREFATORY NOTE TO SECOND EDITION. For greater clearness, in reprinting this report figures 10 and 14 have been enlarged, and in consequence the paging from page 36 to the end has been altered. No change has been made in the text of the report, except for the correction of one sentence on page 43 of the second edition. _ _ - ee — = » Wee, _ wo ia eS eens 7 7, oe oa yr. 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' i =A t ~ * a) & 7 - Ties ‘~ _ : 7 a > —— * ex! r a _ a ‘ 7 7 ae = gN + Lice | Gad D - rs 7 me : '§ = i i i ist _ - : D a 7 2 TIMBER DEPLETION, LUMBER PRICES, LUMBER EXPORTS, AND CONCENTRA- TION OF TIMBER OWNERSHIP. REPORT ON SENATE RESOLUTION 311. The following report is submitted in compliance with Senate resolution 311 (66th Cong., 2d sess.), introduced by Senator Capper and considered and agreed to by the Senate on Febru- ary 21, 1920. The resolution provides: Whereas it has been reported that the forest resources of the United States are being rapidly depleted, and that the situa- tion is already serious and will soon become critical; and Whereas these alleged facts are either largely unknown to the public or are in dispute: Therefore be it Resolved, That the Secretary of Agriculture be, and he is hereby, directed to report to the Senate on or before June 1, 1920, on the following matters, using what information the For- est Service now has available, or what may be obtained readily with its existing organization: . 1. The facts as to the depletion of timber, pulp wood, and other forest resources in the United States. 2. Whether, and to what extent, this affects the present high cost of materials. EFFECTS OF SCARCITY AND HIGH PRICES 3. Whether the export of lumber, especially of hardwoods, jeopardizes our domestic industries. 4. Whether this reported depletion tends to increase the con- centration of ownership in timberlands and the manufacture of lumber, and to what extent; and if such concentration exists, how it affects or may affect the public welfare. ‘ A comprehensive and fully adequate report on these matters would require an exhaustive survey of the forest resources of the country, their ownership, the industries dependent on them, and the general related economic conditions. No such survey has ever been made. Nevertheless, data already available or secured throw much light on the subjects of inquiry. Depletion and the effect of depletion on prices are so interre- lated that sections 1 and 2 of the resolution are considered together. OF FOREST PRODUCTS UPON REPRESENTA- TIVE INDUSTRIES. To illustrate the general situation, the salient facts regard- ing a few representative industries are first presented. They are chosen because of the extent of their raw material demands, their basic character industrially, and the way in which they touch, directly or indirectly, the life of our entire population. They are: General: building and construction, farming, the railroads, the furniture, veneer, handle, yehicle, and agricul- tural implement industries, and the newspapers. A shortage in housing accommodations that is almost world- wide has brought home vividly the close relation of building to the comfort, health, and general welfare of the public. When for any reason construction falls below normal, overcrowding, high rents, lowered standards of living, and other evils follow. Therefore first place will be given to a discussion of conditions in the general building and construction industry. GENERAL BUILDING AND CONSTRUCTION. More lumber is used in the United States for gentéral building and construction than for any other purpose. In normal years probably 28 billion board feet is used in this way out of an average annual cut of 40 billion. For the five years before the war, 1910-14, the average annual building bill of the country shown by building permits was approximately $670,000,000. After dropping to $445,549,493 in 1918, it rose in 1919 to $1,826,936,702; but with building costs increased 100 per cent or more, actual construction did not much, if any, exceed the prewar average. Apparently all con- struction work in the United States is behind requirements, but the deficit is greatest in dwelling houses. The building permits issued in 21 cities of various sizes widely distributed over the country show that, in values, housing con- struction formed 36 per cent of all building in 1913, 21 per cent in 1918, and 27 per cent in 1919. Housing construction in 1913 was exceeded in 1918 in only two of the 21 cities, and in 1919 in only 6, in spite of the “ build-a-home ” campaign. The falling off in house construction generally appears to have been par- | millwork (222 per cent) were the highest. ticularly marked since the latter part of 1919, when the greatest upward movement of lumber prices began. The United States Housing Corporation states that normally 30 per cent of the number of buildings constructed are dwellings ; that in 1919 dwellings were only 15 per cent; that 1,000,000 families in the United States desired houses even before the war; that the shortage has since increased very rapidly; that there were but 70,000 houses built in 1919, when to have met the requirements there should have been 500,000; and that in 1890 an average of 1103 families occupied 100 homes, but to-day 121 families occupy 100 homes. The construction of houses in 1918 was less than in 1919. A part of the reason for delayed house construction, particu- larly in the latter part of 1919 and in 1920, is abnormally high lumber prices. The Pittsburgh home builder of 1913 paid $27 per thousand board feet for his No. 1 common dimension 2 by 4 framing $72 in 1920. Sheathing lumber, No. 2 common yel- low pine, cost him $26 in 1913 and $80 in 1920. Yellow-pine finishing lumber increased from $42 to $140. If he used plain oak finish instead of southern pine, ne paid $85 in 1913 and $260 in 1920. Yellow-pine siding rose from $36 to $120, B and better flat-grain flooring from $38 to $142. Plain oak flooring cost in 1913 $70 per thousand feet and in 1920 $290, and quartered oak rose in the same period from $102 to $352. The total cost of houses has increased proportionately. A frame house built in Washington, D. C., in 1917 for $6,250 is now being duplicated from original plans at a cost of $12,250. A St. Paul architect reports that a house was built for $4,240 in 1915, not including plumbing, heating, and wiring, and that a house built from the same plans in October, 1919, cost $7,724, while for identical plans in February, 1920, the cost rose to $11,820, or 179 per cent over the 1915 price. The lumber and millwork costs in 1920 were $5,039, or $799 more than the total cost of the house in 1915. All of the items increased in 1920 over 1915, but with the exception of an insignificant item for a bond the percentage increases for lumber (304 per cent) and On a six-room frame 7 TIMBER DEPLETION, PRICES, house built in Washington, D. C., for $4,771.60 in 1913 bids on identical plans in May, 1920, total $11,465.50. The lumber for a ready-cut, one-story, five-room house which was listed at $883 in 1915 had been raised to $3,272 in April, 1920, a total increase of 270 per cent. Another company dealing in ready-cut houses listed the material for a two-story seven- room house at $1,995 in 1915 and now lists it at $5,606.90, an increase of 181 per cent. Lumber prices alone do not tell the whole story. The person who builds 2 house faces a series of difficulties in securing his materials; delays, many of which enter materially into increas- ing costs; many of the grades desired, particularly the better grades, can not be secured easily, sometimes not at all. Very often the lumber secured is not properly dried and compara- tively inferior and unsatisfactory construction results. This situation, combined with delays in securing materials, labor diffictilties, ete., makes the construction of a dwelling house a highly uncertain and speculative venture, takes it entirely out of the reach of large numbers of people, and leads to a gradual lowering of standards of living. Classes of industrial construc- tion which can go forward regardless of uncertainties and costs are able to pay lumber prices which the ordinary home builder can not afford and increase the element of specula- tion in the business of building houses for sale or rental. FARMING. Farms consume a very large aggregate of construction lum- ber. Cheap high-grade building material aided powerfully in the rapid development of farm lands. The Middle West, for example, was built up largely with the output of white pine lumber from the Lake States. In the eighties first quality white pine lumber such as can now hardly be found in any market in the United States commonly retailed throughout the Middle West for $15 to $20 per thousand feet. In February, 1920, the farmer in Kansas paid $70 per thousand for yellow pine framing and about the same for Douglas fir. For No. 2 common lumber suitable for temporary sheds and rough construction, either fir or southern pine, he paid $72.50. B and better yellow pine finishing lumber for house construction cost $147.50. Silo stock cost $185. To ascertain the effect of present lumber prices and short- ages upon the farming industry, questionnaires were sent to a large number of agricultural county agents employed coopera- tively by the Federal Government and the States in 33 States lying east of the Rocky Mountains, and similar questionnaires were also sent to a large number of retail lumber dealers sup- plying country trade in seven Middle Western States. County agents throughout practically this entire territory re- port a marked suspension in new construction and even in farm improvements and repairs requiring lumber. Out of some 250 counties in 32 States only about half a dozen agents reported more building than in the past. New building is reported as going on normally or in excess of normal in only 10 out of every 100 counties, and this in regions of exceptional pros- perity. In the Prairie States, from Illinois north and west, re- pairs are reported by lumber dealers as deferred to an extent of about 32 per cent, and new construction as somewhat less than 50 per cent of normal. The average yearly amounts of lumber sold per yard in farming districts of Nebraska and Kansas were slightly more in 1919 than in 1917 or 1918, but be- low the prewar average of 1910 to 1915. The widespread de- ferment of building is almost uniformly laid to a combination of high lumber prices and shortages of Jabor. Lumber dealers for several of the Middle Western States report lumber stocks on hand above normal. This is to guard against delayed shipments, to be able to supply antici- pated increase in demands, ete. Apparently throughout much of the region covered supplies could usually be secured in the as EXPORTS, AND OWNERSHIP. ' desired amount and quality if prices could be paid. Locally, however, the pronounced changes in lumber distribution of the past year have apparently made it difficult to secure desired inaterials and qualities without delay. The difficulties were greater with the better grades than with common lumber, and they oecurred even in the heart of the manufacturing district in the South, because of excessive demands and competition for this class of material. ; An attempt was made also to get at normal and probable future lumber requirements of the farming industry. The esti- mates of county agents indicate an average annual utilization per farm unit of about 2,000 board feet. For practically the entire region covered an increased future demand for |umber is predicted in order to take care of improvements looking toward better equipment and improved living. conditions, provi- sion for increasing population, and the development of new farm units. This is important, in the face of falling lumber production in all parts of the country except the extreme West. Highty per cent of the county agents report that the ex- tremely high prices of lumber are placing a handicap on farm development and the production of crops and live stock. The most serious effect reported appears to prevail throughout the sparsely timbered regions, where in cases of emergency the farmer is not able to secure supplies from the farm woodland. Live-stock raising and dairying seem to be the hardest hit, because of the large barn equipment and shelter necessary. It is reported that heavy losses of implements and crops are re- sulting from lack of proper storage facilities. In some of the newer sections it is even reported that farmers who have not yet reached a stable financial basis are leaving the land because of the cost of new construction. It is reported from all parts of the territory covered that present conditions are tending to lower the standards of living and to make it more difficult to hold on the farm the farmer’s own children and desirable classes of labor. THE RAILROADS. The normal demand for railroad ties is somewhere between 100 million and 125 million annually. In 1918, however, pur- chases were slightly under 77,500,000 and in 10 months of 1919 were slightly over 84,500,000. During the war and the period of Government supervision of the railroads extensions could not be made, and improvements were necessarily confined to those of an urgent character. Lumber purchases were therefore at a minimum. Even under such a policy of retrenchment rail- road purchases of sawed materials, excluding hewn railroad ties, telephone poles, etc., aggregated approximately 43 billion feet, or 14 per cent of the total lumber cut of the country for 1918. That there have been profound changes in the lumber dis- tribution from different regions during the past year is shown by the invasion of the Middle Western and Eastern States by Douglas fir ties. These are regions which in the past have been supplied with the standard oak tie cut immediately along the rights of way or with southern pine ties from the South. During 1919 orders amounting to nearly 100,000,000 board feet were placed for Douglas fir ties for eastern roads because of the uncertainty of securing adequate supplies along their rights of way and because of the excessive costs of local ties. Doug- las fir ties are now said to be costing eastern roads from $1.75 to $2 each at their treating plants or on their rights of way. In other words, oak ties cut within a few miles of the right of way and bearing practically no charge in freight and south- ern pine ties are now being replaced by fir ties hauled overland across the continent or shipped through the Panama Canal. To supply their general lumber requirements the railroads have obvious advantages in the purchase of lumber from mills along their lines, and increases in prices have been far less TIMBER DEPLETION, PRICES, pronounced than for other industries. During the last four years, however, the cost of lumber- purchased has almost doubled, while the amounts have been reduced. Under the great financial burdens of readjustment and reconstruction following the war added costs of any important material delay eyen the most needed repairs and betterments and add to trans- portation difficulties, which react upon all industries and con- sumers. Uncertainty as to securing adequate supplies of de- sired materials at the time wanted has made it necessary for railroad companies in general to hold comparatively large sur- pluses, a tendency which serves to accentuate shortage for all purchasing industries. Railroads operating in the forest re- gions ordinarily carried a few years ago but from one to two weeks’ supplies, since stocks could be replenished quickly. Other roads carried stocks sufficient to last several months. The timber roads are now carrying from 6 to 10 weeks’ sup- plies and other roads sufficient to last from 6 to 9 months. THE FURNITURE INDUSTRY. The furniture industry is one of a group of industries which utilize mainly high-grade hardwoods and have had much the same history. They began in the Northeast, where for many years the local supplies were ample for their needs. The waning of these supplies forced the industries westward, where they rapidly expanded in the last quarter of the nineteenth century, drawing mainly on the magnificent virgin hardwood forests of the Middle West. Within the last 15 or 20 years they have been forced to turn more and more from the depleted and vanishing stands of the States along the Ohio to the timber northward and southward. Their present sources of supply are very largely the remoter and more inaccessible portions of the Southern Appalachians and the luwer Mississippi Valley. When these forests are cut out the industries will have ex- hausted practically their last large resources of old-growth timber. Besides furniture the group includes the veneer, vehicle, and agricultural-implement industries. pete among themselves for raw material. Before the end of the summer of 1919 the demand for furni- ture had assumed such proportions that the normal production of the large factories during the current season had been almost wholly contracted for, with many retailers uncared for. The immediate result was a corresponding demand for lumber on the part of the furniture-manufacturing industry, which nor- mally uses about 14 billion feet, and is the largest consumer of high-grade hardwood timber in the United States. Hardwood lumber stocks following the war were low and have since gone to as low as haif the normal; production has fluctuated down- ward to a minimum, in some districts of as low as 50 per cent of normal, so that it has been the practically universal ex- perience of furniture manufacturers that desired supplies of raw material could be secured only with the greatest difficulty, particularly during the past six months. The veneer situation has been equally bad; orders for sawn oak veneers are said to be 100 per cent greater than stocks, and sliced and rotary veneer equally difficult to secure. For this and other reasons production of furniture, in the face of unprecedented demands, is from 15 to 25 per cent below normal, and many factories face shut downs because of in- ability to secure raw materials. Individual furniture manu- facturers bid against each other for the inadequate supplies of lumber and veneer available, while their industry competes with the automobile, musical instrument, and other manufac- turers similarly situated. The only factories which are not having serious trouble in getting wood supplies seem to be the small plants which can get local timber and which make com- paratively low-grade furniture. Difficulties have been aggravated by lack of facilities in both the lumber and the furniture industries for artificial drying of T797—20—2 handle, These all com- EXPORTS, AND OWNERSHIP. 9 wood. In prewar practice hardwood lumber was ordinarily air seasoned for six to nine months before sale. Furniture dealers are now purchasing material practically green from the saw, involving heavy additional freight charges. While the uncertainty as to securing material and the need for a long drying period justify the carrying of larger stocks at the factory, it is reported that furniture manufacturers have on the average only about one-half of the stocks carried before the war. Supplies have been so limited and uncertain that lumber- men have refused to take contracts for their output at any specified price and have even refused to give buyers an option on any stated amount of lumber at market prices on delivery. Competition has become so keen that buyers have been ordered to secure lumber almost regardless of price. Naturally prices have jumped under such competition. While there has been an increase during the past four years in prac- tically every item entering into furniture production, the larg- est increase has been in the cost of lumber. Roughly, lumber costs increased about 200 per cent during the year 1919, and a total of 300 per cent since before the war. Something like 75 or 80 per cent of the raw material for furniture nranufacture is lumber or plywood. Average prices paid by furniture fac- tories on No. 1 common 4/4 red gum were in January, 1916, approximately $27.50 per thousand Loard feet; in April, 1919, $49.50; and in April, 1920, $170. No. 1 common 4/4 sap gum rose from $24 in January, 1916, to $95 in April, 1920. No. 1 common 4/4 plain oak, another wood largely used in furniture making, during the same periods increased from $37.50 to $160. Quartered oak, firsts and seconds, 4/4 increased from $90 in January, 1916, to $310 in April, 1920; and No. 1 common 4/4 basswood, from $29.50 in January, 1916, to $125 in April, 1920. Wholesale veneer prices haye risen in proportion; between January 1, 1916, and April 1, 1920, } inch gum increased from $16 to $60, #5 inch and zy inch gum, from $4 to $16; 3 inch poplar, from $16 to $65; and quartered white oak on the aver- age, from $17 to $52 per thousand square feet. Higher lumber prices are multiplied in retail prices of furni- ture. This may be illustrated by a single example. The lum- ber for a medium quality plain dresser cost $2.72 in March, 1919, while in February, 1920, the same material cost $7.65, an increase of practically $5. Dealers are reported to add usually from 75 to 100 per cent to the factory price to cover their own selling costs and profit. An increase in lumber cost to the furniture manufacturer of $5 adds from $9 to $10 to the re- tail price, and the purchaser of the dresser actually pays for the lumber which goes into it three or four times prewar prices. Such conditions as have existed during the past year—and the lumber situation has been a material factor in this—have injected a very large speculative element into the furniture industry. In many cases the furniture maker is not sure of his lumber or what it will cost until the time of its delivery. He can neither plan future output nor estimate future costs, He safeguards his own interest through higher prices to the retail dealer, who, in turn, can be certain neither of the filling of orders nor of the cost of his stock until delivered. All of this uncertainty and speculative character encourages, and to some extent necessitates, increased prices all along the line, including finally the price to the consumer, who pays not only for increased costs but for business risks. Furthermore, pur- chasers, since they must pay high prices, demand high-grade furniture; and this, together with the widespread disappear- ance of local timber supplies, makes more and more difficult the position of the small factory producing comparatively low- priced furniture, and tends to centralize manufacture in the larger concerns. THE VENEER INDUSTRY. Veneer manufacture is a rapidly growing industry which sup- plies furniture makers, manufacturers of musical instruments, 10 TIMBER DEPLETION, PRICES, the automobile industry, box makers, ete. For high-grade veneer hardwoods are used almost exclusively. The industry consumes annually the equivalent of about 780 million board feet of high-grade material, the bulk of which can be secured only from virgin stands. The demand among hardwoods is chiefly for red gum and, second, for white oak. One section of the industry, which uses such northern hardwoods as maple, birch, and basswood, is located in the Lake States. As in the case of many other hardwood-using industries, the veneer in- dustry has for some years been centered mainly in the Middle Western States. Supplies, at first local, are now largely in the South, and the main demand hus been transferred from oak to gum. The veneer situation is similar to that described for other forest products—short supplies, abnormal demands, and com- petition, in this case among such consumers as phonograph makers, manufacturers of other musical instruments, the auto- mobile industry, and furniture manufacturers. As indicated in the preceding discussion on the furniture industry, wholesale veneer prices have increased from three to four times between January 1, 1916, and April 1, 1926. Log prices have risen in proportion. Indiana white-oak logs, 20 inches and in diameter, have increased the same period from $75 to $200, and flitches from $100 to $300 per thousand board feet. In general, there is only one-fourth of the normal supply of veneer flitches and logs in sight. Practically the only firms not experiencing extreme difficulty in securing supplies seem to be those factories which can still obtain local timber. In a few agricultural regions reserve stocks in farmers’ wood lots have been drawn out by the current high prices. The scarcity, of logs has compelled some factories to close down. Veneer and ply-wood production, while nearly normal in September, 1918, had fallen approximately to 80 per cent between Januiry, and March, 1919, to 60 per cent in November, to 50 per cent in December, and is now estimated at not over 40 to 50 per cent. : The veneer industry requires high-grade material. It takes practically clear logs, generally 16 inches and more in diameter at the small end. The industry must, for its higher-grade prod- ucts, depend very largely upon the fine old timber found al- most entirely in virgin stands. The general depletion of hard- wood stands has made the industry, along with many others which accept only high-grade material, primarily dependent upon the only reserve of virgin hardwoods of any extent—the southern Mississippi Valley. Here logging operations have been seriously handicapped by adverse weather and other conditions, and as a result log supplies for the industry as a whole have fallen off 75 per cent. Veneer and ply-wood production have fallen off 50 per cent, wholesale prices have gone up from three to four times, and manufacturing concerns in the same and competing industries are bidding frantically against each other to secure the inadequate supplies of veneer stock avail- able in order to meet their current demands. The consumer pays the full bill of increased log and veneer prices, and undoubtedly more, in the advancing prices charged for final products. over during THE HANDLE INDUSTRY. For the high-grade hickory and ash required by the handle industry no satisfactory substitute has yet been found, and these two woods make up about two-thirds of the total used. The supplies now come mainly from the South. Here the most accessible timber has been taken. The few large concerns main- tain large and expensive organizations, which literally comb the country to secure material. More and more it is becoming necessary to work into the districts remote from transportation facilities. Practically the entire territory within which hickory is found in commercial quantities is thus covered. EXPORTS, AND OWNERSHIP. In the case of ash the situation is said to be even more serious. The industry has preferred the denser northern upland ash for handles. ‘The swamp-grown ash of the Mississippi bottom lands has a smaller percentage of the dense material and has been less sought up to the present-time. This has greatly limited the area from which the wood has been secured. Ash in sufficient quantities to support the handle and other competing industries is practically gone, therefore, from the Middle Western States north of the Ohio. It is predicted by one man thoroughly fa- miliar with conditions that five years more will practically see the finish of ash timber in any quantity in this section. The demand for ash and hickory handles is so great that manufacturers can not meet requirements. The export demand is said to be even greater than before the war and American handles are being shipped to all parts of the world. Average prices of handle material are practically unobtain- able because of the great variety in which such material is purchased—logs, boits, dimension sizes (split, hewn, and sawn), flitech, and plank. While prices quoted are from two to three times those which obtained before the war, manufacturers state that in practice they are paying any price necessary to get supplies. They find themselves in active competition with other industries requiring hickory and ash, and particularly with the manufacturers of automobile wheels. Average wholesale prices of standard size hickory handles 36 inches long have advanced from $1.20 per dozen in 1916 to $2.50 per dozen in 1920. Retail prices, which were from 25 to 30 cents per handle in 1916, are now 50 cents. One of the effects of the exhaustion of local timber is the gradual elimination of the small handle factory. When timber can no longer be secured locally, the only source of cheap sup- plies, large organizations become essential in order to cover a large territory. Without the necessary capital for this the small concern must give way to the large manufacturer. There is said to be a steady drift toward concentration of handle manufacture by large concerns and the disappearance of local industries. THE VEHICLE AND AGRICULTURAL IMPLEMENT : INDUSTRIES. The vehicle and agricultural-implement industries compete for hickory and ash with the handle industry, and in addition use other hardwoods, such as oak, for which they must com- pete with such industries as the furniture makers. They are located mainly in the Middle West, but now derive most of their wood supplies from the South. A number of far-sighted organizations are said to have purchased more or less extensive hardwood tracts some years ago, from which they are now able to draw their wood supplies in part at least. For the re- mainder they depend on outside purchases. To secure hickory, which occurs secatteringly over large areas, the vehicle and sagricultural-implement industries ordinarily maintain extensive buying, logging, and milling organizations in the South. They draw upon every conceivable source— farmers’ wood lots, small mills, large sawmills, and even special- ized operations designed to secure hickory alone. These concerns in general carry in stock about a two years’ supply of special-dimension stock. Hardwood lumber prices have now gone so high that a number of them are making pur- chases in the open market only when prices do not exceed a prescribed maximum, and amounts secured have fallen to about one-quarter of their utilization. These industries have found in the case of farm implements that it is impossible to increase the prices of their products beyond a certain point without a marked falling off in sales. The result is that the material in the open market goes to the industries which are able to pass increased costs on to the consumer. Another result has been the withdrawal from the field of a number of pur- chasing organizations. TIMBER DEPLETION, PRICES, Practically the only case in the vehicle and implement in- dustries in which the scale of buying has not been reduced is for automobile wheels and other automobile purposes. Here demand absorbs all the supply, is constantly becoming greater, and as yet there seems to be no limitation as to price. Makers of automobile wheels say that they can still get the material required if they make sufficient effort and pay the price, but it is necessary to go farther and farther away for it. A very careful analysis of cost data by one concern shows that the largest element in recent cost increases is securing special stocks such as hickory from remote and’ inaccessible regions. The preceding discussion applies particularly to the large con- cerns. Small factories without large organization and outside connections for securing supplies are laboring under more serious difficulties, through the interruption of normal chan- nels of distribution. Material is secured practically green. Neither the lumber nor the vehicle industry is adequately equipped with kilns or the trained personnel to kiln-dry the refractory hardwoods in the large sizes used. Excessive losses, in some cases running as high as 40 per cent of the material and even higher, are re- ported. This is merely another phase of the situation hardly known outside of the industries most directly concerned, grow- ing directly out of a shortage of supplies and aggravating the shortage still more. The many inquiries received by the Forest Service from vehicle and implement makers asking for information on pos- sible substitution for the woods used in vehicle making is merely another indication of the difficulties in getting supplies at the present time, and of uncertainty as to the future. Because of the trouble and uncertainty of securing hickory and the rapidly increasing prices, vehicle manufacturers are substituting steel where possible, even though this involves still higher prices. THE NEWSPAPERS. High prices and serious difficulties as to supplies are by no means confined to lumber. The newsprint situation has been very much in the foreground, particularly since the middle of 1919. Practically the only newspapers in the United States, from the large metropolitan dailies to the small country news- papers published weekly, which have not experienced serious difficulties are those having long-term centracts or those for- tunate enough to produce their own newsprint. Under prewar conditions newsprint paper was contracted for on a yearly term basis at $2 a hundred pounds or less. Contract prices during and since the war have risen to $3.50, $5, $6, and at the present time even to $7, and it has been reported that 75 per cent of the existing contracts provide for a price readjustment at the end of every three or six months. Pre- war prices included freight; present prices do not. Few news- papers are now able to contract for their entire requirements. The smaller newspapers entirely and the larger papers to a very material extent must now depend upon the spot market, in which the full effects of competition for an inadequate supply are felt. In such competition there is full opportunity for specu- lation. Prewar spot market prices of about $2 have risen rap- idly, particwarly since January, 1920, until now sales reported at $15 as a maximum, and even higher rates are predicted. At $15 the paper alone for a 82-page newspaper would cost 74 eents. One eastern newspaper, with a consumption of 6,000 tons, has estimated that its 1920 paper bill will be $72,000 in excess of that for 1919. A western paper estimates that its 1920 paper bill will be $450,000 more than that for 1919. The cost of newsprint is said to be from one-third to one- half the total cost of the entire newspaper. To meet increased costs publishers must increase revenues either by raising sub- scription prices or advertising rates, or accepting more advertis- ing. The acceptance of more advertising means either the use EXPORTS, AND OWNERSHIP. 1] of more paper or the elimination of reading matter. The ratio of reading to advertising matter before the war is said to have been about 60 to 40, and it is reported that this ratio is now reversed. Some increases have been made in subscription rates, but the chief source of larger returns has been through more advertising and higher advertising rates. The newspapers which have not been able to increase the amounts of advertising and advertising rates have been hard hit. Advertising rates during the past year have risen 35 per cent or more. Increased ad- vertising costs, designed partly to pay increased operating expenses and partly to reduce newsprint consumption, are passed on to the consumer. Newspapers have been driven to extraordinary measures. Advertising has been refused. One New York paper is reported to have refused six pages of advertising for a single issue. Another New York paper is reported to have refused for a single issue advertising which would have returned $14,000. Attempts have been made to eliminate waste, and the size and number of editions have been cut. Features have been cur- tailed or eliminated, the proportion of advertising to reading matter has been largely increased, and efforts to inerease cir- culation have been suspended. Unfortunately the situation is generally regarded by the public as a whole as one which can be easily remedied within a few months, and it is not realized that the life of the pulp and paper industry in the regions of its present development is absolutely dependent upon rapidly: failing timber supplies, while little or no effort is being made toward their perpetuation. THE SITUATION SUMMARIZED. If the industries considered are representative of general conditions, and there is every reason to believe that they are, the lumber situation of the past few months has, for many industries and many classes of consumers, been one of serious shortages of supplies, of great demands, and of uncertainties in securing satisfactory amounts of desired materials. Rapidly rising prices have reached the highest points that have ever been known for lumber and for practically every other forest product consumed in the United States. Market conditions have been unstable, and it has been impossible for many con- sumers to plan with any certainty on cost of materials. The output of industries which depend upon lumber and other wood products has been very much reduced, and in an extreme case has gone as low as 50 per cent of normal. The entire nature of competition in the case of forest prod- ucts has changed. Prior to the war the producers of lumber, newsprint paper, and other forest products competed with each other for business. Competition during the past few months has been very largely among consumers for generally inadequate supplies. Under any conditions such a reversal in the fundamental situation would result in higher prices; but the shortage and demands have been so extreme that whole- some restraints as to prices which might safely be paid have been removed, and in many cases it has been possible to pass on to the consumer, and even to augment, almost any lumber price increases. This has not been universally true. There has been some difference between industries in the extent to which they could go. Apparently limitations have been felt more by industries producing the necessities than by those with products which fall rather in the class of luxuries. The furniture maker finds himself handicapped in competing with the maker of musical instruments. The manufacturer of agricultural implements withdraws his buying and manufac- turing organizations from the field because he ean no longer compete with the manufacturer of automobile wheels. The largé and well-financed organizations, able to draw their sup- plies from distant sources, have fared much better than the small manufacturer with limited capital who must secure his 12 raw material locally. Unfortunately, in most cases it local supplies which have been most depleted, and the existing situation has tended to eliminate much more rapidly than in normal times the small concern in the best position to supply cheap products. With uncertainty as to supplies, with equal or greater uncer- tainty as to the costs, and with almost frantic bidding between members of the same industry and between different industries for materials, a larger speculative element than has ever before been known has been introduced into the sale of lumber and its further manufacture. This, again, has increased prices to the ultimate consumer, and in extreme cases, such as dwelling houses, has removed the possibility of purchase from large classes. Many industries which were operated on a compara- tively stable basis under prewar conditions now find themselves upon an uncertain and highly speculative basis, Other changes which are much less known, bat almost equally bad, might be mentioned. One will suffice. The hardwood- producing industry commonly held its stocks for several months or a year for seasoning. Consuming industries commonly car- ried in stock supplies sufficient to meet one or even two years’ requirements. When material was needed it was already sea- soned for manufacture. Artificial methods or drying were TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. is the | largely unnecessary and neither equipment nor personnel was provided. Growing out of the conditions described, a very great increase in artificial drying has become necessary; and this has been accompanied by difficulties in securing an adequate number of kilns and great losses in initial kiln operating, some- times reaching 40 per cent or even higher and aggravating the shortage. Enough examples have been given to show the almost limit- less ramifications through which shortages and high prices of forest products reach the public. The building industry, agri- culture, the railroads, the press, house furniture, tools—these and.their like concerr our entire population. «Shortages and high prices, accordingly, seriously affect the whole Nation. With a realization of the existing situation with respect. to representative industries and classes of consumers, the facts as to depletion and prices acquire greater significance, and it is possible to analyze to better advantage the factors which are responsible. The discussion falls logically under two heads: 1. The abnormal conditions which have affected the forest industries and their products along with all other industries and commodities. 2..The cumulative effect of forest depletion, both in the coun- try as a whole and in the more important timber regions. ABNORMAL CONDITIONS IN RELATION TO PRESENT SCARCITY AND HIGH PRICES. The principa’ effect of the war upon the lumber industry was to reduce the stocks available for ordinary purposes, through curtailment of production and through the diversion of large quantities of timber to special war uses. War requirements led to the placing of large orders for unusual sizes and dimensions for such products as Army wagons and wooden ships. Through Government regulation of transportation, of the use of capital, of new construction, and’ even of extensions and repairs, ordi-, nary distribution was practically discontinued before the sign- ing of the armistice. The lumber cut of the country fell from a prewar average of around 40 billion feet to a reported cut of only a little more than 83 billion feet in 1917, and of less than 30 billion feet in 1918. A very considerable proportion of this material, as previously indicated, was utilized for essential war purposes. Surplus woods and mill labor, skilled and unskilled alike, was rapidly drawn into other industries or into the fighting forces. In addition the lumber industry found itself in com- petition for labor with other industries producing war essen- tials. By the time of the cessation of hostilities a very con- siderable percentage of the labor ordinarily employed in lumber production had been diverted and scattered. Lumber stocks at the mills and those in the wholesale and retail yards of the country were very short and badly broken. The industry, there- fore, came out of the war more or less disorganized as to labor, production, stocks, and markets. Following a period of great uncertainty on the part of the public, as well as of the industry, as to possible develop- ments, the demand for lumber began and rapidly grew far be- yond any anticipation. The shortage of houses was already serious in the United States at the beginning of the war. Dur- ing the war it became very much worse. Without any stimulus whatever the demand for dwelling houses would have absorbed large quantities of lumber. The “ build-a-home ” movement was fostered by the Federal Government itself. Industrial construction had during the war also fallen far behind the growing demands of the country. Railroad purchase for repairs had necessarily been held to a minimum and exten- sions had practically been eliminated. The growing freight requirements of the country necessitated large-scale betterments and material extension. Similar demands had piled up during the war in practically all of the industries which use lumber. 4 This accumulated demand soon absorbed the short stock avail- able, and lumber manufacturers were overwhelmed with orders. The lumber industry found itself unable to increase produc- tion rapidly. The output in 1919 was below normal in all the principal lumber regions of the country, .with the possible exception of the South. In many of the former regions of large lumber ecutput, the Lake States, New England, New York, Penr- sylvania, and the Southern Appalachians, the timber is so largely gone that there was little opportunity for material ex- pansion in cut to meet abnormal demands. In regions with timber reserves other factors have held the cut down. In the southern pine region bad weather hampered logging operations during the latter part of 1919. Precipitation was far above the average. This reduced the log production, and even caused shortages which compelled many mills to run on part time. During the first 11 months of the year 135 sub- scribing mills reported to the Southern Pine Association a total loss of 80,213 hours, or approximately 60 working days each, 41,878 hours or 31 working days each, being due to a shortage of logs. On the basis of normal production this loss represented a decrease in production for the 135 mills of nearly 600,000,000 feet. In the southern hardwood region weather conditions have been unfavorable since the fall of 1918. In the fall of 1919 the conditions, already very bad, became much worse, and effective logging or in some cases any logging has become practically impossible through repeated rains and floods. Nor- mal log deliveries for one group of hardwood mills in October and November, 1919, were but one-third of the quantities deliv- ered during the same months in 1916. Some of the labor drawn away from the lumber industry during the war preferred other employment and remained in the towns and cities or in other sections of the country. It is estimated that southern pine operators were confronted with an average labor shortage of 20 per cent, and in many other lumber-producing regions operators found themselves un- able to secure and hold full crews. The industry has been obliged to pay higher wages and grant shorter hours, and has possibly suffered from decreased effici- eney. In the case of one operation in the South it required 23 man hours in July. 1914, to produce 1,600 board feet of lumber, while in July, 1919, it required 374 man hours. Again, in July, TIMBER DEPLETION, PRICES, 1914, it required 134 men on the payroll to maintain a full crew of 100 men per day, while in July. 1919, 153 men were carried to maintain the same sized crew. Many operators in the Appalachian hardwood region say that they hardly know from day to day whether or not their mills will run. Illustrations of this character could be multiplied almost indefinitely for all parts of the. country, but those already given sufficiently indi- cate the general situation. The unstable character of the lum- ber industry has been in no small degree responsible for its inability to secure and hold a desirable class of labor, particu- larly in logging. Dependence upon the South and the Northwest for timber has placed a greater burden upon the railroads of the country than they could carry under the disorganization following the war. The car shortage is estimated by various authorities at from 200,000 up. It is reported from the southern’ hardwood territory that only 60 to 65 per cent of the cars required for logs and lumber can be obtained. The secretary of the Cali- fornia Sugar & White Pine Co., a sales organization which | served 35 mills in 1919, reports materially curtailed shipments in September, October, and November, due to a car shortage of 65 per cent. While the railroads do not altogether agree as to the extent of the shortage, it is certain that difficulties in secur- ing cars, freight congestion, and embargoes have all served to accentuate difficulties in securing lumber supplies. Lumber, as one of the most bulky commodities, is always one of the first to suffer in case of freight congestion. A disorganized industry, short stocks, abnormal demands, and reduced production have all contributed to high prices for lumber. Even though it had still been possible to produce lumber in quantity in each of the regions from which it has been so largely depleted—New England, New York, Pennsyl- vania, the Lake States, and the Southern Appalachians—lumber prices would still have risen in response to other conditions which have grown out of the war. Price increases for other commodities are significant in this connection. As shown by the Department of Labor statistics, the prices for all commodi- ties had, considering the year 1890 as 100 per cent, risen to EXPORTS, AND OWNERSHIP. 13 250 per cent in January, 1919, and to 293 per cent in December, 1919, with an average for the year of 263 per cent. Using 1913 as 100 per cent, prices for January, 1919, had risen to 203 per cent, and in December, 1919, to 238 per cent. Regardless of every other conceivable condition, a very substantial rise in lumber prices would have been inevitable from such causes as the enormous credit expansion growing out of the war and the accompanying currency inflation, causes which are responsible for large price increases in all other commodities. It is un- necessary to dwell upon these general causes, but they must be taken fully into account in any attempt to analyze the extent to which timber depletion is responsible for price in- creases, Abnormal conditions affecting forest products have not ob- tained alone in the case of the lumber industry. One further example, that of newsprint, will be given. Because of war re- quirements, newsprint paper production suffered less than lumber. The industry was: less disorganized and the response to increased demand was much more prompt. The Federal Trade Commission reports that newsprint production during the fiscal year 1919 exceeded that of 1918 by 8 per cent. Pre- war production had reached 1,313,284 tons in 1914. During the 20-year period preceding the war the demand for newsprint had increased practically without a break by 200 per cent. Inci- dental to the inerease in demand which might have been ex- pected normally there grew out of reconstruction the most extensive use of advertising which the United States or possibly any country has ever seen. Within the year national advertis- ing increased greatly. Advertising as a whole in 1919, as shown by nearly 100 newspapers in a little less than 20 of our largest cities, increased over that of 1918 by approximately 40 per cent. During the first two or three months of 1920 the amount of advertising exceeded that for a similar period in 1918 by some- thing over 50 per cent. This demand created, in spite of the restriction of reading matter by the average newspaper, an abnormal demand for paper and was a powerful factor in the unprecedented rise in newsprint prices which has already been discussed. i STEADY PROGRESS OF FOREST DEPLETION. FOREST DEPLETION AND MIGRATION OF THE LUMBER INDUSTRY. Each successive chapter in the history of the lumber industry in the United States has been a story of depletion and migra- tion. In softwoods it is a history of regional industries, each developing in its turn, dominating the consuming markets of the country, and declining at last so far as to be unable to meet the local requirements of its region. Each has had the same essential features of beginning, rise, and fall from light culling operations to clean cutting of good timber and poor alike and of the shifting of cut from the more to the less desirable species. The story of each region will be taken up in detail, but the main outlines should first be made clear. In New England lumbering early became a leading industry, supporting local needs, furnishing the basis for the early ship- building industry, and providing exports. The industry ex- panded very slowly, and owing to the shifting of the cut from one section to another, from one species to another, and finally from virgin stands to second growth, partly on deserted farm lands, production did not reach the maximum until as late as 1907. Since then it has been falling rapidly. New York followed New England as the center of softwood lumber producton and was the leading lumber State in the country in 1850, although the greatest volume production was reached from 10 to 20 years earlier. Pennsylvania followed New York, and led all the States in 1860, but has now declined until one city district. consumes more than the total lumber cut of the State. White-pine operations in the Lake States began with a sin- gle sawmill in 1832; eastern shipments were being made three or four years later; and the culmination was reached in 1892 with a cut of nearly 9 billion feet. Dreary wastes, dismantled sawmills, deserted towns, and an insignificant pine output of a single billion feet in 1918 are depressing reminders of the day when Lake States lumber supplied the markets of the country from the Rockies to the Atlantic Ocean and from the Canadian boundary literally to the Gulf. E The great development of the southern industry began in the seventies and increased rapidly to what was probably the maximum, about 16 billion feet, in 1909. In its turn, southern pine dominated the markets little if any less completely than white pine; but the South is following the course of other regions, and the remaining supplies of virgin pine are only about one-fifth of the original stand. Within a single decade southern pine production promises to exceed by little, if any, the needs of the South. A great start has been made in the last chapter of the history of virgin softwood stands. Since 1894 Pacific coast and Rocky Mountain timber has been forcing its way increasingly into the middle western and eastern markets. Within the year it has dominated those of the Lake States and has even entered in appreciable quantities those of the South itself. To the West only, of all our heritage of magnificent softwood forests, can 14 TIMBER DEPLETION, PRICES, the country look to an increasing cut; but even here there are already local evidences of depletion, warnings that the con- clusion of the story will be the same as that of other regions und in far less time than has been estimated. Hardwood depletion and the migration of centers of pro- duction followed along much the same line, although regional boundaries have been much less distinct. Cutting New England and along the Atlantic coast, spread slowly to the westward through New York and Penn- sylvania as local supplies were cut out, and became important in Ohio and the Middle Atlantic States after water and rail transportation was developed. From here it spread north into the Lake States and south into Kentucky and Tennessee and the southern Appalachian Mountains. The stands of these yarious regions have been successively depleted. In New Eng- land and New York, aside from second growth, largely in farm wood lots, there remain only the stands of hardwoods in the North. The commercial cut of the Middle Western States is almost a thing of the past. That of the Lake States has fallen off materially, as has also even that of the southern Appa- lachians. The end of the cut in the Appalachian States is pretty definitely in sight. The only reserve of importance is the southern Mississippi Valley, and even here it is doubtful if future production will for any length of time materially exceed the average output of the last few years. has began early in BASIS FOR DATA. Before taking up the various timber regions’ the basis for the data used should be given. It> should be recognized that thoroughly reliable data on such subjects as the remaining stand of timber, its quality, rate of growth, and extent of depletion, and on the forest areas of different classes, can be obtained only by a thoroughgoing timber survey requiring two or more years. Nothing of this character has ever been attempted in the United States. More has been done in estimating the amount of saw timber than on any other of the subjects mentioned. The most com- prehensive data on timber stand were secured by the Bureau of Corporations. A part of the country only was covered for timber of saw-timber size, and such questions as the volume of material below saw-timber size, extent of depletion, rate of growth, the requirements of our industries, etc., were not in- cluded. Other available data have covered this and other 1 Figure 1 shows diagrammatically the more or less arbitrary State groups which are used in part for statistical purposes only. It shows also the principal saw timber sections of the United States. The regions of the discussion do not follow either consistently, but the areas included in each are indicated in the text. The State groups used are made up as follows: : New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. Middle Atlantic: New York, New Jersey, Pennsylvania, Delaware, and Maryland. Lake: Michigan, Wisconsin, and Minnesota. Central: Ohio, Indiana, Illinsis, West Virginia, Kentucky, Tennessee, Iowa, Missouri, eastern Kansas, and eastern Nebraska. South Atlantic and East Gulf: Virginia, North Carolina, South Caro- lina, Georgia, Florida, and Alabama. Lower Mississippi: Mississippi, Arkansas, Louisiana, eastern Texas, and eastern Oklahoma. Rocky Mountains: Idaho, Montana, Wyoming, Colorado, western South Dakota (Black Hills), New Mexico, Arizona, Utah, and Nevada. Pacific coast: California, Oregon, and Washington. That part of the Kaniksu National Forest in Washington is in- cluded in the Rocky Mountain region, while those parts of the El- dorado, Inyo, Mono, and Tahoe National Forests in Nevada are in- cluded in the Pacific coast region. The comparatively small area of rather open woodland, chiefly on farms lying in the Great Plains between the ninety-seventh meridian and the Rocky Mountains, is not considered in the report. Some 100,000,000 to 150,000,000 acres of low-grade woodland and scrub, such as open juniper and pinon of the West, scrubby mountain stands, and chaparral, are also omitted, EXPORTS, AND OWNERSHIP. phases of timber supply only for parts of States or regions. Some of the timber remaining in the United States has never been cruised under any method. That cruised has been esti- mated by different methods and by different men, and also at different times when widely varying standards of utilization were in effect. For the State of Washington, for example, a large percentage of the estimates date back to 1890 and 1895, when ‘red fir” and hemlock were considered inferior species and given little attention. Possibly the estimates secured for the southern pine region are as satisfactory as any. Here it was possible to obtain the results of a recent survey which brought together the best estimates available from a large percentage of timber owners. For some regions it was possible to do little more than revise the Bureau of Corporations’ estimates by subtracting the cut and depletion as offset by estimated growth. The Bureau of Cor- porations’ estimates form, in part, the basis for the data used in the southern Mississippi Valley hardwood region and the Pacific Coast States. In all cases, however, such data were supplemented by additional estimates, wherever obtainable, from such sources as later and more reliable cruises of indi- vidual holdings and county tax estimates. For hardwood stands in particular the available estimates are not satisfactory. The Bureau of Corporations’ study covered only the hardwoods of the southern Mississippi Valley, which were at that time regarded as having comparatively little value, and satisfactory estimates could not be secured. Many of the industries which are now dependent for their raw materials upon the hardwoods are in great need of accurate information as to the extent of existing stands and what they can count on for the future. The data available show, however, that the future is very uncertain. For New York results are based on a questionnaire to private owners in 1918 which covered the territory only in part. Simi- lar data were available for parts of New England. Only a part of the estimates for National Forest timber is based on thoroughgoing cruises. The report embodies the first attempt to cover for the entire country the total volume of material below saw-timber size in cubie feet. It can only be an approximation. The data on forest areas have been compiled from a great variety of sources secured for different purposes by different organizations with varying degrees of accuracy. For several of the classifications, such as productive and unproductive areas, the data are fragmentary. The estimates of growth are based on a limited number of studies of growth made at various times during the past 20 years. While representing somewhat more detailed data than were ever before available, they are still very inadequate and no claim is made that the figures given are more than an approximation. In response to the request of the Senate, the Forest Service has endeavored to describe the situation in fairly specific terms, using the best information available. It recognizes that much of the data used lacks scientific accuracy and is tenta- tive rather than final in character. An attempt has been made to utilize every available source of information and to check the figures by the judgment of well-informed men in the differ- ent regions. While an exhaustive and detailed survey of the forest re- sources of the United States is necessary to establish these figures with finality, there can be no question as to the broad facts of depletion which they indicate. NEW ENGLAND. THE GROWTH AND DECLINE OF THE LUMBER INDUSTRY. New England has passed through every stage of forest ex- ploitation from the days when only the best white pines and oaks were merchantable to present dependence upon outside, TIMBER DEPLETION, PRICES, lumber and pulp wood. Early cutting was for local consump- tion, shipbuilding, and export. The homesteads of the first few generations were built of the best virgin timber. Shipbuilding early became one of the chief industries, for which the white pine and oak forests furnished the timber and pitch pine the naval stores. The heavy cutting of early days, particularly for fuel, produced a shortage of wood as early as 1840 in many sections of New England. With the introduction of coal the industrial centers grew, and the movement to the cities and to the new lands of the West resulted in wholesale discontinuance of cultivation. Much of the second growth timber cut to-day dates from this period. : From the Revolution to about 1840 white pine made up almost the entire softwood cut in New England; but soon after that PLAINS OR (NOT INCLUDED IN TABLES ) AREA AND STAND BY REGIONS iE 4) STAND OF ie ErOne Tn SAW TIMBER (MILUON ACRES) |(S)LLION. BO.FT) T = NEW ENGLAND TI -MIDOLE ATLANTIC Il -LAKE IV -CENTRAL V_ -SOUTH ATLANTIC AND EAST GULF Vi -LOWER MISSISSIPPI) Wl - ROCKY MOUNTAIN VIIT- PACIFIC COAST TOTAL REGIONS EXPORTS, AND OWNERSHIP. Ls land rose steadily until it reached a maximum of 3,170 mil- lion feet in 1907. This period of increased production was due to the introduction of portable sawmills, which made smali seattered lots available, to the higher prices of low-grade lumber owing to growing scarcity throughout the country of the better grades, and to the large amount of second growth on deserted farms. The lumber cut in 1907 was about 7 per cent of the total for the country; in 1918 it had dropped to 1,400 million feet, or about 44 per cent, and in actual amount it was less than half as much as in 1907. Particularly marked is the decline in softwoods. While in 1907 the cut of softwood in New England formed 7.6 per cent of all the softwoods cut in the country, in 1918 it had dropped to 4.3 per cent. FOREST REGIONS BY'STATE GROUPS AND FRINCIPAL SAW-TIMGER SECTIONS by LEGEND PRINCIPAL SAW-TIMBER SECTIONS INDICATED 8Y SHADED AREAS 4 NORTHEAST 2 LAKE STATES 3 SOUTHERN APPALACHIAN HARP OWOODS 4 SOUTHERN FINE 5 LOWER MISSISSIPF! HAP OWOODS AND CYPRESS 6 FOCKY MOUNTAIN 7 INLANO EMPIPAE 8 FACIFIC COAST FIR 9S CALIFORNIA PINE 10 FEDWOOD Fic. spruce operations began. By 1870 the original white pine was practically cut except for scattered trees in northern Maine; and by 1880 the second growth pine forests were yielding an annual cut of 200 to 300 million board feet. With the extensive use of low-grade pine for boxes and matches, this later increased to 600 million feet. Soon after it became known that wood pulp was a cheap substitute for rags in paper making, mills were built in north- ern New England as well as New York and the chief develop- ment of forest industries during the past 30 years has been in paper manufacture. Spruce alone was used at first, but now large quantities of balsam and hemlock are taken. For book paper poplar is used chiefly. Probably four-fifths of the pulp wood still comes from the old-growth forests, but an ever-in- ereasing proportion must come from second-growth stands. Although the lumber business of southern and central Maine reached its peak about 1850, the total lumber cut of New Eng- ORIGINAL AND REMAINING FORESTS. Area.—With the exception of a few small areas, New England in 1620 was a virgin forest, comprising some 39 million acres. In 1920 not more than 5 per cent of this virgin forest remains. The present forest area is nearly 25 million acres. Of this about 8 per cent, or 2 million acres, is virgin forest, chiefly in Maine, with scattered areas in New Hampshire and Vermont. The last remnant of virgin forest in Connecticut was cut within the past decade. Of the 24,700,000 acres now classed as forest land 44 per cent, or 10,760,000, is in saw timber or pulp wood. while 34 per cent, or 8.3870,000 acres, contains nothing but fuel wood, and 22 per cent, or 5,570,000 acres, is nonproductive. With nearly three-fourths of the saw timber and pulp-wood area in Maine, the poor condition of the remaining New England forests is apparent. Stand.—The original stand of New England was probably in the neighborhood of 400 billion board feet, not including 16 TIMBER DEPLETION, PRICES, small timber fit only for posts and fuel wood. The present stand of similar material is close to 50 billion board feet, or about one-eighth of the original stand. The total stand of wood in New Wngland is estimated to be 21 billion cubic feet? (equivalent to about 70 billion board feet). Of this 40 per cent is saw timber or pulp wood and 60 per cent is fit only for fuel. The average stand of all the wooded lands is 103 cords per acre. The present stand of saw timber and pulp wood is summarized by species in the following table: Million board feet, lumber scale. Spruce and fir_-------------------------------------- 23, 971 WIHT LeM DING = eee ee ee eat = as 9, 816 ON bie Sa ee a ee So es 2, 789 FUT Gare 0 ee es een 1, 804 Mollows birGho === === ee ee eee eee: Maple) 22-222 ee ne 2, 897 BQ eee ee ee Se eee ae 1, 685 (Oo ee ee Sie ee ee 1,510 NVC TMU sees a ee ee 960 Paper birch.---__--+--------------------------==----- 678 Poplar 2-25 2=2-—- 2 = 374 PN yc ne ee A re ea le 215 Ritch, Pil@sse. <2 -- == aaa eee 100 Other nardwoods==——- --]— = ==- = = eS = — 117 MO tale ee ee ee ee eee 49, 799 Softwoodsi===-—-2—--— CR ee a ae Oe ee ee ee 38, 480 TERE cy 0 0 Cl ee a ee eee 11,319 Of this total stand about three-quarters is softwood and one- quarter hardwood, About one-half is of pulp-wood species— spruce, fir, hemlock, and poplar. THE ANNUAL DRAIN UPON THE FOREST. In 1918 there were cut in New England 1,412,100,000 board feet of lumber and 1,446,000 cords of pulp wood. The total annual cut amounts to about 650 million cubic feet,’ of which 65 per cent is lumber, pulp wood, ties, ete., and 35 per cent fuel wood and fence posts. In addition there is a loss of about 20 million cubic feet, due to disease, insects, and fire. The total annual drain, therefore, is about 670 million cubic feet.‘ THE ANNUAL GROWTH. The annual growth of the New England forests is estimated in round figures at 610 million board feet of saw timber. Of this, about 484 million feet is softwoods and 176 million feet hardwoods. In addition, there is a growth of 341 million cubic feet not suitable for lumber. The total growth is 475 million cubie feet.’ GROWTH COMPARED WITH CUT. The annual drain upon the saw timber of about 2 billion board feet is nearly three and one-half times the annual growth of 610 million board feet. The annual drain upon the fuel wood of 235 million cubic feet is less by 106 million cubie feet than the growth of 341 million cubic feet a year. It is apparent, therefore, that the growth of low-grade material is somewhat in excess of the actual demands. In regard to lumber, pulp, and other high-grade material, however, the situation is anything but encouraging. THE LIFE OF THE INDUSTRY. About half of the entire present stand of saw and pulp timber in New England is in commercial tracts; the remainder is in farm wood lots. It is particularly from the larger com- 2Throughout the report board feet of lumber are converted to cubic feet of standing timber, and vice versa, on the basis of 219 cubic feet to 1,000 board feet for saw timber and of 500 cubic feet to 1,000 board feet for cordwood. ‘Pquivalent to about 2,300 million board feet. 4 Equivalent to about 2,375 million board feet. 5 Equivalent to about 1,300 million board feet. EXPORTS, AND OWNERSHIP. mercial tracts that the cut of most of the higher-grade mate- rial comes at present. Few of even the larger timber owners have more than a 20 years’ supply. Most of the pulp mills will be cut out in 20 years. Not over four or five companies own stumpage enough to last for a longer period. Unless Canadian wood is imported on an increasingly larger scale or effective forestry measures are introduced immediately, the pulp indus- try of New England will be largely a thing of the past within 30 years. Within the next 10 years the lumber cut will prob- ably drop to about 1 billion board feet; within 20 years most of the timber areas containing high-grade lumber will be cut off and the remaining timber will be either on farm wood lots or or a few remaining large tracts and will be made up of second growth or of trees which were left as worthless at the time of the first cutting. The White Mountain National Forest and the State forests may be counted upon to furnish a continuous supply of saw timber, but unless their areas are materially increased their share will be very small, PRESENT AND FUTURE CONSUMPTION OF LUMBER IN NEW ENGLAND. Up to 30 or 40 years ago New England was not only self- supporting in timber but exported large quantities. Within the past 80 years it has become an importing region, and it is estimated that fully 30 per cent of all the lumber used now comes from outside the region. This is in addition to the im- portations of large quantities of pulp wood. Within the next few years New England will have to import more than half the material it uses. This is of vital interest to a region that has about $3800,000,000 invested in wood and forest industries and employs in this connection over 90,000 wage earners, NEW YORK. Practically the entire State of New York was originally eovered with a magnificent forest of white pine, spruce, hem- lock, and hardwoods. The lumber industry was one of the first to be developed. It reached its highest volume between 1880 and 1840 and was already declining at the time of the Civil War. In 1850 New York ranked first among the States in amount of lumber cut and contributed 20 per cent of the total cut of the entire country. Since then it has been steadily de- clining in relative importance until to-day it stands in twenty- fifth place and contributes only 1 per cent of the total cut. Its actual cut has decreased from over 1,300 million feet prior to 1850 to less than 850 million. As early as 1856 New York ceased to be an important ex- porter of lumber and began to draw on Michigan for the upper grades of pine. Pennsylvania hemlock, southern pine, and cypress were used in large quantities from 1880 on, and West Coast woods in upper grades and special sizes began to come in about 1900. To-day Douglas fir from the Pacific northwest is a very considerable factor in the lumber market of the State. The steadily decreasing supply of native woods as compared with the increase in population is illustrated by the fact that New York’s per capita production of lumber had fallen from 300 board feet in 1869 to about 30 board feet in 1918. With the gradual settlement of the State the area of forest land steadily decreased until to-day it forms about 41 per cent of the total area. The stand of timber is estimated at approxi- mately 26 billion board feet, of which white pine, spruce, and hemlock comprise about 10 per cent each, and birch, beech, and maple a total of 55 per cent. Spruce and hemlock suitable for pulp wood but not lumber comprise some 13,400,000 cords, while material of all species suitable only for fuel and acid wood adds another 107,000,000 cords. This gives a total stand for the State of approximately 17,132 million cubic feet.* In quality, the present stand is decidedly inferior to that of earlier days. White pine, of the large size and high quality ® Equivalent to about 49 billion board feet. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. for which the State was once famous, now furnishes little but the poorer grades. Of the total forest area 62 per cent con- tains material which is suitable neither for lamber nor pulp and furnishes only fuel or acid wood. While the area of lands com- pletely denuded is comparatively small, the original forests are being followed by stands of decidedly inferior quality, both as to species and grades. The damage by fire is being steadily reduced by systematic fire protection, but the methods of cutting in private lands are such that an increasingly large area is left partially or wholly devastated. PENNSYLVANIA. The forest history of Pennsylvania has been similar to that of New York. Once practically covered with a heavy timber stand, Pennsylvania for many years exported large quantities of lum- ber. In 1860 it stood first among the States in lumber produc- tion. As early as 1870, however, the stand of white pine, the most valuable species in the State and formerly one of its prin- cipal export woods, had diminished to such an extent that im- ports from Michigan began. The depletion of the white pine was followed by an increasing cut of hemlock and later of hard- woods, and the State reached its maximum lumber production of 2,440 million board fcet in 1889. To-day it occupies twentieth ‘place in lumber production, and its annual cut of 530 million board feet constitutes less than 2 per cent of the cut of the country. The present forest area of Pennsylvania is estimated at ap- proximately 12,000,000 acres, with a stand of 11 billion board feet of timber. Of this 70 per cent is hardwoods, chiefly oak, chestnut, and northern hardwoods, and 30 per cent softwoods, one-half hemlock. In addition to the stand of material suitable for the manufacture of lumber, it is estimated that there are 880,000,000 cubie feet of wood suitable for railroad ties and mine props. The total stand, including fuel wood, is 5,200 million cubic feet.’ Depletion in Pennsylvania has already progressed so far that the complete cessation of large-scale logging operations, of which only a few are now left, may be anticipated within a decade. It has reached a point where the annual lumber production is only 60 board feet per capita, or about one-fifth of the average per capita consumption for the United States. The Pittsburgh district alone uses more lumber than is cut in the whole State. Williamsport, which once had an annual output’ of 800,000,000 board feet of lumber, now has not a single sawmill. In those parts of the State where the forest constituted the sole resource the trail of the lumber industry is marked by abandoned mills and practically deserted vil- lages. The steady decrease in the amount of standing timber has been accompanied by a deterioration in quality. Virgin stands are practically gone, old-growth white pine, for example, being reduced to some 10,000 acres, practically all in a single tract which will be cut out in the next five years. Only about 50 per cent of the total volume of wood now standing is suitable for manufacture either as lumber, pulp wood, ties, or props. The average area burned over annually is 500,000 acres, and much of this has been burned over again and again. In addi- tion to the damage from reckless cutting and fires the State has suffered severely from the chestnut bark disease. Nearly one-seventh of the entire State, once richly wooded, is said to be practically barren. Several counties that were once rich in forest and prosperous are now almost bankrupt because the timber is gone. THE LAKE STATES. GROWTH AND DECLINE OF THE LUMBER INDUSTRY. White pine.—The history of lumbering in the Lake States during the greater part of the past century is substantially the history of white-pine exploitation. Lumbering began in Michi- 7 Equivalent to about 16,600 million board feet, T79T—20 3 or more of the cut is box lumber. nants of the old-growth white-pine forests remain in Wisconsin and upper Michigan, and in lower Michigan the most widely aly gan and Wisconsin about 1835. Pine in enormous quantities drew lumbermen from the East, and before 1870 these States captured the lead in lumber production. They held it until superseded by the southern pine region, between 1900 and 1910. The peak of production was passed in 1892, when the reported output was a little more than 8,900,000,000 board feet white pine. This was an increase of 123 per cent over the cut of 1873. In 1899 Wisconsin, Michigan, and Minnesota, in. the order named, were still the leading three States, with a total production of 8,700,000,000 feet, two-thirds pine; but in 1918 they had fallen to eighth, thirteenth, and eleventh, respectively, and their total output had fallen to 3,220,000,000 board feet, of which only 35 per cent was white pine—mostly from Minne- sota. Wisconsin now produces less than the second-growth cut largely of either Maine or New Hampshire, and Michigan, from lead- ing the country from 1870 to 1895, now actually cuts less than half as much as Massachusetts. As the Lake States forests dwindled, white-pine lumber went down, both in quantity and quality, and Norway and jack pines and even tamarack were admitted as lower grades of “ northern pine lumber.” The fine quality timber which gave white pine its reputation is now nearly all gone. In Minnesota two-thirds Only small, scattered rem- known tract covers about 100 acres. Hemlock.—As the higher grades of pine grew scarce and ex- pensive, hemlock, once left in the woods as worthless, began to compete with the successively lower grades of pine introduced. Hemlock production reached its peak—1,600,000,000 feet—about 1906. In 1914 the cut had fallen to little more than a billion, and in 1918 to 809,000,000. This does not, however, include the cut for pulp, which would increase the total volume by about one-third. By affording a market for cordwood, pulp» manufac- ture is taking the small hemlock timber along with the large and thus delaying or preventing the renewal of the supply of large timber. The northern hardwoods.—Maple, birch, beech, basswood, and elm form at least 85 per cent of the total stand of hardwoods and furnish over 92 per cent.of the total hardwood cut in the Lake States. As with hemlock, the logging of hardwoods began as an aftermath of the white-pine logging. Hardwood produc- tion progressed gradually from culling operations taking only the best trees of the preferred species to cuttings such as those made at present for chemical distillation and charcoal, in which even tops, limbs, and saplings are utilized. Beech was one of the latest species to ‘ome into commercial demand; less than two decades ago it was a common practice to leave all the beech, which fires later destroyed. Now, the hardwood-using industries absorb not merely the upper grades but anything which will make lumber, and in some cases even cordwood. The veneer industry makes a constant demand for high- grade logs. Such logs supply also the bulk of the upper grades of lumber. There has been a constantly growing demand for both veneer and high-grade hardwood lumber, expressed in the pronounced growth of such industries as the musical instru- ment and toy trades. For a considerable part of this demand lower grades ought to be acceptable; but so long as the demand for upper grades exists manufacturers will attempt to fill it, and the stand will dwindle the more rapidly. ORIGINAL AND REMAINING STAND AND RATE OF CUT. The original forests occupied practically all the land area of Michigan, Wisconsin, and the part of Minnesota not natural prairie—a total forested area of approximately 112 million acres. Lumbering and the clearing of land for cultivation have re- duced the merchantable forest cover to little, if any, more than 24,000,000 acres, about 58 per cent in farm woodlots of relatively sinall timber, commonly second growth, and 42 per cent in com- 18 TIMBER DEPLETION, PRICES, mercial timber traets, in many cases already culled of their choicest trees. A very large part of the once heavily timbered land, about 20,000,000 acres, is now fire-swept and devastated sand plain and swamp, much of it with little or no promise of reproduction. The original white pine stand of the Lake States has been estimated by Dr. B. E. Fernow at not less than 350,000,000,000 board feet. After less than a century of lumbering, fire, and settlement, only about 8,000,000,000 feet of white and Norway pine remain, largely in Minnesota. In 1918 the reported cut of white pine in the Lake States exceeded a billion feet. An- other decade will see the practical exhaustion of their com- mercial supplies of white pine. Lower Peninsula of Michigan.—The depletion of commercial timber has proceeded furthest in the Lower Peninsula of Michi- gan, where less than a million (probably not much over half a million) acres of hardwoods and hemlock remain. The hun- dreds of large sawmills that once operated had fallen off in 1918 to about 45 that cut more than 1,000,000 board feet apiece. The number is rapidly becoming smaller, and within tive years there will hardly be a half dozen large mills left. The exhaustion of the remaining old-growth stands will mark the end, among other valuable species, of the highly prized “Lower Michigan hard maple,” long reputed to be the best in the Lake States. From then on whatever lumber is cut will come mainly from farm woodlots, in small amounts and sizes, and of poorer grade. Wisconsin and the Upper Peninsula of Michigan.—In the adjacent forest areas of Wisconsin and the Upper Peninsula of Michigan the case is better. In 1908 the Bureau of Corpo- rations estimated the timberland at about 10,829,000 acres, with a stand of 65 billion feet. During the last 12 years’ probably 30 billion board feet in lumber has been removed. This would leaye only 35 billion, enough at the present rate of cutting to last 15 years. There can be no doubt, however,’ that there is much more timber than this. The 1908 esti- mates were too conservative. There is reason to believe that the timberland still amounts to 4 million acres in upper Michi- gan and 2 million in Wisconsin, and that the total merchant- able stand is at least 48 billion feet. This would insure a con- tinued supply, at the present rate of cut, for about 20 years. This rate will not, of course, continue, but will decrease as successive mills saw out. The rate of cut is considerably heavier in Wisconsin than in the Upper Peninsula. The larger -number of Wisconsin mills and the considerably smaller stand of timber indicate a much quicker falling off in the cut and an earlier termination of the supply there than in upper Michigan. In Wisconsin, assuming a diminishing rate of depletion, the annual lumber cut will be likely to fall off within 10 years to 75 per cent, in 15 years to 40 per cent, and in 20 years to 16 per cent of the present cut, and in 25 years the timber will be practically gone. Cutting for other purposes than lumber will add appreciably to the amount of timber taken out. Further- more the pressure of an increasing demand, by stimulating the rate of cut both at the big millS and at numerous smaller mills, which will probably operate, as at present, in small patches of timber, will very likely hasten the final exhaustion of the timber. All things considered, it is doubtful if there will be any appreciable amount of timber left in commercial holdings in Wisconsin at the end of 20 years. Growth does not enter into the computation at all, unless a radical change is made in the direction of efficient fire protection and the application of forestry. In upper Michigan the stand will last considerably longer. Here 60 per cent as many mills operate in twice the timber— enough, in fact, to last 40 years at the present rate of cutting for lumber only. Some new operations are already contem- EXPORTS, AND OWNERSHIP. plated, however, and the cut for lumber and other products will doubtless increase within the next few years. One prin- cipal holder is reported to have estimated the life of the stand at 25 or 30 years. Minnesota—Vimber conditions in Minnesota differ widely from those in Wisconsin and Michigan. The Wisconsin lumber cut for 1918 was 85 per cent hardwoods and hemlock, while that of Minnesota was 91 per cent white pine (which includes also a considerable amount of Norway pine and other species in the lower grades). Less than 5 per cent of the reported cut was of hardwoods. The timbered area of Minnesota was estimated by the Bureau of Corporations in 1908 at about 5,651,000 acres, and the stand at 23,200,900 000 board feet, 81 per cent of which was softwoods, A recent estimate by the Minnesota State forester places the softwood stand at 11,450,000,000 board feet, of which 41 per cent is white and Norway pine, 17.5 per cent jack pine, 24 per cent spruce, balsam, and cedar, and 17.5 per cent tamarack. The tamarack, which has been the greatest hewed-tie resource of the region, has practically all been killed by the larch sawfly, and must be salvaged soon if at all. The pine forests of Minnesota have been thoroughly culled of their best material, and production now runs heavily to box. lumber. The number of mills duced rapidly. Within four of the large mills operating in this region is being re- the last three or four years at least have burned, and these will probably not be replaced. Five have recently cut out, and two have only a year’s supply. This means a decrease of 30 per cent in the total cut of the State and of 33-per cent in the cut of the big pine mills. The annual cut of the remaining mills will aggregate at least 600,000,000 feet. These mills depend for the great bulk of their cut upon white and Norway pine, the remaining supplies of which are estimated by the Minnesota State forester at 4,700,000,000 board feet. This will not last much more than seven years at the present rate of cutting. If the estimate of supply is increased by one-third, the period of operation would be 10 years at the present rate. As the mills exhaust their supplies, however, the rate of cutting will diminish. Condition of the remaining supplies—The stands considered above are those which are being or could be logged on a large scale to large mills—mills of 10 million board feet or more annual capacity. Such mills now supply about 90 per cent of the lumber produced in the Lake States. Their holdings, even though culled, are almost wholly of old-growth timber of superior quality as compared with second growth. These concentrated commercial stands, aggregating about 63 billion board feet, contain about 57 per cent of the total stand of timber in the Lake States, which amounts to prob- ably 110 billion board feet. Of this total about 80 per cent (334 billion feet) is widely scattered in farm wood lots, while 13 per cent (about 144 billion feet) is in the swamps, jack pine and serub hardwood plains, aspen and birch stands, and cut-over lands in the North. The timber in these stands is far below that of the commercial stands in quality. The vreater part is second growth. It is smaller, more limby, and much of it has been badly damaged by fire. Furthermore, it is largely in small, scattered tracts unsuited for efficient large- scale operations. In addition, about 19 million acres bear a cordwood stand of about 113 million cords below saw-timber size. If the lumber stand also is reduced to cords, the total stand in the Lake States is 680 million cords, or 50,584 million cubic feet. THE ANNUAL DRAIN UPON THE FOREST. Lumber cut compared with total cut—The normal lumber cut of about 84 billion board feet forms less than half of the total volume of wood cut annually in the Lake States for all purposes. The lumber cut is the equivalent of about 770 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. million cubie feet of standing timber. ‘The total output of wood in all forms is close to 1,600 million cubic feet. The classes of output not covered in the lumber-cut statistics in- clude pulp wood, fuel, and distillate wood, hewed ties, posts and poles, and logs and bolts used for veneer and other pur- poses. Of these, pulp wood and distillate wood make up prob- ably 130 million and fuel wood 600 million cubic feet. The remaining 100 million cubic feet consists of veneer, cooperage, excelsior stock, ties, posts, poles, and other products. Deterioration of the forest—In addition to the cut there is a constant loss to standing timber from fire, wind, insects, dis- ease, ete., probably amounting to an annual average of from one-fourth to one-half of 1 per cent of the stand. This is equal to one-half billion board feet, or 110,000,000 cubic feet, of standing timber. It includes such losses as that of tam- arack, of which, as previously shown, about 2 billion board feet has been killed by the sawfly in Minnesota alone. There is also considerable loss from decay following injuries, such as frost cracks and ice breakage. In most of the commercial stands damage from these sources is not made up by growth, since these forests are generally much beyond the age of active growth. THE ANNUAL GROWTH. Growth compared with cut.—The estimated annual growth in the Lake States is much less than the cut. 4 Peer Growth | Estimated eeu mate d in per annual cut. oe cent of growth: | cut. . | Lumber, feet board measure.......--.---- 3,500, 000,000 | 988, 000, 000 28 All products including lumber: Gubicteantieecceesewee ete men ouelaeacte 11,600, 000,000 | ! 468,000, 000 29 Cords..... Ac SoSeCobsEHne RS seoseepocr 20,000, 000 5,850, 000 1In terms of lumber, the aggregate annual cut of all products would be about 5, 160,000,000 board feet, and the annual growth about 1,490,000,000 board feet. These figures indicate that the total rate of cutting is more than three times the total rate of growth, and.that the stand suitable for lumber is being cut more than three times as rapidly as it is growing. Furthermore, the larger part of the eut is from old-growth stands in the North, while nearly all the growth is in widely scattered second-growth stands. The cut is relatively concentrated, while the growth is widely distributed and without reference to the commercial advantages of loca- tion. This is a consideration of great significance for the future of the wood-using industries. The concentrated supplies are steadily waning. Their disappearance will mean the death of industries unable to adapt their production to a supply limited by the rate of growth or to import. Wire renders millions of acres of cut-over forest Jand in the Lake States unproductive. If fires could be kept out, the growth on these repeatedly burned lands would probably even- tually increase 50 per cent, and could be increased still further by intensive management. The life of the industry.—At a diminishing rate of depletion due to the cutting out of one holding after another, it is es- timated that the lumber cut of the Lake States at the end of the next 5 and 10 years will be about as follows: Hstimated| cut, 1925_____-___ 2, 400, 000, 000 Pe VESOMtA TUS CUt se se oa ee eee et 3, 500, 000, 000 Stimated cutee O30 2ee ase eee ee ee ee 1, 800, 000, 000 This represents only the production from commercial tracts. As the commercial stands dwindle the production of lumber and other products from farm wood lots and from second growth in swamps and cut-over areas may be expected to increase con- siderably in proportion to the total cut, though not in actual amvuunt. Such lumber will be much inferior in quality to that from the commercial stands, ks) PRESENT AND FUTURE CONSUMPTION OF LUMBER IN THE LAKE STATES. The average annual per capita consumption of lumber in the Lake States is probably not far from the average for the whole country—300 board feet. Assuming a 12 per cent increase in population since 1910 (the increase for the previous decade was at the rate of 14.06 per cent), the present population of the Lake States is about 8,000,000. The total annual consumption of lumber in the three States is thus about 2,426,000,000 board feet, or 70 per cent of the lumber produced. Comparison with the estimates of future cut above given indicates that by 1925 the local consumption will be equal to the local production, assuming no increase in population and the same per capita rate of consumption. At the end of a decade, allowing for a 10 per cent increase in population, con- sumption will exceed cut by nearly 50 per cent. In other words, the per capita consumption must either fall from 300 to nearly 200 board feet per year or the Lake States must import nearly one-third of the lumber needed for home use. With each sueceeding year the discrepancy between consumption and local supply will become greater. Much western fir and pine lumber is already being consumed in the Lake States, and as the local cut decreases they will depend more and more upon the far West. While an actual lumber shortage may not, therefore, be antici- pated as long as the western stands hold out, the lack of a local supply will be felt in increased prices. THE SOUTHERN YELLOW-PINE REGION. THE GROWTH AND DECLINE OF THE YELLOW-PINE INDUSTRY. The pine forests of the Southeastern United States, begin- ning along the Atlantic coast, have been exploited for naval stores and other forest products from the time of the first settlements. No extensive development of the lumber industry, however, took place until the seventies of the last century. Before the Civil War a limited amount of southern pine lumber was shipped to Baltimore and Philadelphia in schoon- ers by sawmills on the eastern shore of Maryland and near tidewater in Virginia. After the Civil War the industry spread to Georgia, Mississippi, and the other Gulf States. The markets north of the Ohio River made their first demands for southern pine about 1875. By that time the Northeastern States had lost their leadership in lumber production, and the Lake States were coming to the front with about 35 per cent of the country’s cut. The great development of the southern pine industry began in the early nineties. About 1892 yellow pine from the Gulf States and Arkansas began to crowd white pine in the markets north of the Ohio River. Vast quantities were used in the construction of the World’s Fair buildings in Chicago. An extensive demand was ereated by the low prices in the early nineties. This demand spread into the Lake States, the Prairie States, and the Eastern States. At the end of the nineties southern yellow pine was leading the country in the cut of softwoods. In 1909 its production reached the peak, with nearly half of the entire country’s cut of softwoods, and from then on began to decline. Southern yellow pine is still the most important single factor in the lumber production of the United States, furnishing about 41 per cent of the cut of softwood lumber and 385 per cent of the entire lumber cut. It will remain an important factor for at least the next 10 or 15 years. Within the next 8 or 10 years, however, it is certain to undergo profound changes. THE ORIGINAL AND THE PRESENT PINE FORESTS OF THE SOUTH. The original pine forests of the South Atlantic and Gulf States covered from 125 to 130 million acres and had a stand ot timber close to 650 billion feet. Of this about two-thirds was longleaf pine and one-third shortleaf pine.* SUnder “longleaf pine” are included longleaf and slash pines ; under “shortleaf pine’? are included shortleaf, loblolly, serub, and other short-needled pines, 20 TIMBER DEPLETION, PRICES, To-day the area of virgin yellow-pine forests is about 234 million acres, or a little less than one-fifth of the original acreage. (See Table 1.) The stand of virgin timber is about 39 billion board feet, or a little over one-fifth of the original stand, TABLE 1.—NSouthern yellow-pine region—Classification of pine land by character of growth. Cut-over lands. State. Totalnet | Areaold |— es == | pine area. | growth. | Restocking Restocking Not | |sawe chmber.| cordwood. | restocking. | | eee ee | ——_|]—___—— Acres. Acres. Acres. Acres. Acres. Wirginias-<.ctess=e~= |. -44000\000)|5. cbse 5.22: 1,500,000 | 2,200,000 300, 000 North Carolina ‘| 10,700, 000 500,000 | 3,600,000 | 5,400,000 | 1,200,000 South Carolina - 8,000; 000 600,000 | 2/500;000 | 3,000,000 | 1,900,000 Georgia. . =| 15,500,000 700,000 | 3,800,000 | 6,000,000 | 5,000,000 Florida. . -, 18,000,000 | 11,000,000 | 700, 000 1,000, 000 5,300, 000 Alabar | 15,500,000 1,500,000 3,500, 000 4,000, 000 6, 500, 000 12/000;000 | 3,000/000 | 5,000,000 | 12000000 | 3,000,000 : -| 113740)000 | 2'510}000 | 4°500/000 | 12007000 | —37530/000 Arkansas -| 9,500,000 | 1,150,000 | 2,000,000 | 5,500,000 $50, 000 Texas..... | 7)424'000 | 2/000;000 | 1700)000 | 13600,500 | — 2,728)500 Oklahoma. . ‘| 2,000, 000 500, 000 560,000 550, 000 450,000 MUSSOUTICN ocwccec ones 320, 000 30,000 | 110, 000 80, 000 100,000 Motalen-nas sees P 14,684,000 | 23,490,000 | 29,410,000 | 30,930,500 | 30,853,500 Wour-fifths of the original yellow-pine forests has been cut since 1870. Out of the more than 100 million acres of yellow-pine land thet has been cut over about 29 million acres now supports second growth of merchantable sizes and nearly 81 million acres cut over recently second growth not merchantable. About 31 million acres of cut-over land has not come back to pine. although much of it is more suitable for timber growth than for agriculture. As the nonrestocking areas do not produce any new growth and growth in virgin timber is offset by de- terioration, the total area on which yellow pine is now grow- ing is about 60 million acres. The largest areas of old timber are chiefly in the Gulf States— Texas, Louisiana, Mississippi, Alabama, and Florida. Areas of second growth are most extensive in the older South Atlantic States—Virginia, North Carolina, South Carolina, and Georgia. Total merchantable stand.—The total stand of merchantable yellow pine, both virgin and second growth, has recently been estimated at about 258 billion feet, of which 139 billion, or 54 per cent, is old timber, and 119 billion feet, or 46 per cent, is second growth. By States the merchantable pine stand follows: is distributed as M feet. M feet. Louisiana______ — 47,348,400 | North Carolina__ 15,300, 800 Mississippi_____ 40° 4762000) varciniqes 2 e.. = 8, G98, 000 Mloridg22— =a — 86,429,300 | Oklahoma san NA OIAOO Texas: i-=2-Wei5— 27, 524, 700 | Missouri______-... 364, T00 Alabama = see. 25, 316, 400 Georgia saa — 21, 807, 600 Total (lum- Arkansas______.. 15, 743, 700 ber scale)_ 257, 691, 000 South Carolina__ 13, 889, 800 The present stand is about equally divided between longleaf and shortleaf pine, with probably a slight preponderance of shortleaf pine over longleaf, the shortleaf pine being more abundant in the South Atlantie States and the longleaf in the Gulf States. ANNUAL DRAIN UPON THE FORESTS. The cut of yellow-pine lumber in 1918—an abnormally low year—was in the neighborhood of 10 billion feet. Lumbermen estimate a cut for 1919 in excess of 15 billion feet. The aver- age cut for the five-year period before the war, 1911-1915. was about 144 billion feet, to which must be added at least 14 bil- lion feet of hewn ties, poles, and posts, in all a cut of about EXPORTS, AND OWNERSHIP. 16 billion feet of saw timber. There is also being cut in the pine area of the South about 12,250,000 cords of fuel wood. In addition to the cut there is every year a considerable loss of mature saw timber due to windfall, turpentining, insects, fires, and diseases. This loss may be conservatively placed at from one-fourth to one-half of 1 per cent of the entire merchant- able stand, or at present from 650,000,000 to 1,300,000,000 board feet per year. In all, the annual drain upon the forests is nearly 44 billion cubic feet of wood. THE ANNUAL GROWTH. = ~ The annual growth is estimated at about 3 billion feet board measure on the merchantable second-growth areas and 1 billion cubie feet’ on the area of unmerchantable second growth, or in all in the neighborhood of 1,660 million cubic feet * a year, or nearly 30 cubie feet per acre for the entire growing area. (See Table 2.) TaBLe 2.—Southern yellow-pine region—Annual growth of saw timber and cordiwood by States. Cordwood. Saw State. ey ae eubie b. m. feat: Cords. | Virginia-- === 2c-.--< Seiaec See sean seas 225, 000 88, 000 978, 000 North Carolina 360,000 162,000 1, 800, 000 South Carolina 250, 000 120,000 | 1,333,000 Georgie..... 380, 000 240,000 2,667,000 Floride 52,500 30, 000 333, 000 Alabama. 350, 000 160, 000 1,778, 000 Mississippi. 500, 000 40,000 | 444, 000 Louisiana. . 450, 000 48,000 | 533,000 Arkansas. .. 200, 000 165,000 1,833,000 Texas... 170,000 35, 000 389, 000 Oklahoma.. 37,500 11,000 122, 000 Missourizs cc ~ sees eswre os teens Ga smeee Secee neces 8, 000 1,600 18,000 MOtalee cessor ae ctoe stare ale’ 5 malate = Seer 2,983,000 | 1,100,600 12, 228, 000 CUT AND GROWTH CONTRASTED. The amount of yellow pine that is cut is thus about three times the annual growth. In saw timber the disparity is even greater. The annual growth upon the areas of merchantable timber is in the neighborhood of 3 billion feet, while the cut of saw timber is 16 billion feet. In other words, the present cut of saw timber is more than five times the present annual pro- duction. If the present merchantable second growth were not cut into for the next 10 or 15 years, but were allowed to grow at its present rate, and the unmerchantable second growth were allowed to reach merchantable size without being prematurely turpentined, the annual growth of saw timber would be con- siderably increased. This merchantable second growth, how- ever, is now also being cut and its area decreased at a rate of not less than 14 million acres a year. About a quarter of the present yellow pine cut comes from second growth. Within the next 20 or 25 years the entire area of the present merchantable second growth may be completely cut over, and large areas will not come back to pine unless there is a decided “hange in the present procedure in regard to protecting the cut-over land from fire and hogs. DETERIORATION OF THE FOREST. It is doubtful if the South will ever again grow timber to the sizes which we find in the virgin stands. The second growth now cut for saw timber is inferior in quality to the old stands. While trees in the virgin longleaf-pine stands yield on an average from three to four logs which run six or seven logs to a thousand feet, trees in the second-growth stands * Equivalent to about 2 billion board feet. 1 Equivalent to about 5 billion board feet. TIMBER DEPLETION, PRICES, average at most two or two and a_half logs per tree, and the logs run fifteen to the thousand. The amount of upper grades that is sawed from second growth is much smaller than from virgin timber. For instance, a mill tally on a certain operation showed that virgin timber sawed out on the average about 55 per cent of the high grades, while second growth barely yielded 19 per cent. An inferior forest is therefore succeeding the virgin timber and the highest grades are not being replaced at all. Change to inferior species.—Deterioration is taking place not only in grades but also in species. The most valuable timber trees of the southern pines are longleaf and slash pines, both for their timber qualities and as a source of naval stores. The longleaf pine, particularly throughout the Gulf States, as a rule does not come in on cut-over land, because of sparse seed pro- duction and the grazing of hogs. Unless cut-over longleaf-pine land is protected by hog-proof fences or by stock laws the areas of longleaf pine will be greatly diminished. The original pro- portion of longleaf in the southern pine forests has already been reduced for the remaining merchantable timber from two- thirds to a little less than half. North Carolina, which once had large areas of longleaf pine and was famous as the “ Long- leaf Pine State,’ can boast now of hardly 50,000 acres of second-growth longleaf pine widely scattered in small areas. A large part of the remaining virgin longleaf area will, after logging, either become nonproductive or be restocked to a con- siderable extent with shortleaf pine. / THE LESSON OF THE SOUTH ATLANTIC STATES. Large areas of second growth now found in the older South Atlantic States and a fairly permanent cut of timber by small mills are often taken to indicate what the future of the Gulf States is to be after the larger sawmills have completed their logging operations. There are vital differences, however, in the handling of the timber in the two regions. The virgin for- ests in the South Atlantic States were cut over very lightly— often for local consumption only—and the logging was done by animals. This left many young trees which soon formed a new merchantable stand and provided ample seed for young growth. The present-day steam logging in the Gulf States amounts to clear cutting over large areas, and even inferior trees are fre- quently brought to the mill. The virgin forests of the South Atlantic States contained less longleaf pine than the Gulf States. In Virginia, for in- stance, there was practically none. In the Gulf States long- leaf forms the bulk of the stand, and it is the longleaf repro- duction which is most affected by the free ranging of hogs. Furthermore, the turpentine operators are now tapping more und more young trees, and by excessive turpentining prevent many from reaching maturity. It is certain, therefore, that under present practice the Gulf States will not have as much second growth after the virgin forests are cut out as the older South Atlantic States now have. LIFE OF THE YELLOW PINE INDUSTRY. A recent survey covering 5,400 mills, owning or controlling practically the entire remaining virgin stand in the South, indi- cates that 4,419 mills, or nearly 82 per cent of all those re- ported, will cut out in 5 years or less, and the output of virgin timber will be reduced by nearly 50 per cent; that 5,254 mills, or over 97 per cent, will cut out their timber in 10 years or less, with a corresponding reduction in the output of 7S per cent; that in 20 years all the mills, except 12, will have cut out their timber, and their production will have been reduced to only 3 per cent of the present output. This does not mean, however, that the total lumber production will be reduced at this rate. As the larger sawmills cut out small mills will take their place and will work in the second growth and on the small scattered tracts which under present conditions can not be economically logged in large-scale operations. EXPORTS, AND OWNERSHIP. PAL Although in five years over 19 per cent of the present virgin timber will be cut out, only about 11 per cent of the entire merchantable stand will be used up. In 10 years 52 per cent of the entire virgin timber will be gone, but only 380 per cent of the entire present merchantable timber. In 20 years nearly 90 per cent of all the virgin timber will be exhausted and over 50 per cent of the entire merchantable timber. As the virgin timber dwindles, the second growth will contribute more and more to the production of yellow-pine lumber. In 10 or 12 years second growth will probably contribute two-thirds of the entire cut. Although the exhaustion of the virgin timber does not mean entire exhaustion of the yellow-pine industry in the South, the life of the industry as now constituted is largely the life of the present large sawmills. When the larger mills cut out at the present locations, they will cease to figure in the industry; for it is now almost impossible for an operation of any magnitude a location which commands enough timber to justify logging operations. The South will undoubtedly continue, as New England, to be a lumber-producing region. It will cease, howeyer, to be a national factor; and from a general utility wood, the high-grade yellow pine, as the white pine, will be- come a specialty wood, while the second growth will furnish inferior grades for industrial purposes and for local use. In about 10 years the yellow-pine region promises to take second place as a national lumber-producing center. to secure REDUCTION OF THE OUTPUT. Lumber production of yellow pine in 1930, allowing for new sawmills to take the place of the larger sawmills which will be cut out, it is estimated will be about 94 billion feet, a re- duction of nearly 6 billion feet, or 38 per cent, from the esti- mated production of 1919. This means a yearly decrease in the output of about 550 million feet, or a little over 53 per cent. If, however, to the sawed lumber is added the yearly cut of saw- log material for hewn ties, poles, and posts, and the loss of merchantable timber from windfall, turpentining, fires, insects, and diseases, the reduction is likely to be at the average rate of 700 million feet, instead of 550 million feet. This does not mean that every year the output will be actually diminished by 700 million feet. If the present high prices for yellow-pine lumber continue, production may be stimulated and the output may hold up during the next few years instead of declining Should, hewever, such an increased production take place, the decline in the output will be so much the more rapid toward the end of the life of the industry. PRESENT AND FUTURE CONSUMPTION OF LUMBER IN THE SOUTH. The Southern States consume locally about one-third of their total pine cut, or 5 billion feet. By some good authorities home consumption is placed even at 50 per cent. The South has passed the threshold of a great agricultural and industriai development. At the same time the South is underbuilt. The average value of its buildings per farm is less than in any other section of the country. With agricultural and industrial development the standards of rural and urban life will beceme higher; and better and larger houses will be built. This will require more lumber. The annual consumption of lumber is expected therefore to inerease until in 10 to 12 years it may anrount to 9 billion feet. By that time the output of yellow pine will probably shrink to 9 billion feet. Thus by 1930 the South may cease to be an ex- porting region, and may produce barely enough lumber for its own needs. This does not mean that no southern yellow-pine lumber will be shipped out of the Southern States, but it does mean that the exports and imports of lumber will balance. After 1931 the South will become more and more an importing region. In 15 years the South will become dependent for its own needs upon large importations of lumber from the Pacifie coast. TIMBER DEPLETION, PRICES, CYPRESS REGIONS. Cypress has probably passed its maximum production, and but a short time remains during which it can occupy a place of importance in the lumber industry. The value of eypress for house building and fencing was early recognized by settlers in the South. Under the colonial rule of the Spanish and French traffic in shingles and cypress lumber with the West Indies was of great importance. Great quanti- ties were used for the hogsheads and barrels of the sugar and molasses trade. After the opening of the southern pine forestse the general use of cypress as the principal material for house construction, except for shingles, fell off, and the recent de- mands from distant markets date from the falling off of the white pine supply of the North. Until recent years only the largest and best trees nearest to streams and shallow canals in which they could be floated were cut. Utilization was therefore very incomplete. With the in- troduction of the pull boat in the nineties and finally the expen- sive steam skidder systems, and a better understanding of the value of the wood, no stands remained inaccessible. The cypress cut reached 495 million board feet in 1900; by 1909 it was 955 million; and in 1913 it exceeded 1 billion feet. It has fallen off since, with a reported cut in 1918 of only 578 million. Lumbering is followed by practically no second growth, so that with the completion of present operations the cypress industry ends. r In 1909 the Bureau of Corporations estimated the total stand of cypress at 40 billion feet. The best available figures to-day place the total at 22,921 million feet, and the totals for Lou- isiana and Florida, which furnish the bulk of the cut, at ap- proximately 11,000 million. If the annual cut during the next. few years be placed at approximately 700 million feet, with the additional large and unknown amount used annually in the rough for piling, poles, and the like, it is evident that without: growth in the remaining stands and on cut-over lands the supply in sight in the present producing centers, Louisiana and Florida, can not last more than 15 years. A largely diminished yearly production will be experienced much sooner. Well-informed lumbermen place the duration of the important commercial cut at no longer than 10 years. THE ROCKY MOUNTAIN REGION. The Rocky Mountain region includes Montana, Idaho, Wyo- “ming, Colorado, Utah, Nevada, Arizona, New Mexico, and western South Dakota.” It isa region with wide differences in character and density of timber growth, in production and con- sumption of lumber, and in the probable future development and lite of the lumber industry. Thus western Montana and Idaho, becuuse of the heavy stands of white pine, larch, and yellow pine, might properly be considered part of the Pacific coast region; while Utah and Nevada, with their open forests, have entirely different economic problems to meet as far as the timber supply concerned. Similarly, Arizona and New Mexico are practically an economic unit by themselves; Colo- rado and Wyoming form another economic unit, and South Dakota still another. Therefore in considering the present timber situation and the future outlook for the mountain region as a whole, the different sections of the region should be kept in mind. is DEVELOPMENT OF THE LUMBER INDUSTRY. The development of the lumber industry began in the early fifties, chiefly to supply the mines. Even now mining is the heaviest consumer of wood in several sections. After 1900 the u That part of the Kaniksu National Forest in Washington is in- cluded in the Rocky Mountain region, while those parts of the Eldorado, Inyo, Mono, and Tahoe National Forests in Neyada are included in the Pacific coast region, EXPORTS, AND OWNERSHIP. lumber industry assumed more than a local character and began to ship lumber to the Mississippi Valley and eastern markets. The region is still short of the development which it will reach in lumber manufacture. It has shown a steady increase for the last 20 years, and the present cut amounts to about 5 per cent of the entire production of lumber in the country. Western Montana and Idaho, because of the heavy stand of western white pine, larch, cedar, and yellow pine, is the most important section from the standpoint of timber supplies. Within these two States is 75 per cent of the entire stand of the highly prized western white pine. Wyoming, with its dense and extensive stands of lodgepole pine, is an important source of material for railroad ties. Colorado, more than half of whose timber is Engelmann spruce and which has also extensive lodgepole pine stands, is an important tie and lumber-producing center for the central Rockies. Western South Dakota, with its valuable yellow pine stauds, is the center of lumber produc- tion for the State and the adjoining treeless region. Northern Arizona and New Mexico, with large open yellow pine forests, supply much of the lumber used in the Southwest and ship some to the North and East. ORIGINAL AND PRESENT STAND. The original forest area of about 64 million acres has now been reduced by about 3 million acres. This reduction is chiefly in Montana and Idaho, where much of the early logging was on agricultural lands. The present stand of saw timber is about 223 billion feet, or 10 per cent of the entire stand in the country. Practically all of it is softwoods. The stand is very unevenly distributed. Nearly 60 per cent, or 180 billion feet, is in Montana and Idaho; 18 per cent, or 39 billion feet, is in Arizona and New Mexico; 11 per cent, or over 25 billion feet, is in Colorado; and the remainder is distributed in smaller quantities among the other States of the region. THE ANNUAL DRAIN UPON THE FOREST. The annual cut of saw timber is about 14 billion board feet, besides at least half a billion feet for ties, posts, poles, and fuel wood, making the total annual cut about 2 billion feet. This, also, is unevenly distributed. Montana and Idaho to- gether have an annual lumber cut of over 1 billion feet; Colo- rado, Wyoming, and South Dakota together produce not over 150 million feet; and some 170 million feet is cut in Arizona and New Mexico. Besides the cut there is a loss of saw timber through fire, insects, and disease. In Idaho and Montana, where fires are most destructive, the annual loss from fire has recently averaged about 1,100 million board feet. The annual loss due to insects and diseases in these two States is estimated at about 100 million feet. For the entire region the loss from fire, insects, and disease is at least 14 billion feet. The total annual drain upon the forests is about 383 billion feet, two- thirds of which falls upon Montana and Idaho. ANNUAL GROWTH. The annual growth in the Rocky Mountains is estimated at 461 million board feet of saw timber and 264 million cubie feet in the form of immature stands (equivalent to about 528 million board feet), which makes a total of nearly 365 million cubic feet (equivalent to about 989 million board feet), or 21.5 cubic feet per acre per year on the growing area. Most of the growth is in Montana and Idaho. CUT COMPARED WITH GROWTH. Considering saw timber alone, the annual drain is about seven times the growth. If we compare the cut of all forest products with the entire growth in cubic feet, the cut and devastation is two and one-half times the growth, TIMBER DEPLETION, PRICES, LOCAL NEEDS. In Montana and Idaho the present cut of saw timber is in excess of the local needs, which are about 850 million board feet. Arizona and New Mexico are not self-sustaining. In 1914 about 350 million board feet of timber was used and only 132 million feet was produced. Wyoming, although it produces more than 600,000 railroad ties and a large number of poles, posts, props, and mine ties, manufactures only about 15 million feet of lumber, less than enough for its population. Colorado, although it produces 550,000 railroad ties and large quantities of posts, poles, props, and mine ties, manufactures less than 100 million feet of lumber, and is not self-sustaining. THE FUTURE OF THE LUMBER INDUSTRY. Of the Rocky Mountain States, only western Montana and Idaho now produce lumber above their needs and can increase their output in the near future. It would seem that the forests of Montana and Idaho, with some 130 billion feet of saw timber and a present cut of only 1 billion; Colorado, with over 25 billion feet and a cut of 100 million; Arizona and New Mexico, with 89 billion feet and a cut of only 132 million, are capable of sus- taining a larger lumber industry for a considerable time. It should be remembered, however, that the region is still underdeveloped and that its requirements for lumber may also be expected to increase with its rapidly growing population. Furthermore, within the next 12 years over 95 per cent of the existing sawmills in the southern yellow-pine region will cut out. The Pacific coast and western Montana and Idaho will have to assume the main burden of supplying saw timber to the entire country. This means more rapid cutting of the remain- ing stands and a big increase in the existing deficit in annual growth. A large amount of the standing timber is relatively inaccessible. The future supplies of accessible timber are therefore much more limited than is indicated by the estimates of the total standing timber. The privately owned timber in the territory tributary to Spokane will be cut out in 25 or 30 years if the present rate of cutting continues; and the cut, which now amounts to approximetely 550 million feet of logs, will drop to 100 or 125 million feet, which the local National Forests can produce annually on a continuous basis. The lum- ber industry will then move to other timbered regions. probably to the Clearwater territory, which is tributary to Lewiston, Idaho. ven if the rate of consumption should not increase ubove the present figure, if appears that the bulk of Idaho's privately owned timber, including 75 per cent of the remaining white pine in the United States, will be gone in about 40 years. The western red cedar is now being cut extensively in Mon- tana and Idahe for poles, piling, posts, and shingles. The pres- ent average annual shipments of poles, piling, and posts from Montana and Idaho amount to 216,360 poles and piling and 8,789,000 posts. The regions which are now being exploited will probably be exhausted within the next 20 years and opera- tions will be transferred to more remote areas. The present cedar lumber prices have diverted into lumber a large portion of the material ordinarily manufactured into posts and shin- gles. Continuation of this demand might easily exhaust the entire available supplies of post and pole material in 20 years. The future of the lumber industry in western Montana and Idaho will not be unlike that of the Pacific Northwest. There is this difference, however, that the supplies in western Mon- tana and Idaho are much smaller than those in Washington and Oregon, and comprise three-fourths of the remaining sup- ply of one of the most valuable softwood timber trees of the country—western white pine. Now that the eastern white pine is practically exhausted, the demand upon the western species will tend to increase. The other States of the Rocky Mountain group will not be important factors in the lumber production for the general market. EXPORTS, AND OWNERSHIP. PACIFIC COAST. GROWTH OF THE LUMBER INDUSTRY. The development of the lumber industry on the Pacific coast, our last great coniferous timber reserve, has already progressed far. The first sawmill in the Northwest began operations on Puget Sound in 1845. Within a decade lumbering became, and still is, the chief industry in western Washington. The cut for a good many years was used locally or shipped into California or exported. Not very much timber was cut until after the completion of the Northern Pacific Railway in 1882, and then for au number of years only in special grades. Twelve years later lower freight rates were made on eastern lumber shipments and the pronounced development of the west coast industry began. Very little lumber was cut in California prior to the begin- ning of gold mining in 1849. Lumbering in the redwood belt began about 1860 and grew steadily. In 1899 Washington, Oregon, and California cut a little more than 2,900,000,000 board feet. Production increased slowly until in 1918 the total was slightly in excess of 8,590,000,000 board feet. Washington became the leading State in lumber production in 1905 and has since held this place, except only in 1914, when it fell slightly below Louisiana. The present cut is about 4,500,000,000 board feet annually. Oregon at present is the third State, with a lum- ber cut for 1918 of a little more than 2,700,000,000 board feet. That for California has never exceeded 1,500,000,000 feet. In the 12 years between 1906 and 1918 the cut of the West Coast increased only about 13 billion feet, largely because of the inability of the product to displace southern pine in the eastern and middle western markets under the handicap of higher freight rates. Within the last year, however, shipments have increased and yellow-pine markets up to the very boun- -daries of the producing territory have been invaded. ORIGINAL AND REMAINING FORESTS. The commercial forest area of the Pacific Coast States* has been reduced to approximately 57,586,000 acres. os of Douelas fir ¢ rester 7 p ; e ee younger, even-aged stands, as of I oug s fir and western white Reston (anes Percentile Bis Gitar ne pine; lowing fire. Along the Pacific coast the heavy stands . ~ | sand | acres.) Virgin. | Grow- | acres) sand of redweod, Douglas fir, western hemlock, and western red > ines a) 5 * | acres.) cedar formed one of the finest forests in the world. = — lees | —$— New England.............- 24,708 5 | 2,000} 8,761 8,372 | 5,575 PRESENT FOREST AREA. Middle Atlant 3 """] 28° 678 | 6| 17806 | 9,559 | 10,793 | 6/430 : : Nie : A 1 Lake... 2 57, 100 12} 10,100} 13,930} 12,570/| 20,500 To-day of the original forest area there remains but little Central. 56, 682 12 7,150 28,01) 24,011 2,220 more than half or approximately 463,000,000 acres, excluding 22| 18,300} 27,900 | 20,720 i “ases fr 0 5 illi acres yW-2re wood- | Lower Mississippi 17 | 20,835 | 20,200 | 13,755 in both cases from 100 to 150 million ucres of low-grade Rockey Module: 13 | 37°746 3313 3050 land and scrub. (See Table 4 and fig. 4.) Furthermore, | Pacific coast! .............- 13 | 39,369 5, 292 | 6,500 so far has the utilization of the original forest progressed Total eee 100 | 137,396 | 112,256 | 132,859 | 80,950 that of the total remaining area only 30 per cent, or 137 | | million acres, is virgin forest. The remainder includes 112 tiGomplete data for this region not available; total forest area aaa some Poe 2 Swe E a ae 5,000,000 acres more than indicated. million acres of second-growth saw timber, 133 million acres of second growth below saw-timber size, and $1 million acres which are not restocking. Cutting has naturally been heaviest in the most fertile and most densely populated sections of the TABLE 5.—Stand of saw timber in the United States by regions. Total saw timber. country. Thus in the Central States the original forest has Saw-tim-| | Softwood | Hard : cae : . : 5 ber ares illi We been reduced to one-third of its former extent, while in the Region. (thousand! Million. | ial ra (million Rocky Mountains 95 per cent of it still remains. More than 2CT OS) =f Board | cent. | fet). | feet). half of the virgin forests of the country are in the Western | _ iS : o [ate a in | Tak sa States, only 15 per cent of the virgin forest area being, in Now Rubland chan = eee aliaads 10,761 | 49,799 | 2 | 38,480 | 11,319 cluded in the Northern and Central States. Over nearly a fifth | Middle Atlantic. --| 11,455} 44,857 | 2), 15,353 | 29,504 : = : ; : 030 110, 110 5 40, 760 69, 350 of the present forest area the original timber growth is not 30,451 144.470 7 | 11.318 5 sins re el "he lereest areas of Wat gj ‘ ar South Atlantic and E 46, 200 220,577 10 | 136,827 being renewed. The lIsrgest areas of nonrestocking land are Lower Miss 41,035 | 13] 148°308 in northern New England, Pennsylvania, the northern Lake : as = verry GTA 10 Be ua é c . + 5 ~ a >aci ic coast ee cee Sorcerers | , 66 9 ,O31 | 51 | 1, 141,03 States, the pine lands of the South Atlantic and Gulf States, and a | parts of the Pacific coast States. Total... ..----Sevewvieesse= 249, 652 | 2,214,893 100 | 1,755, 218 TABLE 3.—Original and present forest areas in the United States by regions. . SAW-TIMBER STANDS. . ane AVA. - The original stand of saw timber has been estimated at not | eS ~ - . . . ~ - es | less than 5,200 billion board feet. In the light of the cut that Region. Original. = = R Z TS. Fee roe hus already been obtained, and of present standards of utiliza- | Total. Virgin. : oS ae ; : aes t tion, it is probable that the actual stand was considerably dicreseae || tA cres! Werest larger. Even taking the lower figure, however, less than halt New England...........-.---+----++--++ 38,908,000 | 24, 708, 000 2,000,000 | of the original stand, or 2,215 billion board feet, still remains Middle Atlantic 69,610,000 | 28,678,000 3,680,000 | 57, 100, 000 56, 682, 000 | a= s 1) 896, 000 99, 000, 000 4 10, 100, 000 (see Table 5 and fig 5). Of this some 1,755 billion feet is > ey softwoods and 460 billion feet hardwoods. Approximately TO 2 S55, 000 per cent of the total stand, including the best and most acces- ‘y - . . . . . . oO . . 39, 369, 000 | sible timber, is in private ownership, while about 498 billion ar 99 re . Tore $22, 238, mal 463,461,000 | 137,396,000 | Doard feet, or 22 per cent, is included in the National Forests. 2s ae ee : States and municipalities together hold only 59 billion board Lower ate ssippi- Rocky Mountain. Ba PACIHCI CORSE cocae cm esmticin cess c= Sonineeces 78, 865, 000 60, 842, 000 57, 586, 000 New Eng/and.. wa! co — ro essary oS} mb Middle Atlantic. aces i — 17 a cca 3 : ia Cord d : amen Ee, Sy Gy cc ah i fa SASF Paes rR oe {cseon| Non -restocking areas BOPP A ee ig ee Aa in, Se a ES ae sete A ise Seal Sourh Atlanr/c and £957 G.s/*_ | Rie Gaia an ann Serie tag _ETwo__,_,_iaea Lower /ss'35/pp/-\ Rial : i —— a A A Rocky Mounta/n. \iililleae aides it a Te a a vies ee _ i a bee ee a | Pacific Coast Sn ee ae) Million Acres —O /0 20 30 ae 50 70 8a 30 /0O % Complete daza for this region not available; total sty area Probably some five million acres more than (ndicated. Fic. 4.—Forest areas of the United States by regions and character of growth, TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. New England ---- Middle Atlantic_---- Gantral.2e.* 252 =< South Atlantic and Last Gulf.__.--- Lower Mississippi Rocky Mountain_---- Facifie Coast— ~ : 300 400 J00 600 HARDWOODS 700 800 BILLION BOARD FEET Fic. 5.—Stand of saw timber in the United States by regions. feet, or less than 3 per cent of the total. (See Table 6 and fig 6.) The exhaustion of the eastern forests and the steady progress of the lumber industry toward the West is well indicated by the location of the remaining stands of sawtimber. Thus, New England, the Middle Atlantic, Central, and Lake States, with 35 per cent of the total forest area, contain only 349 billion board feet, or 16 per cent of the total; while the Pacific Coast States, with only 18 per cent of the forest area, contain 1,141 billion board feet, or nearly 52 per cent of the total. (See fig 7.) Between these two extremes come the South At- lantic, East Gulf, and Lower Mississippi States, with 39 per cent of the forest area and 23 per cent of the sawtimber; and the Rocky Mountain States, with 138 per cent of the forest area and 10 per cent of the sawtimber. Altogether, 61 per cent of the present stand of sawtimber lies west of the Great Plains. In other words, the depletion of our eastern forest resources has now reached the point where the softwood stands in the Northern and Central States can no longer contribute any large proportion of the total softwood lumber consumption of the country, where the Southern States are losing the command- ing position that they have held for the last 20 or 30 years, and where the one great reservoir of softwood timber still left lies on the Pacific coast, chiefly in the Pacific Northwest. Douglas fir, with an estimated total stand of 596 billion board feet, approximately 85 per cent of which is in the two States of Washington and Oregon, is the principal species in the West. (See Table 7 and fig. 8.) Western yellow pine is a fair second, with a total stand of 250 billion board feet, 27 per cent of which is in the Rocky Mountains and 73 per cent on the Pacific coast. Following these two species, which together com- Eastern US.# Rocky Mountains Pacific Coast stands of 95, 91, and rs) i= SOFTWOODS /000 in the United States by regions. /100 33 1/200 prise nearly half of the softwood sawtimber in the entire coun- try, come western hemlock, the true firs, and redwood, with billion board feet, respectively. Taste 6—Ownership of forest area and stand of sawtimber 1 Not indicated because of lack of data. 7 and fig 8.) /00 150 AREA — 200 MILLION ACRES 250 Rocky Mountains Pacific Coast STAND — BILLION 8d. Ff. Wl Netiona/ Forest FH Other Public DO Other Private /000 E]) Farm Wood/ots in Eastern U.S. (Not estimated for western US.) 1100 Fic. 6.—Ownership of forest area and stand of saw timber in the United States by regions, T797—20—_5 1200 1300 AREA. Federal Private. (iiat e e| State. ise F ‘ot: |_and Region. Total. National |R™UBic-| Farm Total. | ~ ipal. Total. wood Forest. | lots. | = |— ais |- —— | = Thou- Thou- Thou- Thou- Thou- Thou- sand sand sand sand sand sand acres. acres. acres. acres. | acres. acres. Eastern United States....| 345,033 | 5,578 4,578 | 4,300 | 335,155 | 152,465 Rocky Mountains. 60,842 | 51,681 48,281 | 1,411 7,750 (1) Pacific Coast... - 57,586 | 30,319 26,876 | 1,475 25,792 (@) Totaleassseseesen a 463, 461 87,578 79,735 | 7,186 | 368,697 |........ } J STAND. Million Million | Million | Million| Million | Million board board board board board board feet. feet. feet. feet. feet. feet. Eastern United States.... 850,721 8, 184 4,184 | 10,000 | 832,537 | 340,288 Rocky Mountains -| 223,141 | 157,618 | 145,449 | 9,791 55, 732 (4) Pacific Coast.-.-. - 1,141,031 | 434,300 | 348,000 | 39,000 | 667,731 Q@) Motel sossee sea ea aa 2,214,893 600,102 497,633 58,791 |1,556,000 |.......- In the East the only softwood with a stand comparable to any of these is southern yellow pine, with a total of 258 billion board feet, or slightly more than western yellow pine. Spruce and fir come next, with a stand (See 350 34 TIMBER DEPLETION, PRICES 99 of 32 billion board followed by Norway pine, and bald cypress. feet, hemlock, white and The stand of these six species together is considerably less than half as much as the stand of southern yellow pine, and is only 6 per cent of the total stand of sdftwoods. The total saw-timber stand of white pine, once regarded as “inexhaustible,” is now less than the amount estimated to have been manufactured into lumber in either the Saginaw Valley or at Muskegon, Mich., and less than one-fifth of the total estimated cut from the State of Michigan. Of the hardwoods the only large reservoirs of virgin timber still left are in the Lake State, the Southern Appalachians, and the lower Mississippi Valley. The first two of these contain, respectively, about 58 billion feet of old growth. There is also a considerable total stand of hardwoods, estimated at approximately 133 billion board feet, in the Central States out- side of the Appalachians, but this is composed chiefly of second- growth material in widely scattered wood lots, and can not be counted on to contribute any large proportion of high-class material to the hardwoed industries. Oak is easily the lead- ing hardwood of the country, with a total stand of 157 billion board feet, followed by the three northern hardwoods—hbirch, beech, and maple—having together 91 billion board feet. (See Table 7 and fig. 8.) Three of the most valuable hardwoods— hickory, ash, and yellow poplar—together have an estimated stand of only 35 billion board feet, or less than 2 per cent of the total stand. That the depletion of the hardwood supply of the country has progressed even further than that of the softwoods is indicated by the fact that the hardwoods consti- tute only about 20 per cent of the saw-timber stand, as against nearly 30 per cent of the saw-timber cut. Moreover, the deple- is) o- ant tion is particularly marked in the case of the more valuable- woods. TABLE 7.—Stand of saw timber in the , EXPORTS, AND OWNERSHIP. While the cordwood forms more than one-third of the total volume of standing timber, less than one-sixth of the total is on the cordwood areas, which average only about 850 cubic feet to New England..} Middle Atlantic MBB forest Area Eake MMM Sawtimber Stand (J) 7ota/ Stand Centra/____-: South Atlantic and Last Gulf ___-- Lower Mississippi --- - Frocky Mountain ._.-- Facitic AINUOVANNONUQAUUOTEVOQADUONNGNGONONNNG ODODOOOUGVOQOGUUUIVUVNONOUNOGODONOUUOQUONOOROAOOOOOONO OGL Coast... een Sess Sera | eee Se Ga 7) 10 20 30 40 50 Percent Fic. 7.—Per cent of total forest area, total saw timber stand, and total stand by regions. . United States by species and regions. {Quantities in million board feet, lumber tally.) | N Middl Pehers I Rock | Pacifi Species. | ew iddle - tlantic Lower ocky ‘acifie Bbecle Total. | England Atlantic. Lake. Central. gud Hast Mississippi.) Mountain. | coast. | rulf. | 459,675 | (11,319 29, 504 89, 350 133, 152 83, 750 1S2¥G00|anetees ee: in | | | | Opies the hee Eaet een. se eat chron osteo ee eek 157, 372 | 1,510 5, 500 | 8,301 | 64, 712 | 27, 889 | Birch, beech, and maple. 90,784 | 8,143 16, 897 36, 076 20,505 | 4,522 Red pimioc.te ssc ss-==- 44 222i hacen ccs aa 765 Sohiaacs conn | 3, 728 13,400 | Chestnut. - 19,319 960 Bh 754. | Senestteeneee | 7, 989 | 6,616 IGEONYS soenene eens 15, 784 40 412 187 6,791 3,183 Cottonwood and aspen. 10, 824 374 13 999 2,131 1,340 | AS ise ste tee ini ae 9, 988 | 215 513 1, 893 2,929 1, 256 | Yellow poplar 9 OMe |oe ass cece 126 7 5,193 | 4,020 | ORNGYS oc. see esnaten oles eae sietisep eaeieeincameiietsle cai 101,771 | 77 2,113 21, 887 19,174 | 21,524 | ine Pec eeen soos Pes sectiecesa Ma Stern SOlbwOOdS ota = ws a's cie'e's ctecstctersicte ara nisincta aist-Jeictaw sleralele's 391, 046 38, 480 15,353 | 40, 760 | 11,318 136, 827 1885308 || aoe otal | eee ee Southern:yollowypine.-..- -s.-ee aoe e eee = cteee es 257, 691 121, 442 | Hemnlocket: - 2252: 30, 896 1, 845 | Spruce and fir 31,572 | (OYPTOSS= <= ieee 22,921 White and Norway pine. an 23,457 (OSB A ele eye nico Rambo AeOnt ROSE COCSOSCOSORECSETIGSC 24,509 Western softwoods. 1,364,172 Douglas fit. se... 4s os 2 ees Sot oe ee pe ees eee 595, 505 1 Western yellow pine and Jeffrey pine. PAA TG Y U0 (ee Se eee Pema cee ce (OT 66, 125 3,453 Western hemlock. id SEs 7 earner ae at ae SH 1,092 94, 000 Pruetixs sso el 01340)! Sater 8 | eR ie een o 8, 870 $2,479 Redwood. 2.220 os Se aes a pap. 1} | (Dept ace Seer Peat 2 Seed) FSP |” ||| Sn em | I ee es onl eres CES Pere Bone 72,208 Western white pine and sug ea EAR Vy 1d (Seine fee | ORS 2 Ta Pa 18,586 ° Western red cedar................-- ae BSN SIS ee ee eee |e ee ee 4,348 Lodgepole pine. _ 43 91:9)|| | ee | I re 39, 353 Nprice:.—-2---- a4 39, 822 26, 467 13, 355 Others:.€.2o5s5. sc gee cc de eee eee ccace ae| 66, 280 =| 21,366 44,914 1 Includes small amounts TOTAL STAND. The total volume of standing timber in the country, includ- ing both saw timber and cordwood, is estimated roughly at 746 billion eubie feet. Of this, 485 billion cubie feet is saw timber and 261 billion cubie feet cordwood. (See Table 8 and fig. 9.) of various species of yellow pine. the acre. This low average is in itself a striking indication of failure to secure a satisfactory restocking of our cut and burned over forest lands. This failure will have increasingly serious consequences, as depletion of the old-growth forests makes us more and more dependent on second-growth timber. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. oO 400 200 300 400 EASTERN HAROWOODS LA it A 500 600 35 Douglas Fir___] Southern Ye/iow Pine. | Western | Ye/iow Pine___ Predwood.. Westerr White Pine 9 Sugar Pine! festern White . Pore? Mornay Pine Cypress Aickory Yellow Poplar. BILLION BOARD FEET Fic. 8—Saw-timber stands of some of the more important species in the United States. TABLE 8.—Total stand in cubie feet on saw-timber areas and cordwood areas in the United States by regions. Total stand. Stand on— F Saw tim- Cordwood Region. Million ber areas| areas eubie | Percent.) (million | (million feet. cubic cubic feet). | feet). sas =| = = New England... ....:dsc2ssseneess 20, 850 3 15,492 5,358 Middle Atlantic. 24, 897 3| 17,126 7,771 50, 584 7| 41,534 9,050 PS ee oes 85, 118 11 | 61,319 23,799 nd East Gulf 96, 158 13 | 73,060 23, 098 Lower Mississippi. -..-....-.. 118, 364 16 95, 252 23,112 Rocky Mountain............... “| 61,893 8| 53,755| 8,138 ACI CICORSU Estee = ho Saree neem ee ane 287, 724 39 | 274,874 | 12,850 Wotal: sc a ae ST) Lower Mississippl.--- | eG OGG Sy Qo EAT 100 INVA if any, in excess of local requirements. In New England total consumption probably passed total output between 1880 and 1890, and within a few years this section will meet half of its total requirements from outside sources. New York has not produced lumber in excess of its own needs since a few years before the Civil War. The Pittsburgh district alone probably uses more lumber than is now cut in the entire State of Penn- sylvania, and the State ceased to be an important exporter shortly after 1890. The Lake States as a whole still produce more lumber than they consume, but already Michigan and Wisconsin are net importers and it is practically certain that the Lake States as a whole will consume more lumber than they produce within 10 years. Ohio, Indiana, and Illinois since records have been kept have always imported more lumber than they produced. West Virginia, Kentucky, and Tennessee were probably net exporters for about 20 years after 1890, but if thrown together with Ohio, Indiana, and Illinois, they form a group which has always used more lumber than it produced. No lumber-producing region in the East can with certainty be counted on to produce more lumber in 1930 than it will con- sume. The southern Mississippi Valley and possibly the south- ern Appalachian Mountains may produce more hardwood lumber than is needed locally, but they also are likely to be net im- porters if all classes of lumber are considered. Cube foot eguivalent of actual lumber obrarnabse on Saw7176Er Areas (1000 board seer = 637 Cubic Feex) HUH Femainder of stand on sawtimber areas al Stand on cordwood areas 125 1/50 175 225 250 300 Billion Cubic Keer Fic, 9.—Total stand in cubie feet on saw-timber areas and cordwood areas in the United States by regions, 36 A representative of the National Lumber Manufacturers’ As- sociation “ has recently predicted a decline in the cut of south- ern pine of 7 billion feet by 1930, and a further decline in other regions in the East of 2 billion feet, making a total of 9 billion. As further reducing the®eastern output available for general markets he estimates 1n increase in export demand by 1930 of 1 billion feet of southern pine and an increase in local require- ments in the South from 74 billion feet to 9 billion. He esti- mates the total increased production necessary by 1930 from other regions in the United States or from foreign sources at 114 billion feet. From a prewar normal production of southern pine of 15 bil- lion feet it is believed that a reduction to 9 billion by 1930 is very conservative, and the falling off of an additional billion is well within possibilites. The reported output of the southern pine region in 1918 was only 11 billion feet. The prewar normal of all other softwood and hardwood production in the East was somewhat less than 15 billion, and here a reduction of 34 billion feet in the cut by 1930 would be conservative, with possibly TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. the western traffic during 1919 averaged slightly more than 26,000 feet to the car. At this rate every additional billion feet of lumber shipped east would mean 40,000 additional carloads. Five billion feet would make 200,000 carloads. In addition to the difficulty in building and maintaining additional equipment are the physical difficulties involved in moving such vast amounts of freight. Assuming an average freight rate of $15 per thousand on shipments of lumber from the West and increased demands upon that region of 10 billion feet in 1930, the annuai freight bill for moving this timber to the eastern and middle western markets would be $150,000,000. This is about one-half more than the present average transportation cost for the same quantity of lumber, and will form a part of the annual price of depletion. Prior to 1840 the entire lumber cut of the country was used within a comparatively few miles of the sawmill at which it was manufactured. Transportation costs from mill to market, then varying from $1 to $3 per thousand feet, have risen to a maximum of $20 at the present time. [Be as cca Dest nserion NOFGlsS2-2 Growth _Cut and Destruction Softwoods . jo Growth Cutand Destruction Hardwoods Growth Billions of cubic feet Fic. 10.—Relation between forest depletion and forest growth. more than half of this coming from hardwood production. While no exact prediction can be made, it is certain that the total decline in output will be very large. For hardwoods we can turn only to the tropics for materially increased supplies. For softwood lumber we still have large reserves in the West. Of the more heavily timbered Western States the least can be expected from Montana. Increased cuts are predicted from Idaho, California, and Washington by men in the industry most familiar with the situation. The main increases, however, will have to come from Oregon. So far as domestic production is concerned, the entire United States will therefore be chiefly dependent for lumber in excess of local pro- duction upon three or four States in the far West. The part of the lumber traffic from the West which is not handled by ocean shipments via the Panama Canal must move east over the main lines of the transcontinental railroad sys- tems. Even under conditions of the past 10 years there has been a constant complaint from lumber manufacturers of in- ability to secure cars. The situation has been at its worst dur- ing the past year. Shipments for a very considerable part of “ Life of the Softwood Lumber Industry, by F. Vv. Dunham, field rep- resentative of the National Lumber Manufacturers’ Association, South- ern Lumberman, May 8, 1920. ‘come from greater distances, Even more important than the mounting costs is the menace involved in having tke principal markets of the country so entirely dependent upon distant regions for the supply of such an important raw material as lumber. Some of the railroad difficulties have already been discussed. Labor troubles are another possible contingency. How seriously bad weather con- ditions of a season or two at the logging camps can affect many industries and classes of consumers is now illustrated in the hardwood lumber region of the lower Mississippi Valley. Any one of many factors may disorganize the lumber markets and supplies of nine-tenths of the country, and a combination of these factors would be serious in proportion. If we elect to depend upon imports instead of home-grown timber, there is, first, the question of whether timber from foreign countries will be actually available. It would have to and obstacles in the way of securing it would be correspondingly greater. Transportation and other distribution costs would be increased, and higher costs are ordinarily represented in still higher prices to the consumer, Finally, we should have to compete for any supplies available with other countries which do not themselves produce all the timber they need. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. FUTURE TRENDS IN REQUIREMENTS. Future trends in requirements will be considered in detail only for lumber. Our requirements for pulp wood will expand rapidly, but the volume required, as compared with lumber, is small. The per capita lumber consumption in the United States in 1850, the year of the first fairly complete lumber census, was only 280 board feet, with a lumber production of 5.4 billion board feet and a population of 23,192,000. It then increased steadily until it reached its crest of 515 board feet in 1906, with a total lumber cut of approximately 45 billion feet. From 1906 to 1913 the per capita consumption declined to 4380 board feet. The war curtailed production to 32 billion feet in 1918, or 300 board feet per capita, of which part was for war pur- poses. This restricted use resulted in the abnormal demands and unprecedented prices of the past year. The experience of industrial European countries gives some indication of what American future requirements for lumber 37 over four times that for the entire country, times, and in Chicago at least double. Even with large allowances for the substitution of other ma- terials for timber, it seems hardly possible that our annual demand for lumber for years to come will fall below 35 billion feet. This is 5 billion less than the prewar average of approxi- mately 40 billion board feet. Even this will require a gradually reduced per capita consumption as population increases. For many years we shall find ourselves unable to satisfy our re- quirements With anything approaching the per capita consump- tion of either Englund or Germany. It follows that any future lumber production falling below approximately 35 billion feet, unless we can make up the difference by imports, will result in hardship to many classes of consumers and to many industries, like that experienced within the last year. Any such reduced consumption will unquestionably be the result of economic pres- sure from lumber shortages and high prices rather than of eco- homie convenience. We have our warning in the present situa- tion. in Pittsburgh three Cur ard Westrucr/orr Tota/ Growth ca ernreeee se ae LAWITG/TD STQIOS Sotftwoods ' eS COW 711 EM RG WT ST ALAS: ar7rd Hardwoogs ey ut and CestrUuctlor? 117 GLOWNMTG SP ANTAS Growth 17 growing Starks Curt and destructor EA ine SAR ay ohana ‘Oo GrOWA 1 UITGIT? STATES Softwoods }' eh end destruction in growing stands | cea — Grows 12 growing staras Cut and destructor? 117 W1Lgl2 STAMOS Har) Growth 117 W11-G10? SFAa7aS Hardwoods |' Cuht ANd GeESTTUuCTIO/? 177 GIOWING STAMAS Growth 171 GLOWING SPATIOS Billiorrs OF board seer Fic. will be. In England, for example, during the 60 years from 1851 to 1911 the consumption of lumber increased from 40 board feet to 120 board feet per capita, although 95 per cent of her requirements must be met through imports at high cost. Similarly, German home production at least doubled during the 60 years between 1840 and 1900. Industrial development made it necessary to import constantly increasing amounts of timber, and in spite of the cost of imported material, the per capita consumption at the outbreak of the war was about 150 board feet per annum. The United States is still a new country. We still have large areas of undeveloped agricultural land. In much of our terri- fory first construction was of such a character that replacement on a larger and better scale will be desirable if not absolutely necessary. Our population is growing rapidly and there is no reason to believe that it will not continue to grow. Industrial development in many sections has hardly begun. How large the per capita consumption in industrial centers is may be judged from the fact that in St. Louis the per capita consumption is 7797—20-——6 11.—Relation between forest depletion and growth of saw timber. DEPLETION AND GROWTH. PRESENT DEPLETION AND GROWTH. The standing timber in the United States is being cut and destroyed at the rate of 26 billion cubic feet per year, or more than four times as fast as new timber is growing. (See Tables 9 and 10 and fig. 10.) That of saw-timber size is being cut for lumber and other uses and destroyed by fire, disease, and insects at the rate of 56 billion board feet per year, more than five and one-half times the growth of such material. (See fig. 11.) Such data as are available (see Table 9) indicate that about 40 billion board feet is taken each year from our remaining virgin stands, in which there is no net growth in excess of de- cay. The other 16 billion board feet comes from growing stands, but their growth is only 10 billion feet annually. In other words, besides the very heavy drain on our rapidly diminishing supply of virgin timber, we are cutting even the second growth saw timber more than one and one-half times as fast as it is being replaced. 38 TIMBER DEPLETION, PRICES, Comparison of the rates of depletion and of growth of all timber below saw-timber size discloses that even this material is being used up three and one-half times as fast as it grows, or at the rate of about 14 billion cubie feet, as compared with a growth of only about 4 billion feet. (See fig. 12.) If this serious situation continues it will reduce very materially the volume of the material which can reach saw-timber size in the future. This depletion of small timber is proceeding at an especially rapid rate in the case of hardwoods, perhaps in part because the supply of larger timber has been practically exhausted in several regions. The cut of cordwood material in hardwoods amounts to 84 billion cubic feet, five times the growth. EXPORTS, AND OWNERSHIP. Cordwood cut and destroyed Tota/ Cordwood growa Cordwood cut and destroyed Softwoods Cordwood grown Cordwood cut and destroyed Hardwoods BILLIONS OF CUBIC FEET Gordwood grown Fic. 12.—Relation between forest depletion and growth of cordwood. TABLE 9.—Timber removed each year from the forests of the United States. Equivalent in lumber which could have been At yg . ; ‘ q sawed from the same trees. Equivalent in standing timber. Cut. Quantity. > Hardwood. Softwood. Total. Hardwood. Softwood. Total. Board feet. Board feet. Board feet. Cubic feet. Cubic feet. - Cubic fect. UMDER eno. scetensceesnese 40,700,000 M Beet feet...... 8, 700.000, 000 32,000, 000, 000 40, 700, 000, 000 1,905, 390,000 7,008, 600,000 8,913,300, 000 Hewed ties. Ht 7500, 000 ties....... 2,100,000, 000 525.000, 000 2,625,000, 000 840, 000.000 210,000,000 1,050, 000, 000 Pulpwood......... See 4,550, 600 cords...... 200, 000, 000 1, 400, 000,000 1, 600,000, 000 64,350, 000 468,000, 000 532,350, 000 Round mine timbers. oat 250, 000. ,000 eubie ieek 375, 000, 000 375,000,000 750,000,000 162, 500, 000 162, 500,000 325,000,000 Meneing. .<..5-2-- ae 900; 000, 000 posts. . 165, 000, 000 460, 000, 000 825, 000, 000 360, 000,000 1, 440, 000,000 1, 800,000,000 POLES a eee ate socceeoee aoe 4,230,000 Ro es... 55, 000, 000 200, 000, 000 255,000,000 11,700, 000 43,550, 000 55, 250, 000 Shingles @850:000 Mishingles: =~ <2 2.22) Socescssenaceecess 890, 000, 000 8907000) 000 Ber sot ce seisntccnts 194, 700, 000 194, 700, 000 Vehicle stock, handles, | 870,000 M board feet......... 850,000, 000 20,000, 000 870, 000, 000 196, 500, 000 3,190, 000 199, 690, 000 woodenware, furniture, etc. Export logs and hewn vim- | 200,000 M board feet......... 100, 000, 000 100, 009, 000 200, 000, 000 22, 500, 000 22, 500, 000 45,000,000 bers. Moneeilops=s.ccceceene-- ce-o 650,000 M feet logs........... 660, 000, 000 120,000,900 780,000,000 101, 200,000 18,400,000 119,600, 000 Tight staves. . HosncSaces a 000,000 staves. - 380, 000, 000 55,009, 000 435,000, 000 83, 250, 000 11,990, 000 95, 240,000 Tight heading. soeeeeneeees 00 sets....- 140, 000, 000 15,000, 000 155, 000, 000 29, 250,000 3,250,000 32, 500, 000 Slack staves. -......2.------ 1, 1,010, 600,000 staves 265,000,000 40; 000; 000 305, 000,000 58, 080; N00 8,580, 000 £6, 60, 000 Slack heading. sodccodensosesd 61, 000, (OOUIseteses Se 2) Sceene 120, 000, 000 105, 000,000 225,000,000 26,750, 000 22,725,000 49,475,000 Hoops. . 2 333, 000,000 ) hoops. .--.-.----- | 90. 000,000 ¢ 90, 000, 000 19, 650, 090 Piling 1,500,000 pieces... : 90,000,000 19,500,000 Lath... 2/375, OOOKMMlA Th sen csec cst svwsls citatciteceiseces| coe caccies seicec ore | teccce cee neta neat | tale ein ctatetereretete rate rote | eestate arate a ate tere erate | ate eect eee Distillation...... 1,550,000 cords. , 000, 191, 350, 000 Tanning extract..... i 1; "250, 000 cords. 135,000, 000 146, 250,000 Excelsior... ..-.-s-. 4 200,000 CordStaaevesceee 75,000, 000 8,720, 23° 400; 000 MUSlWWOdd sess. e ce see eee | 2103000; 000/cords Joo oe. Sets onl nei aatersne maces|<- Snot ee recese te Geee ee eet eee ance. 7,315, 000,000 os 135, 000, 000 10, 450,000. 000 | sees g S|) ees | eee aan Hil is Se coduadansocenas Jeceece eee ce eee eee e eee eeeeeeees| 14, 790,000, 000 36, 590,000, 000 51,380,000, 000 11, 528, 700, 000 12,790, 215,000 24,318, 915,000 estroyed by— | Ringe eeene ere neon see Sade ooccsadcSoseaneEnonsonde] 500, 000, 000 1,750,000, 000 2,250,000, 000 330, 000,000 750,000,000 1,080,900, 000 TMISECLS NGISCRSENOLC sc conc aeemeee cones aces see eeeeemeee | 500, 000, 000 2, 000,000,000 | 2,500,000, 000 125,000,000 525, 000.000 650,000, 000 Ota owes ms cecsews sa’ s|[Gisrsieseris as salts cise se ee tote _15, 790, 000, 000 40, 340, 000, 000 56, 1380, 000, 000 11, 983, 700. 000 14, 065, 215, 000 26, 048,915, 000 Note,—Figures on amounts used are in most cases the most recent data available. 5 war years). Tasre 10.—Annual growth of saw timber and cordwood in the United States, by regions. Annual growth. . Growing Saw timber. Region. area, P bral Total. | cont Cordwood. i Per Board feet. cent. Acres. Cubic feet. Cubic fest. New England....| 17,133,000 | 474,000, 000 8 | 609,000,000 | 28 | 341,000,000 Middle Atlantic. .| 20,352,000 | 499, 000, 000 $ | 714,000,000 | 31 | 342,000, 000 ak Sue ee ey 26, 500,000 | 468,000, 000 9 | 988,000,000 | 46 | 251,000, 000 Central eats 47,312,000 | 906,000, 000 15 /1,458,000,000 35 587, 000, 000 South Atlantic | and East Gulf. .| 59,980,000 |1,594,600,000 26 |2,428,000,000 33. |1,062, 000, 000 Lower Mississippi 44) 275,000 | 983,000,000 16 |1,752,000,000 39 | 600,000, 900 Rocky Mountain . 17, 846, 000 | 365, 000, 000 6 | 461,000, 000 28 264 000, 000 Pacific Coast......| 11,717,000 | 706,000,000 | 12 |1,262,000,000 | 39 430, 000, 000 Motalis..4 |245, 115, 000 5,995,000,000 | 100 9,672 000,000 | 35 3,877,000, 000 With softwoods the depletion of saw timber is more striking, although the cut of small timber is also considerably in excess of its growth. Nearly three-fourths, or 40 billion board feet of the saw timber used and destroyed, comes from softwood for- ests, and about 82 billion feet of it from virgin stands. The total depletion of softwood saw timber is more than 64 times its annual growth of 6 billion feet. For lumber the average total cut for the period 1909-1918 was taken (5 prewar and For export logs 1913 figures were used. Fire loss 1s an estimated average including bad years, such as 1910 and 1919. The enormous excess of depletion over growth of timber is not because of unduly large consumption of tinrber products. It is due in part to needlessly large losses from fires and other causes, which to a great extent can be controlled. But it is due most of all to the wasteful methods of cutting and to neglect of cut and burned over forest lands. There are now in the United States about 81,000,000 acres of waste forest land, devastated by cutting and by fires, on which nothing of value is growing or likely to grow without a huge expenditure for reforestation. This area is equal to the combined areas of the forest lands of France, Germany, Belgium, Holland, Denmark, Switzerland, Spain, and Portugal. Besides the waste land there are in the United States approximately 245,000,000 acres bearing second-growth forest. In a large part of this forest, wasteful cutting or excessive grazing have reduced production to a mere fraction of what it might be with proper handling. To convert such stands into valuable producing forests will in many cases involve expenditures as great as though the lands were devastated. The area of devastated and partially devastated land is rapidly increasing. Tinyberlands are cut over much more closely now than formerly, with the result that after fires have killed out most of the young growth on logged-off lands there is little or no chance for reproduction to start. At least 5,900,000 acres of merchantable timber are cut over every year. TIMBER DEPLETION, PRICES, Part of it restocks and part does not. During the period from 1915 to 1918 an average of 9,400,000 acres of forest land was burned over each year, and in years like 1910 and 1919 the acreage was considerably larger. Some of this land restocks and some becomes waste, while the productivity of practically all is reduced. POSSIBLE GROWTH. If all of this land had been cut over in the first place, with due regard to securing a future stand, and had been protected from fires or excessive grazing after cutting, it would now be producing timber at least three times as fast as at present. Judging from the experience of other countries and from re- sults obtained where forests have been carefully treated in our own country, it is believed entirely conservative to assume that EXPORTS, AND OWNERSHIP. 39 the 326 million acres could produce at an average rate of 60 cubie feet of wood per acre per annum, or, in terms of saw timber, 150 board feet per annunr. This would mean a total annual growth on the present area of cut-over forest land, in- eluding that now devastated, of 194 billion cubic feet of wood, including 49 billion board feet of saw timber. At the same rate of production for the remaining 137 million acres of virgin forest in which there is now no net increment, our total com- mercial forest area is capable of producing annually, after the virgin timber has been cut off, at least 27} billion cubic feet of wood, including 70 billion board feet of saw timber. This ex- ceeds our present rate of use and destruction. With a rea- sonable per capita consumption, it would be able to meet in- definitely the needs of our growing population for wood and other forest products. FOREST DEPLETION AND LUMBER PRICES. The course of lumber prices in the United States has been very materially affected by the successive depletion of old and development of new fields of lumber production. As one great forest region after another has been opened up two counter- acting influences have been brought to bear on prices. One of these has been interregional competition. Exploitation has begun in new regions well in advance of exhaustion of the older sources of supply. The result has been to hold in check the gradual rise in price which would normally take place as competition relaxed with the diminution of supplies in the older regions and as exploitation advanced from the most accessible and easily logged timber to that involving higher costs of pro- duction and transportation. On the other hand the cutting out of the older regions and the resulting necessity of draw- ing lumber supplies from more distant fields has meant, of course, the periodic addition of new transportation costs. PRICE CHANGES AND REGIONAL DEPLETION. Thus prices have tended to rise at a step from one level to another and then to hold pretty well on this level for a term of years rather than to follow an ascending curve. This is most marked with the softwoods. EASTERN SOFTWOOD MARKETS. Table 11 shows the lumber prices in eastern markets at five-year intervals from 1840 to 1910 and yearly from 1910 to 1920. The prices are computed throughout on a gold standard to eliminate the distortion resulting from depreciated values during the paper-currency period. TABLE 11.—Trend of average wholesale values (eastern markets. ) Softwoods, 1-inch | stock. Hardwoods, 1-inch stock. Year. | | | First | Average First | Average | quality | quality quality | quality | per M feet. | per M feet. | per M feet. per M feet. a” iS S o = $10. 21.46 | 10. 24.35 | 10. 26.15 | 11. 24.45 | 11. 20.43 | 9. 41. 32 | 14. 37.70 14. 39. 93 "| 13. 33 38.41 | 14. 41.51 | ine 34.48 16. 29. 39 16. 34.06 21. 41.93 21. 42. 59 22. 43.50 | 24. 45. 06 2 44.53 25. 26 44, 92 27.88 42.76 25. 19 41.89 24. 41. 53 26.8 42. 60 29. 51.45 | 39. § : : 61. 58 | 44. ) 5. 131.55 73. 26 1178. 82 1 123. 80 1 Figures apply to first three months. While a great variety of factors have influenced lumber prices, a succession of price levels with sudden transitions correspond- ing to important shiftings of the field of supply may be readily ciscerned, ‘Phere has been much price fluctuation in the soft- 40 woods, but in every instance price declines have witimately been regained and new levels have been established, The underly- ing cause has been the widening distance between the sawmill and the consumer of its product. The trend of lumber prices in eastern markets since 1840 is further illustrated in figure 18, which presents average whole- sale values of upper grades of softwoods and hardwoods sepa- rately in relation to the average price trend of all com- modities. These values are expressed in percentages, with 1860 prices as the index basis, and on a gold standard through- out. Hardwood prices will be discussed in a subsequent section. Between 1840 and 1860 average prices of softwood lumber in the eastern markets followed quite closely the average price of all commodities. The lumber was principally white pine from New York, New England, and Pennsylvania. The average value of upper grades in the wholesale trade fluctuated between $20 and $30, centering about $25 per thousand feet, while ma- terial of average quality sold fairly uniformly at $10 to $11. Transportation costs were about $1 per thousand. About 1850 white pine from the Lake States began to filter through to the Atlantic seaboard, and by 1860 Chicago had replaced Al- bany, N. Y., as the leading lumber distributing center in the world. The increase in volume of the more distant Lake States timber entering the eastern market from then on was accom- panied by a price advance in upper grades from $24 in 1852 ‘to $30 in 1858, and may be accounted for by a growing short- age of eastern white pine. The Civil War greatly affected the price of lumber, in com- “mon with that of other commodities, through inflation; but calculated on a gold-standard basis softwood values did not increase materially until after 1865. But between 1865 and 1870 softwoods parted company with general commodity values, and with the exception of one brief period have so remained until the present time. The softwoods reached their new price level in 1866. From that year onward lumber prices, except as indicated, remained well above the average for all commodities. The general level of softwood uppers from 1866 to 1890 was between $34 and $40 per thousand, and that of the lower grades between $14 and $18, an increase over the prewar levels of $10 to $15 and of $4 to $8 per thousand, respectively. This was the period during which Lake States white pine was entering the eastern market in increasing volume, at increased transportation costs of about $5 per thousand. Undoubtedly the increasing absorption of timber from the Lake States by the Middle Western States, whose development was proceeding rapidly, and the growing scarcity of local timber also exerted a lifting influence on softwood prices. Large rafts of lumber were passing down the Mississippi River to Memphis, Vicks- burg, and even New Orleans. The financial depression which began in 1873 caused a tem- porary decline of lumber prices in common with all commodi- ties. Following 1879 softwood lumber prices advanced steadily until 1883, when the upward trend was checked by an increasing inflow to the large eastern markets of yellow pine from the forests of Virginia, North Carolina, South Carolina, jand Georgia, and the rapidly increasing cut in the Lake States. Supplies were brought to New York, Philadelphia, Boston, Baltimore, and other eastern centers by water transportation. During the year 1887, for example, over 200 million feet of southern pine was received at New York, an increase of nearly 30 per cent over 1886. Only a few years before there was but 4] TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. Oz6/ §16/ O/6/ S06/ 006/ SER/ O68/ SOW "ST “Old wv IA 088/ ILE/ OLE/ SIH 098/ SSH OS8/ Ste/ SOAIDOUMLOD f/f —— POOMP1OfY —-»— DOOMIJOS ---— 1 1 1 1 1 ' 1 1 1 ' ' 1 ‘ 1 ' ' 1 i = \. OZ6/- O48/ GO/HFS STATA 098/ QL NOLLYTTY N/ SLIXSVW NYTLS VF Ni SY/LIVONWO) T7110 STNTVA FOVYTAY ONY YFGN/7 JOOMLIOS ONY DOOMCYH FOVHI HO/H SO STINTVA FTVSTIOHM FOVYINY SO ONIYL = SXF. ESS ebay peybey ZZ “yy sojorog SS BU fof MO//Ak WLBYATIOS FI} Bliy DUI/OLAD YON CEE (2D BLOWN TAM bupryny)) aupg Moyes uraysnog TI SLAG A LZ OZ6/- OSG! DO/H¥IS ave a1 { Fes es ALI HHO MIN AL SF/DFSS LNIATSS/0 SO YI ENT NO ONFIFT LIFS ONVSOL Yad LOD LH THA TILYWLST SYTFINWIN XITNL 42 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. N a ILAD. AVERAGE SELLING FACE /N DOLLALRS FER NM. FEET TREND OF AVERAGE RETAIL LUMBER, PRICES IN MINNESOTA ANO NEBIASHA /N FELATION TO SHIFTING SOUP?CES OF LUMBER SUPPLY 50 AND AVEPPAGE MILL PRICES (FAICE CURVE FOR COUNTRY TRADE) ; 2 S 3 NS S JO 7 25 FEAD: LUMBER CUT /N BILLION BOARD FEET e : LON . = ERAGE Mi if HEARN 4860 1870 SECO EGO 4900 4W/O 1920 TIMBER DEPLETION, PRICES, one yellow pine yard in New York, and the receipts were insignificant. - The interregional competition which grew out of the rapid expansion of the lumber industry in the Lake States and the South during the eighties, together with the continued produc- tion in New England and Pennsylvania, was unquestionably the dominating factor in crowding softwood lumber prices down- ward and holding them at temporarily low but fairly uniform points for a decade following 1890. The average value of the upper quality lumber centered about $380 per M feet, and that of the lower quality between $16 and $17 per M feet. During this period the lumber-price trend coincided very closely with the ups and downs of the all-commodity price average. By 1900 the Lake States white pine and the South Atlantic yellow pine were waning factors in the New York market. This was due not only to the decline in cuts in these regions but also to the increasing absorption of lumber by expanding markets west of New York. The bulk of the softwood lumber in the eastern markets came more and more from the Gulf States by rail and water, with increased transportation charges totaling $6 to $9 per thousand. This resulted in prices again moving steadily upward and the establishment of a new level. The graph reflects between 1900 and 1906 an increasing di- vergence of lumber above average commodity prices. From 1903 to 1917, the period of greatest decline in the cut of the Lake States, the level of softwood prices remained fairly uniform. Upper grades averaged from $40 to $45 and ‘lower grades from $24 to $26 per thousand, an advance of from $10 to $15 and from $5 to $10, respectively, over the previous level. There were, of course, minor fluctuations, and since 1907 an abnormal pressure downward on prices arising from weak markets and overproduction in most, if not all, of the producing regions. This is especially true of the years 1914 to 1916, a period of great regional competition in all large softwood lumber markets. i In 1917, it will be noted, the curve for all commodity prices advanced sharply beyond softwood lumber prices for the first time since 1865, due, of course, to war conditions and the fixing of prices by the Government for the more important softwood species. With the close of the war came the opening of a new period. Radical changes had taken place in the general situation. The strain of overproduction and intense regional and interregional competition was markedly relaxed. The cut of southern pine had fallen off some 34 billion feet since 1915, and lumber pro- duction in practically all regions excepting the West was below normal. With the first development of sharp demand following ‘the middle of 1919, therefore, there was demonstrated as never before in the history of lumber prices the effect of regional reduction of lumber production and its consequent weakening of the great leveling influence of interregional competition. By March, 1920, average mill prices in both the South and the West were more than double the average prices received in 1918 and more than four times those of 1914. These increases were swiftly reflected in the large eastern markets. The average value of upper softwood grades was $42 per thousand in 1914, $51 in 1918, and $131 a thousand in March, 1920. Similarly, lower grade material rose from $25 in 1914 to $40 in 1918 and to $78 in 1920. These phenomenal price advances, although precipitated by a variety of factors, unquestionably reflect in part a current transition to another lumber price level, the measure of which is clouded in present abnormal conditions of trade and finance, EXPORTS, AND OWNERSHIP. 43 supply and demand. ‘The new level will be founded on perma- nent increases in production costs and the increasing extent to which eastern markets will have to draw upon western lumber at transportation costs of $15 to $20 per thousand feet. Softwood wholesale lumber prices since 1840 have therefore passed through three main levels in eastern markets and are now apparently in the initial stages of the fourth. The first level, prior to 1861, was characterized by local supplies and up- per grade prices of $20 to $25 per M. The second extended from 1865 to about 1900, with prices of from $35 to $40, and supplies drawn from the Lake States, and the third level, from 1900 to 1918, with the Southern States as the main source of supply, and with prices of $40 to $45. the fourth level are not yet stable. Prices for MIDDLE WESTERN MARKETS. In the markets of the Middle West the effect upon lumber prices of changes in sources of lumber supplies, with their accompanying changes in transportation costs, lumber stocks, and interregional competition, is even more strikingly shown. These Middle Western markets have during the past 25 been dominated by first one species and then another. Each change has grown out of cumulative forest exhaustion or reductions of lumber cut in main forest regions tributary to the markets. Prior to 1900 lumber stocks in the retail markets of the Mid- dle Western States were largely of white pine from the Lake States, distributed at low transportation costs by water and short rail hauls. Lumber production of the Lake States was at its peak. White pine moved in heavy volume by water to Chicago, and in the form of logs down the Mississippi River. Practically every river town of importance had one or more saw- mills. Dubuque, Davenport, and Rock Island, all in the very heart of the consuming region, had, for example, many mills from which lumber was distributed locally and by rail to con- suming markets. Transportation costs were relatively small, lake rates to Chicago, for example, ranging from $1 to $2 per thousand feet. Following 1900 the sharp decline in the production of north- ern pine, due to the exhaustion of the more accessible forests, was reflected in a gradual shrinkage of white-pine lumber from the stocks of retailers farthest removed from the white- pine region. Mills along the Mississippi River, unable longer to get steady supplies of logs, began to close down. By 1905 most of the mills from La Crosse and Winona downward were idle. Coincident with these movements wholesale and retail lumber prices, even in the southern Minnesota region, began to move upward. Wholesale prices of common grades of north- ern pine increased $8 to $17 a thousand feet, while the retail prices advanced $10 to $15 a thousand feet. This upward movement of average retail prices from around $16 in 1895 to $25 in 1905, in response to mill prices and the declining soft- wood cut in the Lake States, is clearly reflected in figure 14. During the same period yellow pine from the South was moving northward in increasing volume, taking markets which northern pine could not supply and exerting through inter- regional competition a restraint upon inereasing white-pine prices. From a production in 1899 of less than 10 billion feet, the cut of southern pine increased to more than 16 billion feet in 1909, carrying with it a gradual transition of lumber stocks from white pine to southern pine throughout a large part of the region. The southern forests were, however, less accessible to the principal markets of the region, and in place of water transportation in part or in whole, rail transportation amount- years 44 TIMBER DEPLETION, PRICES, ing to from $4 to $6.50 per thousand feet was necessary. This imposed an added cost to lumber and raised the general level of lumber prices. Had not these great southern forests been available to meet the rapidly increasing demands of the region and to replace the declining cut of the Lake States, lumber prices in the Middle West following 1905 would unquestionably have reached and maintained a materially higher level than has actually existed. Following 1912 southern yellow pine was the predominant species in the retail yards of Missouri, Kansas, Oklahoma, Nebraska, Iowa, Indiana, and Illinois. It dominated the retail trade. In western Kansas and Nebraska and in North and South Dakota Douglas fir from the coast and western pine from the Inland Empire had largely replaced white pine, while in Wisconsin hemlock formed the principal species in the lum- ber yards. Only in Minnesota and immediately contiguous localities was white pine the leading species in the retail trade. It will be noted from figure 14 that from 1906 to 1917 the level of retail lumber prices fluctuated around $30 per thousand feet and mill prices around $15. This is explained by the de- velopment of further interregional competition from the west- ern forests. Following 1900 the cut of the Pacific Coast States increased rapidly from about 3 billion to more than 7 billion feet in 1910. Surplus stocks soon began to move eastward, and Douglas fir from the West Coast and western pine from the Inland Em- pire became active factors in the northern-pine markets of the Dakotas and Minnesota and in the southern-pine markets of western Nebraska and Iowa. The period 1908 to 1916 was cne of periodic business depression and overproduction at the mills. In order to move stocks of lumber in the South and in the West, prices were often set at cost of production or less. Southern pine and Douglas fir met in keen competition in the Prairie States. This expanding movement in yellow pine and ’ Douglas fir competing for markets naturally exerted a leveling portion of the Middle West. ume than any other species. pressure upon lumber prices. It was a buyers’ market. Buyers whipsawed the price of one species against the other, and thereby exerted further pressure downward on both wholesale and retail prices. From the standpoint of the public, or the lumber consumer, the situation is illustrative of the great economic advantage of haying large available forests in different producing regions. When the supply of lumber from the Lake States first began to decline radical price advances were unquestionably prevented by the inflow of a great volume of lumber from the South. As the southern pine lumber established itself in the markets of the Middle West, the exhaustion of timber in the Lake States reached a point where northern pine and hemlock ceased to be- come effective competitive factors, except in very limited re- cions, but further advances in lumber prices were checked by the great inflow of lumber from the West. The increasing volume of western lumber in the middle west- ern markets obviously increased the freight rates borne by lum- ber. That these increases are not reflected by figure 14 is due to the fact that during the period 1910 to 1916 they were largely absorbed by the mills in lieu of profits in order to move surplus These conditions are shown graphically in figure 15. They therefore have acted as springs, exerting pressure upward and intensifying the responsiveness of prices to any release of pressure from above. In the retail trade of southern Minnesota, for example, the average transportation cost borne by lumber stock. in 1905 amounted to about $3 per 1,000 feet. In 1915 it had increased to $8.50, and in 1919 to practically $12 per 1,000 feet. EXPORTS, AND OWNERSHIP. Normal markets for lumber in the Middle West largely dis- uppeared during the war. The needs of the Nation in prose- cuting the war, however, eventually absorbed available lumber stocks. There was little active demand for lumber, but poten- tial demands steadily accumulated. In the meantime lumber production in almost all regions. declined. Restrictions on lum- ber were lifted following the armistice, and the great pent-up demand for lumber was released into normal channels of trade. Prewar conditions of business depression and overproduction at the lumber mills had passed. There developed, indeed, a striking reversal of those conditions. Lumber was needed in great volume to supply the shortage of homes and other build- ings. Wood-using industries were short of lumber to resume business on a prewar scale. Industries began to expand on the abnormal increase of credit growing out of war financing. Production of southern pine lumber had passed its peak. The South was prosperous and in need of lumber. It absorbed the cut of southern mills at high prices in greater volume than ever before, while eastern markets likewise drew more heavily upon the South. As a result of the foregoing conditions, the former dominating and far-reaching competition of yellow pine was much con- tracted, and the great markets of the Middle West were left primarily dependent upon timber from the Pacific coast and the Inland Empire. The greatly reduced cut of the Lake States’ forests was wholly ineffective as a competitive factor in exerting a leveling influence upon prices, and the upward pressure of increased transportation costs and lean profit years prior to the war to act. Within a year or 18 months Douglas fir became the principal species throughout the greater To-day it forms 80 to 90 per cent of the retail stocks in Minneapolis, which has always been a great white-pine market. It is found in Chicago in greater vol- In Kansas City, which is on the very edge of the southern pine district, it forms more than 50 per cent of the lumber stocks. In the foregoing conditions may be found the underlying causes for the chaotic price situation which developed in these middle western markets during the latter part of 1919 and the first months of 1920. Beginning with June, 1919, prices moved steadily upward. It was the beginning of an intensified sellers’ market. Wholesale and retail lumber prices reached the highest point in the history of the industry. As shown by figure 19, the average sales values of retail stocks in country districts in March were around $85 per 1,000 feet, while average wholesale mill prices ranged from $45 to $60. The trade was plunged into confusion. Buyers needed lumber and were willing to bid for it. For several months prior to March, 1920, lumber prac- tically lost uniformity of price in many markets. Quotations in the same market varied from $2 to as much as $50 per thousand feet on the same grade. The tables of 1914 and 1915 were turned. Sellers whipsawed buyer against buyer. Lumber was auctioned to the highest bidder, with prices continually going higher. On some of the upper grades, especially among the hardwoods, sellers refused to make quotations or to grant op- tions on expected material. Through the use of the transit-car privilege dealers often held cars for big prices, paying demur- rage charges and gambling on further price advancements. Instances were cited where transit cars changed hands six and eight times standing on the sidetracks. The movement of lumber prices and lumber stocks in the Middle West reflect what occurred in varying degree in prac- tically all other large consuming markets dependent upon lum- was set free Do.tars PERM Fr THOUSAND FEET DoLLaARs PER M FEET z Ss TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. COMPARISION OF INCREASING TRANSPORTION CHARGE BORNE ay LUMBER IN CouNnTRy Rerait TRADE iN SaMINNESOTA (Average freight cosr per M freer) TREND OF AveRAGE RETAIL LUMBER PRICES PER M Fr AND OTHER ESSENTIAL FACTORS OF CosT Country RETAIL TRADE MINNESOTA MUU LAT YO Zim ILLUSTRATION. OF CHANGING SPECIES In RETAIL. LUMBER STOCKS N Countrr Wares Ua MINNESOTA CS Pe Cerr Norrhern Pine WEBB “e- Cenr Doughos fir & Wesrern Pine Per Cenr Wisc Hemlock MMM Per Cenr So Yellow Pine Averace LumeBer In_ M Basis -Total Feetage Sales Nebraska- 6! Million Ft Minresota-S5'/SMillion Fr 190/ /Q!2 (WS 1019 S9AS (9/6 19/7 Fia. 15. 19/8 7-7) 500 DOLLARS PER M FEET PER CENT 7 a as THOUSAND F 46 ber from distant regions. As in the Hast, the effects of forest depletion are clearly discernible. Because of interregional com- petition these effects are manifested in the form of successive price levels, the first prior to 1900, with retail price averaging around $16 and the Lake States as the source of supplies; after a period of transition a second, beginning about 1906 and last- ing through 1916, with prices centering around $30 for southern lumber. The rapid advance and chaotic prices of recent months are symptomatic of a transition to a third and permanently higher level than that which has prevailed during the period in which southern pine has dominated the situation. It is true that lumber prices. were bound to rise with pro- ducing costs and in common with other commodities. It is true also that their sudden skyrocketing was unquestionably precipitated by a combination of many conditions, including unfavorable logging weather in the South, reduced stocks at the mills, car shortage, ete. The relation of producing and distributing costs to prices will be discussed in a subsequent section and the underlying cause of the extraordinary and unpreedented price movement since the armistice is not found in that relation. It is found in the weakening of inter- regional competition brought about by a temporary shortage of lumber, occasioned primarily by curtailed production re- sulting from conditions growing out of and following the war. Cumulative forest depletion in regions formerly supplying the big lumber markets of the country has been an important con- tributing factor. The great balance wheel of interregional competition is unable to function effectively and without interruption as the regional sources of timber supply are exhausted and abnormal conditions, such as have characterized the postwar period, are thus free to play a larger part in violent and extreme changes in market conditions. Had the Middle West been able to draw on ample forests of northern as well as of southern pine to meet the demand of un enlarged and insistent market the response would have been far easier and the situation far less acute. Had it not been for the fact that timber from the far West was partially available to lessen the strain of a demand far beyond the supply the pressure would have been still more extreme. It is safe to say that Douglas fir will not permanently lose the place which it has now obtained in the markets of the East and the Middle West, but on the contrary, as the output of southern pine declines it will more and more dominate those markets. The freight tolls upon it are being incorporated in the new price level. And the crisis which has brought about its extensive introduction serves to illustrate what may be expected with increasing frequency and intensity as forest depletion proceeds and no steps are taken to make cut-over lands productive. EASTERN HARDWOOD MARKETS. Wholesale prices in the eastern markets for upper grade hard- woods are shown in figure 13 between 1855 and 1920, and also with material of average quality for somewhat shorter periods in Table 11. The hardwood price curve follows closely that for all commodities until 1860, since when they have been separat- ing gradually except for a short period following the Civil War. The curve of hardwood prices in figure 13 indicates a much sharper and more consistent increase in hardwood than in soft- wood prices. The leveling effect of interregional competition is less apparent, due in part to the more general distribution of TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. | hardwood forests and the relatively smaller consumption of hardwood lumber. Four rather distinct price levels are ap- parent, however. Between 1865 and 1875 there was a rapid rise to almost double the prewar level, followed by a steady increase until between 1960 and 1905,’ when another abrupt rise marked a new general level of hardwood prices. Again in 1918 a still higher level is indicated by an increase of more than $10 a thousand over 1917, and during 1919 and the early months of 1920 a very much greater increase, which carried the average price to almost $125 in excess of that shown for 1917. 5 In the early days, when transportation systems in the United States were undeveloped, commerce in hardwood lumber was limited, owing to the difficulty of rafting. Its consumption was mainly by local markets immediately tributary to the source of supply. Between 1850 and 1860 hardwoods were cut near the consuming centers. Prices were low and the quantity consumed was comparatively small. First-quality white oak sold in the eastern markets in 1855 for $10 per 1,000 feet wholesale, poplar for $11.50, and ash for $10.50. Following the Civil War the commerce in hardwood lumber expanded rapidly with the development of railroads. By 1870 hardwood lumber from Ohio and Indiana was being shipped by rail to the eastern markets, and the local cut was no Jonger sufficient to meet their needs. Prices had risen to about $26 per thousand for oak and $25 for ash and poplar. With the development of the wood-using industries and the increasing use of hardwoods for special purposes. the industry began ex- panding into the highlands of West Virginia and the southern Appalachian Mountains with increased logging and transporta- tion costs. By 1890 the price of ash and oak had increased to . $35 and poplar to $30 per thousand, and in the 10 years follow- ing 1890 oak increased to $48, ash to $45, and poplar to $36 per thousand. Between 1900 and 1909 the total hardwood cut in the United States gradually increased. During the decade following 1910, however, the hardwood cut of the country steadily declined from ten and a half to between 6 and 7 biilion feet in 1918. This decline is reflected in all hardwood regions excepting the iower Mississippi Valley, which has increased from a produc- tion slightly less than S00 million in 1900 to almost a billion and a half feet in 1917. The growing dependency of wood-using industries and other hardwood consumers upon the hardwood cut from the lower Mississippi Valley serves to emphasize the growing exhaustion of the hardwood forests in the central, eastern, and northern hardwood regions. The South is the last large hardwood reserve, and its reduced cut during the past two years, because of bad flood conditions, labor shortage, and other temporary factors which have curtailed both log and lumber output has been a large factor in bringing about an acute shortage of hardwood lumber in practically all markets. The general condition of the hardwood industry following the war became even more unsettled than that of the softwood lumber industry. Hardwood lumber used for war purposes was confined largely to oak, hickory, walnut, yellow poplar, bass- wood, and ash, the stocks of which were well exhausted by the close of the war. The production of other hardwood species was curtailed on account of Government restrictions. The wood- using industries were short of dry stock to meet the demand for furniture, finish for homes, and other hardwood products. ¢ that price. TIMBER DEPLETION, PRICES, The result was that hardwood lumber was bid up to unprece- dented prices.. The market became extremely erratic and un- stable. Several species such as ash practically disappeared from the market. Quotations often did not hold good over- night. It was not uncommon for cars of hardwood lumber to net the owners profits of $50 to $100 and over per 1,000 feet. As an example, a jobber who had bought a car of quarter-sawed oak from a small mill operator for less than $100 per thou- sand immediately sold it for $400 per 1,000 feet. — Wholesale and retail prices in 1920 of a number of the more important hardwoods in relation to prices prevailing in previous years are shown in Table 12. The growing scarcity and high prices of oak are probably of greatest concern, because it is used by such a. great variety of industries and consumers. The cut of oak reached its peak with the decade between 1899 and 1909. For the two years mentioned the cut was identical and amounted to nearly 44 billion feet. Since 1909 there has been a general falling off in production, and in 1917 the cut had dropped to a total of 2 billion and was only 44 per cent of the cut in 1909. The lower Mississippi Valley holds the last large reserves of oak timber in the United States. The cut in these States de- creased from about 715 million feet in 1909 to about 470 million feet in 1917. In 1913 the wholesale price of F A S quartered white oak, used generally by the furniture and musical instru- ment manufacturers, was about $80 per thousand. In February, 1920, it had risen to about $800, and was difficult to procure at To manufacture quartered oak first quality, large sized, straight-grained logs are required, wltich are obtained only from old growth or virgin timber. Quality depletion of timber is important in this case. TABLE 12.—Wholesale and retail prices of hardwood lumber at various points throughout the United States. WHOLESALE PRICES (DOLLARS PER 1,000 FEET). February, | February, | February, | 1914 1919. 1920. OAK. | Firsts and seconds 1-inch plain boards: | Philadelphia) 2-23... so 4-esea= 160.00 80. 00 200. 00 New York City 60. 00 82. 50 200. 00 Pittsburgh....... 2 62.00 75. 00 225.00 Cincinnati 55. 00 75.00 200.00 No. 2 common 1-inch plain boards: “ Philadelphia | 130. 00 46. 00 95.00 New York City. | 29. 00 41.00 95.00 Pittsburgh... 234.00 40. 00 112. 00 Cincinnati eye 24. 00 27. 50 87.00 ‘irst and seconds l-inch quartered boards: NewYork City2is.---5.- fp oceees 88. 00 127. 00 310.00 Pittsburgh. 2 80. 00 95. 00 300.00 IPincinnatipstecsacemse cece a= 78. 50 85. 00 300. 00 ASH. Firsts and seconds 1-inch boards: Pehilade) bia Se a ace abe in oc anes 156.00 90. 00 185. 00 New York City. 55. 00 83. 00 190.00 @incinnAiiet eee eae eee setae we ee as 74.00 78. 00 200. 00 No. 2 common 1-inch boards: TALATEYG EE Faia 8 A eee See e Eee aoe 124.00 45.00 75. 00 New York City - 27.00 | 41.00 | 98. 00 Cmcinnaties sesso eh aeeaeecos tamer ese 27.00 | 28. 00 80.00 YELLOW POPLAR. | Firsts and seconds 1-inch boards: Cincinnati... . 62. 00 80. 00 190. 00 Philadelphia 60. 00 | 106. 00 180. 00 No. 2 common 1-inch boards: Philadelphia... .... 123. 00 | 48.00 93. 00 Pittsburgh... a 2 27.00 | 42. 50 67.00 Cincinnati 26.0 222.2 eee 23.00 29. 00 75. 00 RED GUM. Firsts and seconds 1-inch plain boards: | NEW MOL Cityeemeras sete sen eesteaaee ~ 37.00 | 58.00 195. 00 MAHOGANY. Firsts and seconds Mexican and Honduran ey 1-inch boards: ING WORK IG is jecc sec ccod ence eenecnacecn 155. 00 | 270.00 330. 00 1 February, 1915. 2 February, 1913. EXPORTS, AND OWNERSHIP. 47 TABLE 12.—Wholesale and retail prices of hardwood lumber at various points throughout the United States—Continued. RETAIL PRICES (DOLLARS PER 1,000 FEET). | February, | February, February, 1914 1919. | 1920. OAK. | Firsts ang seconds l-inch plain boards: 132. 00 5 Pittgburen. oP 100. 00 260. 00 enna 100. 00 265. 00 Rittsborghel se ee n= > ce ee ll a ee 154.00 i means | 150. 00 Cincinnati 46. 50 116.00 Firsts and seconds 1-inch quartered boards: New York City 115. 00 192.00 | 400. 00 Pittsburgh 198. 00 126.00 | 385. 00 Cincinnati 106. 00 115. 00 385. 00 ASH Firsts and seconds 1-inch boards | Philadelphia. _.... wetteew anes vic velvawasiafoacs sctoeueee| Sena emeneaes| Ueneaeeeeaee New York City. 95.00 138. 00 245. 00 Cincinnati. =. 2o-Saqcccasregecmlcn eee cee ese 97. 50 105. 00 265. 00 Nc. 2 common 1-inch boards: | Philadelphia......-..... New York City... 45.00 60. 00 140. 00 Omeinnatii se saeeee soe sc oe eee cee ses eee 36. 00 37. 50 105. 00 YELLOW POPLAR. | Firsts and seconds 1-inch boards: | Cincinnati! 2... 2... Philadelphia.......... No.2 common 1-inch boards Philadelphia Pittsburgh Cincinnati RED GUM. Firsts ana seconds 1-inch plain boards: Ne waviorkd Citys sas 9-n> soot seteceae ce. a|bemwansee see | 102. 00 247. 50 MAHOGANY. | Firsts and seconds Mexican and Honduran | Mahogany 1-inch boards: ING Ww? York City 2-2 fo ssew ccs acsbencncesce 175. 00 330. 00 400. 00 . i 1 February, 1913. Red gum, which 20 years ago was considered a weed tree and little cut for lumber, commands a wholesale price of $200 per thousand for F A § figured and $180 for F A § plain. Plain oak flooring in 1913 in Ohio cities retailed for about $75 per 1,000 feet. In March, 1920, the same material brought $8300 per 1,000 feet. White ash trim F A S in 1913 retailed for $72 per 1,000 feet To-day it is very difficult to procure and quotations are not generally available; however, sales’ have been made at $265 and over per 1,000 feet. Maple floor- ing in 1918 retailed for $60 and in March, 1920, for $240. “Yellow poplar F A S in 1913 retailed for $70 and in February, 1920, for $225. Wholesale prices for hardwoods in the eastern markets are therefore characterized by more continuously rising prices and much less pronounced price levels than for softwoods. This is the logical result of the distribution of hardwoods, the larger bodies of which merge into each other and are less distinct than the principal softwood regions. The center of hardwood produc- tion has therefore moved gradually away from the center of con- sumption.” The $10 wholesale price for first quality white oak of 1855 had, by the early months of 1920, reached $230, and the prices of other species had increased proportionately. Without linimizing other factors that have affected prices, the effect of depletion is not less clear or pronounced than in the case of the softwoods. PLENTIFUL AND DEPLETED SPECIES. The foregoing increases illustrate the effect of growing searcity and regional forest exhaustion upon the price moye- ments of species of general and special use. This is further | brought out graphically in figure 16, which shows the price trend of walnut, a species of limited quantity and special use, 45 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. S260 TREND OF AVERAGE PRICES OF UPPER ot OF WALNUT AND EASTERN WHITE PINE,/IN RELATION TO UPPER GRADES OF SOUTHERN YELLOW PINE. WHOLESALE WPRICES FER MiTELT IN LASTERN MALAETS (No quotation on ee after 1W/8 /90 /80 /70 | /60 ae 150 /40 /30 /20 //0 /00 90 80 VALUE PERM B.F.—DOLLARS 70 (940 1845 1/850 1855 1860 1865 1870 1875 /880 /885 1/890 1895 1900 1905 1910 1915 1920 YEARS Fic. 16. TIMBER DEPLETION, PRICES, and of the upper grades of white pine, a species formerly avail- able in large quantities and of general utility, but now near- ing exhaustion, in relation to upper grades of southern pine, a wood of present large-quantity production. The curve for walnut, it will be noted, shows a rise in price from $25 in 1865 to $112 in 1905, without a single drop. This was undoubtedly due to the comparatively small original stand of walnut. At present firms handling walnut in quantity have scouts in the field searching out and buying single trees to supply their needs. In contrast to walnut prices, the prices of white pine were only slightly higher in 1895 than in 1866. During this period white pine was the general utility wood. It was available in large quantities in pure stands first in southern New England, then in New York and Pennsylvania, and later in the Lake States. To-day it is largely a specialty wood. The transition from a general utility to a specialty wood following 1900 is strikingly illustrated by the marked divergence of the white- pine curve from the southern-pine curve. The difference in price in 1900 of approximately $20 per thousand had reached $70 in 1915 and $130 in 1920. PRICES IN DEPLETED OR NONFORESTED VERSUS FORESTED REGIONS. Retail prices collected indicate that in normal times and much more during periods of shortage and extreme prices, such as the present communities close to large lumber-producing regions, benefit very materially in lumber prices. Retail lum- ber sales in producing regions of the South and the West are ‘often made at rates which check closely with wholesale prices in the respective regions. This is an advantage which formerly forested regions, such as the Lake States, Pennsylvania, New York, and New England have now lost. Lumber dealers in producing territories are able to handle lumber on a smaller margin than retailers at distant points, primarily because they are near the source of supply and are not required to carry large stocks or to buy lumber far in advance in anticipation of delayed shipments and traffic breakdowns. Present differ- ences, however, far exceed prewar margins. ¢ Furthermore, many mills retail lumber locally at whole- sale prices. Instances were found, in fact, where special prices below the going wholesale price were made by mills in order to stimulate local building and community development. Red- wood bevel siding sold in February, 1920, at a producing city in California for $40.90 wholesale and $43 retail. During the same month in Washington, D. C., and at Dayton, Ohio, the quoted prices on the same material varied from $110 to $130. The freight rate from California to these points was approxi- mately $8.50. The three tables which follow indicate retail selling prices in towns and cities in lumber-producing regions in contrast to prices prevailing in markets far removed from forest regions. In some instances, sale prices and price quotations from different dealers varied considerably, and in these cases an average of the prices obtained is used. TABLE 13.—Comparison of retail prices per thousand feet of North Carolina pine lumber at points in producing and in con- suming regions. February, 1914. | February, 1919. | February, 1920. North Carolina pine. Wil- Wil- 5 Wil- P ming- Shae ming- aa ming- New ton, Cit ton. Cit ton, Cit INE@ i iene tend NICs. | aon NG, CARY Flooring, 13/16 by 24 inches, No. Mend better. ee 2 caren Sachsnae 5.00 | $38.00 | $45.00 | $62.50 | $98.50 | $150.00 Partition, 7/16 inch, all widths Nor dand better ee | 97.50] 45.00 50.50| 64.50 | 101.00 150.00 Ceiling, 7/16 inch, all widths, No. 2 2 and better....... sonra cece 8.00 27.50} 32.00, 55.00} 46.00 91.50 The freight rate from Wilmington, N. C., to New York City amounted to approxi- mately $3.25 per 1,000 feet in 1914 and to $4 per 1,000 feet in 1919 and 1920. EXPORTS, AND OWNERSHIP. 49 TABLE 14.—Comparison of retail prices of southern yellow pine lumber in South with prices in consuming region. February, 1920. Average |A verage Southern yellow pine.| Points in producing eae Points in consumung | soline region. per M region. | per M feet. feet. = = —— = im Kansas City. Mo....| $133. 5é Lincoln. Nebr...... 1°5. 00 Country town, Kans.) 140.00 Dayton, Chio....... 150.00 Pittsburch, Pa. 142.00 Kansas City, Mo.... 66.45 Chicago, Ill.......... } 65.15 Flooring,1 by 4 inches 5 B and better, flat |; Meridian, Miss Bogalusa, La........ Mobile, Ala......... Montcomery, Ala... Dimensions, 2 by 4 SSS SS SS SSS inches, 16 feet S. & |{ Meridian, Miss...... 55.00 | Country town, Kans. 70.00 ENO: 1; common’.||/Bogalusa, Laisss...|'153,00!|22 ane. 20nd Pensacola, Fla..-... 55.00 |.... Mobile, Ala......... | 56.00 | Kansas City, Mo.... , ||Montgomery, Ala...| 51.60 | Country town, Kans. Common boards, 1 bY |! Meridian, Miss...... | 61.50 | Chicago, Tll...... ines *"S9 *|| Bogalusa, La. ---| 57.00 | Dayton, Ohio... Pensacola, Fla...... | 60.00 | Pittsburgh, Pa Mobile, Ala... e See 110.00 | Kansas City, Mo.... oe Montgomery, Ala-...| 120.00 | Chicago, Il.......... Finish, B and better; |\eridian, Miss-.....| 114.00 | Lineat Nebr... 1 by 6 inches, 8 feet... 112.50 | Country town, Kans Dayton, Ohio. ...... Pensacola, Fla Bogalusa, La. . ‘The freight rates per 1,000 feet from southern yellow pine mill points to Kansas City, Mo., Lincoln, Nebr., and to Chicago, Il., Dayton, Ohio, Pittsburgh, Pa., amounted to approximately $7.25, $7.90, $6.50, and $7.50, respectively. TABLE 15.—Comparison of retail prices of Douglas fir on West Coast with prices in consuming region. | February, 1920. | Aver- Aver- {lenek : bs age age Douglas fir. | Points in producing selling , Points in consuming | selling | region. price region. price per M per M | feet. | feet. | Tincoln, Nebr....... $112.50 Z Country town, Kans.) 125.00 Flooring, No. 2 clear, |{Portland, Oreg...... $85.00 || Kansas City, Mo....| 128.35 vertical grain, 1 by |{ Eugene, Oreg....... | 110 00 | Chicago, HI.......... 111.65 4 inches. Bellingham, Wash..| 88.00 || Minneapolis, Minn... 117.00 Pittsburgh, Pa...... | 140.00 | New York City.....| 139.50 Tincoln, Nebr....... 62.50 Common boards, No. |(Portland, Oreg...... 40 00 ||Country town, Kans., 65 00 1, 1 by 8 inches, 16 Eugene, Oreg....... | 48.00 |; Kansas City, Mo.... 66 65 feet, S1S. Bellingham, Wash..| 39.00 ||Chicago, Ill... ... | 65 00 | Minneapolis, Minn..| 65.00 E = Lincoln, Nebr....... 62.50 Dimension, 2 by 4 |/Portland, Oreg | 40.00 |}Country town, Kans.) 67.50 inches, 16 feet, S1S- |{ Eugene, Oreg. 49.00 |; Kansas City, Mo... . 66.45 1E. Bellingham, Wash..| 39.00 ||Chicago, Ill. ........ | 65.65 Minneapolis, Minn. ‘| 63.00 The freight rates per 1,000 feet from the West Coast to Lincoln, Nebr., and Kansas City, Mo., Minneapolis, Chicago, Pittsburgh, and New York City amounted to approximately $13.75, $12.50, $15, $18.60, and $20. respectively. Differences shown in the foregoing tables are in most cases very striking. No. 2 and better flooring of North Carolina pine, for example, was retailing at around $150 in New York in February, 1920, but was retailing in Wilmington, N. C., at about $100 per 1,000 feet, although the freight rate to New York amounts to only $4 or $5 a thousand. Similarly, No. 2 southern pine common boards 1 by 8 inches were being bought in south- ern cities at from $50 to $60 a thousand feet, put were costing $80 a thousand in Dayton, Ohio, and Pittsburgh, Pa., despite freight rates equivalent to only about $6.50 and $7.50, respec- tively. In the case of Pacific coast Douglas fir flooring No. 2. clear vertical grain, 1 by 4 inches, average retail prices were as low as $85 in some western cities and as high as $140 in some eastern, with freight rates of $20 or less. In some cases the difference between present retail prices in producing regions plus freight and retail prices in consuming regions exceeds the total prewar prices in the consuming region. Twenty years ago sawmills in Minneapolis were cutting more than 500 million feet of lumber annually. As tributary forests became exhausted these mills were forced one by one to close down. The last remaining mill closed a year ago, and one of the larger cities of the country, as well as the rich agricultural 50 TIMBER DEPLETION, PRICES, region surrounding it, is to-day forced to obtain from 80 to 90 per cent of the lumber from Pacific coast forests some 2,000 miles distant. Douglas fir. common dimension, 2 by 4, frora western Oregon and Washington, for example, cost at retail it Minneapolis in February, 1920, $60 to $65, whereas in 1900 2 by 4 dimension of white pine could be purchased for $15 to $20. The growing scarcity of white pine has constantly tended to en- hance‘its value. During January and February of this year it is said that the relatively few remaining northern pine mills could obtain almost any price desired for their lumber cut. Price lists recently issued by two groups of mills, for example, quoted prices varying $15 or more on the same grades. Figure 17 reflects wholesale prices of three grades of northern pine in Minneapolis at intervals of five years from 1900. IXven in normal times lumber purchasers in nonforested and depleted regions are at a distinct disadvantage over purchasers in regions of lumber production. This disadvantage becomes much more pronounced in times of scarcity and unsettled con- ditions such as the present, when the excess in retail prices, deducting all transportation costs, may even exceed the total price of the same grades under normal conditions. PRICES AND COSTS OF PRODUCTION AND DISTRIBUTION. Figures indicative of the increasing costs which have en- tered into lumber manufacture and distribution will be given separately for (1) production, (2) transportation, and (38) re- tailing. Along with these figures showing the increase in costs are given also figures as to increases in selling prices and the ratio of transportation charges to retail prices. MILL PRICES AND PRODUCTION COSTS. Figure 18 shows in graph (@) the trend of average selling prices of Douglas fir, southern pine, and Inland Empire species, separately by years, for periods from 1905 to 1919; graph (b) these prices expressed graphically on a percentage basis, with 1914 as the index year; graph (c) the average mill price re- ceived by a typical Douglas fir mill plotted in relation to operat- ing cost. Pacific coast—Table 16 shows mill prices for Douglas fir lumber produced on the Pacific coast in Oregon and Washington incorporated in graphs (a@) and (c), and adds the average selling prices in December, 1919, and January and February, 1920, as determined from index grades of a large volume of lumber sold by a number of mills. Years. of mills. mill LORZEE SeCyt et te Feet Ss - S35 SSS hee oetas atalee ie Sate eae eee $11.30 1913. ~ 44 8 1919... December, 1919 (orders) January, 1920 (orders)... March, 1920 (orders)... . The average prices shown above for a number of mills do not include underweights and sales of special stock and by-products, which would tend to increase them slightly. The two sets of prices as given above are believed to be representative of high and low average mill prices. Compilations prepared by the West Coast Lumbermen’s Asso- ciation show that manufacturers west of the Cascades received in 1919 an average of $25.70 per 1,000 feet for all species. The association’s figures are based upon data from 50 mills, and the average prices received by the different mills, including returns from lath, wood, and sawdust, -range from $20.50 to $35.50, a variation of $15. It is fair to assume, therefore, that the average mill price of Douglas fir during 1919 was between $25 and $30 per 1,000 feet. EXPORTS, AND OWNERSHIP. The average mill prices given for the months of December, 1919, and January and March, 1920, are based on sales reported to the West Coast Lumbermen’s Association, and represents a large volume of business. It will be noted that the average price for March (based on Orders taken) amounted to over four and a half times the average price received in 1915, and is $20 higher than the average price shown for 1919. A comparison of 1919 production costs in this region with costs in 19138, 1914, and 1915 indicates that the cost of produc- ing lumber has a little more than doubled. On the basis of information collected and compiled by an accountant employed by the West Coast Lumbermen’s Association, the average cost of logging Douglas fir by manufacturers in Oregon and Wash- ington during 1919 amounted to $10.89, this figure being an average of an output of about 1 billion feet. Costs of manu- facture show similar increases. In 1915 the average manu- facturing costs of 30 mills in Oregon and Washington was $5.53 per 1,000 feet, while in 1919 the average manufacturing cost, as determined by the West Coast Lumbermen’s Association, amounted to $10.21 per 1,000 feet, or, with shipping and selling included, $11.83. Jan/300 tj No 2 Common DIMENSION 2x4 -16 SISIE Feb (20 5 Jan 19/0 Jan /9/3 Fe6./92 OR No.4 Common BoaRos AW&AL SIS Dollars |\0 No/ Common Boaros /x10-22 S25 Jan 1901 Feb /905 Jan 19/5 Jan/920 Dollars Fic. 17.—Wholesale prices at Minneapolis of northern pine lumber. The total cost of producing lumber in the region west of the Cascades, in Washington and Oregon, in 1919, based on informa- tion collected and compiled* by the West Coast Lumbermen’s Association, but presented below in a little different form, and compared with other data showing average costs and mill price for 19138, is as follows: Lumber tally per 1,000 feet. Associa- | Service tion data,| data, 1919, 1913. Logging (no stumpage) $9.99 Manufacturing... .. 10. 21 Shipping expense... ae - 90 Sellingiexpensé Q Be lermetie DOUGLAS: FIR (AVERAGE OF NUMBER OF MILLS) QO 1905 13906 4907 1908 1909/3910 /9/1 12 IH13 /W/4 19/5, 19/6 /H17 (3/8 SWF /60 DOUGLAS FIR-MAR.-/920- 332% YELLOW FINE MAR-1920-353/, | PERCENTAGES OF INCREASE AND DECREASE: IN THE | AVERAGE MILL PRICES PER M FEET | 140 120 /00 80 : 60 \ 16) . VA ee FIR [TYPICAL MILL CUTTING HIGH QUALITY MATERIAL) X 40 Se SOFTW vae) RAGE OF NUMBER OF M/LLS) 20 ; SS z £ 1/905 1906 1907 1908 1909 49/0 1911 19/2 19/3 1914 S915 1916 19/17 1918 INF 40) N Ky hen TREND OF M/LL PRICES AND ESSENTIAL COST FACTORS x AT A TYPICAL DOUGLAS FIP CARPGO AND FAIL M/LL & GRAPH ey hee SELLING PRICE PER M FEET F-.O.B MILL x | ep ee ee el e VIA ae LAT TID LLL LILOE NEF PROT N IDI Sof — pec able PU erie e0 as N CA VEEZEEEEE, ae Ce S YY MME (o) 7 f 4 f/f if Va 7/905 (1906 1907 ~/908 /909 /HO LU LHe 19/3 191F THUS SHE SST 1H/8 S93 Fig. 18. 52 The association’s compilation shows that it cost $24.95 per 1,000 feet to produce lumber in 1919, as against $24.15 shown by the above figures. The difference is due to the fact that the figures of the association include log-buying mills. Averag costs at individual mills range from about $18 to $32 per 1,000 feet, with a figure close to $25 representing the average for 1919. Production costs of April, 1920, are estimated to average at least $26 per 1,000 feet. As previously indicated selling prices on the basis of orders averaged $45.72 for March, 1920. The increasing cost of producing lumber is due to a variety of factors, among which may be mentioned increases in wages in both woods and mill; reduction in hours of labor; more in- accessible stumpage; decrease in efficiency of workmen; loss in feeding men; higher stumpage costs; increasing cost for equipment, supplies, and repairs; increases in freight and tow- ing rates on logs; and higher cost of fire insurance, Inland Empire.—Throughout the Inland Empire mill prices and logging and manufacturing costs for 1919 show similar large increases over prewar years. The trend of average mill prices is shown in figure 18, graph (a@), and these average yearly prices, together with costs and profits, are stated specifi- cally in the table below. The figures used are based on data collected from a large number of mills throughout the Inland Empire. During the years immediately preceding the war the mills in the region show small net profits. During the six-year period ending 1914 the largest and best-managed companies in the region, representing 59 per cent of the cut in the Inland Empire, earned only 1.06 per cent on all capital in use, bor- rowed or unborrowed, exclusive of their profits on stumpage investments. Beginning with the year 1917 much more sub- stantial profits are shown. Production costs and average mill prices in 1914 and 1919 were: | 1914 1919 Cost of production per 1,000 feet (stumpage included)........ ..| $14.54 $28. 40 _ Average mill price received per 1,000 feet........---------+---+- | 14.81 30.92 In the table below is given a statement of production costs and average mill prices, with profit and loss, for operations in the region. TABLE 17.—-Costs of production and average selling prices of softwood lumber per M feet cut in the Inland Empire. | Production Profit and loss. Y Stump- costs, pretense at age. including | Sens Be. 2 price. F stumpage. Loss. Gain. | 94 $11.32 |'3 - 06 11.49 15 14.24 |. 59 13.38 22 14.19 00 14.78 15.68 67 15.18 21 15.00 32 14.54 50 14.20 70 16.90 80 19.70 90 25.40 - 00 28. 40 PerprNpyeewer eS © 2 The figures given for 1919 do not reflect prices during the latter months of the year, when they were much in excess of the average of $30.92. They have since continued at higher points. Southern pine States.—The trend of average mill prices for southern yellow pine is shown in graph (a), figure 18. As with Douglas fir, 1915 was the year of lowest prices. Taking 1914 as a more nearly average prewar year, the selling price was $13.68, as against $33.94 for 1919, an increase of approxi- TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. mately 150 per cent. are indicated below : The average mill prices from 1914 to date twerage selling price f. 0. b. mill per 1,000 feet.’ Year: 1914 1915 1916 1917 1918 2 . 46 NOUG AO ee a col ee 2 ee ee 33. 94 September, 1919 39. 37 Metober, LOU) » as he a a a eS ee 44. GO November1919. 8 a ee ee eee 42.06 December: 01919 =o > See AA eee SS ee ee 45. 41 January 1920 ee ee ee ee ee 52.21 Rebruary, 19202.=- = 57. 94 March, 1920 61. 6O The price for the years 1914 to 1919 are bused on reports made to the Forest Service from operators throughout the southern pine belt. Those for the years preceding 1914, as shown in graph (@), were taken from the books of manufacturers without attempt at auditing. The monthly prices given for 1919 and 1920 were obtained from the reports of a lumbermen’s organiza- tion and were based on a weighted average of all sales reported, exclusive of exports. In 1914 the average cost of production for 108 southern pine operations was determined as $12.79, with stumpage at $2.36 carried forward from 1905 at 1 per cent to cover taxes and current expenditures. With stumpage included at the prices then current, the average cost of production was determined as $14.54. In contrast with these production costs the following figures for the latter part of 1919 and the first two months of 1920 are taken from cost statements of the Southern Pine As- sociation : Average operating | Average Month. |Stumpage. cost, selling stumpage | price. | included. September, 1919 | $5.24] $26.56 | $39.37 October, 1919.. 3 5.31 27. 04 | 44.60 December, 1919. 5.41 31.75 45.41 Janudty, 1920 Meise Seca eee Ee om, 5.52 29. 14 52. 51 MODIUSKY, O20 Sse at nec shrneetemcen ceewaaeees | 28.54 57.94 It will be noted that in 1914 the margin between selling price and production cost f. o. b. mill was 89 cents per thousand feet, with» stumpage figured at the 1905 cost plus carrying charges, and that with stumpage carried at its current value a net loss of 86 cents per thousand was incurred. In the latter months of 1919 and the first two months of 1920 the margin of net profit ranged from $13 to $29 per thousand feet, exclusive of whatever profit may have been made on stumpage. In the six or eight years prior to the war, returns in lumber manufacture in the principal softwood regions, on the average, were yielding very low profits on the investments. While profits were greater during the war, the price of lumber during the war years did not increase in proportion to prices of other commodities. As shown in figure 13, the average of com- modity prices rose in 1917 considerable in excess of the average of softwood lumber prices, which were partially restricted by Government price fixing. The war-time restrictions not only upon the price of lumber but upon its production and movye- ment for the supply of the normal trade were unquestionably a large factor in the quick response of lumber prices to the abnormal trade conditions which followed the armistice. WHOLESALE COSTS AND PROFITS. Owing to the complexity of the trade, time was not available to determine average costs and profits representative of the various types of wholesale business conducted by individuals and organizations not attached to mill organizations. The mill prices given are based on sales made by the larger mills TIMBER DEPLETION, PRICES, to retailers, wholesale dealers, and wholesale consumers. While a few of the larger mills do not sell to wholesale dealers, the more general practice is to grant the wholesalers a discount on the prices made to retailers and wholesale consumers. Whole- salers, however, do a large business with small mills which are usually not in as close touch with market prices and from which they often obtain much lower prices than from the larger and stronger mills. They are thus enabled to increase very materially their portion of the margin between mill price and the price paid by the consumer. TRANSPORTATION. The extent to which the growing distance between forests and markets has steadily added to the cost of lumber in east- ern markets and in the country retail trade of the Middle West has been indicated in figures 13 and 15, respectively. In the years before the more accessible forests were exhausted, trans- portation imposed a charge equivalent to from $1 to $3 per thousand feet. The cost to-day of importing lumber into New York from the South is approximately $9 per thousand and from the West Coast $20. An idea of the percentage of the pre- war and postwar retail price absorbed by transportation costs can be obtained from the following table. Freight charges are computed on the basis of 2,500 pounds per 1,000 feet : TasLe 18. eyes Percentage of retail Retail prices per + : price absorbed by thousand. freight rates. 1914 1919 1920 1914 1919 1920 New York—Douglas fir flooring, | No. 2 clr. ver. grain....-.-.-..- $62 $86 $140 31 23 14 Pittsburgh —Southbern pine | boards, No. 2com., 1x 8....... 32 36 80 28 25 11 Chicago—Douglas fir flooring, | Nowa clniveriierain.sccsscceescla-c-scce 73 | LDA sretstctome 20 13 Southern pine boards, No. 2com., | | ils eh Saas basananconepocSEccods 22 49 | 66 35 16 12 \ | | Although transportation costs have gradually increased, the table shows strikingly how present prices have outstripped freight increases made during and since the war, on specific grades and species. The table below serves to Show the increas- ing transportation charges on lumber into Chicago, from the days when the forests were accessible to water transportation, as all rail shipments became necessary with the cutting out of the accessible forests. To-day the average freight charge on all lumber going into Chicago is probably between $10 and $11 per 1,000 feet, due to the increasing volume of western lumber which has entered the market during the past 12 or 18 months. On the basis of the present average retail price this would be equivalent to 12 to 13 per cent, as against about 20 per cent in 1912-1915. Taste 19.—Transportation* per M board feet on lumber to Chicago. By water from— By rail from— Sagi- * . Bir- . Years. Al- | Manis-| ™8¥ | Mem- | Annis-| © Merid- Port- | pena, | tee, ae phis, | ton, | aye | ian, | land, yee e j | . Mich. | Mich. City, Tenn. | Ala. | ‘Ala Miss. | Oreg Rete oe | $1.31 1880. 2.29 + 1882. 1.92 a5 1885. 1.64 = 1888. 1.90 ae 1890. 1.74 Baa 6 Le 1893 . 1.61 2.00 4.50 5. ee = 1897. 1.18 2.50 4.00 5. iE i 1900. -| 2.50 4.00 iy es $5. F 1905. S250 4.25 5. 50 $6.00 | 6.50 13.75 LOLO CEES see Nee =| °2.50 4.25 5.50 5.50 | 6.00 13.75 iW bie Nee enad hod VEIN Soe Be eee 5.63 | 6.138 13.75 LOLS 20 Sees Soke cc cntaccns pat Ceeeesee|Wodeee seas: 7.38 | 15.00 7.88 1 Transportation by water based on weekly rates published by the Northwest Lum- berman; rail rates computed on basis 2,500 pounds per M feet. EXPORTS, AND OWNERSHIP. 5a In southern Minnesota it was possible to determine quite closely from the purchase records of a number of large line yard companies the average transportation cost carried by the lumber distributed through their retail yards. These steadily increasing costs, shown in the table below, are primarily due to the increasing volume of western lumber which these companies have had to import in order to supply the needs of their terri- tory, which only a few years ago was immediately contiguous to the greatest lumber-producing region in the country. TABLE 20. , Portion of average Average retail sell- | Average transporta-| _ retail selling price ing price. tion cost. absorbed by Years. | transportation. | | — = = Per Percent | Per Per cent | por cent,| Per cent thousand. increase. thousand. | increase. | *°" ©°D"-| increase. $26.03 0.0 $3. 25 0.0 12.5 0.0 31. 68 21.6 | 4.25 30.8 13.4 7.2 34. 64 33.0 4.00 | 3.0 11.5 8.0 31.85 22.3 4.00 | 3.0 12.6 0.8 30. 43 16.9 4.50 | 8.5 14.7 17.6 31.71 21.8 4.75 6.0 15.0 20.0 31.17 19.6 4.75 6.0 15.2 21.6 30. 75 18.1 5.75 -0 18.7 49.6 32. 28 23.9 6.75 8 20.9 1603 31. 83 | 22.2 8.00 5. 0 25.1 100.8 30. 44 | 16.9 8. 50 51.5 27.9 132.2 31.43 20.7 7.50 Lf) 23.9 91.2 38. 58 48.0 8.00 0 20.8 66. 4 46. 51 78.6 10.75 | .0 23. 1 84.8 54. 42 109. 0 11.75 32.0 21.6 72.8 | | | It will be noted that the average selling price for 1919 shows an increase over 1905 of 109 per cent, while the increase in transportation in relation to selling price was only 72.8 per cent. Although transportation’s portion of the selling price has been steadily growing in dollars and cents, the price of lumber during the past three years has been increasing faster. The average selling price for March, 1920, was 230 per cent over the average price of 1905, but transportation absorbed only about 14 per cent, the smallest percentage since 1908. In 1905 northern pine, shipped on freight rates of from $2.50 to $3 per 1,000 feet, formed 80 to 90 per cent of the retail stock of these companies, while western timber amounted to less than 20 per cent. In 1919 these percentages were almost re- versed, western timber forming practically 80 per cent of the stocks and northern pine less than 20 per cent. Owing to a larger proportion of western lumber in these stocks this year, it is estimated that the average freight cost represented by each thousand feet of lumber distributed will be between $12 and $13, almost equivalent to the total average lumber price of $16 in that region 25 years ago. RETAIL PRICES AND COSTS. The upward movement of prices—The movement of average retail prices in country districts in the Middle West from September, 1918, to March, 1920, is shown in figure 19. These values are based on line-yard distribution in Kansas, Okla- homa, Nebraska, and southern Minnesota, and represent aver- age selling prices for lumber only, arrived at by dividing the total sales in dollars by the total feetage of lumber sold. It will be noted that the average prices in the above regions coin- cide closely. From 1912 to 1915 the average retail price of luniber in these regions was around $30 to $32 per thousand. In September, 1918, average prices were between $40 and $50, and moved upward to about $85 in March, 1920. In the larger cities of the region, such as Chicago, Kansas City, and Minneapolis, there was a similar upward movement of retail prices. During the period 1912 to 1914 the average selling price of lumber in Chicago, Kansas City, and Minne- apolis was close to $26 per 1,000 feet. There was little varia- tion between the cities. The average selling price in 1919 in Kansas City centered between $45 and $50 per thousand. Average prices of March, 1920, were variously estimated bs 54 retailers in Kansas City and Chicago to be from $75 to $80 per 1,000 feet, a few dollars less than the average shown for eountry trade. Prewar and postwar changes in wholesale and retail prices of specific softwood grades and species at various points throughout the country are indicated in Table 21. It should be explained that the margins shown between wholesale anJ retail values do not always accurately represent the actual margins, since the material sold in any given month may have Fees 8 60}---- kansas and Oklahoma —— Nebraska Southern Minnesota. per MM 3 8 DWa'sS Seni Nov. Var. Mar May, July Seot Nouv Varn. Mar 19/8 1919 /920 Fic. 19.—Comparison of trend of regional retail lumber values. on averages of monthly sales.) (Based been purchased months before. The margin varies with grades and species, retailers figuring a lower gross profit margin in the handling of common grades sold in large volume at a relatively rapid rate of turnover than for higher grades and special woods. The expense of handling hardwoods is, of course, much greater than for softwood lumber. For softwoods the margin on upper grades ranges from zero or a few dollars per thousand at or near mill points to $45 or $50 in New York City, while for hardwoods, especially the upper grades, spreads as high as $80 are of record. Table 22 compares average selling prices of lumber distrib- uted through line yards in the Middle West, in March, 1920, with the selling prices in the period 1912 to 1915, and also with the selling prices in April, 1919, when prices began to ascend sharply. TanLte 21.—Wholesale and retail prices of Douglas fir and southern yellow pine lumber at various points throughout the United States. | Wholesale prices (dollars | Retail prices (dollars | per M feet). per M feet). Douglas fir. | | Septem-| Febru- | Febru- | Septem-| Febru- | Febru- |, iber; ary, ary, ber, ary, ary, 1918. 1919. 1920. 1918. 1919. 1920. No. 1 common, dimension reel 4 inches, 16 feet, 8. | Portland, Oreg........- | 19,50] 18.50} 40.00 |......... |-sostee? 40. 00 Lincoln, Nebr... ---| 32.25 30.50 55. 00 43.33 47.66 62.50 Chicago; eine yccepeds 31.50 50.35 47.00 47.00 65. 65 Minneapolis, Minn. 31.25 30.00 50.50 41.50 40. 00 63. 00 Kansas City, Mo.. 32.00 31.10 52. 80 42.00 43.00 66.45 No, 1common, ‘boards, | 8 inches, 16 feet, &. Piss Portland, Oreg.. = 19.50 18. 50 AQIOON Nes. 5e oscods. 40.00 Lincoln, Nebr... 32. 60 31.50 | 56.30 43.33 | 47.66 62.50 Grice go; Te oe = seers feet nani aratmeeieera 55.00 49.00 49. 00 65.00 Minneapolis, Minn. 3 28.50 27.50 50. 50 40.00 36.00 65. 00 Kansas City, Mo.. - 38. 00 39.00 55.00 48.00 49.00 66. 65 No, 2 clear v ertical-grain | | flooring, 1 by 4 inches: Portland, Oreg. 120.00 43.00 86. 75 Lincoln, Nebr.. 51.00 49.50 | 7 3 112.50 Chicago} Ine Good: calcoo denice 55, 00 Ks 111. 65 Minneapolis, Minn. 46.00 47.00 3 i 117.00 Kansas City , Mo. : 49.00 47.15 i 56. . 128.35 New York City........- 150. 00 57.00 | 111.50 62. 50 86.00 | 139.50 | | 1 February, 1914, TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. TABLE 21.—Wholesale and southern yellow retail prices of Douglas fir and pine lumber, ete—Continued. Wholesale prices (dollars | Retail prices (dollars | per M feet). per M feet). | Southern yellow pine. | =| Febru- | Febru- | Febru- | Febru- | Febru- | Febru- ary, ary, ary, ary, ary, ary, | 19i4. | 19i9.. | 1990. | 19i4, | 1919, | 1920, No, 1common, dimension 2 . LN 4 inches, 16 feet, 8. & Towns in southern yel- low pine belt... .-....|-.-5.20. [eeareterstsy= ee Ea scoossed jspneoseca 50. 00 Kansas City, Mo --| 17.60] 31.35 53.50 24.30 40.75 66.45 Chicapostilie st eneens 17.60 | 33.00 54.75 23.55 47.00 65.15 No. 2common, boards, 1 by 8 inches, 16 feet, S. 2'S.: Towns in southern yel- LOW, (DING Deltereemecas| seorecee elses ee SACO) atest mcietersee 60. 00 Kansas City, Mo <3 16.60 | 33.65 55.75 24.00 43.00 66. 80 Chicago, Ill. . 16. 90 34.15 57.60 22.70 49.00 66.35 Dayton; OW. ese |p oes =e 27.50 99300) ae eee 50.00 77.50 Pittsburgh, Pa... -| 124.00 27.50 59.00 | 132.00 36. 50 | 80. 00 B and better, flat- “grain flooring, 1 by’ 4 inches: Towns in southern yel- low. pineibelte cio. | secee ence (ee haceeae DO500))| SS See ceee| soetea ea 114.00 Kansas City, Mo.. a eee att) 42.35 | 113.00 32. 60 52.00 | 133.55 Lincoln, Nebr.. 240.65 42. 85 108.35 | 261.66 68. 33 125.00 Chicago; Tl. . 23.75 41.00 | 125.00 32.55 DS? 00))- acces Tayton, Ohio. | Sera 199432255), 120800) | Ss2-e =e 54.00 150.00 Pittsburgh, Pa......... 129.00) 43.25 | 110.00} 138.00 48.00 142.00 if 1 February, 1913. 2 September, 1918, 99 TABLE 22.—Comparison of average retail prices per 1,000 feet in various regions and times. April, March, | Percent 1919. 1920. | inerease. | Minnlesota.2i: sco. wage ocsecen basen teeta ee cece $48.75 $86. 76 78.0 Nebraska 49, 20 85. 86 74.5 Kansas and © 50. 81 85. 65 68.5 | A | Feriod March, | Per cent 1915. 1920. increase. Minnesota.» 2.3% <2 sce seep =. ote eeeeaecc dees ene $31. 24 £86. 76 177.5 Nebraska. . u 31, 29 85. 86 174.5 Kansas and Oklahoma | 29. 73 85. 65 188. 0 Changing values in country retail distribution are further shown specifically in Tables 23 and 24, and graphically in figures 20 and 21. A comparison of essential cost factors in the average price of lumber in a large Middle Western city is indicated in figure 22. The average buying prices shown in Table 24 include freight. 99 23.—Comparison of costs and profits of retail lumber distribution in 1912-1915 and 1919. TABLE | Country trade. | | m Gross profit. | Operating cost. Net profit. ver- age selling price | Per | Per | Per | Per | Per | Per i thou- | cent thou- | cent thon- | cent need sand. |ofsales.| sand. |ofsales.| sand. | ofsales. | | Missouri, Kansas, and | Oklahoma: A 1912-1915. $29. 73 $7.07 23. 79 $4.99 16.77 | $2.08 7.02 1919. _. . ..| $56.00 | $14. 86 26, 54 $9.05 16.16 $5. 81 10. 38 Per cent incr --} 882341) OM) asec SU Sileeee esa U7 952) |= eens Western Iowa and Ne- braska: 1912-10 LD nc os meee | $31.29) |) $7.17 22. 91 $4. 33 13.85 | $2. 84 9.06 OG es ..| $57.30 | $13.88 | 24.22] $7.33 12.79 | $6.55 11. 43 Per cent increase....| 83.2 CERT | Ren oneae (}:RP4 | BEB Sec cin 1305 Do) saeeeie = Minnesota: | J | 1912-1915. --| $31.24 | $7.25 23.2 | $4.24 13.5 $3.01 | 9.6 SLO rare ae eiatere tates ieret =e | $54.41 | $14.33 26.4 $7.15 13.1 $7.18 13.3 Per cent increase....| 74.2 A eeeco oct GA es See IRESHY) Pe seeicn TIMBER DEPLETION, PRICES, TABLE 24.—Costs and profits of retail lumber distribution by years 1905-1919, country trade, Minnesota. | Average buying | Average selling price. price. Gross profit.1 Years. | | | Per 1,000 Per cent Per 1,000, Per cent Per 1,000] Fer cent) Per cent feet. imerease.*} feet. jincrease.2) feet. | pri ce, |increase.* - a t: | at Eee) So eS a i} | 0.0 | $26.03 0} $5.78 | 22.1 0.0 15.6 31.68 6 | 8.66 | 26.9 | 49.8 36. 4 34. 64 0 | 7.60 21.7 31.5 27.1 31.85 23 | 6.98 21.2 20.8 | 19.5 30. 43 a) 6.49 21.0 12.3 23.9 31.71 8 6.62 20.8 14.5 23.0 31.17 9.6 | 6.29 20.1 8.8 19.6 30.75 8.1 | 6.97 | 22.2 20.6 | 30.8 32. 28 3.9 6.36, 19.2 10.0 | 26.0 31.83 2 6.79 | 20.8 17.5 | 19.5 30. 44 9 6.77 21.7 Tei | 25.9 31.43 rel 5.80 | 18.3 -4 40.5 38.54 0 | 9.94 25.5 72.0 79.9 46.51 8.6 | 9. 88 21.2 71.0 96.8 54. 42 NON 14:33 26.4 148.0 | Operating cost. Net profit.! Years. Per ae Per cent Per 1,000 of selling|2 er cent|Per 1,000\ 05 ening Per cent feet. price. increase.* feet. | price. increase. | \ $3.08 11.8 A) $2.7 10.3 0.0 4.04 12.5 .0 4.63 14.4 71.4 4.08 11.6 5 3.51 10.0 30.0 3.90 12.0 | 25 2.97| 9.0 10.0 4.12 13.3 8 2.36 7.6 —12.6 3.74 11.8 | 4 2.74 8.6 | 1.5 3.94 12.6 | -0 2.22 7.1 | —17.8 3.66 11.8 | 8 3.10 9.9 14.7 3.82 11.8 -0 2.34 | 7.0 —13.3 3. 82 12.0 0 2.74 | 8.4 1.5 3.65 | 12.0 | 5 3.04 9.8 12.5 3.78 12.0 bi 2.01 6.3 —25.5 5.07 13.1 | 7 4.87 12.3 | 80.2 6.41 13.7 | 3.47 7.5 | 28.4 7.15 13.1 | 32. 7.18 | 13.3 | 166.0 1The number of companies from whose records figures are taken varies somewhat, so that the gross profit shown in the table is not in all cases the exact difference between buying price and selling price, HOF net profit the exact difference between gross profits and operating costs. * Per cent increase figured on 1905 values as base. 3 Per 1,000-foot values. Distribution of price increase——As has been pointed out, the average retail price of lumber in 1919 in the country trade of the Prairie States was about $25 higher than in the period 1912-1915. For the yards covered in Minnesota the exact in- erease was $23.17. Of this increase the manufacturer and wholesaler took $11.84, or approximately 50 per cent, the rail- roads $4.75, or 20 per cent, and the retailers $7.08, or approxi- mately 30 per cent. Of the retailers’ portion, $2.91, or 12 per cent of the total increase, was absorbed in increased cost of retail distribution. Retail profits—From Table 23 it will be noted that retail operating expenses and net profits figured on percentage of business done had not changed greatly over those shown for the period 1912 to 1915. In that period the gross profit was close to 28 per cent in the region covered, while in 1919 the average gross profit centered around 25 per cent of sales. Com- puted on a thousand-foot basis, however, there has been a very decided change in margin of net profit and operating expenses. In 1912 to 1915, for example, the average net profit shown by country yards in Minnesota was $3.01 per 4,000 feet, and the total operating cost was $4.24 per 1,000 feet. In 1919 the aver- age net profit shown by over 100 yards in the same region umounted to $7.18 and the operating costs to $7.15, or a margin of gross profit of $14.33. It should be borne in mind that the net profit shown includes a certain percentage of book profit, or gain on inventory, due to the rising prices during 1919. Actual cash profits are fur- ther reduced by the income taxes, which are not figured in as operating expenses. These taxes, of course, vary with the com- EXPORTS, AND OWNERSHIP. 55 panies and profits shown. In the case of a representative com- pany which operates a line of some 40 or 50 yards the net profit, including gain on inventory after income taxes had been paid, was about $4.75 per 1,000 feet. A portion of the manu- facturers’ increase was likewise absorbed by increased costs of production and operations. As previously shown, average retail selling prices for the Middle West, which were from $30 to $32 in 1912-1915, advanced to about $56 in 1919 and to about $86 in March, 1920. Buying prices averaged about $25 in 1912-1915, advanced to about $40 in 1919, and in March, 1920, were still higher. Retail operating costs increased from about $4.50 in 1912-1915 to about $7.85 in 1919, and to about $8 in March, 1920. LUMBER PRICES UNJUSTIFIED BY PRODUCTION AND DISTRIBU- TION COSTS. A study of prices and increased production and distribution costs during the prewar and postwar periods substantiates the statements made by many lumbermen that prices during the end of 1919 and the beginning of 1920 reached points unjus- tified by production and distributing costs. While present prices are somewhat below the March level they are still in excess of prices justified by increased production costs and fair profits. The following is believed to be a liberal approxima- tion of costs entering into the average retail price of lumber as determined for March, 1920, in the country trade in the Middle West. The lumbermen’s figures on production costs, which may be considered outside costs, are accepted as a basis. The production cost is a weighted average computed from the relative per cents of various species in the retail stocks handled. TABLE 25.—Approrimate production and distributing cost, March, 1920, per thousand feet of lumber. Lumber production (stumpage and selling costs in- Clhuidedi) a" = === 5S ee er eee $26. 50 Transportation (mill to retail yards)_________________ 12. 00 Reta GiSiribuiOne= se ne ee ee 8. 00 Ate Ss So ee eee ee ees BL 46. 50 Average retail selling price March, 1920_______________ 86. 00 Margin of profit (includes interest on investment) _____ 39. 50 The margin of profit indicated exceeds by $8 to $10 the total average retail selling price for the lumber sold in the same region during the 1912-1915 period, which included all costs and profits of manufacture and distribution. Irrespective of the distribution of this excessive profit, which, by and large, has unquestionably varied with relative advantages held and with relative abilities to dominate situations, lumber prices are excessive and yield profits bearing no reasonable relation to increased costs of lumber production and distribution. That prices went unreasonably and unfortunately high is readily admitted by many of the more responsible and far- seeing men in the trade, and is concretely evidenced by the efforts of numerous large companies to stabilize prices during December, 1919, and January and February of 1920, by action on the part of retail lumber dealers calling upon manufacturers to stabilize lumber prices, and by editorial comment in lumber journals. The following is an extract from a published letter, written by the secretary-manager of ua large lumbermen’s asso- ciation in response to a letter from the secretary of a retailers’ association, suggesting that prices be stabilized until July 1 at least: I am not violating any confidence when I say to you that the situa- tion has given the lumber manufacturers much concern, many having expressed themselves as deploring the fact that prices have been bid up to present figures by the buyers themselves. It is a little too much of a strain on human nature to expect that producers shall refuse to accept the highest prices offered for their goods. 56 280 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 180 /60 rt Showing Percentage /ncreases ih Fe er ee Charges, Cost_of Lumber Stocks to Retailers, etai/ Operating Expenses, and Average Reta! Lumber Prices. Based on average va/uves per M feet as shown Ly country yards in Minnesota ard Dakotas.) pao |Mote- Percentage increase Figured on 1905 valves AS @ LaSEe. ~ Ny S sl Ss) 9 Per cer r 60 20 1905. (906 (407 7 IS /909 (9/0 /9H 49/2 19/3 IDF O DD Sa IIE: VIO? IHS: IH/19 - Years - Fic. 20. Several of the largest companies operating both mills and retail yards, for example, sought to stabilize prices on their own responsibility, and their efforts unquestionably kad a far- reaching effect in breaking the rising prices and bringing about a slight decline, ranging from $1 to $10 per thousand, according to grade. Many lumbermen admit that prices went so high that demand was automatically checked. There is ample evidence throughout the Middle West that lumber prices reached a point which aroused public indignation in many communities, and that this feeling, combined with a widely advertised announce- ment of one of the largest producing and distributing com- panies that it proposed to stabilize prices on the basis of its January list, resulted in a sharp falling off in buying. An extract from the announcement issued by this company late in February reads as follows: The interests comprising the group have come to recognize that this condition of the lumber market is injurious to the public and to the industry generally ; that the uncertainty even more than the price level is demoralizing and results in enhanced cost of building and discour- ages construction, and that unless something is done to check the present tendency toward further and frequent and irregular advances which have no relation to costs of production the situation will become still more deplorable. The intent of the company to stabilize prices was construed by the public and the press as a cut in prices, and buyers quite TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. Mi 19 OveratingExpense Kill Net Profit (3 aE GrossProtit S835 1910 Overa ting Expense (TT Net Profit FS LN) rage AverageSellirig Price Gross Protit Dollars OR ORI LS * Feu/va/enh fo é ost Prilce Vora s) *xLgquiva ev? \7o/0 SS) duerage Co 4 Pr. OC als, £9 iva Vert \to // L520 DS SOLS OY IO VIS IVSOW SS Hoo. Fercen# OF Sa/es Amount perM Ft $28.92 #570 1971 ¥ 3/0 10.7/ ¥ 2.60 9.90% O% en ee eee ‘ #55.10 ¥ S77 17.93 B72 11.25 p | . 8 BOS 6.18% 26% on feported\investment 20.26 12.96 7. 8OX 3 Fic. 21.—Comparative average selling prices, all classes of lumber sold, gross profits, total operating expenses, and net profits for country retail lumber yards in Nebraska, for years 1905, 1910, 1915, and 1920. | generally throughout the northern portion of the Middle West, in which the company operates retail yards, deferred purchases in order to buy on the company’s list or to await similar reduc- tions throughout the trade. A statement issued about the same time by the president of another group of companies contained the following: We regard the present prices of lath as detrimental to the best inter- ests of all branches of the trade and not defensible either on the basis of production and distribution cost or on the basis of a fair market value. PRICE CONTROL. Neither time nor facilities were available to investigate the extent, if any, to which prices since the armistice have been subject to artificial control. It is believed, however, that the data presented are fairly conclusive in indicating that during the last half of 1919 and the first months of 1920 no control of prices was necessary to lift prices. SOME SPECIFIC EFFECTS OF REGIONAL DEPLETION ON PRICES. Regional forest exhaustion, with constantly increasing dis- tance between forest and market, gives rise to many accessory conditions vitally affecting the price of lumber to the con- sumer. Among the more important are: Opportunities for speculation in lumber prices by both producers and distributors tend to increase as the distance be- tween forest and market becomes greater and as a species of lumber becomes scarcer. During the § or 10 months preceding March, 1920, much speculation entered the trade in markets far removed from the producing regions. The common use of the reconsignment privilege, for example, by which cars of lumber are shipped prior to sale, the shipper or wholesaler, as the case may be, relying upon favorable sale while the lumber is in transit or when it reaches a consignment point, was a fruitful source of speculation. These cars were often held for bid prices and served to intensify the auction market and to lift prices. During the past year demurrage charges on transit cars amounting to $100 and $200 per car were not uncommon. The records of transit cars at the Minnesota transfer alone show that during the period October, 1919, to March, 1920, 3,000 cars CITY TRADE Average of 3 Companies ~ Wholesale Price F.0.B. Mill) Transportation Operating Expense Net Profit | (includes interest | fo) 10 20 30 Dollars Per M Ff. 0 Zo A Representative Firm Wholesale Price (F-0.8. Mil!) Transportation Operating Expense 1G ex, Net Profit , (Includes interes?) Fig. 22.—Comparison of the essential cost factors in the retail price of lumber, Kansas City. 58 no were held without disposition for an aggregate period of 17,453 days—an average of 5.8 days per car—and incurred accrued demurrage and penalty charges amounting to a total of $76,529. As growing distances between forests and market increase opportunities for price speculation, more and more middlemen are drawn into the trade. While the responsible wholesaler is an essential factor of the trade, a surplus of middlemen is an added burden of cost upon lumber distribution. It has been estimated that lumber brokerage and wholesalers’ offices on the Pacific coast increased 50 per cent during 1919 and 1920. It is often the case that men drawn +o the trade by its specu- lative possibilities are of the less responsible type, methods are not to the best interests of the trade and the public. Speculation, with its accompanying sharp increases of lumber prices, tends to bring upon the market lumber in inferior con- dition. During the months following June, 1919, for example, a general complaint throughout the Middle West was that lumber was inadequately or improperly dried, due mainly to the fact either that it was shipped before being properly dried or that it was too rapidly seasoned in kilns. ‘This, of course, may be attributed to the desire of the manufacturer to ship the lumber before high prices receded or at bid prices offered by jobbers. The load imposed upon the railroads in transporting lumber to meet the country’s needs increases directly with the increase in distance between forest and market. More cars and more labor are required, and the chances of breakdown, delays, and traffic tie-ups, which create lumber shortages and high prices in markets affected, are multiplied. Markets farthest removed are subjected to increasing hazards in obtaining a continuous supply of lumber at stable prices. whose Concentration of lumber production in one or two principal regions accentuates the seriousness of reduced production aris- ing from local labor troubles in woods or mills or from un- favorable weather conditions. The cutting out of timber in different regions carries with it a change in the character of lumber stocks in dependent regions both as to species and grades. This tends to confuse the trade and upset industries dependent upon certain grades and species of lumber as a raw product. At the present time many large wood-using concerns which have developed their factories and their products on the basis of special woods are facing with great concern shortages in the market supply of these woods, and in many instances have had to turn to other ' species involving new problems of manufacture. SUMMARY OF PRINCIPAL PRICE CONCLUSIONS. During the latter half of 1919 and the early months of 1920, lumber prices in the United States increased more sharply and to far higher points than were ever known before. In March, TIMBER DEPLETION, PRICES, | EXPORTS, AND OWNERSHIP. 1920, average mill prices had increased 800 per cent and more over 1914, and the average retail prices showed increases rang- ing from 150 to 200 per cent. While the costs of lumber manufacture and distribution like- Wise increased, the rise in lumber prices was wholly dispropor- tionate to these increases. Present prices, although somewhat lower than those reached in March, 1920, are still excessive and yield profits unjustified by costs. ~ The “auction” market which characterized the trade was precipitated by a sudden urgent demand for lumber, which de- veloped in the spring of 1919, in the face of inadequate stocks of lumber due to subnormal production. The situation was further aggravated by a restricted movement of lumber caused by car shortage. The result was a lessening of competition, which en- ubled the seller with stocks available to auction his lumber to buyers who were in urgent need of material or who were frightened by reports that lumber prices would go higher. In January and February, 1920, prices became so excessive that buying was automatically checked. The history of lumber prices is that as forest regions acces- sible to the larger consuming markets are cut out lumber prices are pushed upward by increased costs of production and distribution incident to the exploitation of less accessible or more distant forests and by altered competitive conditions in the markets occasioned by changes in species and in main sources of supply. In any given market prices are predomi- nantly influenced by the species of greatest supply and general utility. As that species becomes depleted and scarce it in- creases in price and tends to draw the level of competing prices with it. Regional forest depletion therefore results in weak- ened interregional competition, which in the past has been one of the most effective influences in restraint of lumber price advances. Timber depletion is therefore an important contributing fac- tor in present high lumber prices but is not the only cause. Lum- ber production has fallen off to a marked degree in many regions as a result of the cutting out of the forest. Freight congestion, climatie conditions, labor troubles, and other factors which have reduced output in the regions still maintaining large industries have, as a result, been greatly emphasized and have been di- rectly related to depletion in their effect on prices. Transporta- tion charges have been increased to most of our largest consum- ing centers. Competition among manufacturers has been re- duced and a greater opportunity created for manufacturers and dealers to auction their product at higher prices. All of these factors have tended to increase lumber prices and have accentu- ated depletion. If large-scale production had still been possible in New England, New York, Pennsylvania, and the Lake States, there can be little doubt concerning the beneficial effect upon market stability and lumber prices. LUMBER EXPORTS AND TIMBER DEPLETION. LUMBER EXPORTS BEFORE AND DURING THE WAR. Prior to the war, the United States exported annuahy about 3 billion board feet of lumber and saw logs, aside from con- siderable quantities of railroad ties, staves, and other wood products. The export trade absorbed about 83 per cent of the lumber cut. Nearly half of the lumber shipped abroad was southern yellow pine, and softwoods all told constituted about 79 per cent of the export trade. An important factor in the foreign trade is the export of high-grade hardwoods. More than 10 per cent of the yearly cut of oak, or about 800 million board feet (mostly white cak), was exported, in addition to 41 million feet in the form of staves. Seven per cent of the annual cut of yellow poplar, or 35 million feet, was exported, and nearly 50 per cent of the yearly cut of black walnut, or about 25 million board feet. Considerable quantities of hickory, ash, and other uigh-grade woods for vehicle parts, agricultural implements, ete., were also exported. In 1913, 37 per cent of the lumber exports were shipped to IXurope, 30 per cent to North America (chiefly Canada and ‘Mexico), and 16 per cent to South America. The foreign lumber trade fell off to a marked degree during the war, particularly lumber exports to Europe. The total exports in 1918 and 1919 were but one-third of the quantities of lumber and logs exported in 1918. The foreign trade in hard- woods has showr the least decline, the volume exported in 1918 being 88 per cent of that in 1913. | PROBABLE DEVELOPMENTS IN LUMBER EXPORTS. Following the suspension of hostilities, lumber exports have been very slow in returning to their prewar volume, mainly on account of exchange rates running against Wuropean countries, high charter rates on shipping, and the unprecedented demand and high prices for lumber in our domestic markets. As more normal trade conditions with Europe are reestablished there will undoubtedly be a marked increase in lumber exports. The emergency needs of Europe for reconstruction and long- delayed expansion in housing facilities, railroads, etc., have been estimated at 7 billion feet of lumber annually for some time to come oyer and above the consumption of normal times. Great Britain, France, Italy, Germany, Belgium, and Holland are lumber-importing nations now experiencing exceptional and often acute shortages of wood as an aftermath of the war. For the most urgent reconstruction and expansion, particularly of railroads, these countries will presumably seek to obtain lum- ber in large quantities from the United States as soon as ex- change rates reach a stable and more satisfactory basis. In- quiries for several million railroad ties from Great Britain and France have, for example, been made of American manufac- turers, and indications point to a relatively steady demand from Europe for this product. It is, nevertheless, improbable that the United States will be called upon for any considerable part of the ordinary grades of building lumber required in the reconstruction of western Europe. Europe itself contains large quantities of timber suit- able for such purposes, particularly in Russia, Finland, Sweden, Norway, and the new countries carved out of the Austro- Hungarian Empire. Large lumber stocks accumulated in the countries of the Baltic Sea during the war await marketing. The pressure upon all European countries having extensive for- est resources to exploit them and develop trade relations for marketing their products as a means of industrial rehabilita- tion will be very great. These countries, with their advantage of proximity, better knowledge of trade customs and require- ments, and the cheapness of their products, bid fair to supply the bulk of the demands for lumber of general utility arising from the war. On the other hand, European demands for high-grade timber products from the United States, such as large structural and ship timbers, flooring, hardwood staves, and furniture, vehicle, or implement stock will increase. High-grade woods suitable for many of these purposes can not be had in large quantities fromm any European sources now available for exploitation. The recent improvement in the exchange rate with Great Britain apparently has already brought a marked increase in the British demand for hardwoods, which is a factor in fur- ther reducing stocks and maintaining high prices on hardwood lumber required by American furniture makers and other manufacturers. Hickory and ash handies are now going to Europe in considerable quantities, the foreign demand for these products again being a factor which affects stocks and prices in the domestic markets. As previously indicated, the European trade forms less than 40 per cent of our lumber exports. The development of Cen- tral and South America, parts of Africa, China, Australia, and New Zealand will naturally result in a gradual increase in lumber exports to those countries. Central and South America, while containing large hardwood forests, are now dependent upon imports from the United States, Canada, and Sweden for the bulk of their softwoods, the chief staple in international timber trade. Several of these regions may in time develop forest industries sufficient to supply their own needs, and new sourees of international lumber supply may be developed in regions like Siberia. Nevertheless, the United States must anticipate a gradual but material increase in the demand for its lumber products from these parts of the world for some time to come. This demand will comprise mainly lumber of relatively high grade. It will, however, probably run to less specialized and high quality products than the European trade and will consist chiefly of the better grades of softwood build- ing and construction lumber, with considerable quantities of railroad ties. The exports to Canada and Mexico, on relatively short-rail and coastwise shipments, will comprise an average run of sawmill products corresponding to that taken by the donrestic trade. EFFECTS OF EXPORTS UPON DOMESTIC TIMBER SUPPLIES. The depletion of the virgin forests of the United States is making itself felt first through the growing scarcity of timber of high quality—the products cut from large, clear logs repre- senting the cream of our virgin forests. During the past 25 years such products have risen in price more rapidly than the common grades of lumber. The most serious effect of the for- eign trade will be to increase the shortage of high quality prod- ucts, because it is exactly such products which are short the world over and which lumber-importing nations will in the long run most desire to obtain from the United States. 60 TIMBER DEPLETION, PRICES, This effect will be most pronounced in the case of American hardwoods. includes The foreign demand for such species not only cabinet, furniture making, and finishing woods of special beauty, like walnut or quartered oak, but also many woods used in manufacturing essentials of commerce and in- dustry, like oak and hickory wagon stock, hickory spokes, high- grade car stock, ash and hickory. handles, woods used in agricul- tural implements, and the like. The supply of old-growth hardwoods from which most of these products are obtained is nearing its end. Our domestic industries are securing such materials with increasing difficulty and cost. Except as substi- tute woods or other materials may be found, the growing short- age of these products must in any event seriously handicap American industry and commerce. The second important bearing of foreign shipments is upon the remaining supply of high-grade southern yellow pine which, up to the present time, has furnished about half of the total lumber exports. The materials which the foreign consumer de- mands include a large proportion of high-grade flooring and other forms of finish and large timbers for shipbuilding and other structural purposes. The situation as to the supply of these products is less serious, and quite unlike that which holds true of the hardwoods. The total production of yellow-pine lumber will probably decline steadily during the next 10 or 15 years; and the production of high-quality products from old growth will drop off still more rapidly. Such high-grade prod- ucts will, however, continue to be cut from particular localities or holdings, theugh in diminished amounts, for 30 to 40 years, and the substitution of western softwoods for both export and domestic products now made of southern pine is entirely prac- ticable. In the third place, export demands will strike the large sup- plies of high quality softwood timber in the Western States. The Pacific coast carries.on a gradually increasing trade with the Orient, with Australia, with South America, and with Europe. It will logically replace the exports of southern pine ns that timber is further depleted. Here, again, the foreign de- mand will take mainly high-grade products, particularly large structural timbers, shipbuilding materials, and the better grades of clear flooring and other forms of finish. With this demand for high-grade materials will probably be supplied varying quantities of railroad ties and general utility lumber. The large virgin forests of the West will sustain the maxi- mum demand made upon them by the export trade for many years without serious effect upon domestic markets. The do- mestic demand for high-quality timber products from the West will, it is true, increase with rapidity as their production in the South falls off. And in the West, as in the South, the first evidence of depletion will be a scarcity of products of high qual- ity. There is this marked difference, however, in the West, that the existence of large National Forests where timber is cut under careful restrictions affords a means for reserving rea- sonable quantities of high-quality timber and for producing stumpage of this grade. It must therefore be recognized that a material increase in the export lumber trade would accentuate the shortage of high- quality products available to American consumers. ‘The prob- lem presented by lumber exports is not serious from the stand- point of quantity. It may prove serious from the standpoint of quality. Scarcity of high-quality products essential to our ship and car building and many other industries is the first and one of the most serious effects of timber depletion. The eventual solution of the problem presented by an active foreign trade is therefore identical with the remedy for deple- tion through domestic consumption, namely, not to restrict the use, but to increase the production of timber by getting all forest-growing land at work. It must be recognized, however, that this remedy in itself will not entirely meet the need for timber of high quality. .With some exceptions, such material EXPORTS, AND OWNERSHIP. can not be grown in less than 150 years; and even if every acre of denuded land in the United States were planted to-morrow, a long time would elapse before the depletion of high-quality stumpage which has been cut so freely from our virgin forests could be made good. Furthermore, the private landowner can seldom afford to carry timber crops during the long periods necessary to produce. material of high quality. The most ef- fective means of overcoming the shortage of high-grade timber is the creation of public forests which can be utilized to the extent necessary for the production of large timber or, special products. The bulk of the high-quality timber produced in France and other countries of Continental Europe is grown in public forests, it being a recognized function of the Government to produce on its forest lands the classes of material which will not be grown in sufficient quantity on private lands because of the time and cost involved. This policy has already been applied to the hardwood forests acquired by the United States in the southern Appalachians pursuant to the Weeks Act. As far as practicable, these forests will be handled so as to produce high- quality hardwoods rather than railroad ties and common lum- ber, so that they may be at least a factor in meeting the short- age of such products. But no adequate provision for the grow- ing of high-grade eastern woods has yet been made. It can be made only by largely extending the public forests in the Eastern States. IMPORTS OF FOREST PRODUCTS. During the four years preceding the war the imports of lumber and logs ranged from 1,100,000,000 to 1,800,000,000 board feet, or about one-third the volume of exports during the same period. Beginning with 1917, there was a marked increase in wood imports. In 1918 imports exceeded exports by 100,000,000 board feet, and in 1919 the excess of imports was probably much greater. Aside from the importation of 1,870,000 cords of pulp wood from Canada in 1918, the United States imported 596,000 tons of wood pulp and 516,000 tons of paper, chiefly from the same source. Imports of timber and timber products fall into three classes: (1) Cabinet woods, like mahogany and cigar-box cedar, and other valuable woods, like South American greenheart, which ean not be obtained in the United States. The imports of cedar amount to nearly 20,000,000 board feet annually, and the im- ports of mahogany to 50,000,000 board feet. (2) Saw logs and manufactured lumber from Canada, shipped into the United States by the natural routes of commerce on the Atlantic and Pacific coasts and by favorable railroad chan- nels. Such imports aggregate about 1,000,000,000 feet per year, aside from which Canada also ships close to a billion shingles into the United States annually. These imports compete di- rectly with similar products manufactured in the United States, There is, indeed, approximately the same flow of lumber across the Canadian boundary in each direction, determined by the favorable location of consuming regions in one country with respect to lumber-producing centers in the other. (3) Paper and materials for making paper. The imports of pulp wood, pulp, and manufactured paper in 1918, prac- tically all of which came from Canada, were approximately 2,071,000 tons. Imports of corresponding products were still greater in 1919. They furnish about two-thirds of the news- print paper consumed in the United States, a proportion which will grow steadily unless the foreign trade policy adopted by Canada prevents. Other imports of forest products are at the present time of negligible importance. Prior to the war the United States im- ported considerable quantities of chemical pulp and high-grade papers from Scandinavia, a trade whose partial resumption is to be expected. A small quantity of lumber is shipped to our west coast from Japan and Korea, The enormous timber re- TIMBER DEPLETION, PRICES, sources in Siberia have not yet been developed sufficiently to | support a foreign lumber trade.” The two important classes of products for which the United States now depends upon foreign countries are cabinet and other extremely valuable woods from tropical countries and paper or its raw materials. Our dependence upon Canada for paper is an extremely important factor which must be reck- oned with for many years to come. This results in part from the depletion of pulp-making woods in the eastern United States and in part from transport and manufacturing condi- tions which have prevented the paper-making industry from utilizing pulp timbers available in the Western States and Alaska. Adequate development of our western pulp-wood re- sources could make the United States independent of foreign supplies of paper. EXPORT TRADE POLICY. It must be recognized that, unlike most articles of commerce, the replacement of a considerable part of the raw material con- EXPORTS, AND OWNERSHIP. 61 sumed in lumber exports will, under the best conditions, be a slow and difficult process. Foreign trade in softwoods has less serious eftects than the export of hardwood products; a foreign trade in such articles as softwood railroad ties and common lumber is the least serious of all since such com- modities can be produced with comparative rapidity in large quantities once growth replaces devastation of our forest lands. On the other hand, foreign demands for high-grade hardwoods endanger certain of our “key” industries such as the manu- facture of agricultural implements, vehicles, and handles, Without any exports we face a serious shortage in their raw materials. These facts should be considered in determining the foreign-trade policy of the country and in weighing the ad- vantages of reciprocity. Our fundamental national policy, however, should be for timber growth rather than the regula- tion of timber use. If the export trade in lumber is to be regulated, such regulation should be discriminating and should apply to the grades and products in which a shortage is most imminent and most menacing to domestic industries. CONCENTRATION IN TIMBER OWNERSHIP, MANUFACTURE, AND MARKETING. CONCENTRATION OF TIMBER OWNERSHIP IN 1910. A thorough investigation of timber ownership in the Lake States, the southern pine region, and the Pacific Northwest was made by the Bureau of Corporations in 1910. At that time these three great forest regions contained about 80 per cent of all the standing timber in the United States. The two most striking facts reported by the Bureau of Corporations, follow- ing its investigation, were the concentration of control of stand- ing timber in comparatively few large holdings and the vast scale upon which the speculative purchase and holding of tim- ber in advance of its use had been conducted. Both of these conditions were attributed directly to the public-land policy of the United States. The Bureau of Corporations found that 48 per cent of the standing timber privately owned in these three regions, or 839.7 billion feet, was held or controlled by 195 Three large corporations held between them 238 bil- lion feet, or 11 per cent of all the privately owned timber in the United States. The concentration of standing timber in large lioldings was most fully developed in the Lake States and the Pacific Northwest. The degree of concentration of standing timber in 1910 in the States covered by the investigation of the Bureau of Corpora- owners. tions, and subsequent changes or tendencies in so far as it has been possible to determine them, are summarized in the follow- ing brief account of timber ownership in a number of the more important forest regions: TIMBER OWNERSHIP IN THE NORTHEAST. The 1910 investigation did not cover this region. The only timber holdings of large size in New England are located in its northern softwood forests and have been consolidated primarily to secure large supplies of pulp wood. Fifteen owners have acquired something over 54 million acres in Maine, New Hamp- shire, and Vermont, or nearly one-fourth of the forest area of these three States. These 15 owners undoubtedly control at least half of the supply of pulp wood in New England. The process of timberland concentration is still going on to a con- siderable degree, especially in Maine, where the large properties of one of the paper companies were acquired and assembled dur- ing the past three years. In New Hampshire the United States itself has acquired a comparatively large timber holding through the purchase of over 400,000 acres in the White Mountains under the Weeks law. The pulp-wood forests of New England are very largely held on an operating rather than a speculative basis. The non- operating owners in practically all cases are selling timber to operating companies for current logging requirements, re- taining the land. In New York 17 pulp and paper companies have aggregate holdings of nearly 800,000 acres. The largest of these owner- ships exceeds 200,000 acres, and the second in size exceeds 150,000 acres. Practically all of the softwood stumpage in New York is very strongly held, and there is little tendency toward further concentration at the present time. A significant fact in New York is that the State itself is the largest owner of merchantable timber, having acquired 1,886,000 acres of forest land in the Adirondack and Catskill Preserves, which contain 60 per cent of the pulp timber in the State. The cutting of these lands is prohibited by the State constitution. The situation in New York is thus in striking contrast to that 62 in Maine, where almost the entire supply of pulp timber is in private ownership. OWNERSHIP OF SOFTWOOD TIMBER IN THE SOUTH- ERN STATES. The Bureau of Corporations reported in 1910 that 14 holders controlled three-fifths of the cypress in Louisiana, and that 11 owners controlled one-half of the cypress in Florida. Each of these 25 owners had acquired more than 250 million feet of cypress stumpage. There has been comparatively little change in the ownership of cypress land since 1910. The limited supply and high value of this timber and the large investments re- quired for operating plants tend to keep the stumpage in the hands of relatively few owners. The enlargement of the ex- isting cypress holdings is becoming more and more difficult, and the total quantities of timber held by the groups of large owners are diminishing as cutting progresses. The Bureau of Corporations reported that 29 holders in 1910 owned 22 per cent of the yellow-pine timber in the Southern States, each of these owners having acquired over 2 billion board feet. Sixty-seven owners held 31 per cent of the south- ern pine, but the ownership of 50 per cent was distributed among 807 holdings. The concentration of southern pine in large holdings appears to have practically stopped about 1909. The number of hold- ing companies which are not operating is very limited, sales of timber are very few, and practically all of the remaining stump- age is definitely related to manufacturing plants. The southern pine belt well illustrates the increasing degree of concentration ef timber of high quality as the depletion of forest resources continues. The South contains to-day approxi- mately 189 billion feet of virgin pine, controlled by 5,401 saw- mills. It is estimated that in 10 years the remaining stand of old-growth pine will be in the hands of 147 mills, and that in 20 years the 80-odd billion feet of virgin pine timber left will be held by 45 mills. The number of mills alone does not indi- cate the degree of concentration, since a number of corporations control and operate several mills. The southern pine region also illustrates the replacement of large sawmills by small operations, as the greater part of the virgin stumpage is cut out and the industry passes over to the cleaning up of odds and ends and the manufacture of second growth. The number of small sawmills in the South is in- creasing more rapidly than the number of large plants, which are closing down. During 1919 from S800 to 1,000 small mills were established in this region, a moyement, of course, greatly stimulated by the high lumber prices. OWNERSHIP OF HARDWOOD TIMBER. In 1910 the Bureau of Corporations found that timber owner- | ship was concentrated in the hardwood forests of the South than in any other region investigated. The same is true to-day. Hardwood forests lend themselves fo concentration much less readily than coniferous timber. The number of species in the usual stand is great. Manufacture and market- ing must be highly specialized, with diversified products de- manded by a wide range of manufacturing industries and other users. Costs of production run higher than in the case of softwood forests. Hence the individual hardwood hold- ings have averaged much smaller and the average hardwood mill cuts much less timber than in the case of softwoods, less TIMBER DEPLETION, PRICES, The annual cut of 11 of the largest hardwood operators in the southern Appalachians is about 400 million feet. This represents 124 per cent of the cut of the region. The remain- ing S74 per cent of the output is manufactured by companies which produce less than 10 million board feet yearly in every case. In the Mississippi or ‘ Delta” region less than 380 com- panies reported a lumber cut of more than 10 million board feet annually. In the whole hardwood region there are no holdings comparable to the large operating groups in the soft- wood forests of the West and South. At least 10 million acres of hardwood forest in the Ap- palachian Mountains are owned by coal, oil, gas, and other mining corporations. One and one-half million acres have been acquired by the Federal Government as National Forests under the act of March 1, 1911. The remaining hardwood areas in this region, and the same appears to be true of the “ Delta” hardwood belt, are widely distributed and largely in the hands of operating companies. TIMBER OWNERSHIP IN. THE LAKE STATES. The Bureau of Corporations reported in 1910 a marked degree of timber concentration in the Lake States, particularly in the most valuable species. Six owners thus held 54 per cent of the white and Norway pine in Minnesota, but only 2 per cent of the hardwoods, then rated as of inferior value. Thirty-two holdings in Minnesota, each exceeding 60 million board feet, _ aggregated 77 per cent of the valuable pines and but 11 per cent of the hardwoods. Ten holders had acquired 24 per cent of all the timber in Wisconsin and 12 holders had acquired 28 per cent of the timber of Michigan. Since 1910 a good many owners have disappeared from the rolls in the Lake States through the exhaustion of their hold- ings. The few nonoperating holders appear to be disposing of their lands, and a very large proportion of the timber in the region is now attached to going operators. TIMBER OWNERSHIP IN IDAHO. In 1910, 64 per cent of the privately owned timber in Idaho, or 32.3 billion board feet, was held by 10 owners. Each of these holdings comprised over half a billion feet. The three largest owners jointly controlled 46.2 per cent of the private timber in the State. The concentration of timber ownership in Idaho appears to have practically stopped about 1907. Since that time the larger holdings have remained practically at a standstill, ex- cept for depletion from cutting and exchanges between com- panies to secure a better blocking of stumpage for operating purposes. The stoppage of further timber purchases about 1907 appears to haye been due to a full realization of the cost of carrying stumpage for long periods in advance of oppor- tunity for its manufacture and to the general period of lean years which the lumber industry experienced, particularly from 1913 to 1915. For the same reason a number of non- operating companies have constructed sawmills and become manufacturers. Timber concentration had, however, gone very far in Idaho, particularly in the case of western white pine, the most valu- able timber tree of the Northwest. Of the 20 billion feet of white pine in this region, 5 billion feet is owned by the Federal Government, chiefly in National Forests, the State of Idaho owns 3 billion feet, and 12 billion feet are privately owned. A single group of affiliated companies controls one-half of the privately owned white pine, er 6 billion feet. With the exception of the Northern Pacific Railroad, one of the largest timber holding companies in this territory, there is no tendency to break up or decrease the size of the larger properties. The Northern Pacific is disposing of its timber as opportunity affords. The State of Idaho has announced a policy of disposing of its timber EXPORTS, AND OWNERSHIP. 63 lands. There is a marked tendency in Idaho, however, to put timber holdings upon an operating basis and to construct ad- ditional sawmills in sufficient number to liquidate most of these great properties within 25 or 80 years. TIMBER OWNERSHIP IN WASHINGTON AND OREGON. In these States, the Bureau of Corporations found in 1910 the most striking examples of timber concentration. Three owners controlled 191.3 billion board feet of timber. There were 83 owners who had acquired over a billion board feet. Their aggregate holdings were 411.7 billion feet, or 59.4 per cent of the privately held stumpage in the two States. Since 1910 the three largest holdings in this region have been decreased. By decision of the Federal courts the land grant of 2,425,000 acres to the Southern Pacific Railroad Co, in Oregon has reverted to the Government. The Weyerhaeuser Timber Co. has sold approximately 250,000 acres, chiefly to operating com- panies, and has itself become a large timber manufacturer. The Northern Pacific Railroad Co. has sold 522,000 acres of timberland in Washington, a considerable part of which has gone to operating companies. In the State of Washington individual holdings in excess of 25,000 acres, or approximately 1 billion feet of timber, had as a group acquired 155,100 acres of additional timberland be- tween 1910 and 1919 through the consolidation of small hold- ings. On the other hand, this same group had during the same period decreased its holdings by 970,630 acres through logging, timber sales, failures, ete. The net area of timberland con- trolled by this group of approximately 32 owners had decreased in the nine years 815,530 acres. In Oregon the holdings of the same size had, as a group, dropped 959,930 acres between 1910 and 1919 and added 1,437,580 acres, a net increase of 477,650 acres. The increases represent principally the consolidation of small properties. Much of the timbered area of Oregon is still undeveloped and inaccessible for lumber manufacture. Timber values in this region are still low. The greater number of large holdings in Oregon are in such localities. Several of them have changed hands during the past 10 years, some tracts two or three times, due to the inability of owners to carry taxes, interest, and pro- tection costs any longer. The holdings previously carried more or less as a speculation have in many cases passed into stronger hands. There are still many thousand timberland claimants and small owners in these less accessible regions who are anxious to unload; and the low values at which they are willing to sell their land has permitted the blocking of small holdings into large properties at prices which have attracted strong investors. In a considerable number of cases, companies preparing for lumber manufacture have not only blocked up small properties but have also purchased extensively from the larger holders themselves. A process of concentrating small properties and one of breaking down the very large properties are thus going on at the same time. These two movements taken together presage a change in timber ownership in Oregon from a specu- lative to an operating basis and a large increase in its manu- facture of lumber. The individual holdings under 25,000 acres, or about one billion feet of stumpage, aggregate 17,000 in Oregon and 7,000 in Washington. Many of these small holders have retained their timber not from choice but from their inability to sell in locations isolated from present manufacturing centers. The smaller number of such holdings in Washington indicates the much more rapid development of the lumber industry in that State. The enormous number of timber properties of small or unimportant size in the two States on the northern Pacific coast not only show that there is still a very wide distribution of timber ownership in that region notwithstanding the concen- of less than 64 TIMBER DEPLETION, PRICES, tration which has taken place; but also that the process: of con- centration for timber holding as distinet from lumber manufac- ture had been checked, as in Idaho. TIMBER OWNERSHIP IN CALIFORNIA. The timberlands of California illustrated, in 1910, the same tendencies toward a partial concentration in enormous holdings evident in Oregon and Washington. Nearly 75 per cent of the ( privately owned timber in the State, or 178.2 billion feet, was in 39 holdings. The seven largest owners carried 100 billion feet of stumpage ; and one owner, the Southern Pacific Railroad, had acquired 35 billion feet through its Federal land grant. The commercial timber lands of California comprise two dis- tinct belts, the redwood forests bordering the coast, and the sugar and yellow-pine belt covering the eastern and northern mountain ranges of the State. In the redwood region the prin- cipal nonoperating owners are now 17 in number, with holdings ranging frony 200 million to 5 billion board feet of timber. Eleven of these holdings comprise 1 billion feet or more; and in the aggregate they comprise 29,056,000,000 feet. The prin- cipal operators in the same region are 13 in number, with tim- ber holdings ranging from 240 million to 3 billion feet. Six of these companies have holdings of 1 billion feet or more; and the aggregate Ownership of the 13 is almost 20 billion feet. A large part of the redwood stumpage that can be operated most economically is now controlled by operating companies, who also largely control strategic operating sites from the standpoint of coastwise or other shipments. There is still a large percentage of redwood timber in the ownership of nonoperating companies, but the general tendency since 1910 appears to have been away from further concentration. The number and aggregate hold- EXPORTS, AND OWNERSHIP. ings of the group of companies controlling a billion feet or more, for example, has decreased. The principal holding companies in the pine region of Cali- fornia are eight in number, Aside from the enormous property of the Southern Pacific Railroad, these ownerships range from 600 million to 3 billion board feet. In addition, there are 14 large operating companies, one of which controls 15 billion feet of stumpage, while the holdings of the rest range from 181 million to 2.8 billion board feet. All told, these operating com- panies own over 29 billion feet of stumpage. There have been several transfers of ownership since the investigation made by the Bureau of Corporations in 1910; but no-important change as to the general concentration of timberlands. The present tendency in the California pine region is toward the operation of timber areas and the liquidation of the investments which they represent wherever the location of the property permits. In line with this tendency, in California as in Oregon, a rapid increase in the installation of sawmills and volume of lumber output is to be expected. CHANGES IN TIMBER OWNERSHIP FROM 1913 TO 5 1918. The accompanying table, No. 26, prepared by the Timber Sec- tion of the Bureau of Internal Revenue, shows the increases and decreases in timber ownership between 1918 and 1918 by 368 owners, These holdings are distributed by groups through 17 forest regions, representing practically all of the important timber areas in the United States. The figures do not include all of the large timber holdings in the regions represented, but do, through showing what has happened in the case of a sample group of large owners in each region, draw an excellent picture of the tendencies in timber ownership thé country over. TaBLE 26.—Depletion of timber reserves and net changes in timber ownership of large timber owners in the important forest regions of the United States. {Data compiled from “general Forest Industries Questionnaires”’ on file in the Timber Section, Bureau of Internal Revenue—Bureau of Internal Revenue, May 22, 1920, David T. Mason, Chief, Timber Section. J Total area | e , Per cent by Number of | Aver- owned | Timbered area owned | Timber owned (mil- | which pur owners. Least | age | (thousands of (thousands of acres). lions of board feet). Per chases or quan- stand acres). cee et sales dur- timber acre Ratio | Ratio Ratio. os “changed Rarentrericnis owned | Mar. 1, SIO: Zila paantieyol i915, of dit. a a durin, awed ec. san ar. Total. oe 31,1918, bd. ft.). Mar. 1, ap Mar.1 aus a Mar. 1, a oe 1913. i mullon q e ating. Ks aft). 1918. period.| 1918. | period,| 1918. . is | (M+I) (G+F) (K+I) (0=M)| (yw) aro) - | — tei | A B | c D E BeaeGyell! fa I TK L mM | N Oo P Q R | - Ei | | | fe ge New Een WE) aaa 40 | 2 60 3.8 | 5,675 | 6,519 1.15 | 5,386 797 | 5,365 1.00 20,522 | 3,255 | 19, 885 0.97 16 13.0 (Me., N. H., Vt. | New iorkeeeeben os ces fh | 1 60 5.6 853 | 821 -96 782 136 614 -78 | 4,400 755 | 3,620 82 17 — .5 Pennsylvania 5 |eeeeeee 60 17.6 550 545 -99 166 91 83 | -50 | 2,927 | 1,936 1,109 38 66 4.0 iNa ue pine ae Li peceees 250 LOST esooc Pocacod has aeoae 862 415 564 -65 | 3,664 | 1,433 | 2,375 +65 39 4.0 Was C isecsiGa:) Florida pine... .-. (al eee 250) | ye g3-0) [sere ces eee oe ae ee 745| 361] 592} .79| 2,878] 1,305| 2,112| .73 45 19.0 Gulf pine... 65 2| °250 Leh fees teal (ee ee 4,890 | 1,828 | 3,854 | .79 | 39,419 |14,733 | 28,423 .72 37 9.0 ( reshma La., Tex., | | C¥PFOSS- FRISRIStG BRE 17 1 60 UG RaSeted Psacera poceaead Moccaae MeoGece Hae - sod ececes 8,322 | 1,752 | 2,625 .79 53 32.0 a., Fla., S.C.) Appalachian a Ce ie 22 2 60 HOY Eo caal Banna sg Saccase 657 256 601 -91 | 5;284 | 2,271 | 4,275 81 43 24.0 Va., W. Va y. | | Tenn.) i | | Appalachian sores a Heoaas 60 LOH Resend Reestod bt ocedd 354 17 235 -66 | 3,681 | 1,441 2,418 | 66 39 5.0 Ja.,W. Va.,N.C., Tenn.) | Delta hardwoods.............. 60 5.6 577 737 1.28 524 163 545 1.04 | 2,948 894 | 2,891 98 30 28.0 (Miss., Ark., La., Mo.) | | Tale! Stapesie isos eke ats ets 100 7.2 | 3,724 | 3,675 -99 | 2,496 | 1,094 | 1,634] 65 | 18,082 | 7,137 | 11,868 -66 39 5.0 (Minn., Wis., Mich.) z liny? Td ahio iene So rath Ae Ge. 250| 17.5 | 1,020] 1,052} 1.03] 918 94} 902] .98 | 16,082 | 1,595 | 15,228 95 10 | 5.0 Wastingion (fir and pine)..... 250 44.0 | 2,490 | 2,463 «99 | 2,245 163 | 2,096 | -93 | 98,793 | 7,495 | 86, 528 | .88 8 —5.0 Oregon: Jom. ss - =o ses eee 250 | - 50.0 567 550 -97 503 29 462 | -92 | 25,310 | 1,760 | 21,726 86 7 —7.0 Oregon pine......... 250 16.0 674 720 1.07 616 31 633 | 1.03 | 9,568 322 9) 548 } 1.00 3 3.0 California redwood. - 500 78.0 399 401 1.01 278 3l 250 -90 | 21,617 | 2,513 | 19,346 -89 12 1.0 California pine..............-.. 500 | 25.1 | 1,518 | 1,505 -99 | 1,273 | 136} 1,130} .89 | 31,972 | 2,760 | 28,505 .89 9 —2.0 Motallecese. cee seetee | 376 2) | een 13.7 |18,047 |18,988 | 1.05 |22,696 | 5,742 |19,560| —.86 310, 469 [53,357 202, 482 -85 | 17 2.0 | | | TIMBER DEPLETION, PRICES, The following notes on this table have been furnished by the Timber Section of the Bureau of Infernal Revenue : “In New England the 16 per cent cut indicated in column Q is believed to be too low to be fairly representative for all of the owners in the region, for during this period many of the larger operators, desiring to guard heavy investments iu pulp and paper manufacturing plants, secured their supplies of raw material as far as possible from timberlands other than their own. At the same time these owners gladly bought additional timber to the extent of 15 per cent of their original holdings. “Tn the case of New York the statement just made for New England applies to column Q. In the case of column R, how- ever, the owners did not increase their holdings through pur- chase, but in fact diminished them by one-half of 1 per cent through sales, owing to the fact that timberland at the begin- ning of the period was for the most part already closely held in New York and very little was changing hands. “In Pennsylvania there are very few important timber hold- ings left, These are being rapidly exhausted, as indicated by the fact that 66 per cent of the timber on hand March 1, 19138, was cut during the period, and by the further fact that the owners were able to secure only 4 per cent more during the period. In a region such as this, where cutting has materially reduced the supply of virgin timber, the tendency is for an operator to replenish his timber reserve, so far as he is able, by the purchase of other available timber. For the same reason this tendency also obtains in the Atlantic pine, Florida, Gulf pine, cypress, Appalachian hardwoods, Appalachian softwoods, and Lake States regions. “The Atlantic pine region shows about the same situation as does Pennsylvania, excepting that the existing supply suitable for large sawmill operations is not being exhausted as fast. “Tn the case of Florida, while the rate of cutting was high, there were still considerable tracts of timber to be obtained for yood-sized operations, as indicated by the 19 per ‘cent excess of purchases over sales. In the Gulf coast pine region the rate of reduction of timber reserves was slightly slower than in the Atlantic pine region; the opportunity to secure additional tim- ber was better but not so good as in Florida. “ We now leave the regions of the United States in which the timber supplies have been rather heavily depleted and where operators are inclined to acquire as extensively as practicable additional supplies in order to prevent their reserves from falling tco rapidly. We reach the western United States, where there are still enormous supplies of virgin timber. Here during the period covered by the table there was little inclination to buy additional timber because of the exceedingly heavy load of timber already carried; in fact, many owners endeavored to liquidate their timber as rapidly as possible both by cutting and by selling. Those large owners who bought timber usually acquired only that offered at bargain rates. In Idaho, for in- stance, 10 per cent of the timber on hand at the beginning of the period was cut and 5 per cent acquired; much more than 5 per cent could easily have been acquired, for the available sup- plies are large, if the owners included in the group had been in a buying mood. In Washington 8 per cent was cut, and an addi- tional 5 per cent was sold. Similarly in Oregon fir, 7 per cent was cut and an additional 7 per cent was sold. In the case of Oregon pine, California redwood, and California pine the condi- tions were not far different from those just mentioned.” Particular attention should be given to the ratio columns for “Timbered area owned” and ‘“ Timber owned.” In the case of but one group—that of Oregon pine owners—does the total quantity of timber owned in 1918 equal that owned in 1918. In every other region the total group ownership dropped off dur- ing these years. The ratio is close to 100 in most of the regions still having large areas of virgin forest, reflecting, first, con- _ tinued opportunity to acquire timber, and, second, the effort on EXPORTS, AND OWNERSHIP. 65 the part of the larger owners to maintain a constant but not greatly increased supply of stumpage for their mills. It is also notable that the quantity of stumpage held in 1918 by the New England group is very close to that held in 1913. In several other regions low ratios, such as 88 per cent in Penn- sylvania, 65 per cent in the Middle Atlantie States, and 66 per cent each in the softwood areas of the southern Appalachian and in the Lake States, are evidences of timber depletion. These data, compiled from the tax returns made to the Bureau of Internal Revenue, confirm the general tendency, ascertained by the Forest Service from study in the field, toward a decrease in the larger timber holdings in many regions and putting tim- ber ownership more largely upon an operating basis. These facts, however, do not necessarily indicate a decrease in the proportionate amount of timber controlled by large owners. A SUMMARY OF THE PRESENT SITUATION AS TO TIMBER OWNERSHIP. In brief, the situation as to timber ownership has not changed materially from that reported by the Bureau of Corporations in 1910. Half of the privately owned timber in the United States is in the ownership or control of about 250 large companies. About one-fifth of the total is owned by the Government. Sev- eral of the Western States also rank as large holders. The ownership of the remaining timber is very widely distributed. There are 24,000 holdings of less than a billion feet in Oregon and Washington alone. The great bulk of the hardwood timber is distributed among many owners. It is roughly estimated that the farm wood lots in the States east of the Great Plains, aggregating 152,000,000 acres, contain two-fifths of the timber in this portion of the country, or approximately 340 billion feet. In nearly every forested region the group totals of the prin- cipal owners have either practically remained stationary or decreased. The tendency on the part of these groups to acquire and maintain a relatively constant supply of standing timber as cutting progresses is marked in regions where the remaining resources permit. The decrease in the holdings of such groups in several of the eastern forest regions is a clear indication of timber depletion. In many individual cases, of course, a fur- ther concentration of timberlands is in progress. This is par- ticularly marked in the softwood forests of the Northeast, spurred by the scarcity and high value of pulp woods. A realization of the carrying charge on long-term timber in- vestments, which may double the capital cost of stumpage every seven or eight years, has largely halted the movement for building up enormous speculative timber properties which was in full swing prior to 1910. The tendency of the present, with some exceptions, is to put the timber holding on an operating basis, adjusting its size to a practicable scheme for under- writing the cost of particular sawmills and logging improve- ments rather than carry large surpluses beyond operating re- quirements now clearly defined. A number of companies, hitherto timber investors rather than lumber makers, are be- coming operators through the necessity of obtaining a current revenue to meet carrying charges, and also because of the op- portunities for profit afforded by the existing lumber markets. As a broad rule, therefore, particularly in the Northwest, tim- ber lands are passing over from long-time speculations to blocks of raw material connected with particular manufacturing plants. As a phase of this process, the largest holdings are being reduced rather than increased. On the other hand, this regrouping of timberlands is bring- ing new interests into the Western States, chiefly as operators. While often buying timberland from the larger owners there before them or taking over going sawmills, these new interests are also consolidating small holdings in order to block up de- sirable operating units. They thus become large or compara- tively large timber owners themselves; and their establishment in the West tends to even off decreases in the holdings of the 66 TIMBER DEPLETION, PRICES, very large interests. By and large, the degree of concentration indicated in the findings of the Bureau of Corporations in 1910 has not been xppreciably changed; but no general tendency is evident to extend control by increasing the larger holdings or by withholding timber from the saw. Indeed, the opposite is true in many regions. Two factors make the effect of timber concentration greater than it appears. The first is the ownership of key areas, strategically located at the outlets of valleys or other points, where they control to a considerable degree the operation of the back-lying or adjoining timberland. There are many cases where topography thus gives the owner of a key tract practical control over an adjoining quantity of timber which he may confidently expect to purchase more or less at his own terms when he is ready to log, but which meantime must be carried by others. Under the operation of the timber and stone act and other land laws, many such tracts have been acquired within or adjoining National Forests which in effect contro] considerable quantities of publicly owned timber, and the same situation frequently exists as regards private lands. A secoud aid to timber control is the fact that the holdings of many, though not all, of the large owners comprise the most accessible timber in their regions, the timber most cheaply logged, and the timber of the best quality. A considerable part of the western stumpage is so inaccessible and costly to log that it will not be a competitive factor in the lumber market for many years. This is true, particularly, of much timber in the National Forests. Control of the more accessible and high- grade timber will strengthen the position of many large inter- ests aside from the actual volume of stumpage which they own. CONCENTRATION TENDENCIES IN LUMBER MANU- FACTURE AND MARKETING. The most significant tendencies during the past five or six years bearing upon the general question of timber concentra- tion, however, are not in the ownership of stumpage, but con- cern a more highly organized control of sawmills and lumber marketing by groups of operations. During the same period the industry has become more closely knit through the development of regionul associations and other cooperative measures. The census of 1910 reported some 45,000 operating sawmills. The study made by the Forest Service in 1914 indicated that the lumber industry at that time was very individualistie in char- -acter. An enormous number of mills, large and small, operated independently, and the vast majority of lumber-making estab- lishments manufactured and marketed their products as compet- ing units. The sawmill capacity of the country was much greater than the volume of lumber which could be marketed. The bonded indebtedness of the industry was large and, in gen- eral, its financial structure was weak. The pressure of carry- ing charges on timberlands and indebtedness and on investments in manufacturing capacity too large for the market led to fre- quent periods of overproduction and of financial distress to muny operators. The change from these conditions which now appears to be in progress may be compared to the changes in the iron and steel industry during the period when the small foundries and steel plants were disappearing or being consolidated in a compara- tively few large groups; or to the changes in the transportation industry during the period following 1870, when many small railroads were absorbed into large trunk systems. These ten- dencies in the lumber industry may be summarized as follows: ° THE CREATION OF LARGE OPERATING GROUPS OF AFFILIATED SAWMILLS. The necessity of manufacturing lumber in the vicinity of standing timber prevents the geographical concentration of plants to any degree comparable with most other manufactures. Nevertheless, there is a distinct tendency, particularly in the EXPORTS, AND OWNERSHIP. Western States, toward concentration of production through the central control of a considerable group of mills. Such con- trol may be exercised through varying degrees of stock owner- ship, bonding or other financial relations, or affiliations of one form or another. These operating groups range from 2 or 3 sawmills to 12 or more, with a combined cut of from two to three hundred million board feet yearly up to a billion feet. In several instances the group includes mills in two or more of the principal softwood regions—the South, the Lake States, and the Northwest, and in some cases also embraces niills or timber properties in British Columbia or Mexico. The movement of southern lumber interests into the Western States is one of the significant phases of this tendency in lum- ber manufacture. Several of the large southern operators have recently acquired mills or timber properties in the West. In some cases this represents an expansion of existing lumber- producing organizations; in others, the migration into new territory of operating units which have exhausted their former timber holdings. With the development of such operating organizations there is a certain elimination of sawmills and timber holdings which hitherto have been unaffiliated. The tendency of the large operating groups is to consolidate the holdings, large and small, in their vicinity and thus acquire sufficient stumpage to supply their manufacturing plants for at least 20 or 25 years. The relation of the small mill to this general movement is a complex one and, as will be indicated later, works in different ways in different regions. But as regards the principal remaining timber resources of the United States in the West the present tendency is unquestionably toward a closer concentration of lumber manufacture in large units than has existed hitherto. This development toward more large and powerful operating groups is but partial. The number of sawmills operating as independent units is still very large and still manufactures the greater part of the total lumber cut. Furthermore, as far as present indications go, the entrance of new organizations of large size into the lumber industry of the West has not tended to restrict competition. The newcomers, usually well organized, efficient, and well financed, have indeed in several instances introduced a new competitive element in the regions where they located. This tendency in the lumber industry undoubtedly would make a process of “ getting together” between the larger interests easier than it has been before, but it at least is not yet evident. GREATER FINANCIAL STRENGTH OF THE LUMBER INDUSTRY. The study of the lumber industry in 1914 indicated that its financial structure was weak. Incomplete records of bonds and other forms of indebtedness on timber lands and opera- tions in the southern pine region and the West aggregated $151,000,000. Stockholders’ loans, current bank loans, and other forms of borrowing apparently had been carried often beyond the point of safety. Interest and maturities on the various forms of indebtedness formed a heavy charge upon the average thousand feet of lumber manufactured, and notably forced many sawmills to continue cutting during periods when operation represented an actual loss and increased the over- production which occasioned periodic demoralization of the industry. In the three years following 1912 there was a weed- ing out of weaker operators as a result of these conditions, and certain of the large timber holdings in the Northwest were broken up and passed into other control owing to the attempt to carry bonds and other forms of indebtedness beyond the capacity of the business. Within the last four years the financial strength of the lumber industry had radically improved. A large volume of timber bonds has been retired. The flow of eastern capital, particularly from the Southern States, into western timber re- gions has eliminated a certain number of weakly financed timber TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. owners and sawmill operators and has strengthened the finan- cial backing of other concerns where no change in ownership was made. Higher profits in the manufacture of lumber dur- ing the past few years have enabled the industry, by and large, to wipe out much old indebtedness and greatly improve its financial situation. This change is cited because it is part of the general recon- struction of the lumber business which is taking place, thus making it a better organized industry, and which tends to elimi- nate certain conditions which formerly made this industry one of the most highly competitive in the country. The indebted- ness of timber owners and lumber producers was formerly a large factor in keeping up production with little reference to demand, and in causing the scramble to market the lumber cut at almost any price. To a considerable extent the lumber in- dustry now appears to be passing out of a condition where ex- cessive competition was forced upon a large portion of its mem- bers by purely financial exigencies. The fact remains that the nature of timber properties tends to compel the operator to manufacture lumber steadily at the full capacity of his plant and to dispose of his product cur- rently as itis sawn. This results from the cost of carrying large supplies of raw material. The ‘ stumpage load” has forced many timber owners in the West to become operators, and the very necessity of liquidating timberland investments compels continuous operations. The carrying charges on timberland thus tend to keep the ‘lumber industry competitive. In 1914 they compelled many mills to operate at a loss—for operation was still less costly than idleness. The greater financial strength of the lumber in- dustry will minimize the effect of this basic factor to some ex- tent, but can not eliminate it. Once let lumber stocks equal or exceed the demand and it would again become a powerful com- petitive influence. Another safeguard against possible monopo- listic tendencies in lumber manufacture is the public owner- ship of a third of the timber in the Western States, in the Na- tional Forests. The sale of public stumpage under the restric- tions enforced will foster independent mills not affiliated with the large interests. CONCENTRATION OF LUMBER MARKETING. Probably the most significant phase in the reorganization of the lumber industry is the development of large marketing units which handle the output of a considerable number of plants, under central control. This has gone considerably be- yond the concentration of production through the control of groups of mills. A lumber sales company in the Northwest markets approximately a billion board feet yearly, cut by 11 affiliated sawmills. An agency in New York sells the product of 11 southern mills, amounting to some 200 million board feet annually. The second of these examples is much more typical than the first. There are many other groups of mills whose cut is marketed jointly under management which may be identical with the ownership or affiliation of the mills themselves or which may, in the form of a selling agency, be largely or wholly unconnected with the producing plants. One of the most common is.the type of selling agency which markets the eut of 12 or 15 small mills on a commission basis, giving the mills a more efficient selling department than they individually could afford. The “line-yard” system of retailing lumber, although fol- lowed for a good many years, is an indication of the same movement toward a closer organization of lumber marketing. In many cases large sawmills or groups of sawmills under the same financial control maintain their own lines of, retail lumber yards or are financially affiliated with companies operating line-yard systems. The large wholesaler who contracts for the entire cut of a number of mills, or the entire cut of certain 67 grades of lumber, is another factor. Many small mills, par- ticularly in the Southern States, while seemingly independent operating units, are in fact grouped into relatively large market- ing units through a single wholesaler who handles their prod- uct; and in many cases these small mills are partly or largely financed by the wholesaler who markets their cut. The movement in this direction, while only partially con- nected with the ownership of timberlands, is undoubtedly the most pronounced feature of concentration in the lumber in- dustry from the standpoint of tendencies in its development and their bearing upon the interests of consumers. Concentrating the marketing of lumber into large units is still far from com- plete. The 40,000-odd sawmills scattered all over the United States do not lend themselves readily to such a process. Furthermore, the number of distinct marketing units, even those of large size, is still very considerable, and the proportion of the lumber cut of the country handled by the largest of them is relatively small in comparison with other industries. The largest unit of this character, for example, markets about 3 per cent of the lumber cut of the country. In particular reg- ions the proportionate control of lumber distribution by a particular organization may be much greater, and the policy of the organization as to local sales of the products handled by it of corresponding importance to the interests of the con- sumers. In the general lumber trade the large selling organization has often been a strong competitive factor. Reaching out for more business, it has not infrequently brought effective com- petition into regions where formerly it was lacking and given better service to consumers in such ways as stabilization of lumber grades, offering new grades or dimensions especially adapted to local requirements, or furnishing plans for the con- struction of dwellings and farm improvements. In itself this form of organization may be beneficial rather than harmful to the public interests, particularly in an industry like lumber manufacture, which has been backward in the development and adaptation of its products to the requirements of consumers. The danger lies in the possibility of using large marketing units as a medium for price control. DEVELOPMENT OF TRADE ASSOCIATIONS. Regional associations of lumber manufacturers have been in existence for many years. They have discharged certain functions of value both to producers and consumers of lumber, particularly in the standardization of lumber grades enforced by association inspectors and in correcting evils common in the industry to which its product is particularly susceptible through various practices of misgrading. The associations have also largely handled the traffic interests of their members and have been the media through which various forms of statistical and other information are assembled and distributed to the lumber producers comprising them. The general reorganization of the lumber industry has in- volved inevitably an expansion in the activities of such asso- ciations and has given them greater influence upon both the production and marketing of lumber. They have given em- phasis, for example, to the formulation and adoption of uni- form accounting systems, tending to unify the accounting prac- tices of lumber manufacturers, which in former days were ex- tremely diverse and often haphazard and inaccurate. They have been the foremost promoters of the movement for guar- anteeing the quality of lumber products. Another activity, developed particularly during the last six or eight years, is the assembling and distribution among members of the asso- ciation or of a subsidiary organization of current reports on the prices received in lumber sales. The purpose of this work is to give the members of the association a common and up-to- date understanding of the market which they are supplying. 68 TIMBER DEPLETION, PRICES, Ignorance of current market values, particularly on the part of small operators, has been one of the reasons for the very unstable conditions often prevailing in the lumber industry. It was evidenced and is still to some extent evidenced by the wide range in prices at which the same grade of lumber is sold in the same locality. With lumber manufacture and marketing so widely dis- tributed, the industry bas lacked a central medium for re- porting price Changes from day to day, like the wheat or cotton exchanges. No general and authoritative price data have been available to it, like those assembled and published by the De- partment of Agriculture on many agricultural products. The function of the regional lumbermen’s association in assembling and distributing the prices reported on current sales has grown out of a real need on the part of many operators for better information about their market. It is a development common, in one form or another, to most of the large businesses of the country. Solely as a matter of information, the current distribution of prices received by different members of the association tends to unify the rates at which lumber is offered for sale and to make increases or decreases in accordance with the fluctua- tion in the market more nearly similar at all producing plants. The same information would doubtless be of equal value to buyers of lumber, particularly to the smaller buyers less able to keep posted upon market fluctuations, if available to them. The price reports of lumber associations appear to have been made available to lumber buyers in some cases, in other cases not. The assembling and distribution of such information obvi- ously forms a possible vehicle or medium for reaching more or less definite agreements or understandings controlling the prices at which lumber is offered. The extent to which it may serye as such a medium depends upon the policy followed by the particular association as to the degree of publicity given to data of this character, upon the efforts which the association may make to induce its members to price their product in con- formity with the highest rates shown by current reports, and upon the extent to which the individual lumber producers or selling organizations may use the data.as a basis for price- control agreements or informal understandings. Properly employed, particularly with a large degree of publicity, such information should serve to stabilize the lumber market to the advantage of both producer and consumer. EFFECTS OF TIMBER DEPLETION UPON CONCENTRATION. It should be pointed out that the public effects of the con- centration of a large part of the virgin forests of the United States in the hands of relatively few large interests will be- come greater as forest depletion continues. It is to the interest of large operators who have rade extensive investments in operating plants and in marketing organizations and who have built up widespread trade connections to maintain a continuous supply of stumpage for their mills. Carrying charges have placed more or less definite limits upon the quantities of re- served timber which can be carried economically. As these quantities are reduced by cutting, however, it is to be expected, and the data on hand indicate, that the large operators will replenish them by purchasing available small holdings. As a general rule, the small mills are tending to be eliminated in the western regions, where the principal bodies of virgin timber remain. This process may be expected to continue in such regions for a considerable period, first, because in many in- stances the small plants are less efficient in manufacturing and marketing lumber and are_the first to be eliminated dur- ing periods of depression; secondly, because by and large they will be the first mills to exhaust their timber holdings; EXPORTS, AND OWNERSHIP. and, thirdly, because the large interests will find it to their advantage as time goes on to acquire the smaller tracts of stumpage available to their plants. Financial strength, strategic location, ownership of the most accessible timber, far- reaching affiliations of one form or another, including in some instances affiliations with transcontinental railroads—all of these factors will tend to give the large interests in the North- west a greater and greater degree ef control of the situation. This control will increase for a considerable period in about the same ratio as forest depletion goes on, and to a corresponding degree will involve the dangers to the public interest arising from a natural monopoly. One of the most important aspects of this control, as already pointed out in the case of the virgin pine timber remaining in the Southern States, is that it will extend particularly to the timber of high quality still left in the steadily reduced areas of old growth. An increasing concentration of high-quality tim- ber, particularly in the softwood forests of the South and West, may be expected. On the other hand, a point is reached in every lumber-produc- ing region, after the bulk of its virgin timber has been ex- hausted, when the large plant and organization are no longer the most efficient economically and when the large’ sawmill, carried by its square miles of virgin stumpage, is replaced by a, smaller and more portable operating unit. The small mills follow large ones, picking up odds and ends of virgin timber, cleaning up the less accessible, and ultimately operating on second-growth stands, which produce ordinary grades of build- ing lumber and other products of relatively low quality. This process now appears to be taking place in the southern pine States. During the next 10 years the closing down of large Sawmills in that region will be rapid. At the same time the number of small mills is rapidly increasing. These small mills, often operating but a few years at one point, are much less adapted to centralized control and represent a tendency to break up concentration. This tendency may be offset to a degree by the common marketing of the products of a number of small mills through a wholesaler or some form of selling agency and through financial affiliations which may grow out of this mar- keting relationship. In other words, the lumber industry is distinctive in that the concentration or possible concentration of its raw material is necessarily limited in time. Under present methods of opera- tion the physical conditions restrict the life, even of many large plants, to 20 or 25 years. This broad rule has been true of the dominance of the lumber markets of the United States by the large softwood regions, each of which has held control of the markets for a comparatively short time. The ultimate tendency is for the industry to break up into small units under which the possibility of concentration is greatly reduced. The most significant factor in the present situation is that with the exhaustion of virgin timber in most of the eastern States and its impending exhaustion in the southern pine re- gion, although certain large mills will be cutting virgin yellow pine for 30 years to come, the danger of concentration of high- gerade timber is proportionately greater than ever before. The greatest protection which the people of the United States have against such concentration lies in national and-other public for- ests, where such timber can be grown or held in reserve and which are so administered as to aid in maintaining competitive conditions in the lumber business. One of the most effective steps that can be taken to limit the effects of concentration is not only to extend the National Forests by purchase but to in- corporate in them all timberlands which the Federal Government still owns or controls and not to permit a single additional acre to pass into private ownership. As to our requirements for lumber of general utility, the danger of harmful concentration is more remote. It would be dispelled by yigorous action to stop forest devastation and re- TIMBER DEPLETION, PRICES, stock denuded lands, leading to permanent forest industries widely distributed over the country, and tending toward small rather than large operating units. No information has been obtained to justify a conclusion that the tendencies toward a closer knit organization of the lumber industry and various forms of concentration have led, up to the present time, to actual monopolistic conditions of general scope. It has been impossible in the limited time avail- able for this investigation to make a study of that phase of the situation. The particular facts which it is believed are clear are that the lumber industry in the regions where the principal supplies of timber remain is growing away from the loose, un- organized, and highly competitive conditions which prevailed in 1914; that while during the past 10 years there has been no EXPORTS, AND OWNERSHIP. 69 material change in the concentration of ownership of standing timber, the effects of concentration will become more apparent as time goes on, particularly in respect to products of high quality; that the financial weaknesses which hitherto have tended to keep the lumber manufacturing industry in a highly competitive condition are to some extent disappearing; and that the lumber industry in the regions of large forest resources is in a process of partial reorganization into larger units of production and marketing. In other words, some of the factors tending to make this industry highly competitive are changing into conditions more favorable to closer control. The necessity for the steady liquidation of timber investments and the still enormous number of operating units are inherent factors un- favorable to close control. . FOREST DEPLETION THE FUNDAMENTAL PROBLEM. CUMULATIVE EFFECTS OF TIMBER DEPLETION. From the facts presented in this necessarily incomplete re- port it is evident that the fundamental weakness in the supply and cost of wood products in the United States is the cumula- tive depletion of our forests. The extent and broad effects of the steady wiping out of the original forest resources of the country are readily grasped. Three-fifths of our primeval for- The timber remaining is being consumed four times faster than it is being replaced. With the exhaustion of several of our principal forest regions as large producers of products, occurring successively in the Northeastern States, the Alleghenies, the Lake States, and the Atlantic sea- board, and the similar exhaustion of the Gulf State pineries now imminent, the cost of transporting forest products to the average consumer in steadily rising. Not only does the widen- ing distance between the average sawmill and the average lum- ber user, between the average tract of pulpwood and the aver- age newspaper, impose an increasing charge for freight; by eliminating former sources of supply and competition it ac- centuates the evils of abnormal price and transport conditions such as the country is now experiencing. In other words, the effects of forest depletion are felt not only, indeed not chiefly, in the diminution of the total quantity of timber remaining. the process of regional exhaustion through a location of the timber still remaining so restricted as greatly to reduce its availability to the average user of wood. It involves all the elements of higher freight costs, more restricted competition, dependence upon the efficiency of transportation, dependence upon climatic or labor conditions in restricted regions, and innumerable difficulties in getting needed materials of the right kind and at the right time. If all the timber in the United States were cut and our needs supplied by imports from South ests are gone. wood America and Siberia, the situation would differ from that which we are now rapidly approaching only in degree. The effect of regional timber exhaustion may be compared with what would happen if the orchards and truck farms in the Eastern and Central States disappeared and the housewife had to obtain the daily necessities of her table from Florida and California. One of the first effects of the depletion of our virgin forests is the scarcity of timber products of high quality. This has already reached a serious stage in the United States, particu- larly in respect to the high-grade hardwoods which were among the most valuable and distinctive of our original forests. An increasing shortage of such products as compared with their normal consumption must be expected. Not only will their prices be high but it will be increasingly difficult to obtain many of then in the quantities required by American manufac- turers at any price. : TIMBER DEPLETION AND LUMBER PRICES. Timber depletion, while not the primary cause, is. an in- portant contributing cause of high prices. The large curtail- ment in lumber production in many regions, due to the cutting out of their forests, has not only made the consumer pay more for his lumber in the form of freight but has enhanced the effects of congestion in transportation and of climatic and other factors causing temporary curtailment of output in the regions which still support a large lumber industry. It has restricted 70 Its injury is felt particularly through | opportunity for competition and thereby increased the oppor- tunity of the manufacturer or dealer to auction his lumber stocks for higher prices. This is at least one reason why con- sumers of lumber in Pittsburgh are in some instances paying 40 per cent more than consumers of the same material in Port- land, Oreg., over and above the freight charge between those points. If the war had been fought 40 years ago and had brought the same aftermath in all particulars, it can not be doubted that the presence of a large lumber-producing industry at that time in the Lake States, in the hardwood forests of the Central States, in New York and the northern Alleghenies, and on the Atlantic seaboard would by the very extent of regional compe- tition and the better distribution of transportation have afforded a curb on the upward movement of lumber prices which did not exist in 1919. The continued depletion of our forests will con- tribute to similar sharp increases in lumber prices in time of transportation or other crises and will also lead to high price levels under normal conditions. Whatever the precise effects of timber depletion upon recent prices, whatever the tendencies in the lumber industry, there can be no question that the real solution is to grow and protect forests. IDLE FOREST LAND. The depletion of timber in the United States has not resulted primarily from the use of our forests but from their devasta- tion. The kernel of the problem lies in the enormous areas of forest land which are not producing the timber crops that they should. There are 326 million acres of cut-over timberlands in the United States. Their condition ranges from complete devas- tation, through various stages of partial restocking or restocking with trees of inferior quality, to relatively limited areas which are producing timber at or near their full capacity. On 81 million acres there is practically no forest growth. This is the result of forest fires and of methods of cutting which de- stroy or prevent new timber growth. ‘There were 27,000 re- corded torests tires in 1919, burning a total of 8} million acres. During the preceding year, 25,000 fires burned over 103 million acres of forest land. An additional large acreage was burned each year, of which no record could be obtained. The area of idle or largely idle land is being increased by from 3 to 4 million acres annually as the cutting and burning of forests continue. The enormous area of forest land in the United States not required for any other economic use, esti- mated at 463 million acres, would provide an ample supply of wood if it was kept productive. Depletion has resulted, not from using our timber resources but from failure to use our timber-growing land. Nor does this situation exist simply in the less developed and thinly settled regions of the country. The State of Massachu- setts, as a typical example, contains denuded forest lands within a stone’s throw of her dense population and highly de- veloped industries, which have been estimated at 1,000,000 acres and which are largely idle as far as growing wood of economic value is concerned. A NATIONAL FORESTRY POLICY. A remedy for this appalling waste must be found in a con- certed effort to stop the devastation of our remaining forests and to put our idle forest lands at work growing timber. It is inconceivable that the United States should forfeit the eco- TIMBER DEPLETION, PRICES, nomie advantage of its enormous timber-growing resources, and that it should go on using up its forests with no provision for growing more until wood products are priced on the basis of imported luxuries and their use is restricted to the lowest possible scale of civilized existence. The concerted action neces- sary to put an end to forest devastation must enlist the Na- tional Government, the respective States, and the landowner. It is impracticable to nationalize all of the forest land in the country, or even the major portion of it. On the other hand, the results needed can not he attained if timber production is left to the initiative af the private owner of land or is sought solely through compulsory regulation of private lands. Not only has the public very large interests at stake which justify an assumption of part of the burden; certain fundamental causes of forest devastation can be removed only by public action. Chief among these are the fire hazard of forest properties, par- ticularly of growing forests, and a property tax system which discourages or may prevent the landowner from engaging in the business of growing timber. On the other hand, the public can not and should not do it all. A measure of responsibility rests upon the land owner, and should be recognized in equitable requirements in handling his land. It is a case of the public and the private owner wike doing their part. Our policy must aim toward timber production on somewhat the same footing as in France or Scandinavia—as an established national practice. This calls for a core of public forests, public instruction and example, ‘public encouragement in protection and taxation, and a respon- sibility recognized by forest owners to keep their lands pro- ductive. This report would not be complete without indicating the essential steps which should be taken to stop timber de- pletion. The plan here outlined is built up on the belief that the most rapid progress will be made by utilizing the recog- nized police powers of the several States to stop forest fires and bring about better handling of privately owned forest land. The equitable adjustment of timberland taxes in such ways as will promote timber production is a responsibility of the individual States. At the same time the national im- portance of stopping timber depletion calls for the taking of an active part by the Central Government, particularly in aiding the forest activities of the States, standardizing tech- nical practice in fire protection and forest renewal, and largely extending national acquisitions of forest land. THE FEDERAL LEGISLATION NEEDED. The Federal legislation needed may be summarized briefly as follows: COOPERATION WITH STATES IN FIRE PROTECTION AND .FOREST RENEWAL. Legislation is needed, as an ‘extension of section 2 of the act of March 1, 1911 (Weeks law), which will enable the Forest Service to assist the respective States in fire protection, methods of cutting forests, reforestation, and the classification of lands as between timber production and agriculture. It should carry an initial annual appropriation of not less than $1,000,000, ex- pendable in cooperation with the States, with a proviso that the amount expended in any State during any year shall not exceed the expenditures of the State for the same purposes. The Secretary of Agriculture should be authorized, in making such expenditures, to require reasonable standards in the dis- posal of slashings, the protection of timbered and cut-over lands from fire, and the enforcement of equitable requirements in cutting or extracting forest products which he deems necessary to prevent forest devastation in the region concerned, and to withhold cooperation, in whole or in part, from States which do not comply with these standards in their legislative or ad- ministrative measures. Federal activities under this law should not be restricted to the watersheds of navigable streams but EXPORTS, AND OWNERSHIP. gal should embrace any class of forest lands in the cooperating States. This law greatly extending the very limited Federal aid now given to the States in fire protection, will enable the Forest Service to organize and carry forward a nation-wide drive against the chief cause of devastation—forest fires—and to fol- low fire protection with such other measures as may be needed in particular forest regions to stop denudation. It will also aid States and private owners in restocking lands already denuded, where tree growth will not come back of itself. THE EXTENSION AND CONSOLIDATION OF FEDERAL FOREST HOLDINGS. Legislation is needed, in part as an extension of section 1 of the act of March 1, 1911 (Weeks law), which will permit the rapid enlargement of the National Forests and the consoli- dation of existing forest units for more effective administration. This legislation should: (1) Continue the purchase of forest or cut-over lands, as ini- tiated under the Weeks Act, with annual appropriations of at least $2,000,000. (2) Authorize the Secretary of Agriculture to exchange Na- tional Forest land, timber, or transferable timber certificates for private timbered or cut-over land within or adjoining existing National Forests. (8) Withhold from any form of alienation, except under the mineral laws, all lands now in Government ownership or control but not embraced in National Forests or National Parks, includ- ing canceled patents or grants, unreserved public lands, and Indian and military reservations, which are valuable chiefly for the production of timber or protection of watersheds, and all lands of similar character hereafter revested in or acquired by the United States, and authorize the President, upon recom- mendation of the National Forest Reservation Commission or otherwise, to incorporate such lands in National Forests. About a fifth of the forest land in the United States is now publicly owned. One of the most direct and effective means of arresting devastation and offsetting the dangers aris- ing from concentration of timber in private ownership is the extension of publicly owned forests. It is, under present con- ditions, the only effective means for overcoming the depletion of old-growth timber of high quality and for restocking many denuded areas which require planting. The public should own a half of the timber-growing land in the United States, well distributed through all the principal forest regions. Every encouragement should be given to the States and to municipalities to acquire forest land, but the Federal Government must take the lead. In all Federal acquisi- tions there must be an equitable compensation to communities for the tax returns of which they are deprived. Appropriations for the purchase of forest lands should be used, first, to complete the program laid out for the protec- tion of the watersheds of navigable streams under the Weeks Act, through acquiring about 1 million acres in New England and about 5 million acres in the southern Appalachians, and, second, to acquire cut-over land, not necessarily upon important watersheds but distributed through all the principal forest regions where areas suitable for Federal management can be obtained. Much desirable timber-growing land in the vicinity of existing National Forests can be acquired by exchange from National Forest timber or timber certificates, and the adminis- tration of the National Forests will be improved and simplified through such consolidation. As part of this policy it is of the utmost importance that all timber-growing land and land valuable chiefly for watershed protection which the Govern- ment now owns or controls or in any manner may acquire shall be withheld from other disposition, with a view to its incorporation in National Forests. An effective administrative agency for carrying out this policy and for determining the 72 TIMBER DEPLETION, PRICES, best means of liquidating existing equities in such lands, as in the case of Indian reservations, now exists in the National Forest Reservation Commission, representing three executive departments and both Houses of Congress, which passes upon purchases under the Weeks law. THE REFORESTATION OF DENUDED FEDERAL LANDS. The current appropriations of the Forest Service should pro- vide for the progressive reforestation of denuded lands in National Forests, to be completed in not more than 20 years, with a yearly sum beginning at $500,000 and increasing to $1,000,000 as soon as the work can be organized on that scale. The National Forests contain several million acres of forest land so severely burned that it can not be restocked without planting. To restore this land to timber production is an im- mediate Federal responsibility. Tree planting is most urgent on denuded watersheds from which water is obtained for power, irrigation, or municipal use. The work already done by the Forest Service has established methods, costs, and the limits of successful reforestation by artificial methods. This project can, therefore, be undertaken upon an assured basis of costs and results. A STUDY OF FOREST TAXATION AND INSURANCE. Legislation carrying a moderate appropriation is needed which will authorize the Secretary of Agriculture to study the effects of the existing tax methods and practices upon forest devastation, to devise model laws on forest taxation, and to cooperate with State agencies in promoting their adoption. The same law should authorize a study of forest insurance looking to the assembling of authentic data on risks, practicable forms of insurance, the distribution of losses, ete. The annual property tax is not adapted to lands employed in growing 50 or 75 year timber crops, and is an important cause of forest devastation. While land taxes rest with the States, the Federal Government can do much to further wise changes by an authoritative investigation and the formulation of equitable tax laws adapted to timber-growing land. While for- est insurance must be developed largely by private initiative, investigation will be of material help in promoting this impor- tant aid to timber growing by private land owners. THE SURVEY AND CLASSIFICATION OF FOREST RESOURCES. Legislation is needed, with an appropriation of $3,000,000, to be available for from two to four years, as the work may re- quire, which will permit the Secretary of Agriculture to survey the forest resources of the United States, determine the present volume, together with the present and possible production of each class of timber in every important forest region, and ascer- tain the requirements as to quantity and character of timber of each State and of every important wood-using industry. This survey should mark out, by broad lines, timber-growing land from land suited to farm crops to the end that the forest- growing resources of the United States may be fairly estimated and utilized in consideration of other land uses. Senate bill 3555, for the survey of pulpwoods, covers part of the compre- hensive investigation necessary. Exact information upon timber stands or growth and upon the areas of forest as distinct from agricultural land is not to be had. It is essential for developing a national forest policy de- signed to supply timber of the kinds and in the quantities and places needed by the country. CURRENT APPROPRIATIONS FOR FOREST RESEARCH. The current appropriations of the Forest Service should be sufficient to maintain experiment stations in all the principal forested regions of the United States. Further research is not necessary to determine the urgency ef the action proposed. But a continuous study of the technical EXPORTS, AND OWNERSHIP. phases of reforestation in the principal timber regions, with their tremendous diversity of forests and methods of forestry practice, is essential to carry the national policy forward to the best results. Recent cuts in congressional appropriations will necessitate closing the four experiment stations hitherto established in the Western States... Not only should those sta- tions be restored, but provision should be made for additional experiment stations covering the other important forest regions of the country. The survey of forest resources should be undertaken at once; but the essential facts as to timber depletion and its causes are so clear that no time should be lost in enacting the legisla- tion recommended, particularly for cooperation with States and the extension of National Forests. The first point of general attack in arresting devastation is to stop forest fires. Hence a law permitting effective Federal and State action in this matter, as already outlined, is of the greatest urgency. THE STATE LEGISLATION NEEDED. The State legislation necessary to stop forest devastation will necessarily vary in different regions. Certain esSential features of such laws, however, are common to all of the States contain- ing large forest areas. The more important of them may be stated briefly as follows: FIRE PREVENTION AND REFORESTATION OF PRIVATE LANDS. State laws should provide for the organized protection of all forest lands in the State during periods of fire hazard, the pro- iected areas to include all cutover and unimproved land, as well as bodies of timber. The protective system should include patrols during dry weather, lookout stations, fire breaks and roads where effective, and organized fire-fighting forces. Every forest owner, large or small, should bear his proportionate share of its cost, about half of which may be properly borne by the State itself with the aid of the Federal Government. Police regulations for the control of fire during dry periods, in con- nection with railroad or industrial operations near forest land, land clearing or slash disposai, hunting, ete., and for the con- trol of incendiarism, form an essential feature of the protective system. State laws should establish the responsibility of owners of forest land for complying with such equitable requirements as inay be determined upon and promulgated by the proper State vgency, dealing with precautions against forest fires, the dis- posal of slashings, methods of cutting timber or of extracting particular forest products, such as naval stores or pulpwood, und such other equitable requirements as the authorized State ageney shall determine upon as necessary to prevent devasta- tion.