^^' o"», ^% .-.-r->^-. '''^^n^ ■*bv* f'*\o'> ^-..^' .^^•v. ,9j>. / ■■ » ■■■ •""• %>* .«#. \./ .-^fe-' V* • "- •'■-'■' '^oV^ ■"-^..v C° .*^5S?S^<, % ^^^^/' X ''??^' ^ ■^-^ 0* f'-'^fc '\/' 'Sfe- '%.^^"' •&#/"''--/ " V^"- =-^„^^"^' o' '^^< ^^' -K? K" ^•1 o^ ^•^ °- - ,'?.-^ y^^'^ U .^^' 5 >0a '•^'..=>* ^^'% ^1 '■<"'v' ^^ ,«;%j^'. -^e...^ = v" ^r^^ .^^ ^^^ .^'\ 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 t 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 1020 TABLE OF CONTENTS. Page. Letters of transmittal o Effects of scarcity and liigh prices of forest products upon rep- resentative industries " General building and construction 7 Farming 8 The railroads 8 The furniture industry Thf veneer industry 'J The handle industry 10 Tlie v.hiplc and asricultural implement industries 10 Tl-;,. „..,vvp-i,Pr^- 11 ■Til- li iii'.ii -HinmariEed 11 AbnoriiKii ;: .:, m relation to present scarcity and high prii-is 12 Steady piM^n ., ,,i i, irst depletion 13 Fon.si ,i [jk iioii aiul migration of the lumber industry 13 Basis for data 1-1 New England 1-1 The growth and decline of the lumber industry 14 Original and remaining forests 16 Area 15 Stand 15 The annual drain upon the forest 16 The annual growth 16 Growth compared with cut . 16 The life of the industry 16 Present and future consumption of lumber in New England 16 New York 10 Pennsylvania 17 The Lake States 17 Growth and decline of the lumber industry 17 White pine 17 Hemlock : 17 The northern hardwoods 17 Original and remaining stand and rate of cut 17 Lcwer Peninsula of Michigan 18 Wisconsin and Upper Peninsula of Michigan 18 Minnesota 18 Condition of the remaining supplies IS The annual drain upon the forest 18 Lumber cut compared with total cut ' 18 Deterioration of the forest 10 The anrual growth 19 Growth compared with cut 19 The life of the industry 19 Present and future consumption of lumber in the Lake States 19 The southern yellow-pine region 19 The growth and decline of the yellow-pine industry,.. 19 The original and the present pine forests of the South_. 19 Total merchantable stand 20 Annual drain upon the forests 20 The annual growth 20 Cut and growth contrasted 20 Deterioration of the forest 20 Change to inferior species 21 The lesson of the South Atlantic States 21 Life of the yellow-pine industry 21 Reduction of the output 21 Present and future consumption of lumber in the South. 21 Cypress regions 22 The Rocky Mountain region 22 Development of the lumber industry 22 Original and present stand 22 The annual drain upon the forests 22 Annual growth . 22 Cut compared with growth 22 Local needs , 23 The future of the lumber industry 23 Pacific coast 23 Growth of the lumber industry 23 Original and remaining forests 23 Growth and depletion 24 Life of the industry 24 The Southern Appalachian hardwoods 25 Growth and decline of lumbering 25 The original forest 25 The remaining stand 25 Lumber cut and total cut 25 Deterioration of the forest 25 The duration of the cut of old growth 25 Effect of depletion upon selected industries 26 The annual growth 26 (Jrowth compared with cut 26 Importance of the Southern Appalachians in the future lumber supply of the country 26 Hardwoods of the lower Mississippi Valley 26 Area and stand 26 Development of the lumber industry 26 Growth and depletion 1 27 The future of the region 27 Steady progress of forest depletion — Continued. Newsprint supplies The facts as to depletion Alaskan supplies of pulp wood The moveniont of prices Naval «t"ri>« ^ii-'pii.-^ Original .iijil'ij.,,. Ill i.,i.M.-, ./iThe'lfnited'StatesIII^IIIIII Original forest area Present forest area Snw-timber stands Total stand Location of requirements with reference to production and supplies Future trends in requirements Depletion and growth Present dopletion and growth Possible growth Forest depletion and lumber prices Price changes and regional depletion , Eastern softwood markets Middle western markets Eastern hardwood markets Plentiful and depleted species Prices in depleted or nonforested versus forested re- Prices and costs of production and distribution Mill prices and production costs Inland Empire Southern pine States Wholesale costs and profits Transportation Retail pries and costs The upward movement of prices Retail profits Lumber prices unjustified by production and distribu- tion costs Price control Some specific effects of regional depletion on prices Summary of principal price conclusions Lumber exports and timber depletion 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 lumber manufacture and mar- keting The creation of large operating groups of affiliated sawmills 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 Cumulative effects of timber depletion Timber depletion and lumber prices Idle forest land A national forestry policy The Federal legislation needed Cooperation with States In fire protection and forest renewal The extension and consolidation of Federal forest hold- ings The reforestation of ilniuded Federal lands A study of fi ■• I i,i\:ilh II and insurance The survey : ' ' ■ in of forest resources Current np, i r : i forest research . The State iegislii ;i :, . ; ! Fire prevonlin .ml i . ii. 'station of private lands State and munirip.il for.'sts Taxation of forest lands r, or u, NOV 19 )y2(J LETTERS OF TRANSMITTAL. June 1, 1920. The President op the United States Senate. Sir: I have the honor to submit herewith a report on forest depletion in the TJnited Stat«s, 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 Ser\'ice 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 \irgin 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 wgin 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 ia west of the Great Plains. A little over one-fifth of the timber left in the country, or 4G0 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 hea\'ily into its remaining ^-irgin forests everj' 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 dwellings and industrial structures and the use of lumber in many manufactviring 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. Underthecombinedinrtuenceof 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 (juality 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 priqes on upper grades of softwood lumber in New York were from $20 to $25 per thousand prior to 1865 when mills in the san^ State supplied this market, from $35 to $45 between 1865 and 1917 when most of the supply came from the Lake States and the South, aud 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 is an 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 the 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 manufactui-e 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. ^Miile there is still a large number of individual timber owners and of sawmills operating as separate units, tlie 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 cm-rent 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 doing 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 accompanjing 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. Respectfully yours, E. T. Meredith, Secretary. June I, 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 Ser\ice 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 l)ut tentative or approximate in character. A large number of men in the Forest Serv-ice 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. Greelet, Foresttr. 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. TIMBER DEPLETION, LUMBER PRICES, LUMBER EXPORTS, AND CONCENTRA- TION OF TIMBER OWNERSHIP. REPORT ON SENATE RESOLUTION 311. The following report is submitted iu compliance with Senate resolution 311 (66th Cong., 2cl spss.), 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 tlie 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 OF FOREST PRODUCTS UPON REPRESENTA- TIVE INDUSTRIES. 3. A\'hether 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, liow it affects or may affect the public vv'elfare. A comprehensive and fully adequate report on these matters would require an exhaustive survey of tlie forest resources of the country, their ownership, the industries dependent on them, and the general related economic conditions. No such survey lias 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. 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, vehicle, 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 general 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 $1,326,936,702; 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- 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 c-ent of the number of buildings constructed are dwellings ; that in 1919 dwellings were only 15 per cent; that 1,000,000 families iu the United States desired houses even before the war; that the short;\ge has since increased very rapidly; that there were but 70,000 bouses built in 1919, when to have met the requirements there should have been 500,000 ; and that in 1S90 an average of 110* 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 $S0 in 1920. Yellow-pine finishing lumber increased from $42 to $140. If he used plain oak finish instead of southern pine, he 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 hou.se built in Washington, D. C, in 1917 for $6,250 is now being duplicated from original plans at a cost of $12,2.50. 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 millwork (222 per cent) were the highest. On a six-room frame TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 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 lor a ready-cut, one-story, five-room house which was listed at $SS3 in 1915 had been i-aised 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 .$5,600.90, an increase of 181 per cent. Lumber prices alone do not tell the whole story. The person who builds a 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 difficulties, etc., makes the construction of a dwelling house a highly uncertain and speculative venture, take^ 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 Kan-sas 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 tlie 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 2iore 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 labor. Lumber dealers for several of the Middle Western States report lumber stocks on hand as above normal. This is to guard against delayed shipments, to be able to supply antici- pated increase in demands, etc. Apparently throughout much of the region covered supplies could usually be secured in the desired amount and quality if prices could be paid. Locally, however, the pronounced changes in lumber distribution of the Iiast year have apparently made it diflicult to secure desired materials and qualities without delay. The difficulties were greater with the better grades than with common lumber, and they occurred even in the heart of the manufacturing district in the South, because of excessive demands and compelition for iliis class of material. An attempt was made also to get at normal and probable future lumber requirements of tlie 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 lumber 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. Eighty 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 ;nost serious efEect 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 tor raih'oad ties is somewhere between 100 million and 125 million annually. In 1918, however, ijur- chases were slightly under 77,500,000 and in 10 months of 1919 were slightly uver 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 4J 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, EXPORTS, AND OWNERSHIP. pronounced than for other industries. During the last four .vears, however, the cost of lumbec purchased has almost doubled, while the amounts have been reduced. Under the jireat financial burdens of readjustment and reconstruction following the war added costs of any important material delay even 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 fm-niture 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. Tlieir present sources of supply are very largely the remoter and more inaccessible portions of the Southern Appalachians and the lower 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, handle, vehicle, and agricultural-implement industries. These all com- 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 liad 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 li 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 half 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 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 manufacture 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 board 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 nraking, 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 have risen in proportion; between January 1, 1916, and April 1, 1920, i inch gum increased from $10 to $60, ^ inch and A inch gum, from $4 to $16; i 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 nmy 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 tlie 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. Aencer manufacture is a rapidly growing industry which sup- plies furniture makers, manufacturers of musical instruments, 10 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. the automobile industry, box malcers, etc. 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 cliiefly for red gum and, second, for white oalf. One section of the industry, which uses such northern hardwoods as maple, birch, and basswood, is located in the I^ake States. As in the case of many other hardwood-using industries, the veneer in- dustry lias for .some years been centered mainly in the Middle Western States. Supplies, at first local, are now largely in the South, and the niiun demand has been transferred from oak to gum. The veneer situation is similar to that described for other forest product.s — 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 tluee to four times between January 1, 1916, and April 1, 1920. Log prices have risen in proportion. Indiana white-oak logs, 20 inches and over in diameter, have increased during 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 January 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 mu.st, 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 tlie 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. THE HANDLE INDUSTRY. For the high-grade hickory and as!i 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 tlie South. Here the most accessible timber has been taken. The few large concerns main- tain large and expensive organizatiotis, which literally comb the country to secure material. More and inore 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. 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 liandles 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, bolts, dimension sizes (split, hewn, and sawn"), Hitch, 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 .•f^.oO 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 lai^ge concerns and the disappearance of local industries. THE VEHICLE AND AGRICULTURAL IMPLEMENT INDUSTRIES. The vehicle and agricultural-implement industries compete tor liickory 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 scatteringly over large areas, the vehicle and agricultural-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 f?illen 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, PKICES, EXPORTS, AND OWNERSHIP. 11 Practically tlu> 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 necessnry 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 seriou.s 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 tlxe 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 contracts or those for- tunate enough to produce their own newsprint. Under prewar conditions newsprint paper was contracted for on a yearly term tasis at $2 a hundred pounds or less. Contract prices during and since the war have risen to $3.50, $5, ifG, 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. Tlie 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, particularly 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 32-page newspaper would cost 7J cents. 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 rate.?, or accepting more advertis- ing. The acceptance of more advertising means either the use 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 refu.sed 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 increase 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 reaUzed 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. I'rior 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 lias 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 wliioh 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 can no longer compete with the manufacturer of automobile wheels. The largt! 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 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. raw material locally. Unfortunately, in most cases It is the I local supplies which have been most depleted, and the existing situation has toiuled 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 tlie sale of lumber alid 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, but almost equally bad, might be mentioned. One will suffice. The hardwood- producing industry commonly held its otoeks 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 oi drying were 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 concern 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 10 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 Covernment regulation of transportation, of the use of capital, (if 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 33 billion feet in 1917, and of less than 30 billion feet in 191S. 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 himber 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 gi-eat 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 denu^nds had piled up during the war in practically all of the industries which use lumber. 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 pnncipal lumber regions of the country, with the possible exception of the South. In many of the former regions of large lumber output, the Lake States, New England, New York, Penn- sylvania, and the Southern Appalachians, the timber is so largely gone tnat 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 000,000,000 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 tovras 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- (>ncy. In the cas(> of one operation in the South it required 23 man hours In July. 1914, to produce 1,000 board feet of lumber, while in July, 1919, it required 37i man hours. Again, in July, TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 13 1934, it required 134 men on tlie 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 lieen 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 thau 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 ear shortage of 65 per cent, \\hile 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. Limiber, 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 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 increase 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 new.spaper, an abnormal demand for paper and was a powerful factor in the unprecedented rise in newsprint prices which has already been discussed. STEADY PROGRESS OF FOREST DEPLETION. FOREST DEPLETION AND MIGRATION OF THE LUMBER INDUSTRY. Each successive chapter in the hLstory 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 turu, dominating the consuming uarkets 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 produeton 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. \Vhite-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. 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, EXPORTS, AND OWNERSHIP. the country look to an increasing cut; but even here there are already focal evidences of depletion, warnings that the con- clusion of the story will be the same as that of other regions and in far less time than has been estimated. Hardwood depletion and the migration of centers of pro- duction has followed along much the same line, although regional boundaries have been much less distinct. Cutting began eai-ly in 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 vai-ious 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 excei'i! the average output of the last few years. BASIS FOR DATA. Before taking up the various timber regions' the basis for the data used should be given. If 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 aliy other of tlie 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 ■ 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 i-egions 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, Illinois, 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. Kocky 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. Tlie comparatively small area of rather opeij 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. pha.ses of timber supply only for parts of States or regions. Some of the timber remaining In the United States has never been cruiseil 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 matei'ial below saw-timber size in cubic 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 terras, 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 sijrvey 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 wliicli 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, EXPORTS, AND OWNERSHIP. 15 lumber and pulp wood. Early cutting was for local consump- tion, shipbuilding, and exiiort. The'bomesteads of the first few generatlous 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 i-esulted in wholesale discontinuance of cultivation. Much of the second growth timber cut to-day dates from this period. From the Revolution to about lS-10 white pine made up almost the entire softwood cut in New England ; but soon after that 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 small scattered 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 4i 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. 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 niillion board feet. With the extensive use of low-grade pine for boxes and matches, this later increased to GOO 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- creasing proportion nnist come from second-growth stands. Although the lumber business of southern and central Maine reached its peak about 1S.50, the total lumber cut of New Eng- ORIGINAL .\ND REMAINING FORESTS. Area. — With the exception of a few small areas, New England in 1020 was a virgin forest, comprising some 39 million acres. In 1920 not more than .5 per cent of this virgin forest remains. The pre.sent 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 10.700,000, is in saw timber or pulp wood, while 34 per cent, or S.370,000 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, EXPORTS, AND OWNERSHIP. small liiulicr lit mily for posts and fuel wood. The present stand of shnilar material is close to 50 billion board feet, or about one-eighth of the original staud. The total stand of wood in New England 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 GO per cent is fit only for fuel. The average stand of all the wooded lands is lOi conls per acre. The present stand of saw timber and pulp wood is sunnnarized by species in the following table : Spruce and fir 23,971 White pine ^'^l*^ Cedar 2, 789 Hemlock 1' S"'* Yellow birch 2, 933 Maple 2,897 Beech 1-635 Oak 1- 510 Chestnut . ^60 Paper birch 678 Poplar 374 Ash 215 Pitch pine ^00 Other hardwoods H''' Total 40, 7oa Softwoods 38. 480 Hardwoods 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, etc., 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 e.stimated in round figures at 610 million board feet of saw timber. Of this, about 434 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 cubic feet.^ GROWTH COMPARED WITH CUT. The annual drain upon the saw timber of djout 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 cubic 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- = Tlitouyhout tlio report board feet of lumber are converted to cubic feet of .standing limber, 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. 'Equivalent to about 2,300 million board feet. ' Equivalent to about 2,375 million board feet. ^Equivalent to about 1.300 million board feet. 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 on 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. Up to 30 or 40 years ago New England was not only self- supporting in timber but exported large quantities. Within the past 30 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 .$300,000,000 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 covered 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 1830 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 decrea.sed from over 1,300 million feet prior to 1850 to less than 350 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 ' Kquiv to about 49 billion board feet. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 17 for which the State was once famous, now furnishes little l)ut the poorer grades. Of the total forest area 62 per cent con- tains material which is suitable neither for lumber nor pulp and furnishes only fuel or acid wood. While the area of lands eom- pletel.v 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 incretisingly 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 flr.st 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 feet in 1839. 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 pre.sent 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 380,000,000 cubic 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 300,000,000 board feet of lumber, now has not a single sawmill. In those parts of the State where the forest constituted the .«ole 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 m 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- Equivalent to about 7797—20 3 16,600 million 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— largely white pine. This was an increase of 123 per cent over the cut of 1873. In 1899 Wiscon.sin, 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, ;ind 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 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 rd 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 snuill timber, commonly second growth, and 42 per cent in com- 18 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. mercial timber tracts, in many cases already culled of their flioicest 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 l)oard feet. After less than a century of lumbering, fire, and .settlement, only about 8,000,000,000 feet of white and Norway l)ine remain, largely in Minnesota, in 1018 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. f.oirer Fcniiisiila 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 live years there will hardly be u half dozen large mills left. The exhau.stion of the remaluiug 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. Prom then, on whatever lumber is cut will come mainly from farm woodlots, in small amounts and sizes, and of poorer grade. Wisconsin and the Ujipcr I'eninsula of Michinan.—ln the adjacent forest areas of Wisconsin and the Upper Peninsula of Michigan the case is better. lu 1908 the Bureau of Corpo- rations estimated the timberland at about 10,320,000 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 leave only 35 billion, enough at the present rate of cutting to last 15 years. There can be no doubt, however, that there is nnich more timber tlian 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 olf 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, l)y stinnjlating 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 iu 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 ctiicient 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- 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. — Timber conditions in Minnesota diff'^r widely fiom those in Wisconsin and Michigan. The Wisconsin lumber cut for 1918 was 85 per cent hardwoods and hemlock, while that of Minnesota vi-as 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 timljered area of Minnesota was estimated by the Bureau of Corporations in 1908 at about 5,651,000 acres, and the stand at 23,200.000 000 board feet, 81 per cent of which was softwoods. A recent estimate by the Minnesota State forester places the softwood stand at 11,4.50,000,000 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-tle 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 operating In this region is being re- duced rapidly. Within the last three or four years at least four of the large mills 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 comparetl 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 30 per cent (33J billion feet) is widely scattered in farm wood lots, while 13 per cent (about 14^ billion feet) is in the swamps, jack pine and scrub 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 greater 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 al.so is reduced to cords, the total stand in the Lake States is 630 million cords, or 50,584 million cubic feet. THE ANNUAL DRAIN UPON THE FOREST. Lumber cut compared irith total ew/.— The normal lumber cut of about 3i 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 DEPLETIO?:, PRICES, EXPORTS, AND OWNERSHIP. 19 iiiilliou cubic feet of standing tinihor. The total output ot wodil in all forms is close to l,CeO 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 loss 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, jiosts, 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, etc., 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. Gi-oioth compared tcifh cut. — The estiniatetl annual gi-owth in the Lake States is much less than the cut. Estimated annual cut. Estimated 1 '^"^i' I umber feet board measure 3,500,000,000 1 1,600,000,000 20,000,000 988,000,000 1468,000,000 5,850,000 28 All products including lumber: Cords 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 cut 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. Fire renders millions of acres of cut-over forest land 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 : Estimated cut, 1925 2,400,000,000 Present annual cut 3,500,000,000 Estimated cut, 1930 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 amount. Such lumber will be much inferior in quality to that froni the commercial stands. 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 2,420,000,000 board feet, or 70 per cent of the lumber produced. Comparison with the estimates of future cut above given indicates that by 1925 tlie 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 succ<;eding 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 increase:m 600,000 700,000 11,000,000 1,500,000 3,000,000 2,510,000 500,000 30,000 Acres. 1,600,000 3 600 000 2,500,000 3,800,000 '7oo;ooo 3,500,000 5,000,000 4 500 000 1,700,000 560,000 110,000 A crcs. 2,200,000 5400;000 3,000,000 6,000,000 1 000 000 41000 000 1,000,000 1,200,000 550,000 80,000 Acres. 300,000 1,200,000 1,900,000 5,000,000 .■i 300 000 oisooioofl 3,000,000 3,630,000 ..^:'% 450,000 100 000 Arkansas Tox;is Missouri Total 114.684,000 23,490,000 29,410,000 30,930,500 30,853,500 Four-tlftbs of the original yellow-pine forests has been cut siiM-c 1870. Out of the more than 100 million acres of yellow-pine laud thr.t has been cut over about 29 million acres now supports second growth of merchantable sizes and nearly 31 million acres cut over recently second growth not merchantable. About 31 million acres of cut-over land has not come back to pine, alihough 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 oldi^r 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 tiilliou feet, or 46 per cent, is second growth. stand is North Carolina- Oklahoma Missouri ibnted M feet. 15, 300, 800 S, 698, 000 4, 791, 400 364, 700 By States the nirrchantaliL follows : M feet. Louisiana 47,348.400 Mississippi 40,476,200 Florida 36,429,300 Texas 27, 524, 700 Alabama 25, .'iKi. 400 Georgia 21,807,600 Total (Inm- Arkansas 1.5.743,700 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 Atlantic States and the longleaf in the Oulf 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 141 billion feet, to which must be added at least lA bil- lion feet of hewn ties, poles, and posts, in all a cut of about 16 billion feet of saw timber. There is also being cut in the pine area of the South about 12,2.50,000 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, lires. 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 4* billion cubic feet of wood. THE ANNUAL GROWTH. ' The annual growth is estimated at about 3 billion feet board measur(> on the merchantable second-growth areas and 1 billion cubic 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 cubic feet per acre for the entir(> growing area. (See Table 2.) Table 2.— Southern yellow-pine rcgiwv— Annual groicth of saw timber and cordwood hv States. b. m. Cordwood. state. M cubic leet. Cords. 225,000 360,000 250,000 380,000 52,600 350,000 500,000 450,000 200,000 170,000 37,500 8,000 88.000 162,000 120,000 240,000 30,000 160,000 40 000 North Carolina 1,800.000 1 333,000 AlnhnTTiii 1,778,000 Mississippi 444 mo Texas 35,000 11,000 389,000 Oklahoma 122 000 Missouri Total 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 10 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 le.ss than li 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 larpje areas will not come back to pine unless there is a derided "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 wliiih we find in the virgin stands. The second growth now cut for .saw timber is inferior in quality to the old stands. \\'hile trees in the virgin longleaf-piue 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. '" Equivalent to about 5 billion board feet. TIMBER DEPLETIOlSf, PRICES, EXPORTS, AND OWNERSHIP. 21 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 gi'owth is much smaller than from virgin timber. For instance, a mill tall.v on a certain operation sliowed 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 succ(>eding 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 tlie soutliern 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 soutliern pine forests has already been reduced for the remaining merchantable timber from two- tliirds 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 witli shortleaf pine. / THE LESSON OF THE SOUTH ATLANTIC STATES. l-arge 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 liave 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 les-s 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 tlie stand, and it is the longleaf repro- duction which is most affected by tbe free ranging of hogs. Furthermore, the turpentine operators are now tapping more and 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 tho.se 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 78 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. Althougli in five years over 19 per cent of the present virgin timber will bo 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 30 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, tlie life of the industry as now constituted is largely the life of the present large savi'miils. When the larger mills cut out at the present locations, they will cease to figure in the industry ; for it is now almcst impossible for an operation of any magnitude to secure a location which commands enough timber to justify logging operations. The South will undoubtedly continue, as Xew England, to be a lumber-producing region. It will cease, however, 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. REDUCTION OF THE OUTPUT. Lumber production of yellow pine in 1980, allowing for new sawmills to take the place of the larger sawmills which will be cut out, it is estimated will be about 9i 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 .5.50 million feet, or a little over 3J 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 l)y 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. Sliould, however, 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. Tlie Southern States cousunre locally about one-thiril of their total pine cut, or 5 billion feet. By some good authorities home consumption is placed even at 50 per cent. Tlie South has passed the threshold of a great agricultural and industrial development. At tlie 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 become higher; and better and larger houses will be built. This will require more lumber. Tlie annual consumption of lumber is expected therefore to increase until in 10 to 12 years it may amount to 9 billion feet. I5y 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 becomx; dependent for its own needs upon large importations of lumber from the Pacific coast. 22 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. CYPRESS REGIONS. Cypress lias proljably passed its maximum production, and but a sliort time remains during which it can occupy a place of importance in the lumber industry. The value of cypress 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 t!ie 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 forests, 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. 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 13,000 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, Iilaho, Wyo- ming, Colorado, Utah, Nevada, Arizona, New Mexico, and western South Dakota." It is a 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 life of the lumber industry. Thus western Montana and Idaho, because of the lieavy 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 is 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 o\itlook for the mountain region as a whole, the different sections of the region should be kept in mind. DEVELOPMENT OF THE LUMBER INDUSTRY. The development of the lumber industry liegan in the early fifties, chiefly to supply the mines. Even now mining is the heaviest consumer of wood in several sections. After 1900 the " That part of the Kanlksu National Forest in W.ishington is in- cluded in the Rocky Mountain rcylon, while those parts of the Eldorado, Inyo, Mono, and Tahoe National Forests in Nevada are included in the VaciUc coast region. 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 lias 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 Engelniann 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 stands, 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 countrj. Practically all of it is softwoods. The stand is very unevenly distributed. Nearly 60 per cent, or 130 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 li 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 tires 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 disea.se is at least li billion feet. The total annual drain upon the forests is about 3i billion feet, two- thirds of which falls upon Montana and Idaho. ANNUAL GROWTH. The annual ;;rowth in the Rocky Mountains is estimated at 401 million board feet of saw timber and 204 million cubic feet in the form of immature stands (equivalent to about 528 million board feet), which makes a total of nearly 365 million cubic leet (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, EXPORTS, AND OWNERSHIP. 23 LOCAL NEEDS. In Montana and Idaho tlie present cut of saw timber is in excess of tlie local needs, which are about S50 million board feet. Arizona and >few 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 enougli 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 39 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 approximately 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. Even if the rate of consumption should not increase above tlie present figure, it appears that the bulk of Idaho's privately owned timber, including 75 per cent of the remaining .vhite 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 Idaho for poles, piling, posts, and shingles. The pres- ent average annual shipments of poles, piling, and posts from Montana and Idaho amount to 210,360 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- lions 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. Tlie 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 smallier 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 countri — western white pine. Now that the eastern white pine is practically exhausted, the demand upon the western species will tend to increase. Tl;e other States of the Rocky Jlountain group will not be important factors in the lurober production lor the general market. 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 foi' 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 a number of years only in special grades. Twelve years later lower freight rales 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 Wiishington, 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, wlien it fell slightly below Louisiana. The present cut is about 4,500,000,000 boartl 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 IJ 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 oonnnercial forest area of the Pacific Coast States* has been reduced to approximately 57,586,000 acres. A large per- centage of this, about 39,370,000 acres, is in virgin stands, not all, however, of accessible high-grade timber, for there is a large percentage of relatively inferior and inaccessible areas. This is an important factor which is usually overlooked in the consideration of the western timber supply. Second growth of saw-timber size covers about 5,292,000 acres and smaller second growth 6,425,000 acres, while nonrestocking areas cover 6,500,000 acres. Of the volume of the original forest no satisfactory statis- tics are available. The present stand, however, is about 1,141,- 031 million board feet, or practically half of the remaining saw timber in the United States. Oregon leads with a total stand of 493,700 million feet ; that of Washington is 334 billioii ; and that of California, 313,331 million. Six hundred and eighty- six billion, or more than half of the total, occurs in the Doug- las fir belt of western Oregon and Washington. Douglas fir comprises 558,571 million feet, and of this 505 billion, or nearly one-fourth of the remaining stand of saw limber in the United States, is in Washington and Oregon. Estimates by species are as follows : Board feet, lumber scale. Douglas fir 5.5S, 571, 000, 000 Western yellow pine and Jeflfrey pine 183, 4.j3, 000, 000 Western hemlock (largely in western Wash- ington and Oregon) 94,000,000,000 True firs 82,479,000,000 Redwood (California) 72,208,000,000 Sugar pine and western white pine (largely sugar pine in California) 38,485,000,000 Western red cedar (western Washington and Oregon ) 49, 000, 000, 000 Spruce (Washington and Oregon) 13,355,000,000 Lodgepole pine 4, 5GC, 000, 000 Others 44, 914, 000, 000 Tot: 1. 141, 031. 000. 000 24 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. GROWTH AND DEPLETION. The total area cut over is approximately 0,125,000 acres, of which two-tliirds is in Washington and Oregon, and a very large percentage west of the Cascades in the Douglas fir belt. As already indicated, the total nonrestocking area of the Pacific Coast States is estimated at 6,500,000 acres, but this is only 'a part of the sum total of depletion, since there has been great and needless loss from the destruction of virgin stands by fire and other causes on a part of the 6,425,000 acres now support- ing second growth. The area burned over annually in those three States is shown by Forest Service data to amount to 450,000 acres, and the los.s in timber to about 600,000,000 board feet. The average annual cut, largely lumber but including rela- tively small amounts of other materials, is about 10 billion board feet. To this it is probably safe to add IJ billion feet lost by fire and other causes. It is also probably safe to assume that 11 billion feet out of the total represent the driiin upon saw timber. Annual growth is estimated at 1,262,000,000 board feet. There is in addition growth of approximately 430,000,000 cubic feet in stands of unmerchantable size. Total growth in cubic feet amounts to 706,000,000."^ One reason for these compara- tively low figures is, of course, the fact that so much of the territory is occupied by virgin stands. Total depletion in cubic feet amounts to 2,500,000,000. Depletion is therefore approxi- mately three and one-half times the growth. The depletion in timber of saw timber size is approximately nine times the growth of the same class of material. LIFE OF THE INDUSTRY. The timber stand in California is estimated at 313,331,000,000 board feet. This is being reduced by cutting at the rate of about 1,500,000,000 feet annually. These figures should not be tal*en alone, however, for tliere are other important aspects of the situation. Increased demands from the East w-ill almost certainly result in an increased rate of cut for California. Practically all of the cut up to the present has been in the most acce.ssible stands, whereas a considerable part of the remain- ing timber is comparatively inaccessible. Logging operations are now removing annually a little less than 2 per cent of western Washington's timber and le.^s than 1 per cent of western Oregon's timber. Yet the reasonably ac- cessible timber and that in private ownership is going very much faster, and with decreasing southern pine production ( normous pressure to increase the cut may be expected. A study of the local timber supply indicates that in certain localities a large proportion has been cut off and that log- .cing operations ai-e being pushed back to the less accessible limber in the rougher mountainous regions. The exhaustion of local supplies is a vital matter to local prosperity and de- velopment. It means the cessation of a local industry, the abandonment of improvements, rapid depreciation of invest- ment, and other losses which the industry, the community, and the consumer must shoulder. One authority estimates that only a third of the original privately owned timber tributary to Puget Sound remains.. The situation in Grays Harbor County Illustrates the rapid exploitation which in a surprisingly short time is to end the industry locally. About 20 years ago there were in this county 750,000 acres of timber and only about 75,000 acres of cuttings. Now there are 355,000 acres of stumps. One-sixteenth of the county's private timberland is being cut over annually. In 25 years the supply of privately owned virgin timber will be gone. King and Snohomish Counties, Wash., the scene of the earli- est lumbering operations in the Northwest, also illustrate local exhaustion of virgin timber in the not very remote future. Korty billion of the original SO billion feet of commercial timber to about I'.IOO, 000.0(10 board feet. has been cut. Thirty billion of the remainder is in private ownership, and is now being felled at the rate of 800,000,000 feet anuually. Indications are that this private timber will be gone in about 35 years. One authority on the lumber supplies of Washington has studied the rate of exhau.stion from the annually decreasing acreages of private land assessed as " timberland." He found that from 1909 to 1919 there was a decrease in the acreage of timberland in western Washington of about 850,000 acres, or 85,000 acres annually, and in eastern Washington of about 390,000, or 39,000 acres annually. On the basis of 3,585,686 acres assessed as timberland in 1919 in western Washington, privately owned old-growth timber would last 42 years at the present rate of cutting. Similarly, in eastern Washington, for the 1,128,666 acres of private timberland in 1919, the present rate of cutting would exhaust the virgin timber in 26 years. Adjusting these statistics to provide for additional land which was classified as timberland in 1919 but not in 1909, he believes that an even faster rate of cutting of the private stumpage is indicated, and that, disregarding increment in second-growth stands and without allowing for the expected increased cut, the private virgin timber will last only 35 years in western Wash- ington and 20 years in eastern Washington. Allowing for the almost certain increased rate of cutting, he expects the privately owned virgin timber supply of Washington to be virtually gone in 20 years unless forest policies are changed. Bend, Oreg., is the center of one of the most extensive and famous of Oregon's yellow-pine belts. A -few years ago an unbroken forest of virgin yellow pine extended to the very edges of the city. At present cutting has left a practically unbroken waste for 6 or 7 miles to the west and south. The operating territory surrounding Bend has a radius of from 20 to 30 miles and occupies an area of 382,000 acres of mer- chantable forest, carrying 5J billion feet of commercial timber. Of this about 231,000 acres, carrying 3i billion feet, is pri- vately owned. The present rate of cutting, which is likely to continue and may be augmented, will exhaust the privately owned stumpage in 25 to 30 years. Depletion in Washington has gone much further than in Oregon, and while an expansion of the industry in Washington under increased demands from eastern markets may reason- ably be expected, by far the greater part of the expansion may be looked for in Oregon. The reason for the slower develop- ment in Oregon lies in the greater inaccessibility of its Douglas fir stands. Many operations how being seriously considered for Oregon will require transportation and other investments running into the millions of dollars before any timber can be taken out. The factor of local consumption nuist also be considered. California is an example. Its industry is large and promises to grow. From the earliest days California has been an im- portant source of export material. Large quantities are still exported to the East and to foreign countries ; but up to the present time the State's population and agricultural and indus- trial development have more than kept pace with the output of lumber, so that it is doubtful whether production has ex- ceeded consumption since about 1875. From the beginning of lumbering on Puget Sound California has imported large amounts of fir. The per capita lumber cut of the State has been approximately equal to or slightly in excess of the average per capita consumption of the United States since between 1869 and 1879, while the average consumption of the Stiite is probably somewhat greater than for the country as a whole. In 1919 southern California alone used the equivalent of about half the total cut of the State, a per capita con- sumption of at least twice that of the whole United States. The lumber cut for the Pacific Coast States as a whole will undoubtedly increase very materially during the next 10 years. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 25 Local demands will also increase, liut not in proportion to the cut. Large additional amounts will be available for the eastern markets. A gradual ri.se in logging costs Is inevitable as tte more accessible stand.s are cut out and it becomes more and more necessary to extend operations to tbe rougher mountainous logging cbances, with lighter and more broUen stands and larger percentages of the less de.sirable species. The timber resources of the Pacitio Coast States are very large, but it would be very unwise to overestimate them, for much less than the total stand is readily available. Existing transportation facilities to tbe East are already overburdened with present traffic, and they will have to be very materially increased to meet the probable reduction in the eastern and southern luuilier cut during the next 10 years. THE SOUTHERN APPALACHIAN HARDWOODS. GROWTH AND DECLINE OF LUMBERING. For the purpose of this report the southern Appalachian hardwood region includes the hardwood forests of Maryland, West . Virginia, Virginia, North Carolina, South Carolina, Georgia, Alabama, Kentucky, and Tennessee. Large-scale logging operations shifted to this territory from Pennsylvania, Ohio, and Indiana. Operations in West Vir- ginia on a large scale did not begin until after the Civil War. Before 1900 central Kentucky and Tennessee were well cut over. The cut for the entire region was at about the maximum in 1909, with an output in hardvpood lumber of approximately 4 billion board feet. Following this there was a pronounced decline, and in 1918 the cut had decreased to 1,700,000,000 feet. While this heavy falling off in cut was. of course, very largely due to war conditions, there has been a decrease in proportion to the total hardwood cut of the country, for which the deple- tion of supplies appears primarily responsible. The proportion of the aggregate hardwood lumber production which was sup- plied by the Appalachian States had risen gradually from 32 per cent in 1899 to 41 per cent in 1914, but by 1918 it had fallen to 34 per cent. West Virginia, which held the lead in hardwood production from 1910 to 1917, lost it to Arkansas in 1918; while North Carolina, which cut approximately 400 million feet in 1909, dropped to less than 200 million in 1918. The cut has declined in quality as well as quantity, and this is perliaps the more serious aspect. The early lumbering con- sisted of cullings in which only such trees as walnut, cherry, and the finest of oak and yellow poplar situated along the driv- able streams were removed. The introduction of logging railroads extended operations into nearly all parts of the re- gion, until now there is comparatively little virgin timber left, most of it remote and difficult to log. The present logging operations are largely working over previously-culled stands, removing practically every saw log and a large part of the smaller material. The quality of the lumber produced is con- sequently much poorer than formerly. • THE ORIGINAL FOREST. The virgin fore-sts which once covered practically the entire land area of this region contained a wealth of hardwood tim- ber unsurpa.ssed iu tbe Northern Hemisphere. Oalv, chestnut, and yellow poplar of large size and high quality filled the coves and valleys, mixed with walnut, cherry, hickory, bass- wood, cucumber, and other valuable hardwoods, ai d softwoods such as white pine and hemlock. Over an area exceeding 60 million acres the original hardwood stand may be estimated at more than 325 billion feet. THE REMAINING STAND. Lumbering and settlement gradually restricted the area of commercial timber to the mountains. This part of the region, about 3a million acres, now contains practically all of the re- maining tracts of old-growth hardwood timber, and tlie extent of these has been reduced to about one-third of the total area, the remaining two-thirds being either in recently cut-over land, usually badly burned, or in farmers' woodlands. So far as can be learned from the available sources, the stand is in the neighborhood of SO billion hoard feet, of which 60 billion is old-growth timber occupying about 12 million acres. Most ol this has been culled of its best trees, and the virgin tract- which remain are few, relatively small, and remote, .\bout 12 per cent of the stand is spruce, hemlock, and various pines. The oaks are the principal hardwoods and probably comprise about 35 per cent of the stand, while chestnut is the most abimdant single species and is estimated at 25 per cent. For all the States within which the southern Appalachian Mountains lie, the total stand of hardwoods is estimated at 147 billion board feet, about ^>S per cent of the total stand of both .softwoods and hardwoods. Outside of the mountain re- gion the stand is practically all second growth in farm wood- lands. The total area bearing hardwood stands is about .55 mil- lion acres. LUMBER CUT AND TOTAL CUT. During the (wo years preceding our entrance into the war the annual hardwood lumber cut of the southern .\ppalachian States fell from about ?>i to about 2i billion board feet. In ]918 there was a further reduction to less than 2 billion board feet. Under normal conditions it is likely that the cut of lum- ber would still be proceeding at close to 3 billion board feet per year. The lumber cut, however, is probably only about 35 per cent of the total drain upon the forests. An immense amount of material is taken out in the form of tanning-extract wood and bark, poles, ties, cooperage stock, fuel, and other products. Expressed in terms of cubic volume, the " normal " annual lum- ber cut is the equivalent of 657 niilliard feet and an annual gro»-th of about 2,630,000,000 board feet. In contrasting these figures, however, it should be remem- bered that much the greater part of the cut is being taken from the relatively concentrated old-growth timber, while the growth is taking place in the widely distributed stands of second growth. The cut is from large timber yielding high- grade lumber ; the growth is nearly all low grade because of the small size of the trees. Great damage is constantly being done by forest fires, \\hile the second growth Itself is being drawn upon more and more for a wide variety of small wood products. The future production of the Appalachian hardwood region is of far more than purely local importance. The hardwood fore.sit lauds of Ohio, Indiana, and Illinois, which supplied 25 per cent of the total hardwood lumber cut as late as 1899, have been converted into farms almost as fast as the land has been cleared, and small isolated tracts, as farm wood lots, will furnish the only future timber production. Hardwood lumber production is now centered in the lower Mississippi A'alley, and the cut is almost entirely from rich agricultural lands from which timber production can not be expected in the future. Farm woods will continue to contribute, but if there is to be any permanent supply of large-sized, high-grade, hardwood saw timber it must come very largely from moun- tainous, rough, or otherwise nonagrieultural lands like those in the southern mountains. Aside from relatively small areas in the Lake States and in New England, the entire country must look to the southern Appalachians. HARDWOODS OF THE LOWER MISSISSIPPI VALLEY. AREA AND STAND. The lower Mississippi Valley, Including the States of Arkan- sas, Mississippi, Louisiana, eastern Texas, and eastern Okla- homa, constitutes the last great reservoir of hardwoods in the country. Of the hardwood area of 36,000.000 acres in this region, 60 per cent, including the heaviest stands and most valuable species, is located on the alluvial bottoms of the Mis- sissippi Delta. Most of this is unusually fertile and will even- tually be cleared for agriculture. The remaining 40 per cent, of upland stands, is of less importance from a lumber standpoint, both because of the smaller trees and great mixture of species and because much of it is broken up by farms and pine stands. Altogether the region is estimated to contain nearly 133 billion board feet of saw timber, or more than twice as much as the present stands of old-growth hardwoods in either the Lake States or the southern Appalachians. With the exhaus- tion of the hardwood supplies in these regions, the lower Mis- sissippi Vagey is being drawn on more and more heavily to furnish the raw material for the hardwood-using industries of the entire country. DEVELOPMENT OF THE LUMBER INDUSTRY. During the period from 1900 to 1906 the cut of hardwoods in Ohio, Indiana and Illinois, which had previously contributed large quantities to the vehicle, furniture, railroad-car, and other hardwood-vonsuming industries, fell off by nearly 50 per cent. By 1906 the center of hardwood production had shifted to the Appalachian States, which furnished nearly half of the country's hardwood consumption, while nearly one-fifth came from the Lake States. Now these regions in turn are declining in production, and there is a corresponding increase in the cut of the lower Mississippi Valley. The exploitation of hard- M'oods in this region has progressed steadily since 1900. its contribution to the total hardwood cut increasing from 14 per cent to approximately 25 per cent. To-day the hardwood TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 27 products from this region are being used to supply the factories of the Carolinas, the Ohio Valley, and the Lake States, which were formerly independent of imported material. The last of the great hardwood regions is thus well on its way toward complete exploitation. Already .the exhaustion of the original supplies in the northern part of the region centering around Memphis has reached the point where it is profitable to return to cut-over areas for trees that were formerly re- garded as too small to log and for less valuable species, such as tupelo and water gum, which at the time of the first cutting were unmerchantable but which now command a ready sale. The present practice in this part of the region is to remove all species. Wood distillation plants have been installed for using cord- wood and there is a steadily inci easing interest in the utiliza- tion of smaller sizes, inferior trees and logs, and species formerly rejected. The day of the small mill and wood-prod- ucts plant has arrived. More and more the large mills are finding themselves forced either to buy logs in order to con- tinue operation or to move down river into southern Mississippi and Louisiana where new plants can be erected with reasonable prospect of a 20 to 25 years' supply of material. In the southern part of the territory, in southern Mississippi, Louisiana, and eastern Texas a much larger proportion of the origin.-il forest is left. Here large mills are still the rule and are increasing in number and in rate of exploitation. It Is therefore likely that increased production in this part of the region will lead to an increase of the present annual cut of ap- proximately a billion and a half board feet of hardwoods for the region as a whole. How long it will last can not, however, be definitely predicted. The one thing certain is that eventually the southern part of the region will repeat the history of the northern part and that the virgin stands and large mills of to-day will be replaced to a large extent by portable mills operating culled and second-growth stands. GROWTH AND DEPLETION. Since the region is largely agricultural in its future possi- bilities, comparatively little in the way of timber growth can be looked for. The extent to which it is drawing on its forest capital is of great importance, because it is the source of our largest remaining hardwood supply. A net growth is taking place on only some 6.5 million acres carrying hardwoods of saw- limber size. The annual growth on this area is estimated at approximately 395 million board feet, or but little more than one-fourth of the normal annual lumber cut of 1,.500 million board feet. In addition there is an annual growth of 301 million cubic feet (about 602 million board feet) on the 15 million acres with stands below saw-timber size, making a total growth for the region of 387 million cubic feet (about 997 million board feet). In addition to the depletion in quantity of material there is a depreciation in the quality of the remaining stand. Of the 36 million acres of hardwood lands in the region, approxi- mately 22 million acres are contained in the alluvial bottom lands of the Mississippi Delta. It is on the.se alluvial soils that the heaviest and finest stands of hardwoods remain, par- ticularly oak, red gum, ash, and Cottonwood, which in 1918 made up more than 50 per cent of the reported cut of hard- woods for the entire country. Oak and red gum are now being logged most heavily and in 1918 made up more than two-thirds of the total hardwood cut in the region. These species, because of the demand for them in the veneer industry, are two of the most highly prized hardwoods of the South, but they are valuable for veneer only when cut from virgin stands and in large sizes. With the rapid depletion of the present virgin stands there will therefore be a corresponding quality short- age, which will result in a relatively larger proportion of the future cut being made up of such secondary spt>cies as syca- more and tupelo and of poorer specimens of the more valuable species, such as oak and gum. THE FUTURE OF THE REGION. This steady depletion of the hardwoods in the lower Missis- sippi Valley is accentuated hy the fact that the bulk of the l)r)ttoi" land stands are on some of the most fertile farm soils in th(j*\'ountry. With the removal of the timber they will, for the most part, be devoted to agriculture. Drainage and clearing of the cut-over lands has been going on for more than a decade at a rate which indicates that not over 10 per cent, .ind probably less, of the area once under hardwoods will be allowed to come up to second growth. This change in the use of the land, which is of course in accordance with its highest utilization, means that the cut in the bottom-land region of the lower Mississippi Valley can not be maintained from second growth to the same extent as has been the case in the Noitheastern and Central States. Once the present stand of timber on these bottom lands is gone, the hardwood supply of the country will be permanently redueetl, and the future cut of hardwoods nuist come from sec- ond-growth stands of relatively inferior (luality in other parts of the country. NEWSPRINT SUPPLIES. THE FACTS AS TO DEPLETION. Newsprint paper is one of the leading products of the pulp and paper industry, which in its modern development depends upon the forest for its raw material. The present newsprint shortage goes back fundamentally to our dependence for news- print production upon the forests of the Northeast and the Lake States, where timber supplies have already been seriously de- pleted, and where, considering the remaining stands, the pulp and paper industry is already seriously overdeveloped. Until the abnormal demands, short supplies, and resulting prices of the past few months led to increased newsprint pro- duction through the utilization of plants designed for and for- merly used in making other kinds of paper, there had been no expansion in the newsprint industry in the United States since 1909. The demands for newsprint paper had. however, been increasing by leaps and bounds. In 1899 our consumption amounted to .569,000 tons. In 1918 it had reached 1,760000 tons, an increase of approximately 200 per cent. Per capita consump- tion of 3 pounds per person in the United States in 1880 had increased to 33 pounds per person in 1919. With an increase of 11 times in 40 years, rapidly increasing requirements between 1909 and 1919, and very little increase in production, imports were obviously necessary. Before taking up the extent to which the United States is supplying its domestic requirements, the importance of the coun- try's being on an independent basis so far as newsprint pro- duction and the necessary raw materials are concerned should be briefly considered. Dependence upon foreign sources for )mlp wood or pulp newsprint exposes the .\merican consumer to the danger of price control. He must also reckon with the pos- sibility of embargo, which even now is far from being a theo- retical menace. All exports of pulp wood are prohibited from the colony of Newfoundland. The Canadian Provinces have pro- hibited the export of pulp wood from crown lands, which form a very considerable extent of the timborlands both in eastern and western Canada. For a year or more American manufac- turers have been apprehensive concerning the possibility of em- bargo on all pulp-wood exports from Canada. It would unques- tionably be desirable to make the United States as nearly self- supporting as possible. In lumber the United States is still an exporting country, but in pulp wood, pulp, and newsprint we have become large importers. From being self-supporting in newsprint production as late as 1909 the United Stales had, in 1919. 10 years later, 28 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. Ixconie dependent upon foreign sources for approximately two- thirds of our newsprint or its raw material. The factors which have held our newsprint industry prac- tically at a standstill in the face of rapidly growing domestic i-equirements are pertinent in a study of timber depletion. Tlie various requirements of paper making have restricted the num- ber of species wliich have gone into newsprint paper, and inci- dentally into all kinds of pulp and paper, very largely to four, of which spruce supplied 55 per cent of the total pulp manu- factured in 1917, hemlock 16, balsam 7. and poplar 6, a total of 84 per cent from four species. Tlie overcentrallzation of the industry in the Northeast and Lake States and the consequently serious overcutting of the timber in these regions is due in no small degree to tliis restricted use and the occurrence of tliese species chiefly in New England and the Lake States. The lumber industry has followed the timber, but a mucli smaller investment per unit of output is required in the lumber mill than in tlie pulp and paper plant. On a prewar basis an investment of approximately $1,500 per thousand board feet of daily product is required in lumber manufacture, whereas pulp and paper establishments require approximately $50,000 par thousand feet of daily consumption. I^arge investments Imve therefore tended to hold the pulp and paper industry in the regions in which it was first established, and timber has been hauled increasing distances to the mills. A rail and water transport exceeding 500 miles is now not uncommon. When overdevelopment of the American industry in the Northeast and the Lake States, as compared with timber sup- plies within our own borders, prevented further development, and when Canada began to take measures to withhold pulp wood for the upbuilding of a liome industry, new construction to meet growing demands shifted to the other side of the international boundary, where it was welcomed by the Canadian and tlie various provincial governments. Since 1909, the year which marked the suspension in American development, Canadian production has increased from 150,000 tons to 800,000 tons, or approximately 433 per cent. The depletion of supplies in the Lake States is clearly indi- cated in Uie rapidly increasing distances from which the pulp and paper mills find it necessary to secure their material. A repre- sentative of one of the purchasing companies which supplies a large number of the Wisconsin mills reports that in 1904 sup- plies were largely obtained within the State. Five years ago it liad become necessary to go far north into Minnesota, but it was rarely necessary to ship material from points more than 50 miles north of Duluth. At the present time, however, a very material part of the supply is secured from the extreme north- ern part of the State. Spruce from Minnesota is now being hauled from 700 to 750 miles by railroad to the Wisconsin mills, and from Canada up to distances of 1,000 and 1,200 miles. The situation has become so critical that the Wisconsin mills are seriously considering the possibility of securing their raw mate- rials from the Rocky Mountain region of Montana. For hem- lock the paper industry must compete with the lumber industry for logs of saw timber size, and, unfortunately, from the stand- point of future supplies, the cut now includes a very consider- able amount of material obtained from trees under saw timber diameters. It is reported from New York, where nearly 50 per cent of our domestic newsprint production is now centered, that 60 per cent of the pulp and paper mills have absolutely no timber supplies of their own. For tliese mills there seems to be little ahead except closing in a comparatively few years. At least 60 per cent of the remaining spruce pulp wood in New York is in the State preserves, on which no cutting is allowed. In New Hampshire the coniferous pulp wood has been cut very heavily, and 10 or 12 years will probably see tlie end of the supply. Aside from the State preserve in New York, the bulk of the remaining coniferous pulp wood of the East is located in Maine. One of the best supplied pulp and paper companies in the State has holdings which at the present rate of cutting various estimates give a life of from 40 to 60 years. Holdings of another large company are estimated at about 20 years ; of still anotlier at 15 or 16 years. There are about 15 mills which have no lands of their own and which will probably have difficulty in purchasing material within 10 years. The pulp and paper mills of the Northeast in general are be- coming more and more dependent upon Canadian wood. So far as known, no company in the Northeast has sufficient hold- ings under present methods of management to guarantee any- thing approaching a continuous supply. Probably not over six companies control or own tiinberlands with supplies for more than 20 years. The drain upon the forests for newsprint is very heavy. One large daily, for example, which consumes 20,000 tons a year, requires for that brief period the product of a century's growth on 7,500 acres of eastern spruce forest. The present situation from tlie standpoint of timber supplies in the eastern United States for the newsprint industry is therefore very unfavorable, and the future holds no particular promise. The supplies already limited are being rapidly cut ; many mills are already without timber of their own ; the stands in eastern Canada have apparently been very much overesti- mated in the past; and little concerted effort has yet been made to increase the production of pulp woods in the North- east, where the industry is at present centered. Only such eflfort, together with the development of the industry in the West and in Alaska, where there are still large stands of timber suitable for newsprint paper, can assure production in the United States which will even approximate domestic require- ments. The situation as to other classes of paper is somewhat similar, although it may not yet be so serious, and is usually of less importance from the standpoint of public welfare. ALASKAN SUPPLIES OF PULPWOOD. Alaskan timber is so important from a national pulp-wood standpoint that it can not be allowed to pass without special comment. The timber, which is of particular interest, is on the Tongass National Forest in southeast Alaska. While much of this timber is of saw-timber size and will in the future become increasingly valuable for lumber, it is be- lieved that its real future is for pulp and paper. The stands are largely western hemlock and Sitka spruce, species now iu use on the Pacific coast for newsprint and other paper manu- facture. It is estimated that there are in the Tongass Na- tional Forest in the neighborhood of 70 billion feet board measure, in a comparatively narrow belt along the 12.000 miles or more of coast line. Water power is available, as is also deep- water transportation from numerous mill sites. This timber is for sale under practical and favorable terms and in amounts sufficiently large to Justify the installation of plants. Since it is in a National Forest it will be cut under methods which will insure permanence of production. It is estimated that the cut from this region alone will insure a perpetual supply large enough to meet one-half of the present newsprint requirements of the United States. There seems to be no reason why southeastern Alaska, situated in practically the same latitude as Norway and Sweden, should not become the center of a large pulp and paper Industry which will be a source of local prosperity and of great national im- portance in the light of our present dependence upon foreign pulp and paper production. Alaska, in other words, is one of the centers to whidi the newsprint industry of the United States should look for a large future development. The same is true of other centers in the West, where immense sources of pulp wood supply are now almost wholly undeveloped. Much of this timber is in the National Forests. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 29 THE MOVEMENT OF PRICES. Figure 2 shows the trend of pulp-*oocl prices in New England and contract newsprint prices and consumption in the United States since 1899. Spot niarliet prices are shown for 1919 and 1920. Competition among American mills and between the American and Canadian product kept down the contract price (if newsprint until 1916, in spite of the increasing cost of pulp wood. Another factor in keeping prices of newsprint down was the introduction of cheaper methods of manufacture, the effect of whicli was, in part, at least, to help to reduce prices between 1900 and 1909. The general contract price level as represented by 100 per cent is .$2 per hundred pounds. This price level obtained until in 1916 the increased demand for new.sprint outstripped pro- duction, and competition among purchasers for inadequate sup- plies succeeded that among producers to dispose of their pro- duct. Increasing demands and growing competition among newspapers forced contract prices up to .?4.50 in 1920. The M ■>yl /^i^j :t ~! i ,L0 'i' 5 1^ / t / y^ '/v. j% k / ' y ^ M '1> JJJ' 1 1 .^> ^ - /■ / fl^ M yi 19^ 0^ 7 .Ou cfi '> .^ ■^' 551 f^ ^ / {.^ .?■/ / x / ,i ,r^M >r -., y \% ■C7 -"- £C :.. Fig. 2. — Rise of consumption and selling prices of newsprint in the United States and of the price of pulp-vood in New England, 1899-1920. curve as it stands does not take one important factor into ac- count. Prior to the war the contract price was f. o. b. point of consumption, but during the war contract prices were changed to f. o. b. paper mill. Spot market prices are shown only during 1919 and 1920, because prior to that time they are rot available as separate quotations. In general, however, spot market prices before the war followed contract prices closely, and at times were even below them. Prior to the war a relatively small percentage of the total newsprint consumption was handled on the spot-market basis. The larger new.spapers particularly secured all, or practically all, of their supplies under contract. During the last year the larger new.spapers have found it increasingly difficult to secure all of th?ir supplies under contract, and have been forced to secure the remainder in the open market. It is in the open market that the full effect of competition for inadequate sup- plies is shown, and tills is reflected in the much higher prices. It is here that the speculative element in the handling of a necessary commodity at a time of shortage is fully brought into play. Unfortunately it is upon the spot market that the smaller newspapers, least able to increase returns by increasing adver- tising material and raising their advertising rates, must depend. The depletion of timber supplies is first shown in competi- tion for pulp wood and steadily increasing prices. Competition among producers for the sale of their product resulted for a considerably longer period in keeping newsiirint prices at a fairly constant level. Only when the available timber sup- plies of the regions in which the newsprint industry had been developed became so short as to prevent normal additions to plant capacity and demand for newsprint exceeded its pro- duction did newsprint prices advance. Depletion has resulted since 1899 in a large increa.se in both pulp-wood and newsiirliit prices. It is merely the time when and rate at whicli the increase took place that has varied. NAVAL STORES SUPPLIES. DEVELOPMENT OF THE INDUSTRY. So pronounced is depletion of the timber upon which our naval-stores industry depends for Its supplies that it Is com- monly regarded as a dying industry in the United States. In colonial days, when the wooden shipbuilding industry of New England was of great importance, naval stores for domestic consumption, as well as for export, were secured from the pLtcIi pine from Maine to New Jersey. The present-day naval-stores industry dates back also to early colonial times, but uses the longleaf and slash pines of the South. The very name of the industry is no longer appropriate, since the bulk of its products— spirits of turpentine and rosin — are largely used for purposes having no connection with .shipping. They are important constituents in such products as soap, paint and varnish, paper sizing, printing ink, greases, oils and belt dressing, soldering flux, shoe polishes, roofing and linoleum, tly paper, sealing wax, electrical supplies, matches, and varlou-; articles in the drug trade. The annual products of the industry exceo-d $40,000,000 in value, more than half of which comes front exports. Since the Civil War it has held a place among the industries of the South inferior only to agriculture and lumbering. Since 1820, or in fact since .statistics of any value are available, American production has led the world, and even at the present time is approximately SO per cent of the total world production. For the South as a whole, production has been falling off for a number of years. From slightly less than 34,000,000 gallons of turpentine in 1899, the first year of satisfactory statistics, it declined to approximately 17,000.000 gallons in 1918, a de- crease of 50 per cent. Rosin production during the same period fell a proportionate amount. The average production of the lust six years has been 25,000,- 000 gallons of spirits of turpentine and 834,000,000 pounds of rosin, a production which has been easily absorbed by the world's industries. REMAINING SUPPLIES. A study of the opinions and estimates of a number of the best- informed men in the industry, men representing every part of the territory and having more than ordinary means of informa- tion, indicates that there are not more than 31,000 crops of turpentine timber available and uncuppefj ^orr WOODS wesTtRN sorrwooos BILLION BOARD FEET ■-timber stands of some ot the more important species in the United States. Table S. — Total stand in cubic feet on saw-timber areas and cord wood areas in the United States by regions. Total stand. Stand on— Region. Million cubic feet. Per cent. Saw tim- ber areas (million cubic feet). Cordwood areas (million cubic feet). New England 50,584 85,118 3 3 7 11 13 16 8 39 15,492 17,126 41,534 61,319 73; 060 95,252 53,755 274,874 5 S.'iS 7:77? Central 23,799 23 098 South Atlantic and East Gulf 23,112 8,138 12 850 Paoiflc coast 745,588 100 632,412 113,176 LOCATION OF REQUIREMENTS WITH REFERENCE TO PRODUCTION AND SUPPLIES. Ill the comparatively near future all of our eastern timber regions wliich do not already import more lumber thian they export will begin to do so. The .southern pine region as already shown is still a large exporter, but within 10 years production promises to be little, 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 U 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. UetvErj/anc/ M/da>/e /lf/a^f,c^ . . _ /-aA-s Cen/^ra/^ £as^6a./y^. Loiver- M/sstssipp/'. . . . /foe Ay A4oany'a//7. Fac/i^/c Coasf: EM Ml Illlll IIIIIIIIIIIIIIIIKIIIIIIIIIIIIIII ■ Cub 'c foof equii/a/en^o:^ dcZ-uez/ /urnSer o6^/^a6/e on saivf/mier areas OOOO 6oo/x/feef= ffJfcc/6/c /ee^J lllllllll ffemainc/er ofs^ancf on saw^/m6er areas I I S^and on condtvooe/ are/ss Fig. 9. — Total stand 200 2ZS 2SO 3, ///on Cu6/c /^ee/- cubic feet on saw-tiraber areas and cordwood areas in the United States by regions TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 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 marliets he estimates an increase in export demand by 1930 of 1 billion feet of southern pine and an Increase in local require- ments in the South from 7J 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 Hi 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 ofC 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 1.5 biUion. and here a reduction of 3J billion feet in the cut by 1930 would be conservative, with possibly 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 annual freight bill for moving this timber to the eastern and middle western markets would be .$1.50,000,000. 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 .^l to $3 per thousand feet, have risen to a niaximura of $20 at the present time. TotaL 26.0 \6.0 — Cut and Destruction Growth Softwoods \I4:0 m -Cut and Destruction Growth Hardwoods \/2.0 mi .Cut and Destruction Growth Billions of cubic feet Fig. lO.—Relat 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. V. Dunham, field rep- resentative of tlie National Luml>er Manufacturers' Association, South- ern Lumtierman, May 8, 1920. Even more important than the mounting costs is the menace involved in having the 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 discus.sed. 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 clas.ses 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 come from greater distances, and obstacles in the way of securing it would be correspondingly greater. Transportation and other distribution costs would be increased, and liigher costs are ordinarily represented in still higher prices to tlie 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. 37 FUTURE TRENDS IN REQUIREMENTS. Future trends in requirements *ill 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 230 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 430 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 .\merican future requirements for lumber over four times that for the entire country, in I'ittsl)urt;h three 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 England or Germany. It follows that any future lumber production falling below approximately .35 billion feet, unless we can make up the difCerence 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 unquestioniibly be the i-esult of economic pres- sure from lumber shortages and high prices rather than of eco- nomic convenience. We have onr warning in the present situa- tion. Soffivoods ana' A/ardi^ooc/s I 56 UK \4^ UL n: . Groiv^h I Cuf anc/ c/es'/'r vy/~Oii^/^y . J //7 l///~^//7 S/i7/70^ -Grotv/-/} /n i//Vy/r> s /-area's /iardi^^oocys B///'or7S of Aoc7/~ $6.50 per thousand feet was necessary. This impo-sed an added cost to lumber and raised the general level iif 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 Lalie States, lumber prices in the Middle West following 1905 would unquestionably liave 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 tlie retail trade. In western Kansas and Nebraska and in North and South Dakota Douglas fir from the coast and western pine Ircmi 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 one 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 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 having large available fore.sts 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, tlie exhaustion of timber in the Lake States leaclied a point where northern pine and hemlock ceased to be- come effective competitive factors, except in very limited re- gions, but further advances in lumber prices were checked by the great inflow of lum-ber from the West. The increasing volume of western lumber in the middle west- ern markets obviously increased the freight rates liorne 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 stock. These conditions are shown graphically in figure 15. They therefore have acted as springs, exerting pressiire upward and intensifying the responsiveness of prices to any release of lirossui'e from above. In the retail trade of southern Minnesota, for example, the average transportation cost borne by lumber in 1905 amounted to abcmt $3 per 1,000 feet. In 1915 it had increased to $S..50, and in 1919 to practically $12 per l.O^W feot. Normal markets for lumber in the Middle West largely dis- appeared during tlie 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 lieavily 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 was set free to act. Within a year or 18 months Douglas fir lieiame the principal species throughout the greater portion of the .Aliddle West. To-day it forms 80 to 90 per cent of the relail stocks in Minneapolis, which has always been a great white-pine market. It is found in Chicago in greater vol- ume than any other species. In Kansas City, which is on the very edge of the southern pine di.strict, it forms more than 50 per cent of the lumber stocks. In the foregoing conditions may be found tlie 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. AVholesale and retail lumber prices reached tbe 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 Uim- TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 45 LuMBCfi /A' Couf'd TRY Retail. Tfi ii ii i i l M M M I i I JJ /»^f«^G^ Rf O^Tff -P«/C , ^^ — .^ 1 Otmeu EssEfjTiAL. rACTOKS or Cost ^P - / [j^l si ■ I t \ 1 f ^X >r , ^-• ^ --. -__ ccs:::^: ^ r'/.„,'!i77 4 % ^ ^ ^ - ^ ^^ ^ --^ ^ ^-r--' .^4,. ^ *^r ^ ^ p^ m c j^'^^^^BJci ir . ^ ^ m. ^ =="■=5:; -^ ^a. -- :^ :ii^ ^ Q ... «A t,.'i i'j/t ^0/'/?,: ,0 _2 2i_ -2 2S_ -2 S- _a 2S_ -a »_ -2 . i .. ^^ _2 2- ». -2 Z_ .^ fLLUSTRATlOf^ or Cf^AMGtNO Sp£C/£S W /?£TAfl^ LuMB£fi SrOCt^S Country Yards //v MfNA/£5orA 1 E^i2Sg Per Cenr yV^SC /Yem/ac A i I UIUUUIU Per Csnr So YeUo^ P>n9 ■Mm In M FecT Bct^is - Tbf'Cif Fsetcigc -^a/es .Vebraska 61 MW,t)n Ft Mii^riesofo ^'.sM.I/ior Ft 46 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. bor from distant regions. As in the East, 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 mifavorable logging weather in the South, reduced stocks at the mills, car shortage, etc. The relation of producing and distributing costs to prices will be discussed in a subsequent section and the underlying cause of the extraordinary and miprcedented 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 ijostwar 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 an enlarged and insistent market the respon.se would have been far easier and the situation far less acute. Had it not lieen 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 conunodities 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 hardwood forests and the relatively smaller consumption of hai-dwood 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 1900 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. In the early days, when transportation sy.stems 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 counnerce 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 w^as no longer 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 Blountains with increased logging and transporta- tion costs. By 1890 the price of ash and oak had increased to S35 and poplar to $30 per thousand, and in the 10 years follow- ing 1890 oak increased to $43, 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 hardvv-ood cut of the country steadily declined from ten and a half to between 6 and 7 billion feet in 1918. This decline is reflected in all hardwood regions excepting the lower Jllssissippi Valley, which has increased from a produc- tion slightly less than 800 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 un.settled 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. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 47 Tlie result was tliat hardwood lumber was bid up to unprece- ilontod 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 ow-ners 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- .land 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 1S99 and 1909. Foi- the two years mentioned the cut was identical and amounted to nearly 4i 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 $300, and was difficult to procure at that price. To manufacture quartered oak first quality, large sized, straight-grained logs are required, wlrtch 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). OAK. Firsts and seconds 1-inch plain boards: Philadelphia New York City Pittsburgh Cincinnati No. 2 common 1-inch plain boards: Pliiladelphin -inch boards: Philadelphia New York City Cincinnati YELLOW POPLAR. Firsts and seconds 1-inch boards: Cincinnati Philadelphia So. 2 common 1-inch boards: Philadelphia Pittsburgh Cincinnati.. HAfiOGANT. Firsts and seconds Mexican and Honduran mahogany 1-inch boards: New York City '56.00 55.00 74.00 82.50 75.00 75.00 127.00 95.00 85.00 310.00 300.00 300.00 T.\ni.E 12.— Wholesale and retail prices of hardioood lumber at r-arious points throughout the United $!tafes— Continued. RETAIL PRICES (DOLLARS PER 1,000 FEET). February, 1914. February, 1919. February, 1920. Firsts and seconds 1-inch plain boards: Philadelphia ... 1 88.00 '83.00 72.50 i:i2. 00 100. 00 100.00 252.50 260.00 265.00 Pittsbiu-gh Cmcinnati No. 2 common 1-inch plain boards: New York City [[.[w::]:: 5S.00 45.00 31.00 115.00 '98.00 100. 00 Pittsburgh Firsts and seconds 1-inch quartered boards: New York City Pittsburgh Cincinnati Firsts nnH qfennHs l-innh hnarrt^- ■54.00 46.50 192.00 126. 00 115.00 150.00 116.00 400.00 385.00 385.00 Cincinnati Nt . 2 common 1-inch boards: Philadelphia 97.50 105.00 «« NewYorkcity :...::::: Cincinnati ;.... 45.00 36.00 60.00 37.50 140.00 105.00 YELLOW POPLAR. Firsts and seconds 1-uich boards: Cincinnati 83.00 106.50 253.00 No. 2 common 1-ineh boards: Philadelphia Pittsburgh Cincinnati "'""''36.'o6' 56.' o6" 39.00 85.'o6 100.00 n\1?VoXS?^^!°*.!>.'!!°.'.r^.l^ Firsts and seconds Mexican and Honduran 175.00 330,00 ' February, 1913. Ked gum, which 20 years ago was considered a weed tree and little cut for lumber, commands a wholesale price of $200 per thousand for FAS figured and $180 for F A S plain. Plain oak flooring in 1913 in Ohio cities retailed for about $75 per 1,000 feet; In March, 1920, the same material brought $300 per 1,000 feet. White ash trim P A S in 1913 retailed lor $72 per 1,000 feet To-day it is >ery diflicult to procure and quotations are not generally available; however, sales' have been made at $205 and over per 1,000 feet. Maple floor- ing in 1913 retailed for .fGO 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. Thecenterof hardwood produc- tion has therefore moved gradually away from the center of con- .-Tamption. The $10 wholesale price for first quality white oak of 1855 had, by the early months of 1920, reached $230, and tie prices of other species had increased |)roportionately. Without minimizing 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 increa.ses illustrate the effect of growing scarcity and regional forest exhaustion upon tlie price move- ments of species of general and special use. This is further brought out graphically in figure 16, which shows the price iri'iid ol walnut, a species of limited quantity and special use, TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. S260^ TREND OF AVERAGE PRICES OF UPPER GRADES or WALNUT AND EASTERN WHITE PINE, IN RELATION TO UPPER GRADES OF SOUTHERN YELLOW PINE. IVHOLES/JLE P/f/CES P£/f M. FEET /N E/ISTEffN MA/?/st 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 1913, 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.S9, 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. Jen 1900 Feb 190 i Jan 1910 Jon 1915 Fc6/9Z0 __4___L^ ■ No Z COMMOfJ DlM£N5lON Zx^ 16 5ISIE ^B "TT" ■", Jon 1900 Feb 1905 Jan 1910 Jan 19/5 Feb 1920 Dollar:! 1 No 'i Common Boarcs AlVOiALSIS rrf ; h" Jan 1900 Feb 1905 Jan 1915 Janl9Z0 Dol/ar:, . 1^ No /Common Soakds /./0-1I5Z5 — ■ ^ 1 \ , 'rm ^ FIG. 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 1913, Is as follows : Lumber tally per 1,000 (eet. Associa- tion data, 1919. Pervice data, 1913. S9.90 10.21 .90 Maniifacturin" 5.25 .40 Total f. 0. b. mill 2r 79 2.36 10.70 1 50 21. 15 25. S3 Average selling price 12.50 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 51 /305 /906 /307 /908 J309 /9IO /9/I /3J3 19/4 I9J5 /9I7 /3J8 DOUGLAS r/R-MAR-/9aO- 33Z7o — • YBLLOW PINE MAR.I920-353y,-^ PEFIC^NTAGES OF /NCFfEASE AND DECREASE /N THE \ AVERAGE M/LL PR/CE5 PER M FEET I FOR SOUTHERN rELLOiV P/NE. DOUGLAS F/R. AND /NLAND EMPIRE SOFTWOODS /90S /906 /S07 /903 /909 /9/0 /S// /9/e /3/3 /3/-^ /9/S /9/6 /9/7 /9I8 19/9 K30 TREHO OF M/LL PEf/C£S /4/VD ESSENTML COST r/iCTOF?3 y^T y^ TyP'/Cy^L DOUGLAS F/Pf Cy^FfOO AiNDF?Al/L M/LL 52 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. The association's compilation sliows 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. Average 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 efliciency 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 Bmptre.— 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 profit.s 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 : 1919 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 costs, including stumpDge. Average selling price. 14.19 J14.62 14.78 15.38 15.68 15.50 1.1.1S 13.96 15.07 14.54 14.81 14.20 14.12 16.90 14.56 19.70 22.20 luately 3.50 per cent. The average mill prices from 1914 to date are Indicatetl below : 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. Soutliem pine States.— The trend of average mill prices for southern yellow pine is shown in graph (a), figure 18. As with Dou.g!as fir, 1915 was the year of lowest prices. Taking 1014 as a more nearly average prewar year, the selling price was $13.CS, as against $33.94 for 1919, an increase of approsi- {rcrage Year : selling price f. o. 6. mill per 1,000 feet.- 13.02 1916 16.12 21.13 1919 33.94 SeptembHr 1919 44.60 November 1919 42.06 45. 41 .Tanuarv 1920 52.21 57.94 Maich, 1920 61.60 Tlu» price for the years 1914 to 1919 are based on reports made to the Forest Service from operators throughout the southern pine belt. Those for the years prec«ling 1914, as shown in graph (o), were taken from the books of manufacturers without attempt at auditing. Tlie 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 tlien cui'rent, 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 : Month. Stumpage. Avorace operating Average sellini price. September 1919 $5.24 5.31 5.41 5.52 5.44 $26.56 27.04 31.75 29.14 28.54 139.37 October 1919 44.60 February 1920 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 move- 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 organization.s. The mill prices given are based on sales made by the larger mills TIMBER DEPLETION?, PRICES, EXPORTS, AND OWNERSHIP. 53 to retailers, wholesale dealers, and wholesale consumers. While a few of the larger mills do not sell to whole.sale dealers, the more general practice is to grant the whole.salers 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 niarfjin between mill price and the price paid by the consumer. TRANSPORTATION. The ext<'nt to which the growing distance between forests and markets lias steadily added to the cost of lunrber 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 : Table IS. Retail prices per thousand.^ Percentage of retail price absorbed by freight rates. 1914 1919 , 1920 1914 1919 1920 New York— Douglas fir flooring, $62 32 1 S86 i J140 36 SO -.3 112 49 66 31 2S 35 25 20 16 14 Pittsburgh — Sout^ern pine boards, No. 2 com., 1x8 Chicago— Douglas fir flnorin?. No. 2 cir ver. grain. 11 13 Southern pine boards. No. 2 com.. 22 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. T.\BLE 19. — Transportation ' per M board feet Chicago. ihcr to By water trom- By rail from- Years. Al- Manis- Sasi- 1 Mem- Annis- ton, Ala. Bir- rnf: Ala. Merid- ian, Miss. Port- land, Greg. 1877 tl.31 $1.27 1.46 1 49 ia82;;;::;:::::". 1.92 1885 1.64 1888 1.90 i893.::::;::::::i 1:01 1.46 1.13 $2.00 2.50 $4.50 4.00 4.00 4.25 4.25 $5.75 5.00 5.25 1897 1.18 $12.50 1900. . ••$6:66- 5.50 5.63 7 38 1:M 1905 1918-20... 7 88 1 15 00 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 Ihe greatest lumber-producing region in the country. Table 20. Years. Average retail sell- ing price. Average transporta- Portion of average retail selling price absorbed by transportation. Per thousand. Per cent increa,se. Per thousand. Per cent increase. Per cent. Per cent increase. .„„, $26.03 31.68 34.64 iJ:^ 31.71 31.17 30.75 32.28 31.83 30.44 3L43 38.58 46.51 54.42 0.0 2L6 li 21.8 19.6 18.1 23.9 22.2 16.9 20.7 48.0 l^^i $3.25 4.25 4.00 4.00 4 50 0.0 30.8 12.5 13.4 11.5 12.6 14.7 15.0 11? 20.9 25.1 27.9 ^^8 23.1 21.6 8 1908 8 1909 4.75 1 46.0 4.75 1 46.0 5.75 1 77.0 6.75 107.8 8.00 1 146.0 8.50 1 161.5 7.50 1 130.5 8.00 i 146.0 10.75 1 231.0 1912 49 6 1913 1916 91 2 1917 It will be noted that the average selling price for 1919 shows an increase over 1905 of 109 per cent, while the increase In transpoitaition 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 vpaard movement of prices. — The movement of average retail prices in country districts in the Middle West from September, 1018, 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 coln- cid<' closely. From 1912 to 1915 the average retail price of lumber 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 Minneaiiolis, 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 gelling price in 1919 in Kansas City centered between $45 and $50 per thousand. .\verage prices of March, 1920, were variously estiiuated by 54 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. retailers in Kansas City and Cliicago to be from $75 to $80 per 1.000 feet, a few dollars less than the average shown for country trade. Prewar and postwar changes in wholesale and retail prices of specific softwood grades and species at various points througliout the country are indicated in Table 21. It should he explained that the margins shown between wholesale and retail values do not always accurately represent the actual margins, since the material sold in any given month may havo Mar ^ept Nov. Uan. Man May. du/y Sept. Nov /S'S 'SI9 /i^-iu Fig. 19. — Comparison of trend of regional retail lumber values. (Baseil on averages of monthly sales.) been purchased months before. The margin varies with graded and species, retailers figuring a lower gross profit margin in the handling of common grades sold in large volume at a relatively riipid 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 .\pril, r.il9, when prices began to ascend sharply. Tarle -Wholesale and retail prices of Douglas fir and miitlirrri yellow pine lumber at various points throtighout the United States. Wholesale prices (dollars per M leet). Retail prices (dollars per M teet). Pouglas fir. Septem- bcr, 1918. Febru- ary, 1919. Febru- S: Se^ptem- 1918. Febru- Febru- ary, 1920. No. 1 common, dimension 2 bv 4 inches, 16 (ect, S. '9.50 32.25 32.00 ■0.50 32.60 " '28.56' 38.00 120.00 51.00 ,.» 30.50 31.50 30.00 31.10 18.50 31.60 '27.' 56' 39.00 43.00 49.50 55.00 47.00 47.13 57.00 40.00 55.00 50.35 50.80 52.80 40.00 55.30 ,55.00 50.50 55.00 86.75 103.60 95.00 98.00 112. 15 111.50 ':i^\ \::,-^-l^: 43.33 47.00 41.. 50 42.00 47.66 47.00 40.00 43.00 62.50 65.65 63.00 66.45 40 00 Kan,;.U-if . Mo'..'.'.'.'.'.'. Nn. 2 cloar vortical-crain floovins, 1 In- -1 incl.*.;: 40.00 48.00 47.66 49.00 36.00 49.00 62.50 65.00 65.00 66.65 «8.33 73.00 56.00 56.60 62.50 80.00 58.50 86.00 112.50 Minneapolis, Minn Kansas Citv, Mo , New York Cb- 46. 00 49.00 150.00 117.00 128.35 139.50 Table 21.— 117io/r,s((/( southern iirlli, Wholesale prices (dollars per M feet). Retail prices (dollars per M feet). Southern yellow pine. Febru- f9T4. Febru- Febru- iS. Febru- ary, 1914. Febru- f9Y9. Febru- ary, 1920. No. 1 common, dimension 2 by 4 inches, 16 feet, S. & 'To\vns in southern yel- 47.00 63. .50 64.75 63.00 65.75 57.60 59.00 59.00 105.00 113.00 108.35 125.00 110.00 110.00 KansasCitv, Mo Chicaso 111 17.60 17 60 31.35 « nn 24.30 23.55 40.75 47.00 66.45 65.15 60.00 66.80 No. 2 common, boards, 1 by Sinches, ISfeet. S. 2S.: Towns In southern yel- low pine belt Kansas City, Mo 16.60 33.65 24.00 22.70 ">'32.'66' 43.00 27.50 97 f.n Pittsburgh Pa 1 24 66 36 50 1 SO 00 B and better', flat-grain flooring, 1 by 4 inches: Towns in southern yel- low pine belt 114.00 133.55 Kansas City, Mo 23.50 i 42.35 240.65 1 42.85 23.75 ! 41.00 I 43.25 32. « 2 61.66 32.55 52.00 Chicago 111 58.00 '38.00 ' Febniary, 1913. :. — Comparison of average retail prices per 1,000 feet in various regions and times. \^lt March, 1920. Per cent increase. $48.75 49.20 . 50.81 $86.76 85.86 85.65 Nebraska 74.5 68.5 Period 1912 to 1915. March, 1920. Percent S31.24 31.29 $86.76 85.86 Nehra-ika 174.5 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. Tabi-i 'O.sis and profits of retail lumber J!)12-1915 and 1919. Aver- semng price 1.000 leet. Gross profit. Operating cost. Net profit. Per thou- sand. Per cent ofsales. Per Per ofsales. Per thou- sand. Per ofsales. Missouri, Kansas, and Oklahoma: 1912-1915 1919 $2(1.73 $56.00 SS.3 $31.29 $37.30 83.2 S31.24 $54.41 74.2 $7.07 $14. 86 110.1 $7.17 $13.88 93.5 $7.25 23.79 22.91 24.22 26! 4 $4.99 $1.05 81.3 $4.33 $7.33 69.2 ^1 68.6 16.77 16.16 llfo $2. OS $5.81 179.2 $2.81 $6. .55 130.6 $3.01 S7.1S 138.5 7.02 10.38 Per cent increase Western Iowa and Ne- braska: 1912-1915 9.06 11.43 Per cent increase — Minnesota: 1912-1915 1919 "It Per cent increase.... TIMBEK DEPLETION^ PRICES, EXPORTS, AND OWNERSHIP. 55 -Costs and profits of retail lumber distribution by tears lH0'i-l919. country trade, Minnesota. Averaee bujing price. Average selling Gross profit. • Yeirs. Per 1,000 feet. Per cent increase.2 Per 1.000 feet. Percent Per 1,000 feet. Per cent olsellinc pricp. ■ Per cent increase.' $•'0.37 !3.53 27.77 25.90 24.34 25.22 25.03 24.38 26.62 25. 6S 24.34 25.63 28.60 36.63 40.09 0.0 15.6 36.4 27.1 19.5 23.9 23.0 li 40!5 79.9 96.8 $26.03 31.68 34.64 31.85 30.43 31.71 31.17 32^28 31.83 30.44 31.43 38.54 46.51 54.42 0.0 21.6 33.0 16:9 21.8 19.6 18.1 22:2 16.9 20.7 48.0 mo $5.78 8.66 7.60 6.98 6.49 6.62 6.29 6.97 6.36 6.79 1:S 9.94 9.88 14.33 22.1 26.9 21.7 21.2 foX 20.1 22.2 19.2 20.8 21.7 18.3 25.5 21.2 26.4 1906 49.8 19ns 20.8 1109 12 3 8:8 1913 10 1914 IT 5 ms::::::::;::::; 1918 71 1919 148 ■ Operating cost. Net profit.' Yeirs. Per 1,000 Per cent ofsellins price. Per cent Lncrease.3 Per 1,000 Per cent p , ofsellintTj^,^/.^™' price. I>°"<=''^'=- 1905 $3.08 4.04 4.08 3.90 4.12 3.74 3.94 3.66 3.82 3.82 3.65 3.78 5.07 6.41 7.15 11.8 n n 3.51 2.97 2.36 2.74 2.22 3.10 2.34 r^ 2.01 4.87 3.47 7.18 10 3 0.0 190G 12 5 ! 31 n 14 4 71 4 11.6 12.0 13.3 11.8 12.6 11.8 11.8 12.0 }i:g 13.1 13.7 13.1 32.5 26.5 33.8 21.4 28.0 18.8 24.0 24.0 18.5 22.7 64.5 108.0 1.32.0 10.0 1 30.0 1910 8 6 15 7 1 17 8 1913 1914 1915 7.0 , -13.3 8.4 1 1.5 9 8 12 5 1919 13 3 166 n ' The number of companies from whose records figures are talten 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, nor net profit the exact difiference between gross profits and operating costs. - Per cent increase figured on 1905 values as base. » Per 1,000-foot values. Distribution of price increase. — A.s has been pointed out, tlie average retail price of lumber in 1919 in tlie country trade of tlie Prairie States was about $25 higher than in the period 1912-1915. For the yards covered in Minnesota tlie exact in- crea.se was .$23.17. Of this increase the manufacturer and wholesaler took $11.34, 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 23 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 i.OOO 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 i-egion amounted 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- 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 Jliddle 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 increa.sed from about $4.50 in 1912-1915 to about $7.85 in 1919, and to about $8 in March, 1920. 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 sonrewhat 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 lum'ber 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. — Appro.rlmate production and distributing cost, March, 1920, per thousand feet of lumber. Lunil)er production (stumpage and selling costs In- cluded) $26.50 Transportation (in-ill to retail yards) 12.00 Retail distribution g. 00 Total 46.50 A\ wage retail selling price March, 1920 86. 00 JIargin of profit (includes interest on investment) 39. 50 The margin of profit indicated exceetls 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 rea.sonable 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 a 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 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. I Char}'- S/iowmgf P&rcen-/-c7^e /ncrea s es fn Transportaf/on C/7<:7rgres, Cost ofL u/?7 ber SfocAs to /x'efcri/erSj fPefai / Opern-/-//?^ Expenses, and A^era^e /?efcf// Lumber Prices. C^cfsec/ on oi^ercrg^e vc^/'ue-s per M l^e&f OQ shoivn by counfrc/ i/(:}rc/3 /n M/nnesol'a one:/ Da^ofa^.) A/o ie - Perce n fa^e /ncrer/c E -^ * E'^u/i/ti/enf- s ■5 *-£>( r> r< 'por. '-ec/ J 9 7/ /0.7/ 90* / SJO * 2.60 ed }fii/-e^fr>7en-f: / 6.77 /7. 'f'S -3.72 //.2S / 20^ 6 /<9* ves^mert / 950.-20 S 6/2 / 3 7d # 2.3/5 >iyesfrnft- 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 otlier mining corporations. One and one-half million acres have been acquired liy the I^'ederal 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 disti-ibuted and largely in the liands of operating companies. TIMBER OWNERSHIP IN THE LAKE STATES. The Bureau of Corporations reported in 1910 a marked degree of timber concentration in tlie 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, aggregatetl 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 2S per cent of the timber of Michigan. Since 1910 a good many owrters 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 ilieir lands, and a very large proportion of the timber in the i-egion is now attached to going operators. TIMBER OWNERSHIP IN IDAHO. In 1910, 6-1 per cent of the privately owned timber in Idaho, or 32.3 billion board feet, was held by 10 owners. Each of these lioldlngs comprised over half a billion feet. The three largest owners jointly controlled 46.2 per cent of the private timber in tlie 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 have -Ijeen 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- oiierating 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- iible timber tree of the Northwest. Of the 20 billion feet of whire pine in this region, 5 billion feet is owned by the Federal Covcrnmont, 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, or 6 billion feet. With the exception of the Northern Pacific Railroad, one of the largest timber holding companies in tins 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 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 30 years. TIMBER OWNERSHIP IN WASHINGTON AND OREGON. In those 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 tiuiberland in Washington, a considerable part of which has gone to operating companies. In the State of Washington individual holdings in exce.ss 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, etc. 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. Jluch 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 of less than about one billion feet of stumpage, aggregate 17,000 in Oregon and 7,000 in Washington. Many of these small holdei-s 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 owncrshi]) in that region notwithstanding the concen- 64 TIMBER DEPLETION, PEICES, EXPORTS, AND OWNERSHIP. tration wliicli lias (alien place; but also that the process of con- crntradoii for tiiuln'r liokliiig as distinct from luinhcr manufac- tnre had been cheeked, 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 .30 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. Tlie 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 from 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 tliese 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 liold- 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 liave been several transfers of ownership since the investigaFion 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 tliey 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 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 1913 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 the country over. Table 26. — Depletion of limber and net changes in timber oivnership of large limber i Uniied States. in the important forest regions of the Number of Least tity of Aver- age stand ner Total area owned (thousands of acres). Ratio. (G+F) Timbered area owned (thousands of acres). Ratio. (K-^I) Timber owned (mil- Uons of board feet). Ratio. (O.^M) Per cent of Mar. 1, 1913, timber cut during period. (N-i-M) Per cent by which pur chases or sales dur- quantityof timber owned Mar. 1, 1913. (nXm) Forest regions. Total. Not aZy. timber acre owned Mar. 1, Mar. 1,1 1913, 1913, or (thou- Dec. 1 sand 31,1918, fid.lt.). (milUon bd.tt.). i(M-i-I) I Mar 1 ^^''• 1913.' i^l. Mar.l 1913. d^u-^i ing period Dec. 31, 1918. Mar. 1, 1913. perlfd. Dec. 31, 1918. A B C D E F G H I J K i L M N P Q R New England 40 ri 5 11 7 B5 17 22 8 20 69 10 40 17 11 15 2 2' 2 7 2 6 7 5 2 6 60 1 3 8 5,675 550 6,519 821 645 1.15 .96 .99 5,386 782 166 862 745 4,890 797 136 91 415 361 5,365 1.00 614 .78 83 i .50 504 .65 592 .79 3 854 ' 79 20,522 3,664 391419 3,322 5,284 3,681 2,948 18,082 16,082 98 793 25,310 9,568 21,617 31,972 3,255 755 1,936 19,885 3,620 1,109 0.97 !38 .65 .79 .81 .66 .66 .95 ■^ 1.00 :89 16 17 66 39 45 37 53 39 30 13 Ne^toA'!:.^.-;."^? 60 CO 250 2.50 ■250 60 60 100 250 250 250 500 500 5.6 17.6 4.3 3.9 8.1 7.5 8.0 10.4 5.6 7.2 17.5 44.0 • 50.0 16.0 78.0 25.1 (Va.,N.C.,S.C., Ga.) Florida pine 1,752 2,625 19 GuKpine (Ala., Miss., La., Tex., Arlt.) Cypress 32 ^ (La./FIa., S. C.) 057 354 524 2,496 918 2,245 503 f.l6 278 1,273 256 117 163 1,094 94 103 29 31 31 136 601 235 545 1,634 902 2,096 633 250 1,130 .91 .66 1.04 .65 .98 .93 .92 1.03 .90 .89 (Va., W. Va., N. C, Ky., Tenn.) 1,441 894 7,137 1,595 7;495 1,760 322 2,513 2; 760 2,418 2,891 11,868 15,228 9,548 19,346 28,605 5 (Va.,W.Va.,N.C.,Tenn.) Delta hardwoods 577 3,724 2^490 507 674 399 1,518 737 3,675 1,052 2,463 650 720 401 1,505 1.28 .99 1.03 .99 .97 1.07 1.01 .99 (Miss., -M-k., La., Mo.) (Minn., Wis., Mich.) Idaho 10 Washington (fir and pine) 8 7 3 12 9 -5.0 Caliiornia redwood 376 42 13.7 18,047 18,988 1.05 22,696 5,742 19,560 .86 310,469 53,357 262,482 .85 17 2 n TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 65 The following notes on this table have been furnished by the Timber Section of tlie Bureau of Int«rnal 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 in pulp and paper manufacturing plants, secured their supplies of raw material as far as possible from timberlands other than their jwn. At the same time these owners gladly bought additional limber to the extent of 13 per cent of their original holdings. " In the case of New York the statement just made for New Kngland 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 tliat 66 per cent of the timber on hand March 1, 1913, 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. " In the case of Florida, while the rate of cutting was high, there were still considerable tracts of timber to be obtained for good-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 .\tlantic 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 too raiiidly. 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 W'ashington 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 1913. 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 the part of the larger owners to maintain a constant but not greatly incrpysed supply of stumpage for their mills. It is al.so 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 38 per cent in Penn- sylvania, 0.5 per cent in the Middle Atlantic States, and 06 per cent each in the softwood areas of the southern AppaJachian 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 2.50 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 portioi. 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 atTorded 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 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. viT.v l;u-,;:e iiitere.sls. By iiiul large, the degree of concentration indicalcd in llie liiidings of the Bureau of Corporatijjns in 1910 lias not been appreciably changed ; but no general tendency is (■\ident to extend control by increasing the larger holdings or l>y withholding timber from the saw. Indeed, the opposite is Iruc in many roi^ions. Two lactois make the effect of timber concentration greater than it ai>pears. 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 hack-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 confldently expect to purchase more or less at his own terms when he i.s ready to log, but whicli meantime must be carried by otliers. Under the operation of the timber and stone act and otlier land laws, many such tracts have been acquired within or adjoining National Forests which in effect control considerable quantities of publicly owned timber, and the same situation frequently exists as regards private lands. A second 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 regional 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 individualistic 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 many operators. The change from these conditions which now appears to be in progress may be compared to the clianges 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 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 \\'('s(<'in Slates, luward concentration of production tlirough I lie ccnli-ul Clint ml uf a considerable group of mills. Such con- trol may he exercised through varying degrees of stock owner- ship, bonding or other financial velations, 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 souk! cases also embraces mills or timber properties in British Columbia or Mexico. The movement of southern lumber interests into tlie 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 whicii hitherto have been unaffiliated. The tendency of the large operating groups is to consolidate the lioldings, large and small, in their vicinity and thus acquire sufficient stumpage to supply their manufacturing plants tor 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 tlie average thousand feet of lumber manufactured, and notably forced many savi'mills 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 lai'ge 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. 6' owners and sawmill operators and has strengthened the finan- fial 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 whicli is tiilving 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 ownei-s 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 it is 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 nulls 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 cut 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 lumlier, 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 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 uuil: 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 nev? 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 pi-oducts 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. TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. iKiiorance of current market values, particularly on the part (il small operators, has been one of the reasons for the very \i!istable conditions often prevailing in the lumber industry. It w ;is evidenced and is still to some extent evidenced by the wide nuiije in prices at which the same grade of lumber is sold in I he same locality. With lumber manufacture and marketing so widely dis- liibuted, the industry has lacked a central medium for re- IKirting price changes from day to day, like the wheat or cotton exchanges. No general and authoritative price data have been :ivailable to it, like those assembled and published by the De- Iiiirtment of Agriculture on many agricultural products. The function of the regional lumbermen's association in assembling and distributing the prices reijorted on current sales has yrown 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 ti) 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. 'I'he 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 serve 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 miike 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- eentration 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 raade extensive investments in operating plants and in marketing organizations and who have built up widespread trade connections to maintain a continuous supply of sluiiipage for their mills. Carrying charges have placed more or less definite limits upon the quantities of re- sei-ved timber which can be carried economically. As these quantities are reduced by cutting, however, it is to be expected, and tlie data on hand indicate, that the large operators will replenisli them by purchasing available small holdings. As a general rule, the small mills are tending to be eliminated in the western regions, where tlie 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; and, thirdly, because the large interests will find it to their advantage as time goes on to acquire tiie smaller tracts of stumpage available to their plants. Financial strength, strategic location, ownership of the most accessible timber, far- reaching aflJiliations 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 of 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 band, 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 miUs 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 tlie 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 nwthods of opera- tion the physical conditions restrict the life, even of many large plants, to 20 or 25 year.s. 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 inrpending 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- grade tinihor is proportionately greater than ever before. The gi'eatest 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 tiniberlands 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 vigorous action to stop forest devastation and re- TIMBEK DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 69 stock denuded lands, leading to permanent forest industries widely distributed over tiie couutrs, 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 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 (luality; that the financial weakne.sses 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- Ijort 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- ests are gone. 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 wood 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 inmiinent, 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. Its injury is felt particularly through 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 higiier 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 tlie 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 America and Siberia, the situation would differ from that which we are now rapidly aijproaching 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 lo obtain the daily nece-ssities 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. Timlier depletion, while not the primary cause, is an im- 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 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, Oi-eg., 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 tran.si)ortation 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 grovi' 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 lu 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 SI niillion 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 forests fires in 1919, burning a total of 8i million acres. During the preceding year, 25,000 fires burned over lOJ 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 fore.sts 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, EXPORTS, AND OWNERSHIP. 71 nomic 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 k^ft to the initiative of the private owner of land or is sought solely through compulsory regulation of private lands. Not only has the public very large interests at stalje which justify an assumption of part of the burden ; certain fundamental causes of forest devastation can be removed only by public action. Chief among tliese 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 measuEfi 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 alil^e 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 coi-e of public forests, public instruction and example, tjublic encouragement in protection and taxation, and a respon- sibility recognized by forest o^^^lers to keep their hinds 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 tiniberland 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 nuiy be sunmiarized briefly as follows : Le^^'isUition 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 i)roducts which he deems necessary to prevent forest devastation in the region concerned, and to withhold cooperation, in vihole 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 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. Legislation is needed, in part as an extension of section 1 of the act of March 1, 1911 (AA'eelcs 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. (3) 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 tlie most direct and effective means of arresting devastation and offsetting tlie dangers aris- ing from concentration of timber in private ownersliip is the extension of publicly owned forests. It is, under present con- ditions, the only effective means for overcoming tlie 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 tor 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 througli 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 elTective administrative agency for carrying out this policy and for determining the 72 TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. best means of liquidating existing equities in such lands, as in tlie 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 Weelis lavt^. THE KEFORESTATION OF DENUDED FEDERAL LANDS. The current appropriations of tlie Forest Service should pro- vide for the progressive reforestation of denuded lands in .N'ational Fore.sts, to be completed in not more than 20 years, witli a yearly sum beginning at Jf.'iOO.OOO and increasing to .$1,000,000 as soon as the work can be organized on that scale. Tlie National Forests contain several million acres of forest laud so severely burned that it can not be restocljed 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 re.siilts. 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, etc. 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 lie 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- gi-owing 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 of tbe action proposed. But a continuous study of the technical 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 llie best results. Recent cuts in congressional appropriations will neces.sitate closing the four exTJeriment stations hitherto I'stablished in the Western States. Not only should those sta- tions be restored, but provision should be made for additional exiieriment stations covering the other important forest regions (if the country. The survey of forest resources should be undertaken at once ; l)ut the essential facts as to timber depletion and its causes are so clear that no time should be lost in enacting the legisla- I ion recommended, particularly for cooperation with States and the extension of National Forests. The first point of general :ittack in arresting devastation is to stop forest fires. Hence a law permitting effective Federal and State action in this matter, ns 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 esSentinl features (if 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 folhiws: 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- tected 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 idads where effective, and organized fire-fighting forces. Every .'■(irest owner, large or small, should bear his proportionate sliare of its cost, about half of which may be properly borne by I he State itself with the aid of the Federal Government. Police i-egulations for the control of fire during dry periods, in con- nection with railroad or industrial operations near forest land, land clearing or slash di.sposal, hunting, etc., and for the con- trol of incendiarism, form an essential feature of the protective system. State laws should establish the responsibility of owners of lorest land for complying with such equitable requirements as may be determined upon and promulgated by the proper State iigency, dealing with precautions against forest fires, the dis- jiosal of slashings, methods of cutting timber or of extracting ]iarticular forest products, such as naval stores or pulpwood, and such other equitable requirements as the authorized State agency shall determine upon as necessary to prevent devasta- tion. All timbered and cutover land in State or private owner- sliip which is not now required for other uses than timber growing should be classed as " forest land " and placed under tlie control of the State forest organization as far as it deems measures of control necessary to prevent devastation. The agency in each State charged with the administration of the laws dealing with forest fires and devastation preferably siiouid be a nonpartisan commission exercising wide latitude under the general authority of the State in determining equi- table regulations applicable to various classes of forest lands. It should have authority, backed by penalties prescribed in the law, to enforce its regulations, subject to appeal by landowners to a- judicial review. It should have authority to investigate ;iny questions concerning the forests and forest industries of tlie State and to advise and assist forest owners in carrying (Hit the most effective technical methods on their land. It should have authority and funds for growing planting stock and distributing it to local owners in the State at cost. It sliould have charge of the acquisition and administration of State fore.sts and of the classification of receded tax lands to TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 73 segregate areas which should be incorporated in State forests. It should unify in one liody all fffrest activities of the State. The make-up of this commission should represent the general public, its forest owners, its wood-using industries, and other interests or organizations concerned with timber production. STATE AND MUNICIPAL FORESTS. Effective progress in restoring the enormous areas of ile- nuded land to timber growth can be made only by largely in- creasing public forests. Supplementing the policy of forest acquisition by the Federal Government, every State, including States in the prairie regions, should acquire forest lands or lands adapted to tree growth, and provide systematically for the planting of such areas as will not otherwise restock with timber of valuable species. In the forest regions State acquisi- tion should be concentrated largely upon cut-over lands not needed for other purposes. As a part of this program, pro- vision should be made for the classification of lands owned by the State or acquired through nonpayment of taxes or other- wise, and for the segregation as permanent State forests of areas best suited for growing timber or protecting watersheds. State laws should encourage the acquisition of forest lands by municipalities, to the end that public-forest ownership may be extended by any agencies capable of undertaking it. Public- forest ownersliip not only is the most effective direct attack upon timber depletion; it serves other vital publi'' interests, particularly recreation, the protection of water st>urces, and the conservation of wild life. Furthermore, publicly owned and administered forests, widely distributed and setting standards of technical prac- tice, will be of the greatest educational value and stimulus to the general adoption by private owners of methods which will keep their lands productive. TAXATION OF FOREST LANDS. The ad.nistment of existing methods of taxation to the grow- ing of timber crops is one of the most essential steps for ar- resting devastation. Every State containing forest areas should provide for an exhaustive study of the effects of existing methods and local practices of taxation upon forest devastation, to the end that needed revision of tax laws may be drafted and considered by its legislature. The nation-wide study of forest taxation proposed for the Federal Government would serve to assist and correlate the consideration of this problem in the respective States. ADDITIONAL COPIES OF THIS PUBLICATIO.M MAT BE PROCURED Ff THE SUPERINTENDENT OF DOCUMENTS GOVERNMENT PRINTING OFFICE WASHINGTON, D. C. PD 124 •. .3* :mm .r •^:^n^ ^•^-n^ ^^ .V^&^ "" ^/y?», •' ^ X- -^^^ v-<;* ': J-'^-H. n^-o^ 3-' "^fl^ ■0^ * ,-0 ^ m MAR -76 ST. AUGUSTINE ' ' %:-? /'' 32084 ^o-n^ '^i .^'\ LIBRARY OF CONGRESS 003 142 140 8