October 10, 1919 



HARDWOOD RECORD 



Supplement 



the land and reported the timber all cut. Some fellow comes along and 

 wants to buy bolt timber or posts, and that sort of thing, tie timber, 

 wherever he can pick it up. and he makes an offer of say $5,000 on about 

 six sections of cut-over timber land. Well, there is this thousand acres of 

 land and we do not regard it as having any merchantable timber on there 

 until he comes and makes an offer for it. Some of these questions make it 

 hard to handle. 



Major Mason : On March 1, 1913, we will say all of the timber was 

 standing, and at that time these bolts you speak of you considered of no 

 value so that the value or quantity you would report present on March 1, 

 1913. would bo in accordance with the utilization of that time which 

 would not include the bolts because that utilization came later on, that 

 was something later. And then later on you sell these bolts off the land 

 after you have cut everything you wanted from it, that would be a sale of 

 capital assets for which you paid nothing. It would all be protit. 



Jlr. Goodman then introduced the question of products other than saw 

 logs covering pulpwood, chemical, ties, cedar, etc. This class of material 

 would have more bearing on the question of growing timber than would 

 saw logs. He maintained that generally speaking cedar w'ould not grow 

 enough in five or six years to show an appreciable change, and that the 

 main body of timber was stationery. That the second-growth hemlock 

 and spruce unquestionably shows an accretion. That there is less birch 

 on the land than ten years ago, but that some of the other hardwoods, 

 such as basswood, elm and maple are rather making up for the birch. 



There was a further discussion on the question of timber growth in 

 which there was considerable difference of opinion, the consensus, how- 

 ever, seeming to indicate that the bulk of timberlands was a stationary 

 proposition. 



Mr. Goodman raised the question of comparison of logging specifications 

 today as compared to specifications of 1913, pointing out that the specifi- 

 cations of his company have not changed since they began in 1908. 



It was pointed out further that normally the operator will consider the 

 gradual increased cost of man power in the woods, has kept pace with 

 his returns from the logs, and that in going into a harder specification 

 means running up labor cost so high as to offset the gain in the value 

 of the logs. 



Mr. Goodman asked what exceptions there were to that conclusion and 

 the question was asked him what the object of the information was. 



He replied that it is necessary in figuring the 100% estimate in 1913, 

 maintaining that if the operator is cutting closely now and using that 

 cutting experience to fix the 100% estimate in 1913, he is not justified. 

 That it is necessary to figure on the method of cutting employed in 1913 

 in order to get the 100% estimate of that date. 



Sir. Mason said further that if the style of utilization has been changed 

 since 1913, it would be well to describe the nature of the change in con- 

 nection with setting up the 1913 100% estimate. 



There was considerable further discussion on the question. He pointed 

 out that prior to 1913 the drastic conservation agitation led to the cutting 

 of much small stuff, which was ultimately proven to be handled at a loss, 

 and since 1913 has mostly been left on the ground ; that there is no pos- 

 sible chance for a larger or closer utilization on the whole than there 

 was at that time. 



Major Mason : The consensus of opinion seems to be that utilization has 

 not changed much since 1913, that is the answer. I think that is all there 

 is to it, and if that is the answer that is all we want to know. We have 

 known of other sections where there has been a big change, there is a big 

 change out west. 



Major Mason then further explained paragraphs No. 79, SO and 81, 

 saying that 79 gives opportunity to explain any exceptional circumstances 

 with regard to the particular transaction being described. If this trans- 

 action seems high or low the detailed explanatory statement should be 

 appended showing that it is extremely accessible or of unusually high 

 quality, or something of that sort, in order to show the difference. 



No. SO shows other reasons such as quality or something of that sort, 

 while 81 presents oppoitunity to present any other transactions which 

 represent fair market values. This would include, were there no 

 transaction by the operator, such evidence as state sales, sales of less than 

 1,000 acres, sales prior to 1910 or after 1916, which were considered 

 representative : offers may have been refused on which accurate record 

 could be shown and similar information. 



Mr. Goodman here suggested a meeting at a later date to which the 

 members would come prepared with data to give their true ideas as to 

 the proper value of all classes of wood coming into the northern category. 



Mr. Mason said he could see no objection to a general discussion of 

 this sort. 



Mr. Goodman then presented some figures on stumpage values which he 

 tabulated from various sources in December, 1911. He presented these 

 showing what stumpage value the timber operators had in mind as a fair 

 charge on their operations at that date. 



In some cases it may have been not based upon the value at that time, but 

 perhaps the cost at some previous time, so that these prices, these stumpage 

 values would naturally all be on a basis of the cut, and they would be 

 naturally lower than March 1, 1913, values because the.-,- were made pre- 

 sumably from the cost of timber, or the value of timber in 1911, and 

 timber did increase in value between 1900 and 1913. There was a gradual 

 upward tend of lumber prices. Now, the pine from eleven different com- 

 panies is $i."i.oo. $10,00. $in..5o. $i.').no, $12.00, $12.00, $15.00. $l.^.oo. 



$1.').00, $12.00, $12.00, $16.00, and the average which doesn't mean anything 

 particularly, is $12. .50. Now, there is a difference in looking over these 

 figures, there *s a difference between the people that had what they called 

 the virgin stand and the second-growth pine. Where pine runs from ten 

 to twenty logs per thousand they didn't put the same value on it as some 

 of the owners of the large trees that run three or four logs to the thousand. 

 Norway runs all the way from $10.00 to $3.00, or an average of $7.30. 



Hemlock is very uniform. Now, these prices which were gathered in 1911 

 are $3.00, $2.00, $2.00, $3.00, $3.00, $2.50, $3.00, $3.00, $2.00, $3.00, or 

 an average of $2.68. One company put its maple in here at $1.00. I 

 presume he had very poor maple, or else put it in at cost. Possibly he 

 had had it a long time. The value placed upon maple in 1911 averaged 

 $2.41 a thousand. The highest was $4.00 and the lowest $3.00. The I. 

 Stephenson Company was one of the contributors of these figures. The 

 birch values ran from $8.00 highest, to $3.00 lowest, and the average is 

 $5.28 : $4.28 for birch, but the owners of birch in the western part of the 

 state had a little higher valuation on than we had in the eastern part of 

 the state. Basswood ran all the way from $6.00 to $10.50, or an average 

 of $7.23. Rock elm all the way from $4.00 to $10.00, with an average of 

 $6.83. On soft elm the highest is $10.00, the lowest $3.00, and the . 

 average is $5.91. Oak, the values on oak show that some people could see 

 their oak and some couldn't. I will read you those valuations. One value 

 is $8.50, the next is $10.00, the next is $12.00. There are three tens, and 

 the next is twelve and the next seventeen and the last is twenty. The 

 average on that is $12.59. Now, the rest of the figures here are for ash, 

 balsam, spruce and beech. 



Now, the forest surveys about that same time compiled some stumpage 

 values and they were for white pine $10.35, Norwav $7.60, hemlock $3.21, 

 basswood $6.09, elm $5.03, birch $4.81, maple $3.97 and ash $5.37, oak 

 $10.96, cedar $3.94, spruce $4.69, balsam $2.20, hemlock $3.47, poplar $5.00. 

 Now. on that mixed timber I multiplied that by our own stumpage deduc- 

 tions and then by the forest survey's, and on our cut for the year 1916 it 

 made a difference of about 4 per cent in the total deduction, so thev were 

 very close to the figures we happened to be using which we established in 



The question was discussed then fully of having a further meeting for 

 the members to fully discuss the questionnaire and come prepared with 

 tentative answers to the questions. 



Mr. Osborn pointed out that the lumbermen have had a very serious 

 fight on their hands to prevent the most radical and unjust legislation 

 but that now they arc dealing with fair-minded men, and it is absolutely 

 up to the lumbermen to present their testimony and information accurately, 

 honestly and fairly. That this thing cannot be done without further dis- 

 cussion in which those whose ideas were not correct might have them 

 clarified. 



It was decided to have this general meeting either the day before or 

 the day after the quarterly meeting of the association coming between 

 the twenty-fifth and thirtieth of October, Mr. Tanner being invited to 

 attend. 



Mr. Goodman then brought up further the question of what is going 

 to be done with the cedar, pulpwood and other accessory wood products. 



Major Mason got away from this question for a moment, referring lum- 

 bermen to page 12, article 111 at the bottom, inviting taxpayers to 

 submit any statement or evidence which it is desired to present in addition 

 to that given above, which will tend to show a fair market value of the 

 timberland as of March 1, 1913. 



He pointed out information that would be of value in this case, 

 namely, the margin between the cost of the production of lumber, exclusive 

 of stumpage, and selling price. 



He then referred to page 30, article 234. which contains statements 

 which should be very carefully considered before working out timber 

 valuations for March 1, 1913. 



Mr. Flanner then presented a very interesting line of thought in which 

 he maintained that he with other lumbermen who have large timber hold- 

 ings and have not the likelihood of adding largely to those holdings, from 

 now on are reiilly liquidating. He said that years ago he commenced 

 piling up raw material. He cited the case of the boot or shoe manufac- 

 turer who supposedly from 1000 to 1910 piled up raw material and kept 

 piling it up until in 1913 he arrived at the point where he can't buy 

 any more. 



Mr. Flanner said that this is the position of the lumbermen. He says 

 that of the hundred timber owners in the room ninety per cent have less 

 than ten years' operation ahead. He raised the question of what pro- 

 portion of the debt of the country the lumbermen should have to absorb 

 considering that the.v are in the process of liquidation, and that when 

 they have cut-over their timber their raw material will be gone forever. 



Mr. Flanner further cautioned against injecting too high values. He 

 said that his depletion has been written off rapidly on the plant because 

 of the depletion of the timber. He stated that it is a question whether 

 it is desirable to inject any higher value into the surplus or capital, and 

 said that he would like to have a man hired by the association to see 

 what effect an injection of capital and the injection of 100 per cent tim- 

 ber in the holdings would have on the state taxes as well as on the govern- 

 ment taxed. 



He maintained that he would like to have exact information as to just 

 what the effect would be on high valuations considering the four tax propo- 

 sitions that the lumbermen have to meet in Wisconsin during the year. 



There was here some discussion of the effort of conditions pointed out 

 by Mr. Flanner, Mr. Goodman stating that there is a question as to 

 what the income tax would be over the next ten j'ears. He indicated 

 they will not be materially decreased or increased, but that some change 

 in the excess profit features may he expected. 



Mr. Von Platen spoke then of timber values, saying that in 1902, when 

 he went to northern Michigan, maple was valued at a dollar In that 

 region, whereas he has been figuring maple for years at $6 and elm and 

 basswood at $10, even prior to the time he went to upper Michigan. 



He also emphasized the desirability of getting at what the timber was 

 actually worth regardless of the question of the various taxes, and said 

 further that in his estimation it will be wise to ascertain the valua- 

 tions for lower Michigan before computing for upper Michigan and Wis- 



