24 



HARDWOOD RECORD 



WEDNESDAY MORNING SESSION 



George K. Smith, reporting for the credentials committee, said 

 that there were seventy-nine delegates present having one hun- 

 dred and forty-four votes iir the convention. 



Capt. J. B. White, of Kansas City, reporting for the conserva- 

 tion committee, read a paper on conservation which appears else- 

 where in this issiie. 



Following a talk on the prejudice which exists in the public 

 mind against forest products. President Griggs introduced W. B. 

 Greeley, assistant forester of the United States. Mr. Greeley 

 talked interestingly on the sale of national forests and said in 

 part as follows: 



It is not generally realized that the United States is engaged in the 

 business of growing and soiling timber. Under the policy of creating 

 tiational forests. Iiowever, the people of the United States collectively 

 have become, with exception of t!io Government of Russia, the largest 

 single timber owner iu the world. Their holding contain some 600,000.- 

 OOO.OOO feet of stumpage. a little over ono-fifth of the total stand which 

 the Bureau of Coporations credits to the United States. 



The largest part of this publicly-owned stiimpage, including upwards 

 of 150.000.000,000 feet, is in the fir belt of the northern Pacific coast. 

 Nearly 100.000.000.000 feet more stands in the spruce and hemlock for- 

 ests of Alaska. Ninety-two billion feet is estimated for the national 

 forests of the sugar pine belt through the California Sierras and Coast 

 Ganges. The national forests of the northern yellow pine region in Montana. 

 Idaha and eastern Oregon and Washington are credited with 110. 000. 000.- 

 000 f''f't of merchantable timber: and those of the southwestern yellow 

 y. pine region in Colorado, Utah. Arizona and New Mexico, with .o5. 000, 000,- 

 000 feet. The white pine belt of northern Idaho furnishes over 17.(tO0.- 

 000.000 feet of national forest stumpage and the western larch belt of 

 northern Montana over lO.OOO.OOO.OOO feet. The lodgepole pine and 

 spruce forests up and down the Uocky Mountains contribute 50.000.0u0.- 

 000 feet to tlie national woodiot. The rest is made up of small quantities 

 of yellow pine in the Black Hills of South Dakota, shortleaf pine and 

 hardwoods in the two national forests of Arkansas and southern yellow 

 pine in Florida. 



Members of the Forest Service are fond of .saying that this timber is 

 in national forests, publicly administered, tor three things. It is to be 

 put to use now in our own day and generation. It is to furnish a future 

 supply of timber, larger and better than the present if we can make it so. 

 Forestry, wh?ch is not yet profitable for many private owners, becomes 

 possible under joint, or public, ownership. Lastly, it will in the long run 

 help tbe people of the United States maintain competitive conditions in 

 the production of forest products, .wherever such help becomes necessary. 

 And when w;' are talking to Uunl>ermeu we are prone to say most about 

 the immediate use of the timber in the national forests. 



All told, some forty large and medium-sized operations are cutting na- 

 tional forest timber for the general markets of the country. The greater 

 part are mills with a capacity of from 10.000.000 to 20.000.000 feet an- 

 nually, which purchase from three to five years' supply of government 

 stumpage which is relatively accessible to existing railroads or drivable 

 streams and can be exploited at no great cost for new improvements: or 

 plants which log small bodies of public timber mixed with their own and 

 logically handled by the same erpiipnu-nt. The remainder are large opera- 

 tions usually fed by the extensive railroad layouts built for the exploitation 

 of inaccessible tracts or l>y corresponding investments in stream improve- 

 ments to open up some body of national forest stumpage lying back from 

 transportation. 



In disposing of the timber on tlie national forests it is the aim of the 

 service to provide first for the needs of local industries and communities. 

 Sales for outside markets are made only when it is clear that the for- 

 ests are growing mor' timber annually than the localities surrounding 

 them require. In parts of the west having but limited supplies of tim- 

 ber and well developed l()cal mining and other industries, like much of 

 Colorado, the entire product of the national forests is required for local 

 use and no timber is available for the operator who manufactures for 

 the general markets of the country. In the vast timber belts of the 

 Pacific coast and the northwest, however, local needs take but a small 

 fraction of the yield. The local markets for the billions of feet pro- 

 duced annually on these public forests by growth are the main consuming 

 regions of the United States : and it is the aggressive policy of the Forest 

 Service to find buyers for Ibis annual crop who will sell their product in 

 the competitive markets of the country. 



Small loggers and millmen are sought by the Forest Service to cut 

 government stumpage wherever they are able and equipped to do the 

 work. Accessible bodies of timber which can be logged practicably under 

 the local conditions of the industry In amount of 5.000.000 or 10.000.000 

 feet or h^ss are reserved for operations of this size. Where the timber 

 Is near a railroad or drivable river and the purchaser has a going manu- 

 factiu'ing plant relatively smaU amounts need be purchased at one time. It 

 Ss tbe poliey (»f the government, wherever practicable, to encourage several 

 small opi-rations rather than a single large one. In the less accessible 

 <listricts. however, much of the national forest stumpage can not he 

 utilized without extensive investments for mills, railroads and other im- 

 lirovements. 



Aside from the amount ot stumpage contracted and the period specified 

 for its removal the most important business requirements of the Forest 

 Service relate to prices, terms of payment, prevention of speculation and 

 monopoly, an availability of railroads for other purposes from the govern- 

 ment. The law requires national forest timber to be sold at not less 

 than its appraised market value. This is based upon a close estimate of 

 tbe cost of logging and manufacture and tbe market price of the product, 

 made by experienced lumbermen. Ciur stumpage prices represent what, to 

 the best of our knowledge, is left after deducting from the current market 

 price of lumber the producing cost, investment depreciation, and a fair 

 return to the operator on the capital required in the enterprise. In all 

 but the smaller sales the appraised stumpage rates are advertised for 

 periods of from one to six months and every effort made to secure com- 

 petitive I)ids. In the larger transactions printed i-eports and maps giving 

 the detailed terms of sale, tbe location and character of the timber, the 

 estimated costs of logging and manufacture, and such market data bear- 

 ing upon its utilization as we are able to obtain are prepared and dis- 

 tributed. 



The stumpage rates paid for timber purchased under long-term contracts 

 are readjusted by the chief of the Forest Service every three or five years. 

 An equitable basis for readjustment, which will secure to the United 

 States such greater returns for its timber as may be justified liy normal 

 and reasonal)ly stable increases in the value of the products manufac- 

 tured from it and at the same time give the operator a sufficiently definite- 

 basis on which to organize and finance his business, has been tbe knot- 

 tiest problem encountered in the development of the timl>er sale policy 

 on the national forests. The method which has been used in our larger 

 sales is, I believe, somewhat unique in transactions involving the transfer 

 of stumpage. It is based upon an agreed stumpage price and an agreed 

 lumber price at the beginning of the sale. The stumpage price may be 

 advanced only in the event of increases 'in the price of lumber obtaining 

 for periods of two years. An agreed percentage of such increases, as 

 compared with the base price at the outset, may be added by the gov- 

 ernment to the stumpage rates, period by period, at the intervals when 

 n-adjustments are made. It is not probable that all the present details 

 of this method are in final form, but the principle apparently furnishes a 

 working b.isis on which operators are willing to purchase national forest 

 timber and make large investments for its exploitation. And it has made 

 possible the adoption of a policy of long-term sales covering large bodies 

 of stumpage without departing from what we believe to be a fundamental 

 reiiuireraeut. viz., securing for the people of the United States the specula- 

 tive increase or unearned increment in the value of this public property. 



I'ayments on the purchase price under the national forest ctmtracts are 

 requiri'd only in small Insiallments. covering not more than the normal 

 cut of one or two months, in advance of the actual cutting of the stump- 

 ago. This system, relieving tlie operator from large investments in stump- 

 age and '-arrying charges for interest, taxes and protection, compensates 

 in part for the loss of tbe speculative value of the timber. 



Speculation in national forest stumpage is prevented by the periodic 

 adjustments of stumpage prices. Furthermore, sales are restricted to 

 actual operators, excluding buyers who desire to hold stumpage for higher 

 future values. This is enforced by a time limit which is sufficient only 

 for continuous operation, and by the further requirement that specified 

 minimum amounts must be manufactured during each year or other 

 slated p:'riod of the contract. Other checks against spe<-ulation are 

 alTorded by investigation of the financial responsibility of purchasers be- 

 fore contracts are approved and by the act of Congress which forbids the 

 assignment of contracts. 



One of the distinct results sought by the Forest Service through its 

 policy of contracting large bodies of timber in inaccessible locations is the 

 opening up of the national forests by the construction of new railroads. 

 An essential feature of this policj* is that the railroad built by one 

 (tperator must be available to handle the logs or lumber of the next 

 buyer. Ilem-e tlie requirement in sale contracts that all main railroads 

 he made common carriers or that they shall be availabU* to transport 

 timber bought by other purchasers at rates in which the government 

 shall have a reasonable voice. Other preventives of monopoly exist in the 

 prohibition upon the assignment of contracts, in the advertisement and 

 |)ubli<'ity given to the sale before the timber is awarded, and in the exer- 

 cise of discri'tion in the acceptance of bids. Awards will not be made 

 which would result in the control of large quantities of stumpage by 

 affiliated operators. Sales to lumber companies owning large quantities 

 of timber on their own lands are decline*!, if there are other applicants, 

 and companies cutting under government sales are refused further pur- 

 <-hases during the life of their contracts if there is any other demand for 

 I lie stumpage involved. 



It would have been impo.ssible for the Forest Service to sell largo tracts 

 of public timber to single operators without incurring the ready criticism 

 of favoring monopoly. As a matter of fact, the largest sale yet made or 

 contemplated includes less than two-tenths of one per cent of the raer 

 chantable stumpage on tlu? national forests; and almost without excep- 

 tion the construction of railroads or other transportation facilities In con- 

 nection with large sales has made additional timber which formerly was 

 out of reach available to any competitor. 



The technical requirements of national forest sale contracts are lim- 

 ited to half a dozen clauses imposing simple restrictions upon cutting. 

 These are designed to leave the ground In the best practicable condition 

 for restocking and future production They provide t'or the reservalion of 



