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•^ Timber Charges aud Lumber Markets-^ 



BY C. H. WORCESTER. 



Author's Note 



This caption to an article outlines a big subject, wbicb covers the operations of some 200, (lOO timber owners 

 and about •'iO.OOO sawmill operations scattered all over the United States. I do not pretend to be able, nor 

 do I wish to attempt to cover in the following remarks anything except the conditions pi'rtaining to our own 

 section of the country, principally the northern peninsula of Michigan, and I wish it understood that in the 

 following remarks I do not attempt to detail the conditions existing in any other part of the country. 



The value of stumpage has in the past been established by the 

 price at which lumber could be sold, the value of the stumpage being 

 arrived at by deducting from the market value of the lumber a profit 

 and operating cost — the balance representing the value of the stump- 

 age, and inversely, in some cases, the market price of lumber has 

 been sustained and upheld by the fact that the price of stumpage 

 seldom has shown any retrograde movement. The movement has al- 

 ways been upward, but I think we will all agree that during the 

 past five years over-production of lumber and tmder-consumption of 

 the same have been running a race in opposite directions, and the 

 law of supply and demand, without any relation to the cost of jiro- 

 duction or stumpage j)riees, has regulated the 

 price, and so far as the value of softwood 

 stumpage of this country is concerned, the 

 market has been such on the finished product 

 since 1907 that the majority of the softwood 

 stumpage in this country cannot be sold to- 

 day at any more than it sold for in 1907 — 

 seven years ago, and certainly the state of 

 the lumber market at present does not warrant 

 charging against the manufacturing operation 

 any higher rate of stumpage. 



If this be true, what becomes of the old 

 saying that well-bought stumpage will carrj' 

 taxes and interest and show ii profit when cut. 

 It will perhaps be argued in support of our 

 partially discredited saying that because hem- 

 lock was worth $2.00 to .$2.50 per M in 1906 

 and 1907 and the present selling price of hem- 

 lock lumber is such that it does not warrant 

 any higher ])riee for stumpage today, this 

 situation is the result of disturbed Ijusiness con- 

 ditions unprecedented in the history of our coun- 

 try, and that the lumberman is to blame for this 

 condition because he continued to manufacture 

 more lumber than the country wanted and in the 



resultant sales competition the price of lumber has been artificially 

 depressed. Other optimistic supporters of the situation will say ' ' this 

 depression is only temporary; it will soon be righted." We all 

 hope fervently tliat our optimistic friends are right, but at the same 

 time, it is the part of wisdom to face the facts of the situation and 

 read the sign posts along the way. 



Factous M.\KrNG For Over-Production 



I think we will all agree that, commencing with 1907 and continu- 

 ing with intermittent sunsliine and gloom, we have had up and down 

 disturbed conditions in the lumber business throughout the country. 

 Prices have several times gone below the cost of production; part 

 of the time they have been on a profitable level, but during the ma- 

 jority of this period over-production has been jironounced and con- 

 tinued, and average prices for the period 1907 to the close of 1914 

 have been such that, speaking generally and averaging the situa- 

 tion, there has been little if any advance in the value of soft wood 

 stumpage in our section of the country, and from rei)orts which I 

 receive from other sections and offers which arc constantly made, I 

 believe that practically the same situation exists throughout the United 

 States. 



Over-production during periods when business conditions were such 

 that the market would not readily absorb all the lumber manufactured, 

 is undoubtedly the jirincipal cause of the unsatisfactory condition 



C. H. WORCESTER, CHIC.\GO, ILL, 



of the business and if there were no other contributing causes the 

 lumbermen might well be blamed for not only causing his own losses 

 but also those of timberland owners who have no other connection 

 with the business aud are entirely blameless. 



One of these contributors to over-production is tlie growing coun- 

 try wide movement to substitute for lumber steel and iron, concrete, 

 clay products, paper roofing, paper boxes, etc. These substitutes for 

 wood are being aggressively pushed by organized campaign methods 

 and have made serious inroads upon the normal consumption of lum- 

 ber and it is now estimated that substitution has reached such pro- 

 ]iortions that it will prevent any increase in the total consumption 

 of lumber in this country thereby taking away 

 from the lumbermen and timberland owners the 

 expected benefits from a natural increase in con- 

 sumption of lumber proportionate to the natural 

 increase in the volume of national business of all 

 kinds. 



Our conservationist friends in the various as- 

 sociations organized for that purpose in this 

 country and the United States Forest Service 

 ] joint out that the lumbermen are at fault and 

 are making their own troubles, manufacturing 

 more lumber than the country needs and not only 

 ruining one of the great businesses of the coun- 

 try, but also wasting imjiortant and necessary 

 natural resources of the country by wasteful 

 methods of cutting and artificially depressing the 

 value of standing timber. 



To this indictment the lumbermen must plead 

 guilty, but at the same time they also enter in 

 justification the plea of self defense. The fact 

 is that the lumbermen of this country are being 

 driven. They are not voluntarily running a reek- 

 less, thoughtless race. Most of them have no 

 choice. It is a case of ' ' Needs must when the 

 devil drives" and in this case there are several 

 devils, the most prominent among them being our old friends — in- 

 terest and taxes — a team always on the job, working days, nights 

 and Sundays, and driving the lumberman to do the same thing. 

 Carrying charges on standing timber are increasing, due to the com- 

 pounding of interest, the large increase in taxes, los.ses by fire and 

 wind storms and increasing cost of care and surveillance. Happily, 

 interest rates have not increased, but the total annual charges are 

 such that large number of lumber manufacturers are forced by 

 financial need to cut more lumber when the price is low than when 

 it is high, as they must have certain sums of money each year with 

 which to pay accrued debts and interest and taxes. When the price 

 is low they must cut more lumber, as it requires more feet at the 

 lower ])rice to i>rovide the funds. There are a large number of lum- 

 bermen in exactly this predicament and also a large number who are 

 not in this condition. Those who are in debt feel that they have no 

 choice; regardless of price, they must continue to run their mills to 

 their limit of production. In times of depression these concerns, 

 through necessity, demoralize prices by their eagerness borne of 

 necessity, to sell. As before stated, there are many lumbermen who 

 are not heavily in debt and not forced to run their mills when 

 prices are such that there is no profit, but here again the twin devils, 

 interest and taxes, are driving days, nights and Simdays, and the 

 interest money, which in most cases represents income upon which to 



