HARDWOOD RECORD 



41 



Ji Warning to the Lumber Industry 



It is anticipated that the Panama canal 

 will be opened for business in a little more 

 than four years from now, and it is' not 

 too soon to consider what its effect will be 

 upon the hiiiiber business of the United 

 States. 



I do not wish to be considered a mere 

 alarmist, but I feel that a serious situation 

 will be created by this new avenue of trade 

 jind that serious damage to the lumber 

 business threatens which can be avoided 

 only by early and conservative action. The 

 first essential is to arouse people to dangers 

 that threaten them, so that they may take 

 steps to avert those dangers. 



The canal is looked forward to by Inc 

 great mass of lumber producers as likely 

 to bo of enormous benefit to them. Hero 1 

 refer particularly to producers of what are 

 Known as the ordinary building timbers — 

 in the eastern part of the country chiefly 

 yellow pine of its different species, spruce, 

 hemlock and some of the hardwoods; on 

 the Pacific coast, fir, spruce, redwood, etc. 

 Most of the hardwoods are in a class by 

 themselves and the remaining supply of 

 white pine of the better grades is so lim- 

 ited that it is not likely to be materially 

 affected for good or ill. 



Yellow pine lumbermen are expecting to 

 find in the Panama canal an outlet for 

 their commodity to the west coasts of Mex- 

 ico, Central America and South America, 

 to Hawaii and the Orient. West coast lum- 

 ber producers expect to find an enlarged 

 market for their product in the eastern 

 part of the United States, in Cuba, to some 

 slight extent in the Atlantic ports of South 

 America, and in Europe. Based on these 

 anticipations, lumbermen of both sections 

 look for a new era of prosperity in the lum- 

 ber business following the opening of the 

 canal. 



In my opinion, unless effective steps are 

 taken to ward ofE the danger, the opening 

 of the canal will be a calamity to the lum 

 ber business of the United States from 

 which it will take years to recover. 



The present distribution of the lumber 

 product of the United States is based on 

 the established transportation costs on 

 western lumber and eastern lumber re- 

 spectively. In both sections there is an 

 overproduction or an overcapacity. There 

 is plenty of lumber manufactured in the 

 eastern part of the country for the needs 

 of the eastern consuming districts. There 

 is more than sufficient lumber manufactured 

 on the Pacific coast for the needs of that 

 section, and of the territory which can be 

 reached by rail. At a freight cost of 40 

 to 50 cents a hundred pounds on Pacific 

 coast lumber and of 25 to 37 cents a hun- 

 dred pounds on yellow pine lumber the two 

 grand sawmill divisions of the country 

 meet in competition. The division of ter- 

 ritory is not sharply defined, but approxi- 



mately so, after many years of experiment 

 i'ud development. 



On January 1, 1915, or thereabouts, if 

 confident promises are realized, a 35 to 50 

 tent tiiausportation cost on west coast woods 

 will cover practically the entire country; 

 or, in other words, 75 to 85 cent rates will 

 be reduced to 40 to 50 cents; and the pro- 

 hibitive freight costs on the shipment of 

 eastern lumber to the Pacific coast will be 

 reduced to like proportions. There will 

 Ihen be a new scramble for territory, in- 

 volving a readjustment of the fundamental 

 ])riuciples governing lumber merchandising. 

 Yellow pine producers will try to take 

 ;;way from the west coast producers, so far 

 as the woods are competitive in use, their 

 markets on the Pacific, which are responsi- 

 ble for even what measure of prosperity the 

 west coast producers may have. The latter 

 will try to take away from the eastern 

 mills some of their demand on the Atlantic, 

 both domestic and foreign. Therefore, 

 there will be a grabbing for trade territory 

 which can only result disastrously as to 

 prices, and affect not only producers but 

 wholesalers and retailerfi as well, for there 

 will be no dependable basis of values. 



But the threat to prices is not the only 

 menace. There will be a tendencj' to over- 

 production, when, as a matter of fact, the 

 demand will not increase. Lumber is now 

 selling so near to cost at the mills in all 

 parts of the country that a reduction is 

 impossible without serious financial disaster. 

 An increase of production with no increase 

 in the demand, together with the spirit of 

 adventure which is prompted by the fal- 

 lacious hopes of increased prosperity, will 

 make the struggle for trade and territory 

 acute. 



Some may say that the eastern part of 

 I lie country needs the west coast woods. 

 It does not yet need them any more than 

 the west coast needs the eastern product. 

 So long as lumber is in ample supply and 

 can with difficulty be moved at prices which 

 are hardly above the cost of production 

 there is no foundation for the claim that 

 an additional supply is needed. Yellow pine 

 may be at the zenith of production, or may 

 even have passed it, but there will be no 

 appreciable decrease for five years to come, 

 and the canal is to be opened, they say, in 

 four years and three months. Ten years 

 from now the yellow pine output may be 

 so lessened that West coast woods will be 

 wanted; but such is not the case today, nor 

 will it be the case when the canal is opened. 

 So far as the well-being of the lumber 

 industry is concerned I fervently wish that 

 the canal were not to be opened until 1920 

 at the earliest; but opened it will be, re- 

 gardless of the wishes and welfare of any 

 particular department of commerce. If 

 lumbermen are wise, therefore, they will 



face the situation as it is to be and take 

 measures accordingly. 



Some say that there is not a sufficient 

 supply of vessels flying the American flag 

 to take care of the business from coast to 

 coast that will be fostered by the opening 

 of the canal, but I believe it is not safe to 

 trust to anj' such limiting influence on trade. 

 There will be vessels enough when the time 

 comes to do the business. What then shall 

 the lumbermen do? Their first duty is to 

 think, to study the situation in its broader 

 aspect, to agitate, to organize. They must 

 organize for self -protection, to guard the 

 security of their investments, to save them- 

 selves from bankruptcy. But it is objected 

 that the law will not allow them to organ- 

 ize. Then the law must be changed, and 

 if that be impossible there must be such a 

 campaign of education carried on among all 

 the lumber producers of the United States 

 that no man of them all will dare to over- 

 step the sharp borders of wise business 

 conservatism indicated by a study of the 

 facts. 



We should remember that the per capita 

 consumption of lumber in the United States 

 is probably decreasing. Consumption year 

 after year is equal to production. In 1899 

 the lumber product was 35,000,000,000 feet. 

 It rose to 40,000,000,000 feet in 1907, due 

 lather, so far as the figures are concerned, 

 to a more complete census than to actual 

 increase in cut; but it dropped in 1908 to 

 33,000,000,000 feet; and in 1909, though the 

 record is not yet complete, it is improbable 

 that the cut equaled that of 1908. Yet dur- 

 ing this time the population of the coun- 

 try has increased from 84,000,000 to about 

 90,000,000. If it be a fact, as seems prob- 

 able, that the per capita consumption is now 

 decreasing, it will continue to decrease and 

 probably in an accelerated ratio. Yet the 

 possibilities of lumber production, estimated 

 on the total available capacity, are increas- 

 ing and will not show any important de- 

 crease for some years to come. It ought to 

 be a crime in lumber trade ethics for any 

 more sawmills to be built during the next 

 five years. 



I offer no solution of the problem — no cer- 

 tain protection against the dangers that 

 threaten the lumber industry. At this time 

 I wish as strongly as possible to call the 

 attention of the lumber industry to the 

 dangers involved in the crucial period ap- 

 proaching, when the opening of the Panama 

 canal shall upset all present trade adjust- 

 ments, so far as the lumber business is 

 concerned. I do this in the hope that the 

 wisdom of this great industry may be able 

 to devise some means for mutual protection. 

 Other threats are foreshadowed in con- 

 sidering the effect of the canal on the lum- 

 ber business. So far as foreign trade in 

 lumber is concerned, our shipping laws do 

 not affect it; but in our domestic trade the 



