NATION' AI, l-<)Ri;ST SriMPACI' .\PPKA1SA1,S S^i* 



Jt would result, in my opinion, in considerable losses to the Govern- 

 ment in many cases. It would tend toward overproduction and would 

 encourage operators who might be good loggers but poor lumbermen 

 to try the lumber game. 



If an operator knew that the stumpage prices would be adjusted at 

 the end of a sale on the actual history of the selling value of the prod- 

 uct of that particular sale, there would be no incentive to the operator 

 or particular reason why he should make any special effort to obtain 

 the highest prices possible for the lumber. The only feature that he 

 need be particularly interested in would be the estimated cost of oper- 

 ation or the output per hour per crew organization, as submitted by the 

 Forest Service. It would be up to the purchaser to maintain the esti- 

 mated output, but only this to protect his own interests. The quality 

 of the manufactured product, the sales department, distribution, etc.. 

 which are without question the most important features of the lumber- 

 ing game, need not seriously concern the operator if the readjustment 

 is to be made on his actual sales, because he would make the same 

 margin of profit if the mill-run value, through poor manufacture and 

 poor salesmanship, only averaged $15 per thousand as he would if. 

 through efficient management, the average was $20 per thousand. If 

 the readjustment was to be made at the end of the operation on the 

 average for a large region, the receipts for any particular sale would 

 not be necessary. Readjustments would not be so objectionable on this 

 basis, provided that the Government timber formed only a small per- 

 centage of the total cut. 



The history of the lumber business in the United States during the 

 past twenty years shows that if large sales of timber had been made on 

 the basis of average lumber values for the last five years previous to 

 the sale, the purchaser would be investing on a conservative basis. 



Long-term sales are much more safe for the purchaser than short- 

 term sales. If in the latter part of 1913 a chance requiring two years 

 for its removal had been sold, based on the average lumber values for 

 the preceding two years, it can be readily seen that the chances for loss 

 would have been much greater than in the sale of a chance sufficiently 

 large to require four years for its removal. 



In my opinion, our present form of contract is based upon sound, 

 logical principles, so far as it goes, but is probably too much one-sided 

 to be entirely equitable to both Government and purchaser in certain 

 cases. A readjustment clause, worked about as follows, would be en- 

 tirely satisfactory : 



