DISCUSSION OF THE PINCHOT REPORT 455 



and close utilization of all merchantable material, have been adopted 

 to a certain extent. The leaving of merchantable timber as a basis for 

 a future crop, and the planting of logged-off areas involve a cost which 

 the lumberman does not feel ihat he can undertake independently as a 

 business proposition. He realize?, the effect of the law of diminishing 

 returns. 



The lumberman's critics have generally had little knowledge or 

 understanding of the economic conditions he has had to face. Let us 

 suppose that his plant is a single band mill, with a capacity of 50,000 

 feet of lumber per shift, and is situated where he can operate 

 it year-long, or practically 300 days, two shifts each, either by logging 

 year-long or by having ample log storage, if his logging is a seasonal 

 occupation. He then has a capacity of 30,000,000 feet yearly, requir- 

 ing, let us say, 25,000,000 feet of logs. If he is to embark on a sus- 

 tained yield basis with a growth of 1 per cent per year of sawlog ma- 

 terial, he will need, accordmg to the Committee's reasoning, a tract of 

 some 2,500,000,000 feet of timber. Taxes on timberland in the Inland 

 Empire prior to the war averaged about 23 cents per thousand of 

 lumber cut for companies- having a 20-year supply on hand. With a 

 supply on hand good for a hundred years this would have amounted to 

 $1.15 per thousand. Fire protection by associations cost one-third 

 cent per thousand of .standing timber during the 10-year period prior to 

 our entering the war. For such an operator as we have assumed this 

 would have amounted to $8,333 per year, or about '28 cents per thou- 

 sand of lumber cut. This gives a total of $1.43 per thousand of lumber 

 cut and represents a cost am.-junting to nearly 4 per cent interest on the 

 invested capital, or a greater amount than the net returns from sales 

 of lumber. The investment necessary to produce 1,000 feet of lumber 

 annually, as shown in the "Lumber Industry Study," is as follows : 



Plant $15.'J0 



Lumber in yard, 78 per cent of cut at $9.50 7,90 



Bills and accounts receivable. 30 per cent of shipments 4.20 



Stumpage (average supply) 2.30 



Stumpage, 4 x as much 9.20 



39.50 $1.43 



3 2-3% 



At prices prevailing recently this cost could easily reach $3 per thou- 

 sand now. Would you consider it unwise as a business undertaking to 



