CONTINUOUS FOREST PRODUCTION 19 



lower figure of $300,000,000 in this discussion when speaking of invest- 

 ment only useful to preserve highly competitive conditions. 



3. Destructive competition. — As a result of the competitive system 

 under which capital is continually rushing into those industries which 

 seem to promise large and quick returns, in undue amounts, while those 

 that give small or distant returns (such as forest production) are 

 neglected, the results in over-investment we have just discussed have 

 been secured for the limiber industry. The stumpage overload has 

 come within perhaps the past 10 years to aggravate this condition, 

 and its influence in the future, if unchecked, bids fair to be far more 

 disastrous than any influence to date. This follows because the higher 

 the value of the timber becomes, the higher the taxes and other charges 

 mount, so that cutting becomes a more and more urgent necessity, and 

 the competition keener and keener. Whatever the benefits, if any, to 

 be derived from competition in other industries, it is clear enough that 

 here it only results in early destruction of an essential resource. 



These figures of over-investment can be reduced to figures of annual 

 cost with a fair degree of accuracy. Three elements are involved, 

 interest, maintenance and depreciation. Where this capital was 

 borrowed by the lumberman he paid 63^2 per cent or more, but asstmiing 

 it is worth only 5 per cent interest, the annual interest charge on this 

 investment for purposes of competition only is $15,000,000. Mainte- 

 nance of the investment (all of which, one must remember, has been 

 embodied in mills, camps and equipment) cannot be so definitely esti- 

 mated, but can certainly not be under another 5 per cent, or $15,000,000 

 for the whole excess investment. In spite of any amount spent on main- 

 tenance the item of depreciation still remains. In the liimber industry 

 there is so much temporary construction, and machinery depreciates so 

 rapidly, that the total depreciation rate is high. Ten per cent may 

 be considered a very conservative average figure. If so, the annual 

 charge on $300,000,000 must be $30,000,000. The total annual cost 

 of the three is $60,000,000. This means a charge of over $1.50 for 

 each 1,000 feet of timber cut annually in the United States. This 

 figure is, of course, not accurate, but it appears extremely conservative. 

 I shall refer to it hereafter in this discussion as the "cost of competition." 



If an individual needing two mills should build three, two to operate 

 and one to be idle, he would be branded as unwise, and his bank credit 

 perhaps injured, all of which shows that individually we should not 

 under any circumstances knowingly commit practices which collec- 

 tively we have not learned to avoid. In fact, a large majority of the 



