REVIEWS 631 



through the himber industry in the past, it is now time for it to leave 

 the stage and for the industry to be put on a conservative investment 

 basis throughout, under which the cost of capital should be reduced 

 to -i or 5 per cent in place of G to 7 per cent, the present interest rates. 



The conclusion that a mill cannot carry more than a twenty years' 

 cut of standing timber with 7 per cent capital may be correct, but it is 

 erroneous to conclude that it is impossible to so organize forest indus- 

 try as to put it on a conservative investment basis. That, in effect, is 

 the real meaning of the recommendations of the report — that the 

 ownership of forest resources must be put on a stable basis. In dealing 

 with the question of carrying charges on timber, the report shows that 

 interest figured at 6 per cent is the heaviest item of cost. In the field 

 of returns in lumber manufacture it is shown that prices have been 

 fluctuating, and profits and losses equally so as a consequence. It then 

 deals with returns in lumber distribution, under which heading it is 

 stated that the charges for wholesaling lumber appear to range from 

 50 cents to 9(3 cents per thousand feet. When this function is per- 

 formed by the middleman it costs more than when done directly by the 

 manufacturer. The charge for retailing lumber in the Middle West 

 is from $4 to $6 per thousand feet, out of which the dealer makes a 

 profit of from 75 cents to $3. The returns to retailers are higher in 

 the country than in the city, and somewhat better all around than those 

 earned in manufacture. 



One of the most instructive sections of the report deals with the 

 cost of lumber to the consumer. In this section it is shown that a fifth 

 or more of the cost to lumber consumers consists of transportation 

 cost ; that the retailer takes about the same amount, while on the aver- 

 age manufacturers get a little more than half. The rise in lumber 

 prices has not been great different from those of most commodities, 

 and since 1907 lumber has fallen behind. One of the most important 

 causes of the rise in lumber prices in certain sections, which is scarcely 

 emphasized enough in the report, has been the exhaustion of local sup- 

 plies and the necessity of bringing supplies from distant forest regions. 

 Due to this cause, higher and higher freight charges have continually 

 to be added to the cost of lumber to the consumer. It may be said also 

 that where lumber comes from distant regions the intervention of the 

 middleman, with his charge of $4 to $6 per thousand, is almost always 

 necessary, whereas so long as supplies are local most lumber is sold 

 directly by the manufacturer to the consumer. The transportation and 



