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which constitutes over half of the total cost of lumbering, and the 

 high capitalization of timber stands based on the prospect of a grow- 

 ing scarcity of lumber - were also largo factors in the abnormal 

 increase in lumber prices. The cost of maintaining larger stocks of 

 lumber on account of the increase number of species offered in the 

 market, and the expense of bigger sales organizations to push conpeting 

 species were minor causes of the u.pv/ard trend. 



The panic of 1907 had a most severe effect on lumber prices and 

 the recovery of lumber prices after the panic was exceedingly slow. In. 

 fact, the history of lumber prices since 1907 has exhibited some new 

 tendencies and has thrown some old tendencies into higher relief. 

 Because of its more direct bearing on the subject of lumber price fluc- 

 tuations during the war, this later period will be discussed in greater 

 detail. 



In general, lumber prices since 1907 have followed the main 

 tendencies shown in the average fluctuations of "all commodities". 

 This is to bo expected in view of the influence exerted by the general 

 state of business, conditions upon bxiilding activities and upon many 

 others industries which use lumber as a raw material. Thus, the 

 building industries, whreh alone use over three-fourths of the lumber 

 cut, expand when money can bo borrowed at low rates, when business 

 needs new factories, when favorable corps enable the farmer to make 

 repairs and build new barns. On the other hand, now building is post- 

 poned or reduced to the minimum when the money market is tight, when 

 business is dull and crops are bad. Similarly the rar.lroads make 

 more extensive purchases of lumber in periods of prosperity than in 

 periods of depression; more furniture is bought when ivagcs are high, 

 and the demand for boxes increases in periods when a large volume of 

 goods is being prodiiced. 



notwithstanding the close relationship which exists between lumber 

 and general commodity prices, it is a striking fact that since 1907, 

 depressions in lumber prices are more marked than depressions in the 

 prices of most other staples. The period of rising lumber prices 

 begins later, is of shorter duration and does not reach the height 

 attained by other prices. Moreover, lumber prices are affected 

 adversely by local and minor causes wh?ch do not register any effect 

 upon the price level of other commoc.ities. This unfavorable position 

 of lumber as contrasted with other staple commodities is generally 

 admitted* (1) Its explanation is to be found in the fundamental 



(1) 'wllson Cocpton: "The Organization of the Lumber Industry" Chicago 

 American lumberman 1916. 



William B. Greely: "Some Public and Economic Aspects of the Lumber 

 Industry". 1917 Department of Agriculture. Eeport No. 114. 



(WIB559-47) 



