-48- 



economic character.xstj.es of the lumber industries. 



Lunger prices have lagged behr.nd ether pr?ces because there is a 

 strong pressure to increase lumber production even in the face of a 

 declining and fluctuating 



The causes of the pressure to increase lumber production are: (1) 

 Over-capitalization of tinbor stands en the basis of the high prices 

 prevailing before 1907, and the accumulation of a vast tinker surplus 

 in the northwest by private owners, has resulted in a heavy burden of 

 interest charges and taxes whloh accrue regardless of the rate of lumber 

 prwcVuoticn, and which make It desirable to keep on cawing lumber even 

 v/hon tho rl emend is siy.cl^o Moreover , the present slow movement of 

 inver.3 treats ia timber lands "nan forced timber owners to cut their lumber 

 as the only means of liquidating their investment. Thus to reduce the 

 load of fixed charges, and to withdraw excessive capital investments 

 in tin-.bcr lands, timber owrers have been content to sell lumber on a 

 falling market at a price tliab li-1 not yield them a profit. (2) Be- 

 cause of the o/er-cap. ; taliz?,tion of lumber lands and bc.d accounting 

 methods, lumber inOuotries L-.vre had difficulty in securing credit at 

 the "basics and this has inwroo^cfl the pressure upon them to dump lumber 

 on a falling market. K././rhor ? Merest rates deirsncied by the banks 

 iron tlw lunber j.ndustvy ha/e al.~o limited the amount of stock they 

 .coujd na.rvy in dull times. (3) 1'h.e perif.bable nature of lumber and 

 itiJ deterioration v/hen stacked i-i yards prevent lumber from being 

 held over long periods of depression. (4) The highly competitive 

 r.-';uve of the. lur.ber industry,, due to the wide distribution of timber 

 regions, the snail capital necessary to start a saw mill resulting in 

 tli3 gro\v!;h of ever 40,000 mills, and the extreme individualism pre- 

 vailing among lumbermen, have prevented the development of influences 

 that might stabilize prices of lumber. In addition to the keen com- 

 petition that prevails beiween different mills in the same region 

 cutting the same species of wood, there ic a continual struggle between 

 the same species cf woorl cv.t :'.n different regj.ons and between different 

 species of \vocd used for the eam-j purpose. Thus Dov.gj.as Fir from the 

 Pacific coast competes in the markets of the middle webt v/ith Southern 

 Yellow Pine from the gulf states, north. Carolina Pine,, Eastern Hemlock, 

 Westsrn \vhite Pine, and Western Yellow Pine. iThe possibility of sub- 

 sti.tuiir.g ore npuciec for another :.s ccnr-itantly enlarging as new timber 

 resources are tapped, methods for handling new timber resources are 

 developed, anrl tastes fcr 11317 \vods are built up by advertising. This 

 free competition between persons of all c egrees of financial responsibil- 

 ity and accounting accuracy,, fce-cwsen old regions striving to hold their 

 supremacy ageinai- r.e\v regions seeing t,o overcome the disadvr.n-';age of 

 dietarcc by lov/ mj'i.l prices, bew/cor. new species striving to raske inroads 

 upon old species fortified by custon and tradition, hac swept aside all 

 tender sie 3 to reotrJct Itiubsr production or to maintain a price. The 

 market has repeatedly broken under the attempts of small mills with 

 s?ender financial backing to realj^e on their output et almost any price, 

 or the attempts of large mills to liquidate excessive timber investments, 



(WIB359-48) 



