A NATIONAL PLAN FOB AMERICAN FORESTRY 15 



IT IS RESPONSIBLE FOR SERIOUS ECONOMIC DIFFICULTIES IN THE 

 FOREST INDUSTRIES 



The economic difficulties of the forest industries have not been 

 studied in connection with Senate Resolution 175. The time has not 

 been available, and the Timber Conservation Board was created 

 primarily to cover this ground. No survey of the forest situation in 

 the United States can, however, be complete without reference to 

 them. The difficulties of the lumber industry, which is by far the 

 largest of the forest industries, are undoubtedly the most critical. 



The following brief and incomplete resume is based in part on state- 

 ments made by representatives of the industry to the Timber Con- 

 servation Board and so far made public. All of the statements indicate 

 that the overload of forest land and timber is the basic cause. 



The most critical example is probably in the west coast industry, 

 where the investment in nearly 350 billion feet of standing timber is 

 placed at slightly more than $500,000,000. Excessive land and timber 

 holdings in the west coast industry are in part responsible for excessive 

 capital in vestments in logging improvements and equipment, manu- 

 facturing plants, and possibly also working capital, which together 

 add about $335,000,000 to the investment for land and timber. 



The resulting fixed and largely inescapable capital charges on the 

 largest annual cut of west coast timber so far made, including interest 

 on indebtedness, taxes, fire protection, and insurance, total $2.983 per 

 M board feet. 



Excess manufacturing capacity is shown by West Coast Lumber 

 Association surveys. The installed normal operating capacity was 

 slightly in excess of 14 billion board feet annually. In 1928, 72 percent 

 of this capacity was utilized; in 1929, 73 percent; and in 1930, 54 per- 

 cent. Plant capacity for the entire country is undoubtedly far more 

 in excess of needs than that shown for the west coast industry. 



Overproduction, also cited as one of the most serious problems of 

 the lumber industry, grows in part out of an overload of stumpage 

 and forest land, the consequent financial pressure to liquidate, the 

 development of excessive plant capacity, and the burden of high and 

 largely fixed and inescapable capital costs. Manufacturers have 

 accordingly believed that they would lose less money by running 

 than by shutting down. Uneconomic manufacture, overproduction, 

 and demoralized prices have been the inevitable outcome. 



The overload of forest land and timber is also responsible in part 

 for wasteful utilization. A Forest Service survey in the Douglas fir 

 region indicates waste of over 6 miUion cords of sound wood resulting 

 from logging operations annually. It includes 1.7 billion board feet 

 of material suitable for conversion into lumber, or nearly one sixth 

 of the 1926 cut. 



The cause of such waste is overproduction, which leads to "skim- 

 ming the cream" of raw material. And overproduction goes back in 

 large part to an overload of forest land and stumpage. West coast 

 overproduction and the resulting low lumber prices have, for the tune 

 being, handicapped the efforts of owners who have desired to grow 

 timber on their own lands in all of the important forest regions of 

 the East which can be reached by water shipments of lumber at low 

 freight rates. 



