A NATIONAL PLAN FOB AMERICAN FORESTRY 107 



without exception, the original estimates of costs are far below the 

 actual, and the final outcome is that bonds have to be issued to com- 

 plete public projects that have been undertaken. Communities 

 under the spell of optimism and local pride cheerfully vote bonds that 

 their governing bodies say are needed. When the peak of the boom 

 is passed, property values decline, and the burden of local taxation 

 begins to bear heavily on the primary raw material industry and local 

 citizens alike. 



At this time taxpayer's leagues begin to form and endeavors are 

 made to reduce public expenditures. Usually this is difficult, because 

 of the unyielding nature of the fixed charges for maintenance of 

 buildings and roads and for interest and amortization of bonds. 

 Failing in this, county authorities plead for National and State sub- 

 sidies. Ordinarily these are obtained, on the plea that collapse of 

 local government's credit and default on bonds must be prevented. 



This boom process of too rapid exploitation reacts in a broadly 

 similar way on the individual lumber business. Each new operation 

 that starts contributes toward overproduction. Usually two processes 

 then come into operation. First, the major producers in the region 

 attempt to work out some plan of price stabilization or production 

 control. These attempts have invariably failed. Then the indi- 

 vidual concern must begin to analyze production costs and attempt 

 economies which will reduce the unit cost of lumber. These econo- 

 mies can be effected principally through increasing production so as 

 to spread the fixed costs over a larger output. Increase in production 

 frequently means increases in plant and equipment. Thus earnings 

 are reinvested and become frozen assets. As operation after opera- 

 tion follows this formula, overproduction becomes progressively more 

 serious, prices are further depressed, and net return is reduced. 

 Savings in production costs are more than wiped out by decreases in 

 selling price. 



Somewhere in this phase of the cycle the local government begins 

 the practice of assessing a fixed amount of taxes against an annually 

 decreasing volume of stumpage. This still further accentuates the 

 urge for quick liquidation and reduces the chance for the individual 

 operator to come out even. More commonly than not, the latter 

 phases of the cycle are a scramble to cut as rapidly as possible and to 

 sell at any price. In the wake of depressed markets, credit becomes 

 restricted and the need for cash forces still further lowering of prices. 

 With the end of an operation it is often found that earnings have been 

 largely reinvested and that the total capital investment has not been 

 retired. 



COMMUNITY DECADENCE FOLLOWS FOREST DESTRUCTION 



Decline of lumbering is soon followed by decadence of agriculture 

 in the region, and this in turn increases the difficulties for those who 

 endeavor to hang on. The ultimate result is tax delinquency, land 

 abandonment, or finally virtual depopulation of the region, with its 

 train of economic and social wastage. The northern portion of the 

 lower peninsula of Michigan may be taken as an illustration. For 

 many years, while lumbering was flourishing, population steadily 

 increased, homes were built, villages and cities grew up, a network of 

 railroads spread over the region, and thousands of settlers established 

 themselves on farms. Little thought was given to perpetuation of 



