Increased cost ox production that Trill cone with increased 

 prices of commodities and materials used in manufacturing 

 lumber and with the longer haul. lTo\7, if a bloc:, of more or 

 less inaccessible tinker is applied for and by tlio applica- 

 tion of the stiEnpace formula it is found, with the present 

 lunber prices, that the operation is not sufficiently at- 

 tractive for the "buyer to ta.re up, "but it is also found 

 that it is very desirable to secure tho railroad development 

 that would come through the narlioting of this timber, an 

 arbitrary figure may "be acLcLecl to the mill run lumber value 

 within which all rise will go to the operator at the read- 

 justment date. ]?or instance, we have a "block of timber that 

 wall say includes a 2.50 stunpe.ge price *- the Secretary's 

 minimum. This lumber is now worth 18,00. This will give 

 the operator a profit in sight of 80 per cent on tho invest- 

 ment represented in each thousand foet of timber - But the 

 operation, we will say, involves the "building of 70 miles of 

 main line railroad which will render accessible half a "bil- 

 lion feet of Government timber in addition to that included 

 in this sale. The operator in view of this heavy investment 

 and the rislr involved does not wish to take up the proposi- 

 tion unless lie can see 30 per cent profit in sight. How, if 

 we give him 30 per cent profit it means that we must reduce 

 the stumpage price to 1.35. Instead of doing this we add 



a differential of $1.50 to the lumber -price. 7e v;ill assume 



220 



