THE FOREST SERVICE REVEALS 



LUMBER INDUSTRY CONDITIONS 



THAT unstable and partly speculative forest owner- 

 ship in the West and South is the cause of frequent 

 over-cutting of the market and waste of forest re- 

 sources is announced by the Forest Service in a report 

 just off the government press. Too large stocks of timber 

 acquired from the public domain and too much timber 

 speculation mixed with the manufacture of lumber, says 

 the Service, underlie the present instability of the industry. 



All this, the Service points out, concerns the lumber 

 user. Many states are paying dearly for lumber because 

 their own timber is largely used up and outside supplies 

 can be obtained only at high costs for transportation. 

 With little being done to grow new forests on cutover lands, 

 a more widespread shortage of forest products is threat- 

 ened in the future. 



The Forest Service advocates various forms of open- 

 price cooperation among lumber manufacturers to make 

 the industry more efficient and check wasteful over-pro- 

 duction. But it is strongly against changes in the present 

 competitive character of the business through combina- 

 tions to control output or regulate prices, even though 

 advocated in the name of conservation. 



The report contains the boiled-down conclusions of a 

 study of timber ownership and the lumber business, under- 

 taken by the Forest Service to find out how this business 

 as conducted to-day affects forest conservation and the in- 

 terests of the millions of users of wood in the United States, 

 and to see whether the public policies for conserving the 

 nation's forest wealth go far enough. It is also sought to 

 help the industry solve the serious problems which con- 

 front it. Added weight is given to the report by the con- 

 currence in its publication of the Federal Trade Commis- 

 sion, which cooperated with the Forest Service in the In- 

 vestigation. The Commission, however, reserves its 

 specific conclusions or remedies for a report of its own to 

 be published later. 



rIE Forest Service finds that the main problem of 

 the lumber industry has grown out of the hundreds 

 of billions of feet of timber acquired cheaply a few 

 years ago from the public domain. Lumbermen in the 

 West are carrying vast quantities of timberland beyond all 

 possible needs of their present sawmills and logging camps. 

 Widespread speculation during a few years of sudden devel- 

 opment carried timber values very high, and many western 

 stumpage holdings have been over-capitalized. 



The business of making lumber, says the report, has 

 thus been loaded down with investments in timberland. 

 The productive branch of the industry has been inter- 

 locked too largely with speculations in its raw material; 

 and instead of standing on its own feet as a manufacturing 

 business, has tended to be the tail of the dog, made fre- 

 quently to serve the exigencies of timber speculation. 

 According to the report, pressure from an overload of 



timber is the first cause of the general instability of the 

 industry. For one thing, it has led to building mills be- 

 yond the demand for their products. TAt^least a third of 

 the saws are now idle. 



On the other hand, the Forest Service reports that 

 social and economic changes in the United States are re- 

 ducing its proportionate use of lumber. Uses taken over 

 by other structural materials within the last ten years 

 are estimated at one-fifth of the present yearly cut of 

 lumber; and in the same period the per capita consump- 

 tion of lumber seems to have passed its peak and dropped 

 nearly one-fourth. 







CAUGHT with its burden of timberland on the one 

 hand and these changes in the country's use of wood 

 on the other, the lumber industry, the report points 

 out, has been between an upper and nether millstone. 

 The combined result is an ill-adjustment of lumber pro- 

 duction to market requirements, with frequent, almost 

 chronic overproduction. Ups and downs have been the 

 rule with most manufacturers in the West and South. 

 Occasional years of high earnings have been followed by 

 usually longer periods of small profits or loss. The latter 

 reached their climax in 1914 and 1915, although 1916 

 brought somewhat better conditions. 



In the regions studied by the Forest Service, it found 

 that lumber production, with local exceptions, is competi- 

 tive, as a rule keenly so. Competition becomes still more 

 vigorous in its struggle between different regions in selling 

 lumber in the main consuming markets of the country. 



Lumber retailing was studied in all of the Middle 

 Western States only. In that region the Service found it 

 to be competitive for the most part, although its competi- 

 tion is less rigorous than in the case of lumber manufac- 

 turers. The restraints upon trade in lumber distribution, 

 however, in the Central States studied, are judged to be 

 local rather than general; and developments in recent 

 years have tended to increase competition. 



THE rising cost of lumber to consumers, which held 

 generally up to 1907, is attributed by the Forest 

 Service primarily to the exhaustion of the supplies 

 of timber nearest to the bulk of eastern consumers, and 

 the necessity of transporting lumber from greater and 

 greater distances. Railroad freights now take a fifth or 

 more of the consumers' price, retailers about the same 

 amount, and manufacturers, on the average, little more 

 than one-half. The high cost of lumber is thus due in 

 large part to local timber shortage, resulting from the 

 rapid using up of forests without provision for their re- 

 newal. Other causes, according to the Service, lie in the 

 greater demands for specialized service made upon the re- 

 tailer by the purchasing public, in higher iabor costs, 

 and in the decreasing purchasing power of money. Since 



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