198 FOREST VALUATION 



price level when the demand for the specific goods increases 

 relatively faster than the supply. Both demand and supply may 

 be increasing, or both decreasing, or demand may increase while 

 supply diminishes. In any case, the effect on prices is gauged 

 by the difference rather than by the direction of these forces. 



When population is increasing, while the area occupied by 

 timber tends to decrease, the maintenance of the same per capita 

 rate of consumption for timber causes demand to progressively 

 outrun supply; and this factor has resulted in the past two 

 decades in an increase in lumber prices approximately twice 

 as rapid as the movement of prices in general. This increase 

 has had a pronounced effect on stumpage values. Instead of 

 increasing by the same per cent as the price of lumber, the value 

 of stumpage tends to absorb the entire surplus not taken by 

 increased costs ( 170). The profits of the logger and millman 

 tend to maintain a fairly constant ratio to cost of operation, 

 except where, by retarding the advance in stumpage values, 

 they are able to appropriate a larger share of this increase. 

 In the above illustration, the price of lumber can be assumed to 

 have increased from $15 to $25, or 66| per cent, while general 

 prices and the cost of logging advance but 33^ per cent. If a 

 profit of 25 per cent on operating costs is still considered satis- 

 factory, these costs advance only to $16, and the margin of value 

 for stumpage becomes $9, an increase of 200 per cent. 



In regions where timber was formerly barely accessible ( 1 74) 

 this increase in value sometimes amounts to several hundred 

 per cent on cost. Stumpage in general doubled and trebled 

 in value in most regions of large supplies in the decade of 1898- 

 1908. 



189. Effects of Substitutes on Wood Prices. Increasing 

 prices for lumber and other wood products act in two ways 

 to diminish consumption of wood. Less wood is used merely 

 because it costs more and the enterprises depending on wood 

 are curtailed; and substitutes appear, made possible by this 

 same increase in price. 



The extent to which substitutes will succeed in permanently 

 displacing wood as a raw material depends upon three factors: 



