TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



11 



Practically the only case in the vehicle and implement in- 

 dustries in which the scale of buying has not been reduced is 

 for automobile wheels and other automobile purposes. Here 

 demand absorbs all the supply, is constantly becoming greater, 

 and as yet there seems to be no limitation as to price. Makers 

 of automobile wheels say that they can still get the material 

 required if they make sufficient effort and pay the price, but it 

 Is necessary to go farther and farther away for it. A very 

 careful analysis of cost data by one concern shows that the 

 largest element in recent cost increases is securing special 

 stocks such as hickory from remote and inaccessible regions. 



The preceding discussion applies particularly to the large con- 

 cerns. Small factories without large organization and outside 

 connections for securing supplies are laboring under more 

 serious difficulties, through the interruption of normal chan- 

 nels of distribution. 



Material is secured practically green. Neither the lumber 

 nor the vehicle industry is adequately equipped with kilns or 

 the trained personnel to kiln-dry the refractory hardwoods in 

 the large sizes used. Excessive losses, in some cases running as 

 high as 40 per cent of the material and even higher, are re- 

 ported. This is merely another phase of the situation hardly 

 known outside of the industries most directly concerned, grow- 

 ing directly out of a shortage of supplies and aggravating the 

 shortage still more. 



The many inquiries received by the Forest Service from 

 vehicle and implement makers asking for information on pos- 

 sible substitution for the woods used in vehicle making is merely 

 another indication of the difficulties in getting supplies at the 

 present time, and of uncertainty as to the future. Because of 

 the trouble and uncertainty of securing hickory and the rapidly 

 increasing prices, vehicle manufacturers are substituting steel 

 where possible, even though this involves still higher prices. 



THE NEWSPAPERS. 



High prices and serious difficulties as to supplies are by no 

 means confined to lumber. The newsprint situation has been 

 very much in the foreground, particularly since the middle of 

 1919. Practically the only newspapers in the United States, 

 from the large metropolitan dailies to the small country news- 

 papers published weekly, which have not experienced serious 

 difficulties are those having long-term contracts or those for- 

 tunate enough to produce their own newsprint. 



Under prewar conditions newsprint paper was contracted 

 for on a yearly term basis at $2, a hundred pounds or less. 

 Contract prices during and since the war have risen to $3.50, $5, 

 $6, and at the present time even to $7, and it has been reported 

 that 75 per cent of the existing contracts provide for a price 

 readjustment at the end of every three or six months. Pre- 

 war prices included freight; present prices do not. Few news- 

 papers are now able to contract for their entire requirements. 

 The smaller newspapers entirely and the larger papers to a very 

 material extent must now depend upon the spot market, in 

 which the full effects of competition for an inadequate supply 

 ape felt. In such competition there is full opportunity for specu- 

 lation. Prewar spot market prices of about $2 have risen rap- 

 idly, particularly since January, 1920, until now sales reported 

 at $15 as a maximum, and even higher rates are predicted. At 

 $15 the paper alone for a 32-page newspaper would cost 7i 

 cents. One eastern newspaper, with a consumption of 6,000 

 tons, has estimated that its 1920 paper bill will be $72,000 in 

 excess of that for 1919. A western paper estimates that its 

 3920 paper bill will be $450,000 more than that for 1919. 



The cost of newsprint is said to be from one-third to one- 

 half the total cost of the entire newspaper. To meet increased 

 costs publishers must increase revenues either by raising sub- 

 scription prices or advertising rates, or accepting more advertis- 

 ing. The acceptance of more advertising means either the use 



of more paper or the elimination of reading matter. The ratio 

 of reading to advertising matter before the war is said to have 

 been about 60 to 40, and it is reported that this ratio is now 

 reversed. Some increases have been made in subscription rates, 

 but the chief source of larger returns has been through more 

 advertising and higher advertising rates. The newspapers which 

 have not been able to increase the amounts of advertising and 

 advertising rates have been hard hit. Advertising rates during 

 the past year have risen 35 per cent or more. Increased ad- 

 vertising costs, designed partly to pay increased operating 

 expenses and partly to reduce newsprint consumption, are passed 

 on to the consumer. 



Newspapers have been driven to extraordinary measures. 

 Advertising has been refused. One New York paper is reported 

 to have refused six pages of advertising for a single issue. 

 Another New York paper is reported to have refused for a 

 single issue advertising which would have returned $14,000. 

 Attempts have been made to eliminate waste, and the size and 

 number of editions have been cut. Features have been cur- 

 tailed or eliminated, the proportion of advertising to reading 

 matter has been largely increased, and efforts to increase cir- 

 culation have been suspended. 



Unfortunately the situation is generally regarded by the 

 public as a whole as one which can be easily remedied within 

 a few months, and it is not realized that the life of the pulp 

 and paper industry in the regions of its present development 

 is absolutely dependent upon rapidly failing timber supplies, 

 while Httle or no effort is being made toward their perpetuation. 



THE SITUATION SUMMARIZED. 



If the industries considered are representative of general 

 conditions, and there is every reason to believe that they are, 

 the lumber situation of the past few months has, for many 

 industries and many classes of consumers, been one of serious 

 shortages of supplies, of great demands, and of uncertainties 

 in securing satisfactory amounts of desired materials. Rapidly 

 rising prices have reached the highest points that have ever 

 been known for lumber and for practically every other forest 

 product consumed in the United States. Market conditions 

 have been unstable, and it has been impossible for many con- 

 sumers to plan with any certainty on cost of materials. The 

 output of industries which depend upon lumber and other wood 

 products has been very much reduced, and in an extreme case 

 has gone as low as 50 per cent of normal. 



The entire nature of competition in the case of forest prod- 

 ucts has changed. Prior to the war the producers of lumber, 

 newsprint paper, and other forest products competed with 

 each other for business. Competition during the past few 

 months has been very largely among consumers for generally 

 inadequate supplies. Under any conditions such a reversal in 

 the fundamental situation would result in higher prices ; but 

 the shortage and demands have been so extreme that whole- 

 some restraints as to prices which might safely be paid have 

 been removed, and in many cases it has been possible to pass 

 on to the consumer, and even to augment, almost any lumber 

 price increases. This has not been universally true. There 

 has been some difference between industries in the extent to 

 which they could go. Apparently limitations have been felt 

 more by industries producing the necessities than by those with 

 products which fall rather in the class of luxuries. 



The furniture maker finds himself handicapped in competing 

 with the maker of musical instruments. The manufacturer of 

 agricultural implements withdraws his buying and manufac- 

 turing organizations from the field because he can no longer 

 compete with the manufacturer of automobile wheels. The 

 large and well-financed organizations, able to draw their sup- 

 plies from distant sources, have fared much better than the 

 small manufacturer with limited capital who must secure his 



