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4. ,. , TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



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lack of freight cars', ahii bad weather in important producing regions, to respond rapidly with increased production. Aside from the genera! 

 causes affecting prices of most commodities, the expansion of credit accompanied by currency inflation and the wave of speculation and 

 extravagance, an "auction" lumber market would no doubt have resulted from the frenzied competition of buyers to obtain the limited 

 stocks available, wholly inadequate to satisfy current demands. 



Under the combined influence of the general conditions making for high prices and this situation in the lumber industry itself, prices 

 rose to unprecedented limits. In March, 1920, average mill prices in the South and West had increased 300 per cent and more over the 

 prices received in 1914, and average retail prices in the Middle West showed increases ranging from 150 to 200 per cent. In the case oi 

 high quality hardwoods and other specialized products, the average advance in eastern wholesale markets was from 200 to 250 per cent, 

 and the demand at this advance was still unsatisfied. 



The timber market has been more unstable than ever before in our history. Many industries have been unable to secure their supplies 

 of timber at any price. The output of certain entire industries has been reduced as much as 50 per cent. Middlemen and manufacturers 

 of wooden commodities have been able to pass on to the consumer and even augment any price they might pay. Necessities have fared 

 worse than luxuries. The ramifications of lumber shortages and high prices are limitless and have affected seriously practically our entire 

 population. 



Obviously these lumber prices bear no relation to the cost of production and distribution. While the costs of production in the lumber 

 industry have at least doubled as compared with 1916, lumber prices have much more than doubled and have become wholly disproportionate 

 to operating costs. Excessive profits have been made by the industry. The division of these profits between manufacture and distri- 

 bution has varied in accordance with circumstances and the ability of the various elements in the industry to dominate the situation 

 That prices have been too high is recognized by the best thought in the industry, and some manufacturers have sought to stabilize the 

 market. 



The depletion of timber in the United States has not been the only cause of these excessive prices on forest products, but has been 

 an important contributing cause. It has led to the migration of both the softwood and hardwood lumber industries from region to region 

 and each is now cutting heavily into its last reserves. The exhaustion of timber in near-by forest regions has compelled many large lumber 

 consuming centers to import their supplies from greater and greater distances. The wholesale prices on upper grades of softwood lumber 

 in New York were from $20 to $25 per thousand prior to 1865 when mills in the sam State supplied this market, from $35 to $45 between 

 1865 and 1917 when most of the supply came from the Lake States and the South, and are now entering a general level of $130 a thousanc 

 feet with a large part of the material coming from the Pacific coast. In the Middle West, the building grades of white pine lumber cut 

 in Michigan, Wisconsin, and Minnesota, retailed at $15 to $20 per thousand feet prior to 1900. As lumber from the Lake States became 

 exhausted and southern pine took over this market, the retail prices rose to a level of $25 to $35 per thousand feet. The replacement o 

 southern pine by West Coast timbers now in progress is initiating a new price level of about $80 to $85 per thousand feet. The increasec 

 cost of transportation is but one factor in these new price levels, but it is an important one. The freight bill on the average thousand feet 

 of lumber used in the United States is steadily increasing as the sawmills get farther and farther away from the bulk of the lumber users 

 Much information is available to show the disadvantages of the lumber consumer in regions whose near-by forests have been exhausted 

 Retail prices in the Ohio Valley, for example, on certain grades exceed retail prices on the identical grades in Oregon in some instances 

 by as much as $50 per thousand board feet after allowing for all transportation costs. The curtailment of lumber output in the eastern 

 regions not only has compelled the average consumer to pay more for freight but has enhanced the effects of congestion in transportation 

 and of climatic and other factors limiting the production in regions which still support a large lumber industry. It has restricted oppor 

 tunity for competition and thereby increased the opportunity of the lumber manufacturer or dealer to auction his stocks for higher prices 

 In other words, the effects of forest depletion can not be measured in terms of the total quantity of timber remaining. Its injury is felt 

 particularly through the steady process of regional exhaustion. Our remaining timber is so localized that its availability to the average 

 user of wood is greatly reduced. Particularly does such a restricted location of the timber supplies assume a serious national aspect in the 

 face of transportation congestion and inadequate transportation facilities such as the United States is now experiencing. Had the forests 

 and forest industries of the Eastern States still existed, the opportunities for regional competition in supplying the lumber markets and 

 the wider distribution of lumber transport undoubtedly would have afforded a curb upon rising prices which did not exist in 1919. 



The export trade in lumber does not have a serious bearing upon timber depletion from the standpoint of quantity, but does have 

 an important bearing upon the duration of our limited supply of high-grade timber, particularly of hardwoods. The exports of high-grade 

 oak, walnut, hickory, ash, and other woods essential to many industries in the United States which now seem probable will further 

 enhance the shortage of such products for the domestic market and the tendencies already evident toward sustained high prices. On the 

 other hand, the United States imports from Canada about two-thirds of its total consumption of newsprint or newsprint materials. The 

 effects of our export trade in lumber should be considered from the standpoint of the specific timber grades or products whose depletion 

 is most imminent and threatening to American industries. 



The concentration of timber ownership has not changed materially since the exhaustive report made upon this subject by the Bureau 

 of Corporations in 1910. One-half of the privately owned timber in the United States is held by approximately 250 large owners, the 

 ownership of the remaining timber being very widely distributed. The tendency toward the acquisition and speculative holding of timber 

 beyond operating requirements has been checked, and the present tendency is toward the manufacture of large timber holdings. At 

 the same time the lumber industry, particularly in the Western States, is going through a partial reorganization into larger operating anc 

 marketing groups. In this there is a tendency for small mills to disappear and small timber holdings to be blocked iiito larger ones- 

 adapted to extensive lumber manufacture. While there is still a large number of individual timber owners and of sawmills operating 

 as separate units, the larger interests are acquiring a more dominant place in lumber manufacture in the West. It is to be expectec 

 that these large interests or groups will maintain, as time goes on, a fairly constant supply of timber for their manufacturing plants by 

 acquiring smaller holdings. No information is at hand which would justify a conclusion that monopolistic conditions on any genera 

 scale have grown out of this situation. There are many instances to the contrary. On the other hand, the degree of control of the timbei 

 remaining in the United States exercised by a comparatively small number of large interests will steadily increase as timber depletion 

 continues, approaching a natural monopoly in character, and this control will extend particularly to the diminishing supply of high- 

 grade material. 



In 1918 our per capita consumption of lumber was about 300 board feet. The homes and industries of the United States require at 

 least 35 billion feet of lumber yearly, aside from enormous quamtities of paper and other products of the forest. A reduction in the current 

 supply of lumber below this figure would seriously curtail our economic development. Appreciable increases in lumber imports are not 

 possible except at excessive prices. We can not afford to cut our per capita use of lumber to one-half or one-third the present amount 



