TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



41 



one yellow pine yard in New York, and the receipts were 

 Insignificant. 



The interregional competition which grow out of HIP rapid 

 expansion of the lumber industry in the l.:ike States and the 

 South during the eighties, together with tin 1 continued produc- 

 tion in New England and Pennsylvania, was iiiii|uesticiiialily the 

 dominating factor in crowding softwood lumber prices down- 

 ward and holding them at temporarily low but fairly uniform 

 points for a decade following IWHt. The average value of the 

 upper quality lumlier centered about $30 per M feet, and that 

 of the lower quality between $10 and $17 per M feet. During 

 this period I lie lumber-price trend coincided very closely with 

 the ups and downs of the all-commodity price average. 



By 1900 the Lake States white pine and the South Atlantic- 

 yellow pine were waning factors In the New York market. 

 ThiK was due not only to the decline in cuts in these regions 

 hut also to the increasing absorption of lumber by expanding 

 markets west of New York. The bulk of the softwood lumber 

 in the eastern markets came more and more from the Gulf 

 States by rail and water, with Increased transportation charges 

 totaling $6 to $9 per thousand. This resulted in prices again 

 moving steadily upward and the establishment of a new level. 

 The graph reflects between 1900 and 1906 an Increasing di- 

 vergence of -lumber above average commodity prices. 



From 1903 to 1917, the period of greatest decline in the cut 

 of the Lake States, the level of softwood prices remained 

 fairly uniform. Upper grades averaged from $40 to $45 and 

 lower grades from $24 to $20 per thousand, an advance of 

 from $10 to $15 and from <"> to .S;10, respectively, over the 

 previous level. There were, of course, minor fluctuations, and 

 since 1907 an abnormal pressure downward on prices arising 

 from weak markets and overproduction in most, if not all, of 

 the producing regions. Tlds is especially true of the years 1914 

 to 1916, a period of great regional competition in ail large 

 softwood lumber markets. 



In 1917, it will be noted, the curve for all commodity prices 

 advanced sharply beyond softwood lumber prices for the first 

 time since 1865, due, of course, to war conditions and the fixing 

 of prices by the Government for the more important softwood 

 species. 



With the close of the war came the opening of a new period. 

 Radical changes had taken place in the general situation. The 

 strain of overproduction and intense regional and interregional 

 competition was markedly relaxed. The cut of southern pine 

 bad fallen off some 34 billion feet since 1915, and lumber pro- 

 duction in practically all regions excepting the West was below 

 normal. With the first development of sharp demand following 

 the middle of 1919, therefore, there was demonstrated as never 

 before in the history of lumber prices the effect of regional 

 reduction of lumber production and its consequent weakening 

 of the great leveling influence of interregional competition. 



By March, 1920, average mill prices in both the South and the 

 West were more than double the average prices received in 1918 

 and more than three times those of 1914. These increases were 

 swiftly reflected in the large eastern markets. The average 

 value of upper softwood grades was $42 per thousand in 1914, 

 $51 in 1918, and $131 a thousand in March, 1920. Similarly, 

 lower grade material rose from $25 in 1914 to $40 in 1918 and 

 to $73 in 1920. 



These phenomenal price advances, although precipitated by a 

 variety of factors, unquestionably reflect in part a current 

 transition to another lumber price level, the measure of which is 

 clouded in present abnormal conditions of trade and finance, 

 supply and demand. The new level will be founded on perma- 

 nent increases in production costs and the increasing extent to 

 which eastern markets will have to draw upon western lumber 

 at transportation costs of $15 to $20 per thousand feet. 



Softwood wholesale lumber prices since 1840 have therefore 

 passed through three main levels in eastern markets and are 

 now apparently In the initial stages of the fourth. The first 

 level, prior to 1861, was characterised by local supplies and up- 

 per grade prices of $20 to $'_T> per M. The second extended 

 from ix<;r> to nbout Him, with prices of from $:{.'> to $40, and 

 supplies drawn from the Lake Stales, and the third level, from 

 1900 to 1918. with the Southern States as the main source of 

 supply, and with prices of $4O to $4n, I -rices for the fourth 

 level are not yet stable. 



MIDDLE WESTERN MARKETS. 



In the markets of the Middle West the effect upon lumber 

 prices of changes in sources of lumber supplies, with their 

 accompanying changes in transportation costs, lumber stocks, 

 and interregional competition, is even more strikingly shown. 

 These Middle Western markets have during the past 25 years 

 been dominated by first one species and then another. Each 

 change has grown out of cumulative forest exhaustion or 

 reductions of lumber cut in main forest regions tributary to 

 the markets. 



Prior to 1900 lumber stocks in the retail markets of the Mid- 

 dle Western States were largely of white pine from the Lake 

 States, distributed at low transportation costs by water and 

 short rail hauls. Lumber production of the Lake States was 

 at its peak. White pine moved in heavy volume by water to 

 Chicago, and in the form of logs down the Mississippi River. 

 Practically every river town of importance had one or more saw- 

 mills. Dubuque, Davenport, and Rock Island, all in the very 

 heart of the consuming region, had, for example, many mills 

 from which lumber was distributed locally and by rail to con- 

 suming markets. Transportation costs were relatively small, 

 lake rates to Chicago, for example, ranging from $1 to $2 per 

 thousand feet. 



Following 1900 the sharp decline in the production of north- 

 ern pine, due to the exhaustion of the more accessible forests, 

 was reflected in a gradual shrinkage of white-pine lumber 

 from the stocks of retailers farthest removed from the white- 

 pine region. Mills along the Mississippi River, unable longer 

 to get steady supplies of logs, began to close down. By 1905 

 most of the mills from La Crosse and Winona downward were 

 idle. Coincident with these movements wholesale and retail 

 lumber prices, even in the southern Minnesota region, began 

 to move upward. Wholesale prices of common grades of north- 

 ern pine increased $8 to $17 a thousand feet, while the retail 

 prices advanced $10 to $15 a thousand feet. This upward 

 movement of average retail prices from around $16 in 1895 to 

 $25 in 1905, in response to mill prices and the declining soft- 

 wood cut in the Lake States, is clearly reflected In figure 14. 



During the same period yellow pine from the South was 

 moving northward in increasing volume, taking markets which 

 northern pine could not supply and exerting through Inter- 

 regional competition a restraint upon increasing white-pine 

 prices. From a production in 1899 of less than 10 billion feet, 

 the cut of southern pine increased to more than 16 billion feet 

 in 1909, carrying with It a gradual transition of lumber stocks 

 from white pine to southern pine throughout a large part of 

 the region. The southern forests were, however, less accessible 

 to the principal markets of the region, and in place of water 

 transportation in part or in whole, rail transportation amount- 

 ing to from $4 to $6.50 per thousand feet was necessary. This 

 Imposed an added cost to lumber and raised the general level 

 of lumber prices. Had not these great southern forests been 

 available to meet the rapidly increasing demands of the region 

 and to replace the declining cut of the Lake States, lumber 

 prices in the Middle West following 1905 would unquestionably 

 have reached and maintained a materially higher level than 

 has actually existed. 



