42 



TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



Following 1912 southern yellow pine was the predominant 

 species in the retail yards of Missouri, Kansas, Oklahoma, 

 Nebraska. Iowa, Indiana, and Illinois. It dominated (he retail 

 trade. In western Kansas and Nebraska and in North and 

 South Dakota Douglas fir from the coast and western pine 

 from the Inland Empire had largely replaced white pine, while 

 in Wisconsin hemlock formed the principal species in the lum- 

 ber yards. Only in Minnesota and immediately contiguous 

 localities was white pine the leading species in the retail trade. 



It will be noted from figure 14 that from 1906 to 1917 the 

 level of retail lumber prices fluctuated around $:>0 per thousand 

 feet and mill prices around .$15. This is explained by the de- 

 velopment of further interregional competition from the west- 

 ern forests. 



Following 1900 the cut of the Pacific Coast States increased 

 rapidly from about 3 billion to more than 7 billion feet in 1910. 

 Surplus stocks soon began to move eastward, and Douglas fir 

 from the West. Const and western pine from the Inland Em- 

 pire became active factors in the northern-pine markets of the 

 Dakotas and Minnesota and in the southern-pine markets of 

 western Nebraska and Iowa. The period 1908 to 1910 was 

 one of periodic business depression and overproduction at. the 

 mills. In order to move stocks of lumber in the South and in 



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the West, prices were often set at cost of production or less. 

 Southern pine and Douglas fir met in keen competition in the 

 I'rairie States. This expanding movement in yellow pine and 

 Douglas fir competing for markets naturally exerted a leveling 

 pressure upon lumber prices. It was a buyers' market, Buyers 

 whipsawed the price of one species against the other, and 

 thereby exerted further pressure downward on both wholesale 

 and retail prices. 



From the standpoint of the public, or the lumber consumer, I lie 

 situation is illustrative of the great economic advantage of 

 having large available forests in different producing regions. 

 When the supply of lumber from the Lake States first began 



to decline radical price ad\ances were unquestionably prevented 

 by the inflow of a great volume of lumber from the South. As 

 the southern pine lumber established itself in the markets of 

 i lie -Middle West, the exhaustion of timber in the Lake States 

 reached a point where northern pine and hemlock ceased to be- 

 come effective coni]ictitive factors, except in very limited re- 

 gions, hut further advances in lumber prices were checked by 

 (he great inflow of lumber from the West. 



The increasing volume of western lumber in the middle west- 

 ern markets obviously increased the freight rates borne by lum- 

 ber. That these increases are not reflected by figure 14 is due 

 to the fact that during the period 1910 to 1910 they were largely 

 absorbed by I lie mills in lien of profits in order to move surplus 

 stock. These conditions are shown graphically in figure 15. 

 They therefore have acted as springs, exerting pressure upward 

 and intensifying the responsiveness of prices to any release of 

 pressure from above. In the retail trade of southern Minnesota, 

 for example, the average transportation cost borne by lumber 

 in 1905 amounted to about $8 per 1,000 feet. In 1915 it had 

 increased to $S.50, and in 1919 to practically $12 per 1,000 feet. 



Normal markets for lumber in the Middle West largely dis- 

 appeared during the war. The needs of the Nation in prose- 

 cuting the war, however, eventually absorbed available lumber 

 slocks. There was little active demand for lumber, but poten- 

 tial demands steadily accumulated. In the meantime lumber 

 production in almost all regions declined. Restrictions on lum- 

 ber were lifted following the armistice, and the great pent-up 

 demand for lumber was released into normal channels of trade. 

 Prewiir conditions of business depression and overproduction 

 at the lumber mills had passed. There developed, indeed, a 

 striking reversal of those conditions. Lumber was needed in 

 great volume to supply the shortage of homes and other build- 

 ings. Wood-using industries were short of lumber to resume 

 business on a prewar scale. Industries began to expand on the 

 abnormal increase of credit growing out of war financing. 

 Production of southern pine lumber had passed its peak. The 

 South was prosperous and in need of lumber. It absorbed the 

 cut of southern mills at high prices in greater volume than ever 

 before, while eastern markets likewise drew more heavily upon 

 the South. 



As a result of the foregoing conditions, the former dominating 

 and far-reaching competition of yellow pine was much con- 

 tracted, and the great markets of the Middle West were left 

 primarily dependent upon timber from the Pacific coast and the 

 Inland Empire. The greatly reduced cut of the Lake Stales' 

 forests was wholly ineffective as a competitive factor in exerting 

 a leveling influence upon prices, and the upward pressure of 

 increased transportation costs and lean profit years prior to 

 the war was set free to act. Within a year or 18 months 

 Douglas fir became the principal species throughout the greater 

 portion of the Middle West. To-day it forms 80 to 90 per cent 

 of the retail stocks in Minneapolis, which has always been a 

 great white-pine market. It is found in Chicago in greater vol- 

 ume than any other species. In Kansas City, which is on the 

 very edge of the southern pine district, it forms more than 

 50 per cent of the lumber stocks. 



In the foregoing conditions may be found the underlying 

 causes for the chaotic price situation which developed in these 

 middle western markets during the latter part of 1919 and the 

 first months of 1920. Beginning with June, 1919, prices moved 

 steadily upward. It was the beginning of an intensified sellers' 

 market. Wholesale and retail lumber prices reached the highest 

 point in the history of the industry. As shown by figure 19, 

 the average sales values of retail stocks in country districts in 

 March were around $85 per 1,000 feet, while average wholesale 

 mill prices ranged from $45 to $60. The trade was plunged 

 into confusion. Buyers needed lumber and were willing to bid 

 for it. For several months prior to March, 1920, lumber prac- 

 tically lost uniformity of price in many markets. Quotations in 



