50 



TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



The association's compilation shows that it cost $24.95 per 

 1,000 feet to produce lumber in 1919, as against $24.15 shown 

 by the above figures. The difference is due to the fact that the 

 figures of the association include log-buying mills. Average 

 costs at individual mills range from about $18 to $32 per 1,000 

 feet, with a figure close to $25 representing the average for 

 1919. Production costs of April, 1920, are estimated to average 

 at least $26 per 1,000 feet. As previously indicated selling 

 prices on the basis of orders averaged $45.72 for March, 1920. 



The increasing cost of producing lumber is due to a variety 

 of factors, among which may be mentioned increases in wages 

 in both woods and mill; reduction in hours of labor; more in- 

 accessible stumpage ; decrease in efficiency of workmen ; loss 

 in feeding men ; higher stumpage costs ; increasing cost for 

 equipment, supplies, and repairs ; increases in freight and tow- 

 ing rates on logs ; and higher cost of fire insurance. 



Inland Empire. Throughout the Inland Empire mill prices 

 and logging and manufacturing costs for 1919* show similar 

 large increases over prewar years. The trend of average mill 

 prices is shown in figure 18, graph (a), and these average 

 yearly prices, together with costs and profits, are stated specifi- 

 cally in the table below. The figures used are based on data 

 collected from a large number of mills throughout the Inland 

 Empire. 



During the years immediately preceding the war the mills 

 in the region show small net profits. During the six-year 

 period ending 1914 the largest and best-managed companies in 

 the region, representing 59 per cent of the cut in the Inland 

 Empire, earned only 1.06 per cent on all capital in use, bor- 

 rowed or unborrowed, exclusive of their profits on stumpage 

 investments. Beginning with the year 1917 much more sub- 

 stantial profits are shown. 



mately 150 per cent. The average mill prices from 1914 to date 

 are indicated below : 



Average selling price f. o. o. mill per 1,000 feet. 

 Year : 



1914 $13. 68 



1915 13. 02 



1916 -L 16. 12 



1917 21. 13 



1918 26. 45 



1919 33. 94 



September, 1919 39. 37 



October, 1919 44. 60 



November, 1919 42.06 



December, 1919 45. 41 



January, 1920 52.21 



February, 1920 57.94 



March, 1920 61.60 



The price for the years 1914 to 1919 are based on reports made 

 to the Forest Service from operators throughout the southern 

 pine belt. Those for the years preceding 1914, as shown in 

 graph (a), were taken from the books of manufacturers without 

 attempt at auditing. The monthly prices given for 1919 and 

 1920 were obtained from the reports of a lumbermen's organiza- 

 tion and were based on a weighted average of all sales reported, 

 exclusive of exports. 



In 1914 the average cost of production for 108 southern pine 

 operations was determined as $12.79, with stumpage at $2.36 

 carried forward from 1905 at 1 per cent to cover taxes and 

 current expenditures. With stumpage included at the prices 

 then current, the average cost of production was determined as 

 $14.54. In contrast with these production costs the following 

 figures for the latter part of 1919 and the first two months of 

 1920 are taken from cost statements of the Southern Pine As- 

 sociation : 



TABI,E 17. Costs of production and average selling prices of 

 softwood lumber per M feet cut in the Inland Empire. 



The figures given for 1919 do not reflect prices during the 

 latter months of the year, when thoy were much in excess of 

 the average of $30.92. They have since continued at higher 

 points. 



Southern pine States. The trend of average mill prices for 

 southern yellow pine is shown in graph (ft], figure 18. As 

 with Douglas fir, 1915 was the year of lowest prices. Taking 

 1914 as a more nearly average prewar year, the selling price 

 was $13.68, as against $33.94 for 1919, an increase of approxi- 



and production cost f. o. b. mill was 89 cents per thousand 

 feet, with stumpage figured at the 1905 cost plus carrying 

 charges, and that with stumpage carried at its current value 

 a net loss of 86 cents per thousand was incurred. In the latter 

 months of 1919 and the first two months of 1920 the margin of 

 net profit ranged from $13 to $29 per thousand feet, exclusive 

 of whatever profit may have been made on stumpage. 



In the six or eight years prior to the war, returns in lumber 

 manufacture in the principal softwood regions, on the average, 

 were yielding very low profits on the investments. While 

 profits were greater during the war, the price of lumber during 

 the war years did not increase in proportion to prices of other 

 commodities. As shown in figure 13, the average of com- 

 modity prices rose in 1917 considerable in excess of the average 

 of softwood lumber prices, which were partially restricted by 

 Government price fixing. The war-time restrictions not only 

 upon the price of lumber but upon its production and move- 

 ment for the supply of the normal trade were unquestionably 

 a large factor in the quick response of lumber prices to the 

 abnormal trade conditions which followed the armistice. 



WHOLESALE COSTS AND PROFITS. 



Owing to the complexity of the trade, time was not available 

 to determine average costs and profits representative of the 

 various types of wholesale business conducted by individuals 

 and organizations not attached to mill organizations. The 

 mill prices given are based on sales made by the larger mills 



