56 



TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



were held without disposition for an aggregate period of 17,453 

 days — an average of 5.8 days per car — and incurred accrued 

 demurrage and penalty charges amounting to a total of $76,529. 

 As growing distances between forests and market increase 

 opportunities for price speculation, more and more middlemen 

 are drawn into the trade. While the responsible wholesaler 

 is an essential factor of the trade, ia surplus of middlemen is 

 a.n added burden of cost upon lumber distribution. It has been 

 estimated that lumber brokerage and wholesalers' offices on 

 the Pacific coast Increased 50 per cent during 1919 and 1920. 

 It is often the case that men drawn to the trade by Its specu- 

 lative possibilities are of the less responsible type, whose 

 methods are not to the best interests of the trade and the public. 

 Speculation, with its accompanying sharp increases of lumber 

 prices, tends to bring upon the market lumber in inferior con- 

 dition. During the months following June, 1919, for example, 

 a general complaint throughout the Middle West was that 

 lumber was inadequately or improperly dried, due mainly to 

 the fact either that it was shipped before being properly 

 dried or that it was too rapidly seasoned in kilns. This, of 

 course, may be attributed to the desire of the manufacturer 

 to ship the lumber before high prices receded or at bid prices 

 offered by jobbers. 



The load imposed upon the railroads in transporting lumber 

 to meet the country's needs increases directly with the increase 

 in distance between foresf and market. More cars and more 

 labor are required, and the chances of breakdown, delays, and 

 traffic tie-ups, which create lumber shortages and high prices 

 in markets afEected, are multiplied. Markets farthest removed 

 are subjected to increasing hazards in obtaining a continuous 

 supply of lumber at stable prices. 



Concentration of lumber production in one or two principal 

 regions accentuates the seriousness of reduced production aris- 

 ing from local labor troubles in woods or mills or from un- 

 favorable weather conditions. 



The cutting out of timber in different regions carries with 

 it a change in the character of lumber stocks in dependent 

 regions both as to species and grades. This tends to confuse 

 the trade and upset industries dependent upon certain grades 

 and species of lumber as a raw product At the present time 

 many large wood-using concerns which have developed their 

 factories and their products on the basis of special woods are 

 facing with great concern shortages in the market supply of 

 these woods, and in many Instances have had to turn to other 

 species involving new problems of manufacture. 



SUMMARY OF PRINCIPAL PRICE CONCLUSIONS. 



During the latter half of 1919 and the early months of 1920, 

 lumber prices in the United States increased more sharply and 

 to far higher points than were ever known before. In Marcli, 



1920, average mill prices. had increased 300 per cent and more 

 over 1914, and the average retail prices showed increases rang- 

 ing from 150 to 200 per cent. 



While the costs of lumber manufacture and distribution like- 

 wise increased, the rise in lumber prices was wholly dispropor- 

 tionate to these increases. Present prices, although somewhat 

 lower than those reached in March, 1920, are still excessive and 

 yield proiits unjustified by costs. 



The " auction " market which characterized the trade was 

 precipitated by a sudden urgent demand for lumber, which de- 

 veloped in the spring of 1919, in the face of inadequate stocks of 

 lumber due to subnormal production. The situation was further 

 aggravated by a restricted movement of lumber caused by car 

 shortage. The result was a lessening of competition, which en- 

 abled the seller with stocks available to auction his lumber to 

 buyers who were in urgent need of material or who were 

 frightened by reports that lumber prices would go higher. In 

 January and February, 1920, prices became so excessive that 

 buying was automatically checked. 



The history of lumber prices is that as forest regions acces- 

 sible to the larger consuming markets are cut out lumber 

 prices are pushed upward by increased costs of production 

 and distribution incident to the exploitation of less accessible 

 or more distant forests and by altered competitive conditions 

 in the markets occasioned by changed in species and in main 

 sources of supply. In any given market prices are predomi- 

 nantly influenced by the species of greatest supply and general 

 utility. As that species becomes depleted and scarce it In- 

 creases in price and tends to draw the level of competing prices 

 with it. Regional forest depleti9n therefore restlts in weak- 

 ened interregional competition, which in the past has been 

 one of the most effective influences in restraint of lumber price 

 advances. 



Timber depletion is therefore an important contributing fac- 

 tor in present high lumber prices but is not the only cause. Lum- 

 ber production has fallen off to a marked degree in many regions 

 as a result of the cutting out of the forest. Freight congestion, 

 climatic conditions, labor troubles, and other factors which have 

 reduced output in the regions still maintaining large industries 

 have, as a result, been greatly emphasized and have been di- 

 rectly related to depletion in their effect on prices. Transporta- 

 tion charges have been increased to most of our largest consum- 

 ing centers. Competition among manufacturers has been re- 

 duced and a greater opportunity created for manufacturers and 

 dealers to auction their product at higher prices. All of these 

 factors have tended to increase lumber prices and have accentu- 

 ated depletion. If large-scale production had still been possible 

 in New England, New York, Pennsylvania, and the Lake States, 

 there can be little doubt concerning the beneficial effect upon 

 market stability and lumber prices. 



