66 



TIMBER DEPLETION, PRICES, EXPORTS, AND OWNERSHIP. 



Ignorance of current market values, particularly on the part 

 of small operators, has been one of the reasons for the very 

 unstable conditions often prevailing in the lumber industry. It 

 was evidenced and is still to some extent evidenced by the wide 

 range in prices at which the same grade of lumber is sold in 

 the same locality. 



With lumber manufacture and marketing so widely dis- 

 tributed, the industry has lacked a central medium for re- 

 porting price changes from day to day, like the wheat or cotton 

 exchanges. No general and authoritative price data have been 

 available to it, like those assembled and published by the De- 

 partment of Agriculture on many agricultural products. The 

 function of the regional lumbermen's association in assembling 

 and distributing the prices reported on current sales has 

 grown out of a real need on the part of many operators for 

 better information about their market. It is a development 

 common, in one form or another, to most of the large businesses 

 of the country. 



Solely as a matter of information, the current distribution of 

 prices received by different members of the association tends 

 to unify the rates at which lumber is offered for sale and 

 to make increases or decreases in accordance with the fluctua- 

 tion in the market more nearly similar at all producing plants. 

 The same information would doubtless be of fiqual value to 

 buyers of lumber, particularly to the smaller buyers less able 

 to keep posted upon market fluctuations, if available to them. 

 The price reports of lumber associations appear to have been 

 made available to lumber buyers in some cases, in other cases 

 not. 



The assembling and distribution of such information obvi- 

 ously forms a possible vehicle or medium for reaching more 

 or less definite agreements or understandings controlling the 

 prices at which lumber is offered. The extent to which it may 

 serve as such a medium depends upon the policy followed by 

 the particular association as to the degree of publicity given 

 to data of this character, upon the efforts which the association 

 may make to induce its members to price their product in con- 

 formity with the highest rates shown by current reports, and 

 upon the extent to which the individual, lumber producers or 

 selling organizations may use the data as a basis for price- 

 control agreements or informal understandings. Properly 

 employed, particularly with a large degree of publicity, such 

 information should serve to stabilize the lumber market to the 

 advantage of both producer and consumer. 



EFFECTS OF TIMBER DEPLETION UPON 

 CONCENTRATION. 



It should be pointed out that the public effects of the con- 

 centration of a large part of the virgin forests of the United 

 States in the liands of relatively few large interests will be- 

 come greater as forest depletion continues. It is to the interest 

 of large operators who have Tuadi; extensive investments in 

 operating plants ^and in marketing organizations and who have 

 built up widespread trade connections to maintain a continuous 

 supply of stunipage for their mills. Carrying charges have 

 placed more or less definite limits upon the quantities of re- 

 served timber \A'hich can be carried economically. As these 

 quantities are reduced by cutting, however, it is to be expected, 

 and the data on hand indicate, that the large operators will 

 replenish them by purchasing available small holdings. As a 

 general rule, the small mills are tending to be eliminated in the 

 western regions, where the principal bodies of virgin timber 

 remain. This process may be expected to continue in such 

 regions for a considerable period, first, because in many in- 

 stances the small plants are less efficient in manufacturing 

 and marketing lumber and are the first to be eliminated dur- 

 ing periods of depression ; secondly, because by and large 

 they will be the first mills to exhaust their timber holdings ; 



and, thirdly, because the large interests will find it to their 

 advantage as time goes on to acquire the smaller tracts of 

 stumpage available to their plants. Financial strength", 

 strategic location, ownership of the most accessible timber, far- 

 reaching affiliations of one form or another, including in some 

 instances affiliations with transcontinental railroads— all of 

 these factors will tend to give the large interests in the North- 

 west a greater and greater degree of control of the situation. 

 This control will increase for a considerable period in about the 

 same ratio as forest depletion goes on, and to a corresponding 

 degree will involve the dangers to the public interest arising 

 from a natural monopoly. 



One of the most important aspects of this control, as already 

 pointed out in the case of the virgin pine timber remaining in 

 the Southern States, is that it will extend particularly to the 

 timber of high quality still left in the steadily reduced areas of 

 old growth. An increasing concentration of high-quality tim- 

 ber, particularly in the softwood forests of the South and West, 

 may be expected. 



On the other hand, a point is reached in every lumber-produc- 

 ing region, after the bulk of its virgin timber has been ex- 

 hausted, when the large plant and organization are no longer 

 the most efficient economically and when the large sawmill, 

 carried by its square miles of virgin stumpage, isvreplaced by a 

 smaller and more portable operating unit. The small mills 

 follow large ones, picking up odds and ends of virgin timber, 

 cleaning up the less accessible, and ultimately operating on 

 second-growth stands, which produce ordinary grades of build- 

 ing lumber and other products of relatively low quality. This 

 process now appears to be taking place in the southern pine 

 States. During the next 10 years the closing down of large 

 sawmills in that region will be rapid. At the same time the 

 number of small mills is rapidly increasing. These small mills, 

 often operating but a few years at one point, are much less 

 adapted to centralized control and represent a tendency to break 

 up concentration. This tendency may be offset to a degree by 

 the common marketing of the products of a number of small 

 mills through a wholesaler or some form of selling agency and 

 through financial affiliations which may grow out of this mar- 

 keting relationship. 



In other words, the lumber industry is distinctive in that the 

 concentration or possible concentration of its raw material is 

 necessarily limited in time. Under present methods of opera- 

 tion the physical conditions restrict the -life, even of many large 

 plants, to 20 or 25 years. This broad rule has been true of the 

 dominance of the lumber markets of the United States by the 

 large softwood regions, each of which has held control of the 

 markets for a comparatively short time. The ultimate tendency 

 is for the industry to break up into small units under which the 

 possibility of concentration is greatly reduced. 



The most significant factor in the present situation is that 

 with the exhaustion of virgin timber in most of the eastern 

 States and its impending exhaustion in the southern pine re- 

 gion, although certain large mills will be cutting virgin yellow 

 pine for 30 years to come, the danger of concentration of high- 

 grade timber is proportionately greater than ever before. The 

 greatest protection which the people of the United States have 

 against such concentration lies in national and other public for- 

 ests, where such timber can be grown or held in reserve and 

 which are so administered as to aid in maintaining competitive 

 conditions in the lumber business. One of the most effective 

 steps that can be taken to limit the effects of concentration is 

 not only to extend the National Forests by purchase but to in- 

 corporate in them all timberlands which the Federal Government 

 still owns or controls and not to permit a single additional acre 

 to pass into private ownership. 



As to our requirements for lumber of general utility, the 

 danger of harmful concentration is more remote. It would be 

 dispelled by vigorous action to stop forest devastation and re- 



