344 REPORT OF THE FORESTRY COMMITTEE 



to come the advance on stock on hand will exceed any profit obtainable by use 

 of the land for growing a new crop. Acting solely as an agent in charge of a 

 property, expected to make the most out of it financially, the Government would 

 do best for its constituents to take its timber out of the market and hold it for 

 speculation. The price obtainable today is not what it is intrinsically worth 

 today, for the vast supply on the market of timber secured at small cost makes 

 the price less than that of production, which is the true price criterion of any 

 commodity. In other words, timber sold today by anyone not too heavily 

 burdened by carrying charges is sold at a sacrifice. 



It may be said that two crops are worth more than one, consequently that 

 if the low price obtainable today is realized and placed at interest until it can 

 be added to the price received in the future from the second crop to follow, the 

 sum of both will be greater than that obtainable by holding for speculation. 

 But the basis of this arguinent would apply also to holding for a time, adding 

 the higher price thus received to that of the deferred second crop. The period 

 involved would be longer, that is all. Moreover, from a financial viewpoint, as 

 well as from that of conservation, there is clearly an important element of loss 

 in cutting while utilization cannot be as clean as it will be later. As time goes 

 on, more and poorer material becomes marketable, hence holding not only in- 

 sures a higher price for a given quantity but for a time will also increase the 

 salable quantity nearly or quite as fast as would the growth of young timber. 



For the same reason much diseased and very old timber should be regarded 

 as financially immature rather than mature. While it yields but a small pro- 

 portion of grades which are merchantable today, it contains grades which will 

 be merchantable some day. Cases can be cited to prove that in given forests 

 the diseased or dying trees have for this reason had the greatest relative increase 

 of value and paid best to hold — contrary to a popular belief that they should 

 always be cut and thus "saved." Again, other things being equal, government 

 timber is less mature than private timber because it costs less to carry. As 

 long as stumpage value increases faster than the interest paid by the private 

 owner on his investment and carrying costs, his timber is financially immature. 

 Since private interest rates are high, stumpage values must double in short cycles 

 to reimburse him. Government rates are low, hence aflford a profit in waiting 

 much longer. Does it not follow that, considered solely as an investment for 

 the people, government timber cannot be financially mature until long after profit 

 in similar private timber has disappeared? 



BREAKING PRIVATE MONOPOLY 



IT has been charged that a speculative attitude on the part of the Government 

 savors of collusion with private speculators to the disadvantage of the con- 

 sumer. At present this is more theoretical than real, for two reasons; 

 (a) The one-fifth proportion of national forest timber, mostly inaccessible for 

 logging and also subject to long expensive rail haul in competition with the lake 

 States and southern supply which together with the middle west demand de- 

 termines the market, follows rather than leads this market; (b) For similar 



