346 REPORT OF THE FORESTRY COMMITTEE 



stitutes, mill prices of lumber are neither advancing nor capable of being ad- 

 vanced by any action of his to an extent making manufacture profitable if 

 stumpage prices are materially increased. Meanwhile increasing and compound- 

 ing carrying charges are much higher than popularly supposed, often amounting 

 to ten per cent compound interest on the realizable value of the timber. The 

 consequence is a financial pressure which tends to force marketing the timber, 

 especially upon the weaker holders, which needs no augmenting by government 

 action. The tendency already is to cutting at a price which barely covers the 

 investment. 



On the other hand, suppose that government timber is placed on the market 

 at a price which is not only successfully competitive with that acceptable by 

 over-pressed private owners but also sufficiently lower than this to cover the 

 greater logging cost due to its remoteness. The result must be largely the further 

 consolidation of such private holdings, which instead of being cut at a loss will 

 be sold to stronger speculators, and their retention until the still further ac- 

 cumulated and compounded carrying charges can be taken out of the consumer. 

 In other words, there must be a lack of public economy in using first the timber 

 which does not bear heavy carrying burden, and eventually coming back to that 

 which does after the burden has become even greater. And it is the consumer 

 who must pay for such lack of economy. 



It follows that while the standing timber seeker or the manufacturer may 

 find any present tendency to monopoly relieved by liberal government sale, the 

 consumer of lumber will receive most protection by a holding policy on the part 

 of the government for some time to come. 



EFFECT ON STATE REVENUE 



THE States in which national forests are situated receive 35 per cent of the 

 gross receipts from the forests. In other words, they have over a one-third 

 dividend, less, all charge of administration and protection. In effect, they 

 are third owners, without financial or other responsibility. It is clear that in the 

 long run 35 per cent not only of all stored resources now existent but also of 

 successive proceeds from regrown forests, forage, etc., kept up in perpetuity by 

 good management, will return the States immensely more than they could hope 

 to obtain by taxing the same resources were these in private ownership. On 

 the other hand there is much dissatisfaction because the present population 

 realizes comparatively little owing to the slowness of exploitation. This com- 

 plaint is not without grounds. The cost of conservation is borne largely by 

 the population which has the hardest task to meet public expenses and the 

 minimum compensating advantage of employment and market from national 

 forest exploitation, while the population which will enjoy this advantage of earn- 

 ing capacity will also be the one to have a maximum tax reduction through the 

 incident 35 per cent reimbursement. 



The remedy would seem to lie in some method of discounting this revenue 

 which will prevent it from being disproportionately great when least needed but 

 hardly so crude and destructive a one as selling timber in defiance of all other 



