348 REPORT OF THE FORESTRY COMMITTEE 



any industry by subsidy to a point which induces bad management and instability. 

 The point of safety is particularly impossible to determine in this case because 

 forest industry in the United States is not yet on any permanent footing, based 

 upon cost of producing a commodity, but is in a transition period from the stage 

 when it was like the working of a mine without regard to growth. 



It has been shown that a cheapening of lumber at the western mill results 

 in little, if any, reduction of retail prices in the main centers of consumption. 

 Consequently a lowering of price or contract standards by the government to 

 an extent having any decided effect upon sale volume would bring as its most 

 perceptible other result a price cutting among all western mills which would injure 

 these while benefiting jobbers and retailers. The opponents of such a policy 

 assert that the undesirable effect of this would be five- fold, as follows : 



1. A majority of manufacturers of private timber have not made specula- 

 tive profits, but base their business upon a narrow margin of manufacturing 

 profit after purchasing timber at market prices and paying carrying charges. 

 Ups and downs of the market under present conditions affect them and their 

 competitors equally. A paternalistic cheapening of government timber to com- 

 petitors without their investment would wipe them out. 



2. Ordinarily, any business eliminates the most unfit. While the most able 

 presumably succeed best, it is average industry, thrift and integrity that fix its 

 conditions, stability, and relations with the community. It is unfair to those 

 who have exercised these virtues to submit them to the subsidized competition 

 of rivals who may not possess them and might not become rivals if obliged to 

 conform to the same standards without subsidy. No industry is benefited in 

 the long run, even from the consumer's standpoint, by disturbances due to the 

 temporary advent of incompetent or financially weak operators. The would-be 

 national forest operator who is competent and trustworthy from the govern- 

 ment's standpoint in seeking a purchaser, as well as from that of his industrial 

 comrades and his own customers, needs no particular subsidy. One who does 

 is likely to fail if he has one, leaving his contract with the government unful- 

 filled, profiting little or none himself, and injure all others concerned except the 

 jobbers who take advantage of his failure. 



3. While the purchasers under a subsidizing policy would include some of 

 the class just described and others of a deserving class it is admittedly desirable 

 to help, there would also be a rush of operators who already have ample supply 

 but, besides naturally preferring to hold it for speculation as long as they could 

 get government timber for present operating purposes, would be forced to do 

 so in self-defense. These would often be in the best position to bid on the ma- 

 terial. Therefore, since consumption would not be increased, the result would 

 be largely to shift operations, but not operators, from private to government 

 timber. 



4. There is a growing and not unwarranted demand by the public for con- 

 servation by private lumbermen. Prevention of waste and better provision for 

 reforestation are admittedly desirable. But that they are not more widely and 

 successfully practiced is due to inability to do so on the present margin of profit. 



