The lumber industry is undergoing a process of reorganization which reaches to its very foundations. It is so deep-seated as to be almost imperceptible from outward evidence, but is of profound significance to the owner of timber land and to the public.
Hitherto lumbering in the United States has consisted chiefly of manufacturing and selling. The raw material has occupied no consistent place in the equation. The value it has had in fixing the price of the finished product has been merely in its relation to transportation. Intrinsically it has been accorded no value. This situation continued just as long as there was practically free Government timber to be had by opening it up.
It continues now only relatively, however. Transportation must always remain a great factor; the timber owner is still obliged temporarily to meet his obligations by means determined under the old basis. Nevertheless, the moment it became impossible to get timber to manufacture without assuming the costs of producing, such as fire protection, taxation and interest, began an era of inevitable natural regulation. From that time on timber began to assume a value which, although affected by transportation facilities, must eventually be fixed chiefly by the cost of growing other timber to compete with it.
TIMBER IS WORTH THE COST OF GROWING IT
In other words, the value of anything is what it costs to produce it, whether it is a tree or a box of apples. That we found our timber orchard growing when we came to this country does not change this law. It was suspended temporarily while any individual could profit by the growth produced without cost, but began to operate again when he could no longer do so. We are now in a transition period of adjustment. The important thing to remember is that this will not continue until the entire output has actually borne the full cost of production, for before then investments in standing timber will have been regulated by the same influence.
It is true that at present the cost of lumber to the consumer is not fixed absolutely even by the cost of manufacturing and selling it, and that on the contrary it fluctuates greatly with the willingness of the consumer to buy. But this, except within limits, is not a sound working out of the law of supply and demand. It is an incident to the unsound basis of production which still prevails. So long as a very large portion of our standing timber has not cost the owner much in either price, protection, taxes and interest, some of it will be put on the market at a low price in order to carry a milling business through a depressed period, to realize money, or for other exigency reasons. So may a wheat grower lose money on one or two years' crops. But if in the long run the world refuses to pay for wheat what it costs to grow it, wheat will not be grown. The real question is whether or not the world needs forests enough to pay for them.
DEMAND WILL CONTINUE
It is evident, from the history of older countries, that it does. While consumption per capita will undoubtedly decrease, population is growing. Substitution will be necessary, but will not supplant wood for a multitude of purposes. Much has been said about the use of steel, concrete and like materials in building. The building trades only use 60 per cent of our lumber today, without considering fuel. It is unlikely that the reduction of this percentage will very much more than offset the growth in volume of the reduced percentage due to increased population. Fifty years ago there was scarcely a lumber user west of the Mississippi river. We know the settlements, mines, railroads and cities that have developed since to use lumber. It is a poor Westerner who doubts that the next fifty years will see a far greater development. And the Panama Canal is coming, with the certain result of making our fast-producing forests able to compete successfully with Eastern and European forest crops grown with less natural advantage.
Moreover, we now use three and a half times as much wood a year as our forests produce. Consequently the demand might even fall off three and a half times and still consume the product. And the forest producing area diminishes constantly. Little as we now consider the possibilities of food famine, history shows that nations rapidly increase to the limit of their agricultural production or beyond, and we must reckon not only on our own increase but also upon immigration from, and export to, nations whose pressure upon their production exceeds ours. It is certain that land now considered too remote, rough and poor for agriculture will be put to that use. We know that other countries do not to any considerable extent devote land to forest that will grow food crops at all well.