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Popular Science Monthly/Volume 87/August 1915/Some Economic Factors Influencing the Forestry Situation

SOME ECONOMIC FACTORS INFLUENCING THE FORESTRY SITUATION
By A. F. HAWES

STATE FORESTER OF VERMONT

I

IN the movement for the conservation of our natural resources, which is now rapidly gaining strength in our eastern states, as well as in the national government, the influence of many factors must be taken into consideration, and the question may very well arise as to whether our representative form of government, as exemplified in our national congress, our state legislatures, and city councils, is sufficiently far sighted to cope with them. Can these cumbersome bodies, representing, as they do, the contending interests of the day, and having their eyes so closely focused on the present, look into the distant future and pass judiciously on measures affecting the next generation?

It has been a well-recognized policy, on the part of our local governments, to exempt new industries from taxation for a period of years on the ground that such an inducement would counterbalance any advantages that other towns had to offer, and that the new industry would be an unquestioned asset to the community. Very few industries, however, are so constituted that artificial benefits can compete with natural favorable conditions; such as nearness to the supply of raw material, transportation facilities, water power, and a ready supply of efficient labor. Even if these could be counterbalanced, the practise of tax exemption has become so general that it is quite as easy for an industry to secure it in one locality as another, and the result is a practise of community throat-cutting without any appreciable benefits. So long as the practise is tolerated it is, of course, impossible for single towns or cities to prosper without entering into this unfortunate scramble.

A still more important question is as to whether the proposed industries will be really beneficial to the locality in which they are established. They are, as a rule, beneficial or otherwise, according as they have the elements of permanency. That many lines of business of seeming permanency may fail, or after a few years' experience, remove to other places, is, of course, to be expected. So a business, which, by the nature of things, can exist only for a short time, may not be a damage to a community if it leaves that community no poorer than when it came. For example, a corn-canning factory may prosper in a region just so long as corn production is a profitable line of agriculture for the farmers to pursue. But if some other crop becomes more profitable than corn, the new crop will be raised; or, if the value of dairy products rises proportionately higher than corn, the corn will be used for ensilage.

The removal of such an industry would not impoverish the community except in so far as the local people had invested in it. So a business which exploits without waste a mineral resource, the amount of which can never be increased, can not be considered blameworthy for the entire disappearance of the supply. It is very different when we consider a resource, such as timber, which, by proper handling, can be made permanent, and can be even increased from two to ten fold over its natural productivity. A company which enters a region with the intention of stripping off within ten or twenty years timber which has been one or two hundred years in growing, and which can not be regrown in less than three quarters of a century, is in much the same position as the gentleman swindler who entertains lavishly, pays generously for what he gets, but finally escapes with the wealth of his confiding friends. It is only fair to say that this does not apply to the lumbermen of the past, for, after all, business honesty is a very relative matter, and one can hardly expect a firm to conduct its business on principles in advance of public opinion. That interlocking directorates were in good repute a decade ago will not excuse such a condition in the future.

It will be apparent to any one considering permanent prosperity, that such an industry, removing in a wasteful manner a resource like timber, that could be handled in a better way, is anything but an asset to the community. Such a business not only should not be encouraged by tax rebates, but should be controlled by state regulations safeguarding the community from such disastrous results of a wasteful policy as may be seen in many deforested sections of the country.

Innumerable instances could be cited from various states of serious mistakes in public policy where injurious industries have been encouraged by tax rebates. One may suffice as an example. In a Vermont town there was a timber property that was assessed fifteen or twenty years ago at $40,000. For several years, while this timber was being removed, the saw-mill manufacturing it was exempted from taxation. The mill is now gone, and the real estate is assessed at $1,000. Many other properties have depreciated in the same way, and the inevitable result is a steady increase of the tax rate. Depopulation and degeneration are the natural results of such a policy.

 
II

Lumber prices in the past have not justified much attention to the growing of timber as a private business. It must be remembered that these prices have never been based on the cost of growing timber, as are the prices of manufactured articles, upon the cost of production, but have been fixed by competition based simply on the cost of manufacture. While the price of lumber is to-day much higher than it was fifteen or twenty years ago, we must realize that a considerable part of this increase is due to the higher cost of labor, and the increased transportation charges, due to the inaccessible position of much of the timber now being cut. While the stumpage price has also advanced, it has not yet any relationship to the actual cost of growing, but only to the scarcity of, and demand for, the particular kind of timber. Only in the case of a few species, which are in particular demand, and which also happen to be rapid growing, are the prices sufficient as yet to cover the cost of growing. Under this heading may be included such species as the white pine, white ash, basswood and chestnut. On account of the serious dis-ease of the latter it can not at present be advised for growing. Other species, which are almost equally in demand, and which sell for nearly as much, can not be grown for their present sale prices because of their slow rate of growth. As examples of these may be mentioned the hemlock, cedar, birch and maple. The first of these can probably be dispensed with, because its place can well be taken by more rapid growing species; but such species as cedar, birch and maple, which have peculiar qualities of their own, must, if they are to be perpetuated, eventually demand higher prices than the more rapid growing species, in order to compensate the raisers for the greater length of time required. Otherwise, the introduction of some substitute will be essential. Between these two classes is a group of trees whose growth is such that under favorable circumstances they may be profitably raised, but which, under conditions prevailing in many remote sections, can not be grown at a profit. The spruce, balsam, red oak, hickory and poplar may be mentioned in this class.

As the prices for slow-growing timbers must be relatively higher than for rapid-growing species, if they are to persist, so the prices for trees yielding the better grades and wider boards of a species must be considerably higher than for small, poorly developed trees. For some time we have had grading rules formed by various lumber manufacturers' associations for the grading of manufactured lumber, the different grades selling for different prices. This has not generally affected the prices paid for round logs or standing timber. In some localities, where there is a growing competition between wood-working industries for particular kinds of timber, there have been developed, of late, local grading rules for round logs. By these rules, which are similar to those which obtain in European countries, highest prices per unit of volume are paid for large logs free from defects, and the lowest prices for small defective logs with several gradations between. While the prices paid for these various grades are as yet purely arbitrary, they tend to encourage the holding of the better trees for the higher prices. Eventually these prices must be based on the factors which go to produce these better grades, such as the added length of time, the labor expended in silvicultural operations, etc.

At all conservation meetings the cry is common among lumbermen that prices do not yet warrant the practise of forestry. That this is still true in the remoter regions is indisputable; yet the lumbermen should remember that they have only themselves to blame for the condition, since they have always pushed out into new fields faster than the lumber prices warranted. The public is little concerned whether or not a man can practise forestry profitably in one section of the country, if it is known that he can do so in the more accessible regions. The national production of lumber brings up a very nice question. It is well known among lumbermen that a slight overproduction results in a considerable drop in prices; which is, of course, fatal to the forestry cause. Yet we have the popular demand for cheap lumber and the strenuous opposition on the part of the government to any kind of an agreement among lumbermen to limit the output. In the same way the popular feeling is to-day undoubtedly in favor of no tariff on lumber on the ground that more Canadian lumber will be imported, and that our lumbermen will not be obliged to cut so much. As a matter of fact Germany and other countries, which have paid attention to the growing of timber, have a tariff on lumber to protect their growers from countries like our own, which are wholly exploiters of timber, although at the same time a great amount of lumber is imported by their manufacturers. It should be the duty of some federal commission, possibly the Interstate Trade Commission now under discussion, to try to arrive at a compromise between producers and consumers, whereby the annual output would be sufficiently limited to eliminate waste and maintain prices high enough to warrant the practise of forestry; and, on the other hand, to protect the consumers against monopolistic prices.

 
III

Bonded indebtedness for railroad construction has been the bane of many a New England town. In the days when the United States government was subsidizing the railroads of the west, the farm towns of New England were raising every possible dollar to build their own railroads in the forlorn hope that in this way they could meet the competition with the fertile lands which a misguided government was giving away in the west. Voting year after year for unneeded protection against foreign nations, these farm peoples were betrayed by the politicians into a far more disastrous competition with cheap lands in the west, which no established community, with accompanying high values, could resist. The general decline of farm values; migration of the population to cities and the west; the bankruptcy of railroads and similar events, are the chief incidents of the rural history of New England of the last generation. Many of the towns, still overtaxed by reason of long-standing railroad bonds, may well ask the question "whether the railroad was an asset or a liability." In not a few regions railroads were first constructed for the purpose of transporting lumber. If any thought were given to the future it was assumed that agriculture or some unforeseen industry would follow lumbering and would furnish business for the railroad. In many of these sections only a small portion of the soil is adapted for farming, and wood-using industries alone are possible in a community where lumber is the only natural resource. Is it then any wonder that many of these railroads to-day, after the timber has been removed, are on the verge of insolvency? It is too late to remedy this evil in many sections, but new railroads are still being built in the same old spirit of exploitation. Would it not be well for a state, in granting a charter for such a road, to make some provision for the conservation of the natural resources tributary to that road? Such a measure would not only safeguard the community traversed, but would be of inestimable benefit to the innocent stockholders of the railroad, upon whom the road would, sooner or later, be unloaded by the capitalists.

Some form of state control would work no hardship upon the people, if adopted in connection with better transportation facilities. It is a well acknowledged fact that adequate transportation alone makes possible the practise of forestry. Yet, because of the shortness of human life, and the still shorter human judgment, railroads in this country have always resulted in waste and desolation of forests, rather than in conservation and upbuilding, and only in a few cases, where the soil was particularly rich, has forest destruction been justified.

From the standpoint of railroading, there are few crops which furnish the promise for permanent railroad prosperity that is supplied by the timber crop of the well-managed forest. Under fair conditions of soil and management an annual production of 300 board feet per acre is easily obtainable. Let us assume a railroad, fifty miles in length, serving a region about thirty miles wide. If one third of this area is tillable, which is about the average percentage in New England, the total area which should be devoted to forestry would be 640,000 acres. The annual cut from this area would be about 190 million feet of lumber, or 10,000 car-loads, were it all shipped in a rough state.

The average freight rate on a car of lumber from Northern New England to Boston or Springfield, is about $50. Such a traffic would, therefore, be worth to the whole railroad system (although not to this one road alone) a half million dollars a year.

It is estimated there are in New England some twenty-five million acres better adapted for timber production than for other purposes. If this were all utilized as described above, and one half of the lumber cut were shipped, while the other half was used locally, the railroads would move annually over 200,000 cars of lumber. Is it unreasonable to expect that railroad executives will spend more thought in the future on the conservation of tributary natural resources, and less on the manipulation of funds, than has been the case in the past? The only alternative may have been already foreshadowed by the action of the federal government in undertaking an extensive railroad policy in Alaska for the proper development of the immense resources of that territory.

More, perhaps, than any other class, the forester is concerned with the material prosperity of the future; not, however, from any narrow professional sense, but because of the far-reaching influence of such prosperity upon the development of the future people. He may, therefore, be pardoned for looking at some of these matters from a somewhat different angle from that in which they are usually regarded.