A few great corporations or aggregations of corporations and individuals now control an immense proportion of the remaining forests of the United States. One of these, the great Weyerhauser group, is said to have produced more than fifty millionaires, and if we are to believe Mr. N. W. McCleod, president of the National Lumber Manufacturing Association, the bulk of these fortunes must have arisen from the ownership of large bodies of timber rather than from manufacture, and he predicts that this condition will continue. We may say, then, that the fifty millionaires of the Weyerhauser group owe their fortunes rather to the acquirement and holding of stumpage than to the profit arising from the manufacture of lumber.

To illustrate the enormous profits that are thus possible it is worth while to call attention to the fact that the Weyerhæusers some eight years ago purchased from the Northern Pacific Railroad vast tracts of timber lands on the Pacific coast at a price fixed by rumor at about 10 cents per thousand feet, and to-day this same timber is held by the owners at not less than $3 per thousand. Here is a profit of 3,000 per cent, and yet these interests will probably think themselves aggrievd if the tariff is removed from forest products.

A well-known western lumberman has, in recent years, acquired 650,000 acres of sugar and yellow pine in northern California, estimated to carry 15,000,000,000 feet of timber Most of this timber can be manufactured within ten years at a profit of $10 per thousand, and some of it can be manufactured at that profit now. The timber and the land on which it stands has been acquired at a cost probably not exceeding $4,000,000 and the property is now, or soon will be, worth $150,000,000. This gentleman is opposed to the repeal of the tariff on forest products and, identifying his individual interests with those of the forests, he opposes the repeal of the tariff in order to protect the forests.

It is to be feared that many of our lumbermen have confused protection of the forests and excessive profits arising from the "unearned increment" of their forests, which are two vitally different things.

These illustrations are cited in no mean-spirited enmity to lumbermen. Lumbering is one of our chief industries. It gives employment to a host of men and its great captains take high rank in the roll of those admirable leaders of industry whose careers are the pride of the nation. Unlimited abuse has been heaped upon them for doing what, under the conditions prevailing, they could not but do, but we have now come to a time when national welfare offers some considerations that are paramount to those advanced by the lumber industry. If we are to accept the opinions of the authorities, the industry under present conditions will become extinct within a generation, and its decline is certain in the near future. Any course that tends todecrease the pressure on our forests will prolong the existence of the lumber industry.

The advance in the price of lumber in recent years consequent upon the decreasing available supply is a matter of such common knowledge that little emphasis need be laid on it here. Suffice to say the reports of the Department of Commerce and Labor show that from 1899 to 1906, only seven years, yellow-pine lumber increased 77 cent in price; Douglas fir, 63 per cent; white pine, 54 per cent; cedar, 66 per cent; western pine, 44 per cent; maple, 30 per cent; sugar

per

pine, 31 per cent; tamarack, 80 per cent. These figures are based on average values per thousand of all grades of timber. The increase in some qualities of lumber has been vastly greater, and if we go back to 1893 and come down to 1907 we will find that in some cases the increase in the price of lumber has been almost 200 per cent. Reduced to dollars these percentages of increase amount to $7.54 per thousand for yellow pine; $5.53 per thousand for Douglas fir; $5.66 per thousand for white pine: $5.33 per thousand for hemlock; almost $4 for sugar pine; nearly $7 for tamarack; about $4 for cedar; and about $8 for oak.

Just think what these figures mean to those who build houses of wood. The man who built a house of wood in 1907 paid almost half as much again as in 1899 and probably at least twice as much as in 1893.

The purpose of the tariff is to foster industries and increase the industrial well-being of our people by making imported goods pay a customs tax equal to the difference in the cost of their production and that of similar goods made in this country. The tariff was not imposed with a view to encouraging the exhaustion of our natural resources; neither was it intended to protect the enjoyment of natural monopolies. The ownership of timber in this country is now practically a natural monopoly. Timber can be replaced, but the time required is so long that considering the interests of one generation the supply is fixed. There is a certain amount of timber; every year it grows less in extent, and is more and more concentrated in the hands of a comparatively small number of owners. Does Congress wish to protect this monopoly of a great natural resource-mind you, protect the monopoly, which is not protecting the resource, but is rather protecting the speculative profits of the monopolists. We take it Congress is not concerned in protecting this interest. It is concerned primarily with the protection of American labor and secondarily with seeing that conditions are not so altered that the American manufacturer can not profitably compete with the foreigner.

As for wages, American labor has nothing to fear from the effects of free lumber. The only present source of supply for lumber and other forest products that can be or have been grown in the United States is Canada. There was a time when the rate of wages paid in Canada was very much lower than in the United States, but that was before the present era of industrial activity and settlement in Canada, which has brought the standard and cost of living and wages in that country to as high and in some parts a higher plane than prevails in the United States.

We have been at some pains to collect data bearing on the subject of wages paid and the cost of production in the lumber industry in the United States and Canada. There is some oriental labor employed in the western Canadian mills on account of the lack of white labor, but while the rate of wages per man to the oriental is somewhat lower than to the white man for the corresponding work, the superiority and efficiency of the white man makes his labor cheaper in the aggregate The data attached hereto show that wages in western Ontario and western Canada are fully as high and in some cases higher than in middle and western United States mills.

I took the trouble to write to a number of manufacturers in British Columbia and asked them if they employed oriental labor, and, if so,

how it compared in actual cost with white labor. Their answer, without exception, was that they employed oriental labor because it was the only labor to be had owing to the scarcity of white labor; that in some cases they had to pay the oriental almost the pay of a white man, who, as a rule, is very much superior; that they would much prefer white laborers if they could get them at the prevailing price for white men in British Columbia or in Washington.

As for white labor, I have a mass of figures which I will not trouble you with now unless you desire it, but it can be safely stated that white labor is actually paid better wages in British Columbia than in Washington or Oregon, and I am very willing and glad to produce the figures.

The CHAIRMAN. Have you any statistics as to the comparison of the prices of labor in British Columbia and Oregon?

Mr. KNAPPEN. Yes, sir. I intend to submit them in a brief.
The CHAIRMAN. Very well.

Mr. KNAPPEN. As for the protection of the manufacturer, it is to be noted that he has nothing to fear from cheap labor, since that no longer exists in Canada. In the second place, the cost of construction, equipment, and general operation in Canada is higher in that part of Canada most likely to compete extensively with our lumbermen than in the States, so that on that side of production the manufacturer is protected by existing conditions. The data appended hereto show that in British Columbia logging, which by law must be carried on with white labor, paid from $3 to $6 per day, costs 10 to 30 per cent more than in the United States; that the cost of mills, general machinery, and equipment, including logging equipment, is more by about 30 per cent. As to profits, the Canadian mill owner is, perhaps, satisfied with smaller profits than the American. On that account there might be somewhat less profit in good times to the American manufacturer if the tariff on lumber were repealed. The only other item entering into the problem is that of the cost of stumpage. As was stated before, we do not think that Congress desires to protect the owner of American stumpage on the book prices he puts on his stumpage as it increases in value from year to year. The manufacturer who owns stumpage may have to reduce the price charged to his stumpage on his books in order to show a book profit, but that is a matter of bookkeeping and of calculation of values. It does not affect the actual cost of manufacture.

In

As far as the consumer is concerned your committee should be on guard against testimony tending to show that the lumber industry, especially on the Pacific coast, is even now in great straits and therefore actually requires protection. We are just emerging from a period of general business depression lasting more than a year in which naturally the demand for lumber has not been strong. the case of the Pacific coast lumbermen the case is complicated by an increase in railway rates. Your attention is directed to the fact that the mills in British Columbia have been passing through just as severe a trial as that of their fellows to the south. At one time last year practically all of the mills in the Province were shut down, and those mills, it should be noted, while suffering from prevailing business conditions equally with the American mills, had no protection for rough lumber in their domestic territory. The mills in the mountain regions of British Columbia rely chiefly for their market

on the prairie Provinces of Alberta and Saskatchewan and those markets are open to their competitors on the south.

In this connection it is worth while to note that there is now a considerable agitation in Canada looking to the imposition of a retaliatory tariff on American lumber. This agitation is opposed by the consuming population of Canada, especially in the western Provinces, and is not likely to succeed, but if the Canadian government thinks it wise to consider the interests of its consuming population as affected by lumber-tariff legislation, may it not be that it is worth while for our Government to make a similar point of view?

The fact should not be overlooked that though our forests are being rapidly depleted and many of our lumbermen oppose tariff legislation that will tend to admit to our consumers the products of foreign forests, they themselves are freely exporting our forest products. They are exporting not only to countries which have no forests and impose no duties on forest products, but they are actually exporting immense quantities of lumber to countries, such as Canada and Mexico, which have great forests upon which our markets rightly should be drawing. According to the official statistics, our lumbermen exported to Canada during the last fiscal year nearly $10,000,000 worth of lumber and other wood, while $3,632,713 worth was exported to Mexico, and these figures take no account of exportations to either country that may have been carried on salt water.

In fact, it is noteworthy that we export to Canada now about half as much value of forest products as we import therefrom. Our total exports of forest products now exceed in value $126,000,000, and a large portion of this is presumably in competition, and successful competition, in foreign markets with the Canadian product. The United States is in fact the leading exporting lumber nation of the world.

In this connection I would call attention to the competition of our west coast mills in Washington and Oregon with those of British Columbia in the markets of the world. This is shown in detail in appended figures, but I will here merely call attention to the fact that in the export trade, shipping in free competition to the same markets, the mills of Washington and Oregon increased their exports from 131,000,000 feet in 1895 to 363,000,000 feet in 1907, while those of British Columbia increased their exports in the same period from 41,000,000 to 67,000,000 feet, the increase in the former being nearly 200 per cent and in the latter about 55 per cent. If our mills can compete successfully with those of British Columbia in the foreign trade, what have they to fear from them in the domestic market? Certainly not disastrous competition.

It is worth noting here that while the values of lumber per thousand of the domestic product increased 58 per cent from 1899 to 1907, the corresponding increase of imported lumber was 76 per cent, which tends to show that external conditions have not tended to cheapen lumber while United States conditions were tending to higher prices, and suggest possibilities of successful competition on the part of our manufacturers.

Mr. FORDNEY. May I ask you a question now, or do you prefer to finish?

61318-TARIFF No. 9- -08- -2

Mr. KNAPPEN. I have only a little more to say and would prefer to finish.

Mr. FORDNEY. Then finish first.

Mr. KNAPPEN. It is British Columbia competition that most disturbs our lumbermen. We have considered the cost of manufacture in that connection. As to the supply of timber, the Pacific Lumber Trade Journal estimates the stumpage of British Columbia at 150,000,000,000 feet as compared with 225,000,000,000 for Oregon; 196,000,000,000 for Washington: 180,000,000,000 for California; and 100,000,000,000 for Idaho and Montana. Thus, according to the official organ of the Pacific coast lumbermen, the amount of commercial timber in British Columbia is only a small percentage of that in our Northwestern and Coast States.

Indeed, so freely and, from the standpoint of the Canadian manufacturers, so illegitimately did our manufacturers exploit the Canadian market that the Canadian government thought it wise to adopt. what is known as the "antidumping law." This law was aimed at the practice of exporting lumber and other products from the United States to Canada and selling them there at a lower price than it was sold for at home. In other words, our lumber manufacturers for years deliberately sold their surplus lumber product in Canada at reduced prices while maintaining exhorbitant prices at home.

One probable effect of the removal of the tariff would be cheaper lumber to the consumer, either absolutely or relatively, compared with what he would otherwise be compelled to pay in the future. While there is no reason for believing that Canadian lumber can be laid down in the United States at such prices as to disastrously affect the profits of the American manufacturer, the fact that it can be offered somewhat cheaper on account of the cheaper stumpage and that it increases the source of supply and thus widens the buyer's competitive market will undoubtedly benefit the consumer. With Vancouver, British Columbia mountain points, Saskatchewan, and Ontario mills added to the sources of lumber supply, the buyer will undoubtedly have a better opportunity to get a favorable price to himself than he has now with fewer markets in which to buy. There will, therefore, be a distinct advantage to the consumer. With this competition the prices of lumber will not tend to advance so rapidly as the years go by; consequently the pressure upon our American forests will be somewhat relieved and their destruction will not proceed so rapidly as at present.

As to the fiscal side of the question, the revenues the Government receives from the duties on lumber are not in the aggregate very large, being in 1907, for example, $1,853,158.30, though on wood and manufactures thereof it amounted to $1,385,038.59.

To sum up the effects of the repeal of the tariff on forest products as we see it, it would not be at all adverse to the interests of labor, would not disturb the prosperity of the manufacturer, would benefit the consumer, and check the inroads on our American forests.

Not being an expert in this matter, I have invited a number of lumbermen to appear before your committee and give testimony on the subject of comparative wages, cost of production, prices of lumber, prices of stumpage, and other points bearing on this question, all tending to show that as lumbermen they have nothing to fear from the removal of the tariff on lumber.