Mr. BOUTELL. I have coined for my own convenience the term ultimate consumer," the man who finally uses the lumber. Have you any idea that the repeal of the duty would benefit the ultimate consumer? Mr. KNAPPEN. I assume, allowing somebody to be benefited, that the ultimate consumer, as you state, would ultimately get his share. Mr. BOUTELL. Take the history of a white pine tree in the Canadian forest. Through what hands does that go to reach a box manufacturer, say, in Michigan? Mr. KNAPPEN. Of course I can not answer that question from actual knowledge of the trade. I can just give you the inference that any fairly well-informed man might have or might give. I suppose the tree would be manufactured at some lumber mill in Canada, and that the lumber would be bought by an importer or wholesaler on this side of the line, and by him in turn be sold to the retailer. Mr. BOUTELL. So that we would have, first, the owner of the tree, who saws it into boards; second, an American importer; and third, to follow out the illustration which I have adopted, an American box manufacturer, and say he is a maker of starch boxes, who sells them to the starch maker, and the starch maker sells the package to the jobber, and the jobber sells it to the retailer, and you and I are the ultimate consumers, together with the rest of the American people. Now there are six hands through whom the product of that tree passes. Now, of course, it can not be claimed that this $2 is automatically renounced by the owner of the tree. He will try to get his benefit, will he not? Mr. KNAPPEN. Certainly. Mr. BOUTELL. He will try to get his benefit unless the Canadian is different from other people, and so on down the line; so that when you speak of the benefit to the consumer you speak of the American purchaser of the starch? Mr. KNAPPEN. No; I not only refer to him, but I really had in mind the ultimate consumer as well. Mr. BOUTELL. That is, the purchaser of the box of starch? Mr. BOUTELL. You think the difference would work out all along the line? Mr. KNAPPEN. Yes, sir. But in the illustration you cite it would not amount to much in the packing box. Mr. BOUTELL. In our attempt to help the consumer in the modification or repeal of these duties we should look at the benefit, if we can, which it would bring about to the ultimate consumer-the man who uses it. Now, it is not safe to assume that by the repeal of the duty there is an automatic renunciation of all that duty by the originator of the article the owner of the tree. He is not going to give it up. He is going to get all the benefit he can, and the wholesaler is going to get all he can. Mr. KNAPPEN. I think so. Mr. BOUTELL. So that, in considering the benefit to the consumer, we have got to consider that it may go through from two to six hands, all of whom may get their share of the profit. Mr. KNAPPEN. I think so. I think you cited an extreme case in the case of the packing box that goes through six hands, but the principle would apply. Mr. BOUTELL. Yes; the principle would apply, so that by looking at the question of repeal of duty from the point of view of the ultimate consumer, we have got to take into consideration the fact that there are other hands through which it passes, although it may not be six. Mr. KNAPPEN. Yes. Mr. BOUTELL. Now one other point, in reference to the question of conservation, and I may say I was very much interested in that feature of your paper as well as in the other discussion. I never have noticed in any part of Great Britain or on the Continent, to my recollection, a single frame house or a single house with wooden shingles, and with this rise in the price of lumber and this general tendency which now exists for preserving our forests and natural resources, have you thought at all of our possibility of supplanting in a measure a frame for the exterior of a house with the brick, stone, or concrete and the use of tiles, and what the comparative cost would be? Mr. KNAPPEN. I can not say that I have gone into that question of comparative cost, but I have considered those factors as entering into the problem of lumber consumption, and I know that even in so old a civilization as they have in France, where, as you say, they have learned to economize in lumber and have substituted other things for it-even there, with all their economy, they are increasing their annual use of lumber 10 per cent per capita. It is the same in this as in many other things. A new article is used for something, but immediately there are other new uses for the old article, and I do not believe that the many substitutes for lumber that have been introduced and are being introduced will practically affect the demand, though they will relatively, but I believe that the demand will actually increase from year to year, as it has done heretofore. Mr. BOUTELL. It certainly will unless we stop it. Would not the substitution in this country, to as large an extent as it has been substituted in Europe, of stone and brick and terra cotta and tiling for the exterior of houses make an enormous difference in the demand for high-class lumber? Mr. KNAPPEN. It would. relatively, but I do not think it would cause us to decrease the use of lumber. To make my meaning plain, after that was done I do not believe that ten years from now we would be using less lumber than we are using to-day, or that we would be using less lumber per capita. Mr. BOUTELL. You have looked into the question in Canada and Mexico. Have you looked into the competition that may come from the West Indies, where, I understand, there is an inexhaustible supply of hard wood? Mr. KNAPPEN. I am frank to say that I have not looked into that subject. Mr. UNDERWOOD. I would like to ask you a few questions. The gentleman who examined you from the other side of the table asked you questions from the standpoint of protection. I want to ask you questions from my standpoint. I am not a protectionist and do not believe in a protective tariff, but I do believe that a good deal of the revenue of the Government ought to be raised by taxes levied on goods imported into this country. Now, from that standpoint I want to ask you this: Is there importation of logs into this country free of duty now? Mr. KNAPPEN. Yes, sir. Mr. UNDERWOOD. Comparatively few logs, less than a million dollars' worth of logs, were imported in 1907? Mr. KNAPPEN. Yes, sir. Mr. UNDERWOOD. Do you know why there was not a larger amount of Canadian logs imported into this country? Mr. KNAPPEN. One reason that would contribute to that is the fact that some of the Canadian provinces have either prohibited the export of logs taken from the government lands or else have imposed a discriminating tax upon those logs. Mr. UNDERWOOD. That is just what I was coming to. As a matter of fact, the reason why the importation of Canadian logs into this country has been limited is because when this Government removed the duty from logs either the provinces or the Canadian government placed an export tax on logs, did they not? Mr. KNAPPEN. I think it would be more accurate to say that when this country clapped a duty of $2 a thousand on lumber the provinces retaliated by putting not an export tariff, but an export tax, on logs cut from crown lands. Mr. UNDERWOOD. There is no difference, there is no distinction, between a tariff and a tax of that kind. It was a tax or a tariff, whichever you choose to call it, that prevented the importation of logs into this country? Mr. KNAPPEN. I think so. Mr. UNDERWOOD. And the revenue that was originally derived from the tax on logs, instead of going into the Treasury of the United States, goes into the treasury of the provinces or the Canadian government. Now I want to ask this question: Suppose we were to remove the present tax on sawed lumber in order to conserve our resources and preserve our forests. Would not the Canadian government do with sawed lumber just exactly what they did with logsput an export tax or export duty on sawed lumber, and the tax would go into the Canadian treasury instead of going into our Treasury? Mr. KNAPPEN. I do not think so. Mr. UNDERWOOD. And the cost to the consumer here would be the same? Mr. KNAPPEN. I do not think so. Mr. UNDERWOOD. I would like you to give your reasons on that point. Mr. KNAPPEN. The reason I make that statement is that in Canada the lumber-manufacturing industry, in a country where manufactures are not very extensively developed as yet, is a very useful industry and has a great deal to do, as the lumber industry of this country has to do, with the shaping of legislation. I think that that influence would be great enough to prevent the Canadian government from imposing an export tariff, even if it were considered by the Canadian government a desirable thing to do. Mr. UNDERWOOD. It was not great enough to prevent their putting that export tax on logs. Mr. KNAPPEN. Notice that I said "lumber-manufacturing industry." The logger and the owner of logs and the lumber manufacturer in that case might have conflicting interests. Mr. UNDERWOOD. You think, then, that if we removed the tax on lumber absolutely the Canadian government would leave it free trade and not put on an export tax? Mr. KNAPPEN. I do believe that. Mr. UNDERWOOD. Have you anything except your own opinion to warrant that statement? Have you investigated it? Mr. KNAPPEN. I have talked with Canadian lumbermen, and I know they will vigorously oppose such a movement, and I know that they do not think it will be done. Mr. UNDERWOOD. That is all I wanted to ask. Have you any witnesses that you expect to introduce here who have considered that particular question? Mr. KNAPPEN. I think so. Mr. UNDERWOOD. What are their names? Mr. KNAPPEN. I think that Mr. Scanlon and Mr. Lynch and Mr. Rogers are competent to testify on that subject. Mr. UNDERWOOD. That is all I have to ask. Mr. FORDNEY. Mr. Knappen, you stated that the price of southern lumber had increased 77 per cent in a given number of years. Mr. KNAPPEN. I do not recall the exact figure, but I think that was it. Mr. FORDNEY. If that is true, the price on southern lumber was then around $17. It is pretty low now when it is only $13? Mr. KNAPPEN. The figures are not my figures. Mr. FORDNEY. That was in 1880, I think. Mr. KNAPPEN. Those figures were taken from the pamphlets issued by the Forest Service of the Government. They are not collected from private sources. Mr. FORDNEY. You stated also that from 1880 down to date the production of lumber in the State of Washington had increased thirteen-fold? Mr. KNAPPEN. Yes. Mr. FORDNEY. Is it not true that in 1880 Michigan and Wisconsin, especially those two States, were supplying a very large amount of lumber east of the Missouri River? Mr. KNAPPEN. Yes; that is true. Mr. FORDNEY. And that the industry in the State of Washington was really in its infancy and just starting up? Mr. KNAPPEN. That is true. Mr. HILL. Mr. Knappen, will you ask your people who are here if any of them have in their pockets the present price lists at which agents are supplying lumber throughout the country? If so, I would like to have a copy. Mr. KNAPPEN. I will ask them about that. Mr. HILL. I think your statement will be more than sustained by such prices. Now, the first question asked was, "Whom do you represent?" You recognize the fact that you do not have to represent anybody but yourself as an American citizen in coming before this committee? Mr. KNAPPEN. Yes; and I thank you for that suggestion. I noticed a statement in the paper the other day by Mr. Payne, the chairman, to the effect that American citizens are welcome here, and I think that is a sufficient justification for me to be here, even if I represent nobody but myself. Mr. FORDNEY. I made no reflection on you whatever. I asked you, when you said you represented a certain association, if it were not yourself, and you admitted you were the whole association. Mr. KNAPPEN. I was was perhaps overfrank in that statement. [Laughter.] I mean I think I did myself an injustice. I would like to give you the names of our official personnel, if that is at all pertinent. Mr. FORDNEY. Not at all; not at all, sir. I only wanted to know what interest you represented. Everybody is welcome, so far as I am concerned, and I am pleased to see you here and to get better acquainted with you. Mr. KNAPPEN. Thank you. Mr. CLARK. Mr. Knappen, in this question that Mr. Boutell asked you, which you answered, about the ultimate consumer, it is not probable that the Canadian miller, if that is a proper term, and the wholesaler and the retailer could manage to absorb all of this $2, is it? Mr. KNAPPEN. Did you say, Isn't it probable they would? Mr. CLARK. I said, Is it not probable that they would not? Mr. KNAPPEN. I think they would not be able to manage it. Mr. CLARK. Would not the competition have something to do with holding the prices down until the American and Canadian lumbermen would have time enough to form a new combination? [Laughter.] Mr. KNAPPEN. You can not tell what a lumberman will do. [Laughter.] Mr. CLARK. But they would, in the nature of things, have to take a little time to get up a trust that would cover both the United States and Canada, would they not? [Laughter.] In that brief breathing spell the consumer would get a little advantage in this shaving off the tariff. Mr. KNAPPEN. I think that much is certain. Mr. CLARK. And if they did not succeed in getting up this international combine the consumer would get his pro rata share of this $2 difference? Mr. BOUTELL. Is there an international lumber trust now? Mr. KNAPPEN. I do not believe there is. Mr. BOUTELL. So that there is not at the present time any combination between American and Canadian lumbermen? Mr. KNAPPEN. I do not think there is. Mr. CLARK. But it is a rather peculiar coincidence that they all sell at the same price, is it not? [Laughter.] Mr. BOUTELL. Have you any idea that on the repeal of this duty there would be this calamity that Mr. Clark suggests, of a combination between the American and the Canadian lumbermen? Mr. KNAPPEN. That is a possibility, of course. Mr. BOUTELL. Then, by repealing the tariff, we would get a greater trust than before-an international instead of a national one? Mr. KNAPPEN. Mr. Clark has suggested the defense. Mr. FORDNEY. Is it not true that in a given market Canadian and American wheat men sell wheat at the same price? Mr. KNAPPEN. I think so. |