Mr. FORDNEY. But that is no sign of a combination, is it, in itself? Mr. KNAPPEN. I do not think so. Mr. CLARK. Let me ask this question for the benefit of Brother Fordney: Do not these big handlers of wheat fix the price to the farmer, and the farmer has got to take that or not take anything? Is not that true? Mr. KNAPPEN. The farmer is offered a fixed price for his wheat. Whether a combination of buyers has fixed the price, or whether the operation of conditions has done it, it is a fact that every farmer out of a million is offered the same price on the same day. Mr. CLARK. Now, another question: Would not the wonderful sameness of prices in lumber products suggest to you at least that there was a gentlemen's agreement" in keeping up the prices of lumber? Mr. KNAPPEN. Yes; it would make that suggestion. not? Mr. KNAPPEN. Yes. gentlemen" in Minneapolis, are there Mr. FORDNEY. When the prices are going up, those dreams are very delightful? Mr. KNAPPEN. Yes, sir. Mr. FORDNEY. I want to ask you a question, in answer to what the gentleman from Missouri [Mr. Clark] asked you about the elevator man, as you may put it, who fixes the price to the producer. I am not an elevator man or a yard dealer. I am talking from a manufacturer's standpoint. I am in the place that the farmer is in the market in the case he speaks of, and not in the place of the elevator man, and every producer of forest products is exactly in the same position that the farmer is in with respect to the elevator man as compared with the yard dealer. Mr. GAINES. Mr. Knappen, you said that a great deal of land for a long distance about Minneapolis had no timber on it. What is the character of that land? Mr. KNAPPEN. Some of it is good agricultural land. Some of it is practically worthless. It varies, of course, according to the soil. Where there is a clay soil, with a covering of humus, we have a good agricultural land that can be used for agriculture after the trees are removed; but it is true that as to a great deal of the soil, where pine grows, not a very profitable use can be made of it in agriculture. Mr. GAINES. Can you give me an idea of the proportion of the land that is good and that which is useless-or did you say any of it was useless? Mr. KNAPPEN. I would not say that any of it was absolutely useless. Yes; I would say that some of it is absolutely useless. That which is rocky is useless. But even the sandy soil has some value for producing grass crops. Mr. GAINES. Is not your city of Minneapolis more benefited by the increased agricultural population of this land off which the timber has been taken than it would be benefited by keeping it in timber? Mr. KNAPPEN. Where the soil is good there is no question about that. Mr. GAINES. I speak from the West Virginia standpoint, and we are rather more interested in getting people there than in keeping a woody country. Mr. KNAPPEN. Yes. What I said should not be construed as any sort of criticism of the lumbermen for removing that timber. That was the farthest from my thought. I was simply illustrating how the supply was decreased. Mr. GAINES. Yes: but your conclusion was that the condition of the country when the lumber was removed was worse than it was before? Mr. KNAPPEN. Yes; I think that is true of a large part of Minnesota and Wisconsin, and it will only be profitably used in a long time to come, when the country is properly reforested. Mr. GAINES. You have no plan to suggest, have you, by which the timber could be taken off a portion and not off another portion? That is, the conditions which induce the cutting of the timber from an acre of land will induce the cutting of it from the adjacent acre? Do you propose to lodge some power somewhere to permit the Government to determine what acre shall be cut and what shall not? You do not go that far? Mr. KNAPPEN. No; I do not go that far. Mr. GAINES. Now, I understand you to say, also, that it was conceded that the cutting off of the timber produced floods and droughts? Mr. KNAPPEN. Yes. Mr. GAINES. Is that conceded? It is claimed, I know. Mr. KNAPPEN. I thought it was conceded-so much so that I skipped the part of my paper dealing with that in order to save time. I did not present those facts at all. Mr. GAINES. I have heard that the greatest flood in the Ohio River was in the year 1837. Mr. DALZELL. 1832. Mr. GAINES. Then there was a large one in 1847, and another one in 1884, larger than we have had since. I do not think that is conceded. I know it is claimed that it caused that. Mr. DALZELL. I want to say, Mr. Gaines, that a short time ago I had a conversation with Major Sibert, who is one of the most distinguished of our engineers in Panama. Now, he denies that theory absolutely. Mr. GAINES. My own observation would deny it, but that would not be enough to generalize upon. Mr. KNAPPEN. Most of the supposed authorities that I consulted on the matter seemed to be accurate, and therefore I used the word "conceded." Mr. GAINES. Mr. Knappen, if Canada should place upon any lumber products from which we removed the duty an export duty equal to what we would take off, from the amount by which we should reduce the traiff on lumber products, no change in the conditions would result except that the money we now collect as tariff would be transferred into the treasury of the Canadian government. Would not that be true? Mr. KNAPPEN. I think that is obvious. Mr. HILL. You understand that the export duty that is put on by Canada is now added supplementary to the duty on lumber now coming into this country, the United States? Mr. KNAPPEN. Yes. Mr. FORDNEY. The Canadian government does impose an export duty on logs now, does it not? Mr. KNAPPEN. The Canadian government does not. Mr. FORDNEY. Well, what power on earth does? Is it not true that there is an embargo, that the crown land department compels now the manufacturing in Canada of timber cut from crown lands? Mr. KNAPPEN. That does not exactly describe it. Take the timber in Ontario. It is owned, not by the government of Canada but by the government of Ontario, by that province, and that province does impose an embargo on timber cut from land owned by the province, but not from land owned by you or me or anybody else. If you owned lands in Ontario that had timber on them you can freely cut those logs and bring them into this country. Mr. FORDNEY. How much of lands are there in Canada owned by individuals outside of their crown department? There is not anything more, is there, except Indian lands? Mr. KNAPPEN. I think there is a certain amount, not a large proportion, of the whole lands that now have standing timber that are owned in fee. Certain amounts of timber land have passed into the hands of settlers. There have been some special concessions that departed from the usual Canadian practice which have resulted in the fee of lands passing to individuals. Mr. FORDNEY. There is no timber now in Ontario that comes to the United States in logs? Mr. KNAPPEN. I think there are some logs that come from Ontario now. Mr. FORDNEY. I do not know of any. The CHAIRMAN. It is a very small amount. Mr. KNAPPEN. Pulp wood comes in. It is timber and subject to that embargo. The CHAIRMAN. The only prohibition is in the province of Ontario, is it not, and that relates to all sorts of logs, pulp wood, and others, and it is an actual prohibition of exports from government land? Mr. KNAPPEN. I understand it is so as to the province of Ontario. The province of Quebec, instead of imposing an embargo, is, to my recollection, imposing a discriminating tax. That is, if you cut timber from crown or government lands you will be taxed so much if it is consumed in Canada, and taxed a little more if exported. The CHAIRMAN. That is a sort of stumpage tax, is it not? The CHAIRMAN. Now, one word as to the theory of my friend [Mr. Boutell] as to the ultimate consumer. [Laughter.] If the ultimate consumer buys an orange or a box of matches on that price the reduction of duty would have to be very large in order to affect the price of the orange or the box of matches? Mr. KNAPPEN. I think there is no doubt about that. The CHAIRMAN. But on the question of selling boards or sawed timber, where it is sold by the thousand and where the duty is $2 a thousand, that presents an altogether different proposition as to whether the ultimate consumer would get any benefit from it, would it not? Mr. KNAPPEN. I think it does. The CHAIRMAN. If there was competition and a reduction of duty, likely some of it would come to the ultimate consumer? Mr. KNAPPEN. That is my position. The CHAIRMAN. Do you know whether this Georgia pine is cut now in the State of Alabama? All southern pine, I believe, is called Georgia pine. Do you know whether any of this is cut in Alabama? Mr. KNAPPEN. I believe there is. The CHAIRMAN. There is a supply down there? Mr. KNAPPEN. I think there is. The CHAIRMAN. And hence a duty which reported a revenue of $2 a thousand would incidentally help the lumbermen, perhaps, in Alabama? Mr. KNAPPEN. I see no reason to conclude that the Alabama lumberman would not share in the same benefit that the other lumbermen would claim. The CHAIRMAN. It would be levied simply for the purpose of a tax, but incidentally it might help? [Laughter.] Mr. KNAPPEN. Yes. The CHAIRMAN. That is all I have to ask. Mr. UNDERWOOD. I merely wanted to ask you this question: When you come down to the question of the ultimate cost to the consumer, the seller of any article is going to get all out of it he can. It is a question of competition, in the end, as to what the ultimate consumer will pay for any article he buys? Mr. KNAPPEN. I think that is right. Mr. UNDERWOOD. And the more you broaden competition the more chance the ultimate consumer has of buying a cheap product? Mr. KNAPPEN. Yes. I should lay more stress on that broadening of the market than on the mere $2. Mr. BOUTELL. Inasmuch as the chairman has called up the name of my friend, the Ultimate Consumer-I am glad he is taking interest in it-I have here a memorandum with reference to the repeal of the lumber duty, which, it seems to me, would be most beneficent-that is, the repeal of the hardwood tax on the manufacture of furniture. There is a case, is it not, where it would go through fewer hands, and the ultimate consumer of furniture would be apt to get a good deal of benefit from a reduction? Mr. KNAPPEN. You think wood imported into this country and manufactured into furniture would go through fewer hands? Mr. BOUTELL. Yes; I should say it would go through fewer hands than would the vast amount of lumber that is used for packing manufactured products like cotton goods and starch and canned goods. In other words, the benefit to the consumer from the repeal of the lumber duty would be more largely felt and could be most largely felt through competition in the price of furniture? Mr. GAINES. Is it your position, Mr. Boutell, that with free logs for furniture there would be probably a considerable ultimate reduction of price to the consumer? Mr. BOUTELL. I was not referring to free furniture, but to free lumber that goes into the manufacture of the furniture. The factories of furniture in North Carolina are now second in the country, and the factory at Grand Rapids is first. Mr. KNAPPEN. Assuming that it would go through fewer hands in the case of furniture, I should say you are right. Mr. FORDNEY. Now, Mr. Knappen, with reference to the package, the chairman asked you whether or not the man who purchased the article in a package would be benefited by the reduction of duty, and he showed that it would be so small that he would receive no benefit; but he showed, on the other hand, that the man who purchased the lumber would be benefited. It is my understanding and knowledge, gained since I have been engaged in the business, that CO per cent of the lumber imported into this country is consumed in the manufacture of packages, and in that case only 40 per cent of the people would be benefited by a reduction of the duty on wood used for furniture, whereas 60 per cent would get no benefit. Is that right? Mr. KNAPPEN. I do not think I conceded that the man who purchases lumber in the form of a box would get no benefit. Of course we can not tell whether he even pays anything for that box, or what percentage of the cost of the whole article goes to the box. Mr. FORDNEY. When he bought a yard of calico or cotton goods he would not get very much benefit out of the reduction in lumber in the box that brought it to market? Mr. KNAPPEN. No, sir. Mr. CLARK. If a man builds a five, or six, or eight room house he would get some considerable advantage, would he not? Mr. KNAPPEN. Yes, sir. Mr. CLARK. Now, if laths were selling for $2.25 a thousand in 1901, and were selling for $6 a thousand in 1907, and other lumber prices have advanced that much-I am talking about the retail trade then there is a good deal of extraordinary profit that might be divided up so that the consumer would get part of it? Mr. KNAPPEN. Yes, sir. Mr. HILL. Is there any province in Canada where they make crown lands a matter of bidding at auction Mr. CLARK. Now, is it not a fact, that they are The CHAIRMAN. Gentlemen, I would suggest the advisability on the part of members of the committee of refraining from engaging in debates with each other while so many witnesses are here waiting to be heard. What we want most is information from the witnesses, and then we can engage in discussions afterwards. Mr. CLARK. If these hearings amount to anything, when we strike a schedule like this lumber schedule we ought to have it out, even if it takes until Christmas. The CHAIRMAN. We ought to have the questions asked, but if you want to be here until after the 4th of December and still be asking questions, go ahead. We will ask the gentleman to come again. I was not objecting to asking questions, but simply to this joint debate between members of the committee. We will have plenty of time for that in the committee. Mr. FORDNEY. Mr. Chairman, I have no desire to consume time. I know the anxiety of other gentlemen here who are anxious to be heard, and I am ready to stay here until next year to get the facts. That gentleman stated that laths were selling at $2.25 a thousand in 1901, and at $6 in 1907, and if true it is a fact of importance to be brought out. Mr. CLARK. I stated that because I bought them at that time. Mr. HILL. Is there any province in Canada, Mr. Knappen, where the crown lands are not sold at auction-the right to cut timber on them? 61318-TARIFE-- |