Mr. SCANLON. I was speaking in a general way, not particularly about lumber.

Mr. RANDELL. You were speaking of it being owned in Louisiana. Mr. SCANLON. Yes, sir.

Mr. RANDELL. Any in Texas?

Mr. SCANLON. No, sir.

Mr. RANDELL. Are you acquainted with timber in the eastern and southern part of Texas?

Mr. SCANLON. Yes, sir.

Mr. RANDELL. How would you say that the number of individuals, corporations, or firms engaged in the lumber business in Texas would be as compared to the number seven years ago?

Mr. SCANLON. The number engaged in it and the amount produced is larger than it was seven or eight years ago. At that time lumber was being manufactured by small mills. Those are going out of the business.

Mr. RANDELL. Have they been sold out, run out by competition, or have they been bought by the larger concerns?

Mr. SCANLON. They have been bought up by the larger concerns. They were wasteful in the methods of logging and in the methods of manufacturing.

Mr. RANDELL. Are the lumber interests owned now by a few people? Mr. SCANLON. No, sir; the lumber business of Louisiana is owned by operating corporations. There is quite a large number of them. Mr. RANDELL. Formerly the smaller mills owned all the timber, practically?

Mr. SCANLON. Yes, sir; the smaller mills sold because they got more money by selling than they could get by manufacturing, owing to the wasteful methods.

Mr. RANDELL. After that the price of land rose materially?

Mr. SCANLON. Southern pine timber began to advance in the early nineties. It advanced in 1891, 1892, 1893, 1894, 1895, 1896, and up to 1897.

Mr. RANDELL. In 1892 a great many of those smaller mills were bought, and from that time the rise began?

Mr. SCANLON. Yes, sir.

Mr. RANDELL. In southeastern Texas what were the prices nine years ago as compared with the prices now?

Mr. SCANLON. I presume there has been at least 300 per cent increase. Lands that were worth $7.50 ten years ago are to-day worth $30.

Mr. RANDELL. It is about 300 per cent increase. I think that is a fair average.

Mr. SCANLON. Yes, sir.

Mr. RANDELL. What would be the effect on the price of lumber in the southeastern and the southwestern parts of the Mississippi Valley if the tariff were taken off?

Mr. SCANLON. I do not believe it would have any effect upon prices. down there, because no wood would come in from Mexico to compete in that section.

Mr. RANDELL. Would the effect be to prevent the rise to the extent of the tariff?

Mr. SCANLON. I do not think so. There would not be the abnormal advance there has been heretofore.

Mr. RANDELL. Would not that be the tendency? In other words, if we added $2 duty there would be less competition?

Mr. SCANLON. Yes, sir.

Mr. RANDELL. Do we get any lumber from Mexico?

Mr. SCANLON. We export lumber to Mexico.

Mr. RANDELL. There is a great amount of timber in Mexico accessible to Texas and the plains of the Southwest?

Mr. SCANLON. It is a rough country, and the labor is exceedingly poor and very cheap.

Mr. RANDELL. Labor is cheap and timber is often cheap and the country is being opened up by railroads?

Mr. SCANLON. Yes, sir.

Mr. RANDELL. That would open up a supply for the Southwest? Mr. SCANLON. Yes, sir.

Mr. FORDNEY. One gentleman stated a few moments ago that the price of lumber was $10 a thousand above what it was ten years ago. Mr. SCANLON. Yes; but I think that gentleman was wrong in his statement. I think that what he intended to say was that lumber at the time of the government report in 1907 was $10 higher.

Mr. FORDNEY. If that statement is true, there is no reason why Canadian lumber could not come into this country?

Mr. SCANLON. No, sir.

Mr. CLARK. While Mr. Fordney was questioning the witness he asked if it was not true that 60 per cent of that lumber was used in the box business or the packing business, and the witness seemed to agree with him.

Mr. SCANLON. That is not true.

Mr. FORDNEY. I said imported lumber.

Mr. CLARK. I did not understand that.

The CHAIRMAN. Part of the lumber coming here is manufactured into boxes, and they get a drawback on that.

Mr. CLARK. What proportion of the consumption of lumber would this box business take as compared to the general consumption of lumber? It would be a very small percentage, would it not?

Mr. SCANLON. In the United States I think it is estimated that about 25 per cent of all of the lumber goes into the manufacture of boxes.

Mr. FORDNEY. Of all made in this country?

Mr. SCANLON. Yes, sir.

Mr. FORDNEY. How about the imported lumber; do you know? Mr. SCANLON. I do not think any lumber imported from British Columbia would go into the manufacture of boxes, but there is some that comes from Ontario that does so. It is used in the manufacture of boxes in this country, but I would not say what percentage of it. Mr. FORDNEY. Most of the lumber comes into the Pacific coast? Mr. SCANLON. Yes, sir.

Mr. BOUTELL. I understand, then, from your statement that you think the repeal of the duty would give to the price of lumber a greater stability, but would not result in reduction of the price. Mr. SCANLON. That is my theory.

Mr. BOUTELL. If we should repeal the duty on lumber, to go into effect on the 1st of July next, a man in my district could not build a six-room cottage any cheaper after that time than he could now, so far as the tariff is concerned.

Mr. SCANLON. No, sir; so far as the tariff is concerned.

Mr. RANDELL. But if it had the effect to bring down the price of lumber might not the man build his house cheaper hereafter?

Mr. SCANLON. Yes, sir.

The CHAIRMAN. If the duty remains, what do you say to whether or not the price will go up?

Mr. SCANLON. We will have abnormal advances in the price of timber and lumber. It is not a healthy condition. It is not a question of ruining the business, but it might ruin the business of the retailer. I remember that in October, 1905, lumber went down $5 a thousand in five weeks. It left the retailer with a large stock on hand greatly below the prices of 1906. I do not think, however, that that condition will prevail if the tariff be removed.

The CHAIRMAN. Was not that decline of last year due to the panic? Mr. SCANLON. If prices had not been so high there would not have been any cause for such a drop in the manufactured article.

The CHAIRMAN. Without going into that theory, is it not true that the drop in prices was due to the lessening of the demand in consequence of the stagnation of business?

Mr. SCANLON. Yes, sir.

The CHAIRMAN. There has been a good deal of testimony and argument on that, and I do not think we ought to go into it. You have stated that you have interests on this side and on the other side of the border?

Mr. SCANLON. Yes, sir.

Mr. UNDERWOOD. The yellow pine interests in the South are almost entirely owned and controlled by northern men and northern capital, are they not?

Mr. SCANLON. I do not know about that. I know that northern men and northern capital are heavily interested in southern pine timbers, both in stumpage and in manufacturing.

Mr. UNDERWOOD. Yellow pine timber for outside work in the construction of buildings, that part that comes in contact with the weather, has no competitor, has it? Is it not more valuable for that purpose than any other timber?

Mr. SCANLON. There is a certain species of yellow pine, known as "all-heart pine," which has no competitor.

Mr. UNDERWOOD. Old-field timber is poor and would not stand the weather as all-heart yellow pine would, and, since it has no competitor, would it affect the southern mills if we had free trade?

Mr. SCANLON. I would not say "Yes" on that point because I think to a certain extent it will be.

Mr. UNDERWOOD. Who will compete with them?

Mr. SCANLON. You asked as to the competitor of all-heart timber. Fir might come in as a competitor for that purpose.

Mr. UNDERWOOD. Is that domestic pine?

Mr. SCANLON. That is domestic pine.

Mr. UNDERWOOD. It is cheap in this country, and it would be with free trade?

Mr. SCANLON. Oh, yes.

Mr. UNDERWOOD. So that a reduction of the duty, or free trade, would really not affect the southern lumber interests one way or the other?

Mr. SCANLON. I do not think so.

Mr. UNDERWOOD. The cost of transportation of lumber from Mexico into this country is so great that it would not come into competition with the southern territory, especially not with the southern mills, would it?

Mr. SCANLON. I do not think the cost of transportation will be a factor from Mexico, because the railroads can not compete.

Mr. UNDERWOOD. So that, as a practical proposition, so far as the southern mills are concerned, the only thing in which they are involved is the question of revenue?

Mr. SCANLON. Yes, sir.

Mr. UNDERWOOD. At what point do you think the duty should be fixed in order to produce the greatest revenue to the Government? Mr. SCANLON. My idea would be to repeal the tariff and put an export duty on every foot of lumber produced in this country.

Mr BOUTELL. You think you would make more revenue by reducing the tariff than by raising it?

Mr. SCANLON. I think you will, as a revenue producer, lose by reducing it.

Mr. UNDERWOOD. Any reduction will reduce the revenue.

Mr. SCANLON. That is my idea.

Mr. UNDERWOOD. You do not think there will be any more importations than there are now?

Mr. SCANLON. No, sir.

(Thereupon, at 1 p. m., the committee took a recess until 2 o'clock p. m.)

AFTERNOON SESSION.

COMMITTEE ON WAYS AND MEANS,
November 20, 1908.

The committee reconvened at 2 o'clock p. m., Hon. Sereno E. Payne (chairman) presiding.

STATEMENT OF MR. M. J. SCANLON (continued).

Mr. CLARK. I want to ask you one question. Suppose Congress should adjourn after the consideration of this tariff bill-that is, after the revision is made, whatever it is-and leave the tariff on lumber as it is now; do you not think it would not accidentally happen, or some other way, that the price of lumber would be immediately marked up $2 or $3 a thousand?

Mr. SCANLON. I think it would have a tendency to advance the price, but it would be due entirely to sentiment.

Mr. CLARK. Due entirely to what?

Mr. SCANLON. Sentiment. That is, it would have a sentimental effect on the market.

Mr. CLARK. No; the real reason would be that these men who own the lumber would know that there was no reasonable prospect of there being a change in the tariff then for a long time to come, and that they could play it just as they pleased. Would not that be the element in it?

Mr. SCANLON. I do not think so, Mr. Clark.

Mr. CLARK. That is what I wanted to ask you.

Mr. HILL. Mr. Scanlon, how long have you been in the lumber business?

Mr. SCANLON. I have been in the lumber business all my life.
Mr. HILL. Were you ever in the lumber business in Michigan?
Mr. SCANLON. No, sir.

Mr. HILL. Or in Wisconsin?

Mr. SCANLON. In Wisconsin and Minnesota.

Mr. HILL. In Wisconsin and Minnesota. How low do you remember uppers having been sold, in your particular experience? Mr. SCANLON. What do you mean by the term " uppers?" Mr. HILL. What were technically known as fourths and selects. Mr. SCANLON. We do not have them that way in our market.

Mr. HILL. I know you do not, but you did when you were in Wisconsin, did you not?

Mr. SCANLON. I never was engaged in the manufacture of lumber in Wisconsin.

Mr. HILL. I beg your pardon; I thought you were. manufacturing in Minnesota?

You were

Mr. SCANLON. Yes, sir; I was manufacturing in Minnesota. Mr. HILL. What part of the production of your logs, what percentage of it, turns out fine upper grades of lumber?

Mr. SCANLON. A very small percentage.

Mr. HILL. Is it more than than 3 per cent?

Mr. SCANLON. Rather more than that; yes, sir. I would place it somewhere in the neighborhood of 5 per cent. I have those figures here, exactly.

Mr. HILL. Is it not a fact that the Canadian product of lumber, the shipment that comes to the United States, is largely the log run? Are not the Canadian shipments now into the United States largely the log run, everything above the mill cull?

Mr. SCANLON. No, sir; I think you are mistaken in that. It is what is termed "low-grade lumber" from the eastern district. In the western district it is largely the opposite, a high-grade lumber, and the culls find a market at home.

Mr. HILL. Do you ship any southern lumber into Canada, Georgia pine and North Carolina pine?

Mr. SCANLON. No, sir; we are manufacturing in the long-leaf district of Louisiana, and are selling considerable lumber in eastern Canada-Montreal and Ottawa.

Mr. HILL. What is the average price now of yellow-pine flooring; narrow, first-class, clear flooring?

Mr. SCANLON. We only have one market for that class of lumber, and that is in the New England States, and it is usually sold in that territory in a wholesale way at $50 a thousand.

Mr. HILL. How long have you been manufacturing in Louisiana? Mr. SCANLON. There is so little of that grade of lumber sold that the price has practically remained stationary.

Mr. HILL. All right.

Mr. FORDNEY. Do you sell in the Canadian market the same grades of lumber cheaper than you do in the markets in the United States? Mr. SCANLON. No, sir.