As the cost of lumber at the mills is com posed chiefly of raw material cost, which shows constant increase, plus labor cost, which before the war was abnormally low, plus amortization of plant which proceeds more rapidly as the timber supply diminishes, it is an economic cer tainty that, disregarding extraordinary fluctua tions such as occurred during the war period, the price must show gradual increase until it reaches the point at which timber can be grown, converted into lumber and marketed at a profit. That point marks the limit of rise of lumber prices, from the standpoint of the lumber in dustry, but in fact is arrived at by ignoring one particularly important factor—the competition of other materials that can be used in place of lumber. The economic forces that tend to force the price of lumber upward are absent or in consequential in the cases of most of the com peting materials, but it is evident that lumber cannot find a market at prices materially in ex cess of those applying on such competing ma terials. Consequently the lumber industry is rapidly approaching the point at which it will be compelled to meet the problem of constantly increasing raw material and manufacturing costs on the one hand and a price limit fixed by competition on the other. The solution will have to he found in the more complete utiliza tion of the raw tnaterial and in the manufacture and marketing of by-products of many varie ties. It is estimated that waste through the leaving of potentially valuable raw material in the woods ranges from 20 to 40 per cent, but this waste is largely unavoidable and will con tinue so until, by the development of mechanical and chemical processes, material now left in the woods can be profitably converted and marketed.
What has been said about price tendencies relates to the prices prevailing at the mills. The cost of lumber to the consuming public, how ever, is not subject to such extreme fluctuations as the mill price, for the reason that on the average it includes a large item of freighting cost. in which abrupt changes are not apt to occur. In the case of lumber hauled a long dis tance by rail, the freight charges may exceed the mill price of the material. The opening up of water transportation facilities, therefore, be comes an important influence tending to lower the cost of lumber to the consumer. On ac count of its bulky character it can be shipped by water at a fractional part of the cost of rail transportation. The opening of the Panama Canal made possible the shipment of Pacific coast lumber to the Atlantic seaboard at freight rates that compare favorably with rail rates on pine from the Southeastern States, thereby cre ating competition in Eastern markets that tends to hold prices down, to the benefit of the con sumer. The actual effects of the canal's opera
tion were greatly delayed because of the scarcity of tonnage during and immediately after the close of the European War, but the begin ning of 1919 brought Douglas fir from the North Pacific coast into active competition in the Eastern markets.
of the Lumber most important of the by-products made from wood waste include paper of several varieties, fibre board, methyl (wood) alcohol, ethyl (grain) alcohol, charcoal, acetate of lime, pyroligneous acid and numerous tars and oils. Paper and fibre board are manufactured by mechanical and chemical manipulation of slabs, edgings and other saw-mill waste. Wood alcohol, acetate of lime, pyroligneous acid and charcoal are products of destructive distillation. Grain alcohol is produced by a process involv ing the extraction of the starch content from wood waste, its conversion into sugar and dis tillation. In addition to these processes methods have been developed for recovering the turpen tine and resinous contents from longleaf pine stumps, and for the manufacture of various fabrics from wood waste, including an imitation silk sold as fibre silk." The production of tanning extracts from the bark of oak, chestnut, hemlock and other woods is an important means of utilizing what otherwise would be a waste product, but is carried on as a separate business, the lumber business furnishing the raw material.
Careful surveys made by competent chem ists have demonstrated that in connection with almost any large lumbering operating the com plete utilization of the raw material through the development of suitable lines of by-products may be made to increase the profits of opera tion to such a degree that the lumber price can be lowered materially, the by-products opera tion thus carrying its proportionate share of the overhead cost of the business. It is not possible, however, for the individual operator of a small saw mill to undertake enterprises of such character, since they invariably involve large investments in plant facilities, and the de velopment of the by-products business is tend ing in the direction of centralized plants that can utilize waste products from all mills in contiguous territory.