countries to be manufactured into Douglas-fir plywood, which enters foreign trade in competition with our own domestic softwood plywood, particularly Douglas plywood as produced in the Pacific Northwest. Douglas-fir plywood exporters and manufacturers in the United States are finding it increasingly difficult to compete with this situation, and this bill will automatically restrict the export of Douglas-fir-peeler logs which are intended for manufacture into plywood in foreign countries. Port Orford cedar is found in limited stands and areas in the Pacific Northwest. It is a highly specialized wood and, at the present time, is exported to Japan and Canada and there converted into battery separators and other specialty wood products in competition with similar products manufactured in this country. Much of this material is reexported. This bill will restrict the export of Port Orford cedar logs irrespective of size or quality. The bill provides that Douglas fir peeler logs having a diameter of 24 or more inches at either end; suitable for rotary veneer cutting and capable of producing not less than 20 percent of clear veneer, based upon the scale content of the log; having not less than eight annual rings per inch at the smaller end; and not containing defects making such logs unsuitable for rotary veneer cutting shall not be exported from the United States of any Territory or possession thereof except with the approval of the President and the joint recommendation of the Secretary of War, Secretary of the Navy, Secretary of Commerce. and Secretary of Agriculture, after an application made to the Secretary of Commerce. The amendments to S. 1108 propose to further restrict the export of Douglasfir logs regardless of quality and size, whereas the bill as originally introduced referred specifically to Douglas-fir-peeler logs of a certain quality and size. The amendments also include restrictions on the export of Sitka spruce logs, irrespective of size and quality. Although Douglas fir peeler logs are limited in growth and occurrence, Douglas fir logs are quite plentiful. The same observation may be made in connection with Sitka spruce which, while confined in its growth to a limited area in the Pacific Northwest and British Columbia, is not limited in growth and occurrence. Therefore, from a conservation standpoint, the same considerations do not apply to exportations of Douglas fir logs and Sitka spruce logs. From the long-range economic standpoint and for the country as a whole it is doubtful if this bill should be enacted. From the immediate local interest of Pacific Northwest lumber and plywood manufacturers the bill appears to have some merit. However, it is by no means certain that the long-range interests of the groups supporting the bill would be served by this legislation. There is, moreover, the question of doubtful precedent of setting up restrictions on exports of this sort. In addition the bill would appear to be in conflict with the general foreign-trade policy of the administration. This Department does not, therefore, endorse this legislation. The Bureau of the Budget has advised that there is no objection to the submission of this report to the Congress. Very sincerely yours, R. C. PATTERSON, Jr., Assistant Secretary of Commerce. Senator BILBO. Following that we have a report from the Secretary of Agriculture. (The document referred to is as follows:) DEPARTMENT OF AGRICULTURE, Hon. JOSIAH W. BAILEY, Chairman, Committee on Commerce, United States Senate. DEAR SENATOR: Further reference is made to your letters of February 2 and 15 requesting a report on S. 1108 and amendments. The primary purpose of the Douglas fir plywood industry in sponsoring this bill is to improve its situation in international trade in plywood by prohibiting the export of Douglas fir peeler logs which are now being manufactured in foreign countries and the product placed in direct competition with Americanmade plywood. The industry also has in mind the welfare of dependent labor and the promotion of forest conservation in the Douglas fir region. The amend ment broadens the scope of S. 1108 to include all Douglas fir and Sitka spruce logs, as well as those of Port Orford cedar. Federal appropriations are not involved. The subject matter of your inquiry will, for your convenience, be discussed from the standpoint of the three species involved as follows: PORT ORFORD CEDAR The wood of this species is of exceptional quality and is used for the manufacture of specialty products. The stand, which is decidedly limited, is estimated at 1,200,000,000 board feet log scale in Oregon, with probably an additional quarter of a billion feet in California. Port Orford cedar lumber production in Oregon is not separated by the Bureau of the Census. The production of "cedar" lumber in western Oregon, as compiled by our Pacific Northwest Forest Experiment Station at Portland from Census records, averaged 48,000,000 feet annually during 1925-36, inclusive. It is estimated that from 75 to 95 percent was Port Orford. (See attached table.) This would place the average annual lumber cut of this species in Oregon at around 40,000,000 feet. Statistics of exports of Port Orford cedar logs prior to 1936 are not available from Department of Commerce records. Exports decreased from 16,000,000 feet in 1936 to 5,500,000 feet in 1938. SITKA SPRUCE The combination of lightness, strength, and toughness possessed by Sitka spruce have made it the leading wood for aircraft construction. It is also very valuable for certain other specialty purposes. The estimated stand is about 11,500,000,000 feet log scale in western Washington and western Oregon. This includes the highest value and commercially most important stands. The stand in Alaska is placed at 18,000,000 and in British Columbia at 16,000,000 board-feet, respectively. The production of Sitka spruce lumber, in western Oregon and Washington averaged about 205,000,000 feet from 1925–36, inclusive. (See attached table.) Exports of Sitka spruce logs are not segregated by the Department of Commerce. Our Pacific Northwest Forest Experiment Station indicates, however, that they have averaged about 4,000,000 feet a year since 1927, exclusive of exports to Canada, which are probably small. DOUGLAS FIR The primary importance of S. 1108 is in relation to Douglas fir. The suitability of this species for a wide range of building and general construction purposes, and also for the manufacture of plywood, makes Douglas fir one of the most important trees of the United States. In lumber production it is second only to southern pine. The lumber cut in western Washington and Oregon, from 1925 to 1936, inclusive, approximated 6,000,000,000 feet annually. (See attached table.) The estimated stand of Douglas fir in western Washington and Oregon is 330,000,000,000 board-feet log scale. The relation of supply to total depletion is far less favorable than would appear by comparing this figure with that for annual lumber production. Because of remoteness from transportation, rugged topography, etc., probably not over one-half of the above volume is economically available for commercial utilization under present conditions. From the standpoint of forest conservation the situation is far from satisfactory because logging operations in large part have been on a destructive liquidation basis which has not assured sustained productivity of the resource. The relative volume of peeler logs used by the plywood industry is small, but they must be of very high quality. Present specifications are met by only a small fraction of the logs from trees 40 inches in diameter at breast height or larger. Under present conditions, therefore, it is safe to say that only a few billion feet of economically available Douglas fir timber qualifies for peeler logs. Despite some progressive lowering of specifications for Douglas fir logs, it seems probable that we shall face a shortage of suitable raw material if we continue to export 80,000,000 feet of peeler logs annually sooner than we would if S. 1108 is made a law. This is particularly true if peeler logs now being exported are actually reserved for the plywood industry itself. It should, however, be pointed out that the sale of peeler logs represents a very profitable phase of the logging industry and that the price of peeler logs might drop if the market is closed to independent loggers. There is also no assurance that the foreign plywood industry-now using Douglas fir logs-would not turn to other materials if deprived of these logs. In some respects the situation with regard to the export of high-grade Douglas fir peeler logs and logs of Port Orford cedar, and Sitka spruce is not unlike that of hickory, oak, black walnut, and ash, or other specialty raw forest materials. Whether an embargo, as contemplated by S. 1108, is nationally advisable depends in part upon the interrelations of forest industries and trade and forest products with industries and trade in other fields; and also upon its effect of the whole policy of international trade, and upon existing and contemplated trade agreements. These are matters primarily within the jurisdiction of the State Department and the Tariff Commission. The circumstances presented in this letter, however, bear out the contention of the Douglas fir plywood industry that Douglas fir plywood made in foreign countries from logs imported from us, and of which we have a virtual monopoly, is displacing American-made plywood in foreign countries; and that this throws the American plywood industry off balance, causes a serious loss to labor and industry, and will result in an earlier exhaustion of our supply of suitable raw material than if we exported no peeler logs. It is, therefore, my judgment that from the standpoint of foreign conservation and dependent industries and labor, the effect of embargo action of the character contemplated by S. 1108 would be beneficial. On the other hand, the Department recognizes that an embargo on a raw material, such as this legislation contemplates, involves important questions of international trade policy and foreign relations, concerning which the Department of State is in a better position to advise your committee. Upon reference of this matter to the Bureau of the Budget, as required by Budget Circular 344, the Acting Director thereof advised the Department of Agriculture under date of March 18, 1939, that there would be no objection on the part of that office to the submission to Congress of this report. Sincerely, H. A. WALLACE, Secretary. Lumber production, cedar, Douglas fir, and Sitka spruce, western Washington and western Oregon, 1925–36, inclusive [Compiled by the Pacific Northwest Forest Experiment Station from records of the Bureau of the Census [M board feet] Senator BILBO. I understand there are some witnesses here from the Department of Agriculture. Mr. Steer, first, of the Forest Service. Is Mr. Steer here? (No response.) Senator BILBO. Mr. Sparhawk? (No response.) Senator BILBO. Mr. Hayward, chief, Division of Forest Products, Department of Commerce-is he present? Mr. HAYWARD. Yes. Senator HOLMAN. Mr. Chairman, may I just make a statement to the committee, and ask permission for a certain matter. At my request, both in the writing of this bill and to assist me in the hearings of the committee, Mr. Axel H. Oxholm, who has been for 18 years in charge of forest products in the United States Department of Commerce, is here. He has traveled widely throughout the world, studying conservation and forest utilization. Since 1935 he has been the manager of the Pacific Forest Industries, a Webb Export Corporation composed of all Douglas fir plywood manufacturers in the Pacific Northwest portion of our country. I ask permission for him to join me in developing technical phases of the timber industry effected by this proposed measure, and in foreign practices and in reciprocal trade agreements, and all those technical matters. I ask permission, not only to be heard myself in due time at your convenience, but to permit him, as an associate and assistant to me, to be heard. Senator BILBO. Very well, Senator, I had just received a request from Senator Schwellenbach that Mr. Oxholm be heard as soon as the Government witnesses had been heard. Senator HOLMAN. I am not saying when, but during the course of the proceedings, if we might want to ask questions of a particular witness. Senator BILBO. We will certainly be glad to have you. STATEMENT OF PHILLIPS A. HAYWARD, CHIEF, FOREST PRODUCTS Mr. HAYWARD. I should state at the outset that I am here at the request of Senator Holman and not as the representative of the Department of Commerce, whose official views are already before the committee. Whatever I may say, therefore, represents only my own views based upon my experience as a specialist in this field, quite apart from my official connection with the Department. I might say, as a matter of introduction, that the Department of Commerce has given this bill very careful consideration and has informed the committee as to the reasons for not endorsing such legislation. With this thought in mind, therefore, my appearance before your committee should not be interpreted as favoring the bill. I am here to present factual information and to give you the benefit of my experience, in the hope that such may facilitate your determination. We have considered the problem from all sides since, as you gentlemen know, the Department of Commerce, and my division specifically, is charged with the development of both domestic and foreign trade in lumber and timber products. With reference to this bill, we have had to look a little aside from our general departure, because we realize there are many interests concerned. May I point out first, as a matter of economics, that the United States lumber and timber products industry, particularly lumber products formerly enjoyed first place in the world markets. Today the industry stands fifth, and we are superseded by Canada, Finland, Russia, and Sweden. This change has taken place as a result of many circumstances and conditions. I think those intimately acquainted with the industry know what they are. But we believe this loss of lumber exports products is due particularly to increased log imports by consuming countries. If I may cite just as an example, in previous years some of our best customers purchased lumber and manufactured wood products. From that procedure they have switched to the import of raw materials, and we believe, in the Department of Commerce, that this log situation indicates that trend quite definitely. Of course the only way we have to determine this is upon basic information, such as statistics of log exports, but I would like to point out that although we do compile and publish statistics on all types of lumber and timber products, it is rather difficult to take any one particular year, as such, and compare it with the exports or imports of other years, because we have cycle changes. For example, economic conditions in Europe at the present time, have a very peculiar effect upon their exports of lumber and timber products to the world and vice versa. So we do feel that it is rather difficult to use basic statistics in developing any study of this nature. Now as I said a minute ago, it is difficult to determine this particular trend in exports of logs, but as we compare them from the year 1929 to the present, we see that there is a definite increase in the export of logs and raw materials. We find a very peculiar situation existing in Europe at the present time, and we think we are able to judge just how this condition is shifting. At the present time we have noted a very serious shortage in the production of logs in the Scandinavian countries, particularly Norway and Sweden, and as an example of that, only last year the European Timber Exporters' Conference, which had set up a quota for the exportation of their products over a period of years, seriously curtailed their export quotas. Now I believe that I am correct in saying that based upon foreign reports that we have received, the shortage in these products is becoming acute, and for that reason they may be even further curtailed by the European Timber Exporters' Conference next year. What does that mean? It means that regardless of this log shortage these Scandinavian countries have become the world major exporting countries for lumber products and have now supplanted the United States. This means that there must be a growing shortage of timber supply. We feel that their supply of quality timber in the first place is reduced. I am talking about softwoods, because that is what we have under discussion here. It is a known fact that our timber supply here, as far as grade, quality, size, availability is concerned, is probably equal or better than any country in the world, and that is significant, because we think that as this shortage of timber may develop in European countries, or throughout the world, there is going to be a growing demand for our raw materials such as logs. Now I might cite a few examples of what is taking place. Formerly in certain countries we had a fair, and what we believed was a just, duty on our lumber and timber products. We find that |