Mr. CLARK. I told you that would be much less objectionable. For example, if it was raised—————

Senator HOLMAN. But you still object to that; that is all there is to it.

Mr. CLARK. For the reasons that I gave; yes.

Senator HOLMAN. In view of the statement made by the United States Forest Service that unless we change our present cutting practice we will face a serious shortage of old-growth fir, how do you justify the exportation of high-grade fir logs?

Mr. CLARK. Well, the exportation of the true peeler grade of logs is a very small quantity, just a few million feet, and compared with the six billion that was cut last year, it is a very small quantity, and we would be willing to cut that entirely out, that exportation, if the plywood people can take the logs and give us the price that we must have to realize enough to keep operating. There isn't a logger on the Pacific coast at the present time that is making a profit.

Senator HOLMAN. My contention is that they will have a market for this kind of log in the domestic market if we do not supply the cheap labor in foreign countries and therefore the low manufacturing price of plywood to our competitors, our foreign competitors.

Mr. CLARK. Well, my contention is, and that is why I think we should have a study of this, because of the difference of opinion that foreign people use a lower-grade log for peeling, and they can get that supply in Canada, and if we pass that embargo they will get that supply in Canada and it won't make any difference in the plywood business of any great consequence.

Senator HOLMAN. Well, that is one question on which there is great difference. I have conversed with one who has pioneered in this industry, and made a success of it, and now finds himself confronted with a situation that is bringing about a lessening and lessening market, until I do not know about the final successful continuance of the business. Where there is a great possibility of its expansion to employ many, many men, not only loggers but carpenters and joiners, and what not, because I have a notation that there is a possibility in this plywood business, like many others, transportation and communications, and textiles, that where a generation or so ago no one is employed, and today the General Motors figures are that some 16,000,000 jobs have been created by the work of certain individuals.

I can vision plywood taking the place of lath and plaster. I have seen houses beautifully finished inside with strippled plywood, tinted. How can we expect to negotiate with Canada in regard to a mutual agreement concerning the restriction of high-grade fir logs, as long as British Columbia is the largest foreign market for our logs of this character?

Mr. CLARK. Well, I think that the people in British Columbia and a great many people here are interested in many more phases than just the plywood alone, as Colonel Greeley brought out the other day. Many of the leaders in British Columbia are looking askance at some of the exportations up there, which, as I said, are running about three times what they are from this country.

Senator HOLMAN. Do you have first-hand knowledge of the timber conditions in other parts of the world, outside of the American continent?

Mr. CLARK. Except from a study, I have done a great deal of reading on the subject so that I may be informed.

Senator HOLMAN. How do you know that a log of 24 inches in diameter at the small end is twice as large as the average peeler log in northern Europe, or do you know that?

Mr. CLARK. I don't think I said that.

Senator HOLMAN. I don't recall your making any such statement. There has been a puzzle in my own mind about the diameter of the peeler log.

What, then, is your objection to the 24-inch limitation? Is it because it includes many logs that are usable other than peeler logs; is that your objection?

Mr. CLARK. Yes; it goes far beyond peeler grade. The peeler industry of western Washington and Oregon take about 3 percent of our total log input.

Now, this bill will limit, I am convinced, the exportation of half to two-thirds the total Douglas fir production.

Sentaor HOLMAN. Of course, we know that foreign nations do use these smaller logs and compete with us?

Mr. CLARK. And they will get them in British Columbia, as I said. Senator HOLMAN. It says here in this list of questions that I have, that our domestic plywood plants are constantly taking smaller and smaller logs. In other words, we are approaching this limit and at the present time apparently they have used logs as low as 27 and 28 inches in diameter.

Mr. CLARK. Yes; they will have to continue to take smaller logs probably, as time goes on.

Senator HOLMAN. As the larger logs become what we might say extinct, the supply becomes exhausted.

You see even these loggers-I am just as interested in their welfare as you are but it looks like they are working on diminishing returns. As time goes on and there is no attempt to standardize the output of this industry, inevitably they are soon going to be out of work and I would like to make a continuous steady employment so that the same approximate number of men are engaged in the logging and lumbering and timber industry, and the same capital, pretty much, year in and year out, except as it expands by making new products and going into refined manufacture.

There has been a criticism, academic criticism, for a long time in selling logs and dimension timber, even, into the markets of the world, that we ought to engage more and more in refined manufacture.

Now, do you realize that by exporting logs to countries having lower wage levels you are contributing to unemployment at home and are indirectly contributing to the raising of foreign tariffs against American-finished wood products? I think that is inevitable, from my reasoning.

Mr. CLARK. Yes; except from the standpoint that the export of logs is only 1 percent, or a little less, of the total production. Some exports are necessary, however, to stabilize price conditions in the United States, the same as it is of other commodities.

Senator HOLMAN. You denied, however, having any members in Canada, no one that contributes to your employment has his source

of revenue or operations in the timber and logging interests in British Columbia?

Mr. CLARK. We have no members except in western Washington and Oregon.

Senator HOLMAN. Are American companies headed by Jamison, Reed & Bloedell, members of your association?

Mr. CLARK. Yes.

Senator HOLMAN. And do they also operate logging camps in Canada?

Mr. CLARK. Yes.

Senator HOLMAN. In view of the sharp increase in our exports of fir logs to Japan, from a little less than 5,000,000 feet in 1932 to 75,000,000 feet in 1936, the last year before the war, is it not reasonable to expect that this exportation will be resumed after hostilities cease? Mr. CLARK. I don't know; answering that part of your question. Going on, part of that exportation to Japan was included in that example I gave you, but which was entirely of low-grade logs.

Senator HOLMAN. But Japan, I do know, on what they are doing with the Port Orford cedar logs-you are familiar with that, too, aren't you?

Mr. CLARK. Yes, sir.

Senator HOLMAN. Do you object to the embargo on Port Orford cedar logs?

Mr. CLARK. Well, I can't speak for the Port Orford cedar; that is another industry that I do not represent. However, I think that the same thing applies there, that the restriction would amount to a good deal more if it was made on a flexible basis by a board that could study the problem.

Senator HOLMAN. We continually are forced to lower and lower grades; if we go on taking the peeler logs, taking them as they come and as fast as we can go, what will happen to the labor handling the job, the loggers themselves?

Mr. CLARK. Well, it seems to me pretty hard to prophesy that far ahead. There is a supply of peeler logs for the present plywood plants for many years ahead.

Senator HOLMAN. You mean at what volume of consumption?

Mr. CLARK. And refined methods will probably make up for the difference in labor costs.

Senator HOLMAN. Well, that is my contention, they will if we don't lose our markets through supplying our foreign competitors with our raw products, because it is inevitable that we are either going to lose our markets or the American workman is going to lose not only his rate of pay but his entire pay. That is my contention.

I think we have covered this question, but do not Canadian plywood mills import American Douglas fir logs?

Mr. CLARK. Yes; they do to some extent, and they also have a local supply.

Senator HOLMAN. Why does not Germany buy logs direct from Canada instead of buying American peeler logs through British Columbia ports? Do I make myself clear on that?

Mr. CLARK. I have no information that they do that to any great extent. The total exports to Germany last year show, for the United States, 1,119,000 feet.

Senator HOLMAN. But my information is-and it was rather suspected there in a letter this morning-in other words, they feel morally sure but they haven't got the evidence, that American peeler logs are shipped to Vancouver, British Columbia, and reassorted out of the rafts and sent on to Germany as British export, but their source of origin is the United States.

Now, you have no doubt that that does happen to some extent?

Mr. CLARK. I don't know; I think that is one of the subjects that this study ought to bring out.

Senator HOLMAN. Well, your own notion is that it is so, isn't it? Mr. CLARK. Well, there may be a small quantity that does go into further export.

Senator HOLMAN. Why have other countries, such as Canada, Japan, Scandinavia, the Baltic countries, and many others, restricted large exports?

Mr. CLARK. I have no knowledge on that, Senator.

Senator HOLMAN. I haven't, myself; but if so, I see no reason why we should do the same. In other words, I don't see why we shouldn't do it anyhow.

I have no further questions.

Senator BILBO. Mr. Clark, I want to ask you one question. Isn't it logical and safe to predict that if this embargo on peeler logs limits or conserves the Douglas fir in this Pacific Northwest territory for home consumption, domestic consumption, that there will be established other plants, and those existing will be enlarged to carry on the finished product manufacture, plywood, et cetera, in the Northwest territory?

Mr. CLARK. Well, Senator, last year the total exports of fir were 53,398,000 feet, and only part of that are peeler grade. That whole export wouldn't provide for a very large peeler plant.

Senator BILBO. What I am trying to get over to you is the idea that if we prevent the exportation of these woods that are peculiarly adapted for the plywood industry, and the articles that are manufactured from these trees, and thus do away with the competition of foreign countries, foreign industrial plants against our own plants, and if American capital knew that this would be saved for their manufacture and they would be protected from this foreign competition, then couldn't you expect such a development of the industry by the plywood people and the finished-product people to absorb all of the material, all of the timber that is shipped for this particular purpose?

Mr. CLARK. Well, we are not entirely sure of that, and nobody has brought us any definite proof. We are afraid that the business will go to Canada, that the foreign plywood people will purchase a little bit more from Canada and supply their local needs.

Senator BILBO. And thus you will have the competition?

Mr. CLARK. Yes.

Senator BILBO. I have no further questions.

Senator HOLMAN. The last picture I ask to be put into the record is a picture taken in March of this year, and is a shipment of logs from the Grays Harbor District in the State of Washington to Japan. Senator BILBO. All right.

(The picture was filed with the committee.)

Senator BILBO. Mr. Steer is here from the Department and I believe he wants to make a statement.

STATEMENT OF H. B. STEER, ECONOMIST, UNITED STATES FOREST SERVICE, DEPARTMENT OF AGRICULTURE

Mr. STEER. It is my understanding that Senator Holman has requested those appearing before the subcommittee to give a brief statement of their qualifications. I am a graduate forester and have had approximately 15 years' experience in the Douglas fir region. I am also a graduate economist, having obtained a Ph. D. in economics in 1937. I am employed by the Forest Service as an economist.

Mr. Chairman, I would like to say that we of the Forest Service admit that this is a highly involved question. There are pros and cons, and I would prefer to answer such questions as the Senators or others may care to ask me, rather than to make a statement.

Senator BILBO. All right. Senator Holman, have you any questions?

Senator HOLMAN. Yes. I will repeat a question, if I may, which I addressed to Mr. Silcox.

Have you any figures showing the comparative log prices in the Northwest market and export prices?

Mr. STEER. Yes, indeed, Senator.

Senator HOLMAN. Will you elaborate to whatever extent the chairman may think well for the record?

Mr. STEER. The question leads inevitably to a discussion of the whole situation. I cannot simply present the price material that I have without going somewhat into detail as to how these prices were obtained.

Of course, the Forest Service is interested in this bill, as it must be in all matters which pertain to the forests of this country.

The people who advocate this legislation contend that the majority of the logs exported are of high quality. The people who oppose it

Senator HOLMAN (interposing). Now do they, the majority? We just say that a great quantity of peeler logs is exported, and of sufficient quantity to affect the world demand for plywood.

Mr. STEER. But, as I recall it, Senator, haven't statements been made to the effect that the big majority of the logs exported have been of low quality?

Senator HOLMAN. Well, I was going to say that as for myself I hadn't expressed any proportion at all, but if others have stated

Senator BILBO (interposing). Mr. Clark just made that statement. Senator HOLMAN. I am sorry to interrupt you.

Mr. STEER. I think Mr. Clark's figure was about 5 percent or thereabouts of the logs exported were of peeler grade.

Mr. CLARK. I would rather object to being quoted. I didn't say 5 percent.

Mr. STEER. Well, to go back, I think it can be agreed that there is a healthy difference of opinion as to the quality of logs that are exported. The details are something else again, and here is something which we have no absolute or no definite information on.

In assembling the available data pertinent to this matter may I say that I have approached this whole question from as much an unbiased standpoint as a man can approach anything.

Senator HOLMAN. That is what we want; we want the truth.

Mr. STEER. I am interested in getting such facts as are available.