STATEMENT OF GUY V. WHITENER, SR., WHITENER LUMBER CO., NEWBERRY, S.C.

Mr. WHITENER. Thank you, Senator Thurmond and distinguished gentlemen, I do not have a prepared statement, but I have a few words I would like to say.

I am an old lumberman. I have been in it 48 years. I quit school when I was 12 and had to go to work.

And I am alarmed at the situation we find ourselves in at this time in the southern pine lumber industry.

I have a very efficient organization, we think, and it has been profitable, but the profit has long since disappeared at least these last 3 years.

Just to give you some idea of the extent and also to tell you what has been happening to all these mills that have dropped out that you have heard about this morning, in 1960 our losses were 80 percent of our capitalization.

Senator THURMOND. Eighty percent of what?

Mr. WHITENER. Eighty percent of the capital stock, the capitalization of my company or companies.

And in 1961 it was 30 percent.

Now, it stands to reason a good businessman is not going to continue on that basis, so that is what has happened to a lot of these mills. A lot of them have dropped out.

We are still staying in, hoping to get some relief and try to overcome some of these obstacles that are causing this situation in the way of earnings.

This 22 percent import of Canadian lumber is quite a big percentage. But if you break that down on the population basis pro rata, the Canadian mills are furnishing more lumber to this country than our own mills, because Canada is a much smaller country than ours, and still they are getting 22 percent of our use of lumber. Now, there are several factors. First, I want to say that I endorse everything that Mr. Kelly said and Mr. Beal and Guy, Jr., and all the other fellows that have come up here. I make my recommendations along with theirs that a rigid quota system be installed or be imposed and that southern lumber be classed as an agricultural product and that the capital gains on forest products be kept as it now is, and also that the FHA enforce its own rules and regulations as to stress rating of lumber and as to dryness?

Senator THURMOND. As to what?

Mr. WHITENER. As to dryness. As to the dryness of the lumber. Enforce their own rules as to the stress rating and the dryness of lumber.

It has those rules set up, and they have not been enforced.

These points would help us tremendously I am sure, especially the import quota, quota systems.

Thank you for your time.

Senator THURMOND. All right. We are glad to have you with us, Mr. Whitener.

Now, that completes our list I believe of those who indicated they wished to testify. Is there any other timber producer or lumber manu

facturer or other person here interested in the lumber business who would like to testify at this time?

(No response.)

Senator THURMOND. Well, it seems there is no one else here, so I guess this completes the hearings then. I wish to thank all of you good people for coming here today and for the great interest which you have manifested in this hearing.

I am convinced that the lumber industry in the South faces a very perplexing problem and one that demands the utmost consideration by the Congress and the leaders of our Nation.

It is vital, in my judgment, that action be taken, and I hope these hearings will be of benefit to the lumber industry and to our timber growers.

If there is no one else to testify, we will now adjourn the hearing. I am going to leave this record open for about a week, and if there is any futher statement that interested parties would like to place in the record, if they will mail it to me at Washington, we can place it in the record.

I want to say I am glad to have Mr. Tom Mason from the Commerce Department with us. He is going on to Atlanta. Are you going to Shreveport too, Mr. Mason?

Mr. MASON. Yes.

Senator THURMOND. I am glad that the Commerce Department is represented here and can hear these problems firsthand falling from the lips of the witnesses who are vitally interested in this subject.

Mr. Sam Stilwell here is a member of the Commerce Committee staff, and so is Mr. Ralph Horton here, and we are glad to have them with us too. Mr. Stilwell is from Travelers Rest in Greenville County, so he is coming back home like I am. We are glad to have Mr. Horton here too.

I want to take this opportunity to thank Mr. Thomas for the use of this Senate hall and also the capable sergeant-at-arms here and the other people who have been so helpful to us at this hearing. We are very grateful to you for your courtesy and kindness.

We will now stand adjourned.

(Whereupon, at 2:50 p.m., the committee adjourned, to reconvene at 9:30 a.m., in the house chamber, Capitol Building, Atlanta, Ga.) (The following material was submitted for the record:)

CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Washington, D.C., May 3, 1963.

Hon. STROM THURMOND,
U.S. Senator,

Washington, D.C.

DEAR SENATOR THURMOND: May I commend you for holding hearings on the economic condition of the southern lumber industry in Columbia, S.C. Your leadership and keen interest in the lumber and timber industry in the South is greatly appreciated by me personally and by my people.

Timber is by far the greatest and most valuable crop grown in South Carolina today. Anything that you and your great Senate Commerce Subcommittee on Surface Transportation might do to protect this crop and its related industry against unfair foreign competition would be a great step toward insuring the continued growth and future of timber.

We have invested millions in this crop. Our people have paid taxes for years hoping to receive a return on their investment. We have invested in fire protection and in thinning operations. We have invested also in programs of good forest practices and forest management.

Senator, may I add a word also about the pulp and paper industry being closely related to lumber, furniture, turpentine, and other aspects of tree farming. Sawmills now involved in processing lumber find that selling chips to the pulpmills is necessary to remain in business.

We are grateful to you and your great committee for holding these hearings and for studying legislation which will encourage the pulp and paper, lumber, and tree farming to expand and grow.

Sincerely,

WM. JENNINGS BRYAN DOEN.

Hon. STROM THURMOND,

NATIONAL LUMBER MANUFACTURERS ASSOCIATION,
Washington, D.C., April 25, 1963.

Senate Office Building, Washington, D.C.

DEAR SENATOR THURMOND: The dire economic plight of the American lumber industry has been called to the attention of the Congress many times. We have requested support of legislation to help bolster a declining lumber economy and to continue full employment throughout the industry. Bills have been introduced in both Houses of Congress and we now call upon your support to help get these bills favorably reported from the various committees so that they may be enacted into law. I am enclosing material explaining the proposals when they were introduced in both Houses of Congress.

The hearings that you are holding will be most helpful in bringing to light many of the particular problems that the industry faces in the South. Mr. N. B. Giustina, president and general manager of Giustina Bros. Lumber Co., in Eugene, Oreg., and also President of National Lumber Manufacturers Association, closed his sawmill operation March 29. He cited as reasons the competition from Canadian softwood lumber.

On April 18 we received word that Georgia-Pacific Corp. was closing their sawmill operation in Springfield, Oreg., thus putting out of work more than 200 people. Julian C. Cheatham, vice president of Georgia-Pacific, said their decision to suspend the sawmill operations at Springfield was made because they could not compete economically with the advantages enjoyed by Canadian producers. There have been hundreds of mill closings in the past year.

The competition from Canadian softwood lumber is significant. In the South alone over a half a billion board feet was shipped into the South last year. This is almost four times what it was less than 10 years ago. There has been a steady increase of shipments of Canadian softwood lumber into the South and there is no indication that the tide will turn. Only legislation can help at this point.

At the present time one out of every five boards of lumber purchased in the United States is Canadian. This is taking lumber markets away from the southerners as well as the westerners.

This is a nationwide problem and I hope that your committee will look into this particular problem with emphasis.

With kindest personal regards, and best wishes,

Sincerely yours,

DONALD BALDWIN, Director, Legislative Relations.

(The brochures referred to in Mr. Baldwin's letter are on file with the committee.)

[H.R. 5805, 88th Cong., 1st sess.]\

A BILL To amend section 27 of the Merchant Marine Act, 1920, to provide for the carriage of lumber by United States-flag commercial vessels or by vessels of the country of origin of lumber

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 27 of the Merchant Marine Act, 1920 (46 U.S.C. 883) is amended by the addition of a new subsection at the end thereof as follows:

"2. All lumber transported by water to a point in the United States, including districts, territories, and possessions thereof, from a foreign nation or from a

foreign port shall be transported on privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates for United States-flag commercial vessels, or on flag vessels of the foreign nation in which the lumber was manufactured, to the extent such vessels are available at fair and reasonable rates for the flag vessels of that nation."

SOUTH CAROLINA STATE COMMISSION OF FORESTRY,
Columbia, April 29, 1963.

Senator STROM THURMOND,
Senate Office Building,

Washington, D.C.

DEAR SENATOR THURMOND: Mr. E. C. Pickens, assistant State forester in charge of our forest management program in South Carolina, attended the Department of Commerce hearing held by you in Columbia on April 26. After discussing with me the information presented at this hearing, I believe there is one economic problem that is developing as a result of the declining southern pine lumber market that was not emphasized at the hearing.

Most of the information presented emphasized the economic plight of the sawmill operator and the impact upon job opportunities and earnings if the present downward trend in southern pine production continues. This reduction in southern pine sawmill operations will have a very serious impact upon the income of small landowners with the decreasing demand for sawtimber stumpage. Its impact is already being felt by the landowner in many areas of South Carolina.

I wanted to add this statement to the record pointing out the plight of these small landowners who are affected in large numbers when the sawtimber markets decline.

With best personal regards,

Very truly yours,

CHAS. H. FLORY, State Forester.

CAROLINA-GEORGIA LUMBERMEN'S ASSOCIATION,

Troy, S.C.

To: Senate Committee on Commerce, U.S. Senate, Washington, D.C.
Subject: Hearings on problems of the lumber industry.

Carolina-Georgia Lumbermen's Association respectfully requests that the following additional statement be added to the hearing record as aditional statements by our representatives at the hearing in Columbia, S.C., on Friday, April 26, 1963:

Members of the Carolina-Georgia Lumbermen's Association have been dissatisfied with the requirement in national forest timber sale contracts of building certain main-haul roads, i.e., utilization roads, to Forest Service plans and standards. Members of the association recognize the advantage of good roads in a timber sale area and are not opposed to such construction. The problems

are:

(1) Timber sale purchasers are not normally in the road construction business. (2) The roads they are required to build in the course of operating the sale are new and frequently cannot be used for hauling when needed, particularly during wet weather periods.

(3) Most purchasers are forced to subcontract the road building job which creates another element of speculation in operating costs. This creates not only problems in computing a bid but also creates further impact on an already competitive timber situation.

Even though we are informed that appropriations for roads on the national forests are being substantially increased, we are given no assurance that national forest timber operators will be relieved of the burden of building these utilization roads in the Southern national forests. The Carolina-Georgia Lumbermen's Association wishes to point out that it would be much more equitable and desirable to have these roads built in advance of timber sale offerings and at fixed costs to the timber sale purchaser. One method of doing this has occurred to some of our members. This suggestion concerns setting up a capital fund either by congressional appropriation or by loan from Commodity Credit Corporation, Small Business Administration, or other governmental lending agency. The

Forest Service would then build the needed permanent roads well in advance of timber sale offering and that portion of the cost of road which timber should bear would be amortized by assessing the sale as a condition of contract. The exact cost of the road would be known to all prospective purchasers, and thus eliminate one item of speculation. The road would have had 6 months or a year to settle and stabilize. The fixed payment to amortize road costs would be repaid to the capital road fund to be reused and applied to the construction of roads on successive sales on a continuing program basis.

We have made no attempt to work out the details of this suggestion but it appears to us to be sound in principle. It is recommended for your consideration as one of the methods to alleviate the operator road construction program on national forest timber sales in the Carolinas, Georgia, and such other States in which the system or procedure might be applicable.

We request that action be initiated to examine and consider the implementation of this proposal by the appropriate agencies of the Federal Government. Respectfully submitted.

CAROLINA-GEORGIA TIMBERMEN'S ASSN.

By WILLIAM H. HARRISON, Secretary.