Mr. MILLINER. No, sir: I have not. I understand, and this is just an assumption, that where it takes three men in the South to manufacture 1,000 board feet of lumber-now, this is a comparison with the west coast-they can manufacture 1,000 board feet with one man. Senator THURMOND. Is that because they have larger timber and

Mr. MILLINER. Yes, sir; I would think so.

Senator THURMOND. Larger trees and they use more machinery and less man work?

Mr. MILLINER. I would think so. They are probably more mechanized.

Now, the southern pine average log yields I believe about 76 board feet. The typical Douglas fir tree will yield around 700.

Senator THURMOND. Ten times as much?

Mr. MILLINER. I beg your pardon?

Senator THURMOND. Ten times as much?

Mr. MILLINER. That is right, sir. Yes, sir.

Senator THURMOND. In other words, 1 tree out there produces. 10 times as much lumber as 1 tree here?

Mr. MILLINER. Yes, sir.

Senator THURMOND. And, therefore, it increases our cost a great deal more?

Mr. MILLINER. That is right. You have got a lot more handling cost and logging and so forth.

Senator THURMOND. Thank you, Mr. Milliner.

Mr. MILLINER. Thank you, sir.

Senator THURMOND. Our next witness is Mr. J. M. Hannon, Hannon Lumber Co. of Tallahassee, Fla. Is Mr. Hannon here? Have a seat, sir.

STATEMENT OF J. M. HANNON, HANNON LUMBER CO.,

TALLAHASSEE, FLA.

Mr. HANNON. My story is going to be short. I am what is considered a small producer. And through 1957 I used to ship about four to five cars of lumber to south Florida, which was 70 percent of it in the Miami area, a week.

Since 1957 my shipments to south Florida have been gradually cut off to where I do not remember shipping but one car last year in 1962. Of course, I have made some inquiries and some study of why this was, and I see that the west coast lumber, which is usually fir, and the Canadian lumber have taken over my market.

I am more familiar with the northern California situation, and I find that in northern California they can buy the fir timber from about $5 to $8 a thousand.

Now, then, fir is the biggest one. However, that western cedar gets in too.

Now, I find in northern California that they only have to pay $3 a thousand for the cedar, and the mills would pay for the cedar and leave it there but they included in the contract that they must cut it. This lumber has no value on the western market at all, but some way or another they have dumped it on the South.

99-563-638

The fir lumber out there costs as an average not over $7.50 a thousand. That is in the national forest or U.S. forest.

Now, in Florida, the U.S. forest never prices us anything less than $30 a thousand. I think one time in the last 4 years I have seen some timber that was in a very difficult logging area and very small trees that they did price at $24-the only time in 4 years.

Senator THURMOND. Do you know why that is?

Mr. HANNON. How is that?

Senator THURMOND. I say do you know why that is?

Mr. HANNON. I say it is in a difficult logging area, and small timber. So they did bring that price down to about $24. But they never asked over $8 for fir in the West.

And they have another advantage out there. You noticed northern California usually has large forest fires every year. They will let the timber handlers in there. The people that are buying that timber move in and cut that burned timber for a dollar a thousand.

But when we have a fire in Florida they never reduce the price to less than $20 a thousand in the burned timber.

That is the same department of our Government, and I just do not see why we cannot get the same advantage in Florida.

Senator THURMOND. Have you ever taken it up with the forestry department to find out why they are doing that?

Mr. HANNON. You cannot get very far with them. I have taken it up with them. Frankly, I have had to seek timber elsewhere the last 4 or 5 years.

I did not have to have so much timber, since my south Florida market was cut off. I only had my local market.

Senator THURMOND. If you can point out to me a specific case now where down in Florida they charge a certain figure and out in California they charge one-fifth or one-tenth and give that figure, a specific case, if you will write me a letter, I will have something to go on to take up with the forestry department.

Is the U.S. Forest Service represented here today? If so, stand up. I would like to see who is here. Is anybody here from the U.S. Forest Service?

Would you stand up and give your name?

Mr. WELCH. Jerry Welch.

Senator THURMOND. Mr. Welch, do you happen to be familiar with the point he has raised?

Mr. WELCH. No, I am not.

Senator THURMOND. Can you furnish any light on that?

Mr. WELCH. I do not have any particular situation. I cannot visualize what he has in mind. We will surely entertain anything that he has to say in respect to our stumpage.

Our policy is to valuate timber to a fair market value, and we try to do that. If he has something specific in mind, we would be glad to talk to him.

Mr. HANNON. Senator, I would like to get that in the future, because these that I quote are kind of old now. But I will guarantee they will have some more fires in northern California, and we will probably have one in Florida, and then I will let you know about it then.

Senator THURMOND. Would you get specific cases and tell me the dates and the purchase prices and who they sold to in each instance. so you show your comparisons? Or it is more contrast I guess. I will be glad to take it up with the Forestry Service.

Mr. HANNON. I do have a connection out in northern California. That is the reason I name that area. I can get this information.

Another one of our troubles is the discriminatory freight rates that are granted the western mills to get their lumber dumped on the south Florida market. I know you have heard this before.

But I have this before me from a wholesale lumberman. He offers lumber for $90.75 delivered anywhere in Alabama, but he offers to deliver it anywhere in Florida for $91.50. That is only 75 cents you might say from Birmingham, where most of this lumber goes, to Miami, Fla.

Now, from Tallahassee, Fla., to Miami it costs me better than $12 a thousand to get my lumber delivered by rail.

Mine is intrastate where that is interstate. And it is very discriminatory.

Mr. STILWELL. That is by rail from Birmingham?

Mr. HANNON. That is by rail.

Mr. STILWELL. Not by barge or otherwise?

Mr. HANNON. No, sir.

That only amounts to about $20 a car from Birmingham, where my car of lumber from Tallahassee would be about $288. And it is only about 60 percent of the mileage.

I think that is very discriminatory against the southern mills. Senator THURMOND. Are you a member of this Southeastern Lumber Manufacturers Association?

Mr. HANNON. I do not think I am a member right now. been a member.

I have

Senator THURMOND. I was just thinking any time these matters come up, if you have an official association that you belong to, if not this one some other one, maybe if you would get that association to make a formal protest with the appropriate authorities, then if they fail to get results the members of that association ought to write their Senators and Members of the House.

It seems to me that some of these matters you are bringing out are right important, and I wondered why they had not been followed up before now.

Mr. HANNON. Well, one thing about me is I am just a poor letterwriter. But I did come all the way to Atlanta to appear before this committee.

Senator THURMOND. That is the advantage to having an association, to carry more weight than one individual would carry if you all worked together on a problem.

Mr. HANNON. Another thing is during this time that our volume and price have dropped off that our labor and replacement parts have gone up.

I do not know how, but apparently they do not have a labor law in Canada, because I have before me offers of the Wayne Lumber Co. in Canada offering lumber at $35 a thousand at the mill in Canada, where we cannot even buy that timber in Tallahassee, Fla., hardly for that. It costs within $5 of that for timber.

I do not know whether Canada has a labor law or not. But beingas our labor went up and our sales price went down, we are really in a squeeze.

I want to just make a statement personally. Since 1957 income tax has been one of my least worries. All I have done is struggle to stay in business. And I do not know whether I am going to stay in business too long unless some kind of relief is brought to the southern lumber market.

Now, we do not have as big a struggle in hardwoods. About 10 percent of my production is hardwoods, and we do not have as big a struggle with that. The price of that seems to have held better.

Senator THURMOND. That reminds me of the textiles that come from Japan, where we pay maybe a dollar and a half an hour for wages and they will pay one-tenth that.

So you are in somewhat of a similar situation here, I guess, where they pay very low wages in Canada and can sell you the lumber cheaper than you can even buy the timber down here on the stump. Is that right?

Mr. HANNON. That is right.

I have been to northern California

Senator THURMOND. That would point up then the necessity forhaving some quota on the amount of that cheap timber or lumber that can come into the United States then to compete with the lumber here, would it not?

Mr. HANNON. I find that in northern California where they have that average of 700- and 800-foot logs that, for example, they can pay the man that runs a log-loading machine $125 a week, where I cannot pay $50 a week in Florida.

It is just the difference there in the amount of footage we get out of a tree and the logging conditions.

Senator THURMOND. How much longer is California going to be able to produce trees like that? They will soon have them cut out; will they not?

Mr. HANNON. No; they are selective cutting, and I think they will have trees as long as I am worried about the lumber business, right on. I think they will continue to get it, unless fire gets in it. They do have trouble controlling their fires. They cannot even do as well as we can in Florida with that.

Senator THURMOND. Thank you.

Counsel has a question.

Mr. STILWELL. Mr. Hannon, prior to 1957 did you cut primarily Government timber?

Mr. HANNON. I cut Government timber primarily until 1955. Then for 2 or 3 years it was about 50-50.

The Government, the forest department in Florida, continued to try to hold the stumpage high, even though the lumber business was going down. And I made a better deal on some private timber, which is a permanent source, and I would say 95 percent of my timber now is private.

I had to on account of the difference between the logging conditions.. Mr. STILWELL. Since 1955, then, you have found that private stump-age is cheaper on the average than the Government?

Mr. HANNON. I have seldom bothered to bid on Government timber now, because the price is just more than I can get timber for.

Mr. STILWELL. Then if the tax proposal to change the capital gains rate goes through, that is liable to affect you pretty drastically, because prices will probably go up then on the private timber, would you not say, to cover the increased tax cost?

Mr. HANNON. As I would say, in the last 5 years, no more profit than I made, and so on, I am not worried about that. I will let my auditor worry about it, and he has got me more back from the Government the last 5 years than I have had to pay in in income taxes. I am not talking about other taxes.

Mr. STILWELL. That is the only respect I can see you were lucky in. Senator THURMOND. I would like to get the name of your auditor. [Laughter.]

The next witness is Mr. H. L. Manley of the Reynolds & Manley Lumber Co., Savannah, Ga.

Mr. MILLINER. Mr. Chairman, Mr. Manley is ill and unable to make it.

Senator THURMOND. Do you have a statement you want to present on his behalf?

Mr. MILLINER. For him? No, sir.

Senator THURMOND. Tell him in the event he wants to file a statement in the next 10 days we will hold the record open.

Mr. MILLINER. Thank you, sir.

Senator THURMOND. Mr. Olin Fraser of Hinesville, Ga.

Is Mr. Fraser here?

Mr. FRASER. Yes, sir.

Senator THURMOND. Come around, Mr. Fraser.

STATEMENT OF OLIN FRASER, HINESVILLE, GA.

Mr. FRASER. Senator, I am sorry I was unable to get here last night for the meeting ahead of time. I am sorry I just arrived this morning.

I have been listening to this discussion with great interest, and my problems are very similar to what you have already heard.

Senator THURMOND. Do you have any suggestions other than what you heard here this morning or any recommendations that have not been mentioned here that you think would be helpful to the lumber industry?

Mr. FRASER. Well, like the gentleman just before me, I am cutting largely on Government reservation timber, Fort Stewart near Hinesville. Our mill is located at McIntosh-Fraser Lumber Co.-and we have a very similar situation there cutting on military reservation. The stumpage is held higher as a rule than we buy timber on the outside of the reservation.

However, with the vast military reservation there, there is a great supply of timber. In administration of selling it through the post forester, they mark the timber, or, rather, they mark it and make it available to the Corps of Engineers, and the Corps of Engineers sell it. And between the two organizations there is always a good bit of problem trying to mark it to their requirements.