tion of the National Government. With this in mind, you are invited to discuss any topic you think pertinent to the inquiry.

Congress is greatly concerned with the overall economic condition of the lumber industry in our country, and the members of the Commerce Committee have a special interest in this subject. For that reason we are happy to be here in my neighboring State of Georgia, the home State of Senators Russell and Talmadge with whom I have had the pleasure of serving in the Senate. I have also had the pleasure of serving with the Members in the House from this State. I have many close connections, relatives and personal friends in Georgia, and so it is a peculiar and personal pleasure for me to be here on this occasion.

The members of the Georgia congressional delegation have indicated their great interest in this subject to me, and at this point I would like to place in the record a statement by Senator Herman Talmadge who regrets that he is unable to be here today.

Also Congressman J. Russell Tuten of the Eighth District regrets that he could not be here and has sent a statement for inclusion in the record.

(The statements referred to follow :)

STATEMENT BY HON. J. RUSSELL TUTEN, EIGHTH DISTRICT OF GEORGIA

I am glad to know that the Senate Commerce Committee has scheduled a series of hearings in the South to obtain opinions from local timber and pulpwood producers on the economic condition of the southern lumber industry.

On behalf of the great number of timber farmers in my congressional district and because my district contains some of the largest pulpwood producers in the State of Georgia, I am particularly glad that Senator Thurmond is conducting one of the hearings in Atlanta today so that all interested parties will have an opportunity to express their views.

Since one of the topics of discussion will doubtless be on capital gains treatment of timber sales, I would like to say that, before hearings were scheduled on the President's 1963 tax recommendations, I appealed to the Secretary of the Treasury, Secretary of Agriculture, and the chairman of the House Ways and Means Committee on behalf of the large number of constituents who contacted me concerning the serious effects these proposals would have on Eighth District farmers and timber producers.

Let me again urge that the captial gains treatment on timber sales continue to apply to an industry which requires a lifetime to produce a crop.

STATEMENT BY SENATOR HERMAN TALMADGE, OF GEORGIA

Mr. Chairman, I appreciate the attention and consideration which the Commerce Committee is extending the Southern forest industry in scheduling this hearing as well as the opportunity of presenting this statement to the committee. The Georgia forest industry is extremely important, not only to the welfare of our State but to the Nation as a whole. There is some 65 percent of the State of Georgia growing trees, and Georgia recently became the No. 1 tree farm State in the country. Georgia's forest manufacturing industry produces products valued at over $700 million a year. Our forest products industry produces lumber, veneer, railroad ties, pulp and paper, furniture, and many other articles. These industries provide full-time employment for more than 70,000 persons as well as part-time jobs for thousands of others in woods and mills.

The payroll amounts to over one-quarter million dollars per year.

To keep our industry healthy and to promote its expanding economy, we need to increase the markets for our abundant product. We have in Georgia some 2,300 lumber manufacturing mills, 200 furniture factories, and 67 pulp and paper and paper-product mills.

Of the approximately 40 billion board feet of sawtimber growing in Georgia forests, nearly three-fifth is yellow pine. Broken down into homes, this would mean that there is enough standing sawtimber in Georgia forests to build some 4 million five-room frame houses-or put another way, one for every family in Georgia, Florida, Alabama, Mississippi, and Louisiana, and half of the families in South Carolina. I cannot underestimate the value of the growing and manufacturing of lumber to my State, and indeed to the Nation.

Our forest industry is, however, presently confronted with some serious problems. One of the most serious is that of increasing imports, primarily from Canada. The National Lumber Manufactures Association in Washington, D.C., recently supplied me with information that shows that in 1961, the latest figures available, there were 1,000 carloads of softwood lumber shipped into Georgia from Canada. This displaced that much lumber from our own domestic use in Georgia alone. In 1953, there was no record of any Canadian lumber shipped into Georgia. The figures are even more dramatic for some of the other States. In Florida, there were 100 carloads shipped in, in 1953. In 1961 there were 2,300 carloads shipped into Florida. In Texas there were 2,400 carloads shipped into that State in 1953, and it jumped to 4,600 in 1961.

Taking the Southern States only, I find that in 1953 there were 3,800 carloads of lumber shipped into the South. In 1961, there were 14,800 carloads. This represents over one-half billion board feet of lumber.

I understand also that last month the Canadians were taking over 20 percent of our domestic consumption of softwood lumber. Put another way, even more graphic, 1 out of every 5 board feet of lumber used in the homebuilding industry in the United States is Canadian.

Translated into jobs, this means that nationwide the more than 160,000 fulltime forest industry employees are being cut back and displaced because of Canadian imports. The forest industry's annual payroll amounting to over $5.5 billion a year is also being cut back because of Canadian timber coming into this country. Further, the annual value of goods produced is better than $23.5 billion a year, and much of this too will be displaced with Canadian lumber.

These are just some of the reasons why I call this committee's attention to the need for curbing excessive Canadian imports so that our southern mills, and particularly the mills in my State of Georgia can be put to full capacity and expanded to full use of the great resources that our State possesses.

There have been a number of bills introduced in the House and Senate this year which are designed to help the forest industry. They are (1) a bill to require that imported lumber be marked with the country of origin; (2) a request that the President impose an immediate 6 percent emergency quota on all imports of softwood lumber; (3) that the National Housing Act be amended to provide that only lumber and other wood products which have been domestically produced may be used in construction or rehabilitation covered by FHA insured mortgages; (4) a bill to amend section 22 of the Agricultural Adjustment Act to include lumber so that a quota could be applied through this means; (5) a bill to provide for two additional Assistant Secretaries of Agriculture, one of whose prime responsibility will be forest resources.

None of these proposals have been acted upon favorably by Congress as yet. The Tariff Commission in its findings against the lumber industry earlier this year admitted that the lumber industry was being hurt and put the burden of action on the shoulders of Congress. I know, Mr. Chairman, you are here today to look into the reasons and to hear first-hand from the lumbermen what they consider to be the major problems.

The industry itself must bind together as one unit and call upon Congress as a united body to enact legislation which will solve the import problem as well as the other difficulties which are being encountered. As one Senator, and as a member of the Finance and Agriculture Committees, I can assure this committee of my wholehearted support and cooperation toward this goal.

Senator THURMOND. We will keep this record open for 2 weeks. after today for inclusion of additional statements, if any come in.. And also we will keep the record open from the hearing yesterday for 2 weeks. In Shreveport we will keep it open for 2 weeks after that. in order that anyone who overlooked it or could not be present can submit statements if they so desire.

Our first witness today is a gentleman who has to get away on a plane I understand right away, Mr. A. P. Downing of the T. R. Miller Mill Co., of Brewton, Ala.

Mr. Downing, we will take you first so you can make your airline connection.

STATEMENT OF ADRIAN P. DOWNING, EXECUTIVE VICE PRESIDENT, T. R. MILLER MILL CO., INC., BREWTON, ALA., MEMBERS IN THE ALABAMA FOREST PRODUCTS ASSOCIATION

Mr. DOWNING. Sir, my name is Adrian P. Downing of Brewton, Ala. I am executive vice president of the T. R. Miller Mill Co., Inc., of Brewton, Ala., a grower and processor of forest products for over 91 continuous years.

While I am a director of the National Lumber Manufacturing Association, the Southern Pine Association, and the Alabama Forest Products Association, I appear here today representing the latter association.

The Alabama Forest Association is made up of processers and growers of forest products such as saw mills, loggers, producers of veneer, poles, piling, naval stores, pulpwood, pulp and paper.

The number of operating sawmills in Alabama today is 551, whereas 5 years ago there were 813 and in 1949, just 14 years ago, there were over 2,800 sawmills, a reduction of over 2,200 operating sawmills. This sounds almost unbelievable, but it is sadly true.

In my opinion, there are three primary causes of this great loss in employment and production, and they are:

1. The minimum wage legislation,

2. Increased competition from the Western area of the United States brought about, in my opinion, by the so-called hold down freight rates, as well as subsidized federally owned timber, and

3. Unrestricted importation of Canadian lumber.

I am sure the distinguished Senator conducting this hearing is familiar with our serious problems and we are highly honored to present to him our suggestions of how the Congress of the United States can help alleviate some of them.

The most dangerous bill pending in Congress at this time is S. 1050 which provides for amending the Jones Act. The Senator from Oregon who introduced this bill is the same Senator who in the last minute rush of the 87th Congress succeeded in passing an amendment to the Jones Act, for 1 year only, permitting foreign ships to transport lumber to Puerto Rico. I feel sure she was misinformed when she told the Senate that this amendment would not affect southern pine since no southern pine was being shipped into Puerto Rico. Whereas this amendment is costing southern pine industry a 25 million board foot market a year, this new bill, S. 1050, will cause a flood of western lumber to capture a large percentage of our remaining markets in the United States.

Passage of S. 1050 would not only mean that our gulf and Atlantic coast markets would be flooded, due to the reduction of ocean rates of approximately $11 per thousand board feet, but historically the railroads have quickly met ocean rates, and thus our inland markets will suffer as well.

There is no legislation pending to repeal the Jones Act, but only to amend it in such a manner as to make it virtually impossible for our southern pine industry to compete with western lumber. I earnestly urge that you and every Member of Congress from the South and the East not only oppose this bill but fight for its defeat with all your might.

As to the other several bills pending, may I be permitted to comment briefly?

S. 782 and others, use of domestic lumber in FHA housing. While I do not personally favor this bill, our association does.

S. 921 and others, to permit imposition of a quota on lumber. We think this legislation is reasonable and would benefit not only southern pine but all U.S. producers of lumber.

Senate Joint Resolution 50 and others, 3-year 6 percent quota on Canadian lumber. We think this resolution is fair and would recommend a 3-year 10 percent quota instead of 6 percent quota.

S. 923 and others, use of domestically grade-marked lumber in FHA housing. We think this is a fair bill and urge it to be given serious consideration toward passage.

S. 957 and others, country-of-origin marking. We strongly urge serious consideration toward its passage. This is a fair bill and would put lumber on the same basis as all other imported items. Many, many users of lumber have no idea whether or not it is produced in the United States. Most users think it is domestically produced and would, if informed, require domestic lumber. I firmly believe the Congress will accept this bill on its merits.

Thank you very much.

That is my statement, sir.

I would like to add one thing, since your opening remarks said it could cover other fields, and that is the importance of retaining section 631 in the Revenue Code, 017(k), capital gains on timber.

As you know, Senator, that passed in 1944 at a time when the Forest Service and many other informed foresters were predicting a famine in timber.

But since that time it has created a favorable field for growing timber not only by large landowners but by very small ones, and today we are in a better position on our timber inventory than this country has been in probably a hundred years.

We are growing considerably more than is being drained from the forest, which is healthy, and we urge that that section of the Code be retained by all means.

Thank you very much, sir.

Senator THURMOND. We are glad to have you with us. You made a very concise statement and the kind of statement that is effective because you have pinpointed your problems and then you have discussed legislation before the Congress and given us your opinion about it.

I wish to thank you for your presence here, sir.

Mr. DOWNING. Thank you, sir.

Senator THURMOND. Our next witness is Mr. Roy Shirley, Director of the Georgia Forestry Commission.

STATEMENT OF ROY SHIRLEY, DIRECTOR, GEORGIA FORESTRY

COMMISSION

Mr. SHIRLEY. Senator Thurmond, members of the committee, I deem it a great honor to be permitted to make the statement today on behalf of the timberland owners of Georgia and the forestry of our State. First of all, we have a State consisting of 69 percent of its total land area devoted to growing trees. The forestry industry in 1960 was the third largest industry in this State from the standpoint of money and economic values, exceeded only by textiles, No. 1, and food processing, No. 2.

We have approximately 197,000 timberland owners. Private industry, individuals, and corporations, own 93 percent of the forest land in our State.

We in the past years have done much to encourage the growing and production of timber.

Small timberland owners in our State, that average an ownership of 69 acres, own 58 percent of this area.

Large industry owns only 15 percent of the forest land of our State. Therefore, whatever happens to the well-being or adversely happens to the well-being of lumber or any other phase of the forestry affects immediately a large segment of our people.

In the past 10 years we have had a reduction of 76 percent of the number of sawmills in Georgia. Today we have 527 sawmills operating. During this same period we have lost 29 percent of the volume represented by lumber. That is a serious reduction.

I have a preliminary copy of a forest survey just completed in the State which I am reviewing. It is not out but will be published the first of July.

It reveals that we are growing 15 percent net more timber in Georgia than we are cutting or is being harvested in any manner. That to me is very significant, because we are growing 6 percent more saw timber than we are now cutting or harvesting and 9 percent more wood of pulpwood size, 5 inches to 9 inches in diameter.

As our lumber market has been shrinking due to increased competition from foreign lumber, our stumpage prices received by landowners have also been declining. In the past 18 months in this State, over wide areas, we have lost on an average of $10 per thousand board feet stumpage.

Our sawmill operators and others who process forest products must make a profit to stay in business. Therefore, as prices decline, as they are doing, the one who gets caught is the timberland owner, the farmer, and others who are investing, many of them their life savings, into timberland.

We have planted in Georgia, under the soil bank program, almost a third, 32 percent, of all the cultivated land that was retired in this program, almost 700,000 acres. That has occurred in the past 6 years.

In the same period of time industry and others outside the soil bank program have converted forest areas and idle acres in the amount of approximately 800,000 acres to forest. That is better than 1,500,000 acres that have been planted to trees in the past 6 years.

The increase in volume that I have just spoken about is not reflected in this potential timber volume that is represented in these recently planted stands.