1. Plant seedlings or regenerate stands and make growing space available by timber stand improvement at lowest cost as rapidly as possible - to gain lead time.
   
   
2. Make the maximum investments that are economically justified in fire, insects, and disease control - to reduce losses and protect investments.
   
   
3. Increase utilization of cull trees and residues in the woods and - to reduce cutting pressures on inventory.
   
   
4. Provide stable markets for primary forest products - to reduce fluctuations in raw material demand.
   
   
5. Establish equitable State and local property taxes on forest land which are related to productive capacity, and institute efficiencies in government - to encourage landowners to grow timber and reduce revenue needs.
   
   
6. Eliminate inconsistencies in Federal programs which stimulate clearing of some land for crops, drainage, and reservoirs while withholding other lands from crop production - to help maintain the timberland base, particularly for hardwoods.
   
   
7. Study future recreation and urban-expansion needs in depth, and devise approaches that will minimize their impact on timber growing - to forestall unnecessary shrinkage of the land base for timber production.
   
   
8. Inform urbanites and their legislators of timber's contribution to the economy, and show that a wisely used forest is aesthetically pleasing - to increase understanding of mutual problems.
   
   
9. Achieve widespread public understanding of the continuing need for treatment of income obtained by growing trees as capital gain.
   
   
10. Continue to support programs that create favorable relations with governments and people - to permit the forest resource to be developed to its full potential.
    
    
11. Strengthen State forestry agencies, associations, and schools - to help them meet their responsibilities.
    
    
12. Increase research and development efforts until I they are proportional to the contribution to the National economy of forestry and forest industry - to help solve the great number of problems involved.
    
    
13. Utilize all sources of funds and talent, both private and public- to accomplish each phase of the job as quickly as possible.
    
    
14. Form a Southern Forest Resource Council - to implement these recommendations.
    
    

Advances in Technology

Technology and the free market system are often blamed for some of our environmental ills. However, there are instances where both have been used to conserve, rather than waste, resources. One of the major conservation stories of our time has been largely ignored while critics focus on more emotional, but less important issues.

In days gone by, the wigwam burner, with its constant plume of smoke, identified the location of every sawmill, large and small. These burners created quite an air pollution problem in certain areas. Today they are either gone or stand silent and rusting, their former fuel now converted into chips suitable for pulp manufacturing.

The invention of the sawlog debarker made possible the removal of the bark from a log before sawing with the result that the residues such as slabs and edgings can be converted into clean chips which pulpmills are eager to buy.

In 1974, a record 13.5 million cords of residues were used for pulping. These by-products now account for over 27 percent of the total pulpwood production. The story really takes on meaning when translated into acreage impact. If we consider one cord per acre per year an average growth rate, this conservation effort is the equivalent of adding 13.5 million acres of productive timberlands to the production base of the South. It's another case of everybody winning.

1. More of each tree is used.
   
   
2. A greater volume of usable fiber is produced by the same unit of woods labor.
   
   
3. Additional income is available to the sawmill owner and the stumpage seller.
   
   
4. Air pollution is eliminated.

Let's take a look at some of the things we have learned over the years: The growing of trees as a crop is the longest range economic activity engaged in by man. This state of affairs took a long time to mature. It became possible only when the supply of timber, which essentially had no growing costs attached to it, was liquidated. This reduction in supply was accompanied by both an increase in demand and an increase in price.

Gradually, in some locations in the South, it became possible to pay carrying charges on young timber and hold it to maturity, at which time it could be sold at a profit. This in turn provided incentive to grow some more trees which, hopefully, could also be sold at a profit.

Castigating the lumber industry is a favorite theme of certain groups who seem to feel that their aims are served by periodically stirring up public sentiment against the industry on the basis that it failed to take care of the first forest. The fact is that any business is a captive of the restraints of the times in which it operates. What would be waste today was not waste then.

As we all know, however, this action did not lead to the widely predicted timber famine. Royal S. Kellog, one of our industry pioneers, put it very succinctly when he said: "There will never be a timber famine in the United States. That was assured when the price of timber got up to where it was worth something." Toby Moore, long-time traffic authority at the Southern Pine Association, put it another way. He said: "The best way to get trees grown is to develop profitable reasons for cutting them down."


Multiple Use

Lest some of you think that all of this reeks of crass commercialism, let me hasten to assure you otherwise. Southerners are outdoor people. They enjoy hunting, fishing, hiking, picnicking, barbecuing, berry picking, and a host of other activities that take place in and around the forests.

I'll never forget the first time I tried to explain what multiple use was to a native Mississippian years ago. When I finished he said, "Why h--- man, we've been doing that around here long before you ever came along." And so they have. Southerners know that the harvesting, growing, and harvesting again of tree crops has enhanced rather than diminished multiple-use opportunities.

Many of our southern timberland owners hold and manage their properties primarily for recreational activity, with timber harvest only incidental, perhaps coinciding with need for retirement income. Carrying this line of thought a little further, Southerners also enjoy some of the same wilderness activity that Westerners do. Our 500,000 acre Great Smoky Mountain National Park is largely wilderness. The southern portion of the 2,000 mile Appalachian Trail snakes its way along the crest of the southern mountains to its terminus on Springer Mountain in northern Georgia in the Chattahoochee National Forest. A Bee Branch wilderness area has been created around some scenic canyons in the Bankhead National Forest in North Alabama.

At the beginning of this lecture I alluded to the strong private initiative thrust that is present in the South. This extends to recreational activities as well. Over 90 percent of the industrially owned timberlands are open to public use for hunting and fishing, often in partnership with a state game and fish commission.

Bowaters Paper Corporation pioneered the idea of a "pocket wilderness" by setting aside certain scenic areas on their lands and developing hiking trails to them. Most of these are smaller than 500 acres in size and the trails leading to them pass through commercial timberlands under management. The many hikers who have enjoyed these privately owned "pocket wildernesses" can testify that you can enjoy a wilderness experience without tying up a half million acres of land.

Another increasingly popular outdoor activity is nature and hiking trails on commercial forest land. Champion International pioneered the idea that hiking trails, easily accessible to the public, could be laid out on the roadbeds of the old logging railroads that crisscross the piney woods deep in East Texas. Today, under the aegis of the Texas Forestry Association, a network of fourteen Texas forest trails is open to the public on the managed forest lands of the major forest products companies. An attractive four color brochure guides the public to these trails and outlines the distinctive features of each one.


Some Economic Factors

One lesson that the South learned with the passage of the old growth timber economy was that trees are more important as a source of jobs than they are as a source of taxes. Aesop's fable about killing the goose that laid the golden egg is particularly appropriate here. Fundamental to understanding the situation must be an awareness of the great multiplying factor that accompanies the placing of one unit of timber on the market. Forest Service figures indicate that for every dollar of stumpage placed on the market, about twenty-five dollars of goods and services are created or made possible in the national economy. Conversely, failure to place one unit of timber on the market has a twenty-fivefold negative effect on the economy.

The fable of the goose that laid the golden egg is particularly useful in explaining the effect of excessive taxation or excessive regulation on the forest economy. You all remember how the story goes - the owner of the goose, not content with the golden eggs laid on a regular basis, becomes greedy and decides to get all the eggs at once by killing the goose. This is what happened in some of our southern taxing jurisdictions at the end of the old growth timber. Seeking to cash in before it was too late, assessors greatly increased taxes on standing timber.

Those pioneer lumber companies who were attempting to practice forestry by holding timber, selective cutting, or stretching out their supply of old growth timber found themselves saddled with an impossible financial burden, the only escape from which was even more rapid liquidation. This activity seemed to lend credence to those who predicted a timber famine by providing them with a set of numbers which proved their point, that there was no way you could pay taxes annually on trees for forty or fifty years (which was the time needed to grow a sawlog in those days) and come out with anything but a whopping deficit.

Leaders in the South, however, were well aware of the penalties they were paying and of the need to develop a Crop to utilize lands turned loose by the rapidly failing cotton economy. The result was a fundamental change in the tax philosophy of some state governments. In the State of Mississippi, for example, a committee of the State Legislature made an exhaustive study of the situation in 1937-38, and recommended that the ad valorem tax on standing timber be abolished. It proposed that ad valorem taxes be levied on the bare land only, as in agriculture. Timber would be taxed only at the time of harvest. This was harsher treatment than for agricultural crops which escape taxation altogether, but it proved to be a powerful stimulus to the practice of forestry.

The coming of the pulp and paper industry into the South to utilize the stands of second growth timber, which had developed in spite of a horrible fire record, provided another stimulus. Instead of having to wait forty or fifty years for a harvest to return income, pulpwood was available from thinnings at an average of fifteen years. Trees not of potential sawtimber quality could be marketed and the tops of sawtimber trees, formerly wasted, now brought in cash income. The result - another "shot in the arm" for those who wanted to grow trees.

The third stimulus came in the form of the application of the capital gains treatment to timber produced in forestry operations by the Congress in 1944. As so often happens, taxes were having an increasingly negative effect on forestry. Private owners who completely liquidated their properties were given capital gains treatment of income from the proceeds of the sale. But ironically, owners trying to practice forestry were denied capital gains treatment of their income because of certain technicalities. The correction of this situation by Congress in 1944 put in place the last of the three requirements for good forestry, and forestry in the South took off explosively.

In the South we follow the saying that "you ought to put your money where your mouth is." Translated this means that if you are espousing a position or a cause, in order for you to have any credibility you need to be doing something more than just talking about it. If we are serious about the South's Third Forest program, there ought to be some tangible, voluntary results for all to see. And indeed there are. In fact there are a number of individual and collective efforts which in themselves could take up the whole time allotted for this lecture. I will mention a few of them, not necessarily in order of priority, but as representative samples of activities.

The coordinating South-wide group is the Southern Forest Resource Council, composed of the associations which sponsored the study which developed the South's Third Forest program. The council monitors developments throughout the South, and acts as an information clearing house and a liaison group with the Council of State Governments and the Southern Governors' Conference.

The council also sponsors special projects. One project of special interest was a commission to consulting forester Zeb White to review the progress of the program, identify areas of shortfall and recommend corrective action. Zeb found that we were falling short of our planting goal and that under existing conditions we would be hard pressed to meet it in the time frame we set for ourselves.

Zeb suggested we take another look at the technique of direct seeding which, under strict control on carefully prepared sites, could serve a number of small owners with a coordinated helicopter program. Realizing that past direct seeding efforts left much to be desired, nevertheless, we felt it worth another try. In cooperation with the U.S. Forest Service experts a number of parishes in central Louisiana volunteered to run a test program.

A problem which has been with us always is the small landowner who owns most of the land, provides most of the wood, but is not overwhelmingly concerned with growing that wood. The "small landowner" who has been identified by many forestry experts as a "problem" actually is behaving in a very rational, economic manner. This may be the area where forestry as an economic activity faces its ultimate test. A small entrepreneur, for that is what he is, is faced with a number of economic investment choices throughout the lifetime of his family. If he owns land, or even if he doesn't, but considers going out and buying some, he is faced with the same fundamental questions: With the money I have at my disposal, where can I put it where it will do me and my family the most good?

For the private owner who, remember, owns most of the productive forest land in the South, the moment of truth arrives when he makes a timber sale. If he does well (that is, if society - which in our country means the government - treats him well), he may well want to reinvest, if not for his lifetime, maybe for his children's or grandchildren's benefit.

Now, how is society (his government, which is all of us) treating him? A major part of our problem unfortunately lies in the answer, "not so good". What has happened? In 1969, the Congress, in revising the internal revenue code, increased taxes on capital gains by 40 percent. To me, this was a great breaking of faith with the tree farmer. In 1944, he was told by Congress that he was important, that the growing of trees was important. His faith was jarred in 1963 when the Kennedy Administration proposed the elimination of capital gains for income from timber. In 1969, the rate was raised by 40 percent as I have previously mentioned.


Present and Future Demands for Timber

Talk to a landowner now about investing money in planting trees, whether to be harvested in his lifetime or in the lifetime of his children, and what does he want to know? It has become almost a tradition to blame the small landowner for failure to grow more and better crops of timber. Since the small private landowner furnishes most of the timber for the industry and therefore for the American consumer, there is much concern by the industry, government, and forest leaders about his practices as they relate to meeting the projected demands on our forest in the future.

Forest Land Ownership Private Public Forest industry 76.3% 6.3% 17.4% Increase In Growth Between The Last Two Forest Surveys Private Public Forest industry 41 to 63 cu. ft. per acre 39 to 59 cu. ft. per acre 47 to 63 cu. ft. per acre Percent Of Forest Land 60% Or Better Stocked Private Public Forest industry 78.0% 73.4% 80.4% Mortality Of Growing Stock Private Public Forest industry 6.1 cu. ft. per acre 9.9 cu. ft. per acre 6.0 cu. ft. per acre

A recent study in Georgia casts some surprising light on this assumption. W. H. McComb, Research and Training Analyst, Georgia Forestry Commission, has prepared the following analysis. (To the right.)

The author concludes from these and a number of other comparisons that the private nonindustrial ownership class compares favorably with other ownerships in the quality of its management practices. This does not mean that there is not ample room for all ownerships collectively to better their yield in view of the potential productive capacity of their forest land. He concludes with the following statement:

"Georgia has more timber now than at anytime in the past forty years. The greatest progress in growing timber has been made in the past ten years.

"In a thirty-six year period, 1936-1972, in spite of cutting 30 billion cubic feet, Georgia ended up with two-thirds more timber than it started with. If this trend continues, satisfying future demands on our forests may become a reality and should answer the question: The small landowner's mismanaged woodland - fact or fiction?"

It is with results such as this that the South looks forward to meeting the even greater needs that will be thrust upon it.


The Monongahela Decision

No talk about forestry in the South, or any other place for that matter, would be complete without some references to the Monongahela case and its ramifications. Although the Monongahela National Forest is not in the South, the courts have held that the narrow interpretation of the 1897 Organic Act must be followed throughout the Fourth Circuit which includes nine National Forests in Virginia, West Virginia, and North and South Carolina.

Although hailed by preservationists as a victory over "clear-cutting," clear-cutting is a spurious issue. The real issue is a wood supply for the American people in a world and a country that already faces resource limitations. A vast array of scientific forestry information has been built up since 1897, and if it can't be put to use on the National Forests by professional foresters, the public will be the loser.

Although National Forests occupy less than 10 percent of the land in the South, the impact of the Monongahela decision is already being felt in terms of a reduced wood supply and increasing costs for the American consumer. The first sawmill closed on December 5, 1975, as a direct result of the cutoff of Federal timber. Other mills, including one set up with Federal assistance to provide employment in an area of high on employment where the Forest Service controls 60 percent of the timber, are in deep trouble and may be forced to close. Stumpage prices have doubled and log haul distances have doubled.

Over 60 percent of the hardwood produced in this country is consumed in the manufacture of furniture, an activity which has now become concentrated in North Carolina. Although only 10 percent of the hardwoods come from Federal lands, 30 percent of the top grades of lumber are derived from Federal forest lands. These top grades are absolutely essential to the production of furniture. Although orders for wooden household furniture are only 1.6 percent greater than July 31, 1975, the prices of # 1 common oak and # 1 common poplar, the two most frequently used species in furniture manufacturing, have risen 17.5 percent and 22.8 percent.

Time does not permit a review of all the ramifications. Suffice it to say that Southerners are extremely concerned where this action is leading to plant closings. They are also concerned when they are urged by some to support this action because this could mean a bonanza for the private owners, but they quickly see through this when these same people who want to create shortages tell Congress it will be "absolutely necessary" to regulate private lands as well. Southerners just don't buy that and they want no part of regulation resulting from an artificially contrived situation. Congress must act, and do so in such a way as to define the public interest in a basic consumer item, and to allow professional foresters to practice the best forestry possible.


Conclusion

I regret that what could be a whole semester course in southern forestry must, of necessity, be compressed into a rather short space. I am certain that some important aspects have been left out, or treated too lightly.

To summarize, we in the South are very optimistic that, in spite of the obstacles and difficulties we are facing, the South will take its place as the primary wood supply region of our country. We are optimistic because we know the biological potential is there. We are optimistic because we have in place a voluntary cooperative attitude which has proved itself in the rebuilding of the southern forest, to a condition where the second forest is contributing far more to mankind than the first.

This is probably the only time in the long history of mankind where a declining resource trend has been halted and then headed upward again. Having done it once, we feel we can do it again. However, we face the sober realization that constraints are present that were not present during the rebuilding of the second forest. We now know that future timber growth and harvest levels will be set at whatever level the public will permit. In our opinion, the way to do this is to continue to emphasize incentives and minimize compulsion and regulation.

In this era when everyone is complaining about too much red tape and regulation we ought to heed the words of the noted author, economist, and consultant, Peter Drucker, who has this to say about the problem: "Another reason why we are not making much progress in our right to save the environment is that we go about the job by trying to punish instead of trying to create incentives. If there is one thing we know it is that punishments do not work, but incentives do."

The nation is awash with proposals to cure this or that problem, all of which involve much money and more restriction on individual freedom. The big unknown about all these programs is the sixty-four dollar question - "will they work?" We have in the Third Forest program something we know will work. We have a brand new home grown industry - Southern pine plywood, producing nearly one-third of the nation's plywood, all from large size trees that weren't even there thirty years ago.

This has been made possible in spite of the fact that other demands for wood increased enormously during the period. And still growth is staying ahead of cut. The extra value of veneer logs is encouraging many landowners to grow trees to larger sizes.

In the small town of Enterprise in southern Alabama stands a monument to the boll weevil with the inscription of thanks for starting the community on the road to prosperity. For years the South had been shackled to a one crop - cotton - economy that wore out both soil and people. The boll weevil, although a disaster at the time, forced people into diversified agriculture and into a program of industrialization. This episode says much about the spirit of the South: a willingness to face the future and take whatever action is necessary. This same spirit is evident today in the pursuit of the goals of the South's Third Forest.

In looking back over the items I have been discussing I hope I have conveyed one basic idea. The rebuilding of southern forests was accomplished by a cooperative partnership between government, industry, and private landowners. We discovered a working method which would be considered revolutionary in today's atmosphere, namely - government and people are on the same side! It is not "us" versus "them", all of them is "us". The South does not wait for government to do it. There is no wringing of hands over situations you can do something about. In the words of an old Chinese proverb: "It is better to light one candle than to curse the darkness."

Our problems are not in Washington; they are right at home where we live. We would hope that those who propose ever more governmental regulation, placing government in an adversary position, can be made to understand that the South has a better way - a cooperative way - a way we're backing with our own dollars. The challenges ahead are formidable, but probably not as formidable as in the 1930's. Southerners will tell you "We did it once - we can do it again."

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Introducing: Arthur W. Nelson, Jr.


Arthur W. Nelson, Jr. is Vice-President-Industry Affairs for Champion International Corporation's Timberlands operation. He is widely acknowledged as an experienced and perceptive expert in the field of industrial forest management. His home office is in Meridian, Mississippi.

Mr. Nelson has spent his entire professional career in forest management, beginning in 1939 as a forester and timber cruiser for the Crosset Lumber Company, Crosset, Arkansas. In 1940, he joined the Flintkote Company, Meridian, Mississippi, as a chief forester, a position he held until 1957 when he was employed by the Champion Papers organization as a special resources consultant, Champion Paper and Fibre Company, Texas division, stationed in Pasadena, Texas.

Mr. Nelson was appointed general manager of timber in the Timber and Chemical and Woodlands division in 1958, serving in that capacity until 1966 when he was advanced to vice president-woodlands. He was promoted in 1967 to vice president-natural resources for the company's Champion Papers division and in 1969 became vice-president-natural resources. He was named to his present post in 1973.

A native of Illinois, Mr. Nelson received a B. S. degree in Forestry at the University of Idaho and a Master of Forestry at the Yale Forest School. He has also pursued special studies in land law at the College of Law, University of Houston, and has attended seminars on the subject at the Yale Forest School and Harvard Business School.

Mr. Nelson is a member of the Society of American Foresters and formerly served as chairman of that organization's Gulf States section. He is also a past president of the American Pulpwood Association, and a member of the Forest Industries Council, a member of Forest Industries Radio Communications, and a past president of the Southern Forest Institute, Atlanta, Georgia. He is a registered professional forester in the states of Georgia and Alabama.

In addition, Mr. Nelson is active in the Forest Farmers Association, is a member of the Forest Industries Committee on Timber Valuation and Taxation, and has served as secretary of the Mississippi Water Resources Policy Commission and as a member of the Mississippi Board of Water Commissioners, Fifth Congressional District.

Mr. Nelson is the author of numerous articles in the fields of industrial forest management, land classification, watershed management, and water law and the co-author of "The Beneficial Use of Water in Mississippi." He received an honorary Doctor of Science degree from the University of Idaho in 1975.