The Cost of Neglect

Anxious to escape abrasive confrontations of the kind that embroiled his two immediate predecessors, Richard Nixon had hoped to avoid direct federal intervention against price increases by private industry. Yet last week the President took strong steps to arrest soaring lumber prices--and there was little grumbling. His tactics much resembled those of the Johnson Administration, which in 1965 fought off aluminum and copper price rises by threatening to release supplies of the metals from Government stockpiles. Nixon ordered the Interior and Agriculture departments to step up the sale of lumber from publicly owned forests, which contain more than half of the nation's sawtimber supply. To reduce demand, he directed the Defense Department to limit its purchases to "essential requirements."

Wood prices have been highly volatile during the past year. The cost of plywood has risen by 77%. Douglas fir lumber, used mostly in housing, has doubled in price in many localities. Housing's surprising winter strength has only heightened the price pressure. Last week the Commerce Department reported that new housing starts reached an annual rate of 1,700,000 in February, well above last year's total of 1,500,000.

Limiting Exports. Builders blame the price problem not only on heavy domestic demand, but on rising exports to Japan, whose timber purchases in the U.S. have increased twentyfold since 1960. Last year the Japanese bought enough lumber to erect 40% of the U.S. output of one-family homes. In response to complaints that numerous small lumber mills as well as price stability have been imperiled, Congress last fall sharply limited exports of lumber harvested from federal forests. But prices have continued to rise, partly because of severe winter weather in the Pacific Northwest and the recent East Coast longshoremen's strike, which cut down the supply of timber from Canada.

At the urging of George Romney, the Secretary of Housing and Urban Development, Nixon three weeks ago appointed a task force to recommend remedies. Last week's action is aimed at increasing timber output from federal lands by about 10%, but the Administration clearly regards that as only a stopgap. Testifying at a Senate hearing, Romney last week warned that spiraling lumber prices jeopardize the goal of raising residential construction to 2,600,000 units a year under the Housing Act of 1968. The former auto executive and Michigan Governor criticized Democrat Robert Weaver, his predecessor at HUD, for failing to develop programs to meet that objective. Complained Romney: "I have inherited a department that is essentially in the same condition as American Motors when I took over. It was losing money. Our department is losing ground."

Lack of Access. The U.S. faces no shortage of timber. National forests alone occupy an area twice the size of California. Because of federal limitations on logging operations and poor forest management techniques, the Government's holdings yield only a quarter as much timber per acre as private timberland. The Agriculture Department has long complained that Congress allows it too little money to manage better, even though the sale of timber to private lumber producers nets the Treasury substantial revenue. A lack of access roads causes as much sawtimber to be lost to storms and insect infestation as is harvested from national forests. Meanwhile, heavy opposition from conservationists makes any expansion of logging politically difficult.

For the time being, Congress will probably content itself with imposing further limitations on lumber exports to Japan. Such restrictions should help to relieve the shortage and ease prices. On the other hand, they would undercut Washington's goals of fostering free world trade and improving the U.S.'s balance of trade. In any case, Congress can scarcely overlook the need to revamp the nation's timber management policies. That is something that Washington has not done for 30 years.

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