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Timber allocation policy in British Columbia to 1972 Clark, Glen David 1985

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TIMBER ALLOCATION POLICY IN BRITISH COLUMBIA TO 1972 By GLEN DAVID CLARK B.A., Simon Fraser Univers i ty, 1979 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES School of Community and Regional Planning We accept th i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA Apr i l 1985 © Glen David Clark, 1985 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available f o r reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. I t i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of ' d ^ A i t c / ^ » r ^ g t o A J a ^ / PU*>U(kx, The University of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date ABSTRACT According to several recent studies, the future of the forest industry in B r i t i s h Columbia i s in jeopardy. If present forestry management pract ices are continued, i t i s conceivable that within the next decade the timber harvest w i l l dec l ine, employment wi11 be severely reduced, and government revenue from the forest resource w i l l be s i g n i f i c a n t l y less than in previous decades. Pub l ic ownership of the vast majority of p rov inc ia l forest land means that government p o l i c i e s are l a r ge l y responsible for th i s state of a f f a i r s . However, there are r e l a t i v e l y few academic studies of the history of those po l i c i e s . The purpose of th i s thesis i s to review the evo lut ion one aspect of forest po l i c y , the way in which timber i s a l l o ca ted in B r i t i s h Columbia, and to analyze the dynamics of th i s evo lut ion in l i g h t of s ix a l t e rna t i ve theories of the policy-making process. Forest po l i cy in B r i t i s h Columbia i s extremely complicated and i s the r e su l t of decisions made to meet various demands at d i f fe rent times in history. I t i s only through a deta i l ed understanding of the history of forest po l i cy and the nature of the p rov inc ia l state that planners, resource managers, and publ ic policy-makers can attempt to reso lve the current c r i s i s in the forest industry. Pub l i c timber i s a l l o ca ted to pr ivate forest companies in B r i t i s h Columbia by a var iety of tenures. The form of these tenures has changed dramat ica l ly over time. - i i -Pr io r to 1912, access to the forest resource was granted pr imar i l y by leases and l icenses which carr ied few re s t r i c t i on s and r e l a t i v e l y low roya l t i e s and rents. These tenures were perpetual ly renewable un t i l the merchantable timber was removed. Between 1912 and 1947 the primary method of disposing crown timber was through competitive bidding on short-term timber sales. The crown not only received r oya l t i e s and rental fees from these Timber Sale Licenses, but a l so a bid price. The Forest Branch establ ished a minimum bid pr ice based on the value of the end product minus the costs of production and an allowance for p r o f i t and r i sk. After 1947, the government attempted to regulate the harvest of timber in such a way as to guarantee a perpetual supply of timber. They did th i s by awarding huge tracts of publ ic land to owners of pr ivate forest land and perpetual tenures in order for them to manage the whole property on a sustained y i e l d basis. On the remaining majority of forest land the government set aside large areas which were to be managed by the publ ic sector on sustained y i e l d p r inc ip le s . Over time, as a re su l t of these p o l i c i e s , competition for the resource was v i r t u a l l y el iminated and, as one consequence, the government always received the appraised upset pr ice for timber. I t appears that th i s has undervalued the crown's share of the resource rent. The combined e f fect of timber a l l o c a t i o n p o l i c i e s af ter 1947 was to accommodate, i f not encourage, the consol idat ion of timber r ights. In order to expla in the evo lut ion of timber po l i cy in B r i t i s h Columbia and to guide future po l i cy development, the thesis examines s ix broad theories of how the state operates. These are categorized as fo l lows : r a t i o n a l i s t , p l u r a l i s t , neo-conservative, neo-marxist instrumental i st , neo-marxist s t r u c t u r a l i s t , and Canadian. After reviewing these theories the thesis concludes that elements of each theory can be employed to expla in d i f fe rent po l i cy changes over time. No s ing le theoret ica l model i s t o t a l l y adequate to answer the question of why B.C. governments' acted the way they did. Nevertheless, the neo-marxist s t r u c t u r a l i s t and Canadian theories provide the f u l l e s t explanation of the ro le of the state in B r i t i s h Columbia. I t i s apparent that large forest companies have had a disproportionate inf luence on publ ic forest po l i c i e s . Over time, the p rov inc ia l state has become increas ingly dependent on those companies to carry out many forest po l i cy object ives, to provide employment arid generate tax revenues. New resource p o l i c i e s designed to meet the current c r i s i s in the forest industry must recognize these two important facts. - iv -TABLE OF CONTENTS Abstract i i ' Acknowledgements .vi Introduction 1 Chapter One Early Forest Po l i cy : 1858-1943 4 i Chapter Two The Introduction and Implementation of Sustained Y ie ld Management: 1943-1972 20 Chapter Three Theories of Po l icy Making 71 Chapter Four Conclusions 107 Bibliography 124 -v-ACKNOWLEDGEMENTS Many people assisted in the preparation of th i s thesis. In pa r t i c u l a r , I would l i k e to thank Tom Gunton for his deta i led and he lpfu l comments on e a r l i e r drafts , and Brahm Wiseman, for his consistent support. As w e l l , I would l i k e to extend my gratitude to David Hulchanski for his encouragement, and Ray Payne for many hours of st imulat ing discussion. I would a l so l i k e to thank my parents, Barbara Clark and the l a t e James C lark, for always encouraging me to pursue an academic education. F i n a l l y , I would l i k e to thank Dale, without whose support th i s thesis would not have been accomplished. - v i -INTRODUCTION The B r i t i s h Columbia economy i s highly dependent on the export of s taples, p a r t i c u l a r l y forest products. In a report prepared by the B.C. Min i s t ry of Forests in 1980 i t was estimated that the forest industry accounted for almost ten per cent of the province's to ta l employment.* Af ter i nd i rec t ef fects are included, forestry sustained c lose to twenty-f i v e percent of p rov inc ia l employment. The h i s t o r i c a l importance of the forest industry to the economic l i f e of B r i t i s h Columbia cannot be overestimated. However, according to several recent studies, the future of the forest industry i s in jeopardy.^ A report prepared for the Federal Min i s t ry of State for Economic and Regional Development in 1984 concludes: ...the B.C. f o r e s t p r o d u c t s i n d u s t r y has become ' l o c k e d - i n ' to t echno log i e s and products which y i e l d low average ra tes of r e t u r n on i n v e s t m e n t (e.g. construction grade lumber), face dec l in ing markets and, in other cases, have not c ap i t a l i z ed on changes taking place in the marketplace.^ A more recent review by Sten Ni l s son, a Swedish economist, paints an even gloomier scenario.^ On the basis of various forecasting methods, Ni lsson predicts that without fundamental s h i f t s in government and industry p o l i c i e s the forest sector 's contr ibut ion to the economy of B r i t i s h Columbia w i l l be s i g n i f i c an t l y reduced.^ In order for planners and policy-makers to develop strategies to deal with the current c r i s i s in the forest industry, i t i s important for them to understand how past po l i cy was adopted and why. This thesis i s meant to contribute to that understanding. 1 Pub l i c ownership of the vast majority of the timber resource has made government forest po l i cy an area of c r i t i c a l concern. As Peter Pearse has stated: The high p r o f i l e of the forest industry in the economy, the impact of t imber product ion on the environment, and the predominance of the Crown as the f o r e s t 1 andlord push forest po l i cy to the forefront of publ ic concern. Government forest po l i cy has many components. F i re suppression, s i 1 vaculture, pest con t ro l , reforestat ion, and inventory programs, for example, are a l l important a c t i v i t i e s in the government's attempt to manage the p rov inc ia l forest resource. The most important element of forest po l i cy in B.C., however, i s the way in which timber i s a l l o ca ted to the forest industry. The r ights to forest land and timber are conferred by a var iety of forest tenures. As Pearse has noted, these tenures are the "touchstone" of p rov inc ia l forest pol icy.^ This thesis examines the history of forest tenure po l i cy in B r i t i s h Columbia up to 1972. Over the years many po l i cy innovations were implemented, the structure of the industry was dramat ica l ly a l te red , the amount of timber cut increased phenomenally, and technological advances changed the nature of harvesting and production. Forest tenure po l i cy in B.C. i s extremely complicated and i s the r e s u l t of decisions made to meet various demands at d i f fe rent times in history. By 1972, timber a l l o c a t i o n po l i cy was a combination of l e g i s l a t i o n , administrat ive pract ice, m in i s te r i a l d i scret ion and h i s t o r i c a l fact. Many authors, however, have argued that forest po l i cy has general ly operated to the advantage of large corporations. 8 H i s t o r i c a l l y , key po l i cy decisions have encouraged the growth of large, integrated forest companies. 2 This thesis reviews the history of timber a l l o c a t i o n p o l i c i e s in B r i t i s h Columbia and concludes that those p o l i c i e s have indeed contributed to the l e v e l of corporate concentration in the industry. The thesis then turns to a question which has not been analyzed in any depth; namely, why did forest pol icy take th i s direct ion? In order to answer th i s question, s ix broad theories of how the modern state operates are reviewed to determine whether any of them adequately expla in the B r i t i s h Columbia experience. These theories are categorized as fo l l ows : r a t i o n a l i s t , p l u r a l i s t , neo-conservative, neo-marxist instrumental i s t , neo-marxist s t r u c t u r a l i s t , and Canadian. After b r i e f l y describing each theory and assessing i t s v a l i d i t y with respect to the case study, the thesis concludes that elements of each theory can be employed to expla in d i f fe rent po l i cy changes over the years. No s ing le theoret ica l model i s t o t a l l y adequate to answer the question of why B r i t i s h Columbia governments' acted the way they did. Nevertheless, the neo-marxist s t r u c t u r a l i s t and Canadian theories provide the f u l l e s t explanation of the r o l e of the state in B r i t i s h Columbia. 3 CHAPTER ONE EARLY FOREST POLICY: 1858-1943 To the ear ly inhabitants of B r i t i s h Columbia, forests were a l i m i t l e s s resource that impeded the orderly settlement of land. Roderick Haig-Brown, for example, pointed out that B.C. pioneers frequently burned standing timber in order to c l ea r the land for farming. 9 This att i tude changed, however, with the recognition that money could be made by transforming nature's g i f t into functional timber for construction of ra i l roads , ships and houses. Although the f i r s t recorded commercial exp lo i ta t i on of the p rov inc ia l forest resource occurred in 1788, when John Mears. had Chinese loggers and tradesmen bu i l d ships for the fur trade, i t was not u n t i l the gold rush of 1858 that lumbering began to be establ ished as a nascent industry. The discovery of gold led to the i n f l u x of over 30,000 people, dwarfing the ex i s t ing population of about 4,000.^ Among the new immigrants was W.P. Sayward, an American lumberman from Maine. Upon his a r r i v a l , he immediately constructed a p ro f i t ab le water-powered sawmill at M i l l Bay on Saanich In let . This prompted one author to comment: L i ke h i s compatr iots he came seeking h i s f o r tune , but u n l i k e them, he intended to f i n d i t i n the f o r e s t wea l th of the North P a c i f i c of which he had heard so much. 1 In the same year, the l e g i s l a t o r s of the Crown Colony of Vancouver Is land passed the f i r s t act which had a bearing on the forest resource. The Land Act (1858) proclaimed crown ownership of land and 4 authorized the disposal of that land at the price of ten s h i l l i n g s per a c re . 1 2 The fo l lowing year the Act was amended to state "...conveyance of the land sha l l include a l l trees..." 1** Thus, access to crown timber could only be obtained by the outr ight purchase of land. This remained the case un t i l the Governor of Vancouver Is land proclaimed the Land Ordinance of 1865 which authorized the crown to lease land for the purposes of cutt ing t imber. 1 4 Importantly, the government did not decide to lease timber land because of a phi losophical commitment to reta in the land in crown ownership. On the contrary, the government wanted to encourage more rapid development of the forests than had been taking place, and by replacing the cost of land with an annual rental charge, the government reduced the costs to the timber industry. 1^ Another important change included in the Act was the s t i pu l a t i on that the lessee be required to own and operate a sawmil l . Thirty years l a t e r in Ontario, the government imposed a s im i l a r clause that H.V. Ne l le s refers to as the "manufacturing cond i t i on " . 1 6 In addit ion, the government required special approval from the Lieutenant Governor before any timber harvested from timber leases could be exported as logs. But, as one author notes, "...in pract ice, however, the acqui s i t ion of such a permit was not a d i f f i c u l t task. " 1 7 The Act was c l e a r l y intended to promote the exp lo i ta t ion of the forests by supplying inexpensive timber, and to secure the jobs and p ro f i t s associated with secondary manufacturing for the l oca l inhabitants. In r e a l i t y , the government provided cheap timber for big lumber concerns, but excluded small operators by requir ing the construction of a sawmil l. Nevertheless, the 1865 Act set the precedent of publ ic ownership of land 5 with pr ivate exp lo i ta t i on of the timber resource. This p r i n c i p l e has remained in tact to the present day. Over the course of the next 35 years, governments of the day often amended the Land Act to provide d i f fe rent forms of l icences and leases. By the turn of the century, the basic tenets of government forest po l i c y were we l l establ ished. The government wanted to promote settlement by s e l l i n g cheap arable land and, at the same time, reta in va luable timber land for the Crown. However, whi le publ ic ownership of the forests was f i rm l y entrenched, the government devised various means of disposing the timber, apart from the land, to pr ivate firms. Although the ear ly rat iona le for th i s was probably to encourage exp lo i ta t ion by a l l e v i a t i n g the burden of land ownership on cap i ta l - s ta rved companies, governments soon recognized that the revenue received from leases and l icenses would exceed that which could be obtained by the outr ight sale of l a n d . 1 8 Unt i l 1903, the primary method of disposing Crown timber was through the granting of timber leases. These leases conveyed cutt ing r ights over t racts of timber for 21 years. There was a nominal annual rental fee and a royalty of 50 1 Q cents per thousand board feet was charged on timber cut. Other basic features of government forest po l i cy which had been establ i shed by 1900 include encouragement of the rapid exp lo i ta t ion of forest land, requir ing (at l ea s t t heo re t i c a l l y ) the manufacture of logs with in the province, and supporting the export of semi-finished lumber. The year 1903 was the beginning of a new era for B r i t i s h Columbia and i t s timber industry. Richard McBride, a native son and former M in i s ter of Mines in the Dominion government, was c a l l e d upon to replace the scandal-ridden P r i o r Administration. Four months l a t e r , in October, 6 McBride c a l l e d an e l ec t i on , the f i r s t to be fought along party l i ne s . McBride's Conservative Party platform, adopted in 1903, l i s t e d two points regarding forest po l i cy . The f i r s t stressed the need for reforestat ion and "... that steps should be taken for the general preservation of forests by guarding against the wasteful destruction of t imber. " 2 0 The second point suggested that "... i t i s advisable to foster the manufacture of raw products of the Province with in the P rov ince. " 2 1 Upon his r e -e l ec t i on , however, McBride was to prove that party platforms were merely the s tu f f of e l ec t i on propaganda. The McBride government inher i ted a debt-ridden province. Thus, aided by his M in i s ter of Finance, Captain Tatlow, the Premier sought immediately to improve the province's finances. As Martin Robin points out: The f i r s t task of the new government was to re-organize the f i s c a l system by c o n t r o l l i n g expenditure and to seek new ways and means of r a i s i n g money to pay o f f debt charges and other d i s a b i l i t i e s which had sucked the treasury dry for years... 2 2 Various taxes were raised, a l l new publ ic works ceased, and the cost of f inancing education was sh i f ted from the province to the mun ic ipa l i t i e s . Such a po l i cy of retrenchment could hardly be popular for long and Conservative p o l i t i c i a n s desired a large infusion of funds in order to consol idate the pos it ion of the f i r s t party government in B.C. In A p r i l , 1905, the government decided to raise the requ i s i te revenue by s e l l i n g off large amounts of the province's timber cap i ta l at wholesale prices. In what has dubiously been described as a "master-stroke of bold statesmanship", the McBride administration embarked on a po l i cy of 7 reck le s s l y g iv ing away r ights to cut Crown timber. As A.C. F lumerfe l t approvingly notes, ...the government resolved upon a remarkable measure of pol i c y that chal 1 enged and defeated c r i t i c i s m . . . The government threw open a l l t imber lands. Anyone who cared to stake a square m i l e of f o r e s t was encouraged to do so, and the exc lus ive r ight to cut timber on that area was given to him. E s s en t i a l l y , the mechanism which the government used to "throw open" the forests was the special timber l icence. The terms and conditions of these l icences were a l te red so as to make them a t t r a c t i v e to domestic and American timbermen, c a p i t a l i s t s and speculators. Whereas special timber l icences previous ly had been non-transferable and e l i g i b l e for renewal every f i v e years, they were now made renewable annually for twenty-one years, and transferable. One ind iv idua l could hold an unl imited number of l icences. While the roya l t i e s charged for these new l icences remained the same, the annual rental fee was raised modestly to approximately 22 cents per acre per year. However, th i s c l e a r l y undervalued the resource, for , as reported in the V i c t o r i a Da i ly Times, many new l icensees quick ly resold t he i r l icences for prices between $6 and $10 per a c r e . 2 5 These changes to the l i cens ing system sparked a timber "rush" of unprecedented magnitude. W.R. Ross, Min i s ter of Lands in 1912, r e ca l l ed the s i tuat ion in 1905: Stumpage... was being sought f e v e r i s h l y by i n v e s t o r s . Here i n B r i t i s h Columbia was the t imber; here the crying need for publ ic revenue to open up the province, f o r c a p i t a l to i n v i g o r a t e our anemic i n d u s t r i e s and there, throughout the older regions of the continent, was the cap i ta l we needed, cap i ta l which was seeking to invest i t s e l f in the fast diminishing western reserve i n timber... f At the same time as B.C. was loosening the " ru les of the game", so to speak, the American conservation movement was taking hold in the U.S. 8 Gi f fo rd Pinchot, with the strong support of President Roosevelt, moved in 1907 to set aside large areas of publ ic lands into forest reserves. G i f fo rd Pinchot's swi f t action i n i t i a l l y struck fear in the hearts of the powerful timber interests in the West. Although they were soon to learn that the reserves drove the value of remaining pr ivate timber land up and increased s t a b i l i t y in the industry, the Western timber barons qu ick ly cast about to sa t i s f y the i r rapacious appetite for cheap timber. Needless to say, the American timbermen were pleased with the accommodating changes that occurred in B.C. in 1905. They expressed that pleasure in a very tangib le way. American business interests began buying up B.C. timber land, l icences and leases. American investment in B.C. timber increased t h i r t y - f o l d in the f i r s t decade of the twentieth century. In 1900 the to ta l amount of American cap i ta l invested in the province's lumber industry was les s than two m i l l i o n d o l l a r s . In 1910, American interests in B.C. timber lands and m i l l s amounted to 65 m i l l i o n d o l l a r s and four years l a t e r the amount reached 70 m i l l i o n d o l l a r s . 2 7 Americans, however, were not the only ones to invest and p r o f i t from B.C.'s forest wealth. Speculation was rampant. Eastern Canadian business interests , European companies, and B r i t i s h Columbian firms a l l benefited from the government largesse. The number of timber l icences issued increased from 1,451 in 1904 to over 15,000 in 1907. 2 8 In less than three years, more than 9,600,000 acres had been staked - ten times the amount of acreage under l icence in 1904.2^ However, because the special timber l icences were now transferable, many holders of these new l icences qu ick ly so ld out to large corporate interests . Martin Robin asserts: 9 Over eighty per cent of those whose names were used to stake almost 10,000,000 acres i n 1907 a l l owed t h e i r l i c e n c e s to f a l l i n t o the hands of the t i m b e r syndicates. 0 While c a p i t a l i s t s gained access to B.C. timber for a very modest fee, the sheer enormity of the give-away provided a tremendous infusion of pub l ic funds. There i s no doubt that, in terms of providing revenue to the crown, the 1905 changes in forestry l e g i s l a t i o n were a resounding success. In terms of lay ing the foundation for the continual stewardship of the pub l ic ' s forest resource, the changes were more questionable. On December 27, 1907, an order-in-counci1 was passed which withdrew a l l unalienated timber lands from any form of a l ienat ion . E f f e c t i v e l y , a moratorium was placed on a l l further issuance of timber l icences and leases. Most wr iters suggest that the primary motivation for the sweeping a l te ra t i on s to the province's timber l i cens ing system in 1905, and the subsequent moratorium in 1907, were re la ted to the government's f i nanc ia l s ituation.-* 1 In pa r t i cu l a r , F lumerfe l t , Marris and Robin argue that the pressing need for revenue almost forced the McBride Government to induce investors to stake forest land so that rental fees would swell government c o f f e r s . 3 2 A f ter s u f f i c i en t revenue was raised, the government was no longer ' forced ' to a l ienate timber land and a moratorium was c a l l e d for. Stephen Gray, on the other hand, suggests in a recent thesis that the chief goal of the government was to promote i ndus t r i a l development."*3 In e f fec t , however, both the ra i s ing of government revenue and the promotion of economic development were probably seen as twin goals of the government. That i s , the province required more money to enable i t to 10 subsidize development and pursue grand plans to 'open up the north'. Nevertheless, Gray's emphasis on i ndus t r i a l development as the McBride administration 's most important p o l i t i c a l object ive i s no doubt correct. The 1907 moratorium was j u s t i f i e d by the rhetor ic of the conservation movement which, i t was viewed, had f i n a l l y reached B.C. As Samuel Hays points out, the conservation movement focussed on the promotion of e f f i c i e n t , l a rge- sca le i ndus t r i a l production."^ 4 In 1909 the p rov inc ia l government decided to e s tab l i sh a Royal Commission of Inquiry on Timber and Forestry under the chairmanship of F.J. Fulton. This too was cloaked in conservation language. Among other things, the commission was to conduct an inventory of the forest resources of the province and suggest means to "...conserve the present supply of timber, to guard against f i r e and to u t i l i z e vacant lands su i tab le for a f f o r e s t a t i o n . . . " ^ A.C. F lumerfe l t suggests that the commission was establ ished because the government was uncertain as to what forestry goals to pursue and was determined to begin a systematic method of forestry conservation."* 6 Marr is, however, argues that the primary motivation for the inquiry was because l icensees were ag i tat ing for longer, more secure tenure. The evidence presented at the commission's hearings ce r ta i n l y indicates that that was a major object ive of most interveners.-^ 7 More co r rec t l y , the reason for the royal commission was probably because the government had taken ser ious ly the arguments put forward by the conservation movement, as Hay's has out l ined. The government wanted to r a t i ona l i z e the development of the forest resource and put i t on a s tab le, bus iness- l ike footing. Interest ing ly , the McBride government did not wait un t i l the commission reported to act on the question of tenure. In March, 1909, 11 McBride announced that l icences would be perpetual ly renewable un t i l the merchantable timber was removed. This was done in spite of the fact that McBride continued to re i te ra te that no changes to forestry l e g i s l a t i o n would be made un t i l the commissioners had made the i r report. The commission spent 13 months a f ter i t s appointment attending hearings and l i s t en i n g to 115 witnesses. 3 8 The vast majority of witnesses could be c l a s s i f i e d as representing e i ther business interests or government. Indeed, only four intervenors represented labour organizations. I t i s perhaps not surpr i s ing, therefore, that the question of length of tenure was the topic which occupied most of the commission's time. The reason that length of tenure for timber l icences was important to the l icensees i s not d i f f i c u l t to determine. E s s en t i a l l y , because the government had made the l icences transferable and al lowed the unl imited accumulation of such l i cences, they became commodities. Ind iv idua l s not concerned with the timber industry per se could and did hold l icences for speculative.purposes. Extending the length of tenure increased the value of th i s new commodity. For the government's part, i t was concerned with ensuring rat iona l p r i vate investment, whi le at the the same time receiv ing a steady flow of revenue from the forest resource. I t was argued that perpetual tenures would enhance the l icensee 's security and thereby st imulate investment. The government was not so much interested in the s c i e n t i f i c management of the publ ic forest, but rather that the a b i l i t y to control the rent and roya l t i e s for the l icences be retained. 12 The Fulton royal commission conveniently accommodated both the industry and the government. Its F ina l Report placed heavy emphasis on examining the question of p rov inc ia l tenure arrangements. The commissioners suggested f i r s t that l icences and leases should be made renewable un t i l they no longer contained merchantable timber. However, they rejected the forest industry 's argument that f ixed roya l t i e s were necessary to provide s t a b i l i t y for investment. The commissioners were adamant that the government reta in i t s r ight to vary the charges l e v i e d on timber l icences. The fo l lowing excerpt from the Report i l l u s t r a t e s t he i r commitment. Your Commis s ioner s recommend, d e f i n i t e l y and e m p h a t i c a l l y , that the l i c e n c e r e n t a l s , fees and r o y a l t y s h a l l not be f i x e d f o r any per iod beyond one ca lendar year at any time; that the present r i g h t of the Government to r e gu l a t e and adjus t r e n t a l s , fees, r oya l t i e s , or other charges on timber property s ha l l in no way be r e s t r i c t e d or l i m i t e d ; and t h a t a l l conditions appertaining to the control of timber lands by the Province of B.C. s ha l l remain forever d i s t i n c t l y subject to such enactment of the Leg is lature or Order-In-Council as circumstances, at any time may demand.-*9 Considering the lack of data on the prov inc ia l forest base, the commission's F ina l Report was a wel1-researched, comprehensive document. In addit ion to the above suggestion regarding the f i x i n g of roya l t i e s and rents, the commissioners made twenty further key recommendations. Many of these dea l t with questions of tenure arrangements. I t was recommended that lease holders be put on an equal footing with l icences; that i s , lessees should have the automatic r ight to renewal, and they should be charged the same rental and royalty. The commissioners suggested that tanbark and pulp lessees be granted the r ight to cut sawmill timber on the i r leaseholds, provided that they pay the equivalent taxes and roya l t i e s . 13 S i gn i f i c an t l y , the Report advocated the i nde f in i te continuation of the moratorium on unalienated timber land and suggested a method of disposing of these lands in the future. I f the need arose to open up more land for lumbering purposes, the commissioners f e l t that such lands should be subject to publ ic competition. One of the reasons given for the eventual need to provide more timber was the p o s s i b i l i t y of a high degree of corporate concentration leading to less government cont ro l . The commissioners were concerned about the ramif icat ions of a large amount of timber land being held by non-operators. The Report stated: S hou l d such a c i r c u m s t a n c e . . . l e a d to monopoly cond i t i on s i n the P r o v i n ce , and should the f i n a n c i a l control possessed by the Government over l icence rental and r o y a l t y f a i l i n any way to subdue commercial symptoms of th i s character, i t might therefore, in that fu tu re t ime, be found expedient to throw areas of Reserve timber into the market. " A number of the other recommendations dea l t with mechanisms to c o l l e c t more r e l i a b l e data. S p e c i f i c a l l y , i t was suggested that a complete cruise of crown grant timber lands be made by the government, and that "an annual return should be made of the va luat ion of a l l such timber lands."^-'-Special l icensees, the commissioners argue, "...should be instructed to proceed with the survey of the i r holdings," and a l l operators should be required to submit periodic reports concerning the i r operations to the government.^2 The t h i r d major focus of the recommendations concerned f i r e prevention. Various regulations were suggested which required operators to dispose of debris and required the supervision of railway construction and operation. The Report recommended that the government be responsible for f i r e protection with the to ta l cost of the protection of unalienated timber 14 being borne by the government whi le the pr ivate companies would be responsible for f i f t y per cent of the cost of f i r e protection on a l ienated timber. The commissioners a l so recommended that any merchantable timber l e f t standing a f ter logging be charged f u l l r oya l t i e s . Ostensibly, th i s was for f i r e protection purposes. However, th i s had the ef fect of encouraging a larger cut and increasing revenue to the crown. F i n a l l y , the Report recommended the establishment of a Department of Forests under the control of the Chief Commissioner of Lands. The department would be charged with the re spons ib i l i t y of implementing the commission's recommendations. The Report out l ined, rather e x p l i c i t l y , the make-up of th i s new department. Doubtless inf luenced by Pinchot, the commissioners opted for a professional forest serv ice, the employees of which would not be allowed to hold any pecuniary interest in the forest industry. Foresters, the Report suggests, should be s c i e n t i f i c men with "...superior techn i ca l , business and administrat ive a b i l i t y . " 4 3 In order to finance th i s new department, the Fulton commission suggested that a Forest Sinking Fund be created. The commissioners proposed that the ent i re government revenue from forests in 1910 be deposited in the fund. I t appears that the commissioners were inf luenced by the U.S. experience where revenues from the U.S. National Forest financed the U.S. Forest Service. However, the commission was asking the government to turn over about t h i r t y per cent of i t s to ta l revenue to th i s new department. The F ina l Report of the Fulton commission was completed on November 15, 1910. An Interim Report had been published approximately one year e a r l i e r . Although the Interim Report was a scant two pages long, i t 15 indicated the intent of the commissioners. As has been noted, Premier McBride had announced pr io r to the commission's appointment that the government had decided to a l l ow special timber l icences to be renewable in perpetuity. A f ter the announcement, McBride requested that the commission make an Interim Report on th i s matter. The Interim Report merely supported the government's decision to a l l ow renewable l icences. As the document stated, A c a r e f u l c on s i de r a t i on of the f a c t s adduced i n the evidence submitted, and of the opinions of some of the best known author i t ies on timber and forestry matters, have l e d us to the unanimous conc l u s i on that the proposed extension of tenure of these l i cences, under proper safeguards, w i l l not work to the disadvantage of the P rov ince. 4 4 Consequently, the f i r s t piece of l e g i s l a t i o n re su l t i ng from the Fulton commission was introduced pr io r to the publ icat ion of i t s F ina l  Report. An amendment to the Land Act was passed in 1910 which al lowed l icences to be renewable for as long as they contained merchantable timber. A further change enabled the government to d i rect a l icensee to remove timber within a spec i f i c length of time i f the land was deemed su i tab le for agr icu l ture. However, i t was not un t i l 1912 that the government acted on the royal commission's F inal Report. In that year, the Forest Act was passed. Many of the commission's recommendations were embodied in the Act. A Forest Branch was created which was charged with re spons ib i l i t y for a l l aspects of forestry regulat ion. S p e c i f i c a l l y , the Branch dealt with f i r e prevention, the c o l l e c t i o n of data, reforestat ion, the disposal of crown timber, and the c o l l e c t i o n of revenue raised from the prov inc ia l forests. 16 To oversee the work of the Branch, a P rov inc ia l Forest Board was created. Although th i s was a departure from the recommendations of the commissioners, the Board was not a major innovation. The Forest Board consisted of only s ix senior forestry o f f i c i a l s , and i t s duty, as stated in the Act, was "...to ensure the carrying into e f fect and enforcement of the provis ions of th i s A c t . " 4 5 This "executive" committee had the a b i l i t y to view the forestry s i tuat ion in the province as a whole, whereas the Forestry Branch was preoccupied with the day-to-day, rather mundane task of implementing various regulations. In a l l l i k e l i h o o d , the Board dea l t with the broader questions of po l i cy . The new Forest Act did not provide for a Forest Sinking Fund as recommended by the royal commission. Given the amount of money requested by the commissioners, the l i k e l i h o o d of such a fund being created was diminished. However, th i s resulted in the Branch being ser ious ly underfunded from the very beginning. The McBride government's desire for revenue overrode the commission's convincing argument that inadequate reinvestment in forestry would r e su l t in the depletion of the province's " cap i ta l s tock" . The government did provide a l im i ted amount of funds for f i r e protection. The testimony at the hearings indicated that f i r e protection was one of the most important concerns of pr ivate business. A l l holders of l icences and leases, and owners of pr ivate timber land were required to pay one cent per acre into a newly created Forest Protection Fund. The government was charged with to ta l r e spon s i b i l i t y for the f i ght ing of forest f i r e s , and was required to contribute to the Fund an amount equa l l i ng the contr ibut ion of pr ivate timbermen. 17 There were a number of regulations, suggested by the commission, which were incorporated into the Forest Act. The government was given the power to order operators to remove or burn s lash and debris, and a l l merchantable timber which was not logged from a given s i t e was to be subject to f u l l roya l ty charges. The Act ensured that the government's power to vary charges on crown timber remained intact. The new l e g i s l a t i o n a l so attempted to equal ize the various forms of crown timber r ights. In other words, the d i f fe rent tenures became somewhat interchangeable, with s im i l a r r o ya l t i e s , rents and duration. Pulp and tanbark leaseholders, as the F inal Report recommended, could cut sawlogs, with the app l i cab le royalty being l e v i ed . The government agreed with the commission in two s i gn i f i can t areas. F i r s t , the 1907 moratorium on further a l ienat ion of crown timber was continued. Indeed, the Forest Act declared that a l l unalienated forest land be set aside in a forest reserve. Secondly, the r ight to log any land which was to be released from the reserve was to be so ld by competitive auction. B a s i c a l l y , i f timber r ights were to be so ld, the Forest Branch would be required to survey, cruise, e s tab l i sh an upset, or basic pr ice, and advert ise the sa le. They a l so indicated the amount of time al lowed for timber removal. The 'upset' pr ice establ ished by the Forest Branch was determined by "... subtracting the cost of exp lo i ta t ion of timber from the pr ice of the products, with a margin of safety allowed between the two values to cover operating p r o f i t s , carrying changes, interest and r i s k " . 4 6 In other words, the upset pr ice was the payment to the Crown, over and above r oya l t i e s and rental charges, due i t as owner of the resource. A bidder was required to submit a deposit of ten per cent of the bid, and tender an amount he would pay above the upset price. Unsuccessful bidders 18 were refunded the i r deposit. The successful bidder was awarded a form of tenure c a l l e d a timber sale l icence. From 1912 to 1948, the timber sale l i cence was the only means of gaining access to Crown timber. The o r i g ina l intent ion of these l i cences, as set out by the Fulton commission, was to prevent monopolies. In other words, the commission f e l t that i t might be prudent to open up areas of the timber reserve to competition so that entry into the timber industry would not be re s t r i c ted to purchasing a l icence from an ex i s t ing holder. At the time of wr i t i ng , however, the commission was convinced that enough timber had been secured to supply the needs of the industry for many years. They proved to be wrong, and as the demand for timber grew, timber sale l icences became increas ingly s i gn i f i cant . By 1945, th i s form of tenure accounted for 25 per cent of the to ta l p rov inc ia l harvest and 50 per cent of the harvest in the Inter ior region of B.C.4'' More importantly, perhaps, the fees generated by timber sales, known as stumpage fees, accounted for a disproport ionately large amount of to ta l forest revenue. In the f i s c a l year 1945, the revenue from timber sales amounted to $2,569,512; almost 50 percent of the to ta l revenue generated from d i rec t forestry charges. 4 8 From 1915 to 1944 the to ta l annual harvest increased from 1,017,638,000 board feet to 3,096,333,084.49 Many professional foresters within the Forest Branch were aware that the forests were being depleted and in 1937 a comprehensive forest inventory was completed which v e r i f i e d that fact. I t was apparent that continued harvesting at the same pace would have serious long-term consequences for employment, community s t a b i l i t y , and government revenue. 19 CHAPTER TWO THE INTRODUCTION AND IMPLEMENTATION OF SUSTAINED YIELD MANAGEMENT: 1943-1972 When Dr. CD. Orchard became Chief Forester in 1942, he preva i led upon the government to consider the po l i cy options a va i l ab l e . Here i s how he r e c a l l e d the s i tuat ion in a 1948 interview: Once we had an inventory of our resources and compared i t w i th our annual d e p l e t i o n , i t was apparent tha t we could not continue our ex i s t ing po l i cy of l i qu ida t i on . And we t a l k e d , we ate , we s l e p t and we argued that f o r some years and, i n 1942, we put the p i c t u r e before the government. I t was a complete p i c t u r e too. I t out l ined the two a l te rna t i ve s between which we had to choose. On the one hand, to continue our l i qu ida t i on methods and thus secure the immediate maximum return i t was p o s s i b l e to get from our f o r e s t resource. The other was to look ahead and maintain our industry at as high a l e v e l as p o s s i b l e but to s a c r i f i c e immediate p r o f i t s f o r fu tu re and perpetual p r o f i t s of a more modest sum. Our whole l e g i s l a t i o n was set up f o r l i q u i d a t i o n The a l t e r n a t e course was a complete about-face. u Aside from promoting the " l i q u i d a t i o n " of the forest crop, there were other problems with the state of forest po l i cy in 1943. Timber harvesting was concentrated in certa in developed areas, whi le other regions of the province with mature timber remained untouched by loggers. Older industr ies and communities dependent on the forests were concerned about the future supply of raw material and there was very l i t t l e reforestat ion taking place. 51 T n e so lut ion to these problems, according to Orchard, was to move from unregulated harvesting to sustained y i e l d management. The 20 sustained y i e l d concept i s e s s e n t i a l l y a simple one. The object ive i s to l i m i t the amount of timber cut to the amount of timber that grows, so that the forests w i l l l a s t in perpetuity. Orchard convinced the government that action was needed and a second Royal Commission into the forest resources of B.C. was establ ished. Interest ing ly , Orchard and the government apparently perceived the appointment of a royal commission as an important publ ic re la t i ons exercise. The central thrust of a new forest po l i cy had already been decided upon by Dr. Orchard and the government. A high p r o f i l e royal commission was necessary to prepare the publ ic for such a dramatic s h i f t in po l i cy . Orchard r e c a l l e d the government's reaction to his report c a l l i n g for s t r i c t regulat ion of the timber harvest: Mr. Hart and Mr. Wei 1 s-Gray, the Premier and Min i s t e r respect ive ly at that time, were s u f f i c i e n t l y impressed so that, un l ike a great many reports that end up on the s h e l v e s and c o l l e c t du s t , I was c a l l e d i n t o consultat ion repeatedly. And f i n a l l y i t meant so much that the Premier f e l t t ha t we would have to have a l i t t l e p u b l i c educat ion i f we were to attempt i t . And the Royal Commission was set up and s tud ied the th ing f o r two f u l 1 years . I don't th ink - I honest ly don't th ink - that we cou ld have got a b e t t e r man to s u i t the purpose than the C h i e f J u s t i c e and he conf irmed - not word f o r word, but p r i n c i p l e f o r p r i n c i p l e - everything we had put forward and, whether we ever do anything on that Report or not, I th ink the t ime was wel 1 spent f o r the sake of p u b l i c education. The Honourable Gordon McGregor Sloan, soon to be Chief Jus t i ce of B r i t i s h Columbia, was appointed so le royal commissioner in 1943. Although his mandate was a broad one, g iv ing him scope to deal with a l l aspects of the forest resource, i t instructed him s p e c i f i c a l l y to e s tab l i sh the forests of B.C. on a sustained y i e l d basis. 21 The commission's hearings commenced in February, 1944 and concluded in Ju l y , 1945. The F ina l Report of the commission was dated December, 1945. Over 300 witnesses, covering a l l facets of forestry, appeared before the Chief J u s t i c e . 5 3 The F ina l Report of Chief Just ice Sloan was 195 pages long. It contained a wide var iety of recommendations covering a l l phases of forestry. I t was a dramatic report. Among other things, Sloan recommended va s t l y increased expenditure on reforestat ion and insect cont ro l . As one author summarized, "Forest administration in a l l respects i s found to have been t o t a l l y inadequate due to lack of s u f f i c i en t money."5 4 Sloan a lso b r i e f l y discussed the l e v e l of corporate concentration in the industry. He lamented the fact that "...the great part of the a l ienated timber resources of th i s Province are con t ro l l ed by a comparatively few men." 5 5 Nevertheless, he aknowledged that some degree of integrat ion was necessary for e f f i c i e n t operations. Sloan recommended the establishment of a permanent Forest Commission composed of not less than three or more than f i v e members. The Forest Commission would receive a l l forest revenues and make long-term po l i c i e s . They would control a l l expenditures and u t i l i z e the Forest Service to carry out a l l forest a c t i v i t i e s . Ostensibly, the Forest Commission would d e p o l i t i c i z e po l i cy development and put the management of forests on a sound, bus iness- l ike basis. However, i t was Sloan's recommendations concerning the adoption of sustained y i e l d management of the forests that were the most s i gn i f i can t , dramatic and cont rover s i a l . Sloan emphasized that "...we must change over from the present system of unmanaged and unregulated l i qu ida t i on of our forested areas to a planned and regulated po l i cy of forest management, leading eventua l l y to a programme ensuring a sustained y i e l d from a l l our productive land area."56 He more prec i se ly defined sustained y i e l d in the B r i t i s h Columbia context to mean "...a perpetual y i e l d of wood of commercially usable qua l i t y from regional areas in year ly or periodic quant it ies of equal or increasing volume."^ 7 After applying his de f i n i t i on of sustained y i e l d to the state of a f f a i r s that existed in the B.C. forest industry, Sloan immediately ran into a problem. If pr ivate companies were going to be required to l i m i t t he i r cut to the amount of growth of the i r forest land each year, no company had a large enough amount of forest land under l icence or ownership to enable them to cut enough timber to maintain the i r ex i s t ing productive capacity at anything near a p ro f i t ab l e l e v e l . Sloan found an answer to th i s dilemma. The crown, as land lord of 90% of the forest land of the province, would turn over to pr ivate tenure holders huge acreages of publ ic land adjacent to the i r holdings. The combined acreage would be known as a pr ivate working c i r c l e and administered v i a a new form of l i cence c a l l e d the forest management l i cence (FML). The FML carr ied with i t extensive obl igat ions. The l icence holders had to give up the unl imited r ight to cut trees on the i r previous ly held pr ivate tenures. The l icensee was required to submit a cutt ing plan to the government, with the Forest Service ind icat ing where, when, and how much timber would be cut each year within the FML. The Forest Service had the r ight to d ictate what the a l lowable annual cut (AAC) would be and to a l t e r the working plans of the company to su i t sustained y i e l d object ives. In addit ion, l icensees were obl iged to construct logging roads, compile 23 inventor ies, conduct reforestat ion projects and as s i s t with f i r e suppression. On the other side of the coin, the FML guaranteed certa in r ights. F i r s t , the FML was granted in perpetuity. The l icensee no longer had to compete for timber. This was, ostens ib ly, to induce long-term planning and investment. The r oya l t i e s and rental fees remained the same on the o r i g ina l crown-granted lands or o ld temporary tenures (ie. tenures granted pr io r to 1907) held by the l i c en see . 5 8 A l l land included in an FML that was owned by the l icensee or con t ro l l ed v ia an o ld temporary tenure became known as "Schedule A" lands. The precise rental and roya l ty fees app l i cab le var ied depending upon the type and date of the tenure. In general, however, these generated a r e l a t i v e l y small amount of government revenue. On the newly-added crown lands ( l a te r referred to as "Schedule B" lands), the rental would be only one cent per acre and a royalty would be paid equivalent to the timber sale l icence upon the harvesting of t imber. 5 9 The to ta l revenue generated from a l l rental and roya l ty fees in 1974 amounted to less than 5% of d i rect government revenue from the forest resource. Importantly, the FML holder a l so was required to pay stumpage fees on Schedule B lands as appraised by the Forest Service, (Although on these lands certa in management costs could be deducted from stumpage). However, the FML car r ied a s i gn i f i can t advantage, whereas timber sale l icences were awarded by competitive bid and therefore bids could exceed the appraised upset pr ice, FML's were immune from competition. As a r e su l t , FML holders always paid the upset price for harvested timber. In addition to pr ivate working c i r c l e s , embodied in FML's, Sloan recommended the creation of publ ic working c i r c l e s . These were to be large acreages of crown land managed d i r e c t l y by the Forest Service on a sustained y i e l d basis. Pub l i c working c i r c l e s were to be created on a l l land su i tab le for forestry that would not be taken up by FML's. Because of the amount of crown-granted land and o ld temporary tenures held on the Coast region of B.C., the bulk of the publ ic working c i r c l e s would be created in the Inter ior region. The ult imate goal of the Forest Service, as expressed by Orchard, was to have 50% of the prov inc ia l forest land managed pr ivate ly v ia FML's, and 50% managed publ ic ly v ia public working c i r c l e s . Essential l y , the Forest Service woul d cal cul ate the al 1 owabl e annual cut for a publ ic working c i r c l e and dispose of the timber v ia the timber sa le l icence system. In other words, timber was to be a l l o ca ted within PSYU's by competitive bidding. As was the case from 1912, the suuccessful appl icant for a timber sa le l icence was required to pay to the crown any amount bid above the upset pr ice, the cost of c ru i s ing , surveying, and advert iz ing, and the very low rental and roya l ty fees paid by holders of old tenures. However, whi le competitive bidding was recommended, Sloan a lso indicated that ex i s t ing operations, in pa r t i c u l a r , f ixed plant and production f a c i l i t i e s , should be assured a continued supply of raw logs. Sloan agreed with the Inter ior Lumber Manufacturers Association that recommended for the Inter ior that " . . . a l l ex i s t ing operations should be brought under l i cence and no new operation should be l icensed u n t i l the a v a i l a b i l i t y of timber in the area affected, s u f f i c i en t to guarantee the maintenance of that operation on a sustained y i e l d basis in perpetuity, has been determined." 6 0 Although the 1946 and 1948 sessions of the l e g i s l a t u r e enacted l e g i s l a t i o n a r i s ing from the Sloan Report, the major l e g i s l a t i v e resu l t s 25 f lowing from the royal commission's f indings were contained in amendments to the Forest Act of 1947. 6 1 As the Forest Service 's Annual Report of that year approvingly notes, The 1947 session of the Leg is lature marked the passage of an amendment to the Fores t Act p r o v i d i n g f o r the creation of forest management l i cence areas, with the object of f a c i l i t a t i n g the pract ice of sustained y i e l d management of the f o r e s t resource by the f o r e s t i n d u s t r i e s . This outstanding p iece of l e g i s l a t i o n further implemented the recommendations of the recent Royal Commission on Fo re s t r y and ranks with the format ion of the Fores t S e r v i c e t h i r t y - f i v e years previous ly in importance as a progressive step in the development and perpetuation of our forest resource. 6 2 Speaking in favour of the amendment, the minister responsible for forests, the Hon. E.T. Kenney, said f o r c e f u l l y : What does the Commissioner recommend and what does the new Act aim at? D e f i n i t e l y a change o v e r from a system of exp lo i ta t i on and unmanaged and unregula ted harvesting of a ready found crop of t imber to one of planned and regulated forest po l i cy guaranteeing our l i q u i d a t i o n w i l l not exceed our increment. In other words, we must l i v e off interest instead of c a p i t a l . N a t u r a l l y very few operators have s u f f i c i e n t t imber or t imber growing land to go on such a bas i s wi thout Government co-operation. The Government owns approximately 90% of P r o v i n c i a l t imber growing lands and the re fo re must enter i n t o a scheme with the operators or do i t alone. 3 But the adoption of th i s key recommendation of the royal commission created a storm of controversy. The Vancouver section of the Canadian-Society of Forest Engineers presented a b r ie f to the cabinet in March, 1947 which c r i t i c i z e d the l im i t a t i on s to be placed on current holders of timber r ights. Their b r i e f exclaimed: "There i s no adequate compensating inducement or equitable basis for the surrender of ex i s t ing property r ights now held under timber lease, l i cence or crown grant. The terms, as wr i t ten, i n vo l ve v i r t u a l conf iscat ion of present e q u i t i e s . " 6 4 26 In the same month, the B.C. Loggers Association sent a delegation to meet the cabinet. This was a very i n f l u e n t i a l group that included, among others, representatives from many of the largest forest f irms: B loede l , Stewart and Welch, Canadian Forest Products, MacMi l lan Export, and Gibson Brothers. Their pos i t ion, e s s e n t i a l l y , was that a one year's delay was necessary in order that more study could take p l a c e . ^ By far the most vocal c r i t i c of the new l e g i s l a t i o n , however, was the B.C. Truck Loggers' Association, a group representing sma l l , independent logging companies. While careful not to c r i t i c i z e the notion of sustained y i e l d management, the Truck Loggers' Association was strongly opposed to the Forest Management Licence system. In a l e t t e r to the editor of the Vancouver Sun in 1949 the president of the Truck Loggers' re i terated the i r pos i t ion: We do not agree, i n p r i n c i p l e , wi th the idea of the government a l l o t t i n g s p e c i f i c areas of Crown t imber without competitive bid to a spec i f i c party. We be l ieve every c i t i z e n of B r i t i s h Columbia should have the opportunity of acquiring any pa r t i cu l a r piece of forest l and f o r the purpose of growing t imber i f he so desires. 6 6 The Truck Loggers' argued that the s ize of the new FML's would squeeze out the small operator and el iminate competition. I t was th i s c r i t i c i s m which carr ied the most weight and many d i f fe rent groups voiced s im i l a r concerns. The Vancouver Sun e d i t o r i a l i z e d in A p r i l : B r i t i s h Columbia ' s f o r e s t s are i n danger of becoming the p r i v a t e preserve of b ig business... The Act.. . i s found on c l o s e examination to favour c on t r o l of the forests...by a combination of bureaucrats and a few l a r g e - s c a l e o p e r a t o r s . . . . The s m a l l o p e r a t o r , s t r u g g l i n g to r e t a i n a semblance of f r ee e n t e r p r i s e both in the woods and at the m i l l , i s on h i s way out under the system envisaged i n the act.... The hand of 27 the bureaucrat shows b r u t a l l y c l ea r through the b i l l , b r i n g i ng a t o t a l l y unexpected p e x i l to i n d i v i d u a l • i n i t i a t i v e in our r ichest industry. ' The o f f i c i a l Opposition in the l e g i s l a t u r e , the CCF, shared some of the concerns of the Vancouver Sun. Their forestry c r i t i c , Herbert Gargrave r a i l e d against the po l i cy which he perceived would lead to monopoly control of the province's timber land. Speaking on the second reading of the Forest Act amendments, he said: B r i t i s h Columbia 's proposed susta ined y i e l d f o r e s t l e g i s l a t i o n w i l l , in e f fec t , r e su l t in turning over the l ogg ing indus t ry to the few huge co rpora t i on s that already control a large part of the industry. 8 The CCF posit ion did not, however, support the Truck Loggers' c a l l for competitive bidding. Rather, the CCF argued that sustained y i e l d management required large units and the most equitable and democratic method of accomplishing th i s was under d i rect state cont ro l . Harold Winch, leader of the party, argued f o r c e f u l l y for complete nat iona l i za t ion of the i ndu s t r y . 6 9 The government fought back. By the end of March, Forest M in i s ter Kenney reached agreement with some of the larger operators and brought in amendments to deal with the i r concerns. But the amendments were l a r ge l y to do with process, rather than substance. S p e c i f i c a l l y , the government decided to advert ise FML appl icat ions , so that interested part ies could make representations; a provis ion was made so that the terms and conditions of management l icences could be a l te red by mutual consent of the government and the l icensee; and appeals of decisions of the minister could be made to the B.C. Appeal Court . 7 0 28 Kenney rep l i ed to the claims of the Canadian Society of Forest Engineers that no ex i s t ing timber holders would v o l u n t a r i l y accept the government's terms, by announcing in the l e g i s l a t u r e that 34 firms had already appl ied for l icences, before the Act had even been passed. And the minister attempted to deal with the Truck Loggers' complaints by g iv ing assurances that there would always be a place for the small operator. He said that he expected 50 per cent of the forest land of the province would be brought under sustained y i e l d management and that that l e f t room for a d i ve r s i t y of operations. While Kenney's moves s a t i s f i ed some c r i t i c s , the Truck Loggers' and others kept up the attack. The c r i t i c i sms l e v e l l e d against the Forest Act amendments prompted the Deputy Min i s ter , CD. Orchard, to write a personal note to H.R. MacMi l lan, the head of one of the largest forest concerns in the province, asking his advice on the a l l o c a t i o n and administration of the new forest management l icences. I t i s c l ea r from the correspondence in the B.C. Archives that MacMil lan and Orchard were personal fr iends and shared much of the same views on forestry matters. 7 1 MacMi l lan did not disappoint his f r iend and sent a lengthy l e t t e r to Orchard in September of 1947. The thrust of MacMil lan 's advice was that the crown should give preference to ex i s t ing companies that had a proven record of forest management. In his words: Crown t imber should f i r s t be a l l o c a t e d to those Companies which by reason of the i r Capital structure, the i r p r io r possession of enough timber, the i r record of adapting themselves to changing manufacturing processes, and t h e i r record f o r having ach ieved the highest possible u t i l i z a t i o n , have a l ready proven to the proper o f f i c i a l s and to the p u b l i c tha t they are s a t i s f a c t o r y custod ians of the p u b l i c i n t e r e s t i n 29 future and present forest crops and therefore are most l i k e l y to carry out through the period of rotat ion the r e spon s i b i l i t i e s of a FML.' 2 In addit ion, MacMil lan advocated that the government increase spending on reforestat ion and that sawmill waste be used for the manufacture of sulphate pulp pr io r to a l l o c a t i n g crown timber for such purposes. Although MacMi l lan general ly approved of the Act and the new forest management l icence system, c r i t i c i sms from small loggers continued. By the time the f i r s t FML was issued, Orchard f e l t compelled to hold a news conference to attempt to counter the negative press surrounding the issuing of the l icences. Orchard was c l e a r l y f rustrated by some comments in the media and began the conference stat ing: We ought to get a f a i r understanding - an honest understanding - of what i s invo lved so that people w i l l form the i r opinions on facts , rather than on fancy and on d istorted information and propanganda (sic). ' 3 After b r i e f l y summarizing the history of forest l i qu ida t i on elsewhere and in B.C., Orchard reviewed the various l icences the government had used in B.C. to grant access to the resource. He then made the case that, at current harvest rates, the province would soon be out of f i r s t -growth timber and that a switch to sustained y i e l d management was necessary to preserve the industry. Orchard went on to describe and defend the FML system. He dea l t with the objections of the Truck Loggers' as fol lows: Now, what are t h e i r ob jec t i on s ? F i r s t , they say that small industry w i l l be k i l l e d . Now, small industry, as f a r as we can see, w i l l not be k i l l e d and i t i s he the express purpose of the government to p ro tec t smal 1 i ndus t r y as much as p o s s i b l e . Wherein we may not be very c on s i s t en t , but at l e a s t we recognize the moral 30 obl igat ions of the system under which we are working -the soc ia l ^vstem; the business system of competitive enterpr ise. Orchard argued that no company in business would be put out of business by the FML system, although new businesses might be prevented from entering the market. If a small company was operating in an area where a FML was appl ied for, "...then e i ther his being there w i l l lead us to refuse the l icence or we p o s i t i v e l y w i l l provide for him for a reasonable length of time within the area that i s under j u r i s d i c t i o n . " 7 5 Orchard argued that everybody agreed sustained y i e l d management was des i rable, and even required for the long-run health of the forest industry, but that no one had come up with a better way to implement such a po l icy. The CCF advocated, of course, a d i f fe rent method: complete government ownership and cont ro l . But that was anathema to Orchard and his col leagues in industry. Orchard explo i ted an inherent weakness in the Truck Loggers' pos it ion. On the one hand, they appeared to agree with Sloan's c a l l for sustained y i e l d management; and on the other hand wanted to maintain t he i r r ight to cut timber. Perhaps recognizing th i s , J.D. Gilmour, a forester, was commissioned to address the 1949 convention of the Truck Loggers'. The t i t l e of his speech was " R e a l i s t i c Forest Management for B.C." and i t was subsequently published by the Truck Loggers' A s soc ia t ion . 7 6 Gilmour e s s en t i a l l y accepted the basic premise that sustained y i e l d management was des i rable, but argued that the l e g i s l a t i o n enacted by the government was not a des i rable method of accomplishing th i s goal. He suggested, "The Sloan Commission placed too much stress on sustained y i e l d units , Government con t ro l , and re s t r i c t i on s of cut.... I t i s assumed 31 throughout, an assumption contrary to a l l evidence, that the Government i s the only trustworthy manager of forests; a l so that no pr ivate owner can be t r u s t e d . . . " 7 7 Gilmour's so lut ion was to promote pr ivate ownership of forest land. He argued that with ownership comes a long-run view of the land, and that, l e f t to themselves, with an appropriate low taxation po l i cy and some government regulat ion, forest companies w i l l ensure a perpetual growth of timber. He suggested that businesses often maintain more consistent p o l i c i e s than governments. Gilmour stressed that there should be both large and small parcels of pr ivate forest land and that the remainder be managed by government on a sustained y i e l d basis. Gilmour's c r i t i que of government po l i cy helped the Truck Loggers' reconc i le t he i r contradictory posit ions. Pr ivate companies would continue to have as much r ight to log as current l icences would a l low, but ownership of the land would provide the incent ive to manage harvesting for sustained y i e l d . Small loggers would not be squeezed out to make way for huge forest management l icence areas that would be " locked up" by large companies. However, nothing in Gilmour's plan would have prevented small operators from s e l l i n g the i r land to those same large companies. The government's pos it ion remained unchanged and the controversy continued as, gradual ly, forest management l icences were awarded. By the time of the 1952 convention of the B.C. Truck Loggers' Association, 12 FML's had been awarded. 7 8 The Chief Forester, Orchard, was i n v i t ed to address that convention. He began his remarks by commenting on the divergence of opinion between the Forest Service and the truck loggers ': When A l i c e , in Looking Glass Land, complained that, in s p i t e of her running, she hadn't got anywhere, the Red Queen informed her that she must have come from a very slow country indeed i f she expected to get anywhere on the s t rength of a b i t of a s p r i n t . When I r eca l 1 tha t the l a s t time I took part i n your program, i n 1948, I confined myself to the same subjects, I wonder whether I am in Looking G la s s Land, or whether we are j u s t s low, or whether perhaps I d i dn ' t ' r un ' near l y hard enough or long enough on tha t occas ion. Whatever the answer may be, we sJii 1 1 seem to have p l e n t y of divergence of op in ion . ' 9 Orchard again l a i d out the government pos it ion. The administration wished to move to sustained y i e l d management as soon as poss ib le, without "too much, or too pa i n fu l , disruption of the forest business, both publ ic and private."** 0 The FML's and the publ ic working c i r c l e s were the chosen avenues of approach to accomplish th i s task. He then put forward and dismissed the CCF posit ion with one l i n e : " . . . i t i s contrary to a l l our p r i nc i p l e s to decree that a l l lands be retained in Government management to the complete exclusion of pr ivate i n i t i a t i v e and ente rp r i se . " 8 1 Likewise, he gave short s h r i f t to the Truck Loggers' pos it ion as out l ined in 1949: " I t i s c h i l d i s h to suppose that the sa le of Crown lands to pr ivate ownership would in i t s e l f accomplish the desired end [sustained y i e l d ] . . . " 8 2 In his speech Orchard suggested that big changes were occurring in the forest industry as a re su l t of moving from l i qu i da t i on to sustained y i e l d . But i t was the lack of access ible timber, the overabundance of logging companies and the s t r i v i n g for long-term s t a b i l i t y that was causing the changes. I t wasn't the forest management l i cence system. It was the "...natural r e su l t of per fect l y normal business development in a young community...." 8^ Orchard argued that the government "...has been i n c l i ned to favour the small l i cence and the small operator. " 8 4 But,"...dwindl ing timber 33 • supplies... w i l l , and have started to, pinch the smal ler operator; and consol idat ion and s t a b i l i z a t i o n a r i s ing from within the industry i t s e l f , whi le they assure the future of some, are going to make things d i f f i c u l t , or i n t o l e r ab l e , for others " . 8 5 This, then, was the state of forest po l i cy when a new government was sworn into o f f i ce in August, 1952. The sustained y i e l d management concept was f i rm ly entrenched and forest management l icences and publ ic working c i r c l e s were gradual ly being establ ished. By the end of 1952 the to ta l productive forest land under management l icence was 1,943,200 acres with an a l lowable cut of 69.7 m i l l i o n cubic f e e t . 8 6 As w e l l , 30 publ ic working c i r c l e s had been delineated covering 7,740,000 acres of forest land. The to ta l annual a l lowable cut from Publ ic Working C i r c l e s was approximately 155.5 m i l l i o n cubic f e e t . 8 7 For i t s part, the industry was beginning what would be a remarkable period of prosperity, consol idat ion and concentration. The 1952 prov inc ia l e lec t i on brought about the defeat of the L iberal/Conservat ive Coa l i t i on government that had held power since the end of 1941. In i t s place the e lectorate chose the Social Credit party to assume the reins of government. Social Credit was a curious new p o l i t i c a l party made up mostly of ministers of r e l i g i o n , small businessmen, schoolteachers and fo l lowers of Major Douglas 1 monetary phi losophy. 8 8 The Socreds were a popul i s t party with an anti-establ ishment philosophy. As Martin Robin summarizes: ...the o l d p a r t i e s gave ' too much of a show to the b ig companies' and what B r i t i s h Columbia badly needed was a l o t of ' l i t t l e p r i v a t e e n t e r p r i s e ' , a sentiment re f l ec ted in the o f f i c i a l Socred program which promised to 'd i scourage monopol ies ' and 'encourage i n d i v i d u a l and pr ivate enterprise in explorat ion and development of re sou rces ' . 8 9 34 I t would seem, then, that the Social Credit party would be predisposed to supporting the small business interests of the Truck Loggers', instead of the proposed forest management l icences which a l l e ged l y supported large f i rms. So few of the new MLA's had any experience in government or business that i t was no doubt d i f f i c u l t for the new premier, W.A.C. Bennett, to choose a cabinet. The important Lands, Forests and Mines p o r t f o l i o f e l l to Robert Sommers, the MLA for Rossiand-Trai1. Sommers was an elementary school p r i n c i p a l , whose only apparent q u a l i f i c a t i o n for the job appeared to be his volunteer summer work as a f i r e warden. 9 0 Despite the apparent phi losophical commitment to small business, Sommers and the Bennett government continued the forest p o l i c i e s of the previous administration. One author commented, "...even dedicated c a p i t a l i s t s l i k e the Socreds favoured and defended the new system." 9 1 In answer to his c r i t i c s , Sommers rep l i ed : "There i s a great deal of t a l k about ' f ree enterpr isers ' in the forest industry.... Unfortunately, the term i s used at times where 'freebooter ' would be more appropriate.... The free enterprise system i s j u s t i f i a b l e only as long as i t serves the publ i c i n t e r e s t . " 9 2 The new minister approved his f i r s t forest management l i cence within a month of atta in ing o f f i ce . By the end of 1954 there were a to ta l of 19 FML's in existence, 11 other appl icat ions had been given prel iminary approval, and there were 85 more appl icat ions under review. In addit ion, the Forest Service had i den t i f i ed and establ ished 29 publ ic working c i r c l e s . 9 " * As a percentage of the to ta l scale (or harvest) of trees in B.C., the FML's accounted f o r 1.9% of the t o t a l i n 1952 and 2.9% i n 1954. 9 ' 35 The Socreds continued approval of FML's meant that the controversy endured. The e lec t i on in 1952 of Gordon Gibson, a L iberal representing the r id ing of L i l l o e t t , ensured that the Truck Loggers had a vocal and forcefu l proponent in the l e g i s l a t u re . The government, however, did attempt to assuage the c r i t i c i sms of the small logger by insert ing a special clause in forest management l icence contracts ensuring that a percentage of the timber in the l icence area would be cut by small contract loggers. The f i r s t FML with th i s "contractor clause" was FML #14, awarded in 1953, the second l i cence granted by Sommers. The spec i f i c clause read as fo l lows : In the process of harvesting the crop from the l icence area, the L icensee s h a l l p rov ide the opportun i ty f o r contractors other than the Licensee's own employees or shareholders who own more than one per cent interest to harvest a minimum of t h i r t y per cent of the a l lowable cut on Crown lands not h e l d under other tenure as set forth in each succeeding management working plan, but where the M i n i s t e r i s s a t i s f i e d that such con t r a c t operation i s not feas ib le , e i ther by reason of lack of operators or for other good and s u f f i c i en t reason, the Min i s ter may r e l i e v e the l icensee in whole or in part from th i s r e spons ib i l i t y . I t should be noted that the clause only appl ied to "Schedule B" lands with in an FML. 9 6 I t does not appear that the inc lu s ion of the "contractor clause" achieved the intended re su l t for the leading spokesmen for the small logging interest s , as they continued to oppose the awarding of FML's. Nevertheless, no doubt such a move was viewed by many as a pos i t i ve step and somewhat reduced the h o s t i l i t y of independent loggers toward the government. An example of how strongly the government agreed with the FML system, and the continued opposition to that system, can be seen in the app l i ca t ion by Empire M i l l s Ltd. for a forest management l icence in June, 36 1952. Sommers approved the app l i cat ion on June 15, 1954. The l i cence covered 313,658 acres in the Squamish area, of which 80,529 were product ive. 9 7 While not as large as many FML's, the area appl ied for was w i t h i n Gibson's constituency. Gibson accused the government of wiping out free enterprise in the logging industry and g iv ing away one m i l l i o n d o l l a r s to Empire M i l l s . His reasoning was that through competitive bidding on timber sa le l icences, the crown would have rea l i zed a s i gn i f i c an t p ro f i t . FML's were awarded on a s e l e c t i v e rather than competitive basis, and v i r t u a l l y no money i s charged. Gibson argued that publ ic timber should be for sa le to the highest bidder. He a lso c r i t i c i z e d the government for approving the l i cence in secret. The p rov inc ia l cabinet granted an appeal to be heard by the f u l l cabinet on September 7, 1954. According to the Vancouver Sun, Gibson led one of the largest protest delegations ever to be heard on an FML appeal. Once again, the hearing was held in p r i vate , with no press a l l owed . 9 8 In what the newspapers described as a "grandstand play", Gibson announced that on behalf of two l o ca l companies, he had offered one m i l l i o n d o l l a r s for 2/3 of the proposed forest management l i cence a rea . 9 9 Forestry o f f i c i a l s qu ick ly commented that there was no provis ion in the Forest Act f o r the s a l e of FML's and t ha t , i n f a c t , "...the whole act...[was]... designed to prevent t r a f f i c k i n g in l i c e n c e s . " 1 0 0 I t didn 't matter, for Gibson's point was made emphatically. The government was awarding huge t racts of pub l ic timber at vas t l y less than market value. Indeed, the crown's share of the forest resource was to be appropriated pr imar i l y through the appraised stumpage fees l e v i ed on harvested timber. 37 Gibson must have struck a nerve. On September 9, he was charged with slander by Empire M i l l s Ltd. and an ind iv idua l named Berton James Keeley, for charges he had made at the closed cabinet hea r i ng . 1 0 1 The charges were eventua l ly dropped. The government was a l so under pressure from i t s own supporters to reassess the forest management l i cence system. Indeed, one of the l oca l companies that had offered the one m i l l i o n d o l l a r s was owned by G.R. Dent, president of the l o ca l Social Credit League. Dent resigned in protest over the government's handling of the s i tuat ion and was b i t t e r . He claimed that approval of a FML to Empire M i l l s would deprive small loggers of the timber they needed to keep operating. Another g a l l i n g aspect to Dent was that a Vancouver f i rm rather than a l o ca l company got the l icence. He stated, "We want to know why an outside company i s getting the l icence. I've been logging here for 17 y e a r s . " 1 0 2 Perhaps wary of growing publ ic opposition, the cabinet s t a l l e d . In January, 1955 the government appointed Chief Jus t i ce Sloan to head a second royal commission into the forest industry. Shortly thereafter, the government announced that, pending the report of the commissioner, no further forest management l icences would be issued. At the time, there were 23 FML's in existence with a productive forest area of 4,685,492 acres and an a l lowable annual cut of 170,530,000 cubic f e e t . 1 0 3 In other words, approximately 14.6% of the to ta l scale of a l l forest products in B.C. was generated from Forest Management L i cence s . 1 0 4 Other than concern for the small logger, there was another, more pressing, reason why the government froze forest management l icences. Robert Sommers, minister of the crown, stood accused of accepting bribes from the forest industry in return for preferent ia l treatment in granting FML's. 38 On February 15, 1955 Gordon Gibson rose in the l e g i s l a t u r e and attacked the government's handling of FML's. He accused the government of impropriety and stated: "I f i rm ly be l i eve that money t a l k s and that money has ta lked in t h i s . . . " 1 0 5 The seriousness of the charges, and the ensuing uproar caused the Attorney-General to c a l l a one-man commission of inquiry to invest igate Gibson's charges. Judge A.E. Lord was appointed and hearings were held in Vancouver on March 7 - 9 . However, on advice from his lawyer, Gibson decided not to t e s t i f y . His parliamentary immunity removed, Gibson would have been l i a b l e for any non-substantiated charges. As a r e su l t , the only witness to appear before Judge Lord was the Deputy Min i s ter of Lands and Forests, Dr. CD. Orchard. Dr. Orchard was, as usual, mi ld mannered and somewhat academic. He was a good bureaucrat who defended the government's forest po l i cy and the awarding of forest management l icences. He advised the Lord commission that in his professional opinion there had been no dishonesty in the awarding of FML's. He did not t e l l the commission, however, that one app l i ca t ion for a FML had been approved in p r i n c i p l e by the government against the wishes of his department. That app l i cat ion was for FML #22 and was submitted by B.C. Forest Products Ltd., a large, local ly-owned firm. FML #22 was soon to cause a storm of controversy. Having no evidence but that of the deputy minister, the Lord commission exonerated the government. Thus freed of potential scandal, the government awarded FML #22 to BCFP on May 18, 1955. Gibson, for his part, looked rather f oo l i s h for having caused an inquiry, then f a i l i n g to produce any evidence. As a r e su l t , he decided to 39 resign his seat in the l e g i s l a t u r e and run again in a by-e lect ion. E f f e c t i v e l y , he decided to put his case to the e lectorate. Once again, however, he l o s t . The Social Credit candidate, Donald Robinson, with much help from the Premier, defeated Gibson handily. Gibson refused to give up, and his much pub l i c i zed a l legat ions of government corruption f i n a l l y paid off. As i t turned out, Forest M in i s ter Sommers had, from the beginning of his tenure as cabinet minister, been accepting loans and g i f t s from H. Wilson Gray, president of a small logging company. Gibson was informed by David Sturdy, lawyer for Charles E ve r s f i e l d , Wilson Gray's accountant. On December 16, 1955 Sturdy appeared before the Sloan commission and announced that he had evidence proving the Min ister of Lands and Forests had received monies for issuing FML's. Sloan decided, however, not to hear the evidence, arguing that i t was not within his terms of reference. Sloan's ul t ra v i res r u l i ng didn 't matter. The word was out. Sommers launched a c i v i l su i t against Sturdy for l i b e l and the 1956 session of the l e g i s l a t u r e became dominated by the Sturdy charges. In ear ly February, 1956, under increasing pressure, the Attorney-General requested that a l l information in Sturdy's possession be forwarded to Inspector W.J. But ler of the RCMP for invest igat ion. This was done, but the controversy continued. On February 27, Sommers resigned as Min i s ter of Lands and Forests pending the outcome of his c i v i l s u i t and the RCMP invest igat ion. But le r issued his report to Attorney-General Bonner in mid-March. The But le r report contained a deta i led examination of the charges made by C.W. E v e r s f i e l d and Sturdy against Robert Sommers. The report apparently describes " f i c t i t i o u s invoices, f i c t i t i o u s names, and the sett ing up of 40 al i b i s " . b Importantly, But le r notes "...that there i s de f i n i te ind icat ion of wrongdoing..." on the part of Forest Min i s ter Sommers, W. Gray's company, P a c i f i c Coast Services Ltd., CD. Schulz, a c lose associate of Gray, and the giant B.C. Forest Products L t d . 1 0 7 Despite the But le r report, the attorney-general refused to take action. Repeatedly, the opposition requested the tab l i ng of the But ler report, and repeatedly the attorney-general refused to make any but the most general comments on the grounds that a l i b e l case was before the courts. The f u l l contents of the But le r report, to th i s day, have yet to be made publ ic . In the midst of th i s controversy, Premier Bennett c a l l e d an e l ec t i on . The l e g i s l a t u r e was d i s so lved on August 13, 1956. The dominant issue in the e l ec t i on campaign was the "Sommers' A f f a i r " . A l l three opposition part ies hammered the government over the i r handling of the incident. For his part, Bennett ignored Sommers and concentrated on the rapid economic growth which the province had enjoyed over the previous few years. Sommers decided to run again for re -e lec t i on in Rossiand-Trai1. During the e l ec t i on he campaigned as "Honest Bob". Both Sommers and the Bennett government were re-e lected. The Social Credit party elected 39 members to the 52 seat l e g i s l a t u re . The government's new mandate, however, did not s i l ence the c r i t i c s in the opposition. The Sommers case once again dominated the l e g i s l a t i v e sessions of 1957. Sommers' c i v i l s u i t dragged on and Bonner continued to refuse to release the But le r report. Just as Sommers' case was about to be heard in court, he dropped out of sight. On October 28, a f ter 22 months of delay, the court dismissed 41 the charges against Sturdy. During Sommers' period "out of s ight", Waldo Ski 1 l i ng s , a Socred backbencher,.met him on numerous occasions and offered him large sums of money to stay hidden. The money was apparently proffered by "a consortium of business i n t e r e s t s " . 1 0 8 Sommers accepted some of th i s money, but changed his mind and ar r ived back in V i c t o r i a . Meanwhile, Sturdy had f i l e d Eve r s f i e ld ' s documents in the Vancouver court registry. The publ ic could now see the f u l l d e t a i l s of Sturdy's charges and the government was forced to act. On November 1, 1957 Bennett appointed Chief Jus t i ce Sloan, who had recently completed his forestry royal commission, to another royal commission with the sole purpose of hearing the charges surrounding Sommers. But i t was not to be. Defence counsel argued success fu l ly that the province had no const i tut iona l r i ght to e s tab l i sh a royal commission to invest igate cr iminal charges . 1 0 9 The Attorney-General had no choice but to order routine criminal proceedings against Robert Sommers. I t was a f u l l 707 days from the time Attorney-General Bonner f i r s t heard the a l l ega t ions made by Sturdy and E v e r s f i e l d to the time Sommers was arrested. The eventual t r i a l turned out to be one of the longest in Canadian h istory, l a s t i n g over 6 months. Sommers and Gray were found gu i l t y . Sommers was found gu i l t y of accepting bribes in order to inf luence the issuing of FML #22. Gray was convicted of of fer ing bribes in connection with the same l icence. Yet B.C. Forest Products Ltd., which received the FML, was found not gu i l t y . Sommers became the f i r s t minister of the B r i t i s h Commonwealth to serve a prison term. To most observers, however, the big company, BCFP, had escaped, whi le Sommers became the scapegoat. 1 1 0 The Sommers case highl ighted some of the c r i t i c i sms of the FML system. S p e c i f i c a l l y , the Forest Act gave the Min i s ter the sole power to decide on competing appl icat ions. This prompted one author to comment that Sommers f e l l v i c t im to the " . . .c lass ical i l l s of monopoly power, publ ic or p r i v a t e . . . 1 1 1 1 1 The w i l l i ngnes s by some i nd i v i dua l s to o f fer money for forest management l i cences, something for which Gibson was previous ly derided, demonstrated the i r worth to those seeking them. Indeed, FML's were much sought a f te r and extremely valuable possessions. The government, by not charging a fee and by not subjecting FML's to competitive bidding, was, in e f fec t , t ransferr ing income from the crown to the successful appl icant. I t would perhaps be expected that the Sommers case would have caused the government to reassess i t s forest p o l i c i e s ; but i t did not happen. There were two reasons for th i s . F i r s t , the government maintained that, in sp i te of his conv ict ion, Sommers was innocent of any criminal wrongdoing. In Premier Bennett's words: "History w i l l show that Sommers was an honest -stupid and f oo l i s h perhaps, but honest... Sommers made some bad decis ions, but he gave no special concessions to anybody, anywhere..." 1 1 2 Secondly, and more importantly, the government had embarked on a major review of i t s forest p o l i c i e s when i t appointed Jus t i ce Sloan to his second royal commission in ea r l y 1955. I t f e l l to the new minister, the Hon. Ray W i l l i s t o n , to implement any of the changes proposed by Mr. Sloan. While the Sommers drama unfolded, Chief Jus t i ce Sloan set about "...re-examining a l l aspects of forestry in the l i g h t of developments during the l a s t ten years . . . " 1 1 3 Sloan himself, in his 1945 report, had recommended another royal commission ten years hence. C l e a r l y , the government saw an opportunity to assuage c r i t i c i s m by providing a publ ic 43 forum for people to vent the i r concerns about forest po l i cy in general and the forest management l icence system in pa r t i cu la r . The people invo lved with the forest industry responded. Approximately 18,000 pages of t ranscr ip t were recorded from the evidence of over 200 witnesses. The hearings of the commission lasted over a year and a ha l f , and over 440 exhib its were f i l e d . 1 1 4 The report of the commission was submitted in J u l y , 1957, a f u l l two and one ha l f years a f te r i t s appointment. The commissioner's 1957 f i n a l report was not nearly as s i gn i f i can t or dramatic as his previous one. By and large, Sloan found that the government's implementation of his 1945 recommendations was acceptable. In the course of reaching th i s conclusion, however, Sloan was forced to debate the c r i t i c s of the FML system and to re-argue his main conclusion of 1945. At the outset, he posed what he bel ieved to be the general question to be addressed by the inquiry: Are we to seek the cont inued and f u l 1 r ea l i z a t i o n of our forest resource in a system wherein competition i s completely free and unregulated or within a framework of r i g i d state con t ro l , or in a system wherein the free e n t e r p r i s e concept f i nd s express ion w i t h i n a co-operative pattern between Government and Industry wide enough in scope to embrace both p r i v a t e and p u b l i c i n t e r e s t s ? 1 1 5 The government, as Sloan had recommended in 1945, opted for the "partnership concept" and embodied i t in forest management l icences. I t was those l icences which sparked the debate which can be framed in the above question. Sloan put i t th i s way: The bas ic c leavage of op in ion on f o r e s t management l icence po l i cy l i e s between those who be l i eve that the owner sh ip and management of f o r e s t l a n d s i s an e n t e r p r i s e most s u i t a b l e , measured by e f f i c i e n c y and s a t i s f a c t i o n of s o c i a l r e s p o n s i b i l i t i e s , f o r the pr ivate c i t i z e n and pr ivate company, subject to general 44 Government c o n t r o l , and on the other hand, those who b e l i e v e that t h e i r i n t e r e s t s would be b e t t e r served under a system in which ownership and management of forests lands would be a Crown monopoly; that b r i e f l y , the Crown should grow the t rees and s e l l them at matur i ty to the h ighest b idder i n open compet i t ion among manufacturers and loggers a l i k e , with no attempt to a l l o c a t e or give preference of supply to any one of them. 1 1 ( 5 Those who f e l l into the former category, which included v i r t u a l l y a l l of the large forest companies, general ly supported the ex i s t ing system. Their c r i t i c i sms revolved mostly around the method whereby the government chose who would be awarded a FML. I t became apparent, in testimony, that the forest serv ice did not have a uniform method or c r i t e r i a by which to assess an appl icant. This was by choice, for i t was f e l t that each app l i cat ion should be judged on i t s merits. But th i s led to inequit ies in the l i cences; for example, some l icences were required to bu i l d m i l l s , others were not. The large forest companies wanted c l e a r l y defined ru les so that the government had less d i sc ret ion and the appl icants would a l l be treated equal ly. In th i s , Sloan was l a r ge l y in agreement. He recommended that a l l ex i s t ing l icences be made consistent, eventua l ly , and that a s t r i c t po l i cy be establ ished governing the award of management l icences. Sloan dea l t at some length with the comments of those that f e l l into the l a t t e r category, the c r i t i c s of the forest management l icence system i t s e l f . John D. Gilmour t e s t i f i e d representing the independent operators in the Prince George d i s t r i c t . He was a prominent forest consultant who had previous ly addressed the Truck Loggers' Association in 1949 with a scathing attack on the f i r s t Sloan commission. This time he was more ph i l o soph i ca l , suggesting that land could not be compared to other forms of property and that, under the B r i t i s h system, i t must always be under publ ic ownership. He t e s t i f i e d : "The a l l o c a t i o n of any natural 45 resource, forest or other, to a pa r t i c u l a r person or company, i s wrong; j u s t i c e demands equal opportunity, which means in th i s case free c ompe t i t i o n . 1 , 1 1 7 This was a long way from his pos it ion in 1949 - that pr ivate ownership of forest land was the best veh ic le for sound forest management.118 At that time he said: "There i s no safety without real ownership." 1 1 9 As his testimony continued, and under cross-examination, his views came c lo ser to those of seven years previously. He supported the view that pr ivate management was better than publ ic management, but argued for temporary tenures, a l l oca ted on a competitive basis. The ' small logger' pos it ion was put forward by Mr. C. Swanson, a logging contractor and president of the Western Forest Management Association. He argued that a l l crown timber should be auctioned to the highest bidder. The government had no r ight to a l l o c a t e publ ic timber to i nd i v idua l companies in perpetuity. He said, "We are opposed to the system because i t discriminates against many and favours a f e w . " 1 2 0 In his opinion, the government, as land lord, should manage the publ ic forest on a sustained y i e l d basis and a l l o c a t e the a l lowable cut through competitive bidding. It i s here that the forest serv ice came down f o r c e f u l l y on the side of the large forest companies. Rather than defending the a b i l i t y of the forest serv ice to manage the publ ic forests, CD. Orchard stressed i t s i n f e r i o r i t y to pr ivate enterprise. The fo l lowing lengthy quotes from his testimony f a i r l y indicate his pos it ion: Q - Al 1 [the money] you wanted, the Fores t Se r v i ce s t i l l wouldn't do as good a job in managing our forests as pr ivate ind iv idua l s ? 46 A - We would not get as good f o r e s t r y p r a c t i c e on p u b l i c working c i r c l e s as we would on management l i cences " . Q - So you th ink that there may be some fo rce i n what i s suggested, that companies w i th bona f i d e mer i t and i n t e n t i o n to do what's r i g h t and l i v e up to the terms of t h e i r c on t r ac t are going to g i ve more i n t e n s i v e management than the f o r e s t s e r v i c e i s ab le to do wi th the ant ic ipated lack of s ta f f which has bedev i l l ed your organization for so many years? A - Yes, they can do a b e t t e r job than we can. Q - Wei 1 now, i f that i s so, would the next step be, in the p u b l i c i n t e r e s t , to have g reater areas under pr ivate management than publ ic management? A - I t i s my f i r m b e l i e f t h a t , i f you ' re t h i n k i n g of nothing e l se whatever, no consideration whatever except the publ ic interest over a long term of years, we ought to have every square foot of forest land in B.C. under management l icence. I don't advocate that by any manner of means. We have other attendant circumstances that we can ' t i gnore, but i f you ' re j u s t t h i n k i n g nothing whatever except good f o r e s t management and the best r e s u l t s and the general p u b l i c i n t e r e s t , f o r g e t t i n g every i n d i v i d u a l , and the biggest benefit in the long run, put the whole th i ng under p r i v a t e management. Q - Is i t a c o r o l l a r y of t ha t , then, tha t the Crown should gradual ly release more of i t s Crown-owned lands, say, by form of o u t r i g h t s a l e and Crown grants to companies who are prepared to take over a su s ta i ned -y i e l d management? A - Once again a pu re l y personal op in i on , I th ink perhaps i t woul d be i n the publ i c i n t e r e s t i f 50% of our lands belonged to pr ivate owners. Q - I t would appear from what you say that the po l i cy that has been enunciated here s ince about 1909... has d i scharged i t s f unc t i on f o r which i t was designed and we may be approaching a new concept in forest ownership and pattern in B r i t i s h Columbia. A - I'm i n c l i n e d to th ink so... I th ink that at our present stage of development one-half of our lands in p r i v a t e ownership would be a wise step. I don't th ink we can do i t . I don't th ink we ever w i l l . We've got 47 ourselves invo lved; we've so ld the idea of government ownership so thoroughly, we have such a strong minority element of s o c i a l i s m , I don't th ink the people would ever l e t us s e l l the land. But a l l those things aside, i f we were j u s t l o ok i n g f o r the g reates t b e n e f i t f o r the most people over the l onges t per iod of t ime, I think that we should dispose of one-half of our land in p r i v a t e ownership, and the r e s t of i t ^ i f i t were poss ib le, into forest management l icences. 2 This u n c r i t i c a l , unwavering b e l i e f of the top forestry c i v i l servant in the super ior i ty of pr ivate management of the forest rendered the small loggers' case a d i f f i c u l t one to s e l l to the Chief Just ice. Indeed, the small logger simply could not afford the management burdens placed on FML holders and required a certa in amount of government management to operate within sustained y i e l d parameters. Their pos i t ion, e s s en t i a l l y , was that the publ ic working c i r c l e s , of which a few had been organized, were the desired veh ic le for disposing a l l crown timber. The problem was that the most va luable timber land was being "locked-up" in forest management l icences. Pub l i c Working C i r c l e s always took second place to FML's. As proof they pointed to the Clayoquot Working C i r c l e , a large portion of which was removed and placed with in the infamous FML #22. As Gibson stated before the Commissioner: ...The best has been g iven i n every in s tance to the forest management l icence appl icant or holder, and the poorest has been reserved or set aside, the crumbs have been set aside for the small man... 1 2 2 This was unavoidable given the pattern of ownership that had evolved pr io r to 1907. The best most access ib le Coastal stands were na tu ra l l y the f i r s t ones purchased or staked. Because the FML's were somewhat contingent upon the ownership of forest lands, i t fo l lowed that the l u c r a t i v e Coastal forest was qu ick ly being swallowed up by such l icences. 48 After reviewing the main concerns regarding FML's, Sloan comments: The basic c r i t i c i s m of the management l icence po l i c y , that i t c reates monopolies i n which Crown timber i s s o l d to the l i c e n s e e without compet i t i on , f a i l s to d i s t ingu i sh, or great ly undervalues, the contr ibut ion which t h i s p o l i c y should make to the permanent, su s ta ined , and i n c r ea s i n g product ion of manufactured commodities, upon which the c r i t i c s themselves l a r ge l y depend. 1 2 3 He then observed that there was an increasing tendency for integrat ion of a l l aspects of the forest industry, from growing trees to s e l l i n g lumber. But un l ike the independent loggers, th i s didn 't over ly concern Sloan. He stated: Such i n t e g r a t i o n , i f economic and e f f i c i e n t , can be regarded as unde s i r ab l e , i n my op in ion , on ly i f the soc ia l ef fects are unacceptable to our people. 2 4 However, adequate provis ion must be maintained for the independent logging industry. Sloan suggested th i s be done by retain ing the 30% contractor clause in a l l future FML's and by negotiating the i r i nc lu s ion in ex i s t ing l icences without such a provis ion. To strengthen the negotiations, Sloan recommended that any holder of an FML without a contractor clause should be prohibited from bidding on any further Crown timber. Small loggers could, of course, continue to bid on timber sa le l icences on Crown land outside of forest management l icences. The Commissioner made a few other recommendations regarding FML's. F i r s t , he advocated that future l icences be reduced from 'perpetual ' to 21 year terms, although renewable a f ter that time. One of the main arguments Sloan put forward in defense of th i s reduction was that the perpetual nature of the ex i s t ing FML's was a "major reason for opposition" and gave the impression of less government cont ro l . Thus, the 21 year term was " i n order to make government control more evident to the public...". 49 Sloan a lso made suggestions regarding the future a l l o c a t i o n of forest management l icences. He reasoned that susta ined-y ie ld management, in i t s e l f , was not the motive behind publ ic forest po l i cy . Rather, i t was the contr ibut ion made by susta ined-y ie ld management to soc ia l and economic object ives that rendered i t a useful po l i cy to pursue. Sustained-yield management was, therefore, a technical tool to be u t i l i z e d to achieve broader publ ic goals. With that in mind, Sloan advocated two basic c r i t e r i a for awarding FML's. F i r s t , consideration should be given to how much an appl icant w i l l contribute to stable employment in dependent communities. Second, consideration should be given to the amount of pr ivate forest land the appl icant w i l l contribute to the l i cence. As a re su l t of th i s reasoning, the commissioner advised that f i r s t p r i o r i t y be given to: ...the pulp and paper i n d u s t r i e s and other l a r ge conver s i on u n i t s , e s p e c i a l l y the great i n t eg r a ted organizations, because of the i r r e l a t i v e s t a b i l i t y , the enormous investment required for the i r establishment, t h e i r c o n t i n u o u s p r o s e c u t i o n of r e s e a r c h and development of new and b e t t e r uses of wood, t h e i r a b i l i t y to of fer continuous, p ro f i t ab le employment, the support of communities, and the i r d i rect and ind i rect c o n t r i b u t i o n s t o t he p r o v i n c i a l t a x a t i o n s t ructure. . . the p o s i t i o n of ex i s t ing industry, meaning in th i s context companies with m i l l s already producing and i n t eg r a ted expansion a l ready prov ided f o r , with ex i s t ing communities dependent upon t h e i r continuous ope ra t i on , must be c a r e f u l l y examined before any f u r t h e r awards of Crown t imber are made to encourage new companies to i n v e s t i n t h i s f i e l d , except i n the p r e s e n t l y remote and underdeveloped areas of the Province. 2 6 Commissioner Sloan then turned his attention to the other major mechanism with which he advocated in 1945 that susta ined-y ie ld management could be accomplished: the Pub l ic Working C i r c l e (PWC). His f i r s t recommendation was that the name be changed to Sustained Y i e l d Units, a 50 nomenclature which more apt ly describes the nature of the areas. This designation continues to th i s day. The discussions during the Commission's hearings regarding PWC's were, as with FML's, cont rover s i a l . Some witnesses wished the i r extension, others wished the i r e l iminat ion. Once again, Sloan general ly approved of the Forest Service ' s handling of PWC's and agreed with the i r frequently stated goal of u l t imate l y having 50% of the forest under FML's and 50% within PWC's. However, he raised certa in concerns. The major c r i t i c i s m stemmed from the apparent inadequate management by the Forest Service. Sloan att r ibuted th i s to "...the overwhelming immensity of the task with which i t was confronted in organizing the Crown forests on a managed basis with in an administrat ive framework not adequately staffed to cope with th i s very heavy burden imposed upon i t " . 1 2 7 Because of inadequate resources the Forest Service was re s t r i c ted to reserving an area as a Pub l ic Working C i r c l e , regulat ing the A l lowable Annual Cut (AAC) for that area, and then inc luding in Timber Sale contracts r e s t r i c t i on s on logging to ensure reforestat ion. Timber Sales were only conducted at the request of the appl icant. This was a far cry from the deta i led working plans required of FML holders. Those working plans were quite spec i f i c . Among other things, the l icensee had to submit to the Forest Service for approval plans ind icat ing where, when, and how much timber would be cut each year; the l e v e l of reforestat ion to be carr ied out; the taking of inventor ies; and the locat ion of logging roads. However, Sloan was hesitant to suggest any major changes to the current, c l e a r l y inadequate system, perhaps because of the l i k e l i h o o d of continued underfunding of the Forest Service. Nevertheless, 51 he po inted out tha t "...as time goes on...some way of more ex ten s i ve regulat ion in th i s regard must be formulated than presently e x i s t s " . 1 2 8 Timber Sales were the veh ic le for not only a l l o c a t i n g timber with in a PWC, but a l so for disposing of v i r t u a l l y a l l timber not already a l l o ca ted within any of the various leases and l icences that had evolved over time. In 1956 the annual cut from timber sales amounted to almost 50% of the to ta l p rov inc ia l c u t . 1 2 9 I t was, obviously, an important mechanism for gaining access to crown timber. However, for the small loggers, excluded from FML's and not in possession of Crown Grants or Old Temporary Tenures, i t was almost the i r so le means of s u r v i v a l . 1 3 0 As w e l l , some of the cut from timber sales were put into the open log market where conversion plants without appurtenant FML's could purchase a continual supply of logs. Sloan suggested that sma l l , independent loggers and m i l l e r s s e l l i n g and purchasing logs s o l e l y in the open log market was a thing of the past. He stated that i t was: ...abundantly c l e a r i n the ev idence that i n the l a s t decade the number of l a r g e and s m a l l f r e e and independent loggers has been dec l i n i n g . . . Logging i s now, to a major degree, a sub s i d i a r y f unc t i on of integrated companies and other conversion units, using t h e i r own crews or c on t r a c to r s to cut p r i vate t imber, timber sa les, and forest management l i c e n c e s . 1 3 1 Without saying so, Sloan had confirmed what the Truck loggers' and other c r i t i c s had been predict ing since 1945. The independent logger was disappearing from the forest landscape of B.C. However, Sloan did not lament th i s fact ; nor did he suggest measures to counter the trend. Rather, i t was apparently viewed as the pr ice of 'progress' toward a stable and sustained y i e l d harvest. 52 In any event, competition and access to timber were s t i l l , t h e o r e t i c a l l y , preserved v i a timber sa les, within and without of PWC's. Because of i t s increasing importance as a means of acquiring wood, the timber sa le was a subject of much discussion during the hearings and Sloan duly accorded i t appropriate treatment in his Report. Many witnesses suggested that there were problems with the competitive aspect of timber sales. They argued that speculators could and did bid up pr ices, there were sometimes un r ea l i s t i c bids, responsible operators had no assurances of supply, and that, on the whole, the process was d i s rupt ive. They recommended a var iety of ways whereby the ex i s t ing operators would be given a preferred posit ion v i s - a - v i s other bidders. Interest ing ly , Sloan rejected a l l of these recommendations with the comment: We l i v e i n a f r e e e n t e r p r i s e economy, and my recommendat ion of a l l or any of the s u b m i t t e d suggest ions would, i f implemented by the Government, impose upon I n d u s t r y g e n e r a l l y the o b l i g a t o r y acceptance of a regimented and c o n t r o l l e d system of t imber d i sposa l by the Crown with the i n e v i t a b l e concomitant d i rect ion of i t s ult imate end use". 3 I t was i ron i c that Sloan f e l t i t not consistent with free enterprise to protect ex i s t ing industry by reducing competition in non-forest management l icence areas. Af ter a l l , he had previous ly advocated the creation of FML's which had removed from competitive bidding thousands of acres of Crown land. However, while Sloan may have opposed regulations designed to curb competitive bidding, pr ivate forest companies had already moved to protect themselves. In four PWC's the owners of conversion plants had v o l u n t a r i l y formed associations to control the d i s t r i bu t i on of the a l lowable cut. One forester described how one such association worked: 53 I I With the advent of the working c i r c l e p o l i c y , an immediate r e s t r i c t i o n of a l 1 owabl e cut has come i n t o e f f e c t . . . I f two or three a d d i t i o n a l m i l l s enter the a r e a , the a l l o w a b l e c u t i s then on the average reduced... I t immediately became apparent to companies within a working c i r c l e that some apportionment of the a l l o w a b l e cut must be made i f a l l were to e x i s t . In t h i s A s s o c i a t i o n the a l l o w a b l e cut was apport ioned according to a mutual agreement between the m i l l s as to the quota £&ch, p re sumab l y , s h o u l d have i n p e r p e t u i t y . . . 1 3 3 In fact what had happened, as Sloan recognized, was that these associations were turning PWC's into FML's without the associated r e s p o n s i b i l i t i e s or costs. Surpr i s ing ly , in l i g h t of his previous comments, Sloan did not appear the s l i gh te s t b i t concerned and made no recommendations regarding these associations. Perhaps voluntary, pr ivate methods of r e s t r i c t i n g competition were in the ' f ree enterprise ' t r ad i t i on Sloan referred to and, therefore, acceptable. In r e a l i t y , there was very l i t t l e real competition for timber sales. Over the f i v e years pr io r to the Sloan Commission, c lose to 90% of a l l timber sales were awarded without competition at the 'upset' or appraised stumpage rate. The pleas of ex i s t ing operators to protect them from unscrupulous bidders were louder than the numbers would seem to warrant. I t i s hardly surpr is ing that Sloan refused to protect them further. They appeared to be doing f ine on the i r own. Sloan f e l t the real concern of the ex i s t ing operators was that the supply of ea s i l y access ib le timber was not s u f f i c i en t to meet the demand. A buoyant market had resulted in a scramble for timber which was re s t r i c ted by sustained y i e l d ru les. The answer, Sloan submitted, was to open up new crown forests for exp lo i ta t i on . The Forest Service should expedite the bu i ld ing of main access roads to create new areas of supply 54 for timber starved companies. Sloan suggested that th i s would sat i s fy the independents' concerns, provided more small timber sales were a l so awarded. Thus, Sloan, on the whole, approved of how forest po l i cy had developed since his l a s t report. His voluminous f indings and exhaustive hearings, as in 1945, no doubt contributed to publ ic education in forestry matters. At the leas t , his exoneration of the forest management l icence system lent the c r e d i b i l i t y i t needed to withstand publ ic d i s t ru s t aroused by the Sommers a f f a i r . Sloan's report h ighl ighted the major trends occurring in the industry. He documented the increased v e r t i c a l integrat ion taking place and the reduction in the number of small loggers. Nevertheless, he advocated no major changes to government po l i cy . Indeed, he endorsed large sca le, integrated companies as des i rable, for they were stable employers able to plan for the future. R e l a t i v e l y few pract i ca l re su l t s flowed from Sloan's second royal commission. The pr inc ipa l l e g i s l a t i v e amendment to the Forest Act in 1958 changed the name of forest management l icences to tree farm 1 icences(TFL's) and reduced the term of the l icences from perpetuity to 21 years. TFL holders had the r ight of renewal a f ter such time, subject to renegotiation of the terms and conditions of the contract. Although i t required no l e g i s l a t i v e act, publ ic working c i r c l e s were a l so changed. They were henceforth to be c a l l e d publ ic sustained y i e l d units(PSYU's). In addit ion, a new section was added to the Forest Act that provided for the sett ing up of advisory forest committees and Sloan himself accepted a job as "Forest Advisor to the Government". Sloan, who retained the powers of a royal commissioner, was asked to hold hearings on a few 55 spec i f i c problems which continued to trouble the government. Given the poisoned atmosphere generated by the Sommers a f f a i r , i t i s not surpr is ing that the government moved to attempt to ' d e p o l i t i c i z e 1 decisions on controvers ia l issues. One must remember, however, that the 'advisor ' had no power to implement his recommendations other than moral suasion. Within a year of accepting his new appointment Sloan died, and was therefore only able to make recommendations on two problem areas. Sloan had held a series of hearings on other issues, and Judge C.W. Morrow was appointed to conclude and make recommendations on at l ea s t two such issues. One problem that received the attent ion of Sloan and Morrow was the matter of the tree farm l icence appl ied for by Empire M i l l s Ltd., a l l uded to e a r l i e r . The Cabinet had not made a ru l i ng on the controvers ia l appeal of Sommers' awarding of an FML to Empire M i l l s in 1954. Instead, a f te r Sloan had submitted his second royal commission report, the Empire M i l l s app l i cat ion was referred to him for further study. S p e c i f i c a l l y , Sloan was asked his advise on the fo l lowing question: ... as to whether or not the grant of a t ree farm l i c e n c e on the 15th day of June 1954 by the then the Honourable The Min ister of Lands and Forests to Empire M i l l s L td . , ( subject to an appeal to His Honour the Lieutenant-Governor in Council) was then and s t i l l i s i n the general p u b l i c i n t e r e s t having regard to the past and present re levant forestry, economic and socia l factors and values invo lved. 3 4 However, a f ter Sloan's untimely death, Morrow was asked to pursue a narrower f i e l d of enquiry; the terms of reference being as fo l lows: Should the area a p p l i e d f o r by Empire M i l l s L td . , Squamish, be managed under a Tree Farm Licence. The controversy was reopened, but the intens i ty of the opposition was not nearly as strong. After 28 days of hearings, during which 43 witnesses were examined and 133 exhib i ts f i l e d , Morrow re t i red to 56 del iberate over the Christmas season. On December 31, 1959, perhaps f i l l e d with the Christmas s p i r i t , Morrow answered the question in the a f f i rmat ive. Sanct i f ied by Judge Morrow, the Social Credit government was c leared to f i n a l l y award the TFL to Empire M i l l s . This they did, some s ix years a f te r the o r i g ina l app l i cat ion was accepted by Sommers. The delays, the studies, a royal commission, the gradual e l iminat ion of small loggers, and some r e l a t i v e l y minor amendments to the Forest Act combined to wear down opposition to the Tree Farm Licence system. Throughout the remaining twelve years of the Social Credit administration TFL's continued to be issued, although at a s i g n i f i c a n t l y reduced rate. Faint voices were cons i s tent ly raised in protest, but th i s form of pr ivate management of pub l ic land became f i rm ly entrenched as pub l ic po l i cy . By the end of 1972, a to ta l of 41 TFL's had been issued since 1947. Some, however, had been consolidated over the years re su l t i ng in 34 operative TFL's in 1972. The amount of timber land held under these l icences was immense. Over twenty-two and a ha l f m i l l i o n acres was managed with in TFL's, with ten and one ha l f being c l a s s i f i e d as "productive" timber acres. Close to 90% of that land was Crown land previous ly not held by the l icensee. The a l lowable cut within TFL's in 1972 was c lose to seven m i l l i o n c u n i t s . 1 3 6 The Table on the fo l lowing page i l l u s t r a t e s th i s da ta . 1 3 ' ' TFL's accounted for about 25% of the to ta l p rov inc ia l AAC in 1972.13<3 importantly, of the 34 l icences in existence, the ten largest forest companies in the province con t ro l l ed approximately 97% of the c u t . 1 3 9 Indeed, one company's TFL holdings accounted for about 36% of the harvest from TFL's in 1975. 1 4 0 Thus, the ear ly c r i t i c s of the l e g i s l a t i o n 57 TABLE 1 S U M M A R Y OF BASIC D A T A FOR T R E E - F A R M L I C E N C E S ( P R I V A T E (47) SUSTAINED-YIELD UNITS) Forest District Number of Tree-farm Licences Productive Area (Acres) Total Area (Acres) Allowable Cut (Cunits) Schedule B Schedule A Total Vancouver Prince Rupert Prince George Cariboo Kamloops Nelson 171 61 1 1 7 5 2,990,305 3,539,246 390,933 80,643 726,253 1,379,091 1,152,529 207,125 1,733 671 1,841 42,104 4,142,834 3,746,371 392,666 81,314 728,094 1,421,195 6,819,279 11,046,617 447,946 85,046 776,982 3,325,549 4,345,460 1,687,100 140,000 44,000 199,310 580,050 Grand totals 34 | 9,106,471 | 1,406,003 . 1 1 10,512,474 22,501,419 6,995,920 i Three tree-farm licences located in both districts. Schedule B is vacant Crown land. Schedule A is land for which the tree-farm licence holder has cutting rights other than those conveyed by the tree-farm licence agreement. This may include lands held in fee-simple or temporary tenures, e.g., timber leases, licences, and berths. Following removal of the mature timber, lands held under temporary tenure are iransferred to Schodule B. were, at lea s t pa r t l y , correct. TFL's were awarded to large companies and small independents were denied access to a s i gn i f i can t part of the publ ic forest (except as contract loggers t i ed to the TFL holder). Nevertheless, whi le the TFL's locked up much of the most va luable timber on the coast and became a very important form of tenure, they nevertheless accounted for only about ten percent of the productive forest land in the province. The major changes in forest po l i cy in the 1960's centred around the remaining ninety percent of the forest land; that land which was to be owned and managed by the government. 58 S p e c i f i c a l l y , the government establ ished various new methods of a l l o c a t i n g crown timber within PSYU's. These were devised to accommodate a rap id l y growing industry that was undergoing s i gn i f i can t technological change. The changing needs of business induced the government to react. As Nagle points out: These new a l l o c a t i o n systems f o r S.Y.U. Timber Sa les have developed i n c r e m e n t a l l y , on a t r i a l and e r r o r ba s i s , w i th the i ndus t r y used as the main "sounding board" for each new regulat ion or po l icy. Perhaps the most important po l i cy change was the evo lut ion of a "quota system" designed to protect ex i s t ing operators. Despite Sloan's re ject ion of any further reduction in competition with in PSYU's, the Forest Service moved qu ick ly to begin to i n s t i t u t e mechanisms to guard ex i s t ing forest companies from outside competition. Pa r t l y th i s was in response to overcutt ing in PSYU's, for ex i s t ing patterns of harvest in newly created PSYU's were not always consistent with sustained y i e l d management. The quota system came to operate as fo l lows: each holder of a timber sa le l i cence within a PSYU, where the a l lowable cut was f u l l y committed, would always be e l i g i b l e to apply for addit ional sa les, so as to maintain a certa in average annual harvest. This was subject, of course, to the to ta l harvest not exceeding the a l lowable cut for the unit. Certain PSYU's have had to reduce quotas proportionately. The quota system evolved and was not formal ly embedded in law. To operat ional ize th i s system, a l l that was required was that the Forest Service es tab l i sh ex i s t ing operators as p r i o r i t i e s for the awarding of new timber sales. The Min i s ter had the power under the Act to discriminate among appl icants and, indeed, need not accept any app l icat ion for a timber sa le. 59 E s sen t i a l l y , quotas came into being i n i t i a l l y to deal with the problem of overcutting in PSYU's. In 1960 the government establ i shed 'emergency areas'. These were areas with a combined annual timber commitment that exceeded 150% of the AAC for the unit. In order to equitably reduce the cut, the government f i r s t determined each establ ished operators 'share' of the harvest, and then i t was reduced proport iona l ly . Each establ i shed operator's "share' became a quota. Bidding on new timber sales in an emergency area was t h e o r e t i c a l l y open to a l l . However, quota holders who bid became "recognized appl icants ' and were given the p r i v i l e g e of e l ec t i ng that the sa le be made by sealed tender and the r ight to match the highest bid. This was accomplished v ia an amendment to Section 17 of the Forest Act. In 1961 the government expanded the areas where 'recognized app l icants " could e l e c t that a sa le be made by sealed tender, to include a l l PSYU's whose annual harvest was f u l l y committed. In other words, quotas were establ i shed in PSYU's whose combined timber commitment equal led 100% of the AAC. Over time these quotas came to be interpreted as "continuing 1 d? r ights in perpetuity " . Indeed, the only way a quota holder 's pos it ion can be reduced i s by cons i s tent ly f a i l i n g to harvest what the timber sa le authorizes, or by f a i l i n g to match the bid of others. I t was not long before the quota became a va luable commodity. As Pearse, et. a l . , point out: 'Quota' p o s i t i o n s can be, and o f ten are, t r a n s f e r r e d from one o p e r a t o r to another . . . A ' r e c o g n i z e d a p p l i c a n t ' who wishes to ' s e l 1' h i s 'quota ' to another party can a l l ow him to submit a tender bidding up by a nominal amount the p r i c e of new s a l e s , and by not match ing the b i d s the ' q u o t a ' i s e f f e c t i v e l y transferred, often in consideration of payment to the former 'quota' h o l d e r . 1 4 3 60 Over time, the quota system became increas ingly important to the disposal of crown timber. A study conducted in 1974 estimated that almost 60% of crown timber outside TFL's was incorporated in quo t a s . 1 4 4 By 1962 competition for timber sales was rare. In that year, f u l l y 90.7% of the timber sales awarded were at the 'upset' stumpage rate. In other words, they were granted without competition. However, even though th i s was the case, the Deputy Min i s ter wrote in an a r t i c l e in 1963 that he f e l t further action would be needed to stop the pract ice of "preying on the present quota holders" by " free enterprise b i dde r s " . 1 4 5 In other words, i t appears that the government was concerned that quota holders were occas iona l l y required to bid higher than the appraised upset price. In 1965 the government establ ished a non-refundable bidding fee in timber sa le auctions. The fee amounted to approximately 5% of the value of the timber sale. This meant that should an outside operator bid higher than the 'recognized appl icant ' , but with the l a t t e r subsequently matching the b id, the outside operator would f o r f e i t his bidding fee. As timber sales increased in s i ze, th i s presented a s i gn i f i can t bar r ie r to competition. As one author commented: The marked increase i n non-compet i t i ve s a l e s — those awarded at upset p r i c e — from 90.9 percent of a l l sales i n 1964 to 95.1 p e r c e n t i n 1965, may w e l l be a t t r i b u t a b l e to the i n t r o d u c t i o n i n 1965 of the non-refundable bidding f e e . 1 4 6 The matching bid p r i v i l e g e , combined with the non-refundable bidding fee reinforced the quota system and increased the value of such quotas. I t appears that the Forest Service viewed the quota system s o l e l y as a means of s t a b i l i z i n g the industry and encouraging expansion away from crowded PSYU's. As Nagle puts i t : 61 The t h i n l y - s p r e a d Fores t S e r v i c e f e l t (without much d e t a i l e d a n a l y s i s ) t h a t the p o t e n t i a l g a i n s i n s t a b i l i t y ou t -we i ghed any p o t e n t i a l l o s s e s i n e f f i c iency of raw material a l l o c a t i o n . 1 4 ' But i t i s l i k e l y that the government viewed the 'commodification' of quotas as an e f f e c t i v e means of conferring benefits to ex i s t ing small loggers and m i l l e r s whi le at the same time encouraging corporate consol idat ion of the timber resource. This increased concentration was viewed p o s i t i v e l y by the Forest Minister. As he stated in 1961: Consol idation, where there are larger, more e f f i c i e n t m i l l s is... an imperative and e s s e n t i a l development... ( together with) s e c u r i t y of supply f o r an i ndus t ry trimmed to compete.... The oppor tun i ty (then e x i s t s ) f o r s oe ta 1 and c i v i l p l a n n i n g neve r p o s s i b l e b e f o r e . i 4 y In other words, a few large integrated firms were des i rable and ass isted the government's e f fo r t s to plan for future prosperity. In 1961 the government inaugurated a new form of forest tenure c a l l e d Pulpwood Harvesting Areas (PHA's). The object ive of the new tenure was to so lve the question posed by Forest M in i s ter W i l l i s t o n : "...how to superimpose or integrate a pulp economy with a large, vigorous, wel l establ i shed sawmill economy..." 1 4 9 E s s en t i a l l y the government would create a PHA by combining several PSYU's into a large area where a l icensee had the option of harvesting timber not su i tab le for lumber manufacture. The l icensee would enter into a pulpwood harvesting agreement whereby they would construct a pulp m i l l by a given date and the crown would guarantee them a secure supply of raw mater ia l . PHA's were not s o l e l y designed to encourage the construction of p u l p m i l l s , but, importantly, to ensure greater " u t i l i z a t i o n " of the forest 62 than could be accomplished by logging only for sawmills. That i s , in many of the ful ly-committed PSYU's in the Inter ior , vast amounts of wood were l e f t untouched by quota holders. Pulpwood harvesting agreements required the l icensee to purchase pulp chips and other residues produced by m i l l s . Thus, sawmills had a market for previous ly unmerchantable timber. Sawmills were encouraged, by a var iety of incent ives, to invest in barkers and chippers to produce the appropriate mater ials for pulp m i l l s . For a number of reasons i t was decided that PHA's were not required on the Coast. Ch ie f l y , the ex i s t ing pulp industry was f i rm l y establ i shed with adequate security of supplies. In pa r t i cu l a r , two new TFL's were granted and a th i rd expanded to accommodate and encourage new pulp capacity on the Coast. The establishment of PHA's in the Inter ior sparked a new "timber rush". As one author commented: "In t o t a l , the ear ly 1960's saw in the B.C. forestry sector one of the largest surges of timber a l l o c a t i o n in world forest h i s to ry . " 1 5 0 After the announcement of the government's intent ion to create PHA's, a number of contentious issues soon arose. The Min i s ter , who had the so le power to designate PHA's, was required to determine which PSYU's would be combined and to define which logs would be for sawmills and which for pu l pm i l l s . A series of publ ic hearings were held to determine the appropriate boundaries, to define pu lpmi l l wood, and to adjudicate on spec i f i c a l l o ca t i on s . These hearings often resulted in b i t t e r debate between competing PHA appl icants and between ex i s t ing holders of sawlog quotas and proposed pu lpmi l l ventures. In order to reso lve a p a r t i c u l a r l y vexing a l l o c a t i o n problem in south eastern B r i t i s h Columbia, the Forests Min i s ter experimented with 63 auctioning pulpwood harvesting r ights. The resu l t s surprised W i l l i s t o n : To my astonishment and dismay, the b ids from these three companies r a i s ed the stumpage p r i c e $7 mi 11 ion above upset, and I f e l t compelled to reject a l l bids and ca l 1 o f f tbe auct ion i n what I cons idered the p u b l i c i n te re s t . 1 Thus competitive bidding was apparently seen as d i s rupt ive, i r r a t i o n a l , and not conducive to s tab le , healthy i ndus t r i a l enterprise. The a l t e rna t i ve course of action was preferred, that of the r a t i o n a l , planned, p o l i t i c a l decision. However, the decisions reached were not based on consistent c r i t e r i a and hence appeared only p o l i t i c a l and not always rat iona l or planned. In the above case, one of the bidders simply began construction of a pu lpm i l l short ly a f ter the auction was c a l l e d off. Ostensibly, the company be l ieved that th i s would prove a commitment to contribute to the province. As Nagle summarizes: This became known as the 'performance concept ' of a l l o c a t i o n , whereby a company demons t ra te s i t s wi 1 1 ingness to i n v e s t in B.C. and u t i 1 i z e waste wood, more or 1 ess on 'good f a i t h ' t ha t the government wi 1 1 not l e t the mi l 1 s t a r ve f o r wood, or be ' b l a c k m a i l e d ' on price by quota-hoi ding operators, once i t s cap i ta l i s committed. 1 5 2 One wonders, however, who's b lackmai l ing whom, since once a company has b u i l t a p u l p m i l l , with i t s resu l tant employment, i t would be d i f f i c u l t for an e lected government to deny i t access to a v a i l a b l e wood supplies. The Min i s ter be l ieved that f l e x i b i l i t y in ascr ibing terms and conditions for awarding l icences was des irable. As a r e su l t , the s ix PHA's that were u l t imate l y awarded (one of which was l a t e r cancel led) included a var iety of unique character i s t i c s that re f l ec ted the circumstances at the time they were awarded. 64 The PHA tenure "worked" to the extent that i t induced pu lpmi l l development and c lo se r u t i l i z a t i o n of the forests. Indeed, few of the m i l l s have had to a c t u a l l y harvest pulpwood. Rather, t he i r supplies have been drawn almost e x c l u s i v e l y from residual chips generated by sawmills. The government had, for a number of years, ta lked of "c lose u t i l i z a t i o n " of the province's forests. This, in e f fec t , meant harvesting smal ler trees, salvage wood, and more of the tree tops and stumps. But i t was not un t i l the pu lpmi l l boom of the ear ly 1960's that c lose u t i l i z a t i o n became a r e a l i s t i c p o s s i b i l i t y . A market for th i s waste wood could now be found, provided the sawmill had the required technology to transform the waste into marketable chips. The opportunity to adopt c lose u t i l i z a t i o n standards was not l o s t by the Forest Service and they gradual ly adopted a spec i f i c de f i n i t i on . The government then provided a number of incentives to encourage operators to move from what was c a l l e d "intermediate u t i l i z a t i o n " standards to the new c lose u t i l i z a t i o n standards. The chief incent ive was that the government would a l l ow a s i g n i f i c a n t l y greater a l lowable annual cut for those who moved to c lose u t i l i z a t i o n . As Pearse, et a l . , expla in: ...when the Fores t S e r v i c e r e c a l c u l a t e d a l l o w a b l e harvests using the c lose standard, which invo lves a lso a sho r te r growing or r o t a t i o n pe r i od , the annual ra te of c u t t i n g which cou l d be sus ta ined was con s i de rab l y higher than that committed under 'quotas' based on the ' i n te rmed ia te u t i 1 i z a t i o n ' standard. The government offered a strong incent ive for adoption of the c lo ser s tandard, and at the same time a l l o c a t e d much of the addit ional harvest that consequently became a v a i l a b l e , by i n c r ea s i n g 'quotas ' - by o n e - t h i r d i n the I n t e r i o r and by one-half on the Coast - of l icensees who elected to log to ' c lose u t i l i z a t i o n ' standards. 1 5 3 E f fec t i ve January 1, 1966, the government made a v a i l a b l e c lose u t i l i z a t i o n timber sales at the increased harvest l e v e l s i f e lected by the 65 l icensee. The 1965 annual report of the Forest Service heralds th i s new voluntary program with the remark: " I t i s be l ieved that the introduction of c lose u t i l i z a t i o n w i l l be at l ea s t as important to the future of B.C.'s forest as was the introduction of the sustained y i e l d programme." 1 5 4 When the Forest Service reca lcu la ted the AAC to c lose u t i l i z a t i o n standards, i t a lso included new inventory data and improved growth studies. As a r e su l t , the increased a l lowable cut in many PSYU's was greater than the one-third to one-half a l l o ca ted to quota holders. This excess AAC varied with the circumstances of each PSYU and has become known as " t h i r d band" volume. The government a l l oca ted th i s cut v i a the ordinary timber sa le l i cences, u sua l l y c a l l e d , in th i s case however, t h i r d band timber sa le l icences. Once again, bidding on t h i r d band sales was usua l l y re s t r i c ted to ex i s t ing manufacturers who required the volumes to maintain the i r f a c i l i t i e s at certa in rates of production. Competitive bidding ra re l y occurred, as bids from other than the recognized appl icant were o rd i na r i l y rejected. However, the government has not general ly al lowed most t h i r d band volumes to be incorporated within "quotas". By 1973 almost 32% of the harvest from PSYU's originated from th i r d band timber sa le l i c e n c e s . 1 5 5 As was noted e a r l i e r , v i r t u a l l y a l l of the cut from publ ic sustained y i e l d units was a l l oca ted by the timber sa le l i cence mechanism. However, of the remaining 68% of the cut, only about 8% was harvested under the ordinary timber sa le l icence that s ix years prev ious ly was the only means of gaining access to timber in PSYU's. 1 5 6 The reason was that f u l l y 60% of the cut within PSYU's in 1973 was a l l oca ted v i a a new form of timber sa le l icence c a l l e d the Timber Sale Harvesting Licence (TSHL). This l i cence was introduced in 1967. According to the 1967 66 annual report of that year, the primary purpose of th i s new form of tenure was to "...permit the operator to play a larger ro le in the management of the publ ic sustained y i e l d unit and at the same time provide him with as much f l e x i b i l i t y as p o s s i b l e . " 1 5 7 According to Marchak, TSHL's were formed, in part, because of "..public pressure for improved resource management".158 As consistent with the history of B.C. forest po l i c y , a ch ron i ca l l y underfunded Forest Service sought to place an increasing management burden onto pr ivate companies. TSHL's al lowed ex i s t ing operators to consol idate the i r scattered holdings within a PSYU. The l i cence carr ied the r ight to a certa in harvest over a ten year period, thus g iv ing the l icensee greater security of tenure to enable them to plan to meet the i r m i l l requirements. Rather than commit a geographic area to harvest, as ordinary timber sa les, the TSHL commits the crown to make a v a i l a b l e an annual volume of timber within a PSYU. The l icensees are required to prepare, and submit for approval of the Forest Serv ice, a 3 or 5 year development plan. Within the plan, the l icensee must indicate what his cutt ing plans are, the extent and locat ion of roads, and the arrangements for reforestat ion and f i r e protection - a l l of which are part of the l icensee 's ob l igat ions and may be deducted from stumpage fees. Thus, the TSHL comes c lo se r to the tree farm l icence concept. Once again, TSHL's were a l l o ca ted to establ ished quota holders only. Many of these were sawmill owners and some TSHL's refer to an "appurtenant m i l l " with certa in u t i l i z a t i o n features that must be operated by the l icensee. In 1968 a revised form of TSHL was introduced to require " t o t a l adoption of c lose u t i l i z a t i o n and maximum use of forest resources " . 1 5 9 The TSHL's proved extremely popular with industry and quick ly became the dominant tenure form within PSYU's. In summary, sustained y i e l d management, as envisioned by Orchard and Sloan, withstood the attacks by i t s c r i t i c s and became the overr id ing object ive of the government. The forest management l icence system inaugurated in 1947 survived the controversy brought about by then Forests M in i s ter Sommers. The second Sloan commission, and subsequent smal ler j u d i c i a l enquiries into spec i f i c forest problems, "cleansed" the ta inted atmosphere that was Sommers' legacy and c leared the way for the awarding of further tree farm l icences. These TFL's el iminated competition on large t racts of timber land and were held almost e x c l u s i v e l y by large, integrated forest companies. By the ear ly 1960's, government turned i t s attention to the a l l o c a t i o n of publ ic timber within PSYU's, where major new po l i cy innovations occurred. Under Forests M in i s ter W i l l i s t o n , ex i s t ing holders of timber l icences were accorded preferred treatment. They were assigned a "quota" which both protected them from competition and at the same time granted them a commodity which they could s e l l . While th i s enhanced the pos i t ion of sma l l , establ i shed operators, i t provided an e f f e c t i v e bar r ie r to entry for new firms. As quota holders adopted c lose u t i l i z a t i o n standards the i r AAC was dramat ica l ly increased, thus re inforc ing the i r posit ions in the industry. However, in order to move to c lose u t i l i z a t i o n standards, expensive investment in new sawmill technology, (namely chippers and barkers), was required. This l im i ted small quota holders from par t i c ipa t i ng in the increased cut and many of them sold out to larger concerns. The increased AAC that was not awarded to quota holders was 68 a l l o ca ted v i a " t h i r d band" timber sa le l i cences, with establ i shed operators again given preference. In order to accommodate, indeed foster, a major "pulp" boom, the government sought ways to superimpose a pulp m i l l economy on top of the ex i s t ing sawmill economy. They e f f e c t i v e l y did th i s through the creation of a new tenure c a l l e d pulpwood harvesting agreements and the simultaneous move to c lose u t i l i z a t i o n standards. Once again, competition was a l l but el iminated in the a l l o c a t i o n of pulpwood harvesting r ights. F i n a l l y , the government introduced a new form of timber sa le c a l l e d the timber sale harvesting l icence. This encouraged corporate consol idat ion of harvesting r ights with in PSYU's and sought to increase pr ivate management of the publ ic forests. By 1975, harvesting r ights in B.C. had become concentrated in a r e l a t i v e l y few, large companies. The largest ten forest companies con t r o l l ed almost 59% of the to ta l p rov inc ia l a l lowable cut in TFL's, and 39% of the prov inc ia l allowable cut in P SYU ' s . 1 6 0 I t appears that forest po l i cy has expedited th i s trend toward concentration. Schwindt i den t i f i e s three factors which promote corporate concentration; "...pursuit of technical e f f i c i ency , the pursuit of monopoly power and the existence of barr iers to e n t r y . " 1 6 1 While technical e f f i c i ency , or pursuit of scale economies, has contributed to the concentration in the B.C. forest sector, Schwindt concludes that "...the exp lo i t a t i on of scale economies has a very l im i ted usefulness in expla in ing current l e v e l s of concent ra t i on . " 1 6 2 On the other hand, there i s evidence that the largest forest products firms do attempt to pursue and exercise monopoly power in at l ea s t some markets . 1 6 3 As w e l l , the tenure system in B r i t i s h Columbia has establ i shed major barr iers to entry. The a l l o c a t i o n of extensive harvesting r ights in the form of TFL's and PHA's to large companies, and the appurtenancy clauses associated with them, have promoted integrat ion. These r ights carry long terms and are not susceptible to competitive bidding. Within PSYU's, the number of sma l l , independent operators has dwindled. The major, integrated firms have cont inua l l y increased the i r harvest from PSYU's. While the tenure system may not necessar i ly have caused th i s trend, i t has ce r t a i n l y accommodated i t and probably encouraged i t . Thus, timber a l l o c a t i o n po l i cy in B.C., with i t s r e s t r i c ted access to the resource, has contributed to the l e v e l of concentration in the prov inc ia l forest industry. i 70 CHAPTER THREE THEORIES OF POLICY MAKING The s a l i e n t features of the evo lut ion of B r i t i s h Columbia forest po l i c y to 1972 have been out l ined in the previous chapters. The purpose of th i s chapter i s to analyze the dynamics of th i s evo lut ion in l i g h t of s ix a l t e r na t i v e theories of the policy-making process. These a l t e rna t i ve theories include: r a t i o n a l i s t , p l u r a l i s t , neo-conservative, neo-marxist inst rumenta l i s t , neo-marxist s t r u c t u r a l i s t , and Canadian. As in a l l attempts to f i t general theories into spec i f i c c lasses, there i s i nev i t ab l y some overlap. Nevertheless, each category i s s u f f i c i e n t l y d i s t i n c t so as to a l l ow analys is of the case study in l i g h t of the pa r t i c u l a r model. After summarizing each theory, an examination of the case study w i l l be undertaken to assess the v a l i d i t y of the theory in expla in ing the evo lut ion of forest po l i cy in B r i t i s h Columbia. 1) A Rat iona l i s t Theory of the State According to the r a t i o n a l i s t view, po l i cy making i s e s s en t i a l l y an attempt to protect the "pub l i c interest " . The or i g in of th i s view l i e s with the analys i s of people such as Polanyi and M y r d a l . 1 6 4 These authors explained the increased state intervent ion during the nineteenth and twentieth centuries as a rat ional attempt by government to mitigate numerous market imperfections, such as p o l l u t i o n , and to provide basic serv ices, such as water, transportation and power. This r a t i o n a l i s t view i s normally associated with a comprehensive decision-making process which 71 u t i l i z e s object ive experts to analyze problems and evaluate a l t e r na t i ve so lut ions. This process i s described by Peter Aucoin in the fol lowing way: ...the p o l i c y makers (1) recognize a p o l i c y problem ex i s t s , (2) ident i fy the nature of the problem through i n v e s t i g a t i o n s , (3) c a l l f o r the p re sen ta t i on of a l t e r n a t i v e s , (4) rank t h e i r p r i o r i t i e s , (5) make p r e d i c t i o n s on the r i s k s and consequences of the va r ious a l t e r n a t i v e s , and f i n a l l y , (6) come to a decision by combining the q u a l i t a t i v e and quant i tat ive values they have considered. 6 5 The major problem with the r a t i o n a l i s t theory l i e s with the d i f f i c u l t y of defining the "pub l ic interest " . Underlying the theory i s the assumption that the publ ic in teres t can be defined as some object ive standard that can be used to evaluate publ ic po l i cy . However, po l i cy often impl ies certa in goals which are not necessar i ly s c i e n t i f i c a l l y derived. Rather, they are frequently based on personal values. Nevertheless, in attempting to assess whether p rov inc ia l forest po l i cy has operated in the publ ic in teres t , (and hence ra t i ona l ) , two c r i t e r i a have been used. Schwindt and Globerman have equated e f f i c iency and equity with the publ ic i n t e r e s t . 1 6 6 In other words, they attempt to answer the questions: has forest po l i cy promoted e f f i c iency by attempting to mitigate market f a i l u r e ? ; and has the publ ic owner of forest land rea l i zed the f u l l value of i t s resource? With respect to the question of market f a i l u r e , c l e a r l y , governments in B.C. have cons i s tent ly attempted to use the state to overcome perceived def ic ienc ies in the market. Viewed in th i s l i g h t , the retention by the crown of the land base, the establishment of the Forest Serv ice, the creation of the Forest Reserve, and the l im i ta t i on s on the export of logs were a l l attempts by the government to pursue the publ ic interest . Undoubtedly the most s i gn i f i can t intervent ion in the market, 72 however, was the imposition of sustained y i e l d management. This was c l e a r l y an attempt on the part of the government to r a t i o n a l l y respond to current and impending problems in the forest industry. As w e l l , the numerous actions by government to a l l o c a t e timber supply with preference to ex i s t ing industry were made on the grounds of employment and s t a b i l i t y . These were designed to protect processing f a c i l i t i e s . But these government i n i t i a t i v e s to mitigate market f a i l u r e had c l e a r d i s t r i bu t i ona l consequences. Many p o l i c i e s had the e f fec t of creating o l i g opo l i e s at the expense of small producers and the publ ic owner. The eventual e l iminat ion of competition for the resource re s t r i c ted the crown's a b i l i t y to extract resource r e n t . 1 6 7 Thus, according to the c r i t e r i a establ i shed by Schwindt and Globerman, timber a l l o c a t i o n po l i cy in B.C. was not in the public in teres t . Likewise, in an a r t i c l e in 1970, Peter Pearse argued that during the previous two decades forest po l i cy did not operate in the interest of the p u b l i c . 1 6 8 This was because po l i cy was l a r ge l y determined by what he c a l l e d "technologists " . Pearse described technologists as, e s s e n t i a l l y , professional foresters. He said that they "...tend to be interested in technical object ives , such as maximum growth, maximum u t i l i z a t i o n , equal annual sustained harvests and therefore evenly graded age classes of timber stands—These are the precepts of c l a s s i c a l f o re s t r y . . . " 1 6 9 As a r e su l t , Pearse suggested that the primary object ive of forest po l i cy had been to create a pe r fec t l y regulated forest with perpetual harvesting. The ideal forest was one with an equal number of trees in each age group, thus ul t imately achieving an equal annual harvest. 73 However, Pearse argued that the pursuit of the publ ic in teres t required that forest po l i cy maximize the value of the resource for the people of the province. He pointed out that for the po l i cy of equal annual harvest to maximize the value of the forest resource "...a unit of timber would need to be of equal value today and in a l l future periods. But the most certa in predict ion i s that costs, and the value of the product, w i l l change . " 1 7 0 Thus, B.C. forest po l i cy had f a i l e d to operate in the publ ic in teres t because only technical goals were pursued. Pearse argued that p o l i c i e s should be subject to economic tests to ensure that "...our forests make the i r maximum contr ibut ion to the welfare of the people whose resources they a r e . " 1 7 1 Both Pearse and Schwindt and Globerman, therefore, conclude that the pub l ic ' s equity in the forest resource has been sac r i f i ced and that, by d e f i n i t i o n , the publ ic interest was not protected. However, i t depends on one's de f i n i t i on of the publ ic interest. C l e a r l y , the two Sloan royal commissions, and the governments of the day, defined the publ ic interest d i f f e r en t l y . They f e l t that the implementation of sustained y i e l d management, although possibly reducing the crown's d i rec t revenue, would promote s t a b i l i t y and i ndus t r i a l development thus ensuring the long-run v i a b i l i t y of the industry. I t was the i r b e l i e f that the publ ic was best served by enhancing the ex i s t ing industry, minimizing competitive inf luences, and ensuring a perpetual harvest. As a re su l t , the development of 'quotas', the establishment of PHA's and TSHL's, the imposition of non-refundable bidding fees, and the matching bid p r i v i l e g e 74 a l l evolved gradual ly. The government responded at various times to pressure from business and from the publ ic. However, whi le po l i cy was developed that was l a r ge l y in the interests of the ex i s t ing forest businesses, i t i s not c l ea r whether th i s was consistent with the ' pub l i c interest ' . This i s , of course, d i f f i c u l t to determine given the problem of defining the term. Nevertheless, the skewing of forest po l i cy in favour of certa in groups necessar i ly impl ies, in th i s case, that other interests were ignored. For example, the interests of i nd i v i dua l s wishing to enter the forest business were undermined, the interests of environmentalists were ra re l y taken into consideration, and the interests of the state in appropriating economic rent were not guarded. I t i s d i f f i c u l t to pursue the publ ic interest because i t i s d i f f i c u l t to define and because the i nd i v i dua l s and groups that make up the publ ic often have c o n f l i c t i n g goals. In other words, there often i s no overr id ing ' pub l i c in terest ' that the technocrat can plan to protect. The policy-making process i s o ve r t l y p o l i t i c a l and invo lves conscious choices among competing p o l i c i e s that d isproport ionately favour one group or the other. The r a t i o n a l i s t model f a i l s to come to grips with th i s . As a r e su l t , the r a t i o n a l i s t theory i s not adequate to expla in the evo lut ion of forest po l i cy as out l ined in the case study. 2) A P l u r a l i s t Theory of the State In the 1960's, Charles Lindblom attempted to resolve the problem of def in ing the publ ic in teres t by equating i t with the process of po l i cy making. 1 7 2 That i s , because of the d i f f i c u l t i e s in ob jec t i ve l y measuring 75 whether po l i cy outcomes were in the publ ic in teres t , Lindblom thought i t more f r u i t f u l to analyze the way in which po l i cy was developed in a democratic society. Lindblom argued that the policy-making process was characterized by "d i s jo in ted incremental i s m . " 1 7 3 He reasoned that decisions were made, in r e a l i t y by analyzing a series of incrementally d i f fe rent a l t e rna t i ve s , without taking into consideration a l l the possible ramif icat ions of each one. This was, in fac t , v i r t u a l l y impossible given the resources and time a v a i l a b l e to the policy-maker. By "muddling through" a l t e rna t i ve s that invo lved only marginal change, po l i c i e s were more l i k e l y to be accepted by p o l i t i c i a n s and be more r e a l i s t i c and pragmatic. Consequently, Lindblom's theory, as wel l as being desc r ip t i ve , had a normative component. Lindblom stressed that p o l i c i e s were not made through r a t i o n a l , exhaustive studies. The policy-making process was a messy, p o l i t i c a l one. As he states: A p o l i c y i s sometimes the outcome of a p o l i t i c a l compromise among p o l i c y makers, none of whom had i n mind qu i te the probl em to which the agreed p o l i c y i s the s o l u t i o n . Sometimes p o l i c i e s spr ing from new o p p o r t u n i t i e s , not from ' p r o b l e m s ' a t a l l . And sometimes p o l i c i e s are not d e c i d e d upon but neve r the le s s 'happen. ' 1 ' 4 Lindblom's emphasis on the p o l i t i c a l aspect of po l i cy making i s rooted in his b e l i e f that many d i f fe rent interest groups have inf luence on po l i c y outcomes. In other words, i t i s based on a p l u r a l i s t i c notion of society. People ascr ib ing to th i s view, see society made up of competing in teres t groups attempting to inf luence governmental p o l i c i e s . The state, i t i s be l ieved, acts as an a rb i t ra to r reso lv ing c o n f l i c t s and forging compromises between competing groups or classes. Theodore Lowi accurately summarizes the assumptions lay ing behind the p i u r a l i s t model: 76 I t assumes: (l)Organized interests are homogeneous and easy to d e f i n e , sometimes m o n o l i t h i c . Any ' d u l y e l e c t e d ' spokesman f o r any i n t e r e s t i s taken as speaking i n c l o s e approximation f o r each and every member. (2)0rganized interests pretty much f i l l up and adequately represent most sectors of our l i v e s , so that one organized group can be found e f f e c t i v e l y answering and checking some other organized group as i t seeks to prosecute i t s c l a ims aga ins t s o c i e t y . And (3)the r o l e of government i s one of ensuring access p a r t i c u l a r l y to the most e f f e c t i v e l y o rgan ized, and of r a t i f y i n g the agreements and ad j u s tmen t s worked out among the competing leaders and the i r claims. C r i t i c a l to p l u r a l i s t s i s the b e l i e f that power i s widely dispersed amongst in teres t groups, (this corresponds to Lowi's point #2), much as, in c l a s s i c a l economics, there i s a multitude of producers none of which i s dominant in the marketplace. As Adam Smith's ' i n v i s i b l e hand' suggests that the ind i v idua l pursuit of s e l f - i n t e r e s t in the market produces s o c i a l l y des i rable re su l t s , the p l u r a l i s t s see the outcome of groups pursuing partisan interests leading to 'mutual adjustment' and incremental and acceptable change. Christopher Ham and Michael H i l l summarize th i s point: E s s e n t i a l l y , then, i n a p l u r a l i s t p o l i t i c a l system power i s fragmented and di f fused, and the basic picture p r e s e n t e d by the p l u r a l i s t s i s of a p o l i t i c a l marketplace where what a group achieves depends on i t s resources and i t s 'decibel r a t i n g ' . 1 7 " Importantly, the po l i cy outcome of th i s " p o l i t i c a l marketplace" i s , by d e f i n i t i o n , in the publ ic in teres t . The ro l e of the state, in th i s view, i s one of umpiring or refereeing contending groups. Decision making i s merely the r e s u l t of group interp lay. Gunton concludes that; "Pub l i c po l i c y , then, was the outcome of a bargaining process between interes t groups mediated by the state. Planning, therefore, was an incremental process of seeking compromises 77 instead of a comprehensive rat ional process based on technical a n a l y s i s . " 1 7 7 Does the p l u r a l i s t theory of the state expla in the evo lut ion of forest po l i c y in B.C.? C l e a r l y , many of the po l i cy changes over the years, for the most part, were incremental. The imposition of a contractor clause in Tree Farm Licences, the establishment of sealed tender bidding and non-refundable bidding fees, and the experimentation with d i f fe rent means of protecting ex i s t ing operators could a l l be c l a s s i f i e d as incremental po l i cy changes. Many of these changes merely continued or reinforced trends started in 1945. However, whi le these po l i cy modifications were arguably incremental, were they decided upon by negotiations among competing in teres t groups? Or, at the leas t , were a d i ve r s i t y of values and preferences taken into consideration in the development of those po l i c i e s ? And, perhaps most importantly, did the state act as a mediator between in teres t groups? I t i s c l e a r from the case study that, with the exception of the contractor c lause, few organized interest groups had an impact on forest po l i cy . In an ideal pi u r a l i s t worl d, presumably large business interests , small business interest s , workers organizations, environmental groups, professional associations, and other groups would a r t i c u l a t e po l i cy posit ions and, out of the i nev i t ab l e confrontation and discussion, p o l i c i e s would evo lve which, at l ea s t p a r t i a l l y , r e f l ec ted the goals and aspirations of the part ies. In the case study, i t appears that, with few exceptions, forest po l i cy cons i s tent ly supported the interests of large forest concerns and ex i s t ing forest companies. I t i s c l ea r , then, that the prov inc ia l state 78 was far from a neutral a rb i t ra tor . I t a c t i v e l y promoted p o l i c i e s which disproport ionately benefited the interests of ex i s t ing forest businesses. I t i s evident a l so , from the case study that many po l i cy changes over the years could not in any way be c l a s s i f i e d as the r e su l t of group interp lay. Premier McBride's decision to dramat ica l ly a l t e r the terms and conditions of forest l icences and his subsequent decision to freeze any further a l i enat ion of timber land and set up large acreages of forest reserves were not a r r i ved at through partisan mutual adjustment. The adoption of the Fulton Commission's competitive bidding system and i t s l a t e r abandonment a f ter the f i r s t Sloan Commission were also fundamental s h i f t s in po l i cy that had disproportionate consequences for d i f fe rent in teres t groups. Obviously, the adoption of susta ined-y ie ld management was a l so a dramatic departure from past pract ice that does not conform to the p l u r a l i s t model. However, i t i s true that, in the case of susta ined-y ie ld management, most interest groups appeared to see i t as a des i rable object ive. Groups and i nd i v i dua l s t e s t i f y i n g before the f i r s t Sloan Commission, by and large, supported the move to a more regulated cut. Even the establishment of Pulpwood Harvesting Areas by the Social Credit government was not the r e su l t of interest group pressure. The over lay of a pu lpmi l l economy on an ex i s t ing sawmill economy marked a s i gn i f i c an t departure from the norm. As Nagle has commented, the implementation of PHA's gave r i se to an unprecedented timber boom. He states: "In t o t a l , the ear ly 1960's saw in the B.C. forestry sector one of the largest surges of timber a l l o c a t i o n in world forest h i s t o r y . " 1 7 8 The p l u r a l i s t view does not cons i s tent ly expla in the way po l i c i e s were developed in the B.C. forestry sector. The flaws in the model stem from i t s underlying assumptions as l a i d out by Lowi. F i r s t , a l l interests are not organized into groups, and the groups that are organized are not always t o t a l l y united behind a common cause. For example, environmental and conservation groups were disorganized and fragmented, and had l i t t l e or no impact on forest po l i cy over much of the period under study. Indeed, the two Sloan Commissions received scant input from organized environmental groups. Second, power i s not dispersed equal ly amongst in teres t groups. I t i s abundantly c l ea r that the Truck Loggers Association had les s inf luence on government po l i cy than the large forest companies. As we have seen in the case study, the largest forest firms accounted for an enormous amount of the timber cut. Almost 80% of the to ta l a l lowable harvest in B.C. was con t r o l l ed by only 25 firms in 1975. 1 7 9 Not only harvesting r ights exhibited a high degree of corporate concentration, however. In the same year, eighteen companies c on t r o l l ed over 50% of p rov inc ia l sawmill capacity, and the ten largest pulp companies con t r o l l ed over 92% of p rov inc ia l pulp c a p a c i t y . 1 8 0 This concentration of economic power i nva l i da te s the p l u r a l i s t theory. Third, the state did not act as an a rb i t ra to r between interes t groups. The state had an agenda of i t s own, and l i s tened disproport ionately to the po l i cy prescr ipt ions put forward by d i f fe rent interests. In the case study, the state pursued, as i t s primary goal, rapid economic growth. The government saw the development of large, integrated forest firms as the best way to accomplish that goal. Consequently, government forest po l i cy c l o s e l y fo l lowed the po l i cy advanced by larger forest companies. 3) A Neo-Conservati ve Theory of the State The tremendous growth in the s ize and scope of government 80 a c t i v i t y since the second World War has been the subject of much phi losophical and i n t e l l e c t u a l discussion. In recent years i t has become apparent that, in spite of the increased intervent ion of the state in a l l aspects of society, governments have been unable to adequately so lve a growing l i s t of complex problems. Neo-conservatives, or publ ic choice theor i s ts as they are sometimes c a l l e d , developed a theory that attempts to expla in why modern governments f a i l and problems pers ist . They develop a model of the bargaining process i t s e l f . This addresses a p r i n c i p l e f a i l i n g of the p l u r a l i s t model which simply assumes that the outcome of bargaining among in teres t groups i s in the publ ic interest. Like p l u r a l i s t s , neo-conservatives adapt micro-economic theory to analyze publ ic policy-making. As the theory's most powerful proponent summarizes: Both [ p u b l i c p o l i c y and economics] are regarded as markets i n which the outcome i s determined by the i n t e r a c t i o n among persons pursuing t h e i r own s e l f -i n t e r e s t s (broadly i n te rp re ted ) ra ther than by the s o c i a l goa i ^ the p a r t i c i p a n t s f i n d i t advantages to enunciate. a However, un l ike the p l u r a l i s t s , neo-conservatives extend the economic analogy to include p o l i t i c i a n s and bureaucrats. Both are seen as forms of in teres t groups acting to further t he i r own s e l f - i n t e r e s t s . As w e l l , neo-conservati ves argue that the outcome of th i s interact ion between interes t groups i s r a re l y , i f ever, in the general publ ic interest. The primary reason for th i s i s because of the phenomenon of "concentrated versus d i f fuse i n t e r e s t s " . 1 8 2 As Mancur Olson explains: ...other th ings being equa l , the l a r g e r the number of i n d i v i d u a l s or f i r m s t h a t wou ld b e n e f i t f rom a c o l l e c t i v e good, the s m a l l e r the share of the gains from a c t i o n i n the group i n t e r e s t tha t w i l 1 accrue to the i n d i v i d u a l or f i r m that undertakes the a c t i o n . 81 Thus, i n the absence of s e l e c t i v e i n c e n t i v e s , the i n c e n t i v e f o r group a c t i o n d imin i shes as group s i z e increases, so that large groups are less able to act in . t he i r common interest than small ones . 1 9 3 Conversely, the smal ler the interest group the more incent ive there i s to lobby for pub l ic po l i c i e s that benefit them. The p o s s i b i l i t y for success of the small in teres t group i s enhanced because the costs are borne by the wider publ ic . For example, i f a pa r t i cu l a r industry in Canada employing 1,000 people receives a subsidy of one m i l l i o n d o l l a r s , that amounts to $1,000 per rec ip ient. However, although the costs are borne by the taxpayers of Canada, they amount to only pennies for each Canadian. Thus, the Canadian publ ic i s not l i k e l y to lobby against such a l evy , whi le the rec ip ients have a s i gn i f i can t economic incent ive to continue to lobby for the subsidy. Pub l i c po l i cy becomes skewed in favour of special in teres t groups by p o l i t i c i a n s acceding to the i r demands. Even democratic e lec t ions , i t i s argued, don't a l t e r th i s state of a f f a i r s . Because of the d i f fuse nature of the costs and benefits associated with d i f fe rent p o l i c i e s , and the perceived i n a b i l i t y of i nd iv idua l voters to a f fect outcomes, there i s a lack of interest i n , and knowledge of, the p o l i t i c a l process. Those c i t i zen s that do par t i c ipate by voting are forced to vote on a package of p o l i c i e s and not on ind i v idua l issues. In addit ion, special in terest groups finance p o l i t i c i a n s and mobi l ize supporters to maintain the i r p r i v i l e ged pos i t ions. The bureaucracy, l i kewise, acts in i t s own s e l f interest. Fo l lowing the work of Anthony Downs, neo-conservatives argue that, rather than simply ident i fy ing a l t e r na t i ve methods of achieving goals set by p o l i t i c i a n s , bureaucrats are motivated by a var iety of personal 82 object ives. ^ Walter Niskanen, in his book, Bureaucracy and Representit ive  Government, theorizes that the overr id ing object ive of bureaucrats i s to maximize the absolute s ize of the i r budgets. 1 8 5 A lber t Breton develops th i s theory further. In The Economic Theory of Representit ive Government, he wr i tes: The hypothes is i m p l i e s , even when s ta ted i n i t s s i m p l i f i e d form (bureaucrats seek to maximize the r e l a t i v e s ize of the i r bureaus), that i t i s through the maximizat ion of t h i s o b j e c t i v e that bureaucrats are ab le to ach ieve the h ighest p o s s i b l e income and prestige consistent with the constraints to which they are subjected... I t a l s o i m p l i e s that bureaucrats are not responsive to the preferences of c i t i z en s , but are s o l e l y guided i n t h e i r ac t i on s by the network of re lat ionsh ips l i n k i ng them to p o l i t i c i a n s and to other bureaucrats and bureaus. The fact that the behaviour of bureaucrats i s to some extent determined by interact ion wi th p o l i t i c i a n s i m p l i e s , of course, some i n d i r e c t response to the preferences of c i t i z en s . . . 1 8 Thus, bureaucrats operate to expand the i r power, often at the expense of pub l ic benefit. Not su rpr i s ing ly , th i s neo-conservative view of how the state functions usua l l y leads to the conclusion that the r o l e of government should be severely reduced and the a l l o c a t i o n of resources should be l e f t to p r i vate markets. Does the neo-conservative theory help expla in the way forest po l i cy developed in B.C.? In part, i t does. C l e a r l y , the notion of concentrated versus d i f fuse interests has some v a l i d i t y in analyzing the evo lut ion of forest po l i cy in B.C. The group which benefited most from the introduction of the FML system were the owners of o l d l icences and crown-granted lands who were in the best pos i t ion to apply for these new forms of tenure. That small group came to defend the system f o r c e f u l l y , and u l t imate l y , success fu l l y . Before the second Sloan Commission, for example, the holders of FML's were we l l represented. Their evidence armed Sloan with valuable 83 facts and arguments with which to defeat, or at l ea s t d i f fuse the c r i t i c s of the system. Likewise, in the ear ly 1900's, the holders of special timber l icences were successful in convincing the government to grant them perpetual tenure. Most of the al l o ca t i ve systems devised by the government were non-competitive and th i s u sua l l y resulted in favourable treatment for ex i s t ing l icensees. The costs of a non-competitive a l l o c a t i o n system, meanwhile, are d i f fuse. The real lo ser i s the pub l i c , which forgoes some of the benefits associated with ownership, (namely, access to the land base and appropriation of the economic rent). However, in the absence of information regarding the extent of the costs, and the absorption of those costs by the wider pub l i c , the ind i v idua l taxpayer has l i t t l e incent ive to oppose the system. Conversely, those benefit ing have a marked economic in teres t in maintaining the status quo. Nevertheless, the neo-conservative theory does not t o t a l l y expla in the development of forest po l i cy in B r i t i s h Columbia. For example, the implementation of sustained y i e l d , which was one of the major po l i cy i n i t i a t i v e s , was not in the immediate interests of any of the major lobby groups. Indeed, many of the large forest interests opposed sustained y i e l d because i t reduced the i r power to control the pace and pattern of harvest. Instead, the establishment of sustained y i e l d was more of a soc ieta l response to c r i s i s , rather than the r e su l t of i nd i v idua l interest groups s o l e l y pursuing the i r s e l f - i n t e r e s t . Second, the neo-conservative view f a i l s to expla in the ro le of the bureaucracy in the formation of forest po l i cy . From the i r theoret ica l perspective, the bureaucracy i s ever expanding, seemingly ob l i v i ou s to the 84 pub l i c interest . The ro l e of the bureaucrat i s to expand his budget and in su la te him from pressure and accountablity. But, the Forest Service grew slower than the rest of the bureaucracy. In an unpublished paper presented to the Annual Meeting of the Canadian P o l i t i c a l Science Association in 1981, Christopher Leman compared a number of agencies that administer forest l a n d . 1 8 7 He found an enormous difference between the United States and B r i t i s h Columbia experience. The fo l l ow ing i s an extract from a tab le he deve l oped : 1 8 8 Acres (m i l l . ) % of forest land held Budget (m i l l . ) Fu l l - t ime Regional personnel Off ices D i s t r i c t Off ices Min. of Forests B.C. 211.7 89% $88 2,903 6 46 United States Forest Service 188 18.4% $1,942 22,216 9 146 The difference in the above numbers i s s l i g h t l y overstated; for the B.C. f i g u r e s are based on f i s c a l year 1976, and the U.S. data i s from 1980. Nevertheless, the differences in expenditure and personnel are astounding. Leman further points out: In 1974, a year i n which the B.C. M i n i s t r y of Fores t s s o l d almost e x a c t l y the same volume of t imber as d id the e n t i r e U.S. Nat iona l Fores t System, the B.C. ministry employed only 327 professional foresters whi le the U.S. Forest Service employed 4,897. 1 8 9 Rather than cont inua l l y expanding i t s s ize and power, the B.C. Forest Service cont inua l l y sh i f ted more and more management r e s p o n s i b i l i t i e s onto pr ivate enterprise. The comments of CD. Orchard, for example, run prec i se ly counter to what the neo-conservative theory would suggest. Orchard stressed the super ior i ty of pr ivate over publ ic 85 management in his submission to the second Sloan Submission. In fa i rness, however, i t could be argued that sustained y i e l d management va s t l y increased the power of the bureaucracy. They were empowered to d ictate the amount of cut, the area of harvest, the pace of reforestat ion, and even the locat ion of logging roads, among other things. Thus, the i r support for sustained y i e l d management could be seen as in t he i r s e l f - i n t e r e s t . The neo-conservative theory of the state i s useful to describe certa in elements of the forest policy-making process in B.C. Importantly, i t demonstrates that governments are not neutral servants of the pub l i c , but act to further the i r own interes t and the interest of narrow lobby groups. The use of the economist's s e l f - i n t e r e s t model provides ins ights into how po l i cy i s developed, but i t i s an incomplete picture. As Geoff Hodgson points out: The a p p r o a c h o f t h e . . . ( n e o - c o n s e r v a t i v e s ) . . . underest imates both the s o c i a l and the i d e o l o g i c a l e l emen t s i n v o l v e d i n the p o l i t i c a l process and p o s t u l a t e s a system of e g o t i s t i c a l max imizat ion, in which s e l f - i n t e r e s t i s a l l that mat te r s . 1 9 0 4) A Neo-Marxist; Instrumental Theory of the State Since the l a t e 1960's, neo-marxists have placed increasing emphasis on the functioning of the state in c a p i t a l i s t society. The works of Ralph Mi l iband and Nicos Poulantzas have profoundly inf luenced recent neo-marxian thought on th i s ma t t e r . 1 9 1 The former has developed what i s termed an ' instrumental ' theory of the state, whi le the l a t t e r employs a ' s t r u c t u r a l ' analys i s . 86 The debate between the two schools of thought i s a complicated one which continues to th i s day. B r i e f l y , and at the r i sk of o ve r s imp l i f i c a t i on , the instrumental i sts argue that the state e l i t e i s dominated by the economic e l i t e and thus functions to protect the l a t t e r . In other words, the state i s merely an instrument of the dominant c a p i t a l i s t c lass . As Mi l iband states c l e a r l y : In the Ma r x i s t scheme, the " r u l i n g c l a s s " of c a p i t a l i s t s oc i e t y i s that c l a s s which owns and contro ls the means of production and which i s able, by v i r tue of the economic power thus conferred upon i t , to use the State as i t s instrument f o r the domination of society. 9 2 This view i s e x p l i c i t l y derived from the works of Karl Marx and V.I. Lenin. Writing in the Communist Manifesto, Marx said, "The executive of the modern state i s but a committee for managing the common a f f a i r s of 1 Q3 the whole bourgeoisie." Numerous empirical studies, l i k e Wallace Clements' Canadian  Corporate E l i t e , which emphasize the interchange among e l i t e s , are used to support th i s concept . 1 9 4 Simply put, i t i s argued that the economic, p o l i t i c a l and bureaucratic e l i t e s share the same s o c i a l , c u l t u r a l and c la s s backgrounds. Thus, the p o s s i b i l i t y of fundamental change away from the status quo i s remote. What then i s the "job" of the state, given that i t i s to serve the in teres t of the " r u l i n g c lass ? " E s s en t i a l l y , a l l neo-marxists agree that the state must perform two functions; 1) to a s s i s t and promote the accumulation of cap i ta l and; 2) to l eg i t im i ze th i s accumulation process in the eyes of i t s c i t i zens . Perhaps the most s i gn i f i can t contr ibut ion of the neo-marxists i s t he i r p lac ing of the state within the socio-economic context of society. 87 Rather than neutral or a se l f - i n te re s ted unit, the state i s part of the 'system'. I t i s shaped by, (and helps to shape), socio-economic forces. Always the r o l e of cap i ta l i s dominant, and the r o l e of the state i s to f a c i l i t a t e the accumulation of c a p i t a l . Thus, by grounding the i r theory of the state with in a broader context, neo-marxists demonstrate the l im i ta t i on s of state action. Does the neo-marxist instrumental i s t theory help to expla in the evo lut ion of forest po l i cy in B r i t i s h Columbia? The fact that, as the case study has shown, forest po l i cy has systemat ica l ly favoured large firms and encouraged corporate concentration may lead one to be l i eve that the instrumental i s t view has some merit. I t could ea s i l y be argued that forest po l i cy was designed to meet the needs of the dominant economic e l i t e in B.C. The development of 'quotas', the imposition of non-refundable bidding fees, the matching bid p r i v i l e g e , and the increas ingly pr ivate management of pub l i c land have a l l conspired to reduce competition for the resource. This, according to many authors, has led to a reduction in the economic rent appropriated by the s t a t e . 1 9 5 Thus, the state, as owner of the resource, has subsidized and fostered the development of an integrated and increas ing ly concentrated forest industry. But, po l i cy skewed in favour of large interests does not necessar i ly imply that there i s a pa r t i cu l a r r u l i n g c la s s . To begin with, the idea that there i s a c la s s that ' r u le s ' i s debatable. While, c l e a r l y , there are dominant c lasses in society that have tremendous inf luence on po l i cy , i t i s a long step to say that that means there i s a r u l i n g c las s . As Hodgson notes: 88 I t i s p o s s i b l e to t a l k of a c l a s s being dominant i n s o c i e t y , but on l y by v i r t u e of the dominance of a p a r t i c u l a r type of economic s t r u c t u r e . To say that a c l a s s ' r u l e s ' i s to say much more. I t i s to imply tha t i t i s somehow i m p l a n t e d i n t o the appa ra tu s of government. 9 6 Furthermore, i t i s s i m p l i s t i c to argue that there i s one un i f ied, r e l a t i v e l y homogeneous r u l i n g c las s . Within the dominant economic c la s s there are d i v i s i on s and even contrary interests. To postulate that the state acts merely as an instrument of the dominant economic e l i t e ignores the tension and cleavages within that e l i t e . The method of implementing sustained y i e l d management, for example, was not heralded by a l l the large forest companies as a pos i t i ve step. Indeed, H.R. MacMi l lan, (by anyones measure a member of the economic e l i t e ) , the patr iarch of the largest forest company in Canada, commented before the second Sloan Commission on the eventual impact of the forest management l i cence system. He said: A few companies would acquire control of the resource and form a monopoly. I t w i l l be managed by professional bureaucrats... P u b l i c i n t e r e s t would be v i c t i m i z e d because vigorous, innovative c i t i z e n business needed to provide the e f f i c iency of competition would be denied logs and thereby prevented from penet ra t i on of the market. 9 7 Although Marchak points out that MacMi l lan ' s comments were treated somewhat l i g h t l y , they h ighl ighted the fact that there i s ra re l y absolute agreement, both within and between interes t groups, on the appropriateness of state a c t i o n . 1 9 8 The move to sustained y i e l d management l im i ted the r ights of p r i vate holders of forest tenures to l i qu ida te the resource. I t reduced the power of pr ivate companies to maximize the i r revenue. Importantly, however, the constraints imposed by sustained y i e l d management were never quite as 89 onerous as they appeared. In many regions of B.C. the actual harvest of trees ra re l y reached the a l lowable harvest l e v e l s . 1 9 9 This lends a certa in amount of credence to the neo-marxist perspective. On the other hand, increasing the management burden on pr ivate companies (as in TFL's and TSHL's), even though certa in costs could be deducted from stumpage fees, i s not necessar i ly the type of po l i cy one might expect from a state mechanis t ica l ly reacting to the demands of c a p i t a l . Perhaps most fundamental, the decision by the state to reta in publ ic ownership of forest land could hardly be seen as a po l i cy designed s o l e l y for the r u l i n g c lass . Af ter a l l , why did the government not simply re l inqu i sh t i t l e to pr ivate companies. The instrumental i s ts argue that th i s type of po l i cy i s necessary because of the need to l eg i t im i ze the state in the minds of i t s c i t i zens . Indeed, every action that appears to run contrary to the interests of cap i ta l i s explained as leg i t imat ion. But the instrumental i sts f a i l to come to grips with how much autonomy the state has to f u l f i l l th i s leg i t imat ion function. I f the state crudely reacts to the demands of the economic e l i t e , i t fo l lows that i t i s not free to pursue p o l i c i e s that are against the i r interests . As Block summarizes: . . . instrumental ism f a i l s to recognize that to act i n the general in teres t of c a p i t a l , the state must be able to take ac t i on s aga ins t the p a r t i c u l a r i n t e r e s t s of c a p i t a l i s t s . P r i c e c o n t r o l s or r e s t r i c t i o n s on the export of c a p i t a l , for example, might be in the general i n t e r e s t of c a p i t a l i n a p a r t i c u l a r pe r i od , even i f they t e m p o r a r i l y reduced the p r o f i t s of most c a p i t a l i s t s . To carry through such p o l i c i e s , the state must have more autonomy from d i rec t c a p i t a l i s t control than the instrumental i s t view would a l low. 0 0 Were the p o l i t i c a l and economic e l i t e s the same in B r i t i s h Columbia? Did they share the same c la s s backgrounds as the theory would suggest? While there was a certa in s i m i l a r i t y between the p o l i t i c a l and economic 90 e l i t e s p r io r to the 1952 e l e c t i on , the elected l e g i s l a t o r s of the Social Credit administration were not members of the economic e l i t e of the province. Both Forest Min isters holding o f f i ce between 1952 and 1972 were schoolteachers. The Social Credit government has been apt ly characterized as pet it-bourgeois. On the other hand, there was a c lo ser re lat ionsh ip h i s t o r i c a l l y between the bureaucracy and the economic e l i t e . Reid and Weaver, in an analys i s in the mid-70's, point out: Occupat ional m o b i l i t y from the Fores t S e r v i c e to industry provides—evidence as to the intimacy of the re lat ionsh ip. (By 1955 every member of the BCFS who had presented a b r i e f to the 1945 Commission had moved into a pos it ion with pr ivate i ndu s t r y . ) 2 0 2 The personal fr iendship between CD. Orchard, Chief Forester, and H.R. MacMi l lan i s evident in the case study. Orchard's requests for advise from MacMi l lan and his sympathetic att i tude towards the industry lend credence to the instrumental i s t perspective. I t i s c l ea r a lso that Orchard shared the ideology of business. In 1960, whi le interviewing Gordon Gibson, Orchard commented on how he, l i k e Gibson, "hated" s o c i a l i s m . 2 0 3 I t was anathema to him. Nevertheless, i t i s c l ea r that the forest po l i cy pursued by the B.C. government was not cons i s tent ly at the behest of the prov inc ia l economic e l i t e . To expla in a l l po l i cy decisions contrary to the interests of the dominant c la s s as leg i t imat ion i s simply too vague to enhance our understanding of the dynamics of forest po l i cy evo lut ion in the province. A more sophist icated version of the neo-marxist theory of the state i s provided by the s t r u c tu r a l i s t s . 91 5) A Neo-Marxist; Structural Theory of the State The s t r u c t u r a l i s t analys is of the state rejects the idea that the state in c a p i t a l i s t society i s but a tool of the c a p i t a l i s t c las s . Rather, as Gol d, e t . a l . , s t a t e : The fundamental thesis of the s t r u c t u r a l i s t perspective i s t h a t the f u n c t i o n s of the s t a t e are b r o a d l y determined by the structure of the society rather than by the people who occupy posit ions of state power/ 0 4 Thus, s t r u c t u r a l i s t s view the state as a broader concept which i s more than a mere mechanism which can be ea s i l y manipulated, but nevertheless serves the general interests of the c a p i t a l i s t c lass . State po l i cy i s constrained by the nature of the c a p i t a l i s t system i t s e l f and th i s l i m i t s the scope of poss ible state action. While Poulantzas i s perhaps the most widely known exponent of the s t r u c t u r a l i s t perspective, an interest ing and more app l i cab le version has been advanced by Claus Offe, a German s c h o l a r . 2 0 5 Offe postulates four basic features of the state that l i m i t s and shapes the development of pub l ic po l i cy . F i r s t , the state does not control the means of production. I t cannot 'order' a company to produce that which i s not p ro f i t ab le and i t cannot stop production that contributes to the accumulation of c a p i t a l . That i s , property i s p r i vate , and thus pr ivate interests have a degree of autonomy with respect to internal production decisions. These decisions are not made on the basis of p o l i t i c a l c r i t e r i a or some notion of the ' pub l i c i n te re s t ' , but rather are based on pr ivate c r i t e r i a . Second, the state depends upon the volume of pr ivate accumulation because i t derives i t s resources from the taxation of wages and p ro f i t s generated by the accumulation process, (i.e. the term 'accumulation process' refers to the necessary process in c a p i t a l i s t economies of accumulating surplus cap i t a l ) I t can be argued that the increasing proportion of GNP consumed by the modern state has exacerbated th i s dependence on the p r o f i t a b i l i t y of pr ivate production. The recent works of Gough and O'Conner provide the most sophist icated analys i s of the re la t ionsh ip between cap i ta l accumulation and state expenditures. 2 0 6 Third, because i t depends on the process of accumulation the state i s compelled to create and sustain conditions that are conducive to accumulation. Consequently, threats to such a 'healthy ' condition from exogenous or internal forces cannot be to lerated. The state acts through such things as the m i l i t a r y , the po l i ce , and the l e g i s l a t u r e to deal with, for example, aggression from other states, workers organizations, or cr iminal behaviour. F i n a l l y , in democratic regimes p o l i t i c a l part ies must win e l e c to r a l support before exercis ing control over i n s t i t u t i o na l state power. This means that the state must appear to operate in the publ ic in teres t and at times must chal lenge the interests of pr ivate cap i ta l in order to maintain the v i a b i l i t y of society and i t s support. Offe and Ronge suggest that: Th i s mechanism [democrat ic compet i t i on ] p lay s a key r o l e in disguis ing the fact that the material resources of s t a te power, and the ways i n which these are used, depends upon the revenues derived from the accumulation process, and not upon the preferences of the general e l e c t o r a t e . 2 0 ' In other words, because the state depends upon the accumulation process, and must operate to sustain conditions whereby pr ivate production generates p r o f i t s , i t i s powerful ly constrained in i t s scope of action. The state cannot act on the 'preferences of the general e lectorate ' i f to do so would threaten the accumulation process upon which i t depends. The c a p i t a l i s t state depends upon the revenues derived from the accumulation process and democratic competition a l lows choices to be made only within th i s context. However, th i s democratic competition provides the state with i t s important fourth element, leg i t imat ion. Thus, to the neo-marxist s t r u c t u r a l i s t , the four elements of the c a p i t a l i s t state can be succ inct ly summarized as exclus ion, dependence, maintenance, and leg i t imat ion respect ive ly . That i s , exclus ion from but dependence upon the accumulation process, the maintenance of the conditions of accumulation, and the leg i t imat ion of these functions through democratic competition. However, i t i s the fundamental tension between accumulation and leg i t imat ion that i s c r i t i c a l to the neo-marxist s t r u c t u r a l i s t analys is . The s t r u c t u r a l i s t s endeavor to address the most serious deficiency of the instrumental i sts. That i s , they attempt to explain actions by the state that are c l e a r l y against the wishes of the ' r u l i n g c l a s s ' . Rather than resort in every case to the notion of leg i t imat ion as an explanation, the s t r u c t u r a l i s t s ascribe to the state a ' r e l a t i v e ' autonomy that a l lows i t to take the independent action necessary to maintain cap i ta l i sm. In other words, s t r u c t u r a l i s t s see the state as the guardians of the 'system' as a whole. I t, at times, must take action that i s not in the interests of the economic e l i t e , or at l ea s t a f rac t ion of i t , to preserve the system i t s e l f . Capita l i sm possesses inherent contradict ions that would lead to i t s demise in the absence of the coordinat ive r o l e of the state. As Poulantzas puts i t : R e l a t i v e autonomy a l l o w s the s t a te to i n te r vene not on l y i n order to arrange compromises v i s - a - v i s the dominated c l a s s e s , which, i n the long run, are use fu l f o r the ac tua l economic i n t e r e s t s of the dominant classes or f ract ions ; but also... to intervene against the long term economic i n t e r e s t s of one or other f rac t ion of the dominant c la s s : for such compromises and sac r i f i ce s are sometimes necessary for the r ea l i z a t i on of t he i r p o l i t i c a l c la s s i n t e r e s t s / 0 8 However, whi le the concept of r e l a t i v e autonomy i s a more useful explanation of state actions than that provided by the instrumental i s ts , i t presents a number of problems. In pa r t i cu l a r , how does the state reso lve the c o n f l i c t between leg i t imat ion , (or pursuit of the publ ic interest ) , and accumulation, (or pursuit of the interests of cap i t a l ) . Given the constraints indicated by Offe, i t would appear that the scope for independent action to pursue the publ ic in teres t i s severely l im i ted . Imp l i c i t in the notion of ' r e l a t i v e ' autonomy i s the view that the r u l i n g c la s s would respond e f f e c t i v e l y to any abuse of that autonomy. In other words, any time the state leaned to far toward leg i t imat ion. But that assumes a high degree of unity, p o l i t i c a l cohesion, and c las s consciousness of the ru l i ng c lass . More importantly, as Habermas concludes, i t at t r ibutes to the r u l i n g c la s s the capacity to determine which action by the state i s not in i t s long-run i n t e r e s t s . 2 0 9 Christopher Ham and Michael H i l l summarize the weakness of th i s approach: To e x p l a i n the a c t i v i t i e s of the c a p i t a l i s t s t a te requ i re s the i d e n t i f i c a t i o n of c r i t e r i a f o r l o c a t i n g the l i m i t s of dependence by the s t a t e on the bourgeo i s ie and the cond i t i on s under which s t a te agencies are able to operate autonomously. 2 1 0 By emphasizing the economic context of po l i cy making, and the dependent nature of the c a p i t a l i s t state, neo-marxists co r rec t l y demonstrate the constraints on state action. However, neo-marxist theory of the state posits an over ly determinist ic view of the economic/pol it ical re la t ionsh ip . Not a l l p o l i t i c a l power i s derived from economic power and the state can and does respond to non-economic pressure. 95 Does the neo-marxist s t r u c t u r a l i s t theory of the state expla in the development of forest po l i cy in B.C.? C l e a r l y , there are a number of elements of po l i cy that promote accumulation. Indeed, the primary goal of B.C. governments was to promote economic growth and thereby, f a c i l i t a t e the accumulation of c a p i t a l . Over time they systemat ica l ly moved to enhance the security and s t a b i l i t y of the forest industry. They provided a secure and inexpensive resource base and the necessary inf rastructure to enable i t s ext ract ion. The p o s s i b i l i t y of the province i n vo l v i n g i t s e l f in the harvesting and manufacture of timber was never considered. It was not conducive to the maintenance of a 'healthy ' investment cl imate. By a l lowing the deduction of management costs from stumpage fees, the state e f f e c t i v e l y subsidized the accumulation of cap i ta l by pr ivate firms and enhanced the i r value. David Haley and others have pointed out the g lar ing differences in economic rent captured by the governments of B r i t i s h Columbia and the States of the U.S. Pac i f i c Northwest. 2 1 1 Haley demonstrates that a major reason for th i s stems from the competitive bidding practices in the U.S. The moves by the government to el iminate competition for timber, as the case study has shown, has led to increased corporate concentration and benefited large c a p i t a l i s t s . For example, the development of tradeable 'quotas', the awarding of TFL's, and the re s t r i c t i on s on bidding for pub l ic timber l im i ted entry into the forest industry, enhanced the posit ion of the ex i s t ing industry and u l t imate l y contributed to the decl ine of the independent logger. On the other hand, the state enacted a number of po l i c i e s which would best f a l l under the category of leg i t imat ion. The introduction of 96 sustained y i e l d management in 1947 represented a fundamental change in the management of the forest resource. As the land lord of the resource, the province recognized that the harvest had to be regulated to ensure the su rv i va l of the industry. While that may not have been in the interests of the ex i s t ing industry, in terms of maximizing the i r p r o f i t , i t c l e a r l y was in the interests of the continued 'hea l th ' of the economy of the province. In other words, the move to sustained y i e l d management was a real example of the state r e s t r i c t i n g the r ights of pr ivate cap i ta l in order to protect the perceived publ ic interest. However, the mechanism used to implement sustained y i e l d favoured ex i s t ing firms with pr ivate land or o l d tenures. These were the dominant firms in the industry. Thus, the sustained y i e l d po l i cy a l so ensured the long run v i a b i l i t y of the large forest companies. As w e l l , i t should be noted again that the re s t r i c t i on s on timber harvest brought about by sustained y i e l d were not as s i gn i f i can t as they might appear. The p rov inc ia l a l lowab le cut continued to increase dramat ica l ly over the years, and in most regions the harvest rarely reached allowable l i m i t s . 1 C l e a r l y a l so, the retention of land in pub l ic ownership and the levy ing of stumpage fees are a l so p o l i c i e s that are not in the d i rect in teres t of c a p i t a l . After a l l , whi le many of the r ights accorded land owners have been conferred to pr ivate holders of tenures, the crown has ult imate control of the land. As w e l l , whi le stumpage fees have been r e l a t i v e l y low, the government has generated s i gn i f i can t revenue from th i s source. The crown has a l so retained the r ight to vary royalty charges at any time. However, i t appears that a l l of the actions taken by government that have impinged on the accumulation process can be accurately described 97 as leg i t imat ion functions. For example, the move to sustained y i e l d management i s p rec i se ly the type of po l i cy the s t r u c t u r a l i s t theory predicts. In th i s case, the state moved against the immediate interests of cap i ta l in order to preserve the long-run v i a b i l i t y of the forest industry. Thus, the s t r u c t u r a l i s t theory of the state i s the most adequate of the theories reviewed thus far in expla in ing the evo lut ion of forest po l i cy in B.C. I t ' s emphasis on the accumulation and leg i t imat ion functions of the state contributes to a better understanding of the causes and consequences of provincial act ions. 6) A Canadian Theory of the State While the previous f i v e theories of the state have l a r ge l y been based on general p r i nc ip le s independent of a spec i f i c set of facts , what i s c a l l e d here a 'Canadian' theory of the state i s rooted in the spec i f i c h istory of the country. As such, i t i s more a descr ipt i ve statement of how the state has acted in Canada, rather than a normative theory supporting a pa r t i c u l a r course of action. B r i e f l y stated, in Canada and the provinces, the state has pursued as i t s primary goal the promotion of economic growth through s t ap l e - l ed development. Thi$, combined with the unique geography of Canada has resu l ted in an unusually high degree of d i rect intervent ion in the economy by the s t a te . Perhaps the f i r s t deta i l ed study of the r o l e and growth of government in Canada was written by Professor J.A. Corry in 1939. 2 1 3 Corry was commissioned by the Royal Commission on Dominion-Provincial Relations. Corry takes the year of Confederation, 1867, as his s ta r t ing point. At that 98 time, he argues, the "doctrine of l a i s s e z - f a i r e " was at i t s height of inf luence and governments around the world intervened l i t t l e in the l i v e s of t he i r c i t i z en s . In the seventy years a f ter 1867, however, governments came to intervene more in economic and soc ia l matters. The reasons for t h i s , in i ndu s t r i a l i z ed countries, were se l f - ev ident to Corry: The f ree economy, which brought about such rap id development, was se l f -ad jus t ing in a narrow sense. But i t made no provis ion for the soc ia l adjustments which had to f o l l o w what appeared to the s u f f e r e r s as c a p r i c i o u s a c t i o n . The s u f f e r e r s were many and when they secured the franchise, they l a i d these problems of s o c i a l adjustment on the doorstep of the p o l i t i c a l author i ty. 1 4 But Canada was not predominantly i ndu s t r i a l i z ed over much of th i s period, and the small areas that became i ndu s t r i a l i z ed did not suffer the same l e v e l of soc ia l disruption that occurred in Europe. What then accounted for the corresponding growth in government a c t i v i t y in Canada? To Corry, the answer lay in the newness and geographic uniqueness of the country. ...we d id not have, at Confederat ion , any of the p rob lems of a h i g h l y s p e c i a l i z e d and urban i ndu s t r i a l i z ed economy. The pr inc ipa l problems of that day were not the d i f f i c u l t i e s of soc ia l adjustment in a complex s o c i e t y but r a t h e r the d i f f i c i i 1 t i es of organizing a concerted attack upon n a t u r e / 1 5 Hence, from i t s very outset, the state was required to become a force for the development of the country. In the name of national economic development the government b u i l t and owned rai lways, granted enormous acreages of land to pr ivate organizations in order to f a c i l i t a t e the construction of other rai lways, i n s t i t u ted protect ive t a r i f f s , and provided subsidies and technical serv ices to business. 99 Thus, the state in th i s developing country assumed many ' po s i t i ve ' functions, whereas in the more i ndu s t r i a l i z ed countries the growth of state a c t i v i t i e s was more in the form of 'negative' functions. These 'negative ' functions consisted l a r ge l y of government regulat ion of business to improve soc ia l welfare. Corry was one of the f i r s t Canadian wr iters to recognize the unique ro l e of the state in post-Confederation Canada. That i s , as the primary force for economic development. But i t i s not only the i n te rvent i on i s t r o l e of the state that i s uniquely Canadian. I t i s the r o l e of the state as i t re la tes to the export of staples that has been the focus of i n t e l l e c t u a l discussion in Canada and the basis of spec i f i c 'Canadian' theories of the state. The two wr i ters who f i r s t i den t i f i ed the s ign i f icance of staples to Canadian development were Harold Innis and W.A. Mack in tosh . 2 1 6 Innis was c r i t i c a l of the consequences of an economy dominated by the export of staples. He argued that Canada became dependent on the countries that imported the staples. This dependency led to periods of c r i s i s and d i s torted the development of the l oca l economy. As Innis stated: Concentration on the production of staples for export to more highly i ndu s t r i a l i z ed areas of Europe and l a t e r in the United States had broad i m p l i c a t i o n s f o r the Canadian economic, p o l i t i c a l and socia l structure. Each s t a p l e i n i t s time l e f t i t s stamp, and the s h i f t to a new s t a p l e i n v a r i a b l y produced per iods of c r i s i s i n which adjustments in the o ld structure were p a i n f u l l y made a n d a new pat te rn c reated in r e l a t i o n to a new s t a p l e . 2 1 7 Innis be l ieved that because Canada was dependent on a foreign i ndu s t r i a l i z ed country, i t necessar i ly would remain that way. I t was 100 inherent in such an imper i a l - co lon ia l re lat ionsh ip that Canada's manufacturing sector would be constr icted. Mackintosh, on the other hand, be l ieved that the export of staples was the f i r s t step towards the development of a mature economy. Only by generating revenue from staple exports could the country accumulate the necessary cap i ta l for further expansion. Investment in inf rastructure and the creation of a domestic market through settlement would promote the manufacture of commodities for home consumption and u l t imate ly export. U t i l i z i n g both Innis and Mackintosh, the staple theory has been developed by dozens of Canadian w r i t e r s . 2 1 8 Since the 1960's in pa r t i c u l a r , a c r i t i c a l Innisian perspective has been employed pr imar i l y by neo-marxists to explore and expla in the nature of the Canadian economy. 2 1 9 However, for the purposes of th i s thesis, of pa r t i c u l a r interest i s the app l i cat ion of the staples approach to the p rov inc ia l state. The work of Richards and P ra t t in th i s regard stands out as a s i gn i f i can t contr ibut ion to understanding the ro le of the p rov inc ia l state in economic development. In t he i r book, P r a i r i e Capital ism: Power and Inf1uence in the New West, the authors describe and analyze the posit ions of the A lberta and Saskatchewan governments v i s - a - v i s t he i r respective resource i n d u s t r i e s . 2 2 0 They come to the conclusion that, as owners of the resource, the prov inc ia l state has s i gn i f i c an t power to shape the pattern of development and c o l l e c t resource rent. However, in order for the provinces to exercise that power, " i t s leaders [must] be i d e o l o g i c a l l y oriented to take entrepreneurial r i s k . . . " 2 2 1 In the absence of such or ientat ion, the province loses i t s bargaining power to extract from the resource economic rent or developments l i nked to the staple base. 101 In addit ion to a w i l l i ngnes s on the part of the prov inc ia l state to intervene d i r e c t l y in the production process, broad publ ic support i s necessary for the ult imate success of a strategy to generate greater publ ic returns from the resource sector. Richards and Pratt conclude that, p r io r to the 1970's, the provinces of A lberta and Saskatchewan were unw i l l i n g to embark on publ ic ventures in the resource f i e l d and thus were forced to acquiese to the demands of the resource industry. However, since the 1970's, both p rov inc ia l governments determined to capture a greater share of the economic rent generated and were prepared to use publ ic entrepreneurship i f necessary. As a r e su l t , as the authors state: The primary source of the en t r ep reneu r i a l i n i t i a t i v e and of the changes which have overtaken p r a i r i e cap i ta l i sm since the opening of the new postwar mineral staples has been pub l i c , not p r i v a t e . 2 2 2 The Canadian state has h i s t o r i c a l l y promoted the exp lo i t a t i on of staples through the provis ion of infrastructure and subsidies to business. Most wr iters in the staple t r ad i t i on argue that e i ther th i s has resu l ted in dependency and underdevelopment, or i t i s a necessary precondition to developing a mature economy. Richards and Pratt argue that the re l i ance on staples in the p ra i r i e s i s i nev i t ab l e and that development away from the staple base i s un l i k e l y . However, the power of the prov inc ia l state can be (and to some extent has been) u t i l i z e d to e xp l o i t that region's comparative advantage in such a way as to avoid, or at leas t mit igate, the consequences of dependency and underdevelopment. I t i s c l ea r from the case study that the B.C. government pursued s t ap l e - l ed development. I t i s a fact that during the period under review the p rov inc ia l economy was dominated by the export of staples, in pa r t i c u l a r forestry. Thus, the government was successful in promoting the 102 exp lo i t a t i on of the resource. B.C. governments, in pa r t i cu l a r the W.A.C. Bennett administration, acted prec i se ly in the Canadian staples t r ad i t i on . Bennett, for example, was w i l l i n g to use the power of the prov inc ia l government to d i r e c t l y support i ndus t r i a l growth. To that end, he nat iona l i zed B.C. E l e c t r i c to accelerate the development of power and to provide favourable rates for business. His administration embarked on an ambitious rai lway scheme to the north to open up new f ront ie r s for development. Likewise, highways and ' instant towns' were created to meet the expanding needs of expanding business. While the province bus i l y created the necessary inf rast ructure, guaranteed access to natural resources was assured. But the type of access granted in the forest sector was l im i ted to large, usua l l y mu l t i na t i ona l , companies. This was, apparently, desired by the government and f i t with the i r overal l goals. As Bradbury points out: Fo res t p o l i c y under W i l l i s t o n between 1957-1972 was designed to compl ement Bennett's o v e r a l l expansionist p o l i c y . Roads, r a i l w a y s , dams and br idges phy s i ca l l y f a c i l i t a t e d resource e x t r a c t i o n ; changes i n the laws a s soc i a ted wi th the f o r e s t i ndustry a l te red both the l e g a l p o s i t i o n arid the economic chances of l a r ge forestry companies. In B r i t i s h Columbia the p rov inc ia l state has h i s t o r i c a l l y been in te rvent ion i s t . Rather than services to people, however, the p r i o r i t y for state intervention was on aid to business. I t i s probably safe to say that B.C. governments accepted the t r ad i t i ona l staple theory of economic growth espoused by W.A. Mackintosh. That i s , they saw the development of the staple base as a necessary prerequis i te to the evo lut ion of a more d i v e r s i f i e d and mature economy. However, whi le the government success fu l ly promoted the rapid exp lo i ta t ion 103 of the forest resource, did a more mature economy develop? No object ive analyst of the B.C. economy would argue that i t remains anything but staple-dependent and immature. P a t r i c i a Marchak has c l e a r l y documented that the p o l i c i e s pursued by governments in B.C. have not fostered a more d i ve r s i f i ed economy. She writes in 1983: ...the present p o l i c i e s i nev i t ab l y lead to deplet ion of the resource base and increasing per iphera l i zat ion of the economy. The province, i n i t i a l l y a l lowing i t s e l f to become a r e g i o n a l l y s p e c i a l i z e d resource product ion area, e v e n t u a l l y becomes a denuded, depen^e/it, and impoverished region within the world economy. 2 4 Perhaps, then, Innis ' formulation of the staple theory i s more app l i cab le to the r e a l i t y of B r i t i s h Columbia development. C l e a r l y , as Innis suggested, the p rov inc ia l economy f luctuated with the vagaries of the export market. As the demand for raw material rose, so too did the health and v i t a l i t y of B.C. industr ies. Thus, the p rov inc ia l economy became t i ed to the economy of i t s trading partners. This dependency notion i s developed further by Marchak. She argues that government p o l i c i e s which have aggress ively promoted staple exp lo i t a t i on have resulted in an extremely vulnerable economy control led largely by foreign companies. She states: ...the v u l n e r a b i l i t y of a region such as B.C. to such sudden reverses i s caused by the extreme dependence on exports of raw and semi-processed m a t e r i a l s to the advanced manufactur ing cent re . The d i v i s i o n of the world economy into s p e c i a l i z e d product ion components was to the advantage of the c e n t r a l manufacturing reg ions , as sur ing them of con t i nu ing s u p p l i e s of raw m a t e r i a l s and of markets f o r t h e i r f i n i s h e d products. " She further argues that th i s dependence has resulted in inadequate care of the resource base, and v i r t u a l l y no development of backward or forward 1inkages. The case study has demonstrated that p rov inc ia l po l i cy has 104 fo l lowed a " s tap le approach" to development. I t i s c l e a r that the r e su l t has been c lo se r to what Innis suggested than what Mackintosh theorized. Nevertheless, the work of Richards and Pratt suggests that th i s need not have been the case. In the i r study of A lberta and Saskatchewan the authors document the history of p rov inc ia l resource po l i c i e s . Those ear ly po l i c i e s were remarkably s im i l a r to the B r i t i s h Columbia experience. The authors summarize the p r a i r i e pos i t ion: The o r i g i n a l concess ion agreements negot ia ted by the governments of A l b e r t a and Saskatchewan with the internat ional resource industr ies for the development of t he i r o i l , natural gas, and potash a f te r the Second World War f a l l i n t o a f a m i l i a r pa t te rn . Designed to induce foreign investors to commit r i sk cap i ta l to the rap id e x p l o i t a t i o n of n o n - a g r i c u l t u r a l s t a p l e s , the concess ions i n v a r i a b l y p rov ided f a vou r ab l e terms of access to resources, long-term l e a s i n g arrangements wi th r o y a l t y c e i l i n g s f i x e d at low l e v e l s , and assurances that crown-owned companies wouliL n o t be placed in competition with private in teres t s . b They further point out that the respective p rov inc ia l governments fostered rapid development of the i r resources and that th i s resulted in a high degree of corporate concentration and foreign ownership in t he i r natural resource industr ies . But, in the ear ly 1970's, the A lberta and Saskatchewan governments decided to attempt to extract a greater return from the i r resource base and enacted p o l i c i e s which challenged the status quo. I t i s evident from the case study that B r i t i s h Columbian governments never undertook to a f fect a change from the c l a s s i c rent ie r pos it ion. The r e l a t i v e successes, documented by Richards and Pratt , of the A lber ta and Saskatchewan governments' attempts to capture a greater share of economic rent and to promote backward and forward linkages from the resource base hold out some hope that the bias of B.C. government po l i cy 105 toward large corporations need not continue. Their work suggests that by e f f e c t i v e l y u t i l i z i n g the bargaining power of the prov inc ia l state i t i s poss ible to extract greater publ ic benefits from the forest resource base than was the case throughout the period under study. 106 CHAPTER FOUR CONCLUSIONS Pub l i c ownership of the forest resource and the c ruc ia l importance of the forest industry to the economy of the province has meant that publ ic po l i cy in th i s sector has had a profound impact on the l i v e s of B r i t i s h Columbians. This thesis has reviewed the most important facet of p rov inc ia l forest po l i cy ; the method of a l l o c a t i n g publ ic timber to pr ivate companies. I t i s apparent from the case study that there are de f in i te h i s t o r i c a l periods during which timber a l l o c a t i o n po l i cy has remained r e l a t i v e l y consistent. The f i r s t can be c a l l e d the ' ea r l y forest po l i c y " period. This covers the time up to 1912 and the passage of the f i r s t Forest Act. A l l tenures issued during th i s period c o l l e c t i v e l y came to be known as Old Temporary Tenures (OTT's). Contrary to th i s euphemism, however, OTT's have perpetual renewal r ights un t i l the merchantable timber i s harvested. Importantly, the crown's share of the resource rent from OTT's was to be extracted from roya l t i e s and rental fees. The more onerous stumpage fees are not l e v i e d on trees harvested from OTT's. During th i s ear ly stage, there were three d i s t i n c t phases. P r io r to 1905 the primary method of a l l o c a t i n g timber was through timber leases, usua l ly t i ed to manufacturing f a c i l i t i e s . Between 1905 and 1907 a l te ra t ions were made to forest l icences to make them a t t r a c t i v e to investors, speculators and timbermen. An enormous amount of timber was staked during these two years. While spec i f i c l icences car r ied no manufacturing condit ions, the government s t i l l 107 r e s t r i c ted the export of logs from the province. Between 1907 and 1912 there was a moratorium on further a l i enat ion of timber lands pending the report and subsequent implementation of the Fulton Commission's recommendations. The second period of p rov inc ia l timber a l l o c a t i o n po l i cy can be c a l l e d the "stage of competitive bidding" and spans from 1912 to 1947. The 1912 Forest Act ushered in a new method of disposing crown timber. The newly created Forest Branch was to cruise an area of unalienated land and e s tab l i sh an upset price for the timber on that land. Companies wishing access to the resource were required to bid for i t , with the f l o o r being the upset pr ice. The roya l t i e s and rental fees remained v i r t u a l l y the same as on OTT's, but new companies were required to pay a bid price over and above these l ev i e s . The t h i r d h i s t o r i c a l period of B r i t i s h Columbia forest po l i cy can be c a l l e d the "age of susta ined-y ie ld management". From 1947 to 1972 the government sought to regulate the harvest of trees in such a way as to guarantee a perpetual supply of timber. The f i r s t Sloan Royal Commission on forestry suggested methods to induce pr ivate sustained y i e l d management on pr ivate land, OTT's, and on large acreages of publ ic forests. On the remaining land publ ic sustained y i e l d was to be implemented. Throughout the f i r s t ha l f of th i s period, the government concentrated on awarding Forest Management Licences to large forest companies to enable them to continue harvesting at t he i r current l e v e l s in perpetuity. This sparked controversy because i t removed from competition vast areas of publ ic forest land. Throughout the second ha l f of th i s period, the government sought ways to encourage better management on publ ic lands. In order to minimize the 108 poss ible disruptions that would ar i se from the move to sustained y i e l d management, the government moved to increas ingly protect the ex i s t ing industry from competition. The combined ef fect of government p o l i c i e s over th i s period has been to expedite the trend toward corporate concentration evident in the B.C. forest industry, and, according to many authors, to reduce the economic rent captured by the prov inc ia l landlord. I t i s obvious from the preceding chapter that no s ing le theoret ica l model adequately explains the evo lut ion of timber a l l o c a t i o n po l i cy in B r i t i s h Columbia. However, whi le elements of each theory can be said to describe the r e a l i t y of forest po l i cy during certa in times in h istory, i t i s c l e a r that some models more adequately expla in than others why po l i cy evolved the way i t did. The neo-marxist s t r u c t u r a l i s t and Canadian theories of the state are p a r t i c u l a r l y useful in accounting for the actions of the government of B.C. during the period under study. The Canadian theory demonstrates that B r i t i s h Columbia acted in the t r ad i t i on of Canadian states. The governments' goal of rapid economic development and the promotion of the exp lo i t a t i on of staples to accomplish that goal was not pecu l ia r to B.C. As an empirical descr ipt ion, then, the Canadian theory i s v a l i d . However, i t holds r e l a t i v e l y l i t t l e usefulness as an explanatory t o o l . The neo-marxist s t r u c t u r a l i s t theory suggests that the B.C. state acted, by and large, to promote the accumulation of cap i ta l by pr ivate firms. However, the state did intervene to l i m i t the r ights of c a p i t a l i s t s when the long-run v i a b i l i t y of the industry was in jeopardy. A l l of the actions taken by the B.C. government can be explained by the accumulation/legitimation c r i t e r i a . Nevertheless, the central f a i l i n g of th i s theory i s the vagueness of these terms. In other words, i t f a i l s to answer the question: how much autonomy 109 does the state have to pursue leg i t imat ion functions, given the fundamental need to promote the accumulation of cap i ta l ? Richards and Pratt suggest the state has a s i gn i f i can t degree of l a t i t ude to pursue po l i c i e s that are in the publ ic interest (i.e. rent c o l l e c t i o n ) , and not necessar i ly in the d i rect interests of c a p i t a l . In th i s respect, the neo-conservative theory i s more accurate. The state responds to a var iety of in teres t groups. The dominant one may wel l represent large c a p i t a l , but other groups can and do have an impact on publ ic po l i cy . The ro l e of bureaucrats and p o l i t i c i a n s i s not i n s i gn i f i c an t , as the case study has shown. It i s evident also that the state has pursued p o l i c i e s which i t perceived to be in the broad ' pub l i c interest ' . Although that term i s d i f f i c u l t to define, the move to sustained y i e l d management, for example, was c l e a r l y a soc ieta l response to c r i s i s . While the method of implementing sustained y i e l d management had certa in d i s t r i bu t i ona l consequences, the decision to move to a regulated harvest was a rat ional one that was supported by broad segments of the population. In conclusion, i t i s too s i m p l i s t i c to draw exc l u s i ve l y upon one spec i f i c theory to expla in the development of forest po l i cy in B.C. Rather, i t appears that each theory can contribute to our understanding of the nature of policy-making in the prov inc ia l state. This thesis has described how past timber a l l o c a t i o n po l i cy evolved and attempted to determine why i t evolved the way i t did. I t i s hoped that th i s w i l l a s s i s t planners and policy-makers in the development of new p o l i c i e s to deal with the current c r i s i s in the B r i t i s h Columbia forest industry. 110 FOOTNOTES 1) B r i t i s h Columbia, Min ist ry of Forests, Forest and Range Resource Analys is Technical Report, 2 Vols. (V i c to r i a : Queens P r in ter , March 1980), V o l . 1, p. i s : 2) See, in pa r t i c u l a r , Woodbridge, Reed and Associates Ltd., " B r i t i s h Columbia's Forest Products Industry Constraints to Growth," prepared for the Min i s t ry of State for Economic and Regional Development, Vancouver, 1984; and Sten Ni l s son, "An Analysis of the B r i t i s h Columbia Forest Sector Around the Year 2000," Information Report 85-1 of the Forest Economics and Po l i c y Analys is Project, Univers i ty of B r i t i s h Columbia, A p r i l , 1985. 3) Woodbridge, Reed and Associates Ltd., " B r i t i s h Columbia's Forest Products Industry Constraints to Growth," p. 93. 4) Ni l sson, " B r i t i s h Columbia Forest Sector." 5) Ni l sson developed a mathematical programming forest sector model which was a modified version of the IBRD (World Bank) model. He then tested various assumptions about future AAC's, chip prices and general economic conditions to a r r i ve at various scenarios about the future state of the forest industry. 6) B r i t i s h Columbia, Timber Rights and Forest Po l i c y in B r i t i s h Columbia, 2 Vols. Royal Commission on Forest Resources, Peter H. Pearse, Commissioner. (V i c to r i a : Queens P r in ter , 1976), v o l . 1, p. 2. (hereinafter Pearse Report) 7) Ib id. 8) See for example, Pearse Report; Richard Schwindt, "The Pearse Commission and the Industr ia l Organization of the B r i t i s h Columbia Forest Industry," B.C. Studies, 41 (Spring 1979): 3-35; and P a t r i c i a Marchak, Green Gold: The Forest Industry in B r i t i s h Columbia (Vancouver: UBC PressT~19BlX 9) Roderick Haig-Brown, The L i v i ng Land (New York: Wm. Morrow and Co., 1961). 10) J.C. Lawrence, "Markets and Cap i t a l ; a History of the Lumber Industry in B r i t i s h Columbia" (M. A. thes is , Univers i ty of B r i t i s h Columbia, 1957), p. 8. 11) Ib id. I l l 12) B r i t i s h Columbia, Crown Charges for Ear ly Timber Rights; Royal t ie s and  Other Levies for Harvesting Rights on Timber Leases, Licences, and  Berths in B r i t i s h ColumbfaTFinal Report of the Task Force on Crown Timber "Disposal (V i c to r i a : Queen's P r in ter , 1974), p. 53. 13) B.C. Revised Statutes 1859. 22 V i c t o r i a , No. 14. 14) The fo l l ow ing year Vancouver Island united with B r i t i s h Columbia to form the United Colony of B r i t i s h Columbia. The Land Ordinance was extended to the Mainland in 1870. 15) This po in t i s made i n E.C. Young, "The E v o l u t i o n of a B.C. Fores t Landscape, As Observed in the Soo Pub l ic Sustained Y i e l d Unit" (M. A. Thesis, Simon Fraser Univers i ty , 1976), p. 13; and in B r i t i s h Columbia, The Forest Resources of B r i t i s h Columbia, 1956, 2 Vol s. Royal Commission on the Forest RFsources ot B r i t i sh Co Iumbia, Gordon M. Sloan, Commissioner. (V i c to r i a : Queen's P r in ter , 1957). (hereinafter SIoan Report 1956) 16) H.V. Ne l l e s , The P o l i t i c s of Development (Toronto: Macmi l l ano f Canada, 197477~P^~4in 17) Young, " E v o l u t i o n of a B.C. Fo res t Landscape," p. 13. 18) Exact ly when the government determined that more revenue could be obtained by retaining Crown ownership of the land and s e l l i n g only timber i s , of course, d i f f i c u l t to ascertain. However, A.C. F lumerfe l t wr i t ing on "Forest Resources" in Pac i f i c Province, vol.22 of Canada  and Its Provinces, edited by Adam Shortt and A.G. Doughty. 23 vo l s . (Toronto: Publ ishers ' Association of Canada, 1914) discusses forestry l e g i s l a t i o n of the 1880's. He commented on page 492: "The government soon began to r e a l i z e that standing timber had ceased to be valueless... I t was then establ ished that crown timber was no longer to be g iven away; i t was to be so ld. . . " 19) B r i t i s h Columbia, Crown Charges for Ear ly Timber Rights. 20) Canadian Annual Review of Pub l ic A f f a i r s (Toronto: The Canadian Review Co., 1903), pp. 218-219: 21) Ib id. 22) Martin Robin, The Rush For Spo i l s : The Company Province, 1871-1933 (Toronto: McCVeTl aW~aficr~Stewart ITcT, 19/Z), p. 9U. 23) F lumerfe l t , "Forest Resources." 24) Ib id. 25) V i c t o r i a Da i ly Times, 22 January, 1907. 112 26) Hon. Wi l l i am Roderick Ross, Forest Pol icy of B r i t i s h Columbia. Speech by the Hon. W. R. Ross, K. C , M i n i s t e r of LTnds, February 10th, 1913 (n.p., 1913). 27) Lawrence, "Markets and Cap i t a l , " p. 85-86. 28) R.E. Cai1, Land, Man, and the Law: the Disposal of Crown Lands in B.C., 1871-T^T^(Tah~couver: OTC~."Press, 1974). 29) M i n i s t e r i a l Union of the Lower Mainland of B r i t i s h Columbia, C r i s i s in  B r i t i s h Columbia (Vancouver: Saturday Sunset Press, 1916), p. 14. 30) Robin, Rush f o r Spoi I s , p. 92. 31) See for example, Robin, Rush for Spoi1s; and F lumerfe l t , "Forest Resources." 32) Ibid., and R.H. Marris, "Pretty Sleek and Fat: the Genesis of Forest PoTTcy In B r i t i s h Columbia, 1903-1914" (M. A. thes is , Univers i ty of B r i t i s h Columbia, 1979). 33) Stephen Gray, "Forest Po l i c y and Administration in B r i t i s h Columbia, 1912-1928" (M. A. thes is , Simon Fraser Univers i ty , 1982). 34) Samuel Hays, Conservation and the Gospel of Social E f f i c iency: The  Prog res s i ve Conservation Movement, 1890-f9~20 (Cambridge, Mass.: Harvard Univers i ty Press, 1959). 35) B r i t i s h Columbia, F inal Report of the Royal Commission of Inquiry on Timber and Forestry, 1909^10. Royal Commission on Timber and ForesTry, F.J. F u l t o n , Chairman. ( V i c t o r i a : R. Wolfenden, 1910), p. D77. (hereinafter, Fulton Report) 36) F lumer fe l t , "Forest Resources." 37) R.H. Marr is, "Pretty Sleek and Fat." 38) Ib id. 39) Fulton Report, p. D50. 40) Ib id . , p. D55. 41) Ib id . , p. D45. 42) I b id . , p. D63. 43) I b id . , p. D68. 44) I b id . , p. D77. 45) B r i t i s h Columbia, Forest Act, 1912 S. 5. 113 46) B r i t i s h Columbia, Forest and Range Resource Analysis Technical Report, p. 156. 47) Pearse Report, p. 28. 48) B r i t i s h Columbia, Department of Finance, Pub l ic Accounts (V i c to r i a : King's P r i n t e r , 1945). 49) B r i t i s h Columbia, Report of the Royal Commission. Royal Commission on the Forest Resources of B~X., Gordon M. Sloan, Commissioner. (V i c to r i a : King's P r in te r , 1945), p. Q32. (hereinafter, Sloan Report * 1945) 50) "Recording of a meeting between CD. Orchard, Chief Forester, B.C. Forest Service, and members of the Vancouver Press", Hotel Vancouver J u l y 15, 1948, p. 4, in CD. Orchard C o l l e c t i o n , Pub l ic Archives of B r i t i s h Columbia, Add Mss 840, Box 31, F i l e 1, V i c t o r i a , B r i t i s h Columbia. 51) Pearse Report, p.29 52) 'Recording..., ' p. 4. 53) Sloan Report 1945. 54) John D. Gilmour, A Discussion of the SIoan Report (n.p.: Truck Loggers ' A s s o c i a t i o n , n.d.), pT"3. 55) Sloan Report 1945, p. Q81. 56) I b id . , p. Q127. 57) Ib id. 58) The rental on o ld temporary tenures amounted to 50 cents per acre. 59) The rental on "Schedule B" lands amounted to 1 cent per acre. 60) Sloan Report 1945, p. Q147-148. 61) In 1948 the Forest Act was amended to provide for 'Farm Wood-lot Licences'. The purpose of th i s form of tenure was to enable farmers to e s tab l i sh small sustained y i e l d units on adjacent Crown forest land. The Min i s ter was empowered to grant these l icences to bona f ide farmers. The area of Crown land to be managed by the farmer was to be large enough to y i e l d 100 cunits of timber per year, to a maximum of 640 acres. The idea behind th i s tenure was to provide a means whereby farmers could supplement the i r income from a forest crop. Unfortunately, the l icences were a dismal f a i l u r e . The main reasons appear to be the fact that they were excess ively sma l l , appurtenant to a spec i f i c farm, and not t ransferrable. By 1972 only 42 l icences were in existance. The harvest for that year amounted to 332,809 cubic feet out of the to ta l p rov inc ia l harvest of 1,963,747,008 cubic feet. This 114 thesis concentrates only on s i gn i f i can t developments in p rov inc ia l forest po l i cy . As a re su l t , Farm Wood-lots and other minor tenures, l i k e Christmas tree permits and Taxation Tree Farms, w i l l not be discussed in any d e t a i l . 62) B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1947 (V i c to r i a : King's P r in ter , 1948T 63) E.T. Kenney F i l e . Pub l i c Archives of B r i t i s h Columbia, Add MSS 304 F i l e No.32, V i c t o r i a , B r i t i s h Columbia. 64) "Forestry B i l l 'Confiscatory ' say Engineers," Vancouver Sun, 11 March 1947, p. 8. 65) "Loggers Ask Year's Delay on Forest B i l l , " Vancouver Sun, 19 March 1947, p. 7. 66) Vancouver Sun, 28 March 1949, p. 4. 67) "Forests for the Few?," Vancouver Sun, 12 Ap r i l 1947, p. 4. 68) V i c t o r i a Da i ly Times, 29 March 1947, p. 11. 69) "CCF Doubtful of Forest Y i e l d Po l i cy , " V i c t o r i a Da i ly Times, 29 March 1947, p. 11. 70) "Forest Planning Optional to Firms," Vancouver Sun, 28 March 1947, p. 26. 71) See CD. Orchard C o l l e c t i o n , Pub l i c Archives of B r i t i s h Columbia, V i c t o r i a , B r i t i s h Columbia, s p e c i f i c a l l y , Add MSS 840, v o l . 6, F i l e 115, correspondence with H.R. MacMil lan. 72) Ibid., MacMi l lan to Orchard, 13 September 1947. 73) 'Recording..., ' p. 1. 74) I b id . , p. 6-7. 75) Ib id . , p. 7. 76) J.D. Gilmour, " R e a l i s t i c Forest Management for B r i t i s h Columbia" (n.p.: Truck Loggers' Associat ion, January 13, 1949). 77) Ib id. 78) B r i t i s h Columbia, Department of Lands and Forests, Report of the Forest Service, 1952 (V i c to r i a : Queen's P r in ter , 1953). 79) CD. Orchard, "Forest Administration P o l i c i e s in B r i t i s h Columbia", address to the Truck Loggers' Convention, Vancouver, January 16, 1952, p. 1, in CD. Orchard C o l l e c t i o n , Pub l i c Archives of B r i t i s h Columbia, Add MSS 840, Box 31, F i l e 2, V i c t o r i a , B r i t i s h Columbia. 115 80) Ib id . , p. 1-2. 81) I b id . , p. 6. 82) Ib id. 83) Ib id. 84) Ib id. 85) Ib id. 86) B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1952 (V i c to r i a : Queen's P r in ter , 1953), p.~~77. 87) Ib id. 88) Martin Robin, P i l l a r s of P r o f i t : The Company Province, 1934-1972 (Toronto: McCle l land and Stewart Ltd., 1973), pp. 166-I6T 89) Ib id . , pp. 143-144. 90) Robin, P i l l a r s of P r o f i t , p. 166. 91) David M i t che l 1 , WAC Bennett and the Rise of B r i t i s h Columbia (Vancouver: Douglas and Mclntyre, 1983), p. 215. 92) As c i ted by M i t c h e l l , WAC Bennett. 93) B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1954 (V i c to r i a : Queen's P r in ter , 1955). 94) B r i t i s h Columbia, Department of Lands and Forests, Report of the Forest Service, 1952 and 1954 (V i c to r i a : Queen's P r in ter , T9~53 and 1955). 95) As c i ted i n , Sloan Report 1956. 96) B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1959 (V i c t o r i a : Queen's P r in ter , 1960). 97) Vancouver Sun, 8 September 1954. 98) Ib id. 99) Ib id. 100) Vancouver Sun, 9 September 1954. 101) Ib id. 102) Ib id. 116 103) B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1954 (V i c to r i a : Queen's P r in ter , 1955). 104) The determination of the percentage of the to ta l cut that i s derived from FML's i s often d i f f i c u l t . The Forest Service s t a t i s t i c s are usua l l y disaggregated to the extent that the cut from crown granted land within FML's are not included in FML cut s t a t i s t i c s . Thus, FML s t a t i s t i c s often only include Schedule 'B' lands (crown land). In th i s case, however, Table 12 in the 1959 Annual Report of the Forest Service reviews the scale of a l l managed lands from 1950-1959. By converting the TFL s t a t i s t i c s noted in that tab le to 'fbm' from cubic feet and d iv id ing the r e su l t into the to ta l scale as indicated in the 1955 Annual Report, the f igure 14.6% i s derived. 105) Vancouver Sun, 15 February 1955. 106) As c i ted in M i t c h e l l , WAC Bennett, p. 231. 107) Ib id. 108) Ib id . , p. 239. 109) I b id . , p. 242. 110) See for example, Robin, P i l l a r s of P r o f i t ; and M i t c h e l l , WAC Bennett. 111) George Nagel, "Economics and the Pub l i c Po l i cy in the Forestry Sector of B.C." (Ph.D. d i s s e r t a t i o n , Ya l e U n i v e r s i t y , 1970), p. 52. 112) M i t c h e l l , WAC Bennett, p. 251. 113) Sloan Report 1956 114) Ib id. 115) Ib id . , p. 14. 116) Ib id . , p. 62. 117) Ib id. 118) Gilmour, " R e a l i s t i c Forest Management." 119) I b id . , p. 7. 120) SIoan Report 1956, p. 64. 121) Ib id . , pp. 65-67. 122) Ib id . , p. 67. 117 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 Ib id . , p. 89. Ib id . , p. 90. I b id . , p. 96. Ib id . , p. 94. I b id . , p. 134. Ib id . , p. 135. B r i t i s h Columbia, Department of Lands and Forests, Report of the  Forest Service, 1956 (V i c to r i a : Queen's P r in ter , 1957). See discussion of Timber Sales in SIoan Report 1956, pp. 153-193. I b id . , p. 157. Ib id . , p. 162. Ib id . , p. 189. "The Report of the Commissioner in the Matter of a Tree-Farm Licence and in the Matter of Empire M i l l s Ltd.", Judge C.W. Morrow, Commissioner. Pub l i c Archives of B r i t i s h Columbia, GR 1255, p. 1, V i c t o r i a , B r i t i s h Columbia. Ib id. B r i t i s h Columbia, Department of Lands, Forests and water Resources, Report of the Forest Service, 1972 (V i c to r i a : Queen's P r in ter , 1973). Ib id . , p. V91. Ib id. Pearse Report, V o l . 2, p. B7. Ib id. Nagle, "Economics and the Pub l i c Po l i c y , " p. 59. Marchak, Green Gold, p. 49. P. Pearse, A. Backman, and E. Young; Fores t Tenures i n B.C., Pol i c y Background Paper Prepared by the Task Force on Crown~Timber Disposal, (V i c to r i a : Queen's P r in ter , December, 1974), pp. 65, 66. 144) Ib id. 118 145) R.G. McKee, "Forestry in B.C." an address to 72nd Hoo-Hoo Convention, mimeo, September, p.9 as c i ted in Nagle, "Economics and the Pub l i c Pol i c y , " p. 60. 146) M. R. MacLeod, "The Degree of Economic Concentration in the B r i t i s h Columbia Forest Industry" (B.S.F. thes i s , Univers i ty of B r i t i s h Col umbia, 1971), p. 89. 147) Nagle, "Economics and the Pub l ic Po l i cy , " p. 62. 148) Ray W i l l i s t o n , "Address to the Northern Inter ior Lumberman's Association Convention," Prince George, B.C. 24 May 1962, p. 2. 149) Ib id . , p. 6. 150) Nagle, "Economics and the Pub l ic Po l i cy , " p. 66. 151) Ray W i l l i s t o n , "Progress Toward Maximum Y i e l d in B.C.'s Forests," Address to 56th Western Forestry Conference, 1965, p.7, as c i ted in Nagle, "Economics and the Pub l i c Po l i cy , " p. 69. 152) Nagle, "Economics and the Pub l ic Po l i cy , " p. 69. 153) Pearse et . a l . , Fores t Tenures i n B.C., p. 120. 154) B r i t i s h Columbia, Department of Lands, Forests and Water Resources, Report of the Forest Service, 1965 (V i c to r i a : Queen's P r in ter , 1966). 155) Pearse et . a l . , Fo res t Tenures i n B.C., p. 62. 156) Ib id. 157) B r i t i s h Columbia, Department of Lands, Forests and Water Resources, Report of the Forest Service, 1967 (V i c to r i a : Queen's P r in ter , 1968), p. 33. 158) Marchak, Green Go!d, p. 51. 159) B r i t i s h Columbia, Department of Lands, Forests and Water Resources, Report of the Forest Service, 1968 (V i c to r i a : Queen's P r in ter , 1969), p. IZ. 160) Pearse Report, Table B-9 on page B7. 161) Schwindt, "The Pearse Commission," p. 14. 162) Ib id. 163) Ib id . , p. 15. 164) See Gunnar Myrdal, Beyond the Welfare State (London: Duckworth 1960); and Karl Po lany i , The Great Transformation (New York: Rinehart and Company, 1944). 119 165) Peter Aucoin, "Theory and Research in the Study of Pol icy-Making," in The Structures of Pol icy-Making in Canada, eds. G. Bruce Doern and Peter Aucoin (Toronto: The MacmiTTan Company of Canada, 1971), p. 15. 166) Steven Globerman and Richard Schwindt, "Business-Government Relations: A Synthesis of Hypothesis with Special Appl icat ions to B. C.'s Forest Products Industry," Discussion Paper, Simon Fraser Univers i ty, Burnaby, B r i t i s h Columbia. 167) Ibid., and for a recent review of the B.C. government's f a i l u r e to capture economic rent see Paul Drysdale, "Monitering B r i t i s h Columbia's Timber Pr ic ing Performance: An Examination of Interregional Stumpage Comparisons" (Master's thes is , Simon Fraser Univers i ty , 1984). 168) Peter Pearse, "Con f l i c t i ng Objectives in Forest Po l i c y : the Case of B r i t i s h Columbia," The Forestry Chronicle 46 (August 1970): 281-287. 169) Ib id . , p. 284. 170) Ib id. 171) Ib id. 172) See Charles Lindblom, "The Science of 'Muddling Through'," in Readings on Modern Organizations, ed. A. Etz ioni (Englewood C l i f f s : P r e n t i c e - F a l l , 1969), pp. 154-65; and Charles Lindblom, The Pol i c y - Making Process (Englewood C l i f f s : Prentice H a l l , 1968), p. 4"! 173) Lindblom, "The Science of 'Muddling Through'." 174) Lindblom, The Pol icy-Making Process. 175) Theodore Lowi, "The Publ ic Philosophy: Interest-Group L ibera l i sm," in The Bias of P l u ra l i sm, ed. W i l l i am E. Connolly (New York: Atherton Fres"s7~19T9), p. 9b. 176) Christopher Ham and Michael H i ! 1, The Pol icy Process in the Modern  Capital i s t State (Great B r i t a i n : WTieatsheaf Books, I9~54y7~p. 28. 177) Tom Gunton, "The Role of the Professional Planner," Canadian Pub!ic  Administration 27 ( Fa l l 1984): 405. 178) Nagle, "Economics and the Pub l ic Po l i c y , " p. 66. 179) Pearse Report, p. B7. 180) Pearse Report, Tables B-13 and B-18 on pages B l l and B14. 181) M i l ton Friedman and Rose Friedman, Free to Choose (New York: Harcourt Brace Jovanovich, 1980), p. x. 120 182) Ib id . , p. 292. 183) Mancur Olson, The Rise and Decline of Nations (London: Yale Univers i ty Press , 1982), "p7~3r 184) Anthony Downs, Inside Bureaucracy (Boston: L i t t l e Brown, 1967). 185) Walter Niskanen, Bureaucracy and Representit ive Government (Chicago: Ald ine Publ ish ing Co., 1971). 186) A lber t Breton, The Economic Theory of Representation (Chicago: Aldine Publ i s h i n g Co.7T9/4), p. 16~2~: 187) Christopher Leman, "The Canadian Forest Ranger: Bureaucratic Centralism and Pr ivate Power in Three P rov inc ia l Natural Resource Agencies," paper prepared for the 1981 Annual Meeting of the Canadian P o l i t i c a l Science Associat ion, Ha l i f ax , Nova Scot ia, 1980. 188) Ib id . , p. 5. 189) Ib id . , p. 15-16. 190) Geoff Hodgson, The Democratic Economy (Middlesex: Penguin Books, 1984), p. 41. 191) Ralph Mi l iband ' s book, The State in C a p i t a l i s t Society (New York: Basic Books, 1969), i n i t i a t e d the r e l a t i v e l y recent debate over the ro le of the state. Nicos Poulantzas reviewed that book in an a r t i c l e e n t i t l e d , "The Problem of the C a p i t a l i s t State," New Left Review, no.58 (1969). Mi l iband responded in "The C a p i t a l i s t State- Reply to Nicos Poulantzas", New Left Review, no.59 (1970). Poulantzas continued the debate in a book e n t i t l e d , PoTTtical Power and Social Classes (London: New Left Books, 1973). The numerous a r t i c l e s on the r o l e of the state which have come about since 1973 i nva r i ab l y refer to e i ther Mi l iband or Poulantzas, or both. 192) M i l iband, The State in C a p i t a l i s t Society, p. 22. 193) As c i t ed in Ham and H i l l , The Pol icy Process, pp. 32-33. 194) Wal 1 ace CIement, The Canadian Corporate E l i t e (Toronto: McCle l land and Stewart, 1975). 195) See, for example, Schwindt, "The Pearse Commission"; Globerman and Schwindt, "Business-Government Relat ions"; Drysdale, " B r i t i s h Columbia's Timber Pr i c ing Performance"; and Marchak, Green Go!d. 196) Hodgson, The Democratic Economy, p. 196. 197) As c i ted in Marchak, Green Gold, p. 37. 198) Ib id. 121 199) Pearse Report, V o l . 2, pp. D12, D13, D14. 200) Fred Block, "The Ruling Class Does Not Rule: Notes on the Marxist Theory of the State," S o c i a l i s t Revolut ion, No. 33 (1977), p. 9. 201) See Robin, P i l l a r s of P r o f i t , p a r t i c u l a r l y Ch. 6. 202) Keith Reid and Don Weaver, "Aspects of the P o l i t i c a l Economy of the B.C. Forest Industry," in Essays in B r i t i s h Columbia P o l i t i c a l Economy, eds. Knox and Resnick (Vancouver: New Star Books, 1974), pp. 13-24. 203) " Interview with Gordon Gibson, 1961," in CD. Orchard Manuscript C o l l e c t i o n , Univers i ty of B r i t i s h Columbia, The L ibrary, Special Co l l ec t i on s D i v i s i on , Vancouver, B r i t i s h Columbia. 204) Gold, Lo, and Wright, "Recent Developments in Marxist Theories of the C a p i t a l i s t State," Monthly Review 27 (October 1975), p. 36. 205) See in pa r t i c u l a r , C. Offe, "The Theory of the C a p i t a l i s t State and the Problem of Po l i cy Formation," in Stress and Contradiction in  Modern Capital ism: Pub! i c Pol icy and the TheoryTF the State", eds. Lindberg, A l f o r d , Crouch, and Offe (Lexington, Mass.: Lexington Books, 1975). 206) Ian Gough, The P o l i t i c a l Economy of the Wei fare State (London: MacMi 11 an Press, 1979); J . O'Conner^ The F i s ca l C r i s i s of the State (New York: St. Ma r t i n ' s Press, 1973). 207) C. Offe and V. Ronge, "Thesis on the Theory of the State," New German  C r i t i q u e , no. 6 (1975), p. 140. 208) N. Poulantzas, P o l i t i c a l Power and Social CI asses (London: New Left Books, 1973), p. 28b. 209) Jurgen Habermas, Legitimation C r i s i s (Boston: Beacon Press, 1975), pp. 59-60. 210) Ham and H i l l , The Pol icy Process, p. 36. 211) David Haley, "A Regional Comparison of Stumpage Values in B r i t i s h Columbia and the U. S. P a c i f i c Northwest," Forestry Chronicle 56 (October 1980): 226-236. See a l so , Drysdale, " B r i t i s h Columbia's Timber Pr i c ing Performance"; and Ian M c A s k i l l , "Publ ic Charges and Pr ivate Values ': A Study of B r i t i s h Columbia Timber P r i c ing " (M. A. thes is, Simon Fraser Univers i ty , 1984). 212) Pearse Report, Vo l . 2 , pp. D12, D13, D14. 213) J.A. Corry, The Growth of Government A c t i v i t i e s Since Confederation, Report Commissioned by Tfie Rowel l -S i ro i s Commission, (Ottawa: King's P r i n t e r , 1939). 122 214) I b id . , p. 3. 215) Ib id. 216) See in pa r t i c u l a r , Harold Innis, The Fur Trade in Canada (New Haven: Yale Univers i ty Press, 1930); and W.A. Mackintosh"", The Economic  Background of Dominion-Provincial Relat ions, Appendix III of the Royal  Commission" "Report on Dominion-Provincial Relat ions, edited by J.fTT^ Dales, (Toronto: McCle l land and Stewart, 1964). 217) Harold A. Innis, Empire and Communications, revised by Mary Q. Innis (Toronto: Univers i ty of Toronto Press, 1972), p. 5. 218) See for example, the works of Aitken,The State and Economic Growth (New York: Social Science Research Counc i l , 1959); G. Bertram, "Economic Growth and Canadian Industry, 1870-1915: The Staple Model and the Take-off Hypothesis," Canadian Journal of Economics and  P o l i t i c a l Science XXIX (May 1963): 162-184; ancTTJ. Drache, "STaple-i za t i on : A Theory of Canadian C a p i t a l i s t Development," in Imperial ism,  Nationalism, and Canada, ed. Craig Heron (Toronto: New Hogtown Press, 1977); to name only a few such authors. 219) See for example, the works of Mel Watkins. In pa r t i cu l a r , "The Staple Theory Rev i s i ted, " Journal of Canadian Studies, 12 (Winter 1977): 83-95. 220) John Richards and Larry Prat t , P r a i r i e Capital ism: Power and Influence in the New West (Toronto: McCle l land and Stewart, 1979). 221) Ib id . , p. 327. 222) I b id . , pp. 328-329. 223) John Bradbury, "Instant Towns in B r i t i s h Columbia: 1964-1972" (Ph.D. d i s ser tat ion, Simon Fraser Univers i ty , 1977), p. 133. 224) Marchak, Green Gold, p. 2. 225) I b id . , p. 350. 226) Richards and Pratt , P r a i r i e Capital ism, p. 71. 123 BIBLIOGRAPHY GOVERNMENT DOCUMENTS A) B r i t i s h Columbia Royal Commissions Final Report of the Royal Commission of Inquiry on Timber and Forestry, 190^10. Royal Commission orTTimber ancTForestry, F. J . Fulton, Chairman. V i c t o r i a : R. Wolfenden, 1910. Report of the Royal Commission. Royal Commission on the Forest Resources of B r i t i s h Columbia, Gordon M. Sloan, Commissioner. 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