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The development of the Japanese market for Pacific Northwest lumber : a historical survey Shand, Eden Arthur 1968

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THE DEVELOPMENT OF THE JAPANESE MARKET FOR PACIFIC NORTHWEST LUMBER: A HISTORICAL SURVEY by EDEN ARTHUR SHAND B.Sc. (Hons.) For:, The University of Aberdeen, 1963 A Thesis submitted i n p a r t i a l f u l f i l m e n t of the requirements for the Degree of MASTER OF BUSINESS ADMINISTRATION i n the Faculty of Commerce and Business Administration We accept t h i s thesis as conforming to the required standard. THE UNIVERSITY OF BRITISH COLUMBIA AUGUST 1968 In p re sent ing t h i s t he s i s in p a r t i a l f u l f i l m e n t of the requirements f o r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree that the L i b r a r y s h a l l make i t f r e e l y , a v a i l a b l e fo r reference and Study. I f u r t h e r agree that permiss ion fo r ex tens i ve copying of t h i s t he s i s f o r s c h o l a r l y purposes may be granted by the Head of my Department or by hits r ep re sen ta t i v e s . It i s understood that copying or p u b l i c a t i o n of t h i s t he s i s f o r f i n a n c i a l gain s h a l l not be a l lowed without my w r i t t e n permis s ion. Faculty Dgp_____SXt of Commerce and Business Administration The U n i v e r s i t y of B r i t i s h Columbia Vancouver 8, Canada Date August 23, 1968  search the old i s to f i n d the new Confucius. A B S T R A C T This thesis describes the manner i n which the Japanese market f o r P a c i f i c Northwest lumber grew over the l a s t one hundred years. The d e s c r i p t i o n attempts to explain why B r i t i s h Columbia, which f o r many years was the under-dog i n the Japanese market, suddenly and irrevocably took the lead from Washington and Oregon i n 1961. The answer seemed to l i e i n B.C.'s marketing philosophy - the i n t e r n a t i o n a l marketing o r i e n t a t i o n - which geared her i n p r a c t i c a l terms for the export, markets of the world generally and f o r Japan p a r t i c u l a r l y . Manifestations of this marketing philosophy were f i r s t seen around 1934 when H.R. MacMillan, in s p i t e of an ample and v i r t u a l l y guaranteed U.K. market, recognised the importance of keeping one foot i n r e l a t i v e l y slack markets l i k e Japan. I t was a question of increasing B.C.'s market share. Yet i t took more than twenty-five years f o r the Province to bear the f r u i t s of t h i s o r i e n t a t i o n . There were good reasons f o r t h i s time l a g . P r i o r to 1961, except for a f i f t e e n year period a f t e r the Great Japanese earthquake of 1923, Japan was a modest purchaser of P a c i f i c Northwest lumber. The greater part of these lumber shipments were of large Douglas f i r squares which Washington and Oregon were i n a better p o s i t i o n to supply. In the l a t t e r part of the decade of the 1950's, however, when large-sized Douglas f i r was needed f o r the developing P a c i f i c Northwest plywood industry, and when the booming Japanese economy needed more timber, the Japanese had to look f o r an a l t e r n a t i v e species. Hemlock was t h e i r choice and both B r i t i s h Columbia i v and the American Northwest had ample supplies of these resources. But whereas B.C., being geared to the export market, could economically cut unusual Japanese s p e c i f i c a t i o n s , the American Northwest being geared to t h e i r domestic market could not. The Japanese bought U.S. logs instead of lumber for c u t t i n g to t h e i r requirements at home. Thus, by supplying Japan with t h e i r large demand f o r hemlock baby squares, B.C. surpassed Washington and Oregon. In recent r e t a l i a t i o n , the Americans have passed l e g i s l a t i o n r e s t r i c t i n g the export of logs from t h e i r t e r r i t o r y with the hope that the Japanese would buy more lumber from them. But t h i s writer predicts that unless the lumbermen of the American Northwest adopt the i n t e r -national marketing o r i e n t a t i o n expounded upon i n t h i s thesis and gear themselves f o r the export market, then no amount of log export l e g i s l a -t i o n can guarantee them t h e i r former ascendancy i n the Japanese lumber market. T A B L E O F C O N T E N T S CHAPTER PAGE INTRODUCTION 1 I. MARKET FOUNDATIONS: PRE 1868 6 The. Opening of Japan 8 The B i r t h of the PNW Lumber Industry 16 I I . EARLY MARKET DEVELOPMENT - THE MEIJI ERA: 1868 - 1912 23 S o c i a l and P o l i t i c a l Change i n Japan 23 Development of the PNW lumber industry 26 Beginnings of the Japanese Trade 30 I I I . WORLD WAR I AND ITS AFTERMATH: 1912 - 1923 40 I n s t i t u t i o n a l changes i n B.C. Marketing 40 I n s t i t u t i o n a l changes i n American Northwest Marketing 48 Japanese usage of Timber 52 H i s t o r i c increase i n the Japanese Market 59 IV. THE BULGING YEARS: 1923 - 1940 62 Disaster and Reconstruction 63 The ogre of Russian Competition 72 T a r i f f D i f f i c u l t i e s 79 v i CHAPTER PAGE The Conception of the International Marketing Orientation 94 Internal Disorders i n Japan 99 V. THE PACIFIC WAR AND ITS AFTERMATH: 1941 - 1968 104 The Hiatus 104 Rebirth of the Japanese Lumber Trade 112 The Ascendancy o f B . C 116 The Log Export Controversy 126 Russia and Alaska to the Rescue 134 VI. CONCLUSION 143 BIBLIOGRAPHY 153 APPENDICES 169 FIGURES 178 L I S T O F T A B L E S TABLE PAGE I. M i l l s operating i n B.C. - 1867 22 I I . Sawmill Capacity i n B.C. - 1888 - 1896 29 I I I . Export of Sawn Lumber from B.C. - 1859 - 1870 . . . . 31 IV. Exports of Planks, Boards and J o i s t s through Customs Ports of B.C. - 1881 - 1890 32 V. Japanese Lumber Duties - 1932 91 VI... P a c i f i c Northwest Timber Exports to Japan 1959 - 1961 118 VII. Japanese imports of PNW Timber - 1959 - 1963 122 L I S T O F A P P E N D I C E S APPENDIX PAGE I. Waterborne movement of lumber to Japan from B.C., Washington and Oregon. 1895 - 1966 170 I I . Waterborne movement of lumber to a l l export destinations from B.C., Washington and Oregon - 1895 - 1966 174 L I S T O F F I G U R E S FIGURE PAGE I- Waterborne movement of lumber to Japan 178 A B B R E V I A T I O N S B.C. B r i t i s h Columbia B. C.L.M.A. B r i t i s h Columbia Lumber Manufacturers Association C . i . f . Cost, insurance and f r e i g h t f.b.m. Free board measure ( i . e . board foot) f.o.b. Free on board F. T. C. Federal Trade Commission N.A. Not a v a i l a b l e N.L.M.A. National Lumber Manufacturers Association P. L. I. B. P a c i f i c Lumber Inspection Bureau U. B. C. Unive r s i t y of B r i t i s h Columbia U.S.F.S. United States Forest Service W.W.P.A. Western Wood Products Association A C K N O W L E D G M E N T S To someone who i s a stranger to the P a c i f i c Northwest and one who has never set foot i n Japan, w r i t i n g the h i s t o r y of the lumber trade between these two areas would have been impossible without the help of many sympathetic people i n the three countries covered by th i s study. I would l i k e to express my sincere thanks to these gentlemen who gave so generously of t h e i r time and t h e i r knowledge. They are l i s t e d below a l p h a b e t i c a l l y : R.G. Annable A.T. Arakawa M. Baino J . Bass A.E. Bates W. Bray R. Christopher G.S. Crawford F. Dasch D. Haley J.C. Hampton K. Kuri t a J.C. Lawrence Oceanic Trading Co. Ltd., Vancouver, B.C. Trans-Pacific Trading Co. Ltd., Vancouver, B.C. Japanese Timber Importer, Tokyo, Japan. Forest Products Export Counsel, Seat t l e , Washington. MacMillan Bloedel, Ltd., Vancouver, B.C. B.C.L.M.A. , Vancouver, B.C. Robert Christopher, Ltd., Vancouver, B.C. B.C. Research Council, Vancouver, B.C. Weyerhauser Co., Tacoma, Washington. Faculty of Forestry, U.B. C. , Vancouver, B.C. Willamina Lumber Co., Portland, Oregon. Japanese Consulate, Vancouver, B.C. Dept. of History, U.B. C., Vancouver, B.C. x i i H.R. MacMillan J . Miyazawa G. Murray G. P. Nixon F.C.L. Reed A. Saheki J . S olecki J . Southworth D. Spearing K. Takahashi H. Tanoi B. O. Whiles MacMillan Bloedel, Ltd., Vancouver, B.C. Council of Forest Industries, Vancouver, B.C. Canada Dept. of Trade and Commerce, Vancouver, B.C. Canada - Japan Trade Council, Ottawa. Hedlin Menzies & Associates, Vancouver, B.C. Kanematsu-Gosho (U.S.A.) Inc., Portland, Oregon. Dept. of Slavonic Studies, U.B.C. , Vancouver, B.C. B.C. Energy Board, Vancouver, B.C. Birmingham and Wood, A r c h i t e c t s , Vancouver, B.C. Japanese Consulate, Vancouver, B.C. Mi t s u i Co. Ltd., S e a t t l e , Washington. Seaboard Lumber Sales Co. Ltd., Vancouver, B.C. For t h e i r painstaking stenographic services I would l i k e to thank Miss Midge Clarke, Miss Joyce Go, Mrs. Lucinda Buchanan, Mrs. Pat Jensen, Miss Marcia-Lynn Warren and Miss Bev Dickson. F i n a l l y , I would l i k e to express s p e c i a l thanks to my thesis advisor, Professor James B. Warren, who assisted i n many ways but c h i e f l y i n the i n s p i r a t i o n and encouragement that he gave my by h i s sincere i n t e r e s t i n every phase of t h i s study. I have only myself to thank f o r any discrepancies i n the f i n i s h e d work. I N T R O D U C T I O N More has probably been written about the f o r e s t industry of B r i t i s h Columbia (B.C.) than about any other aspect of this most West-e r l y and most heavily wooded Province of Canada. The p i v o t a l p o s i t i o n that the forest industry occupies i n the economy of B.C. i n v i t e s scholars of d i f f e r e n t i n c l i n a t i o n s to examine and write about the important features of the industry. Most of these writers have acknowledged that the Province has been well-endowed (by Nature) with f o r e s t s , that large amounts of c a p i t a l have gone in t o the development of the f o r e s t industry, that the development of the Province has followed i n the wake of the manufacture and sale of f o r e s t products, and that the future of the region i s s t i l l i n e x t r i c a b l y bound to the continued growth and pros-p e r i t y of the f o r e s t industry. The pieces of l i t e r a t u r e that have resulted from these studies have had, by and large, one feature i n common. They have tended to adopt a production-orientation toward the development of the B.C. fo r e s t industry. They n a t u r a l l y gave the impression that the growth of the B.C. f o r e s t industry was a quid pro quo f o r her a b i l i t y to supply more and more forest products to various markets. In t h i s respect the c a r t was placed before the horse f o r the writings did not seem to place any emphasis on the casual r e l a t i o n s h i p between the growth of world markets f i r s t l y and the growth of the forest industry secondly. L i t t l e emphasis seemed to be placed on the fa c t that without the development of the market the development of the industry would have 2 had no motive force. Consequently, very l i t t l e work that has viewed the development of"the industry from the stand-point of market develop-ment e x i s t s . The value of this thesis hopefully l i e s i n i t s attempt to f i l l t h i s gap. I t i s only a s t a r t f o r i t treats but one segment of the fo r e s t industry, namely, softwood lumber, and instead of dealing with the progress of lumber consumption i n a l l the consuming regions, i t focusses on the development of one market, namely, Japan. But while the scope of t h i s thesis has been narrowed at the consuming end so as not to s a c r i f i c e depth, i t has been broadened at the producing end to i n -clude the States of Washington and Oregon i n the American Northwest. These two states and the Province of B.C. ( c o l l e c t i v e l y c a l l e d the P a c i f i c Northwest) i n fa c t form one geographic e n t i t y although they have been divided by a r t i f i c i a l p o l i t i c a l boundaries. But these boundar-ies and the consequent differences i n p o l i t i c a l administration have led to important differences i n the development of the f o r e s t industry on eit h e r side of the U.S. - Canada border. The Japanese market has been selected f o r study because of i t s co n t r o v e r s i a l importance to P a c i f i c Northwest lumbermen. Japan has become the t h i r d most important export market f o r B r i t i s h Columbia lumber producers. T r a d i t i o n a l l y , she has not been as important to American Northwest producers because of the pre-occupation of the l a t t e r with the ample U.S. domestic market. Since 1961, however, the lumber-men of the American Northwest have been forced to become more aware of 3 the Japanese lumber market not so much because they needed i t to com-pensate for f l u c t u a t i o n s on the domestic scene but because the Japanese lumber industry threatened the lumber industry of the American Northwest. Their concern f o r the Japanese market centered on the f a c t that whereas B r i t i s h Columbia was shipping much lumber and few logs to Japan, Wash-ington and Oregon were shipping l i t t l e lumber and many logs to Japan, the very logs that they needed to feed t h e i r own sawmills. They believed that by emulating the B.C. p o l i c y of r e s t r i c t i o n on log exports, they could persuade the Japanese to buy more American lumber. The objective of t h i s thesis i s to show, by examination of the h i s t o r i c a l record, why t h i s p o l i c y i s i l l - a d v i s e d . I t i s hypothesised that the disposal of lumber requires a marketing-orientation which the B.C. producers have approached and which the U.S. producers lacked. This marketing-orientation r e f e r s e s s e n t i a l l y to investing the consumer with a ce n t r a l p o s i t i o n and manufacturing to h i s precise requirements. I t i s further hypothesised that the long-term health of the lumber industry of the P a c i f i c Northwest requires an international-marketing o r i e n t a t i o n . In i t s simplest terms t h i s o r i e n t a t i o n means that a producer must persuade himself to supply an i n s i g n i f i c a n t foreign market even at times of d i s -t r a c t i n g prosperity i n another market, be i t domestic or foreign. Such an o r i e n t a t i o n requires more than a short-run look at the most p r o f i t a b l e market. I t requires a kind of long-run peripheral v i s i o n through which the producer optimises the sum t o t a l of a l l h i s markets i n the long-run while focussing on h i s favourite market i n the short-run. In a p r a c t i c a l 4 sense, i t means taking the r i s k of making a present investment for an uncertain future. In a proverbial sense i t preaches: "Do not put a l l your eggs i n one basket." Only i n t h i s manner can a producing region gear i t s e l f f o r supplying a foreign market when times of unusually high demand a r r i v e . The h i s t o r y covers a time-span of one hundred years. I t begins i n 1868, the year that marked the beginning of the M e i j i Restoration period i n Japan when the country took the f i r s t step away from Feudalism towards the modern i n d u s t r i a l State. I t was the period during which the foundations f o r i n t e r n a t i o n a l commerce were l a i d . The period under study ends as t h i s n a r r a t i v e i s being written, so that the most current developments have been incorporated. The author makes no pretensions as to the completeness of this h i s t o r i c a l t r e a t i s e . Market development i s best studied i n s i t u i n the country under examination rather than i n the l i b r a r i e s of the producing region. Many of the dramatic events associated with the development of the Japanese market have received no record. Those events that have been recorded i n the private f i l e s of the companies involved i n the market have not been made accessible to the author. Moreover, the period of t h i s h i s t o r y stretches so f a r back into time that most of the protagonists and the witnesses are deceased and those that are a l i v e f i n d d i f f i c u l t y i n remembering d e t a i l s about the d i s t a n t past. Nevertheless, by means of a thorough search of what l i t e r a t u r e was a v a i l a b l e and exhaustive discussions with people intimately concerned with the subject, t h i s w r i t e r has attempted to put together a f a c t u a l 5 story about a f a s c i n a t i n g people with a t r a d i t i o n a l yen f o r wood. C H A P T E R I MARKET FOUNDATIONS: PRE - 1868 The reader who i s anxious to follow the flow of lumber from the PNW to Japan since the e a r l i e s t times w i l l not f i n d i n this chapter any r e l i e f for his anxiety. No lumber was shipped during the period covered by th i s chapter. But important things happened. Japan abandoned, or rather, was forced to abandon her i s o l a t i o n from the rest of the world; the P a c i f i c .Northwest discovered her forests and developed the i n i t i a l stages of her forest industry; the foundations for commerce between North America and Japan were l a i d . The purpose of th i s chapter i s to describe these v i t a l occurences that were a prerequisite for any development of the Japanese market for PNW lumber. If the story of the development of a market for a p a r t i c u l a r product begins with the conception of the demand for th i s product i n the minds of the people i n that market, then t h i s narrative should r i g h t l y commence not i n 1868 but many m i l l e n i a ago when the Japanese character was being formed. Wood i s the raw material of t h i s h i s t o r y , a his t o r y which i s of in t e r e s t i f only because of the uncanny devotion of the Japanese to Nature's most v e r s a t i l e raw material. Volumes have been written about the Japanese character, about t h e i r u n r i v a l l e d rapport with Nature and about t h e i r painstakingly craftsmanlike u t i l i z a t i o n of wood. But, perhaps the most poetic t r i b u t e paid to the Japanese people's exceptional treatment of wood was that of the distinguished a r c h i t e c t 7 Frank Lloyd Wright: "Wood i s u n i v e r s a l l y b e a u t i f u l to man. I t i s the most humanly intimate of a l l materials. Man loves h i s assoc i a t i o n with i t ; l i k e s to f e e l i t under h i s hand, sympathetic to h i s touch and to h i s eye. And yet, passing by the p r i m i t i v e uses of wood, getting to higher c i v i l i z a t i o n , the Japanese understood i t best. The Japanese have never outraged wood i n t h e i r a r t or i n t h e i r c r a f t . Japan's p r i m i t i v e r e l i g i o n , "Shinto", with i t s "be clean" i d e a l , found i n wood i d e a l material and gave i t i d e a l use i n that masterpiece of arc h i t e c t u r e , the Japanese dwelling, as well as i n a l l that pertained to l i v i n g i n i t . In Japanese archi t e c t u r e may be seen what a s e n s i t i v e material l e t alone f o r i t s own sake can do for human s e n s i b i l i t i e s , as beauty, for the human s p i r i t . . . . No Western people ever used wood with such understanding as the Japanese used i t i n t h e i r construction, where wood always came up and came out as nobly b e a u t i f u l . " These words are testimony to the f a c t that the Japanese were inculcated with a unique appreciation of wood so that i t offered high q u a l i t y North American material they may be expected to purchase i t - an in t e r n a t i o n a l trade transaction within the context of th i s study. But i n t e r n a t i o n a l trade requires as a quid pro quo the establishment of trading l i n k s between the supplying country and the demanding country. I t would seem, therefore, that some account of how trade between Japan and the P a c i f i c Northwest was i n i t i a t e d i s necessary. Frank Lloyd Wright, On Architecture - Selected Writings, 1894-1940, Edited by Frederick Gutheim. (New York; D u e l l , Sloan and Pearce, 1941), p. 117. 8 The Opening of Japan Up to the middle of the 16th Century the Japanese were an i s o l a t e d community and i t was only by sheer accident that they became exposed to Western commercial forces. This happened about the middle of the 16th Century when the European Nation States were busying them-selves with expansion. Of the European powers the Portuguese were the f i r s t to e s t a b l i s h contact with the Japanese. Portugal was best equipped for expansion by v i r t u e of her superior merchant f l e e t . I t was i n 1542 on one of t h e i r g l o b e - c i r c l i n g voyages of adventure i n evangelism, trade 2 and conquest that the Portuguese f i r s t discovered Japan. Having been blown o f f t h e i r course while s a i l i n g from t h e i r colony at Macao to Siam, the Portuguese were washed up on the shores of Japan and the Japanese 3 seemed eager to trade with them. At t h i s time i t appeared that the Japanese had no d e f i n i t e p o l i c y with regard to foreign trade which was l e f t e n t i r e l y alone because of i n s i g n i f i c a n t t r a f f i c of foreign ships A to Japan. C a p i t a l i z i n g on this lack of interference from the Japanese government, the Portuguese engaged in a highly p r o f i t a b l e trade which they conducted between the Japanese ports and Macao. Ca r l Crow, He opened the door to Japan, (New York and London; Harper and Bros., 1939), p. 92. 3 I b i d . , ^A.F. Thomas and S o j i Koyama, Commercial History of Japan, (Tokyo, The Yuhodo Ltd., 1936) p. 125. -9 C h r i s t i a n i t y f l o u r i s h e d i n t h i s environment f o r in the minds of the Japanese as well as the Portuguese, C h r i s t i a n i t y and foreign trade went hand i n hand, one supporting the other. Where the p r i e s t s were allowed to s e t t l e , shippers and traders followed.-* Following upon the heels of the Portuguese, the Spaniards arrived in Japan i n 1548 with a view to trade and the Dutch, English and others followed afterwards.^ The Japanese did not accept the Europeans e a s i l y . They heard tales of Spanish a c t i v i t i e s i n the P h i l i p i n e s , of Portuguese misbehaviour on the China coast, of questionable B r i t i s h and French actions i n India, and of Dutch exploits i n the East Indies. Moreover, the C h r i s t i a n com-munities i n Japan as they increased i n number, tended to withdraw them-selves more and more from the e f f e c t i v e control of the c e n t r a l government. D i s t r u s t of almost a l l foreigners developed i n the minds of the r u l e r s of Japan.^ With the uncomfortably rapid increase i n the number of ships c a l l i n g at her ports, the Japanese r u l e r s decided that the foreign p r i e s t s had to be driven away from the country. Accordingly, they were ordered out by a series of edicts f i r s t promulgated i n 1578 and culminating 60 years l a t e r i n a huge massacre of C h r i s t i a n s who ignored the Crow, op. c i t . , p. 93. ^Thomas and Koyama, l o c . c i t . ^Harold M. Vinacke, A History of the Far East i n Modern Times, (New York; Appleton - Century - Crofts Inc., 1959), p. 85-86. 10 g expulsion order. These disturbances led to the adoption of a d r a s t i c seclusion p o l i c y by the Japanese government. No Japanese ship nor any native of Japan was allowed to go out of the country. In 1639, a l l 9 Portuguese and Spanish were banished from Japan. The Dutch, p a r t l y because for some time they were .not suspected of being aggressive i n propagating t h e i r f a i t h , and p a r t l y because t h e i r character was believed to be non-warlike, were permitted a limited commercial i n t e r c o u r s e . ^ They, together with the Chinese, were allowed to engage i n trade but they were confined to Nagasaki. The Dutch gained a strong foothold i n Japan and for more than two hundred years p r o f i t e d from a v i r t u a l trade monopoly. It i s of i n t e r e s t to note that during the two centuries of Dutch monopoly the only other ships which were peacefully received i n Japan were.of American ownership. This happened as a r e s u l t of the war which erupted between Holland and England toward the close of the 18th century. The blocade of the Eng l i s h f l e e t was so complete that the Dutch were unable to dispatch t h e i r own ships to Nagasaki and for four years the trade was c a r r i e d on by American ships chartered by the Dutch. The f i r s t of these voyages was made i n 1798 by the " E l i z a " of New York and were followed by other New England vessels. The v i s i t s of Crow, op. c i t . , p. 95. i — Thomas and Koyama, op. c i t . , p. 128. .0 . , Vinacke, op. c i t . , p. 86. 11 these ships exposed the Americans to the Japanese and i t i s probable that t h i s was one of the reasons that the opening of Japan to trade 12 became one of the early aims of the American Department of State. The Americans made several attempts to open diplomatic negotia-tions with the Japanese but with l i t t l e success. The growth of the American whaling industry focused attention on the d e s i r a b i l i t y of opening a few ports i n Japan as places where the whaling ships could spend the 13 winter or could anchor for repairs and secure water and provisions. Quite a vew whaling vessels had been shipwrecked on the coast of Japan and reports of greviances suffered by the American s a i l o r s reached the States. Apparently, they were a l l imprisoned and c r u e l l y treated before being handed over to the Dutch at Nagasaki.^ This was enough incentive for the Ameri-cans to adopt a tougher p o l i c y towards Japan. P r a t t l e yielded to pra c t i c e when the United States v e s s e l , "Preble" was dispatched to Nagasaki i n 1849 for the rescue of f i f t e e n of the surviving crew of the New Bedford ship, "Lagodor", who were detained for nearly a year i n Japanese prisons. The purpose of the v i s i t was not merely to demand ample indemnity and reparation of the shipwrecked seamen but also to demand the opening of c e r t a i n ports of the Japanese Empire and i t s c o l o n i a l dependencies to American commerce, the r i g h t of 12„ Crow, op. c i t . , p. 96. 13 ' ' ' Ib i d . , p. 97. 14 I b i d . , p. 98. ^^Aaron Haight Palmer, Documents and Facts i l l u s t r a t i n g the o r i g i n of  the Mission to Japan, (Washington: Henry Polkinhorn, P r i n t e r , 1857), p. 11. 12 e s t a b l i s h i n g United States Consuls or commercial agents therein and of a c c r e d i t i n g an American Minis t e r or Commissioner to the court of Yedo, the ancient name for the modern c i t y of T o k y o . I t was abundantly c l e a r that early American i n t e r e s t i n Japan was founded not simply on short-term reparations but rather on long-term commercial gain. This i n t e r e s t was heightened with America's a c q u i s i t i o n of the t e r r i t o r y of C a l i f o r n i a , the discovery of gold there and the innovation of steam navigation. America now had a r e l a t i v e l y developed gateway to the P a c i f i c as well as a f l e e t of steamers and t h i s provided added j u s t i f i c a t i o n f o r the opening of ports in the Far East where coal could be procured to replenish the bunkers for the long voyages across the P a c i f i c Ocean. For t h i s reason, America's i n t e r e s t i n the opening of Japan was paramount.^ The tenor of America's motivation toward establish-ing r e l a t i o n s with the Japanese was a p t l y conveyed by an anonymous wr i t e r i n a contemporary American monthly magazine: L "The s t r i c t i s o l a t i o n of the Japanese amidst the busy intermingling of a l l the nations of the world i n an age of extraordinary commercial a c t i v i t y marked them out as a p e c u l i a r race. There was i n this exceptional p o s i t i o n 1 6 I b i d , p. 12. l^Crow, op. c i t . , p. 98. 18 "Commodore Perry's Expedition to Japan." Reprinted from Harpers New Monthly Magazine, Vol. XII, No. LXX,.March 1856, p. 751. 13 of Japan something i r r e s i s t i b l y provocative of American enterprise, the indomitable energies of which had h i t h e r t o mastered every opposition whether of man or of Nature. The change i n the geographical p o s i t i o n of the United States i n r e l a t i o n to the East by the a c q u i s i t i o n of the golden t e r r i t o r y of C a l i f o r n i a , e s t a b l i s h i n g our domain, as i t were, the middle kingdom between Europe and A s i a while i t brought the Americas c l o s e r to Japan, served a l s o to reveal more c l e a r l y the remoteness of that strange country from a l l national communion. Prompted by natural c u r i o s i t y to know a nation which boastingly defied the i n t e l l i g e n c e of the c i v i l i s e d world, and seemed to think l i k e a c h i l d that by shutting i t s own eyes, i t put out the l i g h t of the universe and wrapped i t s e l f forever i n darkness. Stimulated with the desire to e s t a b l i s h commercial r e l a t i o n s with a people known to be industrious and wealthy, and eager to expand a p r o f i t a b l e intercourse with A s i a toward which the newly acquired shores of C a l i f o r n i a d i r e c t l y pointed, and the perfected development of steam commun-i c a t i o n brought the United States so near that i t was not sur-p r i s i n g that American enterprise should be impatient to d i s -perse the obscurity which shut out Japan from the view of the world and darkened the d i r e c t passage to the East." America was indeed interested i n trade with Japan and i n this respect she did not d i f f e r from other nations. Her bigger i n t e r e s t , however, lay i n that " d i r e c t passage to the East", her preoccupation was with navigation. To r u l e the waves she was prepared to waive the rules of peaceful i n t e r n a t i o n a l conduct and accordingly dispatched a distinguished naval o f f i c e r , Commodore Matthew Ca l b r a i t h Perry, together with a well-armed squadron, on November 24, 1852 f o r the Bay of Yedo 19 where he a r r i v e d on J u l y 8, 1953. Crow, op. c i t . , p. 99. 14 Perry's a r r i v a l was an awesome sight f o r the Japanese. It was the f i r s t steam squadron that they had ever seen. A f t e r presenting his demands, Perry s a i l e d away to return early the following year for the reply of the Japanese. The return of Perry with h i s "black ships" which moved against the wind and which were m i l i t a r i l y superior to any-thing Japan possessed, created a c r i s i s that the government could not e a s i l y solve. Faced with the i m p o s s i b i l i t y of defeating Perry, the Jap-anese government had no choice but to give i n to American demands upon 20 h i s return i n 1854. A treaty was concluded which provided f or the opening to American ships of the ports of Shimoda and Hakodate where supplies could be purchased and coal stored. The treaty also provided for the residence of a consul at Shimoda where he was to enjoy a status d i f f e r e n t i n degree but not i n kind from that of the Dutch in Nagasaki. The p r a c t i c a l value of the treaty was small but the exclusive p o l i c y of 21 Japan was broken down and the way prepared for commercial t r e a t i e s . Commodore Perry's treaty was one of amity. I t was a form of surrender on the part of Japan of i t s national exclusiveness. The treaty did not, as some eager American traders had claimed, guarantee the p r i v i l e g e of commerce with the Japanese, though i t might have been The World and i t s Peoples, Japan, Part I I , (New York: Greystone Press, 1964), p. 222. 21 Crow, op. c i t . , p. 100. reasonably i n f e r r e d that the instrument might lead, under a judicious p o l i c y , to future negotiations by which such a p r i v i l e g e might be 22 secured. The sequel to Perry's adventure came when Townsend Harris was dispatched from the U.S. to Japan to negotiate a commercial treaty. Almost immediately upon a r r i v a l Harris was fru s t r a t e d with d i f f i c u l t i e s . He was most unwelcome and was made to f e e l so. The one idea i n the minds of the Japanese was to get him to return to America. They reminded him that a consul was to be appointed only i f both nations desired i t . That a c t u a l l y was the way the Japanese text of Perry's treaty read, either 23 because of a mistake i n the t r a n s l a t i o n or because of a w i l f u l change. Opposition to intercourse with foreigners was growing s t e a d i l y i n Japan and there was a strong f a c t i o n which hoped i n some way that the provisions 24 of the treaty might be circumvented. Harris was the sort of man who persevered under the most severe odds. He i n s i s t e n t l y urged that the Japanese l e g i s l a t i v e body, the Bakufu, sign a treaty, even without Imperial approval, i n order to pro-vide a peaceful precedent f o r es t a b l i s h i n g commercial r e l a t i o n s between Japan and the Western World. He argued that other powers might not be as forebearing as the United States, and he was able to i l l u s t r a t e this point by reporting on the m i l i t a r y intervention of the Anglo-French 22 "Commodore Perry's Expedition, e t c . " op. c i t . , p. 751. 23 Crow, op. c i t . , p. 109. 2 4 I b i d . , p. 118. forces i n China. This argument f i n a l l y proved to be persuasive. Harris had the s a t i s f a c t i o n of seeing h i s immense labours crowned with success when on J u l y 29, 1858, the treaty was formally signed aboard the "Powhatan" 25 i n the Bay of Yedo. In s p i t e of the plans Harris had drawn for a treaty which would be made without a hint of coercion, i t was signed 26 a f t e r a l l on an American gunboat. The treaty provided f o r freedom of trade, f o r the opening of new ports i n c l u d i n g those that were to become Yokaharaa and Kobe, and for recognition of the r i g h t of Americans to reside i n such ports as well as Yedo. I t a l s o included an agreed-upon schedule of Japanese t a r i f f rates and e x t r a - t e r r i t o r i a l r i g h t s f o r 27 American c i t i z e n s . The gate of the i s l a n d Empire which Perry had unbarred was thrown open to the commercial enterprise of the world by the s k i l l 28 of H a r r i s . By 1860, American as well as European merchants had the r i g h t to reside i n f i v e of Japan's major ports and engaged i n unrestricted trade. The B i r t h of the PNW Lumber Industry Whether or not lumber formed part of the American-Japanese trade before 1860 i s unknown, f o r t h i s w r i t e r has come across no references of 2 5 Dulles, Foster R. - Yankees and Samurai, (New York; Harper and Row, 1965), p. 101. 26 Crow, op. c i t . , p. 162. 27 Dulles, op. c i t . , p. 101. 28 John W. Foster, American diplomacy i n the Orient, (Cambridge: Riverside Press, 1903), p. 183. 17 th i s nature i n the h i s t o r i c a l record. I t i s known however that by 1860, the P a c i f i c Northwest, e s p e c i a l l y the American Northwest, did have the f a c i l i t i e s f o r producing and exporting lumber. The m i l l s i n the United States (U.S.) had been established before those i n B r i t i s h Columbia and around 1859 the m i l l s i n Puget Sound were a c t u a l l y export-ing lumber to B.C. where the demand was greater than the indigenous 30 capacity to supply. The e a r l i e s t reference to the development of sawmilling i n the P a c i f i c Northwest that was encountered mentioned the construction of a water-powered sawmill at Point Vancouver on the Columbia River a f t e r the settlement of Fort Walla Walla i n 1818. This m i l l was constructed by Dr. John McLoughlin, sent to the Columbia River by that 31 great English pioneering firm, the Hudson's Bay Company. Great B r i t a i n , whose f l a g was borne by the Hudson's Bay Company made a f u t i l e attempt to e s t a b l i s h domain over the Columbia River, but i n 1846 Horace Greeley's trenchant pen s u c c e s s f u l l y p e t i t i o n e d the U.S. Congress to pass the Oregon Law which, some claim, saved the T e r r i t o r y of Oregon from encroachment 32 by the Hudson's Bay Company. Other h i s t o r i a n s f e l t that migration westward between 1843 and 1846 was the prime fa c t o r i n American a c q u i s i t i o n and the ousting of 30 "Information regarding the B r i t i s h Columbia lumber industry", B.C. Lumberman, Vol. 21, No. 6, June 1937, p. 30. 31 Robert W. Vinnedge, The P a c i f i c Northwest Lumber Industry and  i t s Development, (New Haven: Yale Univ. Press, 1923), p. 7. 3 2 I b i d . , p. 6. 18 the B r i t i s h by 1846. The Oregon "trek" brought the necessity f o r s h e l t e r s , stores, docks and ships. The sawmilling industry on the Columbia River 33 grew r a p i d l y and by 1849 there were t h i r t y sawmills in Oregon. Sawmil-l i n g development i n what i s now B.C. began with the settlement of the Oregon boundary dispute i n 1846 and the transfer of the Hudson's Bay Company's western headquarters to V i c t o r i a on Vancouver Island. The 35 Company b u i l t a sawmill at Parsons Bridge near V i c t o r i a i n 1848. I t s establishment came i n good time f o r one year l a t e r i t was c a l l e d upon to supply lumber to the large i n f l u x of people who entered C a l i f o r n i a i n the h i s t o r i c quest for gold. The C a l i f o r n i a gold rush provided the i n i t i a l impetus to the development of the lumbering industry i n B.C. San Francisco developed i n t o the supply centre f o r the rush and became the most important point of exportation for the colony's e a r l y timber 36 exports. The demand i n C a l i f o r n i a had proven so great that the lumber could be sold p r o f i t a b l y , despite a t a r i f f b a r r i e r of 20 per cent and an 37 already well-established American industry. By 1853, however, lumber producers of the P a c i f i c Northwest were obliged to look elsewhere to 33 Ibid., p. 8. 34 W.A. Carrothers, Forest Industries of B r i t i s h Columbia, i n The  North American Attack on "the Canadian Forests by A.R.M. "Lower, (Toronto: The Ryerson Press, 1938), p. 255. 35 W. Kaye Lamb, "Early Lumbering on Vancouver Island," B r i t i s h  Columbia H i s t o r i c a l Quarterly, Jan. 1938, p. 39. 36 Dennis E. K e r f o t t , Port of B r i t i s h Columbia, Development and  Trading Patterns, B.C. Geographical Series, No. 2 (Tantalus Research Ltd., Vancouver, 1966). 37 Lamb, op. c i t . . p. 48. 19 dispose of t h e i r product for this was the year when the gold rush reached i t s peak. ( I t was a l s o the year when two of the d i s t r i c t s of Oregon 38 T e r r i t o r y were combined to form Washington T e r r i t o r y . ) By 1855 both C a l i f o r n i a and the Puget Sound area were i n the depths of depression. The sawmills on the Sound were p a r t i c u l a r l y hard 39 h i t . A report dated October 1855 described the s i t u a t i o n thus: "The very low p r i c e of lumber, the great stagnation i n trade, and the heavy f a i l u r e s i n San Francisco within the l a s t twenty months have very m a t e r i a l l y depressed our lumber business....but i t i s capable of a rapid and almost i n d e f i n i t e enlargement should the wants of commerce on the coast to the southward, or across the ocean to Japan, A u s t r a l i a , China, etc. authorize i t . " The spacious days when the C a l i f o r n i a market could absorb almost any amount and kind of lumber were over; and when the sawmills on Puget Sound once more got i n t o s t r i d e they had to be more concerned with world markets. The i n t e r e s t i n g thing about the passage just quoted i s that as e a r l y as 1855, PNW lumbermen were at l e a s t thinking about the Japanese market. Japan i n 1855, however, was s t i l l a closed market f o r the treaty of Townsend Harris had not yet been signed. The sole export m i l l i n B.C., the Anderson m i l l which was completed i n 1861, focussed on the markets 40 of A u s t r a l i a , Hawaii, Chile and China. This did not mean that the 3^W. Kaye Lamb, B r i t i s h Columbia H i s t o r i c a l Quarterly, A p r i l , 1938, p. 116-117. 39 Ibid. 4^J.C. Lawrence, Markets and C a p i t a l - A History of the Lumber  Industry of B.C., 1778 - 1952. (Unpublished M.A. Thesis, U.B.C. , Vancouver, 1957), p. 21. 20 P a c i f i c Northwest lumbermen were b l i n d to the p o s s i b i l i t y of a future Japanese market. One author w r i t i n g i n 1865 provides evidence of th i s 41 long-term v i s i o n : "Spars from the North American shores of the P a c i f i c w i l l always command a high p r i c e i n Spain, France, and England, and b u i l d i n g lumber need not f a i l of being r e a d i l y and p r o f i t a b l y disposed of i n A u s t r a l i a , New Zealand, South America, China, and eventually Japan." I t was s t i l l too early to ex p l o i t the Japanese market f o r even though by t h i s time Harris had h i s treaty, the small demand of Japan f or 42 timber was e a s i l y s a t i s f i e d by the home supply. The other foreign markets were nevertheless s u f f i c i e n t to stimulate the development of the lumber industry i n Washington and Oregon at l e a s t . Foreign orders gave the m i l l s a backlog of large items, produced with a minimum of waste and sawing time. Export "cutting", "squares", and "timbers" took much of the low-grade core of the old-growth logs and f a c i l i t a t e d the manufacture of more f i n i s h e d and sp e c i a l i z e d items of lumber f o r home consumption. The B.C. lumber industry no doubt also developed i n response to overseas demands but the greater stimulus came from the Fraser River gold rush which commenced i n 1857. This resulted i n the construction of several 44 small m i l l s on the Mainland. By 1864, lumbering dominance was s h i f t e d 41 M. Macfie, Vancouver Island and B r i t i s h Columbia, (London: Longman, Green, Longman, Roberts and Green, 1865), p. 136. 42 Waldermar T o r i t c h , "Lumber p o s s i b i l i t i e s of Manchuria and S i b e r i a " , Timberman - Vol. 28, No. 3, Jan. 1927, p. 178. 43 William Greeley, In foreword to "U.S. International Timber  Trade i n the P a c i f i c Area" by Ivan M. Elchibegoff, ( C a l i f o r n i a : Stanford Univ. Press, 1949). 4^L.B. Dixon, " B i r t h of the Lumber Industry i n B.C.", B.C. Lumberman, Vol. 40, No. 3, March 1956, p. 44. from Vancouver Island to Mainland B.C. By 1867, the eve of the M e i j i Restoration period i n Japan, the m i l l s i n Table I on the page following were reported as operating i n B.C. This period of the h i s t o r y ended with a well-established lumber industry i n the P a c i f i c Northwest and a Japan which was on the verge of transformation from a f e u d a l i s t i c country to a modern i n d u s t r i a l state. The early 1860's were a time of turmoil and turbulence i n both America and Japan. Each of the two nations was to experience c i v i l war before circumstances permitted the evolution of the close accord of the 46 M e i j i era. The following chapter traces the development of the Jap-anese market f o r P a c i f i c Northwest lumber during what was perhaps the most important period i n Japanese economic h i s t o r y . Henry J.R. Unterreiner, A Study of the Economic History of the  Forest Industry of B.C., (Unpublished B.Com. thesi s , U.B. C., Vancouver, 1967), p. 34. 46 Dulles, op. c i t . , p. 125. 22 T A B L E I MILLS OPERATING IN B.C. - 1867 NAME LOCATION CAPACITY (thousands of board feet) A l b e r n i Barclay Sound, Van. Is. 100 Kinnear Chema inu s, Van. I s . -Shepherd Chemainus, Van. I s . 4 Vancouver Coal Co. M i l l Stone Creek, Van. Is. 15 Sayward Shawnigan, Van. Is. 10 Muir & Co. Sooke Harbour, Van. I s . 8 Cameron Spring Vale, Van. Is. 15 Hastings M i l l Co. Burrard I n l e t , Mainland 80 Moody & Co. Burrard I n l e t , Mainland 50 Moody & Co. New Westminster, Mainland 35 Wood & A u g e l l 1 s Wild Horse Creek, Mainland 7 Total Capacity 324 Source: B.C. Lumberman, Vol. 21, No. 6, June 1937, p. 30. C H A P T E R I I EARLY MARKET DEVELOPMENT - THE MEIJI ERA: 1868 - 1912 S o c i a l and P o l i t i c a l Change i n Japan The h i s t o r y of the consumption of any i n d u s t r i a l good i n Japan finds i n the M e i j i era an unavoidable bench-mark. I t was i n t h i s era that the s o c i a l f a b r i c of Japan underwent a d r a s t i c transformation and the foundations of an i n d u s t r i a l society were l a i d . I t was during this period that lumber f i r s t moved from the PNW to a restructured Japan. The period was so-called because i t was during t h i s time of transforma-tio n that the reinstated Emperor M e i j i governed the country. Immediately p r i o r to t h i s form of government, the body that ruled the country was c a l l e d the Shogunate under the d i r e c t i o n of the Shogun R e i k i Tokugawa. The Shogunate had attempted to enforce the t r e a t i e s of 1858 and to open the country to widened foreign intercourse but t h i s accentuated the c i v i l discontent that had been smouldering for some time against the Tokugawa Government. A period of intense anti-foreignism lasted from the date of the conclusion of the t r e a t i e s of 1858 to about 1865 when the t r e a t i e s were sanctioned. 4^ In the l a t e 1860's the long i n t e r n a l struggle within Japan was approaching a f i n a l c r i s i s . The Tokugawa Government was r a p i d l y l o s i n g ground. The impact of the West had been an important Lawrence H. B a t t i s t i n i - Japan and America, (New York: John Day, 1954), p. 29. 24 contributing f a c t o r i n the steady erosion of the power of the Shogunate, but i t s weakness was rooted i n the more basic change a f f e c t i n g Japanese soc i e t y . With his hold over the people shattered and h i s treasury empty, 48 the Shogun was ready to surrender to the i n e v i t a b l e . In December 1867, the Shogun restored to the Emperor the reins of national government and Imperial rule was re-established. The Emperor M e i j i issued an Imperial Proclamation in 1868 to e s t a b l i s h the c e n t r a l -i s a t i o n of power. From this time on the s t r i c t , complicated caste system 49 was discontinued and the feudal system was abolished. At the dawn of the M e i j i era, Japan's economy was given over predominantly to small-scale a g r i c u l t u r e and to household industry. Factories driven by mechanical power and i n d u s t r i a l equipment of the kind with which the leading Western countries had been f a m i l i a r f o r the best part of a century were n o v e l t i e s . Japan had only s l i g h t experience of foreign trade and of the operation of a merchant marine. The Japanese economy was not merely backward when compared with that of the chief Western nations but the foundations for a new era of expansion seemed to be i l l - p r e p a r e d . ^ Yet Japan entered the modern era f a r better equipped for economic expansion than a s u p e r f i c i a l assessment of her assets suggested. She 48 Dulles, op. c i t . , p. 145. 49 Thomas and Koyama, op. c i t . , p. 147. ^G.C. A l l e n , A Short Economic History of Modern Japan, (London: A l l e n and Unwin, 1962), p. 161. 25 had at the time of the Restoration the great intangible asset of an underlying sense of national unity which was the product of her geographical p o s i t i o n , of l i n g u i s t i c uniformity and of her long h i s t o r y . Her economic and technical inheritance were not i n s i g n i f i c a n t . Indeed, in the decades before the Restoration there had been a remarkable con-vergence of influences and events congenial to change and growth. The surplus of a g r i c u l t u r a l income was increased by the r i s e i n a g r i c u l t u r a l CO p r o d u c t i v i t y during the centuries preceding the M e i j i era. In feudal times the surplus was d i r e c t e d c h i e f l y to the maintenance of the Samurai, a warrior class which eventually became to a large extent economically f u n c t i o n l e s s . A f t e r the a b o l i t i o n of Feudalism much of t h i s surplus was diverted into the c o f f e r s of the Central Government by taxation, and became a v a i l a b l e f o r investment i n new industries and i n 53 the apparatus of the new society. In the f i r s t ten years of the M e i j i era, the foundations f o r c a p i t a l i s m were l a i d by the creation of Government enterprises, Govern-ment d i r e c t intervention for guidance and assistance given to private 54 business. The p o l i c y i n the e a r l y M e i j i period for the Government to operate the main industries developed gradually but brought i n i t s wake "^I b i d . , p. 163. 52 The creation or enlargement of a surplus of a g r i c u l t u r a l income above what i s necessary to maintain the farming population at a conventional standard of l i f e , i s generally considered to be a condition of c a p i t a l accumulation and construction in the early days of i n d u s t r i a l development. "*~*Allen, op. c i t . , p. 164. 54 Thomas and Koyama, op. c i t . , p. 148. 26 many problems such as increase i n f i n a n c i a l burden and i n e f f i c i e n c y of management. Consequently, the Government gradually, handed over t h e i r i n d u s t r i e s to private enterprise and the large Japanese Zaibatsu (money cliques) or trading houses were born. These business i n s t i t u t i o n s were o r i g i n a l l y needed to deal with the B r i t i s h , Dutch and American traders seeking access to the s i l k and c r a f t s which Japan was producing under the new economic system. The f i r s t trading houses grew out of the business of a number of prosperous Osaka merchants at a time when Tokyo played an i n s i g n i f i c a n t part i n business o p e r a t i o n s . T h e s e were the very trading houses that eventually were to handle most of the lumber trade from the P a c i f i c Northwest. Development of the PNW Lumber Industry While Japan was undergoing the transformation that was to prepare her f o r commerce with North America and the rest of the world, the fo r e s t industry of the P a c i f i c Northwest continued to develop. B.C., which became a Province of the Canadian Confederation i n 1870, boasted four-teen operating sawmills i n 1884. Washington and Oregon on the other hand were outstripping B.C. in capacity with as many as two hundred and si x t y f i v e lumber manufacturing plants reported as operating i n 1880, D.A. H i l t o n , "How Japanese Trading Companies Function." Foreign Trade, Vol. 121, No. 6, p. 2. °Unterreiner, op. c i t . , p. 45. 27 with an annual capacity of approximately one-half of a b i l l i o n board f e e t . " ^ The early development of sawmilling i n the P a c i f i c Northwest came as a response not to the development of a market i n Japan or elsewhere outside North America, but rather to the growth of domestic markets made acce s s i b l e by the construction of the r a i l r o a d s which linked the P a c i f i c Northwest, h i t h e r t o cut o f f by the Rockies, to the rest of the North American continent. The a r r i v a l of the Canadian P a c i f i c Railway on the West Coast i n 1886 marked the beginning of the r a i l trade f o r B.C. The railway created a large demand f o r lumber. I t s f i r s t structures, temporary i n large measure because they were b u i l t as cheaply as possible, c a l l e d f o r great quantities of t i e s and timbers. Station houses and other buildings 5 8 required other sizes and grades. In the United States the decade f o l -lowing the completion of the f i r s t two trans-continental r a i l r o a d s wit-nessed a decided impetus to lumbering. The 1890 census credited Washington and Oregon with an output of one and one-half b i l l i o n board f e e t . Shingle and lumber m i l l s sprang up among the r a i l r o a d feeders constructed i n t o the f o r e s t s , and timber soon began to a t t r a c t c a p i t a l because the vast forest's t r i b u t a r y to tidewater could be purchased at low stumpage r a t e s . I n the l a t t e r part of 1892 or very early in 1893, Vinnedge, op. c i t . , p. 12. Lawrence, op. c i t . , p. 38. Vinnedge, op. c i t . , p. 13. 28 the Great Northern Railway reached Everett, Washington and shortly there-a f t e r , Seattle. This date marked the r e a l b i r t h of the sawmilling indus-try i n the American Northwest.^ So a t t r a c t i v e were the investments i n sawmilling that American Lumbermen, not content with investing at home, poured c a p i t a l into the I n t e r i o r of B.C. and established many sawmills there. Table II on the page following indicates the growth i n saw-m i l l i n g a c t i v i t y i n B r i t i s h Columbia between 1888 and 1896. The table serves to indicate how much less developed the industry was i n B.C. r e l a t i v e to Washington and Oregon. In 1890, the annual out-put from the American Northwest was almost twenty times larger than that of B.C. It has been suggested already that the P a c i f i c Northwest found i n her domestic markets the primary stimulus f o r sawmill development. There was, however, some offshore trade taking place. In 1859, B.C. was s t i l l unable to manufacture a l l her requirements and i n that year alone the colony imported four m i l l i o n board feet of lumber from Puget Sound and San Francisco. Not u n t i l 1861 did she erect her f i r s t large sawmill at Port A l b e r n i and i n the following year she despatched her f i r s t cargo 61 62 of lumber to a foreign market. The dest i n a t i o n was Callao, Peru. 6 0Joseph N. Teal, et. a l . , B r i e f on behalf of the N.L.M.A. before  the F.T.C. (Washington, 1916), p. 15. ^B.C. Lumberman, Vol. 21, No. 6, June 1937, p. 30., op. c i t . Unterreiner, op. c i t . , p. 27. 29 The offshore lumber trade from the American Northwest was an occasional one i n the l a t t e r h a l f of the 19th century. Between 1860 and 1873 U.S. exports had declined from an annual average of about 190 m i l l i o n to 134 m i l l i o n board fe e t . At th i s time there were p r a c t i c a l l y no established exports. Whatever lumber was occasionally exported to China, the Netherlands, 63 East Indies and other P a c i f i c countries was p r i m a r i l y ship b a l l a s t . T A B L E I I SAWMILL CAPACITY IN B. C. - 1888 to 1896 YEAR NO. MILLS DAILY CAPACITY (board feet) LUMBER CUT (board feet) 1888 25 769,000 31,868,884 1889 30 1,089,000 43,852,138 1890 41 1,343,000 78,177,055 1891 57 1,786,000 88,108,335 1892 57 1,752,000 64,186,820 1893 60 1,785,000 60,587,360 1894 66 1,786,000 64,498,227 1895 77 1,815,000 112,884,650 1896 85 1,903,000 112,947,106 Source: R.E. Gosnell, Yearbook of B r i t i s h Columbia, 1897, p. 62. 63 T Ivan M. Elchibegoff, op. c i t . , p. 208 30 Beginnings of the Japanese Trade It i s not known f o r c e r t a i n whether Japan belonged to the catagory 'other P a c i f i c countries' referred to i n the l a s t paragraph. The l i t e r a -ture i s not c l e a r on how soon a f t e r the 1858 treaty between the U.S. and Japan lumber was traded. The f i r s t reference of a shipment of lumber from the U.S. to Japan that t h i s w r i t e r i s aware of was made i n 1874. The archives of the General Services Administration in S e a t t l e , Washington revealed that on J u l y 27th, 1874, an American v e s s e l , the 'Barkentine V i c t o r ' l e f t Puget Sound for Kanawajna, Japan, with boards and laths valued at $3,316.^ The f i r s t shipment from B.C. to Japan i s not as pre-c i s e l y recorded. Table I I I on the following page shows the exports from B.C. for the years 1859 to 1870. J.B. Warren, Personal Interview, A p r i l 3, 1968 31 T A B L E I I I EXPORT OF SAWN LUMBER FROM B.C. - 1859 to 1870 (Thousands of Board Feet) Total 1859 1860 1862 1865 1866 1867 1868 1869 1870 Vancouver Island 7,186.7 .8 264.3 208.6 1,475.1 635.0 1,472.0 639.9 886.0 1,605.0 & V i c t o r i a (a) U.S.A. 11,339.0 76.0 - - - 10.0 - 4,485.6 6,767.4 -U.K. 566.5 - - - 133.0 100.0 - - 142.7 190.8 New S. Wales 5,723.6 - - - 290.0 410.3 566.0 997.9 3,102.9 356.5 South A u s t r a l i a 1,757.5 - - - 329.5 246.2 - 631.8 550.0 -Mexico 845.12 - - - 160.0 180.0 - - 61.8 443.4 Sandwich Islands 1,584.2 - - - - 33.0 296.0 682.0 573.0 -New Zealand 812.0 - - • - - - 258.0 - 554.0 -Chi l e 5,487.7 - - - - - 670.0 2,238.6 2,312.7 266.4 China 5,031.4 - - - - - 233.0 3,025.7 1,772.7 -France 173.0 - - - - - 173.0 - - -Peru 7,800.2 - - - - - 700.0 320.6 3,513.1 3,266.5 T a h i t i 150.6 - - - - - - - - 150.6 Hawaiian Islands 1,100.0 - - - - - - - - 1,100.0 49,557.6 76.8 264.3 208.6 2,387.6 1,614.5 4,368.0 13,022.3 20,236.3 7,379.2 Less: Vane. Island shipments 7,186.7 .8 264.3 208.6 1,475.1 635.0 1,472.0 639.9 886.0 1,605.0 Net Export 42,370.9 76.0 - - 912.5 979.5 2,896.0 12,382.4 19,350.3 5,774.2 (a) Lumber exported from B r i t i s h Columbia Mainland to Vancouver Island. Source: E.J. Easton, An H i s t o r i c a l and Economic Review of the Lumber Industry i n B.C., (Unpublished, B.Com. thesis, U.B. C., Vancouver, 1967), p. 35. 32 If t h i s table i s to be accepted as accurate, then the conclusion to be drawn i s that there was no lumber trade between B.C. and Japan before 1870. Another author has presented a table d e t a i l i n g the exports of lumber through the custom ports of B.C. for the years 1881 to 1890. It i s reproduced below as Table IV. T A B L E I V EXPORTS OF PLANKS, BOARDS AND JOISTS THROUGH CUSTOMS PORTS OF B.C. 1881 - 1890. (thousands of board feet) YEAR TOTAL U.K. U.S. AUSTRALIA SOUTH AMERICA CHINA 1881 13,262 103 - 6,137 4,531 1,390 1882 29,878 - 560 15,370 7,664. 5,543 1883 28,899 - 1,161 15,035 5,815 4,421 1884 31,071 232 239 15,673 9,977 3,463 1885 18,743 382 379 1,862 2,369 483 1886 17,637 232 7 11,185 1,966 4,175 1887 20,889 - - 9,347 6,736 3,067 1888 35,821 - 1,635 15,481 11,683 4,850 1889 36,865 - 313 23,218 8,058 3,930 1890 25,847 1,347 485 7,512 12,547 2,097 Source: Carrothers , op. c i t . , p. 22 33 I t would be inadvisable to conclude from Table IV that up to 1890 there were no exports of lumber to Japan from B.C. for the simple reason that the table might not have been prepared i n s u f f i c i e n t d e t a i l to show exports to J a p a n . ^ But on the grounds of the absence of p o s i -t i v e evidence i t i s assumed that p r i o r to 1890 there was no lumber trade between B.C. and Japan. The f i r s t record of lumber shipments to Japan from B.C. i s contained i n the f i l e s of the Council of Forest Industries of B.C. They show that i n the year 1895, B.C. exported almost 5 m i l l i o n board feet to China and Japan as contrasted to approximately 13 m i l l i o n board feet from Washington and Oregon combined. Corresponding figures for subsequent years are shown i n Appendix I, p.170 and Figure 1, p. 178 Close examination shows that from 1895 to 1912, the end of the M e i j i reign, the lumber trade"between the P a c i f i c Northwest and Japan was i n -deed a nominal one. This should not come as a t o t a l surprise when one r e c a l l s that i t was around this very time at the turn of the century that the Canadian P r a i r i e market was ascendant and was to remain so u n t i l 66 the v i r t u a l cessation of settlement around 1912. This did not mean, however, that export markets were t o t a l l y neglected. As a matter of f a c t , i n 1899 the Canadian Government The yearly t o t a l s shown are i n excess of the sum of the figures a t t r i b u t e d to the various destinations. This suggests that a residual f i g u r e might be a t t r i b u t e d to exports to other markets, one of which could have been Japan. 6fi Easton, op. c i t . , p. 41. 34 despatched Mr. George Anderson as Commissioner to Japan with in s t r u c t i o n s to investigate the lumber market and prospects f or t r a d e . ^ This mission i s h i s t o r i c i n the sense that i t represented the f i r s t evidence that t h i s w r i t e r has seen of a p o s i t i v e approach on the part of North Americans towards the Japanese lumber market. I t i s noteworthy that this f i r s t p o s i t i v e thrust came from Canada. Some of Mr. Anderson's findings are quoted below:^ "The demand f o r lumber of a l l kinds i s simply enormous, and this w i l l c e r t a i n l y be one of Canada's largest exports to Japan, and the sawmills of B r i t i s h Columbia should be eager to supply the Eastern trade. The Japanese are constantly b u i l d i n g , t h e i r houses being constructed e n t i r e l y of wood. The s p e c i f i c a t i o n s sometimes asked for are large s i z e and long length, as the contractors desire to cut by hand saw, into the sizes required for b u i l d i n g . Douglas f i r ( B r i t i s h Columbia pine) i s considered very s a t i s f a c t o r y and cargoes of common lumber w i l l f i n d a market.... The Japanese are exceedingly t a s t e f u l i n the i n t e r i o r of t h e i r residences. The forests i n the main islands are considerably denuded and the government i s i n s i s t i n g on the pl a n t i n g of trees f or every one cut down. In quoting, Canadian correspondents cannot be too p a r t i c u l a r i n showing the exact cost i n gold at the point of destina-t i o n , and I would recommend sending a pro forma invoice naming p r i c e on r a i l of vessel at m i l l showing f r e i g h t , exchange, insurance and i n t e r e s t while i n t r a n s i t . " Once more, here was evidence of the Japanese p a r t i a l i t y to wood and the great p o t e n t i a l market that arose out of the desire of the Japanese "About Japan", West Coast and Puget Sound Lumberman, V o l . 11, No. 122, Nov. 1899, p. 56. 68..., Ib i d . 35 Government to conserve t h e i r own f o r e s t s . With a population of approximately 44 m i l l i o n people and a population density of about 306 people per square mile, there was great pressure on the land and the indigenous f o r e s t resources.^ 9 Of importance too i n Mr. Anderson's report was h i s reference to the Japanese preference f o r large sizes of lumber so that they could re-saw by hand to t h e i r exact requirements. This desire to do t h e i r own remanufacturing was a fundamental feature of the Japanese lumber market which they have retained even i n today's con-d i t i o n s . The Americans, too, were devoting some att e n t i o n to the Japanese market. They retained a Consul at Kobe, Hon. Samuel S. Lyon, who around 1900 recommended that the P a c i f i c Coast lumber industry should f o s t e r the Japanese trade more c l o s e l y i f they wanted to keep i t . He cautioned that the lumbermen of the P a c i f i c Coast would have to make some spe c i a l e f f o r t t o hold the trade because of competition from China and Siam. 7^ When war broke out between Japan and Russia i n February, 1904, concern f o r the Japanese market became more acute. Mr. M.F. Henderson, a Portlander, spoke p e s s i m i s t i c a l l y about the implications to the lumber trade of the Russo-Japanese war.^ "War between Russia and Japan might help some of Portland's business i n t e r e s t s , but i t would injure the lumber industry. 69 Bank of Japan, S t a t i s t i c s Dept., Supplement to Hundred-Year S t a t i s t i c s of the Japanese Economy, (Tokyo, 1966), p. 4. 70, Japanese Competition", West Coast and Puget Sound Lumberman. Vol. 12, No. 133, October 1900, p. 20. 7 1 , IWar and Trade", B.C. Lumberman, Vol. 1, No. 2, Feb. 1904, p. 9. 36 Such a war would put a stop to a l l shipments of lumber from Portland to China and Japan and to S i b e r i a , and t h i s trade forms a large portion of the exports, and the lack of demand would cause a suspension i n the manufacture of lumber to that extent....I believe that Japan could bring Russia to terms single-handed, and without the assistance of any of the other powers, but i t would take time and i n the interim our P a c i f i c Coast Jumper in t e r e s t s would s u f f e r very much. We would f e e l i t more because the demand f o r lumber from the Eastern states has f a l l e n o f f considerably of l a t e , and so the bulk of our' trade i s by sea." This was perhaps an exaggerated view of the importance of export markets to American lumbermen. In the same year that Henderson made his remarks, E.G. Ames at the semi-annual meeting of the P a c i f i c Coast Lumber Manufacturers Association at Tacoma, Washington, maintained that 72 export business accounted f o r about 11 per cent of the whole trade. Support f o r this view was found i n the words of an anonymous writer i n 73 a lumber journal of that time: "The foreign demand for lumber has always appeared as a more important factor than i n f a c t i t r e a l l y i s . With a maximum of 300 m i l l i o n feet annually i t has f l o a t e d around these figures perhaps f o r twenty years. While that amount of lumber i s con-siderable, i t bears but a small proportion of the t o t a l output of the m i l l s of this Coast. When i t i s r e c a l l e d that this amount i s scattered over p r a c t i c a l l y every country i n the world, i t shows how l i t t l e each country takes....There does not seem to be much that can be done i n the way of e x p l o i t i n g foreign trade....The fa c t remains that the great consumers of lumber are the c i t i z e n s of the United States. Neither the brown man, the red man, the yellow man nor even the European consumes lum-ber excepting in small q u a n t i t i e s . " Referring s p e c i f i c a l l y to Japan another write r i n the very same 72 "The Semi-Annual Meeting", West Coast and Puget Sound Lumberman. Vol. 15, No. 180, Sept. 1904, p. 831. 73 West Coast Lumberman, Vol. 19, No. 223, A p r i l 1908, p. 471. 37 Journal maintained that there was considerable timber in Japan with only very l i g h t consumption. There was enough timber i n the northern part of Japan on the i s l a n d of Yeddo to supply a l l of Japan's needs and i t was f e l t that with anything l i k e c a r e f u l r e f o r e s t i n g the demand f o r 74 lumber i n Japan would hardly make a mark on the outside world. Japan, indeed, was f i g u r i n g as an exporter of lumber. Soon a f t e r the end of the Russo-Japanese War, Japanese timber made i t s f i r s t appearance on the Chinese market, p r i n c i p a l l y i n Shanghai, T i e n t s i n and other ports. The pressure of Japanese wood on the Chinese market was so strong that the American trade had to y i e l d to a considerable extent. Japanese wood was much i n f e r i o r to the American standard, but the prices were low enough to f i n d buyers. Fortunately f or the American trade the Japanese domination of the Chinese timber market was s h o r t - l i v e d . The Japanese Government, fearing that the growth of the timber export threatened the denudation of the l i m i t e d f o r e s t resources, soon put a r e s t r i c t i o n on the destructive f e l l i n g . 7 " ' Contrary to what has been suggested e a r l i e r by Anderson, the Canadian Commissioner to Japan, some American observers of the time did not believe that the Japanese method of house construction lent i t s e l f to any s i g n i f i c a n t use of P a c i f i c Northwest lumber. A t y p i c a l opinion "Some things O r i e n t a l " , West Coast Lumberman, Vol. 20, No. 230, Nov. 1908, p. 92. To r i t c h , l o c . c i t . 38 7 6 from this school of thought was expressed in 1908: "The houses of Japan - at least a great portion of them - are cheap and flimsy. The ordinary lumber used i s thin and the f l o o r s , p r a c t i c a l l y a l l being covered, can be made of almost any kind of material. Heavy matting i s used everywhere and makes a most love l y f l o o r covering. The majority of the windows are made of r i c e paper. A shingle roof i n Japan would be a c u r i o s i t y . T i l i n g i s used everywhere with now and then a thatched roof." On balance, therefore, although there was a d i s t i n c t awareness of the Japanese market i n the P a c i f i c Northwest, there did not seem to be any great long-term hope for the degree of lumber consumption i n Japan that would induce any remarkable changes in the P a c i f i c Northwest lumber industry. Indeed, i t was the view of P a c i f i c Northwest Lumber-men that the Japanese market did not require any promotional work because of adequate indigenous s u p p l i e s . 7 7 However, the evidence seems to ind i c a t e that whereas B.C. lumbermen entertained hope for a sizeable Japanese market, the American lumbermen' dismissed i t as being i n c i d e n t a l . Yet, i r o n i c a l l y , Washington and Oregon dominated B.C. i n the Japanese market. By the close of the M e i j i Era when the Emperor M e i j i died i n 1912, the United States as a whole was exporting approximately 7 per 78 cent of t o t a l lumber production. Washington and Oregon exported 14 76 West Coast Lumberman, Vol. 20, No. 230, Nov. 1908, p. 92. l o c . c i t . 7 7B.O. Whiles, Personal Interview, March 15, 1968. 7 8 John Zivnusks, Business cycles, Building cycles, and Commercial  Forestry, (New York; I n s t i t u t e of Public Administration, 1952), p. 181. 39 m i l l i o n board feet of lumber to Japan and t h i s represented 9 per cent 79 of a l l exports from the American Northwest. B.C. exported almost 80 3 m i l l i o n board feet to Japan, a mere 6 per cent of a l l her exports. Her most sizeable market at t h i s time was A u s t r a l i a and New Zealand 81 combined which imported more than 25 m i l l i o n board feet i n 1912. Preoccupation with these Empire markets was not the sole reason for B.C.'s subdued status i n Japan, but explanations f or t h i s state of a f f a i r s w i l l be advanced in the next chapter. The M e i j i Era closed with only the meagre beginnings of a lumber trade between the P a c i f i c Northwest and Japan. I t seemed u n l i k e l y that a sizeable and v i t a l trade could r e s u l t from t h i s modest s t a r t , but a devastating world war was imminent and c r i t i c a l changes were to take place within Japan, the P a c i f i c Northwest and Panama. These changes and t h e i r e f f e c t s are examined in the following chapter. 79 See Appendices I and I I . 8 0 I b i d . 81 "The B r i t i s h Columbia lumber export trade", B.C. Lumberman, Vol. 21, No. 9, Sept. 1937, p. 34. C H A P T E R I I I WORLD WAR I AND ITS AFTERMATH: 1912 - 1923 Most of the action of the period covered by this chapter took place within the PNW. To be sure, there were pertinent changes taking place in Japan but i t would be erroneous to claim that developments i n the Japanese market p r e c i p i t a t e d the most important change i n the P a c i f i c Northwest, namely, the organisation of PNW lumbermen for an assault on the export markets of the world. Nevertheless, these changes which resulted from other s t i m u l i did indeed prepare the PNW lumber industry f o r a more e f f i c i e n t s e r v i c i n g of the Japanese lumber market, and i f only for t h i s reason t h e i r d e s c r i p t i o n rates a place in this study. I n s t i t u t i o n a l Changes i n B.C. Marketing Figure I, p. 178, shows that during the period 1912 - 1923 the movement of lumber from the PNW to Japan was s t i l l a t r i c k l e f o r the most part, an even smaller flow than i n the previous period 1895 - 1912. It was during this period (1912 - 1923) that the P a c i f i c Lumber Inspection Bureau f i r s t r e g u l a r l y compiled statements of lumber shipments to the various world markets and i t was from these statements that Figure I 82 was constructed. Before the outbreak of World War I the PNW lumber The P a c i f i c Lumber Inspection Bureau (PLIB) was started i n 1903 as the P a c i f i c Coast Lumber Inspection Bureau (PCLIB), a branch of the P a c i f i c Coast Lumber Manufacturers Association. In January 1907, the 41 producers were s t i l l h e a v ily domestically oriented. The completion of the Canadian P a c i f i c Railway and the consequent P r a i r i e market held the a t tention of Canadian and American a l i k e even a f t e r the v i r t u a l settlement of the P r a i r i e s i n 1912. In h i s 1913 Annual Report for the B.C. Government Department of Lands, Chief Forrester Harvey Reginald MacMillan stated that the Canadian P r a i r i e s had taken t h r e e - f i f t h s of the t o t a l B.C. production. This large consumption was p a r t l y explained by the f a c t that whereas the export markets open to B.C. m i l l s took only the highest grades, the P r a i r i e s took a l l grades. I t was c l e a r from MacMillan's report that he foresaw the dependence of the B.C. lumber industry on export markets. He recommended that the question of extending the export lumber trade of the Coast be taken up with the Dominion Depart-83 ment of Trade and Commerce. Shut out from the American P r a i r i e s by the t a r i f f b a r r i e r , the B.C. forest industry was forced to take recourse 84 to overseas markets outside of North America. Another contemporary observer, Henry Pearse, f e l t that B.C. was not getting a large enough share of the P a c i f i c export trade and that unless an e f f o r t was made to bring B.C. more prominently and immediately before the importing countries PCLIB was incorporated under the laws of the State of Washington under the new name PLIB, as a separate, d i s t i n c t and independent business organization. Its plan was to develop a system of inspection, grading and t a l l y i n g along e n t i r e l y independent l i n e s , i t s committee of management of inspection to be composed of manufacturers, as well as representatives of brokers, buyers and consumers of lumber. (E.G. Ames, President PLIB - West Coast Lumberman, Vol. 20, No. 236, May 1909, p. 596A). 83 Western Lumberman, Vol. 11, No. 4, A p r i l 1914, p. 35. 84 Kerfoot, op. c i t . , p. 44. 42 85 of the world B.C. would continue to be overshadowed. The figures of Appendix I I , which show the waterborne movement of lumber to a l l export destinations from the P a c i f i c Northwest, lend compelling support to these fears. In 1914, B.C. exported 33 m i l l i o n board feet, a mere 16 per cent of t o t a l PNW exports. Of t h i s quantity, B.C. shipped 2 m i l l i o n board feet to Japan, that i s , approximately 20 per cent of the t o t a l 86 PNW shipments to this country. I t has been suggested that there might have been discrepancies i n these s t a t i s t i c s and that the B.C. share might have been larger than reported. Henry Pearse noted that some Puget Sound shippers were sending vessels up to B.C. to load cargoes of lumber which were mis-87 takenly reported as American lumber. There were sound reasons for t h i s . Much of the lumber that was shipped from the P a c i f i c Northwest to Japan was accommodated on Japanese steamers. Unlike the Puget Sound area the f a c i l i t i e s f o r berthing steamers f o r loading i n B.C. were far from s a t i s f a c t o r y . I t was necessary for the Japanese to send any lumber bought i n B.C. down to Sea t t l e i n scows f o r loading on the Japanese vessels. At that time i t cost about $5 per thousand board feet to tow lumber to Seattle, then an a d d i t i o n a l $2 per thousand f o r brokerage 88 and other expenses. In p r a c t i c a l terms this meant that f o r the same 85 Western Lumberman, Vol. 11, No. 9, Sept. 1914, p. 33. 86 See Appendix I. 87 Western Lumberman, Vol. 11, No. 9, Sept. 1914, p. 33. 88 "Vancouver s harbour f a c i l i t i e s sadly l a c k i n g . " Western  Lumberman, Vol. 16, No. 3, March 1919, p. 48. 43 type of lumber the Washington lumbermen held a $7 per thousand p r i c e advantage over B.C. lumbermen. There were, however, other reasons advanced to support the view that B.C. was i n fac t quite dominated by her American neighbour. Henry 89 Pearse pointedly described B.C. s p o s i t i o n i n these words: " B r i t i s h Columbia i s a young commercial exporting country. I t i s to a c e r t a i n extent ignorant of the timber exporting trade. Its competitor and neighbour has a l o t more experience and has greater shipping and broking f a c i l i t i e s . I t s timber i s known and a l l government tests are a v a i l a b l e . The bureau c o n t r o l l i n g the B r i t i s h Columbia export trade i s of the United States, the timber brokers are the same, and most of the a v a i l a b l e shipping f r e i g h t i s co n t r o l l e d from south of the l i n e " . The p l a i n f a c t was that the export lumber trade of the P a c i f i c had i t s beginning i n San Francisco, and although the manufacturing had been done i n the north, the s e l l i n g part of the business had been retained almost e n t i r e l y by the San Francisco timber brokers, who had the trade so well i n hand that i t was exceedingly d i f f i c u l t to d i v e r t any portion of i t . The carrying trade also was to a very large extent i n the hands of American owned vessels. I t was only natural that owners would charter more r e a d i l y with fellow merchants i n San Francisco than with shippers i n B r i t i s h Columbia, the more e s p e c i a l l y as there were some expenses 90 that they could avoid by loading at the home ports. When one considers that i t was f u l l ten or twenty years a f t e r the f o r e s t industry was well established on the Puget Sound area that B.C. began to be developed, i t comes as no surprise that the American Western Lumberman, Vol. 11, No. 9, Sept. 1914, p. 32. Western Lumberman, Vol. 11, No. 11, Nov. 1914, p. 18. 44 lumbermen were i n control of the export trade i n lumber. They had a headstart i n e s t a b l i s h i n g f o r e i g n connections and in b u i l d i n g t h e i r own f l e e t s and these l i n e s of trade once established are not e a s i l y disturbed. The development of the P r a i r i e market i n the early 1900's hampered the export trade of B.C. During the settlement of the P r a i r i e s the B.C. coast m i l l s were tempted to neglect t h e i r water-borne trade f or the more i n s i s t e n t and temporarily higher priced trade coming from the other Provinces to the East. At this time thene was no such extra-ordinary demand from the U.S. so the lumbermen of Oregon and Washington in a condition to export were able to step i n and take much of the trade 91 which B.C. m i l l s were neglecting i n favour of the home market. To cope with the s i t u a t i o n of an i n s u f f i c i e n t share of the export market, B.C. made some bold moves i n 1915-16. The lumbermen's associa-tions and the boards of trade of the Province a f t e r p e t i t i o n i n g the Federal Government i n Ottawa were allowed to e l e c t a representative who was to t r a v e l to various world markets at Federal Government expense to seek t h e i r i n t e r e s t s . The unanimous choice was for Chief Forester Harvey 92 Reginald MacMillan. MacMillan, n a t u r a l l y , was to concentrate p r i m a r i l y on the markets of the B r i t i s h Empire rather than the markets l i k e Japan. His f i r s t task was to go to A u s t r a l i a to secure a preference f or Canadian f o r e s t products i n that market. His f i r s t hand observations of operations i n the A u s t r a l i a n market gave him an i n d i c a t i o n of how the Americans were "U.S. exporters fear B.C. competition", Western Lumberman, Vol. 12, No. 7, J u l y 1915, p. 14-15. 92 "B.C. lumber exporters i n r e a l earnest," Western Lumberman, Vol. 12, No. 4, A p r i l 1915, p. 13. 45 doing business in a l l foreign markets. P r a c t i c a l l y everywhere he saw that lumber was sold almost e n t i r e l y through U.S. firms, and this included the product of B.C. The importers did not know that any of i t came from B.C. He observed that i n the 12 years p r i o r to 1916 B.C. lumber exports had f a l l e n from 32% to less than 3% of t o t a l A u s t r a l i a n imports. His explanation f or this was that whereas in the e a r l y days the business was done by schooners and B.C. m i l l s could take the r i s k of chartering such vessels, i n 1916 steamers operating by the t r i p or time charter and carrying a large shipment on each t r i p , became the norm. The American P a c i f i c Coast exporters studied the s i t u a t i o n and came to control the 93 charters of steamers and consequently what business B.C. could get. MacMillan proposed the idea of a sin g l e agency, established by B.C. lumbermen and designed to act as a broker f o r a l l export lumber sales from the Province. This agency, as was o r i g i n a l l y proposed, was to charge the B.C. manufacturers a commission i d e n t i c a l to that which was paid to American brokers, with a l l revenue i n excess of expenses to be expended i n the promotion of B.C. lumber. The f i r s t agency to be established in B.C., however, was the Canadian Trading Company Ltd., a 94 subsidiary of an American brokerage organization. I t was not u n t i l "B.C. lumbermen hear cold f a c t s , " Western Lumberman, Vol. 13, No. 9, Sept. 1916, p. 13. 94 This organization was i d e n t i f i e d as the Douglas F i r Exploration and Export Co. by John G. Argue in h i s B.Com. Thesis e n t i t l e d : "An  h i s t o r i c a l economic analysis of channels of d i s t r i b u t i o n and markets  f o r B r i t i s h Columbia softwood lumber and plywood." He inferred that the organization existed back to before 1914. Other sources date the 46 1916 that the f i r s t move towards MacMillan's idea of a single agency was made and he himself was the protagonist. He l e f t the service of the Canadian Government i n order to put i n t o p r a c t i c e some of the plans Q 5 that c r y s t a l l i s e d on his world tour. He became Ass i s t a n t Manager of the V i c t o r i a Lumber Manufacturing Company and shortly a f t e r founded his 96 own firm, the H.R. MacMillan Export Company. The Company was incorporated i n 1919 and started i t s l i f e as a sales agency, s e l l i n g B.C. lumber i n foreign markets. I t owned no stands of timber, no lumber m i l l s , no logging camps and i t had less than $10,000 i n assets. But p r a c t i c a l l y a l l lumber production from B.C. m i l l s was sold through the MacMillan firm. From the s t a r t the new company con-ducted a vigorous sales campaign for export markets and the two p r i n c i p a l s MacMillan and W.J. Van Dusen, t r a v e l l e d the world to search out customers. Another move was made following a conference of the managers of Coast export m i l l s held at V i c t o r i a i n November, 1917. The m i l l s not associated with the H.R. MacMillan Export Company agreed to pool t h e i r output for establishment of the organization back only to 1916. The truth seems to be that the Canadian Trading Company was very c l o s e l y a l l i e d to "powerful s e l l i n g agencies i n London, San Francisco, Sydney and elsewhere". (B.C. export m i l l s to pool output," Western Lumberman, Vol. 14, No. 1, Jan. 1917 P. 12) 95 Lawrence, op. c i t . , p. 108. ^ I b i d . , p. 125. 97 J.V. Clyne, What's Past i s Prologue, (Vancouver, MacMillan-Bloedel Ltd., Undated), p. 14-15. 46 export purposes and to place the business i n the hands of the Canadian Trading Company. This company served the export requirements of several coastal m i l l s u n t i l soon a f t e r the outbreak of World War I, at which time the operation lof the agency ceased to be p r o f i t a b l e , and the American 98 parent withdrew from B.C. operations. I t was not u n t i l 1919 that the f i r s t successful large-scale attempt at co-operation between the non-MacMillan m i l l s took place with the formation of the Associated Timber Exporters of B r i t i s h Columbia Ltd. This formation only took place because the B r i t i s h Government placed a huge order of 70 m i l l i o n board feet of r a i l r o a d t i e s with the B.C. m i l l s , none of which was big enough to handle the order s i n g u l a r l y . The successful execution of t h i s order more than any other f a c t o r , served to give self-assurance to the industry i n i t s determination to trade i n the markets of the world as an industry 99 independent of i t s American counterpart. The B.C. P r o v i n c i a l Government was also to make i t s contribution towards f o s t e r i n g the export lumber trade. In 1915, the Hon. W.R. Ross 98 Argue, op. c i t . , p. 107. 99 Lawrence, op. c i t . , p. 123. 47 stated that the estimates of that year included a sum of not less than $50,000 which was to be devoted largely toward the e f f o r t to secure shipping f a c i l i t i e s , or to forward the general object of extend-ing and increasing most m a t e r i a l l y the export lumber trade of the Province. Later on, Premier W.J. Bowser spoke at greater length on 101 the problem: "Ocean transportation must be provided for the tidewater capacity of our m i l l s , now about 700,000,000 feet per annum, so that we may secure and enjoy our proper share of the world's trade. As the matter stands today, we have surpassing wealth of timber, an immense investment i n manufacturing plants .and every f a c i l i t y , save one, for large development. We have no shipping and overseas markets. We must have vessels operating d i r e c t l y i n the i n t e r e s t s of our own industries and also to carry our natural products. Only thus can the province market i t s own timber wealth, and so d i s s i p a t e the depression that has hung over the industry so long. Recognising the v i t a l importance of t h i s matter and the paramount need of a strong commercial p o l i c y to end the shipping c r i s i s , the government w i l l submit decisive l e g i s l a t i o n at the following session of the L e g i s l a t u r e . " On May 3rd, 1916, Premier Bowser introduced into the P r o v i n c i a l L e g i s l a -ture a B i l l e n t i t l e d "An act respecting shipping and to make provision for a id to the shipbuilding industry i n the Province of B r i t i s h Colum-bi a . " The B i l l provided for aid to the aggregate amount of $2 m i l l i o n to shipping and the shipbuilding industry. ^"^Western Lumberman, Vol. 12, No. 4, A p r i l 1915, p. 13, op. c i t . '''^''""Will e x p l o i t world-wide markets," Western Lumberman, Vol. 12 No. 8, August 1915, p. 14. 48 I n s t i t u t i o n a l Changes i n American Northwest Marketing No sooner had the B.C. lumbermen begun to solve t h e i r problems when i n the s p i r i t of competition t h e i r counterparts south of the border i n s t i t u t e d s i g n i f i c a n t changes. Forbidden by the Sherman Anti-Trust Act to consider the factor of prices i n i t s associated a c t i v i t i e s i n the domestic trade, the American lumber industry with i t s high production costs was at a d i s t i n c t disadvantage i n i t s export trade. Accordingly, the P a c i f i c Northwest lumber industry, sensing the beneficient provisions of the Webb-Pomerene Act passed by Congress, decided i n 1916 to form the 102 Douglas F i r E x p l o i t a t i o n and Export Company. It has been claimed that the appointment of H.R. MacMillan as Special Trade Commissioner following close upon the e f f o r t s of the Dominion Government to secure a preference for Canadian forest products i n A u s t r a l i a , and the example of a s l i g h t preference already given to B.C. lumber by the South A f r i c a n Government, p a r t l y i n s p i r e d the formation of the Douglas F i r E x p l o i t a t i o n and Export 103 Company under the Webb-Pomerene Act of the U.S. Provisions of the 102 Vinnedge, op. c i t . , p. 17. J u l i a n Bass, Forest Products Export Counsel, Seattle, i n a personal interview with the author on March 28, 1968, claimed that i t was not long before the organization dropped the word 'Exploitation' from t h e i r t i t l e because of the unsavory connotation that i t c a r r i e d . 103 -Western Lumberman, Vol. 12, No. 8, Aug. 1915, p» 14. op. c i t . 49 Webb-Pomerene Act allowed more freedom from a n t i - t r u s t r e s t r i c t i o n s to firms that wished to j o i n together to pool s e l l i n g resources, e s t a b l i s h export p r i c i n g p o l i c i e s , and a l l o c a t e foreign business. The Douglas F i r E x p l o i t a t i o n and Export Company acted as the sole representative for the export business of a great number of m i l l s and contracted with the buyers to supply t h e i r needs. The company a l l o t t e d the orders i t received to the various m i l l s according to t h e i r capacities or as pre-vi o u s l y agreed upon. While i t s o l i c i t e d some of i t s orders d i r e c t , i t did not attempt to do away with the various middlemen engaged i n the 104 lumber export business. At one time the company handled the marketing of 111 m i l l s which were responsible for 80 per cent of the production of the American Northwest. A c e r t a i n F r a n k l i n H. Smith has been credited with spearheading the formation of the Webb-Pomerene Corporation. Around 1915 he was appointed by the U.S. Bureau of Foreign and Domestic Service to study 106 the Orient and A u s t r a l i a as markets for American lumber. Af t e r about fourteen months i n th i s region he returned to the U.S. and submitted a 104 - ~ Ben Dorfman, The American Lumber Market i n Japan, (Unpublished senior t h e s i s , Reed College, Portland, 1924), p. 22. ''"^^Julian Bass, Personal interview, March 28, 1968. ^Qg " P a c i f i c markets for B.C. lumber," Western Lumberman, Vol. 13, No. 3, March 1916, p. 13. 50 report which figured i n a b r i e f on behalf of the National Lumber Manu-facturers Association before the Federal Trade Commission i n 1916. 107 Smith s report contained the following remarks: "An organisation of lumber export m i l l s on the P a c i f i c coast of the United States would unquestionably be of great advantage to both producer and consumer with an e f f i c i e n t s e l l i n g agency, and by the apportionment among the m i l l s a standard p r i c e could be maintained. This p r i c e could and should be f i x e d at a fi g u r e that would give a l i v i n g p r o f i t to the m i l l s and at the same time eliminate the shopping around for export orders and the constant bidding of one m i l l against another for the business offered.... An organisation of offshore m i l l s would be i n as f a i r a p o s i t i o n to undertake i t s own chartering at favourable rates as would the i n d i v i d u a l shipping concern. Better s t i l l i t would have i t s own f l e e t of lumber c a r r i e r s , i f necessary or desirable, and be able to ship as occasion demanded or even to load and ship subject to diversion i f required." The days of preoccupation with the domestic market seemed to be s l i p p i n g away and the opening of the Panama Canal i n 1914 and the consequent a c c e s s i b i l i t y of more world markets c e r t a i n l y had something to do with t h i s change of a t t i t u d e . Renewed i n t e r e s t i n Japan was brought no closer by the construction of ;the canal but that other epic occurence of 1914, the outbreak of World War I, was not without e f f e c t on.her lumber p o s i t i o n . The f i n a n c i a l 107 Teal, et. a l . , op. c i t . , p. 160-162. 51 prosperity of Japan which was caused by the outbreak of the European War increased the demand for lumber and caused a boom of such an extent that owners of domestic timber f e l l e d trees at random with a consequent 108 decrease of Japan s forest resources. Canadian and American lumber-men looked at the Japanese market with renewed i n t e r e s t . Indeed, the B.C. lumbermen knew that the Americans desired the lumber trade of the -, . . , r . 110 P a c i f i c and the Orient and were getting the l i o n s share of i t . To reverse t h i s s i t u a t i o n , the Canadian Government i n 1919 offered subsidies to various l i n e s carrying Canadian goods from West Coast ports to points i n the Orient and South P a c i f i c . By 1922, the Canadian Robert Do l l a r Lines, the Canadian P a c i f i c Steamship Company Lines and the Canadian Merchant Marine Lines, as w e l l as many smaller companies had ava i l e d themselves of t h i s opportunity. The Canadian Government Merchant 111 Marine became the cornerstone of B.C. shipping f a c i l i t i e s . There was optimism within B.C. that with the scheduling of regular s a i l i n g s to ports i n Japan and China by the Canadian Government Merchant Marine around 1921 that B.C.'s proportion of the O r i e n t a l lumber trade would 108 "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 6, No. 11, Nov. 1922, p. 55. 109 H.R. MacMillan, "The Lumberman's educational class - The B r i t i s h Columbia export trade." B.C. Lumberman, Vol. 9, No. 3, March 1925, p. 46. 110 Western Lumberman, Vol. 13, No. 3, March 1916, p. 13, op. ext. I l l Unterreiner, op. c i t . , p. 98. 52 112 then be on the increase. Indeed, with the settlement of the P r a i r i e s and the slackening off of the lumber market there, Canada's P a c i f i c Coast lumber s h i f t e d i t s p o s i t i o n from that of a support of wheat pro-113 duction for Great B r i t a i n to that of a support of i n d u s t r i a l i s m i n Japan. By 1921 Japan was buying more lumber from B.C. than the B r i t i s h Empire 114 countries of A u s t r a l i a , New Zealand and South A f r i c a . Japanese Usage of Timber It i s appropriate at t h i s juncture of the narrative to elaborate on Japanese usage of timber for i t was i n the 1920's that the f i r s t d e t a i l e d reports of the idiosyncracies of the Japanese i n th i s regard appeared. In th i s elaboration w i l l be found the r e a l reasons for America's f a i l u r e i n today's Japanese lumber market. The fastidiousness of the Japanese about the use of wood necessitated a unique structure to t h e i r l o c a l sawmilling industry and th i s i n turn dictated the type of lumber that they sought from the P a c i f i c Northwest. Mechanically, the ^^W.J. Van Dusen, "Export trade i s important s t a b i l i z i n g factor, "Western Lumberman, Vol. 18, No. 8, August 1921, p. 70. 113 A.R.M. Lower, op. c i t . , Preface - P. x i . 114 . J.O. Cameron, "Manufacturing lumber for export," Western Lumberman, Vol. 18, No. 10, Oct. 1921, p. 26. 53 Japanese lumber industry presented the curious phenomenon of p r i m i t i v e methods of manufacture, employing the tools and methods of hand production of centuries past, competing successfully with modern plants employing the most advanced machinery and mass production methods of operation. The slower hand methods were generally used for the production of lumber of the highest q u a l i t y , while the quantity production of the modern saw-m i l l s produced mainly, low-grade, common product. So r i g i d were the panel and board requirements both i n colour and grain harmony, that the hand sawyers with t h e i r a b i l i t y to lay out the log c a r e f u l l y to produce the desired e f f e c t s and t h e i r a b i l i t y to keep successive boards with harmonizing colours ;and designs together u n t i l they reached the hands of the carpenter, had an advantage which could not be overcome by the power sawmill where such extreme care would be impossible, and where va r i a t i o n s i n the mixed products from d i f f e r e n t logs and cants were in e v i t a b l e . These were the primary reasons why the Japanese preferred to buy his logs and do his own sawing. I t was not so much a matter of costs or the desire for home employment as i t was a necessity i n order to secure the desired product. I t was often a fact that the Japanese Frank H. Lamb, "The forests of the Far East - No. 5 - Lumber i n Japan," Timberman, Vol. 30, No. 9, July 1929, p. 46-48. 54 lumber buyer could secure from abroad sawn lumber at a much cheaper cost than he could buy the same grade of logs and cut them i n his own plants. However, the sawn imported ma t e r i a l , regardless of the basic quality of the logs, could only meet his s p e c i f i c a t i o n s i n less important items of width, length, thickness and percentage of cl e a r . Grain width and design, colour and harmony of grain design and shade were e n t i r e l y impossible under Western methods of mass-production. The Western high-speed production m i l l s with t h e i r coarse, imperfectly set saws that l i t e r a l l y tore the log to pieces, necessitating the carpenter to laboriously plane away h a l f the thickness i n order to secure an even 116 surface, was no competition to the Japanese whip-sawyers. The Japanese desire to import logs or large squares was j u s t i f i e d not only on aesthetic but also on p r a c t i c a l grounds. A Japanese house was a highly i n d i v i d u a l i s t i c phenomenon. The sizes of framework members such as beams, posts and j o i s t s d i f f e r e d according to each i n d i v i d u a l house. Not only did each i n d i v i d u a l house demand d i f f e r e n t framework 116 Ibid. 1 1 7 " O r i e n t a l lumber trade," Timberman, Vol. 24, No. 12, Oct. 1923, p. 53. 55 s p e c i f i c a t i o n s , but the s p e c i f i c a t i o n s of each community i n Japan constituted a problem by themselves.''"''"^ The pra c t i c e of buying large squares and resawing to order for s p e c i a l sizes and length overcame th i s problem. Consequently, the importation of large timber was f a c i l i t a t e d by duty-free entry into Japan of unfinished timber 65 millimeters or more i n thickness. Another reason for buying large timber was that f i n i s h e d lumber was l i a b l e to crack, warp, s t a i n , or be damaged i n other ways during the long t r a n s - P a c i f i c voyage and trans-shipment to the m i l l s . The large "Jap squares" suffered less damage i n 118 t h i s process. It was the lack of big dimension and long length timber i n the otherwise considerable Japanese forest resources that drove the Japanese 119 to P a c i f i c Northwest lumber. Formerly, domestic pine and spruce were used for framework i n Japanese house construction, but since there was a limited supply of timber more than 20 feet i n length, the contractor had to pay a large p r i c e for them. Consequently, they used to j o i n short members to meet these purposes. When P a c i f i c Northwest wood began to be 118 E.R. Dickover, "Japanese market for American lumber," West  Coast Lumberman, Vol. 40, No. 473, June 15, 1921, p. 28. 119 Western Lumberman, V o l . 13, No. 3, March 1916, p. 13, op. c i t . 56 imported at a r e l a t i v e l y low p r i c e , the Japanese builders began to use 120 exc l u s i v e l y imported woods for framework.. Usually the Japanese 121 buyer s p e c i f i e d timber not less than 18 inches square and 24 feet long. Hitherto P a c i f i c Northwest lumber had been considered u n f i t for Japanese a r c h i t e c t u r a l purposes and i t was used only for the construction of bridges and p i l i n g i n connection with harbour improvements. But the regular grains and the cheaper cost of PNW lumber recommended i t s use 122 i n Japanese house construction. PNW lumber supplanted considerable Japanese lumber because i t offered better q u a l i t y at the same p r i c e , but the native woods were s t i l l used for the f i n e joinery work and for 123 the i n t e r i o r f i n i s h i n g of houses. The Japanese c e i l i n g s and those of North America were not the same due to the difference i n construction between the countries. In Japanese c e i l i n g s s t r i p s being barely seen, the grains and soft surfaces 120 "Notes from Japan,"Pacific Coast Lumberman, Vol. 6, No. 8, August 1922, p. 25 121 Cameron, loc. c i t . 122 "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 7, No. 2, February 1923, p. 63. 123 "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 7, No. 9, September, 1928, p. 63. 57 were of great importance. So much so that the planks for Japanese 124 c e i l i n g s were s t i l l sawn by hand. For th i s purpose they used t h e i r own red cedar or sugi extensively. They thought well of red cedar from the P a c i f i c Northwest for the same purposes but they f e l t that i t was not as strong. For the f i n e s t f i n i s h i n g lumber they used t h e i r white cedar, t h e i r highest priced wood. They were p a r t i a l to Port Orford cedar (Chaemacyparis lawsoniana) for the same uses and imported i t extensively on that account. But Port Orford cedar was expensive and for that reason the Japanese were importing large quantities of Washing-125 ton and Oregon red cedar i n the log. The American Vice Consul stationed at Kobe, Japan, E.R. Dickover, observed that by far the greatest part of the timber imported from the 126 P a c i f i c Northwest consisted of Douglas f i r . These were shipped p r i n c i p a l l y i n the form of large "Jap squares". Small squares, 4% inches x 4% inches or 5" x 5", were also imported and these were used i n the P a c i f i c Coast Lumberman, Vol. 6, No. 8, August 1922, p. 25, op. c i t . " F i r emmissaries report on Japanese conditions," Timberman, Vol. 25, No. 4, February 1924, p. 49. 1 2 6 ... Dickover, loc. c i t . 58 o r i g i n a l s i z e , without resawing i n most cases, for posts, j o i s t s and other 127 members. These were p r i n c i p a l l y of Douglas f i r and hemlock, and the l a t t e r was to become so popular that the Japanese demand for i t was to cause a phenomenal di s r u p t i o n of the PNW trade i n the 1960's. The Japanese f i r s t showed an i n t e r e s t i n hemlock around 1920. They i n v e s t i -gated the p o s s i b i l i t i e s of t h i s species when cedar logs became scarce on 128 account of heavy buying previously. The i n i t i a l shipment of hemlock was made by a Tokyo firm i n 1920 when i t was said that the t o t a l imports of hemlock amounted to about 2 per cent of the imports of Douglas f i r lumber. The proportion of hemlock imported continued to increase yearly, both i n the number of pieces and the t o t a l board footage. Hemlock was bought by the Japanese simply because i t was always about $1 per thousand cheaper than the corresponding cut of f i r . The only advantage that hemlock had over f i r was that i t contained no p i t c h pockets and for this reason i t was very su i t a b l e for inside work i n Japanese houses. Hemlock f l i t c h e s were sometimes used for beams for cheap buildings where most 127 P a c i f i c Coast Lumberman, Vol. 6, No. 8, August 1922, p. 25, op. c i t . 128 " "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 6, No. 1, January 1922, p. 19. 59 129 of the baby squares were put into temporary or low-priced houses. The hemlock baby square was to become the most important unit i n Japanese house construction. H i s t o r i c Increase i n the Japanese Market Towards the end of the period covered by t h i s chapter the Japanese market was beginning to consume s i g n i f i c a n t l y more lumber. T o t a l exports from the PNW to Japan jumped from 79 m i l l i o n board feet i n 1921 to 591 m i l l i o n board feet i n 1922. Of t h i s l a t t e r quantity, Washington and Oregon claimed the li o n ' s share, namely, 519 m i l l i o n 130 board feet. This increase r e s u l t e d from b r i s k a c t i v i t y i n the b u i l d -131 ing of small houses on the ou t s k i r t s of Tokyo, and also because of the 132 large demand caused by the construction of the Tokyo Peace E x h i b i t i o n . There were other favourable signs regarding the future of the Japanese market. There were ind i c a t i o n s that the demand for imported timber was going to be a permanent thing. A number of large Japanese firms were making c a p i t a l investments i n forests and m i l l s i n American 129 "Market for hemlock lumber i n Japan," B.C. Lumberman, Vol. 9, No. 1, January 1925, p. 65. 130 See Appendix I 131 "Notes from Japan," P a c i f i c Coast Lumberman, V o l . 6, No. 2, February 1922, p. 52. 60 and e s p e c i a l l y i n B.C. Furthermore, the Japanese government had removed the duties on a l l timber over 2 3/8 inches i n thickness. This was to encourage the import of timbers which could be cut to the required 133 s p e c i f i c a t i o n s i n the Japanese m i l l s . When there were signs of a slackening i n the market, i r o n i c words of optimism were expressed by 134 an anonymous writer i n the P a c i f i c Coast Lumberman: "A r e a c t i o n a l l i v e l i n e s s i s expected i n June or July t h i s year improving considerably the lumber trade of the l a t t e r h a l f of 1922. Judging by past f a c t s , there always has been, strange to say, a big destructive f i r e somewhere i n Japan about that time of the year, causing a large demand for wood with consequent r i s e of p r i c e . " There was indeed a big destructive combination of f i r e , earthquake and t i d a l wave i n Japan, but i t came the following year and l e f t behind a t e r r i b l e devastation that became one of the most important land marks i n the development of the Japanese market^for P a c i f i c Northwest Lumber. B.C. was about to enter an era of great a c t i v i t y i n the 132 "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 6, No. 3, March 1922, p. 52. 133 .'.'Notes from Japan," P a c i f i c Coast Lumberman, Vol. 6, No. 7, July 1922, p. 23. 134 "Notes from Japan," P a c i f i c Coast Lumberman, Vol. 6, No. 6, June 1922, p. 52. Japanese market which, once the peak was passed, was to be of s i m i l a r magnitude only much l a t e r i n 1963. For Washington and Oregon, the aftermath of the earthquake meant even greater a c t i v i t y than B.C. on a scale that they have never been able to repeat. The following chapter traces the fortunes of the P a c i f i c Northwest lumbermen i n this period of Japanese dis a s t e r and reconstruction. C H A P T E R I V THE BULGING YEARS: 1923 - 1940 I f the time series graph of PNW shipments to Japan can be likened to the surface of the earth then the period covered by t h i s chapter would represent high ground. B.C.'s contribution to t h i s topography would compare as a h i l l to the mountain of Washington and Oregon. These were indeed the bulging years for the PNW, for the lumbermen of t h i s region were to ship over the years a quantity of lumber that they could never approach i n subsequent periods. Washington and Oregon s t i l l dominated B.C. i n t h i s market supplying i n 1923 756, m i l l i o n board feet as compared to 106 m i l l i o n board feet from B.C. but as time passed B.C. stumbled on to what has B'e'e'mreferred to as the i n t e r n a t i o n a l marketing o r i e n t a t i o n - a philosophy which they l a t e r used to get the better of the Americans. By the end of the period i n 1940 the combined market for Washington, Oregon and B.C. had dwindled to less than 100 m i l l i o n 135 board feet. This chapter w i l l attempt to explain how this diminution See Appendix I. 63 occurred. Disaster and Reconstruction The cause of the bulge i s now a landmark i n Japanese h i s t o r y . The i s l a n d Empire was h i t on September 1, 1923 by one of the worst earth tremors that the world has experienced. The great earthquake accompanied by conflagrations that broke out almost simultaneously reduced to ashes i n a single night the greater portions of Tokyo and Yokohama. Some 100,000 persons perished i n the catastrophe and nearly 136 2 m i l l i o n people were rendered homeless. A tremendous task of r e s h e l t e r i n g the homeless lay before the a f f l i c t e d Japanese. In the very month of the d i s a s t e r the Government took the f i r s t step towards recovery by c o n s t i t u t i n g by Imperial Ordinance a metropolitan recon-137 s t r u c t i o n board. The board was charged not merely with r e s t o r i n g Tokyo to what i t was before the catastrophe but to b u i l d a new c a p i t a l 138 with an aspect e n t i r e l y new and quite d i f f e r e n t from the old Tokyo. I t was a s i t u a t i o n tailormade for e n t e r p r i s i n g suppliers of b u i l d i n g materials. Bureau of Reconstruction, Japan - The Outline of the Recon-s t r u c t i o n work i n Tokyo and Yokohama, (Tokyo, 1929), Preface. 137 "Rebuilding of Tokyo discussed," Timberman, Vol. 24, No. 12. October 1923, p. 124. Bureau of Reconstruction, loc. c i t . 64 There was a f e e l i n g i n c e r t a i n quarters that during the period of reconstruction the highly progressive Japanese might sieze on the opportunity to elaborate t h e i r former ideas and introduce some Western methods into t h e i r construction.- Some PNW lumbermen went so far as to suggest that the influence of America and Europe might become more and more apparent i n the laying out of Tokyo and Yokohama, and with new styles of construction would come the demand for d i f f e r e n t lumber s p e c i f i c a t i o n s . They seemed to believe that the "Jap square", the most popular form of Japanese lumber imports, would be relegated to a place 139 of lesser importance i n t h e i r a c q u i s i t i o n s . North American influence on Japanese town planning was not long i n coming. Before the end of 1923, Viscount Gato, Minis t e r of Home A f f a i r s of the Japanese Government, selected one Charles Beard, Member of the New York Municipal Bureau, to come to Japan to suggest ways and means to r e b u i l d the Empire's premier 140 c i t i e s . It was an opportunity for the Americans to b l i t z the Japanese market with t h e i r lumber, and what was more, with t h e i r common 141 American s p e c i f i c a t i o n s . The evidence of the time indicated a decided reluctance on the part of the Americans to supply Japan with 139 — -"Japanese requirements / ' P a c i f i c Coast Lumberman, Vol. 7, No. 12, December 1923, p. 21. Japanese lumber market /'Timberman, Vol. 25, No. 2, December 1923, p. 107. 1 4 1Timberman, V o l . 23, No. 12, Oct. 1923, p. 28, op. c i t . 65 large timber when with some persuasion they/pmight be able to dispose of the more convenient American standards on the Japanese market. Such a prospect, however, was not as simple as i t seemed. The Japanese were expected to import a c e r t a i n amount of lumber manufactured to American standards but i t was argued i n r e a l i s t i c quarters that this was only natural i n view of the considerable curtailment of t h e i r own manufacturing capacity because of the d i s a s t e r . The factor that r e a l l y m i l i t a t e d against Japan's acceptance of American standards was a law that was promulgaged i n Japan around 1920 providing that within ten years Japan would adopt the metric system of standards. With this p o s s i b i l i t y before them i t was hardly l i k e l y that the Japanese would e a s i l y adopt American standards. The Americans had previously considered supplying Japan with lumber ready cut to f i t the standards of the Japanese houses. I t was doubtful, however, whether t h i s work could be done to advantage i n America. The p r i n c i p a l objection was that such cut and f i n i s h e d lumber 1 / O" * ' ' "" " • - - - • P a c i f i c Coast Lumberman, Vol. 7, No. 12, December 1923, p. 21, op. c i t . 143 Timberman, Vol. 25, No. 2, December 1923, p. 107, op. c i t . 66 was c l a s s i f i e d as b u i l d i n g materials which were subject to...an import duty of 25 per cent ad valorem. Another objection was founded i n the design of Japanese houses. Owing to the prevalence of earthquakes, i n d i v i d u a l house members were not n a i l e d but mortised together and i t would have been impractical to form the tenons and mortises before shipment. Such work required a large amount of hand labour which could 144 be more cheaply done i n Japan. An a f f l i c t e d country desperately short of reconstruction material cannot a f f o r d to be too p a r t i c u l a r about t h e i r precise requirements. Recognising t h e i r d i r e need for wood, the Japanese Government suspended import duties on a l l foreign lumber. This largely benefited the PNW lumber producers since countries other than the U.S. and Canada could not produce lumber i n large quantities with any degree of r a p i d i t y due 145 to l i m i t e d f a c i l i t i e s . R e a l i z i n g the d i f f i c u l t i e s of obtaining t h e i r f u l l requirements of P a c i f i c Coast lumber i n t h e i r own p a r t i c u l a r speci-f i c a t i o n s , Japanese buyers began to purchase i n sizes that could be more r e a d i l y supplied by the exporting m i l l s . There seemed to be l i t t l e 144 — West Coast Lumberman, V o l . 40, No. 473, June 15, 1921, p. 28, op. c i t . 145 Timberman, Vol. 24, No. 12, October 1923, p. 53, op. c i t . 67 doubt that the demand from Japan would be the most important factor i n 146 the P a c i f i c Coast lumber export trade for some considerable time. But there was to be a momentary drop between 1923 and 1925, the sort of drop that i s usually part and parcel of the chaotic business conditions that accompany natural d i s a s t e r s . The heavy imports of lumber i n the l a t t e r part of 1923 and the beginning of 1924 are now a matter of history. Immediately a f t e r the catastrophe firms jumped i n and bought heavily knowing that prices would be bound to advance sharply. The Fukkoin or Reconstruction Bureau was formed under Government auspices with a view to ensuring adequate supplies, not only of lumber but of a l l bu i l d i n g materials for recon-s t r u c t i o n purposes. Very few at the time, even the most conservative traders, estimated that there was going to be an over-importation and that within only a few weeks the market would be glutted, with the r e s u l t that the bottom would f a l l out of p r i c e s . Everyone was too occupied worrying about new sources of supply to f i l l the increased demands from both old and new firms. Prices on the Canadian side kept advancing, but day by day fresh orders were being cabled across the P a c i f i c , some by firms who had never traded i n lumber before and did not know a Douglas f i r "baby" from a cedar f l i t c h or t h e i r r e l a t i v e value. Nevertheless P a c i f i c Coast Lumberman, Vol. 7, No. 12, December 1923, p. 21, op. c i t . 68 the banks, who were encouraged by the Government, rendered a l l the 1 / "7 assistance to finance these extravagant purchases. The Fukkoin, having l a i d out t h e i r programme, decided to buy a large amount of lumber and Canada had the honour of making the f i r s t sales of something over 30 m i l l i o n board feet to the Fukkoin about the end of November. They also placed large orders with the United States m i l l s through the medium of the Japanese Embassy i n Washington. Soon the harbours became congested and i t was d i f f i c u l t to handle the lumber - often as many as f i f t e e n or twenty cargo ships would be waiting out-side the breakwater for t h e i r turn to come i n and discharge. The a u t h o r i t i e s then r e a l i s e d how the thing had been overdone with the r e s u l t that money soon became t i g h t and c r e d i t d i f f i c u l t to arrange, e s p e c i a l l y 148 ton lumber business. Lumber dealers found themselves i n trouble. The Government which at f i r s t intimated that large sums would be forthcoming for bu i l d i n g , to be advanced to those who would require i t through the medium of c e r t a i n banks, f i n d i n g that cost of b u i l d i n g 147 - , A.E. Bryan, The Lumber Market of Japan, (Ottawa; Dept. of Trade and Commerce, Commercial I n t e l l i g e n c e Service, 1926), p. 32 - 33. 1 4 8 i b i d . 69 materials was beginning to go down, withheld the helping hand i n order to economize on i t s advances. The r e s u l t was that many who would have otherwise bought lumber and b u i l t could not do so, consequently the importers could not dispose of t h e i r stocks while fresh shipments were a r r i v i n g d a i l y . Then the Fukkoin's own purchases began to a r r i v e on an already f a l l i n g market: a l l concerned wondered how the a u t h o r i t i e s were going to s e l l t h e i r stock. They d i d not dispose of i t a l l but stored i t - over 100 m i l l i o n feet - thinking perhaps that prices would advance again and they would be able thus to recoup t h e i r apparent loss. This added fury to the already inflamed conditions, prices continued to drop, many dealers short of cash sold at any p r i c e , a panic of p r i c e - c u t t i n g ensued, fresh imports dropped e n t i r e l y and the market became stagnant 149 with low prices and heavy stocks. The aftermath was even more disastrous than immediate losses. Several of the largest, and formerly the most important lumber dealers f a i l e d , causing much confusion and bringing losses to a number of foreign houses who had, as formerly, sold them large parcels on promissory notes. Other concerns had to take over shipments from t h e i r c l i e n t s on 149 Ibi d . 70 a r r i v a l , store the goods at great cost and s e l l them as best they could at spot market rates, with much loss to themselves. This drove two or three of the large foreign houses out of the lumber business, and by 1926 there were only about h a l f the number of recognised lumber importers i n Japan as compared with before the earthquake. A degree of s t a b i l i t y was to bless the Japanese market with the formation of the Japan Foreign Lumber Import Association i n May 1926. The thing that r e a l l y spurred t h i s move was Japanese d i s a t i s f a c t i o n with the untenable s i t u a t i o n of too many grading rules for American red cedar. The leaders of t h i s syndicate movement claimed that American grading rules were no longer s u i t a b l e for the Japanese market. They also expressed disenchantment with the wide d i v e r s i f i c a t i o n i n trading methods and believed that with proper financing they could adopt grading rules acceptable to a l l and could organize c a r e f u l inspection and regulation 151 of imports. It i s c l e a r , therefore, that less than three years a f t e r the great earthquake, the Japanese were prepared to organize themselves' so as to obtain the type of lumber that they wanted. 1 5 0 , Ibi d . ,jNew Japanese import association," Timberman, Vol. 27, No. 7, May 1927, p. 158 71 The Japanese were s t i l l s e n s i t i v e about the d i s i n t e r e s t of North Americans r e l a t i v e to supplying s p e c i f i c Japanese requirements. The Tokyo manager of the Douglas F i r E x p l o i t a t i o n and Export Co., Mr. R.D. Horning, was often asked by the Japanese the reason :why FNW lumbermen were reluctant to v i s i t Japan to study t h e i r requirements and to produce the s p e c i f i c a t i o n s and grades suitable for t h e i r market. The Japanese were apparently f r u s t r a t e d by the hundred or more grading rules for red cedar and suggested that the American lumbermen should f i n d out the material suitable f o r the Japanese market and evolve a grading r u l e that would ensure t h e i r r e c e i v i n g what was s u i t a b l e . To the Japanese i t was a mystery that there was not a closer working arrangement between American sawmillers and Japanese dealers and they f a i l e d to see why American sawmillers could not take a cedar log and cut i t into s a t i s f a c t o r y Japanese s p e c i f i c a t i o n s as e a s i l y as the Japanese themselves could. R.D. Horning noted these Japanese sentiments during his 19 month sojourn i n Japan and upon his return to America uttered some pointed words that shook contemporary lumbermen and which should enlighten t h e i r 152 present-day counterparts: R.D. Horning, "The Japanese Viewpoint," Timberman, Vol. 26, No. 7, May 1925, p. 75. 72 " A l l of these things lead me to believe that the Japanese lumbermen, unless we awaken to the s i t u a t i o n , w i l l be forced to buy cedar logs and cedar logs alone, i n order that he may secure s a t i s f a c t o r y s p e c i f i c a t i o n s for his trade, and for general high grade construction material he w i l l be forced, years before i t would be otherwise necessary, into that vast untouched forest of the Russian maritime Province of S i b e r i a . " V i s - a - v i s the Japanese preference for logs, Horning 1s words were t e r r i b l y prophetic. With regard to S i b e r i a , his remarks in s p i r e d an era of serious assessment of Russia as a competition i n the Japanese market. The Ogre of Russian Competition Japanese lumbermen began to wonder whether i t was possible for Russia to prove to be as good a f r i e n d to her as America and whether 153 she could a f f o r d to give Russia a t r i a l . The menace of Russian competition i n the Japanese market had arr i v e d and t h i s was to be one of the most talked about topics of the 1920's. In 1923, Japan's lumber imports came p r i n c i p a l l y from the U.S.A. 154 (717o), S i b e r i a (15%) and Canada (5%). Although dominated by the "The Japanese market and the Soviet timber supply," B.C. Lumberman, Vol. 9, No. 11, Nov. 1925, p. 22. 154 Z. Kuruda_,"The Japanese lumber business a f t e r the gold ban removal," B.C. Lumberman, V o l . 14, No. 7, July 1930, p. 18. Americans, Japan was Canada's second largest market both for sawn lumber and round logs during the 1920's . S i b e r i a too was dominated by the Americans and t h i s state of a f f a i r s probably led to a c e r t a i n complacency on the part of the Americans. The day before the great earthquake, Mr. H.A. Butts, the U.S. Trade Commissioner i n Japan went on record as fearing l i t t l e competition from A s i a t i c Russia because of the unstable p o l i t i c a l climate there. He did acknowledge however, that S i b e r i a would i n time supply Japan with a large amount of softwood timber but not i n the lengths and sizes possible to be obtained i n America. The same: was true for the Japanese colonies of Sakhalin and 156 Hokkaido. After a f i r s t - h a n d look at conditions i n Japan, Major Everett G. Griggs, President of the Douglas F i r E x p l o i t a t i o n and Export Company, agreed that more lumber would enter Japan from S i b e r i a but added that t h i s material could not be compared with the American product, PNW lumbermen boasted that t h e i r red cedar, f i r and hemlock possessed q u a l i t i e s which were superior to Japan's commonest species ^"'L.R. Andrews, Post War Export Markets for Canadian Lumber, (B.C. Lumber and Shingle Manufacturers Association, 1944), p. 185. •*"56H.A. Butts, "Economic aspects of Japan, "Timberman, Vol. 24, No. 11, Sept. 1923, p. 108. Japan may adopt American standards," Timberman, Vol. 25, No. 4 Feb. 1924, p. 48. 74 158 and to the general run of Siberian timber. Siberian lumber seemed to be good only for pulpwood and also for making boards. I t was much smaller than the P a c i f i c Coast lumber, p a r t i c u l a r l y in!length, and this was a heavy handicap for the former i n competing with the l a t t e r as a 159 b u i l d i n g m a t e r i a l . By far the greater part of Russian lumber reaching japan was of the coniferous species. One of the large Japanese firms doing a regular business i n Siberian lumber was advertising Siberian Kedar (benimatsu) as a substitute for P a c i f i c Coast lumber. But the m i l l s were only cutt i n g i t into cheap panels and 1% inch planking. Its strength and d u r a b i l i t y were a matter of doubt i n the minds of the saw-m i l l e r s and l i t t l e or no uprights were being made from i t . There seemed to be no immediate l i k e l i h o o d of t h i s species crowding North American 160 timber on the Japanese market. But Kedar was already.competing d i r e c t l y with Port Orford cedar and although the Japanese had not begun to use the wood for the same purposes as Douglas F i r , i t was possible that they might get educated to i t s use, even for the same purposes for , 1 6 1 which Douglas f i r was used. I C Q . . - .. . -. "The future of the Japan market," B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 19 159 B.C. Lumberman, Vol. 10, No. 4, A p r i l 1926, p. 25. 16 <L • V Bryan, op. c i t . , p. 21. •j^g ^  -. B.C. Lumberman, V o l . 9, No. 6, June 1925, p. 19. Among the PNW lumbermen there were the cautious ones who f e l t that the i n f e r i o r i t y of Russian timber to North American timber was not to be taken for granted. They argued that the apparent quality differences between Russian and American material i n the Japanese market did not necessa r i l y r e f l e c t the q u a l i t y differences between the forest stands of the two regions. This opinion was j u s t i f i e d i n the absence of sophisticated grading methods i n the Russian export trade. Lumber and logs that were exported to Japan from the West Coast were c a r e f u l l y inspected under the supervision of the PLIB, and hence t h i s graded .material was expected to appear better than the m i l l - r u n grade of • j 162 Russian forest products . Whether or not P a c i f i c Coast lumber was of higher q u a l i t y than Russian lumber seemed to some lumbermen of the time a meaningless question on i t s own. The important things was not q u a l i t y but quality at a p a r t i c u l a r p r i c e . Herein lay the r e a l threat of Russian competi-t i o n . As long as the Russians needed foreign exchange, they were Bernard Brereton, "The Competition of Siberian lumber," B.C. Lumberman, V o l . 9, No. 8, August 1925, p. 57. prepared to work t h e i r forests to the point of exhaustion and take 163 whatever p r i c e they could get for th e i r products. There was indeed some evidence to show that the p r i c e of Russian lumber i n the Japanese market was much less than that of North American lumber though the q u a l i t y 164 of the former averaged out to be much lower than that of the l a t t e r . The question that the North Americans had to put to themselves was how far the Japanese were prepared to s a c r i f i c e q u a l i t y for the advantage i n p r i c e . PNW lumbermen, however, could count one s i g n i f i c a n t blessing. They had i n common with the Japanese a s o c i a l and business system that was compatible one with the other. Because of the d i f f e r e n t ideologies, great d i f f i c u l t y and r i s k s accompanied the importation of Siberian lumber into Japan. Logging operations i n the Russian Par East had been unsatisfactory c h i e f l y because of the Russian f i g h t with private , 166 c a p i t a l . Two or three Japanese companies had been formed for the purpose of negotiating with the Soviet a u t h o r i t i e s for the p r i v i l e g e of 163 T o r i t c h , op. c i t . , p. 180. ^^Bryan, op. c i t . , p. 18. 1 6 5 - - • B.C. Lumberman, Vol. 10, No. 4, A p r i l 1926, p. 25. 1 6 6 " ' B.C. Lumberman, Vol. 9, No. 8, August 1925, p. 57, op. c i t . c u t t i n g i n Siberian forests and transhipping the timber to Japan. In every case the negotiations f e l l through due to the high revenue which the Soviet o f f i c i a l s wished to exact, and to other onerous conditions. These, together with the high rate of handling charges and the high cost of labour i n S i b e r i a made i t impossible for any company to b u i l d up 167 a p r o f i t a b l e business. Operators either became bankrupt or withdrew from business. The majority of the timber operations became concentrated i n the hands of the "Dalless" (a Russian Government i n s t i t u t i o n ) and a few corporate organisations. These organisations were backed by a number of Japanese, American and B r i t i s h f i n a n c i e r s who took heavy losses due 1 fift to v i o l a t i o n of contracts by the "Dalless". PNW lumbermen were assured that the hampering conditions imposed by the Soviet Government formed a good reason why Japan would not increase to any extent her shipments from Russia. Even the signing of the Russo-Japanese basic treaty between 1924 and 1925 caused l i t t l e consternation in.^North America. I t was 167 Bryan, op. c i t . , p. 18-19. 168 B.C. Lumberman, Vol. 9, No. 8, Aug. 1925, p. 57, op. c i t . 169 ' " -Bryan, op. c i t . , p. 18. 78 true that by the treaty Japan obtained c e r t a i n r i g h t s to develop the natural resources of S i b e r i a , i n c l u d i n g timber, but the optimists f e l t that i t would be d i f f i c u l t to implement the intent of the treaty. The outstanding feature of the treaty was that i t dealt only with g e n e r a l i t i e s and the s p e c i f i c d e t a i l s were l e f t to the private Japanese concerns to negotiate with Soviet authorities. One expected that the fundamental differences i n the business methods and the s o c i a l and p o l i t i c a l ideals of the respective countries presented an almost insurmountable obstacle 170 i n the way of reaching an agreement. It was f e l t , however, that whatever might have been the e f f e c t s i n t h e i r s e l l i n g methods, the Russians might reasonably be expected to adapt them to the requirements of Japanese purchases, i f the trading offered f a i r prospects of either 171 commercial p r o f i t or p o l i t i c a l advantages. Certain adaptations were made indeed, not by the Russians but by the Japanese who smote PNW lumbermen with that most l e t h a l of i n t e r n a t i o n a l trade weapons - the t a r i f f . 170 S. Kikuchi, "Japan and Soviet timber," B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 38. 171 B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 19. 80 prices below manufacturing cost not only disorganized the whole water-borne trade i n Douglas f i r but also seriously antagonized the better class of overseas importers.''"^ There was another angle to the imposition of the Japanese t a r i f f and t h i s r e l a t e d to the Japanese concessions i n the Russian Maritime Provinces. While i t was true that any Japanese t a r i f f would t h e o r e t i c a l l y apply equally to lumber from S i b e r i a and the P a c i f i c Coast, the opinion was held that i t would be f a r c i c a l for the Japanese concessionaires to pay duty to the Japanese Government. If for d i p l o -matic reasons they -were forced to pay duty the Japanese Government could resort to subsidizing the concessionaires for each unit of timber im-ported. Precedent had already been set i n the case of p i g i r o n from Manchuria, the subsidy being more than s u f f i c i e n t to cover the duty.''"^^ The duty was i n fact set at such a rate to favour the Siberian timbers. B.C. lumbermen were outraged. The low t a r i f f s that were applied to Sib-erian timbers also applied to the minor B.C. species. But there were " E d i t o r i a l , " B.C. Lumberman, Vol. 15, No. 3, March 1931, p. 12. 175 -Timberman, Vol. 28, No. 9, July 1927, p. 199, op. c i t . 79 T a r i f f D i f f i c u l t i e s On A p r i l 1, 1929, a new Japanese t a r i f f on lumber became 172 e f f e c t i v e . PNW lumbermen were convinced that the whole purpose of enacting a new t a r i f f was to discriminate against PNW lumber i n favour of S i b e r i a n lumber. Most Japanese lumbermen supported the move i f only because of enlightened s e l f - i n t e r e s t . They had been able i n the past to make ti d y p r o f i t s on domestic and Siberian lumber because the quantity produced was known and held i n strong hands thus making i t possible to s t a b i l i z e the market and control the p r i c e . On the other hand, they found that they had been unable to make a p r o f i t on American lumber due to the large quantity imported which resulted i n periodic market depressions when the losses far exceeded the p r o f i t s of good 173 times. Colonel Greeley, whose name has been associated with American f o r e s t r y since the e a r l i e s t times, suggested that the low pr i c e of West Coast Lumber was an important cause of the adverse Japanese t a r i f f . He reminded the Douglas f i r shippers of the U.S. of the e v i l s of i n d i s -criminate dumping and added that the dumping of t h i s valuable species at 172 "Lumber trade i n Japan," Timberman, Vol. 30, No. 6, A p r i l 1929, p. 126. 173 -"New angle on Japanese lumber t a r i f f , " Timberman, Vol. 28, No. 9, J u l y 1927, p. 199. 81 p r o h i b i t i v e charges on such unique and v e r s a t i l e woods as Douglas f i r , red cedar and western hemlock, i n the possession of which B.C. excelled and the export of which the bulk of the lumber trade to Japan consisted. - The Japanese Consulate i n Vancouver endeavoured to quieten the B.C. lumbermen. They maintained that the Japanese Government c a r e f u l l y designed the new t a r i f f so as not to give the Northwest lumber business any serious blow. They claimed that the ultimate aim of the t a r i f f r e v i s i o n was to help the Japanese forest industry out of i t s miserable condition, a condition that had ari s e n because of the phenomenal increase i n foreign lumber imports and the depressed market for Japanese lumber. It was hoped that the e f f e c t of the new t a r i f f would be to regulate the importation of lumber, thus bringing about s t a b i l i t y of lumber prices i n Japan. F i n a l l y , they i n s i s t e d that the new t a r i f f was designed not to apply to lumber by country of o r i g i n but rather by species of lumber and that i t was a mistaken idea to think that Japan was e s p e c i a l l y 177 favouring Siberian lumber. " E d i t o r i a l , " B.C. Lumberman, Vol. 14, No. 1, Jan. 1930, p. 12. ^ 7 7"The new Japanese t a r i f f on lumber," B.C. Lumberman, Vol. 13, No. 5, May 1929, p. 26. 82 The Japanese i n s e t t i n g the new t a r i f f overlooked one loophole. They underestimated domestic reaction to the favourable conditions brought about by this protective w a l l . For one thing, the t a r i f f 178 r e v i s i o n induced an excess of output. The measure encouraged the Japanese forest owners to increase production enormously with the r e s u l t that the domestic market was simply flooded with a surplus supply thereof. The consuming demand on the other hand sharply declined because of the 179 completion of c i r c l e s . During the f i v e months immediately following the enforcement of the new t a r i f f rates, domestic lumber depreciated by about 15 per cent a l l around, and Northern Island lumber, e s p e c i a l l y 180 Karafuto pine, declined by about 50 per cent. In the circumstances, the Japanese producers had no choice but to r e s t r i c t the f e l l i n g of standing trees, p a r t i c u l a r l y when money began to get t i g h t due to outflow 1 8 1 of gold subsequent to the removal of the embargo on gold exportation'. Forest owners sustained enormous losses as they were unable to dispose of t h e i r increased holdings. There was no denying that the t a r i f f 178 E. Kusano, " E f f e c t of t a r i f f r e v i s i o n on Japanese trade," B.C. Lumberman, V o l . 13, No. 10, Oct. 1929, p. 16. 179 --E. Kusano, "Latest trade news from Japan," B.C. Lumberman, Vol. 14, No. 9, Sept. 1930, p. 34. E. Kusano, op. c i t . , B.C. Lumberman, Vol. 13, No. 10, Oct. 1929, p. 16. 1 8 1 E . Kusano, op. c i t . , B.C. Lumberman, Vol. 14, No. 9, Sept. 1930. The embargo on gold exports from Japan, imposed during World 83 r e v i s i o n was a f a i l u r e . The fact that the increase i n duties was absorbed by the shipping concerns that were p r i m a r i l y Japanese also contributed to the m i s - f i r i n g of the Government plan. Up to 90 per cent of the P a c i f i c Coast lumber exported to Japan was transported i n Japanese tramp ships. As these shipping concerns were unable to get contracts for future d e l i v e r y at the time -of the t a r i f f r e v i s i o n , they gradually brought down the freightage and t h i s meant that CIF quotations were that much smaller. Yet there was some e f f e c t on the quantity of lumber shipped to Japan. For B.C. alone, exports f e l l from 219 m i l l i o n board feet (64% of exports) i n 1928, the peak year of the period, to 192 m i l l i o n board feet (51% of exports) i n 1929. For Washington and Oregon the f a l l was even mightier - from 776 m i l l i o n board fe"et i n 1928 to 475 m i l l i o n board feet i n 1929. From 1928 to the end of the period i n 1940, 183 exports of lumber from the PNW to Japan showed a steady decline. The decline i n exports to Japan was most noticeable i n the baby squares 184 as the demand for larger squares kept up well for a time. It would War I, was l i f t e d on January 11, 1930. (Z. Kuruda, op. c i t . , B.C. Lumber-man, V o l . 14, No. 7, July 1930, p. 18.) 1 8 2 E . Kusano, op. c i t . , B.C. Lumberman, Vol. 13, No. 10, Oct. 1929, P- i ? . 183 ~r" See Appendix I and Figure I. 1 8^"Chats with Vancouver exporters," Timberman, Vol. 31, No. 2 Dec. 1930, p. 128. 84 be inaccurate to a t t r i b u t e to the Japanese t a r i f f r e v i s i o n the brunt of the decline i n PNW lumber exports. The whole world was i n trouble at the time of i t s enactment for the year 1929 heralded the Wall Street Crash and the beginning of the great World Depression. Under the pressure of the world depression, the structure of world commerce f e l l to pieces. The f i n a n c i a l c r i s e s which started i n the summer of 1931 led to the collapse of the world monetary system. The e f f e c t of the f i n a n c i a l catastrophe on merchandise trade led countries to adopt a r e s t r i c t i v e trade p o l i c y of an extreme measure i n emergency e f f o r t s to improve t h e i r f i n a n c i a l condition. But the s i t u a t i o n had only become worse i n an ever growing v i c i o u s c i r c l e of high t a r i f f b a r r i e r s and low 185 trade volumes. The lumber trade was not exempt from the world depression. United States firms based i n Japan received frequent enquiries from buyers but the f i n a n c i a l conditions did not warrant going into the r i s k of s e l l i n g on promissory note terms. Those who bought on d i r e c t l e t t e r of c r e d i t f r e e l y picked up the s e l l e r s who sold at " d i s p o s a l p r i c e " , and no s e l l e r who quoted his p r i c e on legitimate c a l c u l a t i o n s could secure business. There was the prospect that future 185 -• T. Uyeda, The recent development of Japanese foreign trade, (Tokyo: Japanese Council I n s t i t u t e of P a c i f i c Relations, 1936), p. 73. 85 i n d i v i d u a l transactions would be limited i n small parcels, making i t d i f f i c u l t to do f u l l cargo business, and that buyers would become more p a r t i c u l a r about q u a l i t y with more tendency of buying on s p e c i f i e d .,, 186 m i l l s . While the timber trade between the PNW and Japan was de c l i n i n g with the depression, that between the Soviet Union and Japan seemed to be increasing. Timber imports into Japan from North America f e l l from 95 m i l l i o n cubic feet i n 1929 to 67 m i l l i o n cubic feet i n 1930. In th i s same period imports from the Soviet Union increased from 92 m i l l i o n 187 cubic feet to 99 m i l l i o n cubic feet. Colonel Greeley explained away 188 t h i s Soviet success by t h e i r organized dumping p r a c t i c e s . But the Soviet Union was to run headlong into yet another Japanese t a r i f f . In mid-1931, the Government of Japan increased the duty on lumber made of Siberian Kedar, northern and white f i r , spruce and larch. The l e g i s l a t i o n placed the import t a r i f f on Russian Kedar on about the same 186 "Japanese lumber trade", Timberman, Vol. 31, No. 4, Feb. 1930, p. 126. 187 - - • Japan lumber Journa1 Inc., White Paper on Japan's Forestry 1 Industry 1965, (Tokyo, 1966), p. 298. 1 8 8 -B.C. Lumberman, Vol. 15, No. 3, March 1931, p. 12. op. c i t . 86 189 basils as .Japan's duty on Douglas f i r . This unhappy s i t u a t i o n was further aggravated by squabbles that were taking place between the Japanese concessionaires i n S i b e r i a and the Soviet a u t h o r i t i e s . The import from the Soviet Maritime D i s t r i c t was expected to decrease because of the demands made by the Soviet trade representative on the Mit s u b i s h i Trading Company which had been disposing of the Soviet 190 government's consignments. (In 1930, the Mi t s u b i s h i Company was awarded a contract by Soviet Russia for the del i v e r y of 240 m i l l i o n 191 feet of Siberian logs into the Japanese and Korean markets. ). The Soviet trade representative demanded that the Mitsubishi Company should make an advance equivalent to the pri c e of lumber and that Japanese buyers should send vessels to the port of shipment to take away the lumber, This meant that transactions were then to be conducted on an FOB rather than;;the accustomed CIF basis, an arrangement which the Japanese did not r e l i s h since handling lumber shipments on the buyer's side meant 192 considerable s a c r i f i c e . 189 -"Japan increases tax on Russian lumber," B.C. Lumberman, Vol. 15, No. 5, May 1931, p. 20. 190 I b i d . , p. 36. 191 -Timberman, Vol. 31, No. 4, Feb. 1930, p. 126, op. c i t . 192 - -"News from overseas markets - Japan," B.C. Lumberman, Vol. 15, No. 5, May 1931, p. 36. 87 These d i f f i c u l t i e s stood the PNW lumbermen i n good stead for at t h i s very time Russian timber was becoming increasingly competitive on the Japanese market. The Yokohama correspondent of the B r i t i s h Columbia Lumbermen f e l t that the competition from the Soviet Union was formidable and that the strength of the Russian p o s i t i o n was l i k e l y to increase as time went on. The Siberian species seemed to be of equivalent .quality to such well-known North American species as C a l i f o r n i a White pine, balsam, f i r and l a r c h , and t h i s indicated t h e i r value for general u t i l i t y purposes. North Americans had to r e a l i z e that i t was only by intensive trade extension work that they could expect to maintain 193 t h e i r dominant p o s i t i o n i n the Japanese lumber business. The threat of even heavier t a r i f f s s t i l l hung over the heads of a l l Japan's trading partners and t h i s threat was to become an ugly r e a l i t y i n the chaotic condition of the 1930's. Much of the chaos has been blamed on Japanese expansionism i n the Far East. I t a l l began with the h i s t o r i c "Manchurian Incident" when, i n September of 1931, the young o f f i c e r s of Japan's Kwantung army stationed i n Manchuria for the protection of the South Manchuria r a i l r o a d claimed that Chinese troops "News from overseas markets - Japan," B.C. Lumberman, Vol. 15, No. 10, Oct. 1931, p. 12. 88 t r i e d to sabotage the r a i l r o a d and used t h i s alleged incident to 194 occupy the whole of Manchuria. Because of the "Manchurian Incident" foreign pressure upon the Japanese economic e n t i t y was greater than 195 ever. The gold embargo that was re-imposed i n 1931 enabled Japan 196 to achieve a remarkable trade expansion i n dwindling world markets. The yen had been depreciating and t h i s reacted favourably on Japanese 197 manufactured goods whose export p r i c e became cheaper. Japan had to encounter many kinds of stringent trade b a r r i e r s i n a large number of countries. The trade b a r r i e r s i n the main markets for Japanese goods before 1932 or so were not s p e c i f i c a l l y designed to check Japan's advance, but merely consisted either of the general t a r i f f increases of a p r o t e c t i o n i s t character due to the world depression, or of the control of foreign exchange. But a f t e r 1933, one country a f t e r another resorted to high, ( t a r i f f s , import quotas or import-licensing regulations or exchange-control with the s p e c i f i c objective of excluding imports 1 9 4 -The World and i t s Peoples, op. c i t . , p. 235-236. 195 • - • - - -N. Kawashima, S t a t i s t i c a l Survey of Japanese foreign trade, (Japan, The Hokuseido Press, 1938), p. 20. 196 - ' Tokyo Assoc. for L i b e r t y of Trading, The Trade agreements between Japan and some other countries, (Tokyo, 1937), p. 5. ^^Kawashima, loc. c i t . 89 from Japan. These measures followed accusations of "exchange dumping" 1 9 8 and " s o c i a l dumping" that were hurled at the Japanese. Among the discriminatory t a r i f f s against Japanese goods the most notable were the exchange compensation duties (aimed at the depreciated 199 yen) and dumping duties (aimed at low Japanese wages.) Japan r e t a l i a t e d by enacting a "Trade Adjustment and Safeguarding Law" i n A p r i l 1934. This law was designed to adjust and safeguard the country's trade i n t e r e s t s i n response to such r e s t r i c t i v e steps as any foreign country might either have had already taken or was taking against Japan. I t was also designed to vest the Government with a power to p r o h i b i t or r e s t r i c t imports of any s p e c i f i c goods, or to levy a d d i t i o n a l 200 duties. Canada was one of the f i r s t countries to suffer at the hands of this law. The Dominion Government had imposed on Japanese goods a dump duty based on the difference between the current value of the yen which then stood at 28 to 29 cents, and i t s former value of 201 49% cents. Japan n a t u r a l l y protested t h i s system of valuation. Tokyo Assoc. for L i b e r t y of Trading, loc. c i t . 199 I b i d . , p. 6. 200 Ibid ., p. 15-16. 201 "Japan imposes surtax on B.C.", Timberman, Vol. 36, No. 9, July 1935, p. 53. I t seemed unfair to them since Canada was enjoying a very favourable 202 trade balance with Japan. The Japanese Government consequently imposed a d d i t i o n a l import duties of 50 per. cent ad. valorem on eight 203 items of import from Canada among which was timber. The Canadians were already undergoing acute f r u s t r a t i o n s from the heavier duties which were imposed upon the ent i r e l i s t of lumber and timber products i n June 1932. Table V on the following page d e t a i l s the increase i n the Japanese lumber t a r i f f s . 202 Tokyo Assoc. etc., op. c i t . , p. 69. In 1933 Japan imported 46.9 m i l l i o n yen's worth of goods from Canada while Canada imported 6.6 m i l l i o n yen's worth of goods from Japan. 203 Ib i d . , p. 15-16. 204 "New Japanese lumber duties," Timberman, Vol. 33, No. 9, July 1932, p. 55. 91 T A B L E V JAPANESE LUMBER DUTIES - 1932 Species New Duty Old Duty (Yen per thousand board feet) Douglas F i r Medium and big squares Small squares, f l i t c h e s One-inch boards 8.023 13.215 16.282 4.96 9.21 10.75 Port Orford Cedar Logs and bolts Small squares 17.202 31.36 12.80 23.30 Red Cedar and Hemlock Logs Medium and big squares Small squares One-inch boards 10.05 11.78 17.51 19.89 7.80 8.80 13.00 14.80 Noble f i r , spruce, white pine, larch Logs Small squares 8.59 14.15 6.40 10.50 Source: Timberman, Vol. 33, No. 9, July 1932, p. 55. 92 As a r e s u l t of i n d u s t r i a l i s a t i o n and a high t a r i f f p o l i c y , a remarkable change took place i n the structure of the Japanese timber trade with 205 both the U.S. and Canada sharing losses. With lumber prices i n -creasing following the t a r i f f a p p l i c a t i o n many construction and engineer-ing projects were postponed. Domestic boards and baby squares were.used to replace imported s p e c i f i c a t i o n s to a considerable extent. Importers began to show a decided preference towards purchasing common i n place of the better merchantable P a c i f i c Coast grades. In r e t a l i a t i o n to Japan's Trade Safeguarding Law, Canada l o s t l i t t l e time i n lowering the l e g a l Canadian equivalent of 100 yen to $41.51 and also, according to a r t i c l e 7 of the T a r i f f Act of Canada, i n proclaiming an Imperial decree placing an addition duty of 33 l/370 ad  valorem on every item of goods o r i g i n a l l y produced i n Japan, i r r e s p e c t i v e of whether i t was a dutiable or duty-free a r t i c l e . Canada and Japan were now engaged i n a regular t a r i f f war, and no further e f f o r t on either side to improve t h i s unfortunate state of a f f a i r s were to bear 205 Elchibegoff, op. c i t . , p. 219. 206 . . . "The Japanese Market," B.C. Lumberman, Vol. 17, No. 3 March 1933, p. 18. 93 207 any f r u i t u n t i l the end of the Conservative Government i n Canada. With the v i c t o r y of the L i b e r a l s over the Conservatives i n the Canadian General E l e c t i o n s of 1935, negotiations were at once restarted between 208 the two countries. At the time of the opening of conversations regarding a more balanced trade, enquiries for B.C. logs and lumber were 209 p r a c t i c a l l y at a s t a n d s t i l l . From about May 1935, Japan had ceased to buy B.C. lumber. This stoppage was at t r i b u t e d to a command from the Tokyo Government. B.C., at a time when i t could i l l a f f o r d to do so was l o s i n g about $6 m i l l i o n worth of trade i n timber products. I t could not be denied, of course, that Japan had a c e r t a i n trade grievance against the Dominion but the v i r t u a l embargo placed on the Canadian imports by the Japanese Government was pretty hard on B.C. which was a f a i r buyer per capita of Japanese goods. A s i t u a t i o n had arisen at 210 Ottawa i n which Eastern and Western Canada were at loggerheads. Commercial peace was to come only when the negotiations between the Japanese and Canadian Governments were concluded. An exchange of notes 207 • Tokyo Assoc. etc. op. c i t . , p. 68. 9 0 8 I b i d . , p. 70. 209 "News from overseas markets - Japan", B.C. Lumberman, Vol. 19, No. 6, June 1935, p. 28. 210 "The Japanese embargo on B.C. lumber," B.C. Lumberman, Vol. 19, No. 8, August 1935, p. 8. 94 between the two governments resulted i n the decision of the Japanese Government to cancel as from January 1, 1936, the surtax of 50 per cent 211 ad valorem levied on c e r t a i n Canadian goods. The Conception of the International Marketing Orientation The problem of t a r i f f s during the bulging years was not confined to the Japanese arena. The issue was much more serious between Canada and the United States and i t q u a l i f i e s for discussion here because of the consequences which were pertinent to B C.'s a t t i t u d e towards other export markets, including Japan. In the early 1930's the American Government, l i k e most other Governments, was desperately wrestling with the economic havoc wrought by the depression. Their remedy for the s i t u a t i o n was the passage of the National Recovery Act which f i x e d mini-mum prices for goods and minimum wages for labour. The National Recovery 212 Act forced a substantial r i s e i n American O r i e n t a l markets. I t may be assumed that a s i m i l a r p r i c e d i f f e r e n t i a l existed i n the American market for the American Government produced the celebrated Smoot-Hawley Japan," B.C. Lumberman, Vol. 20, Japan," B.C. Lumberman, Vol. 18, "News from overseas markets -No. 2, Feb. 1936, p. 26. 212 "News from overseas markets -No. 4, A p r i l 1934, p. 28. 95 t a r i f f of 1932. Canadian lumber was affected to such an extent that B.C. operators f e l t that the duty deprived them of a natural market 213 for t h e i r output. Thus deprived, B.C. Lumbermen were compelled to concentrate on markets elsewhere and they n a t u r a l l y turned to the B r i t i s h Empire. At the Imperial Economic Conference held i n Ottawa i n 1932 Imperial preferences were revived at the instance of Canada rather than Great B r i t a i n . Canadian lumber was given an advantage of 10 per cent ad valorem. The bulky cheap character of the commodity increased the effectiveness of governmental p o l i c y i n t i l t i n g the preference for lumber 214 to B.C. away from the adjacent areas of Washington and Oregon. The e f f e c t s of the Imperial preference were s t a r t l i n g . Shipments of lumber from B.C. to the U.K. jumped from 81 m i l l i o n board feet i n 1931 to 271 m i l l i o n board feet i n 1933. I t i s possible that t h i s s h i f t i n market emphasis p a r t l y accounted for the f a l l i n shipments from B.C. to Japan from 139 m i l l i o n board feet i n 1931 to 61 m i l l i o n board feet 215 i n 1933. This f a l l would have hardly r u f f l e d the B.C. lumberman who f e l t secure i n the great prosperity of the U.K. market. But B.C. lumbermen, thanks to the leadership of Harvey Reginald MacMillan, 213 " E d i t o r i a l , " B.C. Lumberman, Vol. 16, No. 7, July 1932, p. 7 214 Lower, op. c i t . , Preface, p. xv. 215 B.C. Lumberman, Vol. 21, No, 9, Sept. 1937, p. 34, op. c i t . 96 were beginning to understand, what has been c a l l e d i n the introduction to t h i s t h e s i s , the i n t e r n a t i o n a l marketing o r i e n t a t i o n . The U.K. market was a well-woven basket, as i t were, into which the B.C. lumbermen could deposit t h e i r eggs, but i t was only one. H.R. MacMillan buckled himself down to some shrewd analysis. He noticed that of the chief non-Empire importing countries, Japan, China and South America were the most important, and that i n 1933, B.C. supplied only 24 per cent of th e i r imports from the PNW. This quantity was less than 3 per cent of t h e i r t o t a l timber consumption and about 11 216 per cent of t h e i r t o t a l imports. B.C.'s p o s i t i o n had to be assessed i n the l i g h t of the e x i s t i n g competition. He f e l t that Washington and Oregon by reason of lower costs and a larger domestic consumption sold abroad 217 at lower prices than B.C. could meet. He recognized- that i n Japan and H.R. MacMillan, "The lumber s i t u a t i o n i n B r i t i s h Columbia," B.C. Lumberman, Vol. 18, No. 10, October 1934, p. 16. 217 MacMillan 1s assessment was i n contradiction to what has been said e a r l i e r about p r i c e d i f f e r e n t i a l s between Canadian and American lumber as a r e s u l t of the National Recovery Act. The important point, however, was that regardless of the accuracy of his assessment, the fac t remained that he did not take for granted B.C.'s advantage i n the non-Empire markets. This a t t i t u d e was complementary to the International marketing o r i e n t a t i o n . 97 China, i n addition to American competition, there was an increasing volume of competition from S i b e r i a and the neighbouring large forested is l a n d of Saghalien (Sakhalin). He advocated co-operation between a l l classes i n B r i t i s h Columbia to restore and maintain B.C.'s a b i l i t y to produce lumber competitively for outside markets where they sold over 218 90 per cent of a l l lumber manufactured. Even before MacMillan made' his plan, there was already a co-operative movement underfoot. The enterprise of the B.C. Lumber and Shingle Manufacturers Association coupled with the splendid help of the Federal and P r o v i n c i a l Governments by way of f i n a n c i a l assistance enabled B.C. to increase world markets. The P r o v i n c i a l Government had included i n the Department of Lands estimates for 1934, a budget of $80,000 for 219 market extension work. The B.C. Lumbermen and those from Eastern Canada sent abroad a lumber s p e c i a l i s t who devoted a great deal of time and e f f o r t to the education of the foreign customers i n regard to Canadian woods. The Canadian Trade Commissioners stationed i n the p r i n c i p a l markets of the world also received s i g n i f i c a n t support. I t 218 MacMillan, ..Idc. c i t . 2 1 9 "Gains world markets," Timberman, Vol. 35, No. 4, Feb. 1934, p. 46. 98 was a matter of perfect team work between the lumber exporters and the P r o v i n c i a l and Federal o f f i c i a l s . The trade promotion a c t i v i t i e s involved te c h n i c a l engineering service, the working with a r c h i t e c t s and a r t i s a n s , 220 builders and i n d u s t r i a l i s t s . It would be unfair to suggest that American lumbermen were t o t a l l y apathetic to markets other than t h e i r own domestic one. Some were indeed perturbed by the sales promotion e f f o r t s of the B.C. lumbermen. Their volume of export business compared with Canada was s t e a d i l y d e c l i n i n g and they f e l t that this should be met with aggressive merchandising p o l i c y i n foreign countries such as Canada was employing. They r e f e r r e d to the zeal with which B.C. products were being pushed i n England, the high class personnel of i t s timber department and the consistent broadsides 221 of advertising and l i t e r a t u r e that were pouring out of that o f f i c e . The U.S. Department of Foreign and Domestic Commerce responded to the s i t u a t i o n by promising that everything would be done to co-operate with the manufacturers and exporters of American lumber i n opening up closed 220 Axel H. Oxholm, "A t r i b u t e to the Canadian lumber exporters," B.C. Lumberman, V o l . 18, No. 7, July 1934. 221 ' "Strengthening sales e f f o r t abroad," Timberman, Vol. 36, No. 3, Jan. 1935, p. 7. markets and developing new o u t l e t s . Hitherto, a l l promotional e f f o r t s had been undertaken by the lumber exporters at t h e i r own expense. The Douglas F i r lumber manufacturers were to continue to bear the brunt of 222 any p r a c t i c a l trade promotion campaign. In t h i s respect the American campaign was less s a t i s f a c t o r y than the Canadian. Co-operation between the private lumber i n t e r e s t s of the American Northwest was a d i f f i c u l t . . 223 proposition. Internal Disorders i n Japan So much for PNW trade promotion of the 1930's. But the most important r e s u l t of the U.S. t a r i f f enactment of 1932 was not so much the volume of business that B.C. lumbermen secured by t h e i r market extension e f f o r t s . Of paramount s i g n i f i c a n c e were t h e i r awaking to the p o s s i b i l i t i e s of world trade, t h e i r enlarged knowledge of the rules of give and take that governed t h i s trade, the fine advertisement they gained both for t h e i r product and the land of i t s o r i g i n , the develop-ment of t h e i r seaports and the increase i n shipping that resulted, and "Regaining foreign lumber trade," Timberman, Vol. 36, No. 5, March 1935, p. 8. 223 J u l i a n Bass, Personal interview, March 28, 1968. 100 224 f i n a l l y , the valuable connections they had formed abroad. S t i l l as the 1930's were drawing to a close i n spite of a sound world-wide pro-motional campaign, the Japanese market for PNW lumber continued to decline. Internal disorders rather than disenchantment with P a c i f i c Coast lumber was the reason. Evidence of Japan's expansionist ambitions has already been noted i n the "Manchurian Incident™ of 1931. In a near r e p e t i t i o n of th i s event, a new provocation was manufactured i n 1937 by Japanese army extremists on the out s k i r t s of Peking i n North China. Japanese troops seized large parts of tyorth China, including the c i t i e s of Peking and T i e n t s i n . Chinese resistance was great and the incident was escalated into a f u l l - s c a l e c o s t l y war which meant the maintenance of a large army 225 i n the f i e l d . The p o l i c i e s of t e r r i t o r i a l expansion and vast expenditures on armaments disturbed the s t a b i l i t y of the Japanese f i n a n c i a l structure. The unparalleled increase i n the obligations of the leading banks, the 50 per cent drop i n gold reserves, the sharp f a l l i n bank rates, and the 226 r i s e i n commodity prices were creating a d i f f i c u l t s i t u a t i o n . The 224 "The r e s u l t s of the U.S. t a r i f f , " B.C. Lumberman, Vol. 18, No. 6, June 1934, p. 12. 225 The World and i t s Peoples, op. c i t . , p. 236. .....~ . "News from overseas markets - Japan," B.C. Lumberman, Vol. 21, No. 2, Eeb. 1937, p. 38. 101 Tokyo Government was indeed s e n s i t i v e to the unhappy economic s i t u a t i o n and attempted to c u r t a i l the r i s i n g trend of commodity p r i c e s . But i n 227 the p o l i t i c a l unrest,.the Tokyo Government f e l l . From then on the s i t u a t i o n was to deteriorate even more. Lacking foreign assets or cr e d i t standing abroad, Japan was forced to husband her f i n a n c i a l resources and r i g i d l y control imports. Peace commodities had borne the brunt of the r e s t r i c t i o n s but raw materials 228 eventually were affected. Lumber exchange was soon exhausted by the Japanese lumber importers and th i s fact handicapped sales and shipments 229 of West Coast lumber. By November 1937, the demand for B.C. lumber 230 from Japan was p r a c t i c a l l y at a s t a n d s t i l l . Another important change induced by the Japanese war e f f o r t was the complete Japanese monopolization of softwood imports from North America through the organization of the Japan-American lumber imports company. The Japanese monopoly of timber imports was an exaggerated No. 6, 227 "News from June 1937, p. overseas 49. markets - Japan," B, .C. Lumberman, Vol. 21, No. 8, 228 "News from overseas August 1939, p. 46. markets - Japan," B. .C. Lumberman, Vol. 23, No. 6, 2 2 9"News from June 1937, p. overseas 49. markets - Japan," B, .C. Lumberman, Vol. 21, 230,,„ News from overseas markets - Japan," B, .C. Lumberman, Vol. 21, No. 11, Nov. 1937, p. 48. 102 version of the general trend i n the country where r e s t r i c t i v e l e g i s l a t i o n such as the American a n t i - t r u s t laws was unknown. Indeed, i n Japan i t was the Government i t s e l f , through the Department of Commerce and Industry which had created t h i s monopoly and p r a c t i c a l l y handed i t over to the four giant i n d u s t r i a l and trading concerns which maintained branch o f f i c e s i n North America - the M i t s u i Bussan Kaisha, the M i t s u b i s h i Trading Co., Yamacho Lumber Co. and Tamura Shoten. This was i n part a reaction against the American p o l i c y of creating huge export corporations through cnnsolidation of various lumber exporting units s p e c i f i c a l l y 231 exempted from the operation of a n t i - t r u s t laws. The P a c i f i c Coast producers saw t h i s monopoly development as a hindrance to t h e i r trade. In spite of the fact that there was a known shortage of timber i n Japan, the market for B.C. wood i n that country remained dormant. A l l the lumber orders i n Japan were passed through the hands of "the Japan-American importing company and were re-routed by i t to four other Japanese companies which acted as the actual buying agencies. These concerns received bids from the m i l l s and placed a l l orders. While t h i s arrangement worked smoothly p r i o r to the war "Japanese competition i n the O r i e n t a l lumber trade",B.C. Lumber-man, Vol. 23, No. 9, Sept. 1939, p. 28. 103 when prices and fr e i g h t s were more or less stable, the ce n t r a l control now complicated the business of negotiation between the importers and the m i l l s as the former were without authority.to pay more than the fix e d p r i c e , and a l l new business had to be referred back to Japan for 232 f i n a l acceptance. In October and December of 1939, there were no lumber shipments to Japan by B.C. exporters, the only business done being 233 i n small log parcels. The Japanese market was s l i p p i n g away completely from the PNW lumbermen. The 1911 Treaty of Commerce and Navigation between Japan 234 and the U.S. was formally abrogated on January 26, 1940. At the end of the following year, on December 7, 1941, Japan's zest for t e r r i t o r i a l expansion culminated i n the surprise bombing of Pearl Harbor, the strong -hold of the American P a c i f i c F l e e t . For the world, the P a c i f i c War had begun and for PNW lumbermen the dark ages of the Japanese lumber market had a r r i v e d . The following chapter traces the emergence of the market from t h i s darkness and i t s development up to the present time. 232 "News from overseas markets - Japan," B.C. Lumberman, Vol. 23, No. 11, Nov. 1939, p. 47. 233 "News from overseas markets - Japan," B.C. Lumberman, Vol. 23, No. 12, Dec. 1939, p. 42. 234 "Japanese trade outlook reviewed," Timberman, Vol. 41, No. 3 Jan. 1940, p. 10. C H A P T E R V THE PACIFIC WAR AND ITS AFTERMATH: 1941 - 1968 The Hiatus The years 1941 to 1948 represent a hiatus i n the export of PNW lumber to Japan. During the greater part of these years Japan was at war with the A l l i e s which included the United States and Canada. Understandably, there was no trade of any kind between North America and Japan as long as there was no peace and when peace did come i t took Japan a few years to recover from the devastation that the war l e f t i n i t s wake and to renew the import of PNW, lumber. When the lumber trade was renewed i n 1948 i t assumed the magnitude of that of the f i r s t decade of the present century. I t was back to square one for PNW lumbermen. The market was to continue at a modest l e v e l u n t i l 1961 when Japan's imports of PNW lumber suddenly shot up and when for the f i r s t time B.C.'s share of the supply surpassed that of Washington and Oregon. Since that year B.C. exports of lumber to Japan have been increasing while those of Washington and Oregon have been on the wane. This chapter examines the reasons f o r and the implications of these trends. 105 During the war, Japan did engage i n some foreign trade with the less unfriendly nations and t h i s trade was handled by the Foreign Trade Management Corporation which the Government established i n July of 1943. The body was authorized to control imports and exports and was responsible for purchasing and warehousing materials such as lumber, galvanized i r o n , 235 n a i l s and medicines needed for emergency r e l i e f . Japan underwent the sort of hardship that a country at war was expected to s u f f e r , e s p e c i a l l y i n the area of obtaining e s s e n t i a l raw materials. There were a l l sorts of shortages which ran the gamut from s t e e l plate and pipe to , , , 236 wire, copper, n a i l s , cement and lumber. To s t a b i l i z e the lumber s i t u a t i o n the Japan Lumber Company was set up by the Japanese Government i n February 1941. It was authorised to regulate production and sale of domestic lumber and timber and to f i x reasonable p r i c e s . Some of i t s s p e c i f i c jobs were to boost pro-duction i n Japan and the Japanese dependencies (Lumber trade i n Japan was then c l o s e l y t i e d up with the Japanese program i n Manchuria and China.), to exercise tcontrol over imports and have power to buy and Jerome B. Cohen, Japan s economy i n war and reconstruction, (University of Minnesota Press, 1945), p. 67. 2 3 6 I b i d . , p. 138. 106 s e l l imported forest products at prices deemed reasonable by the a u t h o r i t i e s , and to determine resale prices and p o l i c i e s and to control 237 exports. There i s no doubt that lumber was an e s s e n t i a l and s t r a t e g i c war material and cut o f f from external supplies by such things as lack of shipping, trade breakdowns with foreign suppliers and conservation of foreign exchange, the Japanese were forced to e x p l o i t t h e i r own forests more heavily. During the war, land was devastated and forests 238 were overcut d e s t r u c t i v e l y and d r a s t i c a l l y . Even so, lumber was s t i l l i n short supply. This shortage was due not to the lack of wood, for Japan was well forested, but to lack of able bodies to cut i t . P a r t i c u l a r l y i n the l a s t year and a h a l f of the war when the demand for lumber was the greatest, the supply of men to cut i t was the shortest. So acute did the problem become that the army purchased or seized stands of timber i n the h i l l s and used i t s forces to cut, leg and d e l i v e r the lumber. Sawmills had d i f f i c u l t y getting maintenance parts and r e t a i n i n g 237 -"Japan - New lumber body established," Timberman, Vol. 42, No. 12, Oct. 1941, p. 72. 238 Japan Lumber Journal, Inc. op. c i t . , p. 19. 107 labour and the Japan Lumber Company declared that by the end of the 239 war h a l f the m i l l s were out of operation. The P a c i f i c War ended, as i t had begun, with the surprise bombing of enemy t e r r i t o r y . This time, however, they were nuclear bombs which were dropped by the U.S. on Hiroshima and Nagasaki i n August 1945. They were very persuasive indeed for very shortly afterwards Japan's unconditional surrender was announced by the Emperor himself i n an unprecedented broadcast to the nation. History was to repeat i t s e l f when the Japanese opened t h e i r doors again by signing a treaty on an American gunboat i n the very waters where Townsend Harris dropped anchor. On September 2, 1945, representatives of the Japanese government signed the surrender documents aboard the ;U.S. battleship "Missouri" i n Tokyo Bay and Japan entered a period of six and one-half years of foreign occupation by the United States and her A l l i e s . The occupation of Japan was supposed to be an a l l i e d venture but i t was predominantly planned and executed by Americans under the leadership of General Douglas MacArthur, 240 the Supreme Commander for the A l l i e d Powers (SCAP). 239 Jerome Cohen, op. c i t . , p. 265. 240 The World and i t s Peoples, op. c i t . , p. 240. 108 At the end of World War I I i n 1945, the Japanese economy along with a major proportion of i t s i n d u s t r i a l plants was i n a state of r u i n . Materials and power f a c i l i t i e s required for industry as well as the basic n e c e s s i t i e s were exceedingly scarce. In addition, the s c a r c i t y of transportation equipment and evacuation of the i n d u s t r i a l centers . brought confusion and breakdown of the production and d i s t r i b u t i o n sectors of the economy under the d i r e c t i o n of the SCAP, attention was given i n the period from 1945 to 1957 to s o c i a l and p o l i t i c a l reform for the a n n i h i l a t i o n of the material basis of imperialism and the encouragement of democratic i n s t i t u t i o n s , rather than to the recovery of - i , 2 4 1 the economy. The A l l i e d a u t h o r i t i e s considered the "Zaibatsu", the group of family-owned companies that c o n t r o l l e d a large part of Japan's industry, trade and finance, to be a deterrent to the reconstruction of the country with democratic i n s t i t u t i o n s and a competitive economy. There-fore, to r e d i s t r i b u t e wealth and economic i n i t i a t i v e , the SCAP adopted a p o l i c y of d i s s o l u t i o n of the "Zaibatsu", which i t c a r r i e d out rigorously u n t i l 1948. Not only were the gigantic i n d u s t r i a l empires 241 J . Dryburgh, Factors a f f e c t i n g the growth of the Japanese plywood industry since 1945, (Unpublished BSF thes i s , U.B.C., Vancouver, 1968), p. 3. 109 divided into numerous smaller concerns, but also the wealth of the major "Zaibatsu" f a m i l i e s was c u r t a i l e d and the introduction of a r e l a t i v e l y 242 stable free enterprise economy was made. The order of SCAP on July 3, 1947 to M i t s u i and M i t s u b i s h i to dissolve came l i k e a clap of thunder. In view of the predominant r o l e of these organizations i n the Japanese economy i n the past, t h e i r disbandment was a matter of the greatest concern not only to the 243 "Zaibatsu" themselves but to the country's economy as a whole. Even though the d i s s o l u t i o n of the "Zaibatsu" had p o l i t i c a l and s o c i a l merit, 244 i t rather i n h i b i t e d economic recovery instead of stimulating i t . Though not p a r t i c u l a r l y concerned with the economic recovery at f i r s t , the SCAP were forced eventually to adopt a p o l i c y of strengthening Japan economically. The United States had to re-examine i t s p o s i t i o n around the world i n general and i n the Far East i n p a r t i c u l a r . China was i n the throes of c i v i l war arid the Communist ideology which was undesirable to the 242 Ibid. 243 -Mitsubishi Economic Research Institute,. M i t s u i , Mitsubishi, Sumitomo - Present Status of the former "Zaibatsu" enterprises, (Tokyo, 1955), p. 13-15. 244 J . Dryburgh, op. c i t . , p. 4. 110 Americans seemed to be taking hold of the people. The United States began to see the need for a strong Japan, w i l l i n g to serve as a partner 245 of the West i n the f i g h t against Communism. The SCAP enacted a Nine Points S t a b i l i z a t i o n Program which provided for the s t a b i l i z a t i o n of the economy i n general, and i n p a r t i c u l a r , for expansion of trade and pro-246 duction. Despite o f f i c i a l r e s t r i c t i o n s , the companies formerly associated with the "Zaibatsu" were allowed to regain leading positions i n the p r i n c i p a l branches of industry. After A p r i l 1952, when the Peace Treaty became e f f e c t i v e , these r e s t r i c t i o n s were removed or moderated, and following the l i f t i n g of the ban on the use of former company names, 247 trademarks and such-like, the former names were revived again. The development of the Japanese economy i n the early post-war period was unprecedented. The Korean War which exploded i n 1950 gave sudden spurt to the i n d u s t r i a l a c t i v i t i e s of Japan. Situated as she 245 The World and i t s Peoples, op. c i t . , p. 241. 2 4 ^ J . Dryburgh, op. c i t . , p. 4. 247 Mitsubishi Econ. Res. Inst., op. c i t . , p. 19. I l l was r i g h t next to the f i e l d of c o n f l i c t , Japan became a convenient base of operation for the United Nations (U.N.) forces and she n a t u r a l l y 248 received a l l kinds of orders r e l a t e d to the prosecution of war. The demand for Japanese goods for the UN forces stimulated production and export. By 1955, the post war reconstruction allowed economic conditions to surpass the prewar 1934-1936 l e v e l with a Gross National 249 Product of 8.235 m i l l i o n yen. Even before the outbreak of the Korean War, Japanese foreign trade had been restarted. Immediately following the cessation of h o s t i l i t i e s trade between Japan and the rest of the world was c a r r i e d out on a government-to-government basis. In August 1947, the SCAP per-250 mitted a li m i t e d amount of private foreign trade to occur. With the a r r i v a l of Senator Dodge i n Japan i n 1949 came further measures to pro-mote the economy. Under his guidance l e g i s l a t i o n was introduced i n the form of a foreign exchange and foreign trade control law. This allowed more exporting by private companies i n December 1949 and more importing 248 M.S. Farley, The problem of Japanese Trade expansion i n the post-war s i t u a t i o n , (-New York: I n s t i t u t e of P a c i f i c Relations, 1940) p. 45. 249 J . Dryburgh, op. c i t . , p. 17. 250 Ibi d . , p. 11. 112 251 by private companies i n January 1950. Compared with Germany, Japanese trade had been somewhat slower to develop i n t e r n a t i o n a l l y because United Nations purchases i n the Orient for the Korean action took a substantial part of what Japan could produce and lessened the need to s e l l abroad. By the early 1950's Japan was shipping an almost amazing assortment of well-made items, very low i n p r i c e , to Southern Hemisphere countries outside the Commonwealth, and was earning d o l l a r s with which to buy Canadian raw materials, semi-252 processed items and some manufactured goods. In the Western World there was a l i v e l y awareness of the fact that i f the Western Nations did not make room for Japanese p a r t i c i p a t i o n i n the commerce of nations, then Communist markets and Communist supply would look good to them and 253 they would lose Japan from the Western group of nations economically. Rebirth of the Japanese Lumber Trade P a c i f i c Coast lumber exporters were p a r t i c u l a r l y g r a t i f i e d with the l i b e r a l i z a t i o n of trade. They had been r e c e i v i n g o p t i m i s t i c l e t t e r s 251 I b i d . , p. 4. 252 " E d i t o r i a l , " B.C. Lumberman, Vol. 27, No. 9, Sept. 1953, p. 39. 253 I b i d . , p. 66. 113 from Japan with respect to revival of the lumber trade but they felt that no private business could be conducted until the SCAP had been 254 eliminated as trader between the U.S. and Japan. The apparent growth of the Japanese national income and the expansion of production had been partly brought about at the sacrifice of the national resources. The 255 forestry resources, for instance, were diminishing year after year. In 1951 the forest laws were entirely revised to ensure continuous care of the forest and increase forest production by the establishment of a system for plants and forest owner associations. These newly established forest plants imposed on owners of forests the obligation of afforestation and restrictions on cutting trees and also indicated standards for forest 256 management. With these restrictions on domestic supply, the need for foreign sources of timber became acute. Japan, then with a population of 80 million needed a minimum annual lumber supply of 8^  billion feet, of 254 . "Prospects of trade with Japan," Timberman, Vol. 49, No. 10, Aug. 1948, p. 138. 255 * Institute of World Economy, Economic aspects of Japan after conclusion of peace, (Tokyoy 1952), p. 2. 256 Japan Lumber:. Journal Inc., op. cit. , p. 19-20. 114 which a maximum of 6 b i l l i o n feet was to be expected .from the native 257 fore s t s . I t was estimated that t h i s d e f i c i t of 2% b i l l i o n feet had to be made up over a period'of 30-40 years. Japan needed mostly the so-called Jap squares i n sizes 12" square to 24" square, i n lengths from 20 to 40 feet. The material was badly needed for renovation of bridges, wharves and shipways, as well as for the construction of 258 schools, h o s p i t a l s , and other welfare i n s t i t u t i o n s . The Americans were the f i r s t to book an order of lumber i n the post-war period. This was i n 1949 when the firm of John P. Therber and Co. Inc. took an order for Douglas f i r clears and squares t o t a l l i n g approximately 6 m i l l i o n board feet. The lumber was to be supplied by 259 the m i l l s of the Weyerhauser Timber Co. The Canadians sent t h e i r 260 f i r s t post-war lumber shipment to Japan i n 1950. It was only i n September 1949 that the Canadian Government regulation of lumber exports 261 through quotas was discontinued. There was great optimism that Japan would again be buying large quantities of softwoods from the P a c i f i c Northwest. There was also the f e e l i n g that the Japanese would have to 257 "Japan wants to buy American lumber," Timberman, Vol. 51, No. 5, March 1950, p. 92. 258 loc. c i t . 259 "Japanese order booked," Timberman, Vol. 50, No. 5, March 1949, 260 See Figure 1. 261 "Ending lumber export quotas a f f e c t s industry across Canada," Foreign Trade, Vol. 6, No. 140, Sept. 3, 1949, p. 414. 115 make some s l i g h t adjustment i n the pattern of t h e i r demand. Whereas i n pre-war times i t was r e l a t i v e l y easy for the Japanese to procure logs or large squares, the development of the plywood industry both i n the 262 U.S. and Canada had changed the picture r a d i c a l l y . The great domestic demand for large timber i n North America had forced up the r u l i n g p r i c e for forest products) i n the North P a c i f i c area at the very time when Japan needed large quantities of Douglas f i r and other softwoods for reconstruc-263 t i o n . No one imagined that the Japanese had the a b i l i t y to pay for t h e i r timber needs from the PNW. But the boom brought about by the Korean War enabled them to sustain t h e i r demand for large timber, e s p e c i a l l y logs, the logs that were necessary to feed her large sawmill . , 2 6 4 capacity. In 1954 Japan required over 3 m i l l i o n housing units to ease the 265 housing shortage. The generally buoyant state of the Japanese economy i n 1957 res u l t e d i n an upswing i n the demand for construction 262 "Seaboard Salesmen seek Far East markets," B.C, lumberman, Vol. 36, No. 8, Aug. 1952, p. 76. 263 -Robert C. H i l l , "New shipping p r i o r i t y p o l i c y , " Timberman, Vol. 52, No. 1, Nov. 1950, p. 104-108. 264 J.C. B r i t t o n , Foreign Trade, Vol. 13, No. 319, Feb. 7, 1953, p. 46. 2^ .... "Commodity notes - Japan," Foreign Trade, Vol. 14, No. 369, Jan. 23, 1954, p. 13. 116 lumber. A substantial percentage of the Japanese demand for West Coast timber was for Douglas f i r and t h i s explained Washington and Oregon's 266 s t i l l dominant p o s i t i o n i n the Japanese market. The forests of B.C. contained a much smaller proportion of Douglas f i r than those of the American Northwest. Furthermore, the Douglas f i r i n B.C. contained a very much smaller proportion of peeler and high-grade sawmill logs than 267 the average i n the U.S. The long lengths and clear cants which used to win new markets for Douglas f i r were no longer a v a i l a b l e from the I n t e r i o r of B.C. and most of the highest q u a l i t y Coastal Douglas f i r 2 6 8 logs were ending up i n plywood m i l l s . The Ascendancy of B.C. The time series of Figure I, p. 178, reveals how meagre B.C.'s share of Japan's lumber import from the PNW was during the 1950's. Suddenly i n 1961 something phenomenal occured. For the f i r s t time i n i t s h i s t o r y the viplume of lumber shipped to Japan from B.C. surpassed 266 "Asia", Foreign Trade, Vol. 107, No. 11, May 25, 1957, p. 57. 2 6 7 " E d i t o r i a l , " B.C. Lumberman, Vol. 39, No. 1, Jan. 1955, p. 35. 268 • J.H.G.. Smith, from an address contained i n "New Marketing Insights for Forest Products Companies", (Univ. of Oregon, 1964), p. 78. 117 that from Washington and Oregon. The 1961 B.C. figu r e was 9,510 per cent over 1960 and up 12,000 per cent over 1959. American lumber ship-ments rose only s l i g h t l y from 1959 to 1960 and although there was a s i g n i f i c a n t increase from 1960 to 1961 i t was only 157 per cent compared 269 with the B.C. increase of 9,510 per cent. The table on the page following shows the absolute increases i n lumber exports. I t also shows the absolute increases i n log exports and these s t a t i s t i c s provided the lumbermen of the American Northwest with t h e i r excuse for B.C,'s success. The table reveals that whereas Washington and Oregon were sending many logs and l i t t l e lumber to Japan, B.C. was sending few logs and much lumber. The American Northwest lumbermen argued that t h i s was due to the fact that the U.S. exported logs f r e e l y while i n B.C. c e r t a i n r e s t r i c t i o n s applied to the export oaf logs. R e s t r i c t i o n s on B.C. Log exports commenced i n the early 1900's when the m i l l s of Washington and 270 Oregon were competing with B.C. m i l l s for B.C. logs. Today, B.C. 269 "Japanese log buying c r i s i s return mulled as '62 season nears, Western Timber Industry, Vol. 13, No. 2, Feb. 1962, p. 9. 270 Bob Christopher, Personal Interview, A p r i l 5, 1968. 118 T A B L E V I PACIFIC NORTHWEST TIMBER EXPORTS TO JAPAN 1959 - 1961 (Thousands of Board Feet) LOG EXPORTS LUMBER EXPORTS 1 ? U.S. West Coast B.C. U.S. West Coast'' B. C . 1959 48,000 28,535 45,769 1,200 1960 92,000 40,311 46,883 1,607 1961 3 300,000 60,000 117,957 155,550 1. B.C. Log exports are t o t a l s including those sent elsewhere than Japan. 2. U.S. West Coast lumber export figures d i f f e r only i n s i g n i f i c a n t l y from those i n Appendix 1. Probably, C a l i f o r n i a figures are included here. 3. 1961 log export t o t a l s are estimated. Source: Western Timber Industry, V o l . 13, No. 2, Feb. 1962, p. 9. 119 w i l l export logs only a f t e r a prescribed l e g a l procedure has been followed. This requires an applicant for an export permit to submit bona f i d e statements from three l o c a l lumber manufacturers refusing to buy his logs. The a p p l i c a t i o n i s then examined by an advisory board co n s i s t i n g of loggers, exporters, shingle and lumber manufacturers, and representa-tives of the P r o v i n c i a l Forest Service. This group then recommends to the Mini s t e r of Lands and Forests i n V i c t o r i a as to whether the permit should be granted and i n prac t i c e the recommendation generally c a r r i e s . Some Washington and Oregon lumbermen f e l t that had the U.S. adopted a log export p o l i c y s i m i l a r to that of B.C., i t s shipments of job-creating 271 f i n i s h e d lumber products would have benefited accordingly. That this was a c l a s s i c a l non sequitur i s made evident upon close examination of the h i s t o r i c a l record. Japan at the edge of the s i x t i e s was a country that was about to go on a spending spree for wood. The national needs of a burgeoning population i n a ti n y area with a r i s i n g l i v i n g standard and great purchasing power has proved d i f f i c u l t to meet. In 1960 alrane, Japanese 271 Western Timber Industry, Vol. 13, No. 2, Feb. 1962, p. 9, op. c i t . 120 consumption of wood products rose by three b i l l i o n feet. Plant capacity and employment i n the wood converting industry were expanded accordingly and expanded despite the f u l l knowledge of the degree to which t h e i r 272 own resource was being overcut. Timber production i n Japan had not been able to meet the changes and increases i n demand, with the r e s u l t that timber prices had continued to r i s e s t e a d i l y r e f l e c t i n g the un-273 balanced demand and supply which accelerated r a p i d l y i n 1961. I t was i n 1960/61 that the Japanese r e a l i z e d that t h e i r forest resources were i n poorer shape than they had imagined. Consequently, the Government put a c e i l i n g on the timber cut and t h i s coincided with a period of 274 prosperity i n Japan when the demand for timber shot upwards. Fortunately for Japan, she had accumulated sizeable quantities of foreign exchange through trade i n the 1950's so that she was i n a p o s i t i o n to buy logs and lumber i n increased quantities i n 1961. Trade became completely free i n 1961 when importers found less d i f f i c u l t y i n obtain-275 ing d o l l a r a l l o c a t i o n s from the banks. 272. loc. c i t . 273 Japan lumber Journal, Inc. op. c i t . , p. 29. 274 Jan Solecki, Personal Interview, A p r i l 2, 1968. 275 Hisashi Tanoi, Personal Interview, March 28, 1968. 121 The West Coast of North America was the obvious source of s o f t -wood logs and protected Japanese markets made i t possible for t h e i r 276 traders to pay whatever pr i c e was necessary to obtain the U.S. logs. Apparently, however, there was a sudden shortage of logs a l l over the world and because of t h i s the Japanese were forced to take more of th e i r 277 timber needs as lumber. Table VII following d e t a i l s the increase i n import of PNW lumber and logs by species and s p e c i f i c a t i o n for the years 1959 - 1963. Although there are discrepancies between t h i s table and Appendix I there i s one important and undisputable feature and that i s the phenomenal increase i n the import of hemlock baby squares from about 1 m i l l i o n board feet i n 1960 to about 60 m i l l i o n board feet i n 1961. The evidence suggests that most of t h i s increase was supplied by B.C. The type of lumber that the Japanese most demanded was these very baby squares which the U.S. m i l l s were not prepared to cut because 278 of the troublesome Japanese s p e c i f i c a t i o n s . Japanese lumbermen did 276 P a c i f i c Power and Light Co., Log Exports - Their Impact upon the Forest Products Industry and the Oregon economy. (Oregon, 1968), p. 3. 277 B.O. Whiles, Personal Interview, March 15, 1968. 278 • loc. c i t . , The American m i l l s were more interested i n s e t t i n g up standard lengths, thicknesses and widths for t h e i r domestic market and producing i n great volume and great speed to these s p e c i f i c a t i o n s . Because the Japanese s p e c i f i c a t i o n s were odd i n the American market, i t 122 T A B L E V I I JAPANESE IMPORTS OF PNW TIMBER: 1959 - 1963 (1000 board feet) 1959 1960 1961 "1962 1963 ' Hemlock Log 1,153 1,210 204,460 200,443 579,258 Mixed Log - - 111,402 102,623 144,112 D.F. Log 8,840 27,904 120,003 74,029 125,361 P.O.C. Log 56,232 56,597 66,562 66,713 87,665 Spruce Log 5,171 11,986 41,625 46,106 68,185 F i r s Log 12-s972 167764 32,038 33,836 8,505 Noble Log - - - - 47,566 C a l i f . F i r & ' Pine Log - - - 33,375 7,626 Y.O.C. Log 4,347 1,203 39,295 9,184 21,143 R.C. Log 6,046 7,236 8,100 7,898 28,551 Pines Log 502 15,709 33,202 6,044 15,291 Alaskan Log 7,197 8,310 5,292 3,791 -Cottonwood Log 2,784 5,576 8,551 4,178 2,100 Others Log 48 139 1,480 8,745 -P.F. P i l i n g 15,638 22,162 28,751 25,171 21,358 Hem. Baby Sqr. - ,1,023 57,923 90,906 146,457 Alaskan Lumber 18,279 21,339 43,693 34,938 21,245 Mixed Spcs. Lbr. - - 25,681 27,742 -D.F. Square 37,021 33,498 51,434 27,485 37,083 Hem. Square 1,144 1,198 23,889 21,153 69,929 Hem. F l i t c h - - 8,646 18,500 -Hem./Bal. Lbr. - - 5,639 8,889 -R.C. Baby Sqr. - - 13,806 4,436 6,737 D.F. F l i t c h 1,586 1,875 6,697 3,930 3,148 R.C. F l i t c h - 3,49L2- 3,469 Spruce F l i t c h - - 1,399 2,724 24,694 Y.C. Baby Sqr. - - 174 1,936 5,273 Y.C. F l i t c h - 78 1,433 1,368 -Spruce Square - - 150 450 -P.O.C. F l i t c h - 121 187 201 15 D.F. Baby Sqr. - - 2,081 359 -R.C. Square - - 222 297 -P.O.C. Baby Sqr. - - 868 89 -Spruce Baby Sqr. - - - 50 -TOTAL 178,961 233,928 948,103 871,056 1,497,118 Source: Japan Lumber Journal, Vol. 5, No, . 5 , Mar. 5, 1964, p. 1. 123 approach the Americans with orders for p a r t i c u l a r Japanese s p e c i f i c a t i o n s s p e c i a l lengths of 10 f t . , 13 f t . , and 20 f t . - but they were prepared to supply only random lengths because t h e i r m i l l s were geared to pro-duce i n t h i s fashion. The Japanese buyers got a much better reception from the Canadian m i l l s which, i n keeping with the i n t e r n a t i o n a l marketing o r i e n t a t i o n , were prepared to supply the s p e c i f i c a t i o n s that 279 they desired. The B.C. giant, MacMillan Bloedel Ltd. got back into the Japanese trade i n 1961 when they decided i n p r i n c i p l e to cut to Japanese s p e c i f i c a t i o n s and turned to producing hemlock squares since 280 f i r was no longer e a s i l y a v a i l a b l e . Akira Saheki, a prominent Japanese timber importer, summed up the s i t u a t i o n thus: "As long as U.S. m i l l s desire to take the p o s i t i o n of Canada i n today's export market to Japan, I must say t h e i r f a i l u r e to do so i s e n t i r e l y the U.S. m i l l ' s f a u l t . They have f a i l e d to meet Japanese s p e c i f i c a t i o n s and have f a i l e d to compete with Canadian products i n p r i c e . " {Sic] was d i f f i c u l t for an American producer to dispose of unsold Japanese stock at home and it.would have been too co s t l y to trim the Japanese s p e c i f i c a t i o n s down to the size of the American ones. (Charles Young, personal interview, March 26, 1968. 279 Akira Saheki, Personal Interview, March 27, 1968. 280 A.W. Bates, Personal Interview, March 15, 1968. 124 A f t e r a year's experience of buying baby squares from the U.S. and Canada further purchases were r e s t r i c t e d to the l a t t e r country 2 82 because the p r i c e and qu a l i t y were more to Japanese l i k i n g . Two facts are now abundantly c l e a r , f i r s t l y that the increased consumption of B.C. lumber had nothing to do with B.C.'s log export p o l i c y and, secondly, that the U.S.'s r e f u s a l to cut Japanese s p e c i f i c a t i o n s rather than t h e i r l i b e r a l p o l i c y on log exports accounted for t h e i r being surpassed by B.C. i n lumber shipments to Japan. Notwithstanding t h i s , the forest products industry associations of Washington and Oregon claimed that where log exports had been permitted, they had increased sharply and s t e a d i l y , and lumber exports had been very small i n comparison. A. Saheki, "Lumber and log trade with Japan," Western Forester, Vol. 13, No. 5, Feb. 1968, p. 4. Saheki was t r y i n g to say that the U.S. M i l l s by t h e i r unpreparedness to cut Japanese s p e c i f i c a t i o n s allowed the Canadian m i l l s to consolidate t h e i r p o s i t i o n i n the Japanese market. 2g2 • W.H. Fi s h e r , Analysis of the Relationship of Softwood Log Exports to the Economy of the State of Washington, ( B a t t e l l e Memorial I n s t i t u t e , Columbus, Ohio, 1964), p. 27. 125 On the other hand, areas where log exports had been r e s t r i c t e d , such as Alaska and Canada, had shown sharp and steady increases i n lumber 283 exports. To make the broad statement that B.C. was exporting more lumber than the U.S. without specifying the type of lumber tempts one into a r r i v i n g at the wrong conclusion. I t must be admitted, however, that because of t h e i r l i b e r a l log export p o l i c y , Washington and Oregon did , i n f a c t , export more logs than lumber to Japan, but this comes out as only a p a r t i a l truth when one becomes more s p e c i f i c . Table VII showed that the increases i n log imports between 1960 and 1961 from the PNW were p r i m a r i l y i n hemlock (16,797%), Douglas f i r (330%) and Spruce (247%). It i s safe to assume that most of these increases were borne by the U.S. The increase i n hemlock log imports were astounding. Of course, the l i b e r a l U.S. log export p o l i c y was p a r t l y responsible for t h i s i n the sense that i t f a c i l i t a t e d Japanese purchases of the material i n the U.S. rather than i n B.C. One could : not deny, however, that the r e f u s a l of the U.S. m i l l s to cut t h e i r own hemlock logs to Japanese s p e c i f i c a t i o n s had a l o t to do with t h e i r impasse. In t h i s respect the B.C. m i l l s : showed more enlightened marketing a b i l i t y . W.W.P.A., Unpublished, u n t i t l e d mimeographed paper. 126 The Log Export Controversy . The sawmillers of the American Northwest were not r e a l l y disturbed about t h e i r shrinking share of the Japanese lumber market as such. They s t i l l had t h e i r very v i a b l e domestic market to supply. They were concerned, however, with t h e i r increasing share of the Japanese log market, a trend which was damaging t h e i r own sawmilling industry. The U.S. sawmills were caught i n a squeeze between the plywood industry which outbid them for the better Douglas f i r sawlogs and the Japanese ;who outbid 284 them for the white woods (hemlock, white f i r , balsam and spruce). Plywood was oriented not to western softwoods but to Douglas f i r since 285 v i r t u a l l y a l l of the softwood plywood was made from that species. The American Northwest sawmillers saw the solution to t h e i r problem i n the passage of l e g i s l a t i o n to r e s t r i c t the export of logs to Japan. It should be added that pressures on the State Governments to r e s t r i c t the export of logs did not a r i s e s o l e l y from the desire of Washington and Oregon sawmillers ( p a r t i c u l a r l y the smaller ones) to get cheaper logs. There were a complex of factors that gave r i s e to t h i s s i t u a t i o n most of which are beyond the scope of t h i s t h e s i s . The question of log exports to Japan i s dealt with here only insofar as i t r e l a t e d to the 2 8 4W .H. Fi s h e r , op. c i t . p. 33. 285 John A. Guthrie :and George R. Armstrong, Western Forest  Industry, (Baltimore; Johns Hopkins Press, 1961), p. 283. 127 Japanese lumber market. Nature postponed any serious consideration of such l e g i s l a t i o n when October 12, 1962 (Columbus Day), a series of severe storms did widespread damage to the forests of the P a c i f i c -Northwest. In a l l , the storms affected some 30 m i l l i o n acres of commercial timberlands and l e v e l l e d an estimated 17 b i l l i o n board feet of timber. I t was necessary to salvage the blown down timber so as to f o r e s t a l l the development of serious bark beetle i n f e s t a t i o n s that could destroy standing timber. There seems to be general agreement among a l l p a r t i e s that Japanese a c t i v i t y i n the P a c i f i c Northwest log markets did much-to finance and expedite the cleanup from the 1962 blowdown. Viewed from the other d i r e c t i o n , i t might well.be that the blowdown accelerated Japanese purchases of U.S. logs. The facts that the salvaged logs were coming to market, many of them i n the species desired by the Japanese, and that the s e l l e r s were i n a hurry to dispose of them, might have been major factors i n generating the rate of export now being treated as a threat by the domestic manufacturing industry. The Japanese claimed that the U.S. government requested Japanese lumber firms to import wind-thrown timber. The Japanese trade p e r i o d i c a l , the Japan Lumber Journal, reported the following to be the thought W.H Fi s h e r , op. c i t . , p. 14 - 16. 128 expressed by the American Embassy o f f i c i a l s : "America welcomes export of timber to Japan, and some c o n f l i c t i n g problems i n America w i l l be gradually solved by increasing exports. The U.S. government has already held talks with Japanese lumbermen on these problems. We have pleasure i n informing Japanese lumbermen that there i s every p o s s i b i l i t y of exporting the f a l l e n timbers to Japan from the P a c i f i c Coast. Any questions on t h i s problem w i l l be welcome." The sale of surplus logs to the Japanese n a t u r a l l y led to fewer 288 purchases of lumber from the Americans. No sooner had the debris from the Columbus Day blowdown been cleared up when the question of r e s t r i c t i o n on log exports r a i s e d i t s head again. But the Japanese were already thinking of counter-measures. Opposition to the import of logs into Japan by the Americans was met by demands by Japanese sawmillers for barriers to the imports of lumber. Japanese wood converters had asked t h e i r government to apply severe r e s t r i c t i o n s on the import of North American sawn lumber and to encourage the import of logs. The American Lumber Sawmiller's Association "U.S. asks Japanese to buy salvage logs." Western Timber  Industry, V ol. 14, No. 3, March 1963, p. 3. R.G. Jennejphn, Factors and trends i n the export of B.C. forest products to Japan, (Unpublished BSF t h e s i s , UBC, Vancouver, 1965), p. 34. 129 (a Japanese association of m i l l s sawing imported logs) presented the p o s i t i o n to the Forestry Agency and to the M i n i s t r y of International Trade and Industry and to the Japan Lumber Importers Association. Some duty was already imposed on and more f u l l y sawn Items with the purpose 289 of discouraging lumber and encouraging log imports. To make matters worse, Japan's demand for logs was accentuated by the modernizing of the lumber industry i n Japan. For the f i r s t time the Japanese Government was lending heavily to i t s own lumbermen for expansion and modernization of t h e i r m i l l s . The Japanese were very clear i n t h e i r own minds about what they wanted by way of timber from the PNW. They needed a c e r t a i n minimum quantity of logs to feed t h e i r sawmills. Norio Tanaka, Secretary General and Managing Director of the Council for Forest Resources, Tokyo, had e a r l i e r expressed the opinion that Japanese imports of U S. wood f i b r e would remain at about the r a t i o of three-quarters logs to one-quarter 289,, Japanese sawmillers demand bar r i e r s for lumber imports -none on logs," Western Timber Industry, Vol. 14, No. 11, Nov. 1963, p. 1. 290 "Siberian log prices to Japanese r i s i n g as Europe runs low," Western Timber Industry, Vol. 15, No. 1, Jan. 1964, p. 1. 130 lumber and added that this would be subject to the free play of 291 economic forces and not a r t i f i c i a l l y pegged by the Japanese Government. The PNW sawmillers were disenchanted with "the free play of economic forces" for i t was c r i p p l i n g them. On the contrary, they were for a r t i f i c i a l l y pegging the r a t i o of logs to lumber. Senator Warren Magnusson urged the Secretaries of State and Commerce to negotiate an agreement with the Japanese whereby they would have to import lumber and plywood as a condition of continued import of logs. He urged establishment by trade agreement of a "mixed export trade" co n s i s t i n g of proportionate log, lumber and plywood exports. This i s how he r a t i o n a l i s e d the small export of lumber to Japan from the American West 292 Coast: " C l e a r l y , there e x i s t s a substantial and growing market i n Japan for lumber and plywood - a market being supplied i n part by the lumber m i l l s of B r i t i s h Columbia, which pr o h i b i t s the export of logs. Because the Japanese are 291 "Japanese sees steep increase i n demand for West Coast Logs," Western Timber Industry, V ol. 13, No. 4, A p r i l 1962, p. 1. 292 "Lumber,, .ply exports i n r a t i o to Jap logs urged by Magnusson," Western Timber Industry, Vol. 15, No. 8, Aug. 1964, p. 3. 131 eager to continue purchasing logs from us, i t i s reasonable to assume that they would also be w i l l i n g , as a condition of continued log purchases, to agree to take a s p e c i f i e d proportion of lumber and plywood purchases by the Japanese, to be t i e d to a progressive decline i n Japanese purchase of uncut logs. The intense pressure on the log market would be r e l i e v e d , while a fir m export market was being established for lumber and plywood." This plan was , not without i t s p r a c t i c a l problems. John Hampton, a 293 Portland lumberman, provided an able r e b u t t a l to t h i s suggestion. " I t would not appear to be desirable to t i e together log exports with lumber volume. With a sensible l i m i t on log export volume, the Japanese could be free to obtain t h e i r lumber to t h e i r best advantage whether here, Canada, S i b e r i a or elsewhere. Without a s p e c i f i c commitment to fur n i s h lumber to Japan, U.S. production would be av a i l a b l e for domestic consumption when needed." Hampton was quite confident that the Japanese would buy American lumber once a r e s t r i c t i o n on log exports was exercised. He f e l t that the Jap-anese understood that they had to take more lumber i f they wanted to get logs. He was convinced that the only reason they had not bought John Hampton, "Conifer c r i s i s - log exports," Western  Forester, Vol. 13, No: 5, Feb. 1968, p. 2. 132 lumber i n the past was because of the ease with which they could get logs. He did concede, however, that the American lumbermen had to f i n d a p r a c t i c a l means of s e l l i n g lumber to the Japanese. Western lumbermen had to d e l i v e r the lumber that the Japanese were w i l l i n g to take or r i s k having the Federal Government term r e s t r i c t i o n s on log 294 exports a f a i l u r e . Hampton was confident that the American lumber-men could f i n d a way to produce Japanese s p e c i f i c a t i o n s which would be compatible i n manufacture with items which they were cutting for the domestic market. The American m i l l e r s had to be prepared to take some s a c r i f i c e i n the inconvenience of changing t h e i r methods to cut to Japanese requirements rather than have t h e i r business exported to Japan 295 i n the form of logs. As late as March 1967, there were only 10 m i l l s i n Washington and Oregon that had established a good reputation i n Japan and were w i l l i n g to cut to Japanese requirements. Akira Saheki f e l t that the number of m i l l s for cutti n g hemlock baby squares could be greatly increased but that t h i s would be limited to those m i l l s which were able 294 "We must d e l i v e r lumber Hampton warns export men", Western Timber Industry, Vol. 19, No. 3, March 1968, pgs. 1, 8. 295 John Hampton, Personal Interview, March 27, 1968. 133 to cut Cascade type hemlock logs, the type which the Japanese preferred. Saheki came to the conclusion that the U.S. Lumber export to Japan would not be increased by the stoppage of log exports. He was sure that i f Japan could increase her lumber import, the majority of increase would benefit Canadian m i l l s as long as the U.S. m i l l s kept the same p o l i c y as before without adjusting to the new structure of business. With reference to Senator Magnusson's plan, he f e l t that the idea of allowing export logs to Japan, combined with lumber orders was impractical since, generally, log wholesalers and lumber wholesalers were operated separately i n Japan and also some U.S. lumber suppliers were not i n a p o s i t i o n to 296 supply logs to Japan and U.S. log suppliers could not fur n i s h lumber. Saheki, the p r a c t i c a l timber trader, found learned support for his views 297 i n Dr. John Zivnuska, the scholar: "(Log) exports have been blamed for various i l l s of the forest i n d u s t r i e s of Oregon and Washington, which i n r e a l i t y seem to r e f l e c t a complex of forces. Some lumber manufacturers i n the PNW apparently believe that i f log exports were r e s t r i c t e d , 296 A. Saheki, "Lumber and log export to Japan," WWPA Notebook, A supplement to "Plumb Line", Vol. 3, No. 11, March 18, 1967, p. 4-5. J. Zivnuska, United State Timber Resources i n a World  Economy, (Baltimore, Johns Hopkins Press, 1967), p. 31. 134 lumber exports to Japan xrould expand with the advantage of a d d i t i o n a l economic a c t i v i t y i n the Northwest. The extent to which any enforced reduction of log exports to Japan would be picked up by expanded lumber imports by Japan i s a debatable point, as i s the question of whether any such increase i n lumber imports would come from the U.S. or from other nations." Russia and Alaska to the Rescue There was a great deal of speculation as to which other nations could supply what p a r t i c u l a r types of material to Japan should r e s t r i c t i o n on log exports be f u l l y adopted. S i b e r i a , the great competitive threat of the 1920's, was to be hotly discussed again. With softwoods, American logs had been playing the major part with Siberian logs i n a supporting r o l e , but i n August of 1964 the Japanese began to t a l k about a turning point i n /foreign timber imports. Some importers recommended that more attention be paid to the import of Soviet logs which were i n a far better p o s i t i o n than American logs i n respect of p r i c e and transport. They held that the supply of Soviet logs was inexhaustible and added that the Soviet Government was looking to Japan for the development and use of these resources. These logs were the best goods i n the Soviet-Japanese two-way trade and the U.S.S.R. wanted to expand trade with Japan. As far as these business i n t e r e s t s were concerned, Japan and the Soviets were i n complete agreement and there 135 was every p o s s i b i l i t y that the import of Soviet logs would greatly 298 increase. The U.S.S.R. trade representative i n Japan, Boris V. Ivanov, was also supporting closer r e l a t i o n s between Japan and the Soviet Union i n the timber trade. He spoke of the almost unlimited reserves of the far east area of the Soviet Union and the short distance between t h i s 299 area and Japan. The i n s i n u a t i o n was that any r e s t r i c t i o n on log exports from Washington and Oregon would be met by increased log imports from the Soviet Union so that the lumber purchases from the U.S. P a c i f i c Northwest would not necessarily be stepped up.^^ John Hampton was not convinced that Russian sources could s a t i s f y Japan's log require-ments should the U.S. impose r e s t r i c t i o n s . He was of the opinion that the Japanese s t i l l had great d i f f i c u l t y i n dealing with the Russians and to get any s i g n i f i c a n t increase i n softwood from t h i s source would be impossible from phy s i c a l l i m i t a t i o n s as well as from trading r e l a t i o n -ships. He c i t e d Japan's large d e f i c i t trade balance with Russia, the 298 "Sign of turning point seen i n foreign Timber imports," Japan Lumber Journal, Vol. 5, No. 16, Aug. 20, 1964, p. 4. 299 Boris v. Ivanov, "Closer r e l a t i o n s i n Japan - Soviet Timber trade," Japan Lumber Journal, Vol. 5, No. 19, Oct. 5, 1964, p. 4. ^^^"Demand for expansion of American log imports", Japan Lumber  Journal, Vol. 5, No. 22, Nov. 20, 1964, p. 4. 136 d i f f i c u l t i e s attached to Russia expanding her softwood production because of c l i m a t i c and labour f a c t o r s , the problem of transporting timber to the Russian ports and the problem of getting the timber 301 loaded i n increasing q u a n t i t i e s . To a l l these arguments was added the fear that the Soviet Union was cutt i n g down on t h e i r logging because they were becoming s k e p t i c a l about the extent of t h e i r forest re-302 sources. The a v a i l a b l e evidence suggested that the U.S.S.R. would be facing a t i g h t wood supply and r e l a t i v e l y high-cost production and i n the long run r i s i n g domestic consumption would tend to keep up with the expanded output. S t i l l , i t was f e l t that the Japanese could get as much as they wanted from Russia, but at a p r i c e . Although the timber stands of Eastern A s i a t i c Russia were f a i r l y extensive there were large costs standing i n the way of t h e i r e x p l o i t a t i o n . I f the Russians had other natural resources i n t h i s area, they probably could have spread the development costs to mining i n d u s t r i e s , t o u r i s t industries and 301 John Hampton, Personal Interview, March 27, 1968. 302 Jan Solecki, Personal Interview, A p r i l 2, 1968. 303 J. Zivnuska, op. c i t . , p. 95. 137 others. But the whole cost of opening the t e r r i t o r i e s had to be at t r i b u t e d to the Forest Industry and this meant that the prices of 304 forest products would be driven upwards. As far as Russian lumber was concerned, some of th i s was already marketed i n Japan but there were numerous complaints about such things as qu a l i t y and uneven dimensions. There was also much d i s s a t i s f a c t i o n with the . j £ „ . 3 0 5 species mix received from Russia. Alaska was another source of supply to which the Japanese gave consideration. The Japan Lumber Journal of February 1968 c a r r i e d an a r t i c l e which re f e r r e d to an announcement by Walter J . H i c k e l , the Governor of Alaska. He claimed that Japan's lumber industry had under-taken to buy a l l the lumber that Alaska could produce, and that he had reeeived a l e t t e r of commitment to th i s e f f e c t from four major Japanese trading companies - Mi t s u b i s h i Shoji, M i t s u i Bussan, Ataka Sangyo Co. and Marubeni-lida. These four importers hastened to comment that Hickel's statement was rather exaggerated. They added the following 304 Jan Solecki, Personal Interview, A p r i l 2, 1968. G.S. Crawford, The Japanese Lumber Market, (Vancouver B.C. Research Council, 1965), p. 19. 138 306 remarks: "The four member companies of Alaska Hinoki-Kai including Alaska Pulp Company have submitted \,a l e t t e r of commitment to the Governor at his request, s t a t i n g that companies would purchase entire quantities of the production of primary processed lumber, mostly i n the form of cants i f the prices are reasonable.... . . . . i t w i l l ' n o t be r e a l i z e d i n the near future as the Governor states that imports of substantial quantities of the products can be more." ( s i c ) The long-term supply p o s i t i o n of Alaska was deemed to be a powerful force i n the Japanese market since the increasing i n d u s t r i a l demands on the forests of Washington and Oregon continued to improve Alaska's competitive p o s i t i o n . Moreover, Alaskan Coastal forests were becoming inc r e a s i n g l y valuable as Canadian m i l l s u t i l i z e d more remote 307 timber stands. Charles Young of the WWPA was dubious about Alaska's a b i l i t y to meet Japanese demands since t h i s market required so much more 308 than Alaska s p o t e n t i a l shipments. But John Hampton added that 306 "Japan to buy a l l lumber that Alaska can produce," Japan Lumber Journal, Vol. 9, No. 3, Feb. 30, 1968, p. 1. The l a s t sentence of t h i s quotation seems to mean that the Japanese, i n spite of the Governor's remarks, could not s u b s t a n t i a l l y increase t h e i r imports from Alaska. 307 Robert C. Haring and Michael R.C. Massie, A Survey of the Alaskan Forest Products Industry, (Univ. of Alaska, 1966), p. 98. 308 Charles Young, Personal Interview, March 26, 1968. 139 Alaskan resources would in the future be very much needed and very much appreciated in view of the increasing demand for timber, not 309 only in Japan, but a l l over the world. As things stood, Japan was the most important foreign market for Alaska's products, receiving 76% of the total exports in 1962, 82% in 1963 and 89% in 1964. The best Sitka spruce logs were cut into cants and graded in various export grades and shipped to Japan. Timber sale contracts by the forest service required primary manufacture of western hemlock and sitka spruce logs in Alaska. However, because there was no market for cedar logs, in Alaska, the better logs were 310 exported to Japan rather than left in the woods. Alaska became jthe focus of attention for the Treasury Department of the U.S. Federal Government in 1968. This northernmost State of America was seen as the means to solving the log export problem of the Pacific Northwest. The gist of the Treasury Department plan was to shift some of the drain on logs onto Alaska which had hitherto restricted log exports. 309 John Hampton, Personal Interview, March 27, 1968. 310 0. Keith Hutchinson, Alaska's Forest Resource, (U.S.F.S, Resource Bulletin PNW19, 1967) p. 44. 140 The Japanese were then to be persuaded to take part of t h e i r growing wood needs i n the form of sawn lumber from Alaska, and t h i s sawn lumber purchase was to be a quid pro quo for the continuation of log 311 exports. The WWPA endorsed the p a r t i c i p a t i o n of Alaska i n the Japanese market when they recommended that the bulk of the baby square business should be l e f t to thi s state and B.C. They figured that the U.S. m i l l s would be better to concentrate on supplying medium and large s i z e squares. There were important reasons for t h i s suggestion, not the least of which was some evidence that the Japanese were attempt-ing to show the i n a b i l i t y or d i s i n t e r e s t of American producers i n sup-312 p l y i n g the smaller and less p r o f i t a b l e s p e c i f i c a t i o n s . Presumably, the Americans were prepared to cut the large and medium squares to Japanese s p e c i f i c a t i o n s for they knew that the Japanese sawmilling industry had geared i t s e l f to timber and not to r e s i z i n g or r e f i n i s h i n g 313 lumber imports. Moreover, they had been warned e a r l i e r that Canada 311 U.S. Treasury Dept. St a f f Report on the PNW log export  problem, (Washington, D.C., 1968) p. 1. 312 , , -G..C. Edgett, W.W.P.A., Trade Paper - Softwood Conference, Tokyo, Japan, 1968, Sec. 4. 313 "The export log jam - i s diplomacy the answer?" Forest Industries, Jan. 1968, p. 69. 141 was the only country i n a p o s i t i o n to supply Japan with lumber i n sub s t a n t i a l quantities because .the production sit u a t i o n s i n Canadian m i l l s were applicable to Japan. The Americans, however, s t i l l had t h e i r trump card. For as long as they could, the Federal administration had taken no p o s i t i v e action on the question of log exports because the j o i n t d e cision of the Departments of State, Treasury, Commerce, Ag r i c u l t u r e and I n t e r i o r and the Council of Economic advisors had been that other national a f f a i r s would not permit the imposition of r e s t r i c t i o n s on 315 Japanese trade. But the squeeze came on Thursday, A p r i l 18, 1968 when the U.S. Secretary of A g r i c u l t u r e , O r v i l l e L. Freeman, announced that log exports from Washington and Oregon would be cut by h a l f . The r e s t r i c t i o n s became e f f e c t i v e on A p r i l 22, 1968, and were to l a s t , for the time- being, u n t i l July 1969. Naturally enough, the Japanese Government decided to lodge a protest with the United States against 316 these r e s t r i c t i o n s . The showdown had arrived and interested parties 314 Japan Lumber Journal, Vol. 5, No. 22, Nov. 20, 1964, p. 4., op. c i t . 315 P a c i f i c Power and Light Co., op. c i t . , p. 10. "Japanese to protest cut i n log exports," The Oregonian, Vol. CVIII, No. 33,612, A p r i l 23, 1968, p. 1. 142 waited to see whether logs would s t a r t flowing into Japan from other sources. Pertinent to t h i s t h e s i s , however, the more important focus was the a t t i t u d e of the Japanese lumber buyers. Would they or would they not buy more lumber from Washington and Oregon? Could the American Northwest ever regain t h e i r dominant p o s i t i o n i n the Japanese lumber market, a p o s i t i o n which B.C. then held and s t i l l does hold, so strongly? Speculation on these questions has been reserved for the concluding chapter. C H A P T E R V I CONCLUSION The study of h i s t o r y i s j u s t i f i e d not so much because the past was eventful and e x c i t i n g as because the future needs d i r e c t i o n . The past i s important only insofar as i t i n s t r u c t s us for the future, and i f we are to t r a v e l towards the horizon with sound philosophies and clear objectives we would be better to search the past to f i n d the rules for future conduct. The l a s t f i v e chapters have attempted to reconstruct the past about the Japanese lumber market by piecing together information and opinions from several published and unpublished books and monographs, p e r i o d i c a l s , newspapers, and personal interviews with knowledgeable men. The message that stands out i n high r e l i e f upon a perusal of the hi s t o r y i s the contrast between B.C. and the American Northwest i n t h e i r attitudes towards export markets. B.C.'s low population: forest resource ratiop.was the basic compelling reason for her i n t e r e s t i n export markets where she had to s e l l the bulk of her output. The American Northwest lumbermen on the other hand, protected by various t a r i f f s at various times had a good strong "basket" i n th e i r own domestic market and they did not hesitate to "put a l l t h e i r eggs i n i t . " But the value of researching the his t o r y of the Japanese 144 market does not end with the transmission of this f a i r l y obvious message. I t rather begins with i t , for i t i s i n the p r a c t i c a l mani-festations of the i n t e r n a t i o n a l market o r i e n t a t i o n that a country builds the " i n f r a s t r u c t u r e " that strengthens her against her competitors. It would be an over s i m p l i f i c a t i o n to say that B.C. overtook Washington and Oregon i n the Japanese lumber market merely because she decided to cut hemlock baby squares to Japanese requirements while the Americans could not be bothered. History reveals that there i s more to the story than that and part of the function of this chapter i s to elaborate on t h i s basic issue. I t was not mere apathy on the part of the American Northwest lumbermen that caused them to ignore the Japanese requests. It was a matter of d o l l a r s and cents. They simply could not manufacture to Japanese s p e c i f i c a t i o n s and d e l i v e r to Japan at a p r i c e as competitive as that of B.C. Several reasons accounted for this but they a l l had t h e i r root i n B.C. being geared to the export market as a r e s u l t of the i n t e r n a t i o n a l market orienta-t i o n . What did this mean i n practice? F i r s t l y , i t meant that they possessed more export finesse than the Americans and this showed i n the way they organized themselves for s e l l i n g abroad. Once committed to supplying the Japanese market, the two main agencies i n B.C. responsible for marketing lumber i n the 145 Japanese market, MacMillan Bloedel Ltd. and Seaboard Lumber Sales Ltd. (formerly Associated Timber Exporters of B.C.) could put together shipments i n such a way that they had maximum advantages from economies of scale. MacMillan Bloedel could put a couple of m i l l s on the coast into doing nothing else but supplying customers i n Japan, Seaboard could do the same with two or three of t h e i r small member m i l l s . They could work the year round c u t t i n g Japanese s p e c i f i c a t i o n s and they could 317 promote sales through established outlets i n a very e f f i c i e n t manner. Up to 1962 the Seaboard organization supplied the Japanese market p r i m a r i l y through the branch o f f i c e s of Japanese trading houses. There-a f t e r they adopted a p o l i c y of s e l l i n g through an appointed agent who gathered orders from large trading';houses as well as smaller companies. A a l l and Co. was the natural choice for the appointed agent since they 3 1 8 had hitherto been shipping agents i n Japan for Seaboard'. MacMillan Bloedel went one better. Previously they had been operating through t h e i r agents i n Japan, Jardine, Matheson and Co. Ltd., an old d i s t i n -guished company that had been established i n the Far East as merchants 317 Les Reed, Personal Interview, March 18, 1968. 318 B.O. Whiles, Personal Interview, March 15, 1968. 146 and shipowners for over a century. In view of the recognized growing importance of the Far Eastern markets and a f t e r a v i s i t to these areas by the Chairman of MacMillan Bloedel, arrangements were made with Jardine, Matheson and Co. to enter into a j o i n t enterprise for the marketing of forest products i n the Far East. The r e s u l t was a MacMillan subsidiary, MacMillan Jardine Ltd., which was incorporated 319 i n Hong Kong. With t h i s subsidiary company based i n Japan, MacMillan Bloedel no longer needed to cut Japanese s p e c i f i c a t i o n s to order for 320 they could cut at w i l l and keep an inventory i n t h e i r yards i n Japan. The most important r e s u l t of t h i s new marketing p o l i c y , however, was the i n t e g r a t i o n that MacMillan Bloedel r e a l i s e d . More than c o n t r o l of the bottoms carrying the lumber, they s h i f t e d to control of the o f f -loading f a c i l i t i e s which control could stand them i n good stead i n solving d i s t r i b u t i o n problems during periods of congestion i n the 321 Japanese ports. The lumber companies of the American Northwest never approached 319 • • MacMillan Bloedel Ltd., Annual Report 1963, p. 13. 320 John Hampton, Personal Interview, March 27, 1968. 321 Bob Christopher, Personal Interview, A p r i l 5, 1968. 147 the degree of s o p h i s t i c a t i o n that the B.C. companies displayed i n t h e i r a l t e r e d channels of d i s t r i b u t i o n . But the distressed domestic market around 1957-58 suggested to them the f o l l y of pl a c i n g a l l t h e i r 322 eggs i n one basket. They consequently adopted a broader outlook and began to recognise the value of c u l t i v a t i n g export markets even when there were good times at home. In other words, they began to understand the i n t e r n a t i o n a l marketing o r i e n t a t i o n . Becoming more interested i n s e l l i n g a l l t h e i r production i n the best markets, be they domestic or export, they thought i t wise to keep one foot i n the door of the most promising export markets. For the f i r s t time the American companies became committed to doing business permanently and r e g u l a r l y 323 i n Japan. The Weyerhauser Company, i n keeping with this new philosophy, assumed the r o l e of manufacturer as well as exporter. To t h i s end the company abandoned the pra c t i c e of dealing with American middlemen and dealt p r i m a r i l y with the branch o f f i c e s of Japanese 324 trading companies. This was s t i l l a far cry from the d i s t r i b u t i o n systems that the B.C. companies had adopted. 322 Charles Young, Personal Interview, March 26, 1968. 3 2 3 l o c . c i t . 324 F.W. Dasch, Personal Interview, March 28, 1968. 148 Being geared to the export market meant, secondly, that most of the large B.C. m i l l s were at tidewater and th i s made them not only export oriented but ship-export oriented. The m i l l s were commit-ted to produce i n bulk for Japan and i f they were not loading d i r e c t l y from t h e i r own docks, they were loading at c e n t r a l points where as many as ten d i f f e r e n t m i l l s could be d e l i v e r i n g lumber for quick 325 loading on bulk c a r r i e r s . Usually, the B.C. m i l l s could load a ship for Japan with about 10 to 12 m i l l i o n board feet at one or two 326 pick-up points l i k e Port A l b e r n i or Harmac. Whereas the Canadians had b u i l t up a market i n Japan i n s u f f i c i e n t volume that they could ship f u l l loads on chartered vessels on either a short-term or a long-term arrangement, the quantities involved i n -U.S. sales to Japan had been generally less than shipload and therefore went at much higher 327 rates. To f i l l a vessel for Japan, part of a load had to be picked up i n Longview, part i n Coos Bay and part i n Puget Sound. I f some small m i l l i n the lower mouth of the Columbia River wanted to s e l l h a l f a m i l l i o n board feet to Japan, i t was necessary to charter a 325 J . Miyazawa, Personal Interview, March 14, 1968. 326 Les Reed, Personal Interview, March 18, 1968. 327 Charles Young, Personal Interview, March 26, 1968. 149 ship and get i t i n there to pick up a small parcel at a regular expensive conference rate. 328 One substantial difference between shipping from B C. and shipping from the American Northwest lay i n loading time, a c r u c i a l factor i n the waterborne market since charter h i r e costs were of the order of $2,500 to $3,000 (U.S.) per d a y . 3 2 9 H.R. MacMillan reminded this writer of the cold hard fact that today lumber i s never sold by i t s e l f : i t i s always sold i n conjunction with These then were the r e a l reasons behind America's bankruptcy i n the Japanese lumber market. It was not merely a question of the ease with which the Japanese could purchase t h e i r logs. The Japanese pref-erence for logs over lumber was understandable but i t went further than the common desire to import raw materials and to do the manufactur-ing at home. By doing the sawing themselves, they could get the 33 dimension they wanted and the better rough f i n i s h that they preferred.' The B.C. m i l l s c e r t a i n l y compensated for th e i r r e s t r i c t i o n on log f r e i g h t . 330 328. Les Reed, Personal Interview, March 18, 1968. 329. F.W. Dasch, Personal Interview, March 28, 1968. 330. H.R. MacMillan, Personal Interview, A p r i l 1, 1968. 331 G.S. Crawford, op. c i t . , p. 32. 150 exports by agreeing and being able to cut t h e i r logs economically and i n a fashion that the Japanese themselves would have employed. The overt reason for America's loss was the lack of the i n t e r n a t i o n a l marketing o r i e n t a t i o n which came na t u r a l l y to H.R. MacMillan i n the 1930's arid which equipped B.C. for supplying Japan when she went on her spending spree i n the early 1960's. Once the lumbermen of B.C. regognized t h e i r dependence on foreign markets they made sure that t h e i r production and d i s t r i b u t i o n f a c i l i t i e s gave them advantages over t h e i r competitors. In fairness to the Americans i t must be admitted that i n view of B.C.'s compulsion to foster markets other than her small domestic one, the i n t e r n a t i o n a l marketing o r i e n t a t i o n came easier to her. B.C. Lumbermen t r a d i t i o n a l l y had to traverse the Continents i n search of outlets for her forest products. They simply did not have the population i n Canada that could support the p o t e n t i a l capacity of the forest industry. Washington and Oregon lumbermen on the other hand flourished i n the United States market. They had i n the possession of vast Douglas f i r resources a great advantage over other American producers and the healthy domestic demand for t h i s species d i s t r a c t e d the American Northwest lumbermen from other markets. I t i s p r e c i s e l y i n these conditions that i t pays 151 to adopt an i n t e r n a t i o n a l marketing o r i e n t a t i o n . Unless the Americans f u l l y grasp t h i s philosophy and a l t e r t h e i r production and d i s t r i b u t i o n conditions as B.C. d i d then no amount of r e s t r i c t i o n on log exports could guarantee them a decent share of the Japanese lumber market. This writer has at l a s t a r r i v e d at the unavoidable stage of indulging i n the hazardous business of d i d a c t i c p r e d i c t i o n . The lessons of the h i s t o r y just covered are so c l e a r , that B.C. Lumbermen can r e s t assured that they w i l l command the major portion of PNW lumber shipments to Japan for some time to come. Even i f the Americans decided to cater f u l l y to the needs of the Japanese, they could not change t h e i r production and d i s t r i b u t i o n methods over night. This i s not to say, however, that the B.C. lumbermen could " r e s t on t h e i r oars". They s t i l l have a great deal of promotional work to do i n Japan, not so much against American lumber as against non-wood substitutes for lumber. Studying the h i s t o r y of the Japanese market has driven home one important point to t h i s writer. This world i s f r i g h t e n i n g l y dynamic and e n t e r p r i s i n g businessmen have to conduct t h e i r business with almost clairvoyant dynamism i f they are to suceed i n i t . The American lumbermen never believed that the Japanese lumber market would come to 152. mean so much to them. Thanks to the i n t e r n a t i o n a l marketing o r i e n t a t i o n , B.C. i s now comfortably i n s t a l l e d i n the Japanese lumber market, just as Washington and Oregon are comfortably i n s t a l l e d i n t h e i r own domestic market. The dynamic clairvoyant w i l l see, however, that just as the i n t e r n a t i o n a l marketing o r i e n t a t i o n was appropriate for 1934, a new or i e n t a t i o n may be appropriate for 1968. What th i s may be i s anybody's guess but t h i s writer .would imagine i t to be something of an extension of the old philosophy i n which the producer d e l i b e r a t e l y c u l t i v a t e s a sub-optimal market. Having decided to go i n , and having committed himself to supplying a p a r t i c u l a r product, he must continue to improve his goods to the point where at a moment's notice he could stave o f f the threat not ::only of competing countries but of competing products. 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Documents and Facts I l l u s t r a t i n g the O r i g i n of  the Mission to Japan. Henry Polkinhorn, Pringer, Washington: 1857, 22 pp. Smith, J.H.G. An address i n "New Marketing Insights for.Forest Products  Companies", Edited by S.U. Rich, Forest Industries Management Center, School of Business Administration, University of Oregon, 1964. Takahashi, Masao. Modern Japanese Economy Since the M e i j i Restoration. The Society for International C u l t u r a l Relations, Tokyo: 1967, 170 pp. T e a l , J.N. ,. Boyle, L.C. and R. MacVeagh. B r i e f on Behalf of the National  Lumber Manufacturers Association before the Federal Trade Commission. Washington D.C. : 1916, 251 pp. Thomas, A.F. and S o j i Koyama. Commercial History of Japan. Tokyo:. The Yuhodo Ltd., 1936, 168 pp. Tokyo Association for L i b e r t y of Trading. The Trade Agreements Between  Japan and Some Other Countries. L i b e r t y of Trading B u l l e t i n No. 8, 1937, 87 pp. Tauru, Shigeto. Essays on Japanese Economy. Kinokuniya Bookstore, Tokyo: 1958, 241 pp. Uyeda, T e i j i r o . The Recent Development of Japanese Foreign Trade. Japanese Council I n s t i t u t e of P a c i f i c Relations, Tokyo: 1936, 127 pp. Vinacke, Harold M. A History of the Far East i n Modern Times. Appleton-Century-Crofts Inc., New York: 1959, 8*77 pp. Vinnedge, Robert W. The P a c i f i c Northwest Lumber Industry and i t s Development. Yale University School of Forestry, Lumber Industry Series No. IV, New Haven: Yale University Press, 1923, 26 pp. 157 Western Wood Products Association. U.S. Delegation Trade Paper, Softwood Conference, Tokyo, Japan: 1968, 25 pp. Wright, Frank Lloyd. On Architecture - Selected Writings 1894 - 1940. Edited by Frederick Gutheim, D u e l l , Sloan and Pearce. New York: 1941, 275 pp. Zivnuska, John. Business Cycles, Building Cycles and Commercial Forestry. I n s t i t u t e of Public Administration, New York: 1952, 254 Zivnuska, John. United States Timber Resources i n a World Economy. Baltimore; Johns Hopkins Press, 1967, 125 pp. B. GOVERNMENT PUBLICATIONS Bryan, A.E. Lumber Market of Japan. Dept. of Trade and Commerce, Ottawa: Commercial I n t e l l i g e n c e Service, 1926, 64 pp. Gosnell, R.E. Yearbook of B r i t i s h Columbia - 1897, Kings P r i n t e r , V i c t o r i a , 1897, 285 pp. Hutchinson, 0. Keith. Alaska's Forest Resources. U.S.D.A., U.S. For-est Service, Resource B u l l e t i n PNW19, 1967, 74 pp. U.S. Treasury Dept. Improving the U.S. Balance of Payments on Lumber  A Major New Balance of Payments I n i t i a t i v e . Treasury Dept. Staff report, Washington, D.C.: 1968, 17 pp. C. COMPANY PUBLICATIONS Clyne, J..V. What's Past i s Prologue - An Address by the Chairman of  the Board and Chief Executive O f f i c e r . MacMillan Bloedel Ltd., Undated, pp. 20. MacMillan and Bloedel Ltd. Annual Report, 1963. P a c i f i c Lumber Inspection Bureau. Annual Reports 1916 - 1966 158 D. UNPUBLISHED THESES AND MANUSCRIPTS Andrews, L.R. Post war export markets for Canadian lumber, B.C. Lumber and Shingle Manufacturers Association, 1944. Argue, .John Gordon. An H i s t o r i c a l Economic Analysis of Channels of  D i s t r i b u t i o n and Markets for B.C. Softwood Lumber and Plywood. B. Com. Thesis, U.B.C., Fac. of Com: 1968, 160 pp. Council of Forest Industries of B.C. Lumber Movements: B r i t i s h  Columbia, Washington, Oregon: 1895 - 1915. Dorfman, Ben D. The American Lumber Market i n Japan. Senior Thesis, Reed College, Portland: 1924, 54 pp. Dryburgh, •Jack. Factor A f f e c t i n g the Growth of the Japanese Plywood Industry Since 1945. BSF Thesis, U.B.C., Fac. of For., 1968, 56 pp. Easton, E.J. An H i s t o r i c a l and Economic Review of the Lumber Industry  i n B.C. B. Com. Thesis, U.B.C., Fac. of Com., 1967, 122 pp. Jennejohn, R.G. Factors and Trends i n the Export of B.C. Forest Products  to Japan. BSF Thesis, U.B.E. Fac. of For;, 1965, :''79 pp. Lawrence, J.C. Markets and C a p i t a l : A History of the Lumber Industry  of B.C. 1778 - 1952. MA. Thesis, U.B.C. Fac. of Ar t s , 1957, 208 pp. Unterreiner, Henry J.R. A study of the economic History of the Forest  Industry of B.C. B. Com. Thesis, U.B.C. Fac. of Com., 1967, 124 pp. Western Wood Products Association. U n t i t l e d Mimeographed Paper, 1967, 14 pp. 159 E. NEWSPAPERS AND PERIODICALS "About Japan", West Coast and Puget Sound Lumberman. V o l . 11, No. 122, Nov. 1899, p. 56. "Asia". Foreign Trade, Vol. 107, No. 11, May 25, 1957, p. 57. "B.C. export m i l l s to pool output," Western Lumberman, Vol. 14, No. 1, Jan. 1917, p. 12. B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 19. B.C. Lumberman, Vol. 10, No. 4, A p r i l 1926, p. 25. 'B.C. Lumberman hear cold f a c t s " . Western Lumberman, Vol. 13, No. 9, • Sept. 1916, p. 13. "B.C. Lumber exporters i n r e a l earnest". Western Lumberman, Vol. 12, No. 4, A p r i l 1915, p. 13. Brereton, Bernard, "The competition of Siberian lumber". B.C. Lumberman, Vol. 9, No. 8, Aug. 1925, p. 57. Butts, H.A. "Economic Aspects of Japan". Timberman, Vol. 4, No. 11, Sept. 1923, p. 108. Cameron, J.O. "Manufacturing lumber for export." Western Lumberman, Vo l . 18, No. 10, Oct. 1921, p. 26. "Chats with Vancouver exporters", Timberman, Vol. 31, No. 2, Dec. 1930, p. 128. "Commodity Notes--Japan". Foreign Trade, Vol. 14, No. 369, Jan.' 23, 1954, p. 13. "Demand for expansion of American log imports". Japan Lumber Journal, Vol. 5, No. 22, Nov. 20, 1964, p. 4. 160 Dickoyer, E.R. "Japanese market for American lumber". West Coast  Lumberman, Vol. 40, No. 473, June 15, 1921, p. 28. Dixon, L.B. " B i r t h of the lumber industry i n B.C." B.C. Lumberman, Vol . 40, No. 3, March 1956, p. 44. " E d i t o r i a l " , B.C. Lumberman, Vol. 14, No. 1, Jan. 1930, p. 12. " " " Vol. 15, No. 3, Mar. 1931, p. 12. I I " " " Vol. 16, No. 7, July 1932, p. 7. " " " V o l . 37, No. 9, Sept. 1953, p. 39. " " " Vol. 39, No. 1, Jan. 1955, p. 35. "Ending lumber export quotas affeats industry across Canada". Foreign  Trade, Vol. 6, No. 140, Sept. 3, 1949, p. 414. "Export trade i s important s t a b i l i z i n g factor". Western Lumberman, Vol. 18, No. 8, Aug. 1921, p. 70. " F i r emissaries report on Japanese conditions". Timberman, Vol. 25, No. 4, Feb. 1924, p. 49. "Gains world markets". Timberman, Vol. 35, No. 4, Feb. 1934, p. 46. Hampton, John. "Conifer c r i s i s - - l o g exports". Western Forester, Vol. 13, No. 5, Feb. 1968, p. 2. H i l l , Robert C. "New Shipping p r i o r i t y p o l i c y " . Timberman, Vol. 52, No. 1, Nov. 1950, p. 104-108. H i l t o n , D.A. "How Japanese trading companies function". Foreign  Trade, Vol. 121, No. 6, March 1964, p. 2-6. Horning, R.D. "The Japanese viewpoint". Timberman, Vol. 26, No. 7, May 1925, p. 75. "Information regarding the B r i t i s h Columbia lumber industry". B.C.  Lumberman, Vol. 21, No. 6, June 1937, p. 30. 161 Ivanov, Boris V. "Closer r e l a t i o n s i n Japan—Soviet timber trade" Japan Lumber Journal, Vol. 5, No. 19, Oct. 5, 1964, p. 4. "Japan imposes surtax on B.C." Timberman, Vol. 36, No. 9, July 1935, p. 53. "Japan increases tax on Russian lumber". B.C. Lumberman, Vol. 15, No. 5, May 1931, p. 20. "Japan may adopt American standards". Timberman, Vol. 25, No. 4, Feb. 1924, p. 48. "Japan--New Lumber body established". Timberman, Vol. 42, No. 12, Oct. 1941, p. 72. "Japan to buy a l l lumber that Alaska can produce". Japan Lumber Journal, Vol. 9, No. 3, Feb. 30, 1968, p. 1. "Japan wants to buy American lumber." Timberman, Vol. 51, No. 5, March 1950, p. 92. "Japanese competition", West Coast and Puget Sound Lumberman. Vol. 12, No. 133, Oct. 1900, p. 20. "Japanese competition i n the Or i e n t a l lumber trade". B.C. Lumberman, Vol. 23, No. 9, Sept. 1939, p. 28. "Japanese log buying c r i s i s return mulled as '62 season nears". Western Timber Industry, Vol. 13, No. 2, Feb. 1962, p. 9. "Japanese lumber market". Timberman, Vol. 25, No. 2, Dec. 1923, p. 107. 'Japanese lumber trade". Timberman, Vol. 31, No. 4, Feb. 1930, p. 126. "Japanese order booked". Timberman, Vol. 50, No. 5, March 1949, p. 126. "Japanese requirements". P a c i f i c Coast Lumberman, Vol. 7, No. 12, Dec. 1923, p. 21. "Japanese^sawmillers. demand b a r r i e r s for lumber imports—none on logs". Western Timber Industry, Vol. 14, No. 11, Nov. 1963, p. 1. 162 "Japanese sees steep increase i n demand for West Coast Logs". Western  Timber Industry, Vol. 13, No. 4, A p r i l 1962, p. 1. "Japanese to protest cut i n log exports". The Oregonian, Vol. CVIII, No. 33,612, A p r i l 23, 1968, p. 1. "Japanese trade outlook reviewed". Timberman, Vol. 41, No. 3, Jan. 1940, p. 10. Kikuchi, S. "Japan and Soviet timber". B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 38. Kuruda, Z...."The Japanese lumber business a f t e r the gold ban removal". B.C. Lumberman, Vol. 14, No. 7, July 1930, p. 18. Kusano, E. "Latest trade news from Japan". B.C. Lumberman, V o l . 14, No. 9, Sept. 1930, p. 34. Kusano, E. " E f f e c t of t a r i f f r e v i s i o n on Japanese trade". B.C. Lumber-man, Vol. 13, No. 10, Oct. 1929, p. 16, 17. Lamb, Frank H. "The Forests of the Far East--No. 5 - Lumber i n Japan". Timberman, Vol. 30, No. 9, July 1929, p. 46-48. Lamb, W. Kaye. "Early lumbering on Vancouver Island: 1844 - 1866". B r i t i s h Columbia H i s t o r i c a l Quarterly, Jan. 1938, p. 31-53, A p r i l 1938, p. 95-121. "Lumber, ply exports ;in r a t i o to Jap logs urged by Magnusson". Western  Timber Industry, V ol. 15, No. 8, Aug. 1964, p. 3. "Lumber trade i n Japan", Timberman, Vol. 30, No. 6, A p r i l 1929, p. 126. MacMillan, H.R. "The lumberman's educational class--The B r i t i s h Columbia Export Trade", B.C. Lumberman, Vol. 9, No. 3, Mar. 1925, p. 46. MacMillan, H.R. "The Lumber s i t u a t i o n i n B r i t i s h Columbia". B.C. Lumberman, Vol. 18, No. 10, Oct. 1934, p. 16. "Market for hemlock lumber i n Japan". B.C. Lumberman, Vol. 9, No. 1, Jan. 1925, p. 65. 163 "New Angle on Japanese lumber t a r i f f " . Timberman, Vol. 28, No. 9, July 1927, p. 199. "New Japanese import association". Timberman, Vol. 27, No. 7, May 1926, p. 158. "New Japanese lumber duties". Timberman, Vol. 33, No. 9, July 1932, p. 55. "News from overseas markets - Japan". B.C. Lumberman, Vol. 15, No. 5 May 1931, p. 12. "News from overseas markets - Japan". B.C. Lumberman, Vol. 15, No. 10, Oct. 1931, p. 36. "News from overseas markets - Japan. B.C. Lumberman, Vol. 18, No. 4, A p r i l 1934, p. 28. "News from overseas markets June 1935, p. 28. - Japan". B, .C. Lumberman, Vol. 19, No. 6, "News from overseas markets Feb. 1936, p. 26. - Japan". B .C. Lumberman, Vol. 20, No. 2, "News from overseas markets Feb. 1937, p. 38. - Japan". B, ,C. Lumberman, Vol. 21, No. 2 "News from overseas markets June 1937, p. 49. - Japan". B, ,C. Lumberman, Vol. 21, No. 6, "News from overseas markets Nov. 1937, p. 48. - Japan". B, ,'C. Lumberman, Vol. 21, No. 11, "News from overseas markets - Japan". B. .C. Lumberman, Vol. 23, No. 8, Aug. 1939, p. 46. "News from overseas markets - Japan." B.C. Lumberman, Vol. 23, No. 11, Nov. 1939, p. 47 . "News from overseas markets - Japan." B.C. Lumberman, Vol. 23, No. 12, Dec. 1939, p. 42. "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 1, Jan. 1922, p. 19. "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 2, Feb. 1922, p. 52, "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 3, Mar. 1922, p. 52, "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 6, June 1922, p. 52, "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 7, July 1922, p. 23, "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 6, No. 8, Aug. 1922, p. 25, "Notes from Japan". P a c i f i c Cca st Lumberman, Vol. 6, No. 11, Nov. 1922, p. 55, "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 7, No. 2, Feb.:. 1923, p. 63. "Notes from Japan". P a c i f i c Coast Lumberman, Vol. 7, No. 9, Sept. 1928, p. 63. "O r i e n t a l lumber trade'.'. Timberman, Vol. 24, No. 12, Oct. 1923, p. 53. Oxholm,, Axel H. "A tr i b u t e to the Canadian lumber exporters". B.C. Lumberman, Vol. 18, No. 7, Julyl934, p. 13. " P a c i f i c markets for B.C. lumber". Western Lumberman, Vol. 13, No. 3, Mar. 1916, p. 13. 165 "Perry's expedition to Japan." Harpers New Monthly Magazine, Vol. XII, No. LXXII, May 1856, p. 733-756. "Prospects of trade with Japan". Timberman, Vol. 49, No. 10, Aug. 1948, p. 138. "Rebuilding of Tokyo discussed". Timberman, Vol. 24, No. 12, Oct. 1923, p. 124. "Regaining foreign lumber trade". Timberman, Vol. 36, No. 5, Mar. 1935, p. 8. Saheki, A. "Lumber and log trade with Japan". Western Forester, Vol. 13, No. 5, Feb. 1968, p. 4. Saheki, A. "Lumber and log export to Japan." Plumb Line, V ol. 3, No. 11, Mar. 18, 1967, p. 4-5. "Seaboard salesmen seek Far East markets". B.C. Lumberman, Vol. 36, No. 8, Aug. 1952, p. 76. "Siberian log prices to Japanese r i s i n g as Europe runs low". Western Timber Industry, Vol. 15, No. 1, Jan. 1964, p. 1. "Sign of turning point seen i n foreign timber imports". Japan  Lumber Journal, Vol. 5, No. 16, Aug. 20, 1964, p. 1. "Some things O r i e n t a l " . West Coast Lumberman, Vol. 20, No. 230, Nov. 1908, p. 92. "Strengthening Sales e f f o r t abroad". Timberman, Vol. 36, No. 3, Jan. 1935, p. 7. "The B r i t i s h Columbia lumber export trade: B.C. Lumberman, Vol. 21, No. 9, Sept. 1937, p. 34. "The export log jam - i s diplomacy the answer?" Forest Industries, Vol. 95, No. 1, Jan. 1968, p. 69. "The future of the Japan market". B.C. Lumberman, Vol. 9, No. 6, June 1925, p. 19. 166 "The Japanese embargo on B.C. lumber". B.C. Lumberman, Vol. 19, No. 8, Aug. 1935, p. 8. "The Japanese market". B.C. Lumberman, Vol. 17, No. 3, March 1933, p. 18. "The Japanese market and the Soviet timber supply". B.C. Lumberman, Vol. 9, No. 11, Nov. 1925, p. 22-25. "The new Japanese t a r i f f on lumber". B.C. Lumberman, Vol. 13, No. 5, May 1929, p. 26. "The r e s u l t s of the U.S. t a r i f f " . B.C. Lumberman, Vol. 18, No. 6, June 1934, p. 12. "The Semi-Annual Meeting". West Coast and Puget Sound Lumberman., Vol. 15, No. 180, Sept. 1904, p. 831. T o r i t c h , Waldermar. "Lumber p o s s i b i l i t i e s of Manchuria and S i b e r i a " . Timberman, Vol. 28, No. 3, Jan. 1927, p. 178-182. "U.S. asks Japanese to buy salvage logs". Western Timber Industry, Vo l . 14, No. 3, Mar. 1963, p. 3. "U.S. exporters fear B.C. competition". Western Lumberman, Vol. 12, No. 7, July 1915, p. 14-15. "Vancouver's harbour f a c i l i t i e s sadly lacking". Western Lumberman, Vol. 16, No. 3, Mar. 1919, p. 48. "War and trade". B.C. Lumberman, Vol. 1, No. 2, Feb. 1904, p. 9. "We must d e l i v e r lumber Hampton warns export men". Western Timber Industry, Vol. 19, No. 3, Mar. 1968, p. 1,8. West Coast Lumberman, Vol. 19, No. 223, A p r i l 1908, p. 471. " " " V o l . 20, No. 236, May 1909, p. 596A. Western Lumberman, Vol. 11, No. 4, A p r i l 1914, p. 35. 167 Western Lumberman, Vol. 11, No. 9, Sept. 1914, p. 32-33. " " Vol. 11, No. 11, Nov. 1914, p. 18. " W i l l e x p l o i t world-wide markets". Western Lumberman, Vol. 12, No. 8, Aug. 1915, p. 14. F. PERSONAL INTERVIEWS Arakawa, A.T., Tra n s - P a c i f i c Trading Co. Ltd., February 26, 1968. Baino, M. Japanese timber importer, February 26, 1968. Bass, J . , Forest Products Export Counsel, March 28, 1968. Bates, A.E., MacMillan Bloedel Ltd., March 15, 1968. Christopher, R., Robert Christopher Ltd., A p r i l 5, 1968. Dasch, F., Weyerhauser Co. Ltd., March 28, 1968. Haley, D.A. Faculty of Forestry, U.B.C., March 12, 1968. Hampton, J . , Willamina Lumber Co. Ltd., March 27, 1968. MacMillan, H.R., MacMillan Bloedel Ltd., A p r i l 1, 1968. Miyazawa, J . , Council of Forest Industries of B.C., March 14, 1968. Reed, F.C.L., Hedlin Menzies and Associates, March 18, 1968. Saheki, A., Kanematsu-Gosho (U.S.A.) Inc., March 27, 1968. Solecki, J . , Dept. of Slavonic Studies, U.B.C., A p r i l 2, 1968. Southworth, J . J . , B.C. Ensrgy Board, A p r i l 2, 1968. Tanoi, H M i t s u i Co. Ltd., March 28, 1968. Warren, J.B., Faculty ofCommerce, U.B.C., A p r i l 3, 1968. Whiles, B.O., Seaboard Lumber Sales Co. Ltd., March 15, 1968. Young, C.E., Western Wood Products Association, March 26, 1968. A P P E N D I X A P P E N D I X I WATERBORNE MOVEMENT OF LUMBER TO JAPAN FROM B.C., WASHINGTON AND OREGON 1895 - 1966 (Mi l l i o n s of Board Feet) WASHINGTON AND OREGON YEAR B.C. WASH. ORE. . TOTAL TOTAL PNW 1895 1 4.9 - - 12.6 17.5 1896 1 15.6 - - 22.5 38.1 1 1897 13.0 - - 36.0 49.0 1 1898 7.8 - - 17.9 25.7 1899 1 14.9 - - 34.7 49.6 1 1900 4.1 - - 33.4 37.5 1901 1 12.7 - - 46.8 59.5 1 1902 4.6 - - 48.3 52.9 1 1903 7.0 - - 70.3 77.3 1 1904 5.7 - - 39.0 44.7 1905 1 4.8 - 80.3 85.1 1906 2.3 - - 2.6 4.9 1907 2.1 - - 9.3 11.4 1908 2.1 - 10.5 12.6 1909 1.6 - - 1.8 3.4 1910 1.4 - - 3.5 4.9 1911 ' 2 . 0 - - 9.8 11.8 1912 2.7 - - 14.0 16.7 1913 4.7 - - 16.5 21.2 1914 2.1 - - 8.9 11.0 1915 1.6 - - 5.9 7.5 171 APPENDIX I - Cont'd. WASHINGTON AND OREGON YEAR B.C. WASH. ORE. TOTAL TOTAL PNW 1916 1.6 1917 3.0 1918 1.5 1919 19.8 1920 4.7 1921 6.0 1922 72.3 360.1 1923 105.9 499.2 1924 79.1 442.0 1925 67.7 389.8 1926 177.2 550.6 1927 191.6 571.0 1928 219.4 593.3 1929 192.4 356.1 1930 150.9 257.6 1931 138.9 261.6 1932 60.0 183.5 1933 60.7 179.0 1934 80.3 146.5 1935 43.1 137.5 1936 33.1 133.8 1937 30.7 128.0 1938 6.0 21.7 1939 5.6 42.3 N.A. N.A. 11.4 14.4 34.0 25.5 30.9 50.7 34.7 39.4 72.6 78.6 158.5 518.6 590.9 256.6 755.8 861.7 170.8 612.8 691.9 125.9 515.7 583.4 175.3 725.9 903.1 170.4 741.4 933.0 183.1 776.4 995.8 118.8 474.9 667.3 57.9 315.5 466.4 64.2 325.8 464.7 50.2 233.7 293.7 33.4 212.4 273.1 29.9 176.4 256.7 48.0 185.5 228.6 41.8. 175.6 208.7 50.3 178.3 209.0 9.1 30.8 36.8 6.0 48.0 53.6 APPENDIX I - Cont'd. 172 WASHINGTON AND OREGON YEAR B.C. WASH. ORE. TOTAL TOTAL PNW 1940 0.8 43.0 3.5 46.5 47.3 1941 - -1942 - -1943 1944 - - - -1945 - -1946 - -1947 _ -1948 - -1949 - 5.9 - 5.9 5.9 1950 2 0.1 3.4 3.6 7.0 7.1 1951 2 0.1 - - 17.0 17.1 1952 0.1 4.9 5.7 10.6 10.7 1953 20.7 22.4 32.7 55.1 75.8 1954 8.2 10.9 6.4 17.3 25.5 1955 1.6 13.9 8.6 22.5 23.7 1956 5.9 20.2 10.1 30.3 36.2 1957 2.3 22.0 21.1 43.1 45.4 1958 1.0 10.6 14.1 24.7 25.7 1959. 1.2 14.5 31.2 45.7 46.9 1960 1.6 18.0 28.6 46.6 48.2 1961 155.6 61.6 55.3 116.9 272.5 173 APPENDIX I - Cont'd. WASHINGTON AND OREGON YEAR B.C. WASH. ORE. TOTAL TOTAL PNW 3 1962 107.4 40.2 18.7 58.9 166.3 3 1963 278.2 80.8 19.8 100.1 378.3 3 1964 204.4 83.3 18.3 101.6 306.0 1965 207.8 70.6 3 16.7 87.3 295.1 1966 277.8 13.8 6.7 20.5 298.3 Sources: PLIB Annual Statements, Council of Forest Industries F i l e s . 1. Includes shipments to China. 2. Includes shipments to Korea. 3. Includes lumber o r i g i n a t i n g i n Alaska. A P P E N D I X I I WATERBORNE MOVEMENT OF LUMBER TO ALL EXPORT DESTINATIONS FROM B.C., WASHINGTON AND OREGON, 1895 - 1966 (Mi l l i o n s of Board Feet) WASHINGTON AND OREGON YEAR B.C. WASH. ORE. TOTAL TOTAL PNW 1895 40.7 - - 131.1 171.8 1896 62.5 - - 145.2 207.7 1897 62.3 - - 153.7 216.0 1898 55.1 - - 106.9 162.0 1899 49.1 - - 137.2 186.3 1900 75.0 - - 159.9 234.9 1901 67.5 - - 198.4 265.9 1902 55.7 - - 190.2 245.9 1903 62.2 - - 279.8 342.0 1904 33.2 - - 215.3 248.5 1905 49.8 - - 258.9 308.7 1906 77.5 - - 93.5 171.0 1907 65.3 - - 102.0 167.3 1908 56.4 - - 109.7 166.1 1909 79.1 - - 100.1 179.2 1910 73.2 - - 131.6 204.8 1911 50.1 - - 109.1 159.2 1912 51.5 - - 161.8 213.3 1913 47.3 - - 233.5 280.8 1914 33.2 - - 178.9 212.1 175 APPENDIX I I - Cont'd. YEAR B.C. WASHINGTON AND OREGON WASH. ORE. TOTAL TOTAL PNW 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 56.7 N.A. 189.2 268.7 218.0 216.5 312.2 346.4 381.4 399.5 380.0 358.5 367.2 633.1 830.7 792.0 1041.0 998.7 N.A. 579.1 761.4 778.2 771.2 1010.8 1153.1 1137.4 1066.4 757.0 622.3 382.6 477.1 509.3 378.4 324.8 362.4 N.A. 311.0 425.8 427.6 380.3 471.3 443.1 492.1 546.7 354.2 294.1 154.4 167.9 210.5 185.6 173.5 247.5 71.6 N.A. 890.1 1187.2 1205.8 1151.5 1482.1 1596.2 1629.5 1613.1 1111.2 916.4 537.0 645.0 719.8 564.0 498.3 609.9 128.3 N.A. 1079.3 1455.9 1423.8 1368.0 1794.3 1942.6 2010.9 2012.6 1491.2 1274.9 904.2 1278.1 1550.5 1356.0 1539.3 1609.6 176 APPENDIX I I - Cont'd. WASHINGTON AND OREGON YEAR B.C.- WASH. ORE. TOTAL TOTAL PNW 1938 1036.4 153.1 131.5 284.6 1321.0 1939 1284.5 263.4 138.8 402.2 1686.7 1940 1187.2 267.7 93.7 361.4 1548.6 1941 590.8 N.A. N.A. N.A. 1942 454.2 " " " 1943 638.3 1944 676.3 N.A. N.A. N.A. 1945 678.3 ** " " -1946 741.2 85.1 213.9 299.0 1040.2 1947 1109.0 244.2 501.1 745.3 1854.3 1948 723.7 90.3 216.2 306.5 1030.2 1949 614.2 115.9 205.8 321.7 935.9 1950 492.5 82.9 186.3 269.2 761.7 1951 1062.5 - - 650.9 1713.4 1952 900.5 108.4 317.8 426.2 1326.7 1953 818.7 193.7 294.0 487.7 1306.4 1954 1030.4 168.9 287.1 456.0 1486.4 1955 1016.8 119.1 260.6 379.7 1396.5 1956 645.8 91.5 207.8 299.3 945.1 1957 749.1 88.0 238.0 326.0 1075.1 1958 656.8 76.9 150.3 227.2 884.0 1959 527.0 80.2 199.8 280.0 807.0 1960 876.8 114.3 247.8 362.1 1238.9 177 APPENDIX I I - Cont'd. WASHINGTON AND OREGON YEAR B.C. WASH. ORE. TOTAL TOTAL PNW 1961 856.1 119.0 184.3 303.3 1159.4 1962 875.4 123.7 199.7 323.4 1198.8 1963 1115.2 180.0 229.3 409.3 1524.5 1964 1252.9 162.5 222.5 385.0 1637.9 1965 1193.9 141.7 225.5 367.2 1565.1 1966 1099.3 116.6 250.3 366.9 1466.2 Sources: PLIB Annual Statements, Council of Forest Industries F i l e s . 178 r Million fbm • FIGURE I - WATERBORNE MOVEMENT OF LUMiffi* TO 'JAPAN 800 700 600 500 400 300 200 100 THE MEIJI ERA ' WORLD WAR I AWD|-1 . 1 1 1 'ashington &. Oregon ; ! : I ! ! ••!'! British Columbia' K.3.- 7f '•• "~r _ AFTERMATH: i' - • -1 I THE BULGING YEARS' i I : I :. I .:': \:::. •I" "HIATUS" '' 1895-1905 : Includes shipment's to China. 1950 &_ 1951 '• Includes^ shipments to Korea; Sources J,l)_o_uncy._ojf_Forest _Industri:e^ of J3_.C;._J Lumber movements:British Columbia, Washington' Oregon.' 1895"- 1915.. (2)?.L.I.3.: Annual Reports,: 1916 1966 1892 '96 1900 '04 '48 '52 '56 '60 •64 '68 1 

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