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VI. THE PUBLIC TIMBER LANDS OF CANADA: CROWN LANDS.

These lands belong to the Provincial Governments within which they lie, with the exception of those in the Northwest Territories and the Province of Manitoba, which belong to the Dominion Government. In Quebec and Ontario these lands are in charge of a Commissioner of Crown Lands; in New Brunswick, of the Surveyor-General; in Nova Scotia, of the Attorney-General; and in British Columbia, of the Chief Commissioner of Lands and Works.

A concise account of the system of management and regulation of these lands, under the former Canadian Government, and as modified by experience in later years, with a more detailed statement of the recent and existing systems under the Dominion Government and the sev eral Provinces, may afford suggestion worthy of attention, in determining the future policy of the Government of the United States, in regard to its public lands and the future timber supply.

It will be seen that hitherto almost no attention has been given in Canada to the reproduction of timber upon lands from which it has once been cut off; but all the laws and regulations that have been established have reference only to the native forests of the country and to the securing of a revenue from the existing supply. The reservation of young timber, too small for profitable use, by the limitation of a size below which it should not be cut, has received attention only in the Province of Quebec, and only with respect to pine timber. Questions of conservation and restoration are, however, beginning to attract notice, as will be seen in the following pages, and it is earnestly to be hoped that a knowledge of the true interests of the country will lead to effectual measures for this end, before vested rights have been established, to embarrass, and before the need of these measures has become urgent.

1. Former timber regulations in Canada.

The system of granting licenses to cut timber on the public lands in Canada was introduced in 1825, and since that time the right of renewal upon compliance with regulations has been practically acknowledged. In 1845 an Order in Council was passed making the licenses annual, but with the above understanding, and in the Order of 1849 the lessee was permitted to transfer his limit by simple assignment. In 1851 a groundrent system was introduced.

The branch of Woods and Forests in the Department of Crown Lands was organized under the former government of Canada, in 1852. A system of local agencies were established, and reforms much needed had begun to be introduced at the time when the Dominion Government was inaugurated. Among the abuses of earlier times was the monopolizing of immense tracts without using the privileges or paying an equivalent for them. A ground-rent system was at last adopted, which made reserved but unoccupied privileges unprofitable to hold, more especially as the rate increased in geometrical proportion as a penalty for not using. As lessons of experience in questions of timber management always have value, it may be interesting to learn how this expedient, apparently so easy to enforce, and so effectual to control the mischief, was found to operate when put to the test of trial.

The Commissioner of Crown Lands of Canada, in his report for the year 1856, in describing the workings of this rule, says:

It will be readily seen, however, that the operation of such a system would reach a climax within a limited period; that although it could scarcely be said to be even a

check in any degree upon monopoly, in the first instance, the increase in the annual rents on unoccupied tracts, after the first few years, became so sudden and great that a crisis became inevitable.

This crisis arrived in the year before last (1855), the rents of unoccupied berths having in many cases reached a figure the preceding year which if again doubled, with a certainty of being quadrupled in 1856, would have rendered the ground untenable. A general effort was therefore made by those interested to have the system suspended or rescinded.

A new feature in the controversy arose on this occasion from the interference of a great body of the Shipping Merchants of Quebec, who submitted a counter-petition opposed to the views of those of the Producing Merchants, who desired to be relieved from the accumulating ground rents.

The lumber trade being one of the principal resources of the country, the regulations by which it is governed must always be of great moment and worthy of the greatest consideration, and therefore I trust that the importance of the subject to the country at large may be deemed sufficient to warrant a pretty extended reference to the consideration bestowed upon it at the period of the crisis referred to, and which has resulted in establishing a degree of permanency in the institutions connected with it which was previously unknown.

As the lumber trade is ordinarily conducted in this country there are two distinct branches of it, viz, that in which the producer is engaged and that which is carried on by the shipper. There are some firms who are engaged in both branches of the trade, but although mutually dependent, they are always distinct from and sometimes antagonistic to each other. The principal feature in which they conflict is that it is the interest of the producer that the prices should rule high as compared with the cost of production, while it is the interest of the shipper that they should rule low in the lumber markets of the country as compared with the prices in England.

This subject was very fully treated of in the evidence taken before the parliamentary committee in 1849, appointed to inquire into the causes of the ruinous state of the trade which had existed for some years previous to that date (see Appendix P. P. P. P. of that year), which it may not be considered inopportune to refer to as perhaps the greatest crisis the trade has ever had to contend with since it grew to anything like its present importance.

By the evidence obtained by the committee on that occasion, it will be seen that, commencing with the year 1846, there was a supply in the Quebec market wholly disproportionate to the demand, originally caused by an unwise forced production, and aggravated in the succeeding years by a diminished consumption arising from the general depression in commercial affairs which occurred in 1847. The important fact to be observed here is, that in 1846, a year in which the statistics of the trade prove that all the elements of prosperity existed in the highest degree, the most wide-spread ruin occurred among the producers. The business of 1845 was most profitable to the country and to individuals engaged in the trade, while the business of 1846 was ruinous to individuals and a loss to the country. The demand and the shipments in 1845 exceeded those of previous years; the demand and the shipments in 1846 were equally great, or even slightly in excess of those of the previous year. The reason of the prosperous state of the trade in the one year and its ruinous state in the other is therefore to be found in the fact that in 1845 the supply was in just proportion to the demand, while in 1846 a supply was forced upon the market out of all proportion even to the great demand and shipments of that year; the result was, that in the one year individuals realized a profit on their business and the country at large reaped a pront on the total export, while in the other year individuals had, from over-supply, to sell for much less timber which (from over-stimulated production, enhanced price of labor, &c.) had cost more, and were therefore in many instances ruined, a loss being at the same time sustained by the country at large, which, in the total export of the season, parted with so much capital at something like half its value.

The over-production of 1846 (which did not all reach market that year) continued to depress the trade for several years, the supply of square timber resulting from it, in Quebec market, having been as follows, viz: In 1845 there was a supply of 27,702,344 feet, to meet an export of 24,223,000 feet; but in 1846 a supply of 37,000,643, to meet an export of 24,242,689 feet; and in 1847 a supply (including the overstock of previous years) of 44,027,253 feet, to meet an export of 19,060,80 feet. Here then the distinctive interest of the different branches of the trade may be seen. The business of 1845, which was so profitable to the producers and the country, having been of but doubtful benefit to the shippers, who had to pay quite as high a price here as the prices in England would justify; while the business of 1846, which was so ruinous to the producers, who had to sell at less than the cost of production, was profitable to the shippers who obtained the timber in Quebec at about half the price it had cost them the previous year, while there was not a corresponding diminution of price in the English markets, at least during that season, and those of them who had contracted realized

the full benefit of their contract prices on the diminished rates they had to pay in Canada.

It is needless to discuss the continued depression of the succeeding years, in which the general derangement of commercial affairs, which began in 1847, was the principal cause; but there can be no doubt that, so far as the lumber trade was concerned, the depression was aggravated by the enormous production of 1846, which continued to hang upon the market for years after. But it is important to observe that the cause of the over-production itself was shown by the Parliamentary inquiry referred to, to have been in part indeed the natural stimulus arising from the successful operations of the previous years, but in part, also, the unwise course, at that time pursued by the Government, of forcing production, as will hereafter appear upon explanation of the regulations.

It is to the advantage of the shipping interest that production should again be forced; it is to the advantage of the producing interest that it should be limited. Shippers and producers are alike essential to the trade, and while it would be a mere waste of the labor and capital of the Province for the Government to force production, it may be safely assumed that the true course is to let the trade, as far as practicable, regulate itself, without interfering on the one side or the other. But it so happens that there must be some regulations to govern the cutting of timber on crown lands, and it is an unavoidable incident of such regulations that they must exercise some influence upon the trade. The object the regulations should have in view, therefore, in this particular, is to exercise that influence to the least extent possible at the same time that they hold out equal facilities to all desirous of embarking in the trade, due protection to all in the rights acquired and full security for investments of capital necessary to be made, to render the resources of the timber territories available, but not to lock them up in unproductiveness.

Such being the principles at stake and such the adverse interests involved both parties memorialized the Government, cach endeavoring to secure the preponderance of their particular views.

The memorial in the shipping interest did not, however, correctly represent the grounds upon which those who signed it really opposed the object sought for by the producing interest. I would indeed be sorry to accuse gentlemen of their standing and respectability of any intentional misstatements, but yet, from being ignorant of that branch of the trade with which they were not connected and of the regulations by which it was governed, they allowed themselves to be led into a train of argument which raised entirely false issues, some erroneous information or misconception having led to the result that every paragraph in their memorial conveyed either inferentially or directly some statement that could not be sustained by facts.

They assumed in the first place that the ground rent was "a condition agreed to by the license holders when they obtained the privilege of cutting, &c.," which was not the fact as regards the great bulk of the trade, the timber berths having been obtained without any such condition, and the ground rent being an additional impost to which they have since been subjected. They next stated that "of late years the bulk of the timber limits of the Crown have been monopolized by a few houses," whereas, there had been no change by which this could have been effected, the only change introduced for several years having been the very one they were seeking to maintain, establishing ground rents, &c., as the most efficient check upon monopoly which had yet been found.

I may here remark that the assumption that a great monopoly of the timber territories existed was at best a chimera, as proved by the fact that there are upon an average about nine hundred timber berths under license in the hands of about five hundred persons. The assertion, therefore, there is monopoly where there are five hundred competitors, each equally free to deal to a large or a small extent as he sees fit, or his means will allow, needs no further contradiction.

There may indeed be some local monopolies, where persons of large means buy up the lesser establishments in their vicinity; but anything approaching a general monopoly in this trade, under existing regulations, is impossible; and, so far as any local monopoly exists, it is not by the Government that it has been created or is sustained, but by the influence of capital, the application of which for the purposes of trade the government cannot control. The greatest local monopoly that has yet arisen in the trade was that which existed for a few years on the Saint Maurice, and there it arose from the influence of capital at public competition, although the regulations on that occasion were specially calculated to throw the trade of the territory into the greatest number of hands possible. Capital, however, bore down all opposition for the moment, and it is due to the firmness with which the government resisted repeated, most urgent, and most influential appeals to relax the regulations that that monopoly was ultimately broken up.

Indeed it may be truly said that the shipping branch of the trade, as carried on at Quebec, bears much more the character of a monopoly than the producing branch, the whole of the business arising from about five hundred competitors on public lands,

and perhaps an equally great number of producers on private lands, being, so far as the business centers in Quebec, in the hands of about forty shippers, nine or ten of whom do more than three-fourths of the whole business. But this, in like manner, so far as it can be called a monopoly, is the result of capital, and is not influenced by government, which can as little interfere to limit the operations of the producer to one timber berth or a hundred timber berths as to limit the business of the shipper to one ship or a hundred ships.

The memorialists also stated that the monopoly of which they complained was "to the almost total exclusion of those whose means or influence was not so great as to obtain limits." There was here a remarkable instance of men of high position descending to meddle with other people's affairs, and being thereby led to commit themselves to vulgar errors on matters of which they were themselves wholly ignorant. It will be seen that in the above they asserted two distinct grievances as the causes of the monopoly they complained of; first, that those without a certain amount of means could not obtain "limits" or timber berths; and, second, that (failing means) they might be obtained by influence. The first must indeed be admitted. Men of means will acquire timber berths, as well as houses and lands and ships, to the "exclusion of those whose means are not so great as to obtain them;" it is an old grievance for which governments have not yet found a remedy.

And even if, at the suggestion of these memorialists (who, by the way, were not of the class who usually advocate such a doctrine), the Government had taken, or should yet take, some undefined way of throwing the timber berths into the hands of those who have not means to obtain them in a legitimate manner, those who possess means would (provided the tenure justified the investment) immediately buy them out, and then there would be the same cry for a repetition of the operation.

With repect to the second grievance, it is sufficient to say that it is not to be found in the law or the regulations affecting the trade; and as it could only exist in violation of both, the memorialists should have established the fact before they claimed the credit for it as such, whereas they did not attempt to substantiate even one case of such violation.

They suggested, in conclusion, that if the license holders were unable or unwilling to pay, &c., their timber berths should be thrown open to competition, and they, the memorialists, believed that, notwithstanding the depressed state of the trade at that time, they would be readily taken by others without loss to the revenue.

It is difficult to write seriously on such a proposition; there can be no doubt that if the opportunity had occurred and had been taken advantage of to submit to public competition, privileges which have already been in many cases dearly bought, and in the development of which on the whole hundreds of thousands of pounds of private means have been expended (as shown by returns laid before Parliament in 1852), they would readily be taken without loss to the revenue, but it was an issue not more reasonable nor likely than that the ships of the memorialists would have been made available to the revenue if they had asked for a change in the navigation laws.

Such was the false position assumed by the shipping interest at the period referred to, but the erroneous grounds upon which they opposed the prayer of the producing merchants of course made no argument either for or against the latter, which had to be dealt with upon its own merits.

The memorial of the producing merchants was signed by some of the shipping merchants also, who are connected with or interested in the business of the producers, and there appeared to be two or three firms, not known to the department to be connected with the producing interest, who signed, it is presumed, in a liberal view of what they conceived to be for the good of the country and the trade at large; some merchants and others of Ottawa had also joined in it, who are not personally engaged in the trade, but whose interests are bound up with those of the producers.

The object of the memorialists, as expressed, was to obtain a cessation for three years, or until the then existing depression had passed away, of the penalty imposed for noncccupation of timber berths. Although the object sought was professedly of a temporary nature, however, it would no doubt have been made a precedent for seeking government interference in every fluctuation of the trade thereafter. It would have been the first precedent that could be quoted since the adoption of the new system, and therefore I shall state the reasons that induced its rejection, as I conceive that upon the integrity of the system being maintained in the future depends much of the prosperity of the trade.

It is to be observed that when the great depression occurred in the trade, which began in 1846, and from which it was about four years before it could be said to have recovered, the ground-rent system was not in force. The license holders were at that time subject only to the payment of the amount of duty accrued on the quantities cut; they were then as now obliged to occupy every year, but under pain of forfeiture of the right to renewal of license instead of the penalty of an increased payment. It was complained of this system that it favored monopoly, inasmuch as a berth could only be proved unoccupied at a very heavy expense, and then it was still subject to be re

purchased by the former holder. The standard of occupation (that it is the quantity required to be cut to constitute occupation) was in 1845-46 made too high, thereby having a tendency to force production. In obedience to the cry of monopoly, then prevalent, notice was also given by the department, about the same time—there being then no statute upon the subject-that all the larger timber berths would be subdivided in three years; this also, although never actually effected, had a tendency to force production, as license holders were naturally desirous of making the most of their berths by cutting off all the best timber in the interim.

Parties differed on opinion as to the exact amount of influence these rules exercised upon the over production, but it was generally admitted that they exercised some influence in that way. At all events the result of the ruinous state of the trade was that the government did afford relief in these particulars, the notice of subdivision was withdrawn, the standard of occupation was reduced, and finally the parties were allowed from year to year up to 1850 to hold their timber berths without any condition of occupation at all, and without any payment where they did not choose to occupy.

The action of the Government on the trade, during the periods of great prosperity and succeeding depression referred to, was thus in opposite extremes. It therefore became expedient that a better permanent system of regulations should be framed for the government of the trade, and the regulations of which the ground-rent system is a part were finally the result.

By this system an annual ground rent was imposed on timber berths, in excess of the duty, as a regular permanent charge. And as a check upon monopoly it was provided, by way of penalty, that the ground rent should double upon each renewal of license on berths which had not been occupied during the preceding season, and continue doubling every year, so long as the berths continued unoccupied. Thus the rent paid for the largest size of berth the regulations permit-in excess of all other charges—is £6 58., the same being payable annually. But upon non-occupation for one season the rent rises to £12 108.-upon non-occupation for a second season to £25for a third season to £50-and so on (as the system was first introduced) without limit, but reverting to the original rate of £6 58. whenever occupation recommenced.

For the first few years after the introduction of this system it could not force production to any very sensible extent; but the constant increase, in geometrical progression, at last comes to a point when the increase is so great and sudden that those who held any timber berths in reserve had either to occupy or relinquish them. Unfortunately as regards the great bulk of the license holders, the operation of the system had just reached the point (when they had either to produce more timber or relinquish that which they had already paid a series of rents for, and, in some instances, otherwise laid out money upon, without return) at a moment when the trade was in a state of considerable depression, and required a decreased instead of an increased production. This state of depression, too, arose from causes wholly foreign to the internal management of the trade; for it differed from the previous great crisis in the trade (that of 1846-47, &c.) in this, that it arose less from an excessive production than from a sudden cessation of demand-the result probably of the war then raging. It differed also in degree, bearing only the character of a temporary embarrassment as compared with the widespread ruin which fell upon the trade on the former occasion. It was none the less necessary, however, to apply a remedy, if practicable, in time, and it was in this view that the producers sought to be temporarily authorized to suspend productions where the ordinary tendency of the regulations was to enforce it.

It was not therefore, as put by the opponents of the producing interest, a question of the holders of timber berths fulfilling or failing in their obligations; and even if it had been so, the maintenance of the penalty in its full force would not, at least for some time, have compelled any considerable relinquishment of licenses. On the contrary, the parties would have continued to hold them, and endeavored, by extendent operations, to reduce to their original amounts the ground rents on such berths as the penalty had most accumulated upon, thus risking the consequences of increased production rather than abandon their licenses.

The real question at issue, therefore, simply was, whether the penalty for non-ocenpation had been made too severe or not.

But there was also the question of whether the exceptional circumstances then existing, arising out of the war or otherwise, were such as would justify the temporary suspension of the penalty.

On the first head, as regards the penalty for non-occupation generally, it is to be observed that, if any regulation were to succeed in compelling the occupation of all the lands licensed, it would force a production far beyond the requirements of the trade; no regulation could permanently have this effect, however, as the result of an excessive penalty would be to cause the relinquishment of a portion of the territory now under license, which (apart from the question of whether it would not afford, in every period of excitement, too great a facility for a rush into the trade) would leave

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