that if I buy it at one price, and I hold it for a while and it has a higher fair market value at the time I cut it, the difference roughly between what I paid for it and its fair market value is capital gain. Hence you will see in our industry that certain companies-and the Washington Post had quite an interesting exposition of this a couple of years ago that are substantial holders of timber may be paying Federal tax rates that will average out in the low 30 percent. Other industries pay more.

Now if I were an owner of a vast tract of timber, I would have been quite interested in this. To those who buy Federal timber in a competitive area, the thinning of lumber sizes would have meant nothing. Even if it had been theoretically more profitable for my peopleand let's ignore every other factor-in order to buy the standing timber they would have been forced to bid their profit away. Hence they would have had nothing, except an increase in the difference in economic status between the major timber owners and those who do not own timber. I think this was probably a greater source of schism within the industry than the big-little, or green-dry issues that I never thought were the core of the difference. Whether this type of standard would be as appetizing if that provision of the capital gains tax were eliminated is an interesting speculation. The Treasury did propose that it be eliminated. At the last go-around Congress did not eliminate it. Whether they will consider it again I don't know. But it is fair to say I think that the experts who consulted with the Battelle people do not share the view of the Battelle report that the subject of capital gains is not material to the standard.

Mr. ROOSEVELT. I am glad you have explained that to us. It sort of emphasizes again the broadness of the issues involved here. It is not just purely a technological problem.

Mr. NETZORG. Yes.

Mr. ROOSEVELT. I appreciate having that in the record. Mr. Netzorg, I want to thank you for your assistance to the subcommittee this morning, and to say that we will look forward to receiving such suggestions as Mr. Jones, the West Coast Lumber Inspection Bureau, you, or anybody else that you may be associated with, make to the Secretary with respect to the revised composition of the standards committee.

Mr. NETZORG. Thank you, sir, and I do want to add again both personally and in behalf of Mr. Jones and the West Coast Lumber Inspection Bureau our thanks to you for affording this forum to everybody, both pro and con. It is about the one opportunity we have all had to sit down before an impartial body and expound our views, not only as to what is wrong in the past but how do we avoid this in the future.

Mr. ROOSEVELT. As was said, and I might introduce it at this time, without objection, we have a letter from Mr. Mark Townsend of the National Lumber Manufacturers Association. I invited him to present the view of the National Lumber Manufacturers Association at these hearings, and he responded that he didn't wish to make a statement at this time in view of the referral back to the standards committee of the whole problem. However, he has said that members of

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