December 29, 1998	




MEMBERS OF THE 
BOARD OF DIRECTORS
POTLATCH CORPORATION


On December 3, 1998, the Board authorized the amendment of 
all outstanding stock option agreements to reflect two 
amendments to the 1995 Stock Incentive Plan as follows:

1. to extend the post-termination exercise period for stock 
options from 36 months to the full term of the option 
when board services terminates due to retirement (after 
five years of service as a Director) or death; and

2. to update the location of the Corporation's office.

If you wish to have the new rules apply to your outstanding 
nonqualified options, please sign and return the enclosed 
copy of this letter.  These amendments will apply to all 
nonqualified options held by you on December 3, 1998.

If you agree to these amendments by signing and returning 
the copy of this letter, Sections 5 and 8 of your 
outstanding option agreements will be amended to read as 
follows:

   Section 5.  The term of this Option shall end and this 
   Option shall not be exercisable after 10 years from 
   the Date of Grant or, if earlier, upon the termination 
   of Outside Director's services as a director of the 
   Corporation subject to the following provisions:

      (a) If the termination of services is caused 
      by Outside Director's death, this Option, to the 
      extent that it was exercisable under Paragraph 3 
      of this Agreement at the date of death and had 
      not previously been exercised, may be exercised 
      at any time before the end of the Option Period 
      as specified in the Option Agreement by Outside 
      Director's executors or administrators or by any 
      person or persons who shall have acquired this

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                                                 Exhibit (10)(m)(ii)

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      Option directly from Outside Director by bequest or 
      inheritance.

      (b) If the termination of services is caused by 
      retirement after five years of service as an Outside 
      Director of the Corporation, this Option, to the extent 
      it was exercisable under Paragraph 3 of this Agreement 
      at the date of such termination and had not previously 
      been exercised, may be exercised at any time before the 
      end of the Option Period as specified in the Option 
      Agreement.

      (c) If the termination of services is for any 
      reason other than death or retirement, this Option, to 
      the extent that it was exercisable under Paragraph 3 of 
      this Agreement at the date of such termination and had 
      not previously been exercised, may be exercised within 
      three months after the date of such termination; 
      provided that in such case the right to call a stock 
      appreciation right as described in Paragraph 4 shall 
      terminate on the date Outside Director's services 
      terminate unless Outside Director requests and the 
      Committee permits the call of the stock appreciation 
      right within three months after the date of such 
      termination. Notwithstanding the foregoing, if the 
      termination of services is for cause, the option shall 
      cease to be exercisable or callable at the time of such 
      termination. The Board shall determine whether Outside 
      Director's services are terminated for cause in 
      accordance with the Corporation's Restated Certificate 
      of Incorporation.

Section 8.  Outside Director, or Outside Director's 
representative, may exercise this Option by giving written 
notice to the Corporation at Spokane, Washington, attention 
of the Secretary, specifying the election to exercise the 
Option, the number of Shares for which it is being exercised 
and the method of payment for the amount of the Purchase 
Price of the Shares for which this Option is exercised. Such 
payment shall be made:

     (a) In United States dollars delivered at the time 
     of exercise;

     (b) Subject to the conditions stated in rules and 
     regulations adopted by the Committee, by the surrender 
     of Shares in good form for transfer, owned by the 
     person exercising this Option and having an aggregate 

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     Fair Market Value on the date of exercise equal to the 
     Purchase Price; or

     (c) In any combination of Subparagraphs (a) and (b) 
     above, if the total of the cash paid and the Fair 
     Market Value of the Shares surrendered equals the 
     Purchase Price of the Shares for which this Option is 
     being exercised.

The notice shall be signed by the person or persons 
exercising this Option, and in the event this Option is 
being exercised by the representative of Outside Director, 
shall be accompanied by proof satisfactory to the 
Corporation of the right of the representative to exercise 
the Option. No Share shall be issued until full payment has 
been made. After receipt of full payment, the Corporation 
shall cause to be issued a certificate or certificates for 
the Shares for which this Option has been exercised, 
registered in the name of the person or persons exercising 
the Option (or in the name of such person or persons and 
another person as community property or as joint tenants), 
and cause such certificate or certificates to be delivered 
to or upon the order of such person or persons.

If you have any questions regarding the proposed amendments to 
your nonqualified stock options, please let me know.

Yours very truly,


Betty R. Fleshman
Corporate Secretary


I agree to the foregoing proposed amendments to my non-qualified 
stock option agreements.


____________________________________    ___________________
          Signature                            Date


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