POTLATCH CORPORATION DEFERRED

               COMPENSATION PLAN FOR DIRECTORS


          1.   Establishment and Purpose.
          The Potlatch Corporation Deferred Compensation
Plan for Directors was adopted on December 31, 1980, by the
Board of Directors of Potlatch Corporation to provide
Directors of Potlatch Corporation an opportunity to defer
payment of their Director's Fees.  The Plan is also intended
to establish a method of paying Director's Fees which will
assist the Company in attracting and retaining persons of
outstanding achievement and ability as members of the Board
of Directors of the Company.  The Plan was amended and
restated to read as set forth herein effective as of May 1,
1991.

          2.   Definitions.
          (a)  "Beneficiary" means the person or persons
designated by the Director to receive payment of the
Director's Deferred Compensation Account in the event of the
death of the Director.
          (b)  "Board" and "Board of Directors" means the
board of directors of the Company.
          (c)  "Committee" shall mean the Nominating
Committee of the Board.
          (d)  "Company" means Potlatch Corporation, a
Delaware corporation.

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                                                  Exhibit (10)(g)

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          (e)  "Deferred Compensation Account" means the
bookkeeping account established pursuant to Section 6 on
behalf of each Director who elects to participate in the
Plan.
          (f)  "Director" means a member of the Board of
Directors who is not an employee of the Company or any sub-
sidiary thereof.
          (g)  "Director's Fees" means the amount of compen-
sation paid by the Company to a Director for his or her
services as a Director, including an annual retainer and any
amount payable for attendance at a meeting of the Board of
Directors or any committee thereof.  "Director's Fees" shall
not include (i) any reimbursement by the Company of expenses
incurred by a Director incidental to attendance at a meeting
of the Board of Directors or of a committee thereof or of
any other expense incurred on behalf of the Company or
(ii) any amount payable with respect to services rendered
prior to January 1, 1981.
          (h)  "Dividend Equivalent" means an amount equal
to the cash dividend paid on an outstanding share of the
Company's common stock.  Dividend Equivalents shall be
credited to Stock Units as if each Stock Unit were an out-
standing share of the Company's common stock, except that
Dividend Equivalents shall also be credited to fractional
Stock Units.

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          (i)  "Plan" shall mean the Potlatch Corporation
Deferred Compensation Plan for Directors.
          (j)  "Stock Units" means the deferred portion of
Director's Fees which is converted into a unit.
          (k)  "Value" means the closing price of the
Company's common stock as reported in the New York Stock
Exchange, Inc. composite transactions reports for the
Valuation Date.
          (l)  "Valuation Date" means, for the purposes of
Section 6 or 7, the last trading day of the month preceding
the month in which Director's Fees or Dividend Equivalents
are converted into Stock Units pursuant to Section 6 or 7
and, for purposes of Section 8, the last trading day of the
month preceding the month in which Stock Units are converted
into cash for purposes of Section 8.
          (m)  "Year" shall mean the calendar year.

          3.   Eligibility.
          Each Director who receives Director's Fees for
service on the Board of Directors shall be eligible to
participate in the Plan.

          4.   Participation.
          In order to participate in the Plan for a par-
ticular Year, a Director must file a deferral election with

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the Secretary of the Company prior to January 1 of such
Year; provided, however, that in the case of a newly elected
Director an election to participate shall be effective for
the Year in which the Director is first elected if it is
filed before the date the Director first receives Director's
Fees (but in no event later than one month following the
date of election).

          5.   Deferral Election.
          A Director who elects to participate in the Plan
shall file a deferral election on a form which shall
indicate:
          (a)  The amount or percentage of Director's
     Fees which such Director elects to defer pursuant
     to the terms of the Plan.  This election shall
     apply to amounts deferred under the Plan until
     modified by the Director.  The Director shall
     notify the Secretary of the Company in writing of
     any such modification, which shall apply solely to
     amounts deferred with respect to Years following
     the Year in which the modification is made;
          (b)  The Year in which payment of the
     Director's Deferred Compensation Account and/or
     Stock Units shall commence; provided however, that
     payments shall commence no later than the Year
     following the Year in which the Director attains
     age 72 and, in the case of Stock Unit payments, no

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     earlier than six months after the last date on
     which Director's Fees have been converted into
     Stock Units on behalf of the Director (except in
     the case of payments made following the Director's
     death, total and permanent disability or the date
     the Director ceases to qualify as a Director).
          (c)  Whether the payment of such Director's
     Deferred Compensation Account is to be made in a
     single lump sum or in a series of approximately
     equal installments over a period of years
     specified by the Director (but in no event more
     than fifteen years);
          (d)  Whether the deferral election shall be
     effective only with respect to Director's Fees
     paid for the Year in which the Director's partici-
     pation in the Plan is to commence as determined
     pursuant to Section 4 above or shall apply with
     respect to Director's Fees paid for that Year and
     all subsequent Years until revoked or modified by
     the Director.  The Director shall notify the
     Secretary of the Company in writing of any such
     revocation or modification, which shall apply
     solely to amounts deferred with respect to years
     following the Year in which the revocation or
     modification is made; and
          (e)  The percentage of the Director's Fees
     deferred pursuant to the election which is to be
     converted into Stock Units.  This election shall

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     apply to the Year in which the Director's partici-
     pation in the Plan commences and to all subsequent
     Years until modified by the Director.  The
     Director shall notify the Secretary of the Company
     in writing of any such modification, which shall
     apply solely to amounts deferred with respect to
     years following the Year in which the modification
     is made.
Irrespective of the period designated pursuant to (d) above
in connection with a Director's initial deferral election
under the Plan, the Director's initial designation as to
time and form of distribution under (b) and (c) above shall
apply to all amounts deferred under the Plan and may not be
revoked or modified by the Director.

          6.   Treatment of Deferred Accounts.
          Upon receipt of a duly filed deferral election,
the Company shall establish a Deferred Compensation Account
to which shall be credited an amount equal to that portion
of the Director's Fees which would have been payable
currently to the Director but for the terms of the deferral
election and which is not converted into Stock Units.  If
the deferral election includes an election to convert a
percentage of the Director's Fees deferred pursuant to the
election into Stock Units, the number of full and fractional
Stock Units shall be determined by dividing the amount
subject to such an election by the Value of the Company's

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common stock on the Valuation Date.
          Director's Fees shall be credited to Director's
Deferred Compensation Account or converted into Stock Units
as of the following dates:
          (a)  The deferred portion of one-fourth of
     the annual retainer fee shall be credited to such
     Account or converted into Stock Units as of the
     first day of each calendar quarter; and
          (b)  The deferred portion of the fee for any
     meeting of the Board or any committee thereof
     shall be credited to such Account or converted
     into Stock Units as of the first day of the month
     following the date of such meeting.

          7.   Treatment of Deferred Compensation
               Account and Stock Units During
               Deferral Period.
          (a)  Deferred Compensation Account.  Interest
shall be credited on the balance in each Director's Deferred
Compensation Account commencing with the date as of which
any amount is credited to the Deferred Compensation Account
and continuing up to the last day of the quarter preceding
the month in which payment of the amounts deferred pursuant
to the Plan is made.  Such interest shall become a part of
the Deferred Compensation Account and shall be paid at the
same time or times as the balance of the Deferred Compensa-
tion Account.  Such interest for each calendar quarter

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during the deferral period shall be computed at 70% of the
higher of the following averages:  (i) the prime rate
charged by the major commercial banks as of the first
business day of each calendar month (as reported in an
official publication of the Federal Reserve System), or
(ii) the average monthly long-term rate of A rated corporate
bonds (as published in Moody's Bond Record).  Such interest
shall be compounded quarterly.
          (b)  Stock Units.  Dividend Equivalents shall be
credited to each Stock Unit on each dividend record date. 
Such Dividend Equivalents shall themselves be converted into
Stock Units as of the dividend record date by dividing the
amount of the Dividend Equivalents by the Value of the
Company's Common Stock as of the applicable Valuation Date.
          (c)  Effect of Certain Transactions.  In the event
of a change in the number of outstanding shares of the
Company's common stock by reason of a stock split, stock
dividend, or other similar changes in capitalization, an
appropriate adjustment shall be made in the number of each
Director's Stock Units determined as of the date of such
occurrence.

          8.   Form and Time of Payment of
               Deferred Compensation Account.
          Payment of a Director's Deferred Compensation
Account shall be made in cash prior to January 31 in each

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year in which a payment is to be made in accordance with the
Director's deferral election.  Payment of a Director's Stock
Units shall also be made at such time except that, if the
applicable January 31 occurs within the six-month period
beginning on the last date on which Director's Fees have
been converted into Stock Units on behalf of the Director,
then payment of the Director's Stock Units shall be made on
the last day of the month in which such six-month period
expires.  Notwithstanding the previous sentence, Stock Unit
payments may be made following the Director's death, total
and permanent disability or the date the Director ceases to
qualify as a Director, without regard to whether such six-
month period has expired.  For the purpose of payment, Stock
Units shall be converted to cash based on the Value of the
Company's common stock on the applicable Valuation Date.    
     In the case of a Director who has both a Deferred
Compensation Account and Stock Units, if a partial
distribution of a deferred portion of Director's Fees is to
be made and if the Director's Stock Units are immediately
payable in accordance with the previous paragraph, payment
shall be made partially from the Director's Deferred
Compensation Account and partially from Stock Units, in pro-
portion to the relative size of the Deferred Compensation
Account and the Stock Units.  If the Director's Stock Units
are not immediately payable in accordance with the previous

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paragraph, the partial payment shall be made entirely from
the Director's Deferred Compensation Account.
          Notwithstanding the foregoing, the Committee
reserves the right to determine in its sole discretion that
payment shall be made at a different time or times (but no
later than fifteen years after the payment commencement date
specified by the Director in his or her deferral election).

          9.   Effect of Death of Participant.
          Upon the death of a participating Director, all
amounts, if any, remaining in his or her Deferred Compensa-
tion Account and all Stock Units shall be distributed to the
Beneficiary designated by the Director.  Such distribution
shall be made at the time or times specified in the
Director's deferral election.  The Committee, however,
reserves the right to determine in its sole discretion that
payment shall be made at a different time or times (but no
later than fifteen years after the payment commencement date
specified by the Director in his or her deferral election). 
If the designated Beneficiary does not survive the Director
or dies before receiving payment in full of the Director's
Deferred Compensation Account and Stock Units, payment shall
be made to the estate of the last to die of the Director or
the designated Beneficiary.

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          10.  Participant's Rights Unsecured.
          The interest under the Plan of any participating
Director and such Director's right to receive a distribution
of his or her Deferred Compensation Account and Stock Units
shall be an unsecured claim against the general assets of
the Company.  The Deferred Compensation Account and Stock
Units shall be bookkeeping entries only and no Director
shall have an interest in or claim against any specific
asset of the Company pursuant to the Plan.

          11.  Statement of Deferred Compensation
               Account and Stock Units.
          The Secretary of the Company shall provide an
annual statement of each participating Director's Deferred
Compensation Account and Stock Units no later than
January 31 each year.

          12.  Nonassignability of Interests.
          The interest and property rights of any Director
under the Plan shall not be subject to option nor be assign-
able either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any
act in violation of this Section 12 shall be void.

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          13.  Administration of the Plan.
          The Plan shall be administered by the Committee. 
In addition to the powers and duties otherwise set forth in
the Plan, the Committee shall have full power and authority
to administer and interpret the Plan, to establish pro-
cedures for administering the Plan and to take any and all
necessary action in connection therewith.  The Committee's
interpretation and construction of the Plan shall be con-
clusive and binding on all persons.

          14.  Amendment or Termination of the
               Plan.
          The Board of Directors may amend, suspend or ter-
minate the Plan at any time.  In the event of such termina-
tion, the Deferred Compensation Accounts and Stock Units of
participating Directors shall be paid at such times and in
such forms as shall be determined pursuant to Section 8,
unless the Board of Directors shall prescribe a different
time or times for payment of such Accounts and Units.


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              POTLATCH CORPORATION DEFERRED
             COMPENSATION PLAN FOR DIRECTORS

                      APPENDIX A
                RETIREMENT STOCK UNITS

     1. Establishment and Purpose.
     This Appendix A to the Potlatch Corporation Deferred
Compensation Plan for Directors (the "Plan") is effective
December 31, 1996.  Its purpose is to provide benefits to
Directors who participated in the Potlatch Corporation Directors'
Retirement Plan (the Retirement Plan"), which is being terminated
on that date.  This Appendix A is a part of and shall be
administered in accordance with the terms of the Plan except as
otherwise provided in this Appendix A.  Capitalized terms that are
used but not defined in this Appendix A shall have the same
meaning as in the main text of the Plan.

     2. Conversion of Retirement Plan Benefits to Stock Units.
     In connection with the termination of the Retirement Plan,
the present value of each Director's Retirement Plan accrued
benefit shall be calculated as provided in Section 14(a) of the
Potlatch Corporation Salaried Employees' Retirement Plan, giving
each Eligible Director credit for the lesser of ten years or
actual years of service upon reaching mandatory retirement age.
The present value shall be converted into Stock Units by dividing

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the present value by the Value of the Corporation's common stock
on December 31, 1996.  The resulting Stock Units ("Retirement
Stock Units") shall be credited to a special account for each
Director under this Appendix A.

     3. Vesting of Retirement Stock Units.
     If a Director has completed at least 10 years of service as
a Director on December 31, 1996, then the Director's Retirement
Stock Units shall be fully vested as of such date.  If a Director
has completed fewer than 10 years of service as a Director on
December 31, 1996, then only the amount of the Retirement Stock
Units attributable to actual service as a Director shall be vested
as of December 31, 1996.  The balance of the Director's Retirement
Stock Units shall vest in equal installments on each December 31
thereafter until the Director completes 10 years of service as a
Director or retires from the board, whichever is first.  If the
Director's service terminates before the Director is fully vested
in his or her Retirement Stock Units, the nonvested Retirement
Stock Units shall be forfeited.

     4. Payment Election.
     On or before December 31, 1996, each Director who is credited
with Retirement Stock Units shall file an election on the
prescribed form indicating the Year in which payment of the
Director's vested Retirement Stock Units shall commence; provided,
however, that payments shall commence no earlier than the date

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(a) all units are vested, or (b) board service terminates, and no
later than the Year following the Year in which the Director
attains retirement age.  The election shall specify whether
payment is to be made in a single lump sum or in a series of
approximately equal installments over a period of years specified
by the Director (but in no event more than 15 years).  If a
Director fails to file an election concerning payment of the 
Director's vested Retirement Stock Units, payment shall be made in
accordance with the Director's most recent deferral election
pursuant to the Plan, or if the Director has no prior deferral
electionm, payment shall be made in a single lump sum in January of
the Year following the termination of the Director's service.
Until payment, the Director's Retirement Stock Units shall be
credited with Dividend Equivalents in the same manner as other
Stock Units under the Plan.  Payment of vested Retirement Stock
Units shall be made in cash in the same manner as other Stock
Units under the Plan.

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             DIRECTORS' DEFERRED COMPENSATION PLAN
       DEFERRAL ELECTION FOR RETIREMENT PLAN STOCK UNITS

To: Secretary - Potlatch Corporation

    Pursuant to the terms of Appendix A of the Potlatch
    Corporation Deferred Compensation Plan for Directors, I
    hereby elect to receive payment of my vested retirement plan
    stock unit special account as follows:

    (1) Date Payments to Commence:

       ___   Payment of my deferred compensation retirement
             plan stock units special account shall begin
             January,        (year).

             NOTE: This date may be no earlier than the date
             (a) all your units are vested or (b) your Board
             service terminates, and no later than the year
             following your 72nd birthday.

     (2) Method of Payment:

             Payment of my deferred compensation retirement plan
             special account shall be made in cash as follows:

        ___  Lump sum; or

        ___         annual installments (not exceeding 15).


   ___________________             _____________________________
         (Date)                        (Director's Signature)

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                                                          12/5/96