SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               Form 10-Q



              Quarterly Report Under Section 13 or 15(d)
                of the Securities Exchange Act of 1934


For Quarter Ended   March 31, 2001    Commission file number     1-5313


                              POTLATCH CORPORATION
           (Exact name of registrant as specified in its charter)



        A Delaware Corporation                            82-0156045
   (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                     Identification No.)




    601 West Riverside Ave., Suite 1100
          Spokane, Washington                             99201
(Address of principal executive offices)                  (Zip Code)


Registrant's telephone number, including area code     (509) 835-1500





Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.  Yes[X] No[ ]



The number of shares of common stock outstanding as of March 31, 2001:
28,296,434 shares of Common Stock, par value $1 per share.


<PAGE>
           POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES

                           Index to Form 10-Q





PART I.   FINANCIAL INFORMATION                               Page Number

 Item 1.  Financial Statements

   Statements of Earnings for the three
   months ended March 31, 2001 and 2000                              2

   Condensed Balance Sheets at March 31, 2001
   and December 31, 2000                                             3

   Condensed Statements of Cash Flows for the three
   months ended March 31, 2001 and 2000                              4

   Notes to Financial Statements                                5 -  6

 Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations         6 - 13


PART II. OTHER INFORMATION

 Item 6.  Exhibits and Reports on Form 8-K                          14


SIGNATURES                                                          15


EXHIBIT INDEX                                                       16


                                    1

<PAGE>
                                PART I

Item 1.   Financial Statements



Potlatch Corporation and Consolidated Subsidiaries
Statements of Earnings
Unaudited (Dollars in thousands - except per-share amounts)
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                               March 31
                                                          2001          2000
----------------------------------------------------------------------------
<S>                                                   <C>           <C>
Net sales                                             $444,047      $474,556
----------------------------------------------------------------------------
Costs and expenses:
 Depreciation, amortization and
   cost of fee timber harvested                         40,872        40,837
 Materials, labor and other
   operating expenses                                  405,531       382,359
 Selling, general and
   administrative expenses                              28,666        33,140
 Restructuring charge (Note 4)                           4,217             -
----------------------------------------------------------------------------
                                                       479,286       456,336
----------------------------------------------------------------------------
     Earnings (loss) from operations                   (35,239)       18,220

Interest expense                                       (16,734)      (14,051)

Other income (expense), net                                485          (175)
----------------------------------------------------------------------------
     Earnings (loss) before taxes on income            (51,488)        3,994

Provision for taxes on income (Note 2)                 (20,080)        1,558
----------------------------------------------------------------------------
Net earnings (loss)                                   $(31,408)     $  2,436
============================================================================

Net earnings (loss) per common share (Note 3):
 Basic                                                  $(1.11)        $ .08
 Diluted                                                 (1.11)          .08
Dividends per common share (annual rate)                  1.74          1.74
Average shares outstanding (in thousands):
 Basic                                                  28,330        28,779
 Diluted                                                28,330        28,814
----------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>


                                   2

<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Condensed Balance Sheets
2001 amounts unaudited (Dollars in thousands -
except per-share amounts)
---------------------------------------------------------------------------
<CAPTION>
                                                   March 31,   December 31,
                                                        2001           2000
---------------------------------------------------------------------------
<S>                                               <C>            <C>
Assets
 Current assets:
   Cash                                           $    1,970     $   11,652
   Short-term investments                                  9              9
   Receivables, net                                  213,377        187,819
   Inventories (Note 5)                              219,935        223,206
   Prepaid expenses                                   83,199         61,153
---------------------------------------------------------------------------
     Total current assets                            518,490        483,839
 Land, other than timberlands                          9,044          9,044
 Plant and equipment, at cost less
   accumulated depreciation                        1,551,442      1,637,374
 Timber, timberlands and related
   logging facilities                                389,844        333,249
 Other assets                                         81,854         78,939
---------------------------------------------------------------------------
                                                  $2,550,674     $2,542,445
===========================================================================

Liabilities and Stockholders' Equity
 Current liabilities:
   Notes payable                                  $  239,970     $  188,943
   Current installments on long-term debt            100,306            325
   Accounts payable and accrued liabilities          248,080        249,831
---------------------------------------------------------------------------
     Total current liabilities                       588,356        439,099
 Long-term debt                                      701,568        801,549
 Other long-term obligations                         185,059        184,147
 Deferred taxes                                      297,861        293,961
 Put options                                           8,334         10,453
 Stockholders' equity                                769,496        813,236
---------------------------------------------------------------------------
                                                  $2,550,674     $2,542,445
===========================================================================

Stockholders' equity per common share                 $27.19         $28.69
Working capital                                     $(69,866)       $44,740
Current ratio                                           .9:1          1.1:1
---------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>


                                    3

<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
---------------------------------------------------------------------------
<CAPTION>
                                                         Three Months Ended
                                                              March 31
                                                           2001        2000
---------------------------------------------------------------------------
<S>                                                    <C>         <C>
Cash Flows From Operations
 Net earnings (loss)                                   $(31,408)   $  2,436
 Adjustments to reconcile net earnings (loss)
   to net cash provided by (used for) operations:
   Depreciation, amortization and cost of
     fee timber harvested                                40,872      40,837
   Deferred taxes                                         3,900       1,091
   Working capital changes                              (42,243)     (6,855)
   Other, net                                               113        (337)
---------------------------------------------------------------------------
   Net cash provided by (used for) operations           (28,766)     37,172
---------------------------------------------------------------------------
Cash Flows From Investing
 Additions to investments                                (1,149)       (921)
 Reductions in investments                                  466         281
 Additions to plant and properties                      (13,294)    (34,062)
---------------------------------------------------------------------------
   Net cash used for investing                          (13,977)    (34,702)
---------------------------------------------------------------------------
Cash Flows From Financing
 Change in book overdrafts                               (3,841)      2,156
 Increase in notes payable                               51,027      33,703
 Repayment of long-term debt                                  -      (9,999)
 Issuance of treasury stock                                   -         404
 Purchase of treasury stock                              (2,120)    (13,011)
 Dividends                                              (12,332)    (12,567)
 Other, net                                                 327      (5,407)
---------------------------------------------------------------------------
   Net cash provided by (used for) financing             33,061      (4,721)
---------------------------------------------------------------------------

Decrease in cash                                         (9,682)     (2,251)
Balance at beginning of period                           11,652      11,531
---------------------------------------------------------------------------
Balance at end of period                               $  1,970    $  9,280
===========================================================================
<FN>
Net interest payments (net of amounts capitalized) for the three months
ended March 31, 2001 and 2000 were $9.3 million and $6.6 million,
respectively.  Net income tax payments (refunds) for the three months
ended March 31, 2001 and 2000 were $0 million and $(0.2) million,
respectively.

The accompanying notes are an integral part of these financial statements.
</TABLE>


                                    4

<PAGE>
Potlatch Corporation and Consolidated Subsidiaries
Notes to Financial Statements
(Dollars in thousands)
---------------------------------------------------------------------------

NOTE  1.  GENERAL - The accompanying condensed balance sheets at  March
31, 2001, and December 31, 2000, and the statements of earnings and the
condensed statements of cash flows for the three months ended March 31,
2001,  and  2000,  have  been  prepared in  conformity  with  generally
accepted accounting principles.  The management of Potlatch Corporation
(the  "company")  believes that all adjustments necessary  for  a  fair
statement  of  the results of such interim periods have been  included.
All  adjustments  were  of a normal recurring  nature;  there  were  no
material nonrecurring adjustments.

NOTE  2.  INCOME  TAXES - The provision for taxes on income  has  been
computed by applying an estimated annual effective tax rate.  This rate
was 39 percent for the quarters ended March 31, 2001 and 2000.

NOTE  3.  EARNINGS  PER COMMON SHARE - Earnings per common  share  are
computed  by  dividing net earnings by the weighted average  number  of
common  shares outstanding in accordance with FASB Statement  No.  128,
"Earnings Per Share."

     The following table reconciles the number of common shares used  in
the basic and diluted earnings per share calculations:

                                                    Three Months Ended
                                                         March 31
                                                     2001        2000
                                                     ----        ----
Basic average common shares outstanding          28,329,767   28,779,449

Incremental shares due to common stock options            -       34,140
                                                 ----------   ----------
Diluted average common shares outstanding        28,329,767   28,813,589
                                                 ==========   ==========

     Incremental  shares  due to common stock options  of  778  and  put
options  of  59,201  were  not included in the diluted  average  common
shares  outstanding total for March 31, 2001 due to their  antidilutive
effect  as  a  result of the company's net loss for the period.   Stock
options  to purchase shares of common stock of 2,035,425 and  1,940,225
at  March  31, 2001, and 2000, respectively, were not included  in  the
above  computations  because the stock options'  exercise  prices  were
greater than the average market price of common shares.

NOTE  4.  RESTRUCTURING CHARGES - In March 2001 the company recorded  a
$4.2  million charge associated with a workforce reduction plan at  its
pulp,  paperboard and consumer products operations in Idaho.  The  plan
permanently reduced the workforce by 124 hourly positions.  During 2000
the  company also recorded charges related to a company-wide  reduction
and  reorganization  in its salaried workforce and  for  the  permanent
closure  of  a  plywood  plant.  The  following  table  summarizes  the
components of the accrued liabilities for all of these charges and  the
cash and noncash amounts applied against them as of March 31, 2001:


                                    5



<PAGE>
<TABLE>
<CAPTION>
                                       Accrued Compensation  Ancillary Site    Asset
(Dollars in thousands)                and Employee Benefits   Maintenance    Valuation    Total
------------------------------------------------------------------------------------------------
<S>                                          <C>                 <C>           <C>      <C>
Hourly workforce reduction charge            $  4,217            $    -        $    -   $  4,217
 Cash payments                                      -                 -             -          -
 Noncash allocations                           (2,864)                -             -     (2,864)
------------------------------------------------------------------------------------------------
                                                1,353                 -             -      1,353
------------------------------------------------------------------------------------------------

Salaried workforce reduction charge            27,909                 -             -     27,909
 Cash payments                                (16,872)                -             -    (16,872)
 Noncash allocations                           (2,009)                -             -     (2,009)
------------------------------------------------------------------------------------------------
                                                9,028                 -             -      9,028
------------------------------------------------------------------------------------------------

Mill closure charge                             7,825             3,837         6,840     18,502
 Cash payments                                 (4,065)             (795)            -     (4,860)
 Noncash allocations                           (3,852)                -             -     (3,852)
------------------------------------------------------------------------------------------------
                                                  (92)            3,042         6,840      9,790
------------------------------------------------------------------------------------------------
                                             $ 10,289            $3,042        $6,840   $ 20,171
================================================================================================
</TABLE>


NOTE  5.  INVENTORIES - Inventories at the balance sheet dates consist of:

                                        March 31, 2001   December 31, 2000
                                        --------------   -----------------
 Raw materials                             $105,806           $105,022
 Work in process                              5,788              3,849
 Finished goods                             108,341            114,335
                                           --------           --------
                                           $219,935           $223,206
                                           ========           ========


ITEM  2.  Management's Discussion and Analysis of Financial  Condition and
          Results of Operations

Liquidity and Capital Funding

     Net cash used for operations for the first three months of 2001, as
presented in the Condensed Statements of Cash Flows on page 4,  totaled
$28.8  million,  compared with cash provided  by  operations  of  $37.2
million  for  the same period in 2000.  The unfavorable comparison  was
largely due to a decrease in earnings before taxes of $55.5 million  in
the first quarter of 2001 compared to the same period in 2000.

     Net cash used for investing was $14.0 million for 2001's first quarter,
a decrease of $20.7 million compared to the first quarter of 2000.  The
change was due to a planned reduction in capital spending from 2000 levels.
Capital expenditures totaled $13.3 million for the first three months
of 2001.  Of this amount, the company spent $5.6 million in the wood products
segment, the majority of which were for the completion of the modernization
and expansion project at the Cook, Minnesota, oriented strand board mill.
Total spending in the resource segment for the quarter equaled $3.1 million,
mainly for reforestation and activities at the Boardman, Oregon, hybrid
poplar plantation.  The company spent $1.2 million in the printing papers
segment and $3.4 million in the pulp and paper segment, largely for
environmental, safety and general replacement projects.

                                    6

<PAGE>
     Net cash provided by financing totaled $33.1 million in the first
quarter of 2001, compared to cash used for financing activities of $4.7
million in the first quarter of 2000.  The company borrowed $17.3 million
more under its credit lines in the current quarter than in the same period
last year and also reduced its purchases of treasury stock by $10.9 million.
Additionally, the company repaid $10.0 million of long-term debt in the
first quarter of 2000.

     The  company's ratio of long-term debt to stockholders' equity  was
 .91  to 1 at March 31, 2001, compared to .99 to 1 at December 31, 2000.
Long-term  debt declined $100.0 million during the quarter due  to  the
reclassification  to  current  of debt which  matures  in  March  2002.
Stockholders' equity decreased $43.7 million due to a net loss of $31.4
million and dividend payments of $12.3 million.

     In  the  first  quarter of 2001, the company funded  its  operating
losses  and other cash requirements primarily through borrowings  under
its  bank  credit  agreements.  At March 31, 2001, the  company's  bank
credit  agreements  permitted the borrowing of up to $350  million  (later
increased  to $400 million), of which $100 million may  be  used  for
long-term  debt.   At  March 31, 2001, the company had  $173.0  million
outstanding  under  the  short-term portion of  the  bank  lines.   The
remainder  of  the  credit lines was used to back the commercial  paper
issued by the company.  Commercial paper outstanding at March 31,  2001
totaled $167.0 million, of which $67.0 million was classified as short-
term  debt and $100.0 million was classified as long-term debt.  During
April  2001,  all  commercial paper became  due  and  was  replaced  by
borrowings under the bank credit lines.  During March 2001, the company
determined  that  it  might be in violation of its  quarterly  interest
coverage ratio test in its bank credit agreements for the quarter ended
March  31,  and it obtained a waiver of the covenant for that  quarter.
The  covenant  requires, in effect, that for any four fiscal  quarters,
the  net  earnings of the company plus income tax expense, depreciation
and depletion exceed the interest expense of the company by a ratio  of
at least three  to one.  The company had a 3.0 interest coverage ratio at
March 31, 2001, which was in compliance with the covenant.

     The company is currently in the process of negotiating a new bank
credit  facility  to replace the existing bank credit agreements.   The
company   expects   that  the  new  facility  will  contain   financial
maintenance  covenants (to be negotiated with the lenders), be secured by
certain assets, and become effective upon the sale of $200-$300 million of
long-term debt securities in a separate  financing  with  institutional
investors.  The company expects that the new credit facility will be in
place by June 30, 2001, although there can be no assurance that it will
be  in  place  by  that time or that it will contain  terms  (including
pricing terms) that are favorable to the company.  If a new credit facility
is not in place by June 30, 2001, the company may need to obtain an additional
waiver of the quarterly interest coverage ratio test under its existing
bank credit agreements.

     During the quarter, Standard & Poors, Moody's and Fitch completed a
review  of  their ratings on the company's outstanding long-term  debt.
As  a  result of the review, Standard & Poors and Fitch adjusted  their
ratings  from BBB+ to BBB and Moody's adjusted its rating from Baa1  to

                                   7


<PAGE>
Baa3.   As of April 3, 2001, Standard & Poors placed the company  on  a
negative credit watch.  The changes in its debt ratings are expected to
increase the company's borrowing costs in future financings but are not
expected  to  significantly  adversely affect  its  access  to  capital
markets.

     The  company had negative working capital of $69.9 million at
March 31, 2001, a decrease of $114.6 million from December 31, 2000.  The
decrease  was  largely due to the reclassification  from  long-term  to
current of $100.0 million of 6.25 percent debentures maturing in  March
2002.   Also  negatively affecting working capital was an  increase  of
$51.0  million in notes payable and a decrease in cash of $9.7 million.
Partially  offsetting these amounts were increases of $25.6 million  in
receivables and $22.0 million in prepaid expenses.

                                    8


<PAGE>
                          Results of Operations

     A  summary of  period-to-period changes in items included  in  the
statements of earnings is presented on page 13 of this Form 10-Q.   Net
sales  figures  for 2000 have been restated due to the reclassification
of freight costs.

<TABLE>
Segment Information                                   (Dollars in thousands)
---------------------------------------------------------------------------
<CAPTION>
                                                        Three Months Ended
                                                             March 31
                                                        2001           2000
---------------------------------------------------------------------------
<S>                                                 <C>            <C>
Segment Sales
 Resource                                           $ 91,287       $ 88,558
 Wood products
   Oriented strand board                              32,326         61,844
   Lumber                                             58,039         69,883
   Plywood                                            10,726         18,359
   Particleboard                                       3,889          5,541
   Other                                               5,754          6,868
---------------------------------------------------------------------------
                                                     110,734        162,495
---------------------------------------------------------------------------
 Printing papers
   Printing papers                                   110,786        117,033
   Pulp                                               17,604          9,620
---------------------------------------------------------------------------
                                                     128,390        126,653
---------------------------------------------------------------------------
 Pulp and paper
   Paperboard                                        116,640        108,990
   Tissue                                             83,127         65,415
   Pulp                                                2,830          5,745
---------------------------------------------------------------------------
                                                     202,597        180,150
---------------------------------------------------------------------------
                                                     533,008        557,856
Elimination of intersegment sales                    (88,961)       (83,300)
---------------------------------------------------------------------------

Total consolidated net sales                        $444,047       $474,556
===========================================================================

Intersegment sales or transfers
 Resource                                           $ 84,335       $ 79,357
 Wood products                                         4,023          3,681
 Printing papers                                         594            247
 Pulp and paper                                            9             15
---------------------------------------------------------------------------
Total                                               $ 88,961       $ 83,300
===========================================================================

Operating Income (Loss)
 Resource                                           $  7,863       $ 12,783
 Wood products                                       (20,718)        15,728
 Printing papers                                      (2,172)        (4,134)
 Pulp and paper                                      (15,095)         3,344
 Eliminations and adjustments                          2,334         (1,339)
---------------------------------------------------------------------------
                                                     (27,788)        26,382
Corporate                                            (23,700)       (22,388)
---------------------------------------------------------------------------

Consolidated earnings (loss) before taxes on income $(51,488)      $  3,994
===========================================================================
</TABLE>

                                    9


<PAGE>
     The company reported a loss for the first quarter of 2001, largely
due to continuing high energy costs and poor market conditions for most
of  its  products.   The results for the quarter include  an  after-tax
charge of $2.6 million, or $.09 per diluted common share, related to  a
workforce reduction plan at the company's pulp, paperboard and consumer
products operations in Idaho.

     For  the first quarter of 2001 the company incurred a net  loss of
$28.8  million, or $1.02 per diluted common share, before the workforce
reduction charge.  Including the charge, the loss was $31.4 million  or
$1.11 per diluted common share.  Net earnings for the first quarter  of
2000  were  $2.4 million, or $.08 per diluted common share.  Net  sales
for  the first quarter of 2001 were $444.0 million, compared to  $474.6
million recorded a year ago.

    The resource segment reported earnings of $7.9 million for the first
quarter,  compared to the $12.8 million earned in the first quarter  of
2000.   The unfavorable comparison to the prior year was primarily  due
to  lower log production in Idaho and Arkansas combined with lower  net
sales realizations for log sales in Idaho.

     The  wood  products  segment reported an operating  loss  of $20.7
million for the first quarter of 2001, versus earnings of $15.7 million
recorded  in 2000's first quarter.  Net sales realizations for  all  of
the  company's wood products were considerably lower than first quarter
2000 levels, especially for oriented strand board, which were down over
40  percent.  Oriented strand board shipments declined during the first
quarter  of  2001, largely due to the temporary shutdown of  the  Cook,
Minnesota, mill to complete a modernization and expansion project.  The
Cook  mill  has been operating well since its startup in late  January.
Lower  plywood  shipments  in the first quarter  of  2001  reflect  the
permanent  closure  of  the Jaype, Idaho, mill in  the  fall  of  2000.
During  the  first  quarter  markets  for  lumber  and  panel  products
continued to reflect the effects of foreign imports.

     The printing papers segment reported a first quarter 2001 operating
loss  of $2.2 million, a slight improvement over the $4.1 million  loss
in the first quarter of 2000.  Increased production at the pulp mill in
Cloquet,  Minnesota,  helped to reduce costs and led  to  significantly
increased pulp shipments compared to the first quarter of 2000.   Those
benefits  were  partially offset by lower net  sales  realizations  for
printing  papers  and pulp and higher energy costs.   Markets  for  the
company's printing papers remained soft for the first quarter.

     The  pulp  and paper segment reported an operating loss for 2001's
first quarter of $15.1 million, compared to earnings of $3.3 million in
2000's   first  quarter.   High  energy  costs,  particularly  in   the
northwest, severely affected the segment's financial performance.   The
company   is   actively  working  to  mitigate  these   costs   through
conservation  initiatives and enhancement of  its  internal  electrical
generation capabilities.  Results were also adversely affected by lower
net  sales realizations for paperboard and pulp and a decline  in  pulp
shipments.    Consumer   tissue  product  shipments   and   net   sales
realizations  showed modest increases for the quarter compared  to  the
first  quarter of 2000.  Markets for the segment's products  were  soft

                                   10


<PAGE>
during  the  quarter, with the exception of consumer  tissue  products,
which were stable for the period.

     The company's operating results reflect the general cyclical pattern
of  the  forest  products  industry.  All of the  company's  pulp-based
products  other  than  tissue  products  are influenced by international
trade.  In  addition, the  company's  wood  products  are  subject  to
competition from manufacturers in North and South America.   Historical
prices  for the company's products have been volatile, and the company,
like  other participants in this industry, has limited direct influence
over  the timing and extent of price changes for its products.  Product
pricing  is significantly affected by the relationship between industry
supply   and  demand.   Product  supply  is  influenced  primarily   by
fluctuations in available manufacturing capacity.  Demand  is  affected
by  the state of the economy in general and a variety of other factors.
The  demand  for  the company's lumber resources and wood  products  is
affected by the level of new residential construction activity and,  to
a lesser extent, home repair and remodeling activity, which are subject
to  fluctuations due to changes in economic conditions, interest rates,
population  growth, weather conditions and other factors.   The  demand
for  most of the company's  printing papers and pulp and paper products
is  primarily affected by the state of the global economy, in  general,
and,  in  particular,  the  economies in North  America  and  Asia.   A
prolonged  and severe weakness in the markets for most of the company's
principal  products could seriously harm its results of operations  and
financial  condition and could affect its ability  to  satisfy  working
capital   requirements   and  its  obligations   under   various   debt
instruments.

     The markets for the company's products are highly competitive, with
a  number  of  major companies competing in each market.  Many  of  the
company's  competitors have significantly greater  financial  resources
than  the company.  In addition, some of the company's competitors  are
currently  lower-cost producers in some of the businesses in which  the
company  operates, particularly in the company's pulp-based businesses.
Because the company's competitors are located worldwide, variations  in
exchange  rates between the United States dollar and other  currencies,
particularly  the  Euro,  significantly affect the  company's  relative
competitive position as compared to many of its competitors.

     Although the company generates a substantial portion of the energy
required  to operate its mills, the cost of natural gas and electricity
purchased  from outside suppliers increased significantly  during  late
2000  and these high costs continued during the first quarter of  2001.
The company's facilities in Idaho have been most adversely affected  as
a  result  of  relatively greater price increases in  the  Northwestern
United  States.  The company has taken steps  to  increase  its energy
production and reduce its energy needs, which has substantially reduced
its energy costs since the beginning of the year.

Other

     This report contains, in addition to historical information, certain
forward-looking statements.  These forward-looking statements are based
on management's best estimates and assumptions regarding future events,

                                   11


<PAGE>
and  are therefore subject to known and unknown risks and uncertainties
and  are  not  guarantees of future performance.  The company's  actual
results could differ materially from those expressed or implied by such
forward-looking statements.  Factors that could cause or contribute  to
such   differences   include,  but  are  not  limited   to,   operating
difficulties; changes in the United States and international economies;
changes  in  worldwide  demand for the company's products;  changes  in
worldwide  production and production capacity in  the  forest  products
industry; competitive pricing pressures for the company's products; and
changes in raw material, energy and other costs.

                                   12


<PAGE>
<TABLE>
          POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
                   Changes in Statements of Earnings
                        (Dollars in thousands)


<CAPTION>

                                              Three Months Ended March 31
                                        -----------------------------------
                                                                   Increase
                                            2001          2000    (Decrease)
                                            ----          ----     --------
<S>                                       <C>           <C>        <C>
Net sales                                 $444,047      $474,556       (6%)
Costs and expenses:
 Depreciation, amortization and
   cost of fee timber harvested             40,872        40,837        -%
 Materials, labor and other
   operating expenses                      405,531       382,359        6%
 Selling, general and
   administrative expenses                  28,666        33,140      (14%)
 Restructuring charge                        4,217             -        *
Earnings (loss) from operations            (35,239)       18,220     (293%)
Interest expense                           (16,734)      (14,051)      19%
Other income (expense), net                    485          (175)     377%
Provision for taxes on income              (20,080)        1,558   (1,389%)
Net earnings (loss)                        (31,408)        2,436   (1,389%)


<FN>
*Not a meaningful figure.
</TABLE>

                                   13


<PAGE>
                                PART II


ITEM 6.  Exhibits and Reports on Form 8-K

Exhibits

     The exhibit index is located on page 16 of this Form 10-Q.

Reports on Form 8-K

     No reports on Form 8-K were filed for the three months ended March 31,
2001.

                                   14


<PAGE>
                              SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

                                       POTLATCH CORPORATION
                                           (Registrant)


                                       By /S/ G. L. Zuehlke
                                          ------------------------------
                                          G. L. Zuehlke
                                          Vice President, Finance, Chief
                                          Financial Officer and Treasurer
                                          (Duly Authorized; Principal
                                            Financial Officer)



                                       By /S/ T. L. Carter
                                          ------------------------------
                                          T. L. Carter
                                          Controller
                                          (Duly Authorized; Principal
                                            Accounting Officer)


Date: May 9, 2001

                                  15


<PAGE>
          POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES

                             Exhibit Index



Exhibit
-------

  (4)        Registrant undertakes to file with the Securities and
             Exchange Commission, upon request, any instrument with
             respect to long-term debt.


                                   16