Before Owen R. Cheatham bought a small lumber yard in Augusta, Ga., for $12,000 in 1927, his grandfather warned him:

"Stay out of the timber business. In 20 years, all of the timber will be cut down."

Today, the Georgia Hardwood Lumber Co. that Cheatham bought has grown into the Georgia-Pacific Corp., a multinational giant. It still uses trees to make lumber, but its holdings now include paper and pulp mills, timberlands, plastics factories, gypsum mines, offshore drilling and reserves oil, natural gas, coal and other minerals. It owns or leases nearly 2 million acres of forests in Brazil, Indonesia and the Philippines.

G-P officials say it is more accurate to speak of natural resources, rather than trees, as the business of their company.

In one sense, the metamorphosis of G-P is a classic American success story, a story of growth, of betting on the country's future, of boldly exploiting the nation's enormous natural resources. Owen Cheatham, who died in 1970 at 67 while watching a football game, was a visionary go-getter in the American mold. The expansion of his company could stand as a symbol of the country's surging growth in the last 50 years.

But in another respect, G-P's rise to riches tells a great deal about the agglomeration of power - through merger, consolidation and expansion - in one key sector of the country's economy, the $50-billion-a-year pulp and paper industry.

The decisions that led to the growth of G-P and of other timber and paper companies - the "multipulps" - are not the kind that usually make headlines in Washington. Yet they shape the future of the nation as surely as any economic decisions taken by the federal government.

The surplus capital which made that activity possible came from profits. The way those surpluses are allocated determine how companies grow. And that, in effect, sets the economic future of the nation.

The paper and timber industries are a particularly interesting case study of how this works, because the forces influencing the changes are clear.

In the post World War II prosperity of the United States an almost unquenchable demand arose for paper building room. This generated profits and fueled expansion.

First the companies channeled the profits of this period into land investment that gave them a secure source of timber, their essent of raw material. Then, they poured money into new production facilities. Lumber-companies acquired paper mills and paper companies moved into the sawmill business. In the present stage, profits finance a further step: the comapanies have begun to exploit the minerals beneath the timber. Several are in the oil and petrochemical business.

Among customers of the multipulps - publishing houses and manufacturers, for example - there was a similar drive to obtain a secure source of supply.

Coming from a different direction, newspaper companies and manufacturers which ship goods in corrugated cartons bought interests in paper companies.

The result is that key segments of the economy are undergoing significant shifts in control.

Oil companies are eying that 67 million acres of forest lands owned by paper or timber companies as a possible new source of minerals and as a hedge against their decling resources.

Multipulps have been buying up small oil and gas companies to obtain a guaranteed supply on the energy and chemicals that they consume in enormous quantities in paper-making.

In 1975, International Paper Co. world's largest paper maker, paid $500 million for General Crude Oil Co. of Houston. The purchase gave IP mineral lands in Texas, some 54,000 acres of which also serve as prime land for rice cultivation.

A picture of the paper company's newly acquired holdings emerges from a brochure: "From the air, the 54,000-acre plantation is a panorama of multiple use. There are pastures with cattle grazing; contoured rice paddies being readied for planting; oil and gas wells in full production and rigs drilling for new petroleum reservoirs below the moist fertile land."

Some analysts question the wisdom of a paper company spending so mush to enter an untried field. An IP executive said General Crude's annual earnings don't pay the full principal and interest on IP's borrowing to buy the oil company.

But officials say they are enthusiastic about into the oil and minerals business. In September, IP announced that its oil company had made a major discovery" of lead, zinc, cadmium and silver on federal lands in Alaska's Brooks Mountains.

In 1975, Georgia-Pacific purchased Exchange Oil and Gas Corp. of New Orleans, thus obtaining full or partial control of 141 oil wells and 153 natural gas wells, plus oil, gas, coal and other mineral interests in several states and the Gulf of Mexico.

G-P's decision as based on its need for natural gas feedstocks for its rapidly expanding chemical complex at Plaquemine, La. That facility had been built starting in 1968 to supply paper-making chemicals such as chlorine to G-P's southern paper mills and resins for giving plywood veneers.

Building that chemical plant and subsequently acquiring Exchange Oil and Gas positioned G-P in the plastics industry. About $100 million of Plaquemine's yearly production goes to the paper company's mills, but it sells another $300 million of chemical products, including polyvinyl chloride for automobile seatcovers.

According to industry sources, a number of major oil companies are actively exploring purchases of paper companies that have timber holdings. Several already have. In 1976, Mobil Corp. of America. Container Corp. produces packaging and cans, but analysts say it was its 744,000 acres of timberland that may have appealed to Mobil.

An expert on the paper industry described the appeal of the multipulps to petroleum giants this way:

"There are obviously strong incentives to somebody who sees his resources being depleted, like an oil company, to obtain resources that can't be depleted, like trees."

Other experts say the oil-timber connection now taking shape through mergers and acquisitions is an outgrowth of economic logic.

Oil and natural gas can be refined and converted into thousands of products. The same is true of logs, which can be made into lumber and plywood or converted into writing paper, juice cartons, cardboard boxes or newsprint. In that respect, the giants of timber and oil are compatible bedfellows, say the experts.

The evolution of the multipulps into sufficient status to purchase oil companies came relatively quickly.

Until World War II, most lumber and paper companies pillaged the forests around their pulp and sawmills and moved on when the supply of trees was depleted. An exception was Weyerhaeuser Co. of Tacoma, Wash., which accumulated vast holdings of Douglas fir in the West in the early part of the century.

In the 1940s, timber became scarcee, and lumber and paper companies rushed to obtain land.

Then, in the 1950s and 1960s, the pulp and paper industries began to convtrge. Lumber companies began using wood scraps and wastes from sawmills to make paper. At about the same time, paper companies discovered they could earn bigger returns by converting the core of quality logs into lumber and using the outside residue to supply their pulp mills.

At the end of Worl War II, Weyerhaeuser was mainly in the lumber business. But this year, half its $3 billion income is expected to be derived from paper sales and the company is making disposable diapers from "fluff pulp." International Paper has moved into the lumber business.

In the 1950s and 1960s concern over access to supplies shifted to the consumer level.

The Owens-Illinois Co. of Toledo, Ohio, a maker of glass containers, began manufacturing corrugated shipping containers instead of buying them.

Newspapers and magazines, for which newsprint and slick, coated paper is a major cost, also bought interests in pulp companies.

Today, the Los Angeles Times gets about 85 per cent of its newsprint from the Times Mirror Co.,s wholly owned subsidiary. Publishers Paper Co. The Times Mirror's paper company has sawmills and extensive timber holdings in the Pacific Northwest.

The New York Times, The Washington Post, Gannett, Knight-Ridder and Cox Newspaper have also purchased, or plan to purchase interests in plants in Canada or the United States. Recently, a number of these publishers have been investing in new newsprint facilities in the South, as canadian prices continue to rise.

Media General Corp., which publishes newspapers and owns the Garden State Paper Co. in New Jersey, has plans for a venture in Georgia for a newsprint recycling plant. Among other things, the Georgia plant would supply newsprint to the Miami Herald and haul back wastepaper and spoiled newsprint for recycling.

Amidst this activity, Georgia-Pacific stands out as the master of growth in the rapidly shifting multipulp sector.

Paper company executives inside and outside the company attribute that to an almost uncanny timing in decisions on where to invest profits.

G-P grew organically almost like the trees that were the material basis of its prosperity. In the late 1940s the company moved West, buying up timberland and pioneering in plywood manufacturing. In the 1950s profits were channeled back to its old home in the South, where they were used to buy timberlands, sawmills, papermills and to construct plywood plants.

Construction of the chemical plant at Plaquemine, La., came logically from its need for chemical glue for the sheets of veneer and plywood and for chlorine in papermaking. Its purchase of gypsum mines in Pennsylvania put GP in the industrial paper business, since wallboard is made from gypsum with a paper covering.

G-P's purchase of large timberlands in the South and its development of the Southern pine plywood industry in the 1960s had a major economic impact on the South's economy and environment.

Earlier, Cheatham and his associates' plunge into plywood manufacturing in the Northwest in the 1950s was timely. Many experts questioned that plywood would have the growth it ultimately did in the nation's construction business.

Weyerhaeuser, which dominated Northwest timber at that time, started later in plywood, and his not moved into related fields such as petrochemicals.

Weyerhaeuser's development of a huge market in Japan for logs cut from the forests of the pacific Northwest has spurred a long battle with enviromentalists over export of such a precious resources.

This is yet another example of how the decisions made in Weyerchaeuser's corporate board room cast a broad shadow over the national economy.