492 ANNUAL REPORTS OF DEPARTMENT OF AGRICULTURE. 



In these large sales a contract period sufficiently long to cut the 

 limher under a continuous operation, considering: the physical factors 

 of the situation and the amount that the tributary markets will 

 absorb, is allowed. When this period exceeds five years, provision is 

 made for a readjustment of stumpage prices at the end or each three, 

 four, or five year interval. Provision is also made for changes in the 

 contract rec[uirements Avhich will insure utilization, methods of log- 

 ging, and silvicultural practice fully up to the best standards devel- 

 oped in the region at the time of each periodic readjustment of prices. 

 The original stumpage appraisal is based upon a close estimate of the 

 cost of manufacture and the market price of the product. It per- 

 mits a fair operating profit to the purchaser on his actual investment 

 in the business, but no more. It is, as nearly as the experts of the 

 service can determine, the full market value o^f the timber where it 

 stands. As a further insurance of full value to the Government in 

 larger sales, the period of advertisement of at least 30 days required 

 by law is increased to from 2 to 6 months. The period of adver- 

 tisement in all cases gives full opportunity to any interested persons 

 to make field examinations of the timber. All possible further pub- 

 licity which will tend to increase interest and competition is sought. 

 The plan of price readjustment most commonly used in the negotia- 

 tions of the last year was one based upon a comparison of the average 

 mill-run lumber prices during a specified period immediately preced- 

 ing the date of readjustment with the prices existing at the date of 

 the original appraisal. The Forester, in his discretion, may increase 

 the stumpage price by such an amount as he may deem equitable, up 

 to 75 per cent of the increase in lumber values. The operator is 

 justly entitled to a portion of the increase in the market value of his 

 product, to offset increases in the cost of production and other inherent 

 contingencies. 



In sales of large amounts of timber with long cutting periods 

 special precautions are necessary to prevent speculative purchases and 

 the monopoly of timber holdings. The readjustment of stumpage 

 prices largely precludes speculative profits. Other safeguards against 

 speculative purchases are provided by requiring a fixed minimum cut 

 during specified periods which vary from one to five years, but in the 

 larger sales are usually from three to five years; by making sales only 

 to bona fide operators who are financially able to complete them ; and 

 by refusing to allow the assignment of contracts. Monopoly is pre- 

 vented by (1) advertisement and publicity; (2) requiring that rail- 

 roads and other transportation facilities constructed shall be available 

 under reasonable terms for the use of other purchasers of national 

 forest products, either by becoming common carriers or otherwise ; (3) 

 the use of administrative discretion in the approval of bids. When 

 any question of monopoly through the possible control of large quan- 

 tities of timber by affiliated operators arises, a certified statement of 

 the relation of the applicant or bidder to other purchasers of national 

 forest timber may be required. A certified statement of the member- 

 ship of firms or lists of stockholders in corporations may similarly be 

 required. Lumber companies already holding large amounts of 

 timber on private lands may be refused sales if there are any other 

 purchasers, and companies having one sale may be refused others until 

 the first has been cut. Further safeguards against monopoly are 

 found in that practically without exception the construction of rail- 



