24 



HARDWOOD RECORD 



that, taken as a whole, the forests of this section are deteriorating at 

 a greater rate than the annual growth of the timber which has not 

 yet reached its maturity. Therefore, as related to this territory, 

 the item of annual growth may be considered as negligible. 



An item of cost in carrying timber, which is by no means negligible 

 but which cannot be ascertained definitely, is the damage done to 

 timberlands by fires which occur annually all over the country, burn- 

 ing over cut over areas, eating into the edges of virgin forests and 

 causing in the aggregate a large amount of damage. We are all 

 spending considerable sums of money yearly to protect our forests 

 but this does not suffice for complete protection, and damage con- 

 tinues more or less annually. This loss by fire, coupled with the 

 damage from wind storms and insects, is large in the aggregate, but 

 so indefinite in character that it can only be guessed at. 



A few years ago we noticed that all our tamarack trees were dead, 

 and some of us on inquiry learned that from the eastern edge of the 

 peninsula extending west to Duluth and north up through Minnesota 

 the same condition prevailed. We now know that the saw fly has 

 killed eighty per cent of the tamarack timber in the upper peninsula 

 of Michigan. The value of this timber has never been computed, but 

 in the aggregate it is verj- large. These are real risks occurring an- 

 nually, which should be offset by a sinking fund in the nature of an 

 addition to the cost of carrying timber, as we do not know that any 

 year, fire, cyclone or destructive insects may cause serious damage to 

 our forests. The amount which should be included in carrying charges 

 to compensate for losses of this kind cannot be accurately determined 

 and the opinions of those who have had experience must be taken as 

 a guide. These opinions vary according to individual experience ; 

 some have suffered more than others from damage to their timber- 

 lands and these are inclined to rate it as high as two per cent per 

 year. Others put it as low as one-half per cent. An average of 

 opinions solicited is close to one per cent of value. I have, there- 

 fore, adopted this figure as a part of the annual carrying charge. 



The cost of taxes has been definitely ascertained by compiling re- 

 turns from timber owners in each county in northern Michigan cov- 

 ering the period 1907 to 191.'3, and the progressive increase in cost 

 of taxes is certainly alarming. There is no doubt that the increase 

 in taxes works to prevent conservation, as it is a source of constant 



TABL'^ Ho.l Jan. 1.190' 



pressure against the timber owner, driving him to realize and get out 

 from under an accumulation of expense, and the only way the timber 

 can be realized on is by conversion into lumber and other finishecJ 

 products, thus defeating the principle of conservation and adding 

 new burdens to an already over-supplied lumber market. 



Interest rates used in computing carrying charges vary from five 

 per cent to six per cent, but most of the financing done by lumber- 

 men in the form of bond issues consists of issues of six per cent 

 bonds, which are sold to bond dealers at from 92c to 95c on the 

 dollar, with an additional charge for expenses of examining the 

 jirojierty covered by the mortgage, which is about equal to a further 

 discount in the selling price of tivo per cent. A large part of the 

 bond issues which have been floated on timber properties have netted 

 the lumberman only 90c on the dollar. Most of them have run for 

 ten years at six per cent, the discount equals an additional one per 

 cent for the period, making the interest rate paid $7.00 per year on 

 the $90.00 secured by the lumberman from the sale of his bonds, 

 which is very close to eight per cent. At eight per cent, with the 

 taxes added, the cost of timberland increases alarmingly fast. For 

 the purpose of our computation six per cent is certainly a conservative 

 figure for use in this case. 



In order to arrive at a starting point for a computation, we have 

 endeavored to ascertain the average value of the various kinds of 

 timber growing in the northern peninsula of Michigan during the 

 period 1907-8, and I have solicited the exjjeriences of many lumber- 

 men and timber owners in this section of the country, and have se- 

 lected many actual sales and purchases made during that period, 

 which, together with the opinions given, form a basis for an average 

 of price ruling at tliat time. Some of the figures used were very low, 

 placing hemlock at $1.00; others placed it as high as. S-'i.SO. The 

 location of standing timber and the relative cost of getting the logs 

 to the market enter so largely into the value of the standing timber 

 that it is only by securing averages of this kind that dependable fig- 

 ures representing an average of the territory in question can be se- 

 cured, and in making this computation I have endeavored to secure 

 an average. 



As the variety of timber on our lands is large, consisting of about 

 sixteen different kinds of saw-logs and a list of other products in 

 ' - Jan. 1.1916 



Eettmsted arerape TiQaa 

 of timber Jan.l.lSOT 

 Proportion of Taxes 1907 

 l6/» Interest on Coat 

 l^J Slnklnp Tund 

 Total Cost Jan. 1,1908 



1908 Tazsa 

 >6^ Intsreat 



1« Slaking F'nnd 

 Total Coat Jan. 1,1909 



1909 TaxoB 

 6/b Interest 



1,.' Sinking Fxmi 

 Total Cost Jan. 1,1910 



1910 Taxes 

 6i Intoreet 



Is Slatcinp Fund 

 Total Cost J-in. 1,1511 



1911 Taxes 

 6'i Interest 



1,» SlnTsln* ?und 

 Total Coot Jan.l,13le 



1912 Taxes 

 6i Intereet 



1* Slaking Trma 

 Total Coat Jnn. 1.1913 



1913 TBxee 

 6» Intereet 



I'i SLnklnp Pund 

 Total Cost 'an. 1,1914 



1914 Taxee 



6;i Interoot 

 1^ Sinki.ag Fund 

 Total Coat Jnn. 1,1915 



H2M. 



£.50 

 .022 

 .16 

 .025 



2.697 



.022 

 .162 

 ■027 



8.908 



.026 

 .174 

 >^229 



UAPL?; BIHCH 



1.50 

 .Ol.'? 

 .09 

 .015 



1.618 



.013 

 .097 

 .016 



3.137 



.020 

 .188 

 .031 



3.384 



.328 

 .203 



.03-1 



3.64ii 



.039 

 .219 

 .036 



3.943 



.053 

 .236 

 .039 



T:Trr 



.063 



.266 

 .043 



.623 



1.744 



.016 

 .106 

 i211 



1.882 



.017 

 .113 

 .019 



2.031 



.017 

 .122 

 .02 



8.190 



.024 

 .131 

 .022 



S.3S7 



.032 

 .142 

 .024 



.00 

 .335 

 .24 

 .04 



4.. 315 



.036 

 .269 

 .043 



4.653 



.041 

 .279 

 .046 



5.019 



.045 

 .301 

 .06 



5.415 



.045 

 .326 

 .054 



5.839 



.064 



.35 



.056 



■vLM 



6.00 

 .044 

 ..30 

 .05 



5.394 



.045 

 .324 



.054 



.058 

 .349 

 .056 



5.276 



.056 

 .376 

 .062 



BASS. 



6.O0 

 .063 

 .36 

 .06 



.064 

 .388 

 .066 



ASH 



6.00 

 .053 

 .36 

 .06 



.054 

 • 338 

 .066 



6.560 6.990 



.062 

 .419 

 .07 



6.770 



.066 

 .406 

 .068 



7.800 



.08 



.438 



.073 



6.Sil ' 7.^91 



"2TESF 



.032 



.164 



.026 



2.777 



J085 

 ,378 

 .063 



6.337 

 .386 



.410 

 .068 



7.402 



.106 

 .473 

 .C79 



7.531 



.069 



.462 

 .075 



8.126 



.067 

 .487 

 .061 



8.760 



.096 



.526 

 .087 



9.469 

 .127 



irfcea 



.Cp95 



6.649 10.259 



.106 



.513 

 _.005 

 9.253 



.127 



.file 

 _-ilO? 



11.100 



.362 

 .419 



.07 



■TTFSr 



.067 

 .452 

 .076 



8.126 



.067 

 .487 

 .081 



*.P. 



12.00 

 105 

 .72 

 .12 



15.946 



.106 

 .777 

 .129 



HORJ. 



8.00 

 .070 

 .46 

 .08 



B.630 



.072 

 .618 

 .036 



13.959 9.306 



.125 

 .837 

 .139 



lE.(56d 



.134 

 .904 

 .161 



8.760 



.396 

 .526 



.037 



9.409 



.127 

 .568 



.095 



10.259 



.127 



.616 



_.103 



11.105 



16.249 



.136 

 .975 



.162 



17.521 



.192 



1.061 



.175 



18.939 



1.136 



.149 



20.409 

 .225 



1.2C9 

 . ..206 

 22.148 



OAX 



6.00 

 .054 

 .36 

 .06 



6.^7? 



.054 



.388 



.065 



6.981 



.034 



.668 

 .093 



lO.Ml 



.09 

 .602 



.100 



.054 



.419 



.07 



7.534 



10.833 



.091 

 .650 

 .108 



11.682 



.129 

 .701 

 .117 



12.629 



.172 

 .76^ 

 .126 



15.t8i 



.172 



.821 

 _ _.137 

 14.815 



.07 

 .452 



.07 



a.isi 



.07 



.498 

 .031 



8.770 



.099 

 .526 

 .008 



9.483 



.131 



.569 

 .09, 



10.276 



lAllA. 



2.00 

 .018 

 .12 

 .02 



SPHUC 



5.00 

 .04 4 

 .30 

 .06 



.018 

 .129 

 .021 



.046 

 .324 

 .064 



2.326 : 5.817 



.020 

 .139 



.023 

 2.508 



.052 



.349 



.056 



6.276 



.022 I .066 



.160 I .376 



.025 1 ,063 



2.705 ' 6.771 



.022 

 .162 



.027 



2.916 



.031 

 .175 



.029 



3.151 



.131 .042 



.610 

 __.102 

 11.127 



.205 



_^034_ 



3.696 



.056 

 .40 6 



.068 



7.301 



.08 



.438 

 .073 



7.892 



.106 



.4 73 

 .079 



.106 



.613 

 .066 



9.254 



Balaom 



3.00 



.18 

 .03 



3.236 



4.379 



.047 

 .263 



4.733 



.063 



.284 

 .047 



.063 

 .307 

 .051 



5.548 



iaaah. 



r.annTRl 



.50 



.004 



.03 



.005 



.639 



.004 

 .032 

 .005 



AT»r?ge 

 4.73 



-02£ 



.284 



— .047 



.580 



.06 

 .034 



■ 006 



5.087 



.027 

 .305 

 .061 



.670 



.006 

 .04 



.723 



,006 



,04 



.007 



.776 



.008 

 .05 



,842 



.01 



.05 



m- 



01 

 054 



009 



983 



5.470 



.031 

 .328 

 -OfiB 



6.864 



.0334 

 .362 



6. 3284 



.034 

 .38 



6.805 



.047 

 .408 

 ■ 066 



7.328 



.063 

 .440 



.064 

 .474 

 ■ 079 



8.521 



