THE ORGANIZATION OF FINANCE IN FOREST INDUSTRY 2H 



I'TNCTIONAL ORGANIZATION 



On account of the various classes of loans to be placed, the banks 

 ■should be functionally t)rganized into the following divisions, the func- 

 tions of each of which is obvious, when considered in connection with 

 the classes of loans later dealt with : 



( (/ ) Division of Public Forest Loans, whose duty shall be to ])ass on 

 ai)])lications of municipalities. States, and Federal departments for 

 loans on forest properties presumably worked for continuous forest 

 production. Federal loans are included here, because there is no reason 

 \\hv such great properties as the National Forests should not finance 

 themselves without recourse to tax moneys. 



(/;) Division of Private Forest Loans. — Continuous i)roduction 

 forest. 



((■) Division of Private Forest Loans. — Exploitation forest. 



(d) Division of Forest L^tilization Loans. — To loan on sawmills, 

 logging develo])mcnts, inilp and paper, and other wood utilization in- 

 dustry jjlants. 



(r) Division of Receiverships. — Any financial institution which 

 loans adequatel}' to any industr\- will have to foreclose some mortgages. 

 Tlie division of receivership should close out or operate such proper- 

 ties until such time as they will close out with the least loss. In accord- 

 ance with the social ])ur])ose of such an institution as this, special efifort 

 should be made by this division to put bankrupted exjiloitation forests 

 int(j the hands of owners who will put them on a continuous produc- 

 tion basis, as, for example, the Federal Government, States, or munici- 

 palities. This division, by reason of its close relations with other divi- 

 sions ha\'ing power to make loans, would be in position to place forest 

 properties in hands ^\•here they will be best managed. 



SlvCURITIES RECEIVED AND ISSUED 



The Federal Forest Loan Banks should advance capital to the various 

 units of forest industry under suitable restrictions, considered in more 

 detail hereafter, and receive first mortgages as security therefor. 

 These relatively small mortgages should be used as collateral for large 

 bond issues which will be marketable in the bond markets of the world, 

 as no timber bond issue now is. Such bonds are desirable as invest- 

 ments because of their marketability, stable value, and continuous 

 income vield. 



