XATIO.NAI. I-KKI.ST S'lT .Ml'AC.l-: Al'l'RA 1 SALS ^21 



It is, of course, obvious that the necessity does not exist for the appli- 

 cation of any such methods to small sales of timber for local consump- 

 tion or to any sale the contract period of which is of very short dura- 

 tion. That the need does exist for some method of making adjustments 

 in large sales has long been recognized, although but feebly met by the 

 provision in some of the larger contracts for periodic readjustments of 

 stumpage rates. This plan contemplates making such adjustment as 

 nearly correct as possible by rendering it continuously operative 

 throughout the life of the contract. 



One objection which may be raised to such a method is that in giving 

 full weight in stumpage appraisals to market fluctuations we operate 

 against the tendency that stable stumpage rates may have to reduce the 

 cut automatically in periods of market depression. Since at the present 

 time this desirable effect on the general timber market is much more a 

 tendency than an accomplished fact, it is not of great importance until 

 .Xational Forest stumpage becomes a much larger factor in the timber 

 market than it now is. 



It has been suggested that where timl^er is sold on the Ijasis of log 

 grades it will also be necessary to establish by contract a percentage 

 above or below the mill run for the region on which selling \alue of 

 the product in any particular case will be based, since logs of l)etter 

 than average grade will cut out lumber that will bring more than aver- 

 age returns. This condition, however, can easily be met when the 

 necessity of meeting it arises. 



The question of interest due the purchaser on deposits refunded 

 when final readjustment is made and of interest due the Government 

 on ])ayments deferred because of an ai>praisal made in a period of 

 market depression is of some importance and it may be necessarv to 

 ])rovide for its payment in either case. It is. however, regarded as of 

 much less importance than the fact that an appraisal made under exist- 

 ing methods in a time of depression may lead to a loss to the Govern- 

 ment not only of interest but of considerable principal as well. 



Similarly, an appraisal l)ased on the prices obtaining during a period 

 of prosperity may lead to a substantial loss on the part of the pur- 

 chaser. 



It seems probable that i)rovision for payment of interest at a mod- 

 erate rate in such cases might be provided for in the contract. Interest 

 on money deposited by the jjurchaser on account of co-operative brush- 

 disposal agreements is now given consideration in existing approved 

 stumpage appraisals, and while the case is not a parallel one it has 

 something of similarity and appears to give satisfaction. 



