YOUNG GROWTTI ON CUT-OVER I.AND 915 



the method to forest properties Hes in the greater time intervals l^efore 

 income is realized. 



By way of illustration, Class I comprises 1G.7 per cent of the tract 

 and TO per cent of this class is satisfactorily stocked. This amounts 

 approximately to 2,100 acres. Under management with an 80-year 

 rotation this land should- yield at least 30,000 fe:t bocird measure per 

 acre. Assuming a stumpage value of $20 per thousand, an average pro- 

 tection charge at 10 cents per acre per year, an assessed valuation of $20 

 for 20 years, $!0 for the next 20 years, and $80 for the last 20 years, 

 with a tax rate of 20 mills, and an interest rate of 5 per cent, the present 

 acreage value of the 20-year-old stuff would be $18.G4. The $10 per 

 acre planting cost, plus an assumed basic land value of $5 per acre, 

 carried forward at 33^4 per cent for 20 years amounts to '$29.85. 



It does not appear safe to assume that the private owner can carry 

 an investment of this character for less than 5 per cent. If we assume 

 a higher rate the expectation value is lower. It may be objected that 

 the assessed value is too high. However, actual values in stumpage 

 will increase rapidly following the 20-year-old stage. Unless there are 

 decided changes in the administration of the general property tax, the 

 assumed acreage values for taxation purposes may be regarded as mod- 

 erate. The owner cannot claim the benefit of prospective tax revision. 

 His values must be estimated on the basis of present practices. The 

 annual charge of 10 cents per acre for protection and administration 

 may be high, but a private organization cannot reduce this item mate- 

 rially. What I am trying to point out is that income net, and not cost, 

 determine value. No reasonable economic foreca.st would seem to 

 justify materially greater values or lower costs than those indicated. 

 Assuming these data then, the owner cannot expect a greater price 

 than $18.64 per acre. 



Obviously the owner cannot plead the benefit of the basic Govern- 

 ment interest rate in computing a value established by expected income. 

 He has no right to advantages coming from the greater security and 

 efficiency of Government organization as compared with private enter- 

 prise. Neither is it apparent that the owner is entitled to a sum result- 

 ing from carrying forward replacement costs plus the basic land value 

 at the commercial interest rate. Granting that the replacement cost 

 should be used as the purchase price, the Government, as the purchaser, 

 shoidd pay only that sum for which it can bring the property to its 

 present condition. The inuxhaser is not concerned with any ]jast 



