916 JOURNAL OF FORESTRY 



expenses incurred by the owner. The purchaser is concerned vitally 

 with the present value of the property. This position is sound eco- 

 nomically ; hence if we accept replacement cost as a fair purchase price, 

 we must assume that expectation value justifies it. This is in effect 

 granting that the Forest Service has demonstrated that a certain replace- 

 ment cost is justified on the basis of assumed returns. In this case we 

 are coming back to expectation value again. My view of the matter 

 is that fixing land prices on the basis of replacement costs is uneconomic 

 and consequently unscientific. At best it is a makeshift, used because 

 of lack of exact cost and yield data. Why not save replacement costs 

 as a means of determining damage awards when very young stuff' has 

 been destroyed, and try to approximate values, as they should be, and 

 as in the long run they are, on net incomes ? 



With his knowledge of the situation, I believe Mr. Berry can take this 

 particular 18,000-acre problem and develop something which will be of 

 still greater use in establishing cut-over land values. 



By B. A. Sherman 



Mr. Berry's study of this cut-over area together with his findings 

 are very interesting. It would be much more so, however, had he 

 carried further his calculations on the determination of value. He con- 

 cludes his study at the point where he has determined the approximate 

 price the Government could afford to pay for this tract of land if its 

 only alternative were a replacement by planting with computed protec- 

 tion and carrying costs or reserving seed trees from cutting in current 

 sales with computed protection and carrying costs. It would be exceed- 

 ingly interesting if Mr. Berry had continued his computations on his 

 Class I lands and shown the returns which the present owner might 

 expect to receive from this young growth at the end of the suggested 

 80-year rotation, together with^the present worth of the land based 

 upon an interest rate satisfactory to the present owner as an investment. 



The conclusions reached at the point where Mr. Berry stops are like 

 the flowers that bloom in the spring — appealing, but have nothing to 

 do with the case. Under the law authorizing exchanges, and in accord- 

 ance with prevailing commercial practice, the only values to which the 

 Government can give weight in appraising such land for acquisition 

 are commercial values. These are most properly reflected in current 

 sales, and upon last analysis are controlled chiefly by the returns which 

 the present owner may reasonaljly expect, under prevailing conditions 

 to secure from the land itself. 



