NATIONAL rORESTS AND PRIVATE LANDS 137 



of stumpage, as it should insure hnn the highest market price. Seem- 

 ingly both of these foregoing plans can be carried out under existing 

 regulations. 



It is probable, however, that more fundamental changes in tim'oer- 

 sale methods will in man) cases get better results. In view of the 

 trend of methods of timber sale appraisal toward securing tlie services 

 of capital and private initiative in the manufacture of timber at the 

 lowest rates, the writer has long believed that better results could be 

 secured by more direct methods than the present cumbersome ones, 

 the chief defect of which is the failure to eliminate unnecessary risk 

 from the timber enterprise. Where risk is not eliminated the wages 

 of capital must always be high in order to secure its use. Plan ;3 is 

 designed to meet the requirements either of a unit of regulation 

 wholly in the National Forest or a co-operative unit. It is further de- 

 signed to preserve individual initiative at the same time that caj)ital 

 for forest utilization is secured on the best terms. 



Plan J. — The fundamentals of this plan are as follows: 



1. A base price not too high is fixed for the stumpage commen- 

 surate to the value in each case ; for example, in a Douglas fir sale, $2 

 per thousand. 



2. A base interest rate, say 6 per cent, is fixed, more than which 

 the timber owner is not permitted to make on his capital so long as he 

 pays no more than the base stumpage price. 



3. Premium for efficiency in management is secured as follows : 

 Whenever the annual audit shows earnings in excess of the amount 

 necessary to pay 6 per cent on the investment, they may be added to 

 surplus to cover lean years in future, or they may be distributed be- 

 tween the stumpage owner (Forest Service or private co-operator) 

 and the mill operator in the following proportion : For every 25 cents 

 per thousand additional paid for stumpage the operator may take one- 

 half per cent additional for his capital investment. (These figures are 

 merely suggestive.) 



4. All accounting shall be under a uniform standard system pre- 

 scribed by the Forest Service, and the accouiU shall be audited by 

 Service experts at frequent intervals. 



5. Only reasonable salaries shall be paid to executives and em- 

 ployees, and dividends shall be paid only after annual audit by the 

 Service representative. 



The essential factor in this plan is to hold the base price to mod- 

 erate figures and the base interest rate as low as possilbe. If the base 



