ECONOMICS OF PRIVATE FORESTRY 215 



continuous forest production may be considered as the method of 

 management of forests now to be adopted. All questions of capitaliza- 

 tion, interest returns, taxation, etc., should be discussed in this light. 



2. Interest returns and capitalisation. These two questions are 

 closely related. In a review of the Report of the Forester, p. 66, Janu- 

 ary, 1920, Journal of Forestry, **T. S. W., Jr.," states that European 

 forest production pays only 2 to 5 per cent on the investment. This 

 is, of course, a mere matter of capitalization. Much European capital 

 being accustomed to 2 to 5 per cent earnings, the forests have become 

 capitalized on that basis at several hundred dollars per acre. If Euro- 

 pean capital earned 10 per cent the forests would have been capitalized 

 at something like half their present figure. 



Under (1) of this article it was concluded that continuous forest 

 production is the only thinkable future method of management for 

 our forest lands. Capitalization must then be predicated on this assump- 

 tion rather than on destructive exploitation as in the past. Economic 

 conditions in all our commercial forest regions have arrived at the 

 stage where forests organized in economic sized tracts will yield net 

 revenue above all costs, including taxes, even on badly ruined tracts. 

 This is true because where necessary forestry can be reduced to utiliza- 

 tion and fire protection, thus keeping costs so low as to secure a net 

 return even from a very poor annual yield. In the magnificent timber 

 tracts of the Northwest large net returns are possible. The writer is 

 familiar with a tract containing about 3,500,000,000 feet board measure 

 which has for exploitation an average value for good and poor timber, 

 accessible and inaccessible, of about $1 per thousand, or a total of 

 $3,500,000. It will provide a sustained annual yield of 50.000,000 to 

 70,000,000 feet board measure with an average value of $3 per thousand 

 on account of the quality and accessibility of the stands first cut. (The 

 average value of $1 arises from inaccessibility of some parts of the 

 tract.) After all administration, protection and taxes are paid, the 

 net annual revenue will exceed $100,000 per annum. // lo per cent 

 is the right earning for capital the forest is nozv worth $1,000,000 as 

 a continuous production forest. Capitali::ed at 3 per cent it is rvorth 

 about the same, as it capitalises for as an exploitation forest. This 3 

 per cent return is only a fraction of the total return to the owner 

 from holding the tract under continuous production. Its situation is 

 such that there is scarcely a shadow of a doubt that all stumpage 

 standing 20 years hence will be worth $10 per thousand. The amount 



