REPORT OF THE SUBCOMMITTEE 263 



Rental. 



The rental should be equivalent to interest at the market yield of 

 Government bonds on the appraised value of the land plus the repro- 

 duction and merchantable timber (if any) growing thereon. A liberal 

 appraisal of the reproduction and a close appraisal of the land will have 

 a desirable effect in putting a premium on better logging methods from 

 a silvicultural standpoint by private owners. 



Addition for Sinking Fund 



For very long-term leases it will be found that a trifling addition to 

 the rental will build up a sinking fund sufficient to purchase the land 

 outright at the end of the period. Assuming the cut-over land worth 

 $6 per acre of which the bare land is valued at $3, and the reproduction 

 at $3, and interest at 4 per cent, the actual rental would be 24 cents. 

 The annual payment on the sinking fund to equal $6 at the end of 

 100 years is only about 4.8 mills. It is obviously advantageous to pay 

 in such a case a rental of 24.48 cents and thereby acquire free title 

 after 100 years instead of paying 24 cents through eternity. This 

 sinking fund payment should be handled as part of the rental and naid 

 to the owner annually. The lease plan is thereby modified into an 

 installment plan purchase. 



Period of Lease 



The period of the lease should be the ai)proximate rotation for each 

 tract. On account of the sinking fund provision, mistakes, in fixing 

 this period accurately would be of little moment. 



Taxes 



It has been generally accepted that in the case of public purchase 

 some provision would have to be made to reimburse the States and 

 counties for the withdrawal from their tax lists of large values. This 

 same policy should apply to leasing. The simplest procedure would 

 probably be for the owner to deed his land to the Government under a 

 contract which i)rovided for proper annual payments, thereby leaving 

 the reimbursement in lieu of taxes to be dealt with between national 

 and State and county governments. 



Right of Owners to Repurelwse. 



The provision lliat the owner can at his option trrminate tbe lease 

 and regain control of his land uj")n certain pa\'ments is not advocated. 



