REPORT OF THE SUBCOMMITTEE 269 



FOREST INSURANCE 



Why Forest Insurance Is Needed 



The statement is often made that one of the greatest obstacles in the 

 way of the practice of forestry by private owners is the time element — 

 the long period required to grow crops of timber. This is not exactly 

 true, as is shown by the fact that, other things being equal, conservative 

 investors are willing to accept a lower rate of return on long-time 

 Government bonds than on short-term notes. It is true that the bonds 

 yield a return annually, but so does a forest properly managed on a 

 conservative basis, as has long been demonstrated by the regulated 

 forests of other countries. The difficulty is not due primarily to the 

 time element, but to the clement of risk involved — the uncertainty that 

 young forests once started will ever go through to maturity so that 

 returns can be realized. It is bad enough to run the risk of destruction 

 by fire, hurricane, blight, or insect infestation for one year, but when 

 the same crop is subjected to the cumulative hazard from these sources 

 for 50 or 100 years or even longer, the investment loses much of its 

 attractiveness for a private individual. 



That this risk has generally been very much overestimated is true, 

 yet it is largely, though of course not entirely, due to fear of these 

 hazards that forest owners in many regions are anxious to convert their 

 timber into cash as soon as possible, that they hesitate to invest money 

 in leaving merchantable material for a second cut or in starting and 

 protecting new stands, and that they have to pay unduly high rates 

 for money borrowed on standing timber. The uncertainty whether a 

 young stand will ever be harvested is responsible for the general lack 

 of a recognized value for stands of reproduction or very 3'oung timber, 

 so that they arc practically worthless for purposes of sale or as col- 

 lateral for loans. 



Strict and conscientiously enforced forest fire laws, backed by 

 intelligent public sentiment, and coupled with efficient and thorough 

 protective organizations, will go a long way toward reducing the iiazard. 

 With the best of protective systems, however, there will still be losses, 

 just as there are still fires even in the cities with the most up-to-date 

 fire regulations and the most efficient fire departments. 



Fire protection alone will not suffice to reduce the business of forestry 

 to a basis attractive to conservative investors. It is necessary' not only 

 to protect the forest owner against flamage iiy Hre or other agencies, 



