454 JOURNAL OF FORESTRY 



fancied lumber trust, and an individual or stockholder in a corporation 

 whose capital is unlimited. 



Reference to Colonel Greeley's "Report on the Lumber Industry" 

 will readily show anyone who is interested that the profits in the in- 

 dustry have been very small throughout the industry as a whole. In 

 the Inland Empire in particular the profits have not been sufficient to 

 return even a fair rate of interest on the capital invested.^ The present 

 system of taxation places a heavy burden on the lumberman if he car- 

 ries sufficient stumpage to last him even 20 or 30 years ahead. In 

 manv cases large tracts of timberland have become a questionable asset. 

 Owing to heavy carrying charge^ the lumberman has felt obliged to 

 liquidate his stumpage as rapidly as possible through his sawmill. He 

 seldom has on hand any large surplus of working capital - which is 

 free of debt and acquisitions of stumpage frequently have to be made 

 tnrough the issue of some kind of bonds or notes upon which interest 

 charges become due at stated intervals. During periods of depression 

 he cannot close up his plant and await better times, but rather is forced 

 to meet the competition of other mills, all seeking such business as 

 there is to be had, in order to maintain his organization and meet fixed 

 current expenses. 



Under these circumstances lumbermen in general do not feel that 

 they can make investments whose returns will be deferred for a period 

 of from 40 to 100 years and whose rate of return is less than the rate 

 at which money can be borrowed for the purpose of making such in- 

 vestments, when at almost any time daring the period of the deferred 

 returns fire may destroy a portion or all of the investment, upon which 

 so far there is little possibility of placing insurance. 



Each measure adopted with a view toward forest conservation adds 

 to the cost of logging. Seme measures, such as fire protection of mer- 

 chantable timber, with slash burning as a step toward fire protection, 



* For a certain group of representative plants in the Inland Empire cutting 

 over 60 per cent of the lumber cut during the 6-year pleriod prior to 1915, the 

 earnings paid an average of 3.7 per cent on the average paid up capital, and 

 an actual loss of 1 per cent when a reasonable depreciation and interest on debt 

 is deducted. 



'For 11 mills in the Inland Empire during 1914 with an aggregate cut of 242 

 million feet, interest at 6 per cent on borrowed money amounts to $1.17 per 

 thousand produced. According to the ratio between their assets of timberland 

 and manufacturing plant, 62 cents is chargeable to timberland and 55 cents to 

 manufacturing. 



