VALUATION OF DAMAGES TO IMMATURE TIMBER 1'^? 



in a most arbitrary manner, so that it is practically impossible to deter- 

 mine the relation between total forest values involved and amount of 

 loss. The appraisal of values of immature stands has presented con- 

 siderable difficulty, due in part to the uncertainty as to quantity and 

 value of product, date of receipt of income and costs of production, 

 and even more to the introduction of compound interest computations 

 and the somewhat confusing combination of capital investment and 

 accumulated product which is involved in the business. 



With the progress of investigative work, it should be even easier to 

 predict time and quantity of yield from a forest than is the case with a 

 fruit-grower who attempts to judge in advance what his new orchard 

 will produce. It should also be as safe to figure with present values^ 

 for timber and costs of production as it is for the orchard owner to 

 use present fruit prices and costs in his computations. While prices 

 may increase, any figures based on such increase are pure speculation 

 and have very little place in conservative financial calculations. It does 

 appear reasonable, however, to use the best present stumpage prices in 

 estimating yields of young stands, since present inequalities due to 

 differences in transportation facilities will probably be evened out in 

 the future.^ The mathematical principles of valuation have been con- 

 siderably clouded by the confusion of capital and accrued earnings and 

 by mixing the ideas of interest and profit or loss — that is, the commer- 

 cial interest rate and the rate actually earned by the forest. 



To confusion of ideas as to what constitutes the investment and what 

 is merely accumulated earnings on this investment may be attributed 

 much of the discussion of values of forest stock and much of the con- 

 troversy between "soil-renters" and "forest- renters" which has filled 

 so large a place in foreign forestry literature. The methods of valua- 

 tion which have been proposed may be classed under five general heads : 



1. Arbitrary proportions. 



2. Cost of production or replacement. 



3. Expectation value. 



4. Sale value. 



5. Value of accumulated rentals. 



The first method, which is at the same time the simplest and the least 

 scientific or accurate, disregards the compound-interest element entirely. 



' Present values incaii here tlie averuKC for a short period to avoid aiiv al)nor- 

 mality which mipht control prices at the moment. 



'See Kraft: /ur Praxis der WaldwertrechnunK iind forstliehen Slatik, i88j, 

 p. 21. 



