28 JOURNAL OF FORESTRY 



lines to serve the same territory differs only in degree from waste of two 

 retail yards serving one small town, or two mills to cut the timber from 

 a tract from which one could cut the timber. In the case of the parallel 

 railroad lines, the unnecessary retail yard, and the unnecessary mill, 

 the waste as to the original capital expended is alike complete. We 

 have ceased building the parallel railroad line and recognize the right 

 to fair railroad earnings. As a reward, capital is willing to work on a 

 conservative investment basis. This reduces the cost of the service to 

 us of the $16,000,000,000 of capital required, by hundreds of milHons 

 annually under the cost of spectilative capital. 



When we acquire even that imperfect degree of wisdom in regard 

 to forest industry that we have in regard to the railroads, the public 

 will be wilHng to let the industry organize to save the cost of competition. 

 When that is done, the conservative investor will know that here is a 

 safe investment field and will be willing to furnish the borrowed capital 

 needed at 4 to 5 per cent interest. The conservative investor will be 

 benefitted by this new large field, while speculative capital need not 

 suffer, because it can move on to serve the pubHc in new untried fields 

 at home and to the conquest of the tropics. At the same time, the 

 savings to this industry and through it to the public, should be enormous. 

 According to the Department of Commerce, the investment in standing 

 timber in private hands in this country is not less than $6,000,000,000," 

 while, as we have seen the investment in the logging camps and sawmills 

 is nearly $1,000,000,000, a total of $7,000,000,000 without including 

 the distribution end of the industry. We should, as an ultimate goal, 

 if intelHgence is used in organization of credit, look forward to securing 

 40 to 60 per cent of this capital on an investment basis of 4 to 5 per cent. 

 This means 2 to 2^/^ per cent under the present cost of capital. 

 This wotild mean on $3,000,000,000 of borrowing an annual saving 

 of $60,000,000 to $75,000,000. This is not necessarily a loss to the 

 lender. It means, rather, that his lossesof capitalhaving been eliminated , 

 the average interest rate he can loan under are less. 



These statements may seem overdrawn, and that these reasonable 

 interest rates are impossible. This is without doubt absolutely true, 

 so long as forest industry is organized as at present. If we cannot 

 secure cheaper capital, private forest management is impossible and 

 only such of our forest resources as the Federal Government and States 

 can rescue in time can be saved. Forestry will not yield over 5 per cent 



"I Department of Commerce and Labor, The Lumber Industry, Part I, p. 19. 



