36 JOURNAL OF FORESTRY 



Table 1 shows that as prices increase expenses do also, due particu- 

 larly to taxes. The net annual increase per annirm therefore becomes 

 less year by year unless the total annual increase becomes constantly 

 greater. As the capital becomes larger, moreover, the interest rate 

 which a given increase makes becomes less and less as the years go by. 

 Speculation is therefore its own cure. In the case of those resources 

 which need care as does the forest, speculation — anticipation of future 

 values — hastens the day when care will be bestowed, but it also hastens 

 the day when increase in value will not give a satisfactory return on the 

 investment. That day is here or nearly here in the case of the forest. 



What is the answer? From the investor's standpoint only one is, 

 in my judgment, practicable. Take as great a current return as possible 

 without depleting the property, and to this will be added as time goes 

 on increase in value of the property as an additional return. This, 

 with the forest means use for continuous production. The case becomes 

 similar to that of the farm. Farm surveys by many agencies show con- 

 clusively that the average farm does not yield a current return of over 

 2 to 3 per cent, if the farmer is conceded wages such as farm laborers 

 receive.^ Much sympathy has been lavished on the farmer on account 

 of these low retiirns, but all the time farmers in large numbers were 

 retiring to residences in the town and purchasing pianos and automobiles. 

 How coiild this be? The fact was that besides the ctirrent return from 

 operation there was constantly accumulating a return from increase 

 in land value, which increased in the middle west from the time when 

 homesteaded 50 years or more ago to $200 to $300 per acre today. 

 These increases in many cases, became noticable only when a sale was 

 made. The increase in value, was in fact reaHzed as time progressed 

 without a sale of the property because the earnings of the farm continued 

 to increase and pay the 3 per cent interest on a constantly increasing 

 valuation. Now that land values are so high the increases in value are 

 not likely to contribute much to the rate earned by the capital even 

 should the arithmetic rate of increase continue to be what it had been 

 in the past. 



The case of the forest is precisely the same. Given a forest to 

 start with which may be organized to give continuous yield and given 

 stimipage prices at the beginning of even so much as 50 per cent per M 

 and forestry will yield some net return. This is true, because the cost 

 of regeneration cut-over land mostly by natural means and protecting 



« See Roth's Forest Valuation, pp. 26-27, on this subject. 



