54 Forestry Quarterly 



3. A management which tries to secure the highest interest on 

 the entire forest capital (Waldrenten — or rentabilitatslehre — 

 forest-rent management). 



The first, which does not consider the relation between income 

 and investment, can hardly claim to be a financial management. 

 It accepts inherited conditions, and does not consider whether a 

 better employment of the capital represented by soil and forest 

 could be found. It is the financial basis of government forestry. 



The main financial problem is, of course, the determination of 

 the rotation, i. <?. , the normal financial felling age. According to 

 the soil rent theory the soil value should be the basis of the 

 calculation and that rotation which will yield the highest interest 

 rate on this value would be the one to chose. Schiffel points out 

 that instead of taking real actual soil values as basis, an unreal, 

 fictitious or artificial value, the expectancy value, is substituted 

 by the soil renters, calculated with a given or demanded, unreal 

 or fictitious interest rate. Indeed, the result depends wholly on 

 the interest rate chosen. The fact that by calculating with actual 

 soil values the resulting interest rate falls below desirable ones 

 induces the soil renters, so Schiffel declares, to avoid this method 

 of approaching the problem. " The soil value, the only invest- 

 ment capital of the soil renter, which should be considered as of 

 given amount, becomes a plaything of the interest rate and to a 

 smaller degree of cost of cultivation and other expenses." 



"This method, derived from agriculture, fits the peculiar char- 

 acteristics of forestry, with its longtime element and the stock of 

 wood standing not as yield but as capital, only when no other 

 means of determining the soil value are to be had." 



The forest rent theory recognizes as forest capital both soil and 

 normal stock and seeks the rotation which pays the highest at- 

 tainable interest rate on it ; and it tries to use as far as possible 

 real values. In figuring the normal stock, for the older age classes, 

 sales values, for the younger, cost of production with an assumed 

 interest rate, or else an interpolation curve (a straight line from 

 o to last sale- value) are to be used. In a given example the soil- 

 rent theory finds a 60 year rotation, the forest rent theory a 90 

 year rotation financially most advantageous. Of course, the ro- 

 tation so found is merely a guide to be deviated from by consider- 

 ations of value and price increases, etc. 



The determination of the normal stock value is the weak spot 



