640 Forestry Quarterly. 



over 50 years and selection forest not more than 9% of the stock 

 value. 



The original cost of cultures is set for pine at $10 per acre, for 

 spruce at $8, for the better class of broad leaf species at $15 and 

 for other broadleaf species at $7 ; and the figuring is done at 3% 

 interest rate. 



The stumpage value is ascertained by using the official yield 

 tables reduced by 15% and multiplying with local prices. 



Of the 60 banks canvassed, 26 make no loans on forest prop- 

 erty, 13 base loans on soil values; 14 base loans for regularly 

 managed forests on the yield, with a working plan as basis, and 

 some making conditions as to the personnel of the administration, 

 fire insurance, etc. ; two banks have special prescriptions how the 

 yield is to be ascertained and capitalize it at 5% interest rate. It is 

 of interest to note that the credit institutions which are mutual, i. e. 

 not organized for money-making, loan only on stumpage at pre- 

 sent exploitable. Altogether in bank circles only present values 

 appear loanable. Future values do not appeal to practical finan- 

 ciers. 



The reason why most of the banks do not loan except on 

 forest property in connection with farms is explained by the fact 

 that the latter are more readily saleable and they can be rented. 

 Especially forests in intermittent management do not offer satis- 

 factory security for loans and only their soil value may form a 

 basis for them. In the valuation of 21 forests containing 23,000 

 acres the soil value figured out $17.70 per acre, while the yield 

 value was $61.70. 



The author then declares and defends the position that a forest 

 which does not contain any usable stock furnishes no solid basis 

 for a valuation which would be acceptable to bankers, the soil 

 rent theory not furnishing such a basis. This theory is based 

 upon one equation with two unknown quantities, the forest value 

 itself and the interest rate. 



With the usual interest rates too low or even negative values 

 result, and the use of a lower rate on the ground of the increase 

 in wood prices is looked at doubtfully by financiers. He sees this 

 rise in prices partly in a lowering of money value, partly in de- 

 velopment of means of transportation which cannot go on for a 

 much longer time. He even foresees the possibility of a lower- 



