Current Literature 49 



ings of economics. The first chapter is devoted to a discussion 

 of "Values" — different forms of value and what determines them. 



Chapter II deals with outlay and income and their relation to 

 each other. 



Chapter III is a discussion of interest: simple and compound. 

 The rate of interest for a business investment is that interest 

 which a lender will accept on the security of the business. This 

 rate should be used in calculating cost and in valuing the business. 

 There is no standard of comparison for forestry because the 

 returns are so long deferred. Life insurance has an average of 

 thirteen and one-half years' risk, and as a rule earns about 4 per 

 cent. The rate to use in forestry should not be appreciably higher, 

 for the economic law is that the rate of compound interest be- 

 comes lower the longer returns are deferred. The difficulty at 

 present is largely due to the insecurity of the investment, as is 

 explained in Chapter XIII on "Risks." The efficient organiza- 

 tion of fire protective associations in different sections is doing 

 great work toward reducing the risk. 



Assets and their valuation is the subject of Chapter IV. A 

 property or business can be valued on its cost or sale value, but 

 its "economic" value is based on income. This is called "capital" 

 or "expectation" value, and is the difference between gross 

 receipts and future expenses discounted to the present. As an 

 example showing why past costs do not enter into the calculation 

 the author says : "Two parcels of land cost $35 each to clear, one 

 is suitable for truck gardening and sells for $500 ; the other will 

 not bring rilore than $5. 



The text changes with Chapter V, "Formulae of Compound 

 Interest." This chapter shows how to compute the amount of a 

 principal at compound interest; find the present value of a 

 future sum; the sum of a geometrical progression in general, 

 capital value of annual or intermittent rentals, both temporary 

 and permanent; annual equivalents, and ratio of income to cost. 



"Investments and Costs in Forest Production" (Chapter VI), 

 takes up the separate items of cost : permanent investments — land 

 and permanent improvements; expenses or temporary outlay, 

 including reproduction costs, silvicultural and protective meas- 

 ures, overhead expense, taxes, interest and maintenance, and 

 shows how to calculate the total cost of growing an even-aged or 

 many-aged crop of timber and a normal forest. One article 

 compares costs of forestry with those of destructive lumbering. 



