Cost of Growing Timber on Pacific Coast. 433 



I. At 3%, the Federal Government Interest rate $3-54 



16 

 42 



27 



2. " 4%, the Provincial or State Government rate 6 



3. " 4i%, the Municipality rate 8 



4- " 5%> the interest rate paid by the large owner 9 



5. " 6%, the interest rate paid by the moderate sized 



corporation 15 



6. " 7%, the interest rate paid by small corporation or in- 



dividual 25 



21 



77 



The deduction to be made from this table is that the growing 

 of timber is a function to be performed by Federal, Provincial 

 or State Governments and Municipalities. The policy of Cana- 

 dian Governments in reserving timber lands is thus economically 

 sound. 



The interest rates quoted are interest rates ruling in the North- 

 western States. There is not in Canada the same difference in 

 interest rates paid by Dominion and Provincial Governments 

 as exists between rates paid by the Federal and State Govern- 

 ments in the States. The Province will not be at such a disad- 

 vantage in growing timber as appears in the comparison quoted. 



The large owner is not entirely out of court. Stumpage value 

 of White pine is now over $16.00 per M in Eastern Canada. It 

 is reasonable to expect that stumpage in the West will eventually 

 reach this point. The large owner who can borrow money at 5% 

 will then be able to grow timber at a profit. 



Another interesting deduction is the effect of taxation on 

 forestry by private owners. Professor Kirkland pointed out that 

 the taxation rate is now claimed to be the chief obstacle to the 

 growing of timber by private owners. He disagreed with this 

 objection, holding that the interest rate paid by private owners 

 was an even greater obstacle. 



Where the rate of interest is 5%, and taxes the present average 

 in the Pacific Northwest, i-| cents per thousand feet annually, 

 the tax, with interest on taxes, is only 15 per cent of the cost of 

 growing timber on a rotation of sixty years, while other interest 

 charges are 75 per cent of the total cost. Where the interest rate 

 is 6 per cent the proportions become 11 per cent and 81 per cent 

 respectively, and where the interest rate is 7 per cent the propor- 

 tions are 9 per cent and 86 per cent. Clearly the rate of interest 



