Pitfals of Timber Bond Issues 553 



naturally inclines to the longer term bond as providing a more per- 

 manent form of investment, consequently, but not necessarily 

 always, assuming the greater risk. 



The conditions attached to the application of sinking funds 

 differ, but the best form is that which applies the money, as raised, 

 directly to the extinguishment of the debt for which it was 

 created, thus avoiding any possible loss by temporarily investing it 

 otherwise. 



But my argument has lead me ahead of the natural order of 

 things, for the examination of the property and its valuation by 

 timber experts of large experience is a primary consideration. 



Too many timber bonds have been sold upon a "dressed-up" 

 circular. One reads, for instance : 



"Our cruisers estimate so much timber" or 



"Our cruisers estimate the value of the timber to be such and 

 such ; the mills, railroads and permanent improvements amount 

 to so much." 



The above statements, which may show fine figures and make 

 the issues attractive from the standpoint of the circular fabulist, 

 can, at the same time, be very misleading. The timber bond in- 

 dustry unquestionably developed a new cruiser, viz., the "Timber 

 Bond Cruiser." From experience, it has been learned that the 

 old lumbermen's cruiser, whose office was a tent in the woods, and 

 whose duty it was to get reliable and conservative facts for his 

 employer, who was to buy the timber on his estimate, was a much 

 more reliable and careful checker than a majority of the "timber 

 bond cruisers" whose offices are in some twenty-story office 

 building in a metropolitan city. It is very easy for the latter to 

 estimate that on a rough piece of land the loss by wreckage, when 

 the timber is cut, may run as high as 25%. It is also easy for him 

 to include, in the stand, timber such as over-mature hemlock, in 

 some sections, or hardwood in others, that only find a profitable 

 market under most favorable conditions. In the estimated value, 

 the same thing holds true. There never was a circular issued 

 that stated such a fact that because of the inaccessible location of 

 a certain portion of the tract, the timber on it is worth so much 

 less than other timber nearby, more favorably located. 



Again, it is very easy to add the cost of the logging railroad and 

 sawmills to the value of the property, but this is liable to lead to 



