Current Literature 289 



the different interest rates, and then arbitrarily (on p. 55) pro- 

 poses the adoption of 3 per cent for calculatory use because this 

 rate is ''used extensively in European works." The reasoning 

 is not convincing. In discussing the interest actually made in 

 European forest management he very properly calls attention to 

 the fact, which we have repeatedly pointed out, that in the usual 

 finance calculations of State administration the returns are not 

 related to any original investment value, but are based upon a sale 

 value not at any past time but the present. We disgree in think- 

 ing that "this high value is not a fictitious one, but a very real 

 thing, and that these properties could readily be sold at these high 

 prices." We believe, on the contrary, that the values are merely 

 calculated, fictitious ones, and while the exploitable timber part 

 could perhaps be sold, there would never be a ready market 

 for the large areas of the young age classes : the prices are figured, 

 but there is no market. 



As Chapman correctly points out (p. 109), the method of recal- 

 culating the investment with a standardized interest rate also 

 clouds the question of profitableness of the investment. 



Chapman gives a much fuller and comprehensive discussion of 

 the factors which influence interest rates, in a chapter of 13 pages. 

 He leaves out, however, the practical considerations, applicable 

 under American conditions particularly, of increment on stump- 

 age price, which is a most potent influence on the interest rate. 

 There are good reasons why wood prices should still rise in 

 Europe, and still stronger reasons why they should rise with us, 

 and by so much as they rise we can be satisfied with a lower inter- 

 est rate on our investment, since the value of the investment is 

 sure to increase without our effort and make up for the low rate. 

 That the item of interest on borrowed capital is not paid from 

 gross income and is "entirely a personal matter between the owner 

 and his creditors" is a novel way of looking at banking business 

 and misleading, for such loans are made on some sort of mortgage 

 and not on personal notes. 



That such important fundamental conceptions of forest finance 

 as the soil rent and forest rent should, in Chapman's book, receive 

 only incidental notice in the chapters on Appraisal of Damages 

 and Taxation, is, to say the least, an unsatisfactory arrangement. 



Better logical arrangement of matter is also in other respects 



