374 Forestry Quarterly. 



not of practical value. Thus, American foresters may get lost in 

 the maze of the soil rent and forest rent theories for which as 

 yet there is little call in this country. Perhaps the most frequent 

 call at present for forest valuation is in case of damage from 

 fires. Hence an analysis of the problem of damages should 

 occupy a large place in the discussions. A time allotment of 25 

 hours seems for the present sufficient to give to the subject. 



The following outline, (in which in part a syllabus by Prof. H. 

 H. Chapman has been used) will suggest the contents of the 

 course : 



I. Definition and Scope. Two Divisions : Forest Valuation, determining 

 values; Forest Statics, comparison of different operations financially — 

 balance of effects, based on valuations. 



II. Value definitions. No commodity or property has one objective 

 value; all values subjective, hence at least two values (seller — purchaser) 

 to everything; and variations according to at least three points of view: 

 cost — sale — rent. Hence in practice determine several values and choose 

 according to circumstances. 



Commodity vs. Capital value. Use value the controlling basis of valu- 

 ation, but not expressed in money. Real value (value to all parties) a 

 phrase. 



Values never remain the same but are subject to change. 



a- Cost value based on expenditure for production — the minimum price 

 for disposal without loss. Actual vs. fictitious. May be excessive com- 

 pared with other values or the reverse (present stumpage prices represent 

 not even approximately cost value). Used generally only to figure loss or 

 gain, or for young growths. 



b. Sale or Exchange Value, based on current market conditions — what 

 property may bring if exposed for sale. Minimum — Maximum value. 



Factors influencing market prices. 



Tendency of rising prices for natural resources. 

 Special sale values : 



Wrecking value (minimum) secured by dismantling — immediately avail- 

 able by forced sale. 



Stock value (fair, real economic value) secured by operating. 



Former favors purchaser, latter favors seller. 



Expectancy value (prospective sale value), an assumed future sale value, 

 discounted to present time, as for immature stands. 



c. Rc)it value (Yield value — Investment value) based on net income or 

 profits possible or "actually to be derived by management — requires con- 

 tinuous operation, and conception of capital and interest. 



Forest Rent Value based on conceiving soil and stand as capital paying 

 annual interest (like rented house and lot) ; applicable in established 

 forest management with annual yield. 



Soil Rent or Soil Expectancy Value based on soil alone as capital, pro- 

 ducing rent intermittently, hence requiring compound interest calculations ; 

 applicable in intermittent management ; also for statical calculations. 



III. Capital and Interest. 

 a. In General. 



Capital, the basis of interest, whatever produces values or income. Fixed" 

 (permanent) vs. Circulating, (used up in production) capital. 



Non-productive (dead) capital, having prospective ability to produce 

 revenue. 



General economic laws and influences affecting capital values. 



