TIMBER BONDS 4I 



Bonds are issued in denominations of $500 or $1,000 with the 

 exception of a speculation series on the Pacific Coast which may 

 be purchased in denominations of $100. The largest bond issue 

 was that of the Long-Bell Lumber Company of Kansas City, 

 Missouri, for $9,000,000, maturing in fourteen years at semi- 

 annual periods. These draw 6 per cent and any or all may 

 be paid at any interest period prior to maturity on sixty days' 

 notice, at a premium of 1.5 per cent and accrued interest. 



Sinking Fund. — The amount of the bond issue is based 

 largely upon the standing timber owned by the mortgagor. It 

 is essential, therefore, that the loan be reduced as the stumpage 

 is cut. This is accomplished by depositing with a trustee a 

 certain sum for each thousand feet cut or to be cut within a 

 given period. These funds are then used by the trustee to meet 

 interest charges and also to pay off bonds as they become due. 

 Many bonds call for the payment of the deposit at intervals of 

 thirty or sixty days; in some cases every six months, or at the 

 end of the logging season, where, as in the North, logging is 

 carried on only for a portion of the year. The safest bonds are 

 those calling for payment in advance of cutting. The amount 

 paid is often based on an estimate of the stand by '' forties " as 

 shown by the sworn report of the cruiser. Provision should also 

 be made for the payment for timber destroyed or injured by 

 fire, wind, insects, or other causes, on the same basis as for the 

 timber that is logged. Numerous issues have not contained 

 provisions of this latter character, but they cannot be regarded 

 as a safe investment because fire and winds may wipe out a 

 large part of the security, and unless some provision is made to 

 offset this the sinking fund will not be sufficient to meet the 

 bonds when due, or at least the bond purchaser will not have 

 the protection to which he is entitled. 



There is no uniformity as to the amount per thousand feet 

 paid into the sinking fund. It ranges from $1.50 to $6 per 

 thousand feet, the greater number of bonds calling for a payment 

 ranging from $2.50 to $3.50 per thousand feet. As a rule 

 lumbermen prefer to pay approximately the value of the stump- 

 age into the sinking fund, because as the price of stumpage in- 



