10 



MICHIGAN ROADS AND FORESTS. " 



Michigan Forestry Association. 



The Michigan Forestry Association was organized in Grand Rapids August 30, 1905, having for its object the promotion of a rational system 

 of forestry in Michigan. The society is managed by the following roster of officers: President, John H. Bissell, of Detroit; Vice-President, R. 

 Hanson, Grayling; Secretary, J. Fred Baker, Lansing; Treasurer, J. J. Hubbell, Manistee. Board of Directors Mrs. Francis King, Alma; Hon. 

 Arthur Hill, Saginaw; S. M. Lemon, Grand Rapids; H. N. Loud, Au Sable; Thos. B. Wyman, Munising; Prof. Filibert Roth, Ann Arbor. 



The State Forestry Commission Charles W. Garfield, Grand Rapids; Hon. W. B. Mershon, Saginaw; William H. Rose, Lansing. 



PRIVATE FORESTRY 



AS AN INVESTMENT 



Although the owners of the timberland in 

 the United States now seem to be coming very 

 rapidly into that state of mind where they 

 conskler a technical forester as necessary for 

 the conduct of their business, it is clear that 

 most of the "forestry methods" now being 

 introduced amount to no more than conserva- 

 tive lumbering. It is still principally what one 

 might call "extractive" forestry, the harvesting 

 of the supply furnished by unaided nature, 

 only some care is taken to avoid unnecessary 

 waste. One might distinguish between the 

 'extractive" stage and "productive forestry," 

 which produces forest supplies by the applica- 

 tion of capital and labor to the land. The 

 latter method is still a rare exception in this 

 country. It may be worth while to analyze 

 the conditions under which the transitional 

 stage of conservative lumbering may be ex- 

 pected to give place to true productive for- 

 estry by private enterprise. 



This method of timber production involves 

 the investment of capital for long periods, 

 with the probability of but small returns. 

 These returns are entirely dependent on the 

 annual wood increase of the growing timber. 

 With all the species now ordinarily coming 

 into market this increase is very moderate, 

 even under the best of conditions, and^even 

 more so on the inferior lands that are most 

 to be devoted to such purposes. It is true 

 that some special kinds of tree, such as sev- 

 eral varieties of eucalyptus, have a much 

 higher percentage of increase. But these are 

 adapted to a few districts only, and no mat- 

 ter how excellent they may prove to be, will 

 not for a long time be of much importance to 

 the market. 



Under these circumstances an investment in 

 productive forestry cannot be expected to bear 

 a rate of interest much above that yielded by 

 other long investments. Probably from two 

 to three and one-half per cent is all that one 

 dare assume. The question then is: What 

 class of investors is likely to be attracted by 

 such low rates of interest? 



As is well understood, other low-rate in- 

 vestments, as for instance government bonds, 

 are in this country made almost exclusively 

 by banks and other financial institutions which 

 use them as pledges to secure note issues, de- 

 posits of public funds and the like. The rest 

 goes to the trustees who look to the greatest 

 safety rather than to profitable returns in the 

 management of their funds. The private in- 

 vestor in the United States very rarely cares 

 for investments of this kind. He is quite will- 

 ing to accept a risk materially greater than 

 that represented by government bonds, pro- 

 vided that the rate of interest is higher. The 

 lowest interest rate acceptable by private in- 

 vestors in this country may be said to be that 

 paid by the savings banks. But in all proba- 

 bility the majority of investors in savings 

 banks consider their deposits therein more or 

 less temporary. Just as soon as they have 

 accumulated enough, they will draw it out and 

 invest their money either in a home or in some 

 business enterprise. 



Up to this time practically every American 

 who has had money at his command over and 

 above a little provision for a rainy day has 

 had the desire to speculate with it. He has 

 not looked for safe investments at low inter- 

 ests, but for opportunities to double or triple 



his capital within a short time. The man 

 with a small capital hopes to make it a for- 

 tune, the moderately wealthy man tries to 

 become rich, the rich man a multi-millionaire. 

 As long as this state of mind exists, private 

 productive forestry is not to be thought of 

 in this country. 



In Europe there are multitudes of people 

 with more or less money to invest who never 

 think of risking it in an enterprise that may 

 promise great gain but may also result in loss. 

 They are looking for safe investments, even if 

 the rate of interest is small. Moreover, they 

 wish to be spared as much as possible of the 

 trouble connected with the management of the 

 enterprise and with freq-uent re-investments. 

 Therefore, they are looking for long invest- 

 ments, and for those in which they need not 

 employ their labor as well as their capital. 

 Not until there is a large number of people 

 in this frame of mind, is there any probability 

 of private productive forestry becoming at- 

 tractive. 



There are, however, still other conditions 

 that must be fulfilled. The holding of forestry 

 lands in this country is not yet a safe invest- 

 ment in the sense in which it is so in Germany. 

 The fire danger must be considered, although, 

 on the large tracts which would of necessity 

 be involved, tha't could be kept under control. 

 It is greatest where the land is subdivided. 

 But more to be dreaded is the question of 

 taxes. How seriously our barbarous tax sys- 

 tem affects such investments is probably fa- 

 miliar to all readers of this paper. 



Assuming that the fire and tax problems 

 can be solved, the question arises: What prob- 

 ability is there of a number of such investors 

 as described above arising in this country in 

 the near future? 



Fifty years ago there were comparatively 

 few large fortunes in the country, while the 

 probability of small investments combined 

 with the personal efforts of the owner leading 

 to wealth was very consderable. It might 

 be said that at that time almost everybody 

 was trying to build up a fortune. Gradually 

 the situation has been reversed; there are now- 

 many established great fortunes, but the prob- 

 ability of new ones being built up has become 

 comparatively small. Productive forestry can- 

 not build a fortune, but it may be an excel- 

 lent conserver of fortunes already existing. It 

 may be reasonably expected that an increasing 

 number of our wealthy men will see this, and 

 turn to investments of this kind. Very likely, 

 many of the timber tracts that now begin to 

 be conservatively lumbered will gradually be 

 brought under truly productive forestry. To 

 what extent the fact of corporate ownership 

 of most of these tracts will affect the question, 

 may well be discussed at another time. 



Too much nee<l not, however, be expected 

 in this direction. Even in Germany or France, 

 it is not at all probable that many large for- 

 tunes would today be invested in large forest 

 enterprises. Those now existing have almost 

 existed for generations. Even to a rich man, 

 the profits of forestry look rather small, while 

 the difficulty of changing the investment is a 

 great drawback. For large forests are hard 

 to sell, except to lumbermen who will destroy 

 therri, and almost impossible to mortgage. 



So far productive forestry has been consid- 

 ered exclusively as a business for itself, de- 

 voted to producing for the market. It must 

 be confessed that the outlook for this sort 

 of investment in the United States, although 

 not hopeless, is not very promising. How- 

 ever, there is another form of private forestry 



which seems to be much more adapted to 

 American conditions, and, consequently, now 

 making fairly rapid progress. This is the 

 management of forests, not to produce for 

 the open market, but to raise raw materials- 

 needed in a particular enterprise under the 

 same ownership. A very large part of Ameri- 

 can timber lands is now in the hands of manu- 

 facturing concerns holding them for this very 

 purpose. As the owners hope to stand in; 

 need of raw material for an indefinite time, 

 they are very rapidly adopting conservative 

 lumbering, and will in all probability arrive 

 at the productive forestry stage in due time. 

 Analogous are the forestry undertakings of 

 railway corporations, such as plantations for 

 growing ties. Forests devoted to such pur- 

 poses might be called "auxiliary forests," dis- 

 tinguishing them from those managed as- 

 separate enterprises, for which one might coin 

 the technical term "auonomous forests." With 

 the auxiliary forests should be classed also 

 the great number of farm timber lots. This 

 system of forestry is at the present time little 

 known in Europe, and hi the treatises of Eu- 

 ropean writers is often treated as an unde- 

 veloped stage. However that may be, it seems- 

 to hold out the only promise of vigorous de- 

 velopment of private forestry in the United 

 States. It seems to me highly probable that 

 the general public will in the future, after the 

 exhaustion of the natural supply, have to rely 

 principally on timber grown in public forests. 

 This opens up the question of a very consid- 

 erable extension of the reserve policy, espe- 

 cially in the hardwood regions. But that need 

 not be discussed in this article. Ernest 

 Bruncken, Chief of Sociological Department 

 California State Library. 



FORESTERS VERSUS CARETAKERS. 



The time has passed when it was excusable 

 for men who owned over 2,000 acres of forest 

 land, used either as a park or held for future 

 profit from timber, to employ men as simple 

 caretakers men who knew little or under- 

 stood little of the requirements of a forest, a 

 park, or a piece of woodland. Men who sim- 

 ply served as watchmen, or perhaps roadbuild- 

 ers and cleaners of the forest. An owner of 

 forest land now finds that what he needs most 

 of all is a trained forester for his land a man 

 that understands all the conditions and re- 

 quirements of the forest, from the sowing of 

 seed to the harvesting, and the use of every 

 stick of timber of the forest; a man that 

 knows how to give nature a helping hand so 

 as to produce the best results, both for beauty 

 and money; a man that is capable to meet 

 any new conditions that may arise in the 

 forest. 



Owners of forest lands who employ men 

 that understand forestry have more beautiful 

 parks and reserves, better stream flow and 

 reproduction, and they also in the end fill 

 their pockets and leave a legacy to their chil- 

 dren of far more worth, than if they had sim- 

 ply employed caretakers on their forest area. 



No man would think for a moment of em- 

 playing a man ignorant of his business as fore- 

 man or overseer of that business. A business 

 in which there is so much money involved as 

 in forestry, and in which such a long time is 

 required hefore returns are obtained, needs a 

 man in charge who knows the business from 

 beginning to end, a man capable of making it 

 bring forth interest at the rate of 700 per cent 

 or more. C. H. Goetz, forester for H. M. 

 Loud & Sons. Au Sable, Mich. 



