A NATIONAL PLAN FOR AMERICAN FORESTRY 



909 



The movement of the value of the individual tree as the tree grows 

 from one diameter class to another is due not only to the fact that 

 the larger tree contains more wood but to the fact that the larger 

 tree is more cheaply logged and milled, proportionately, and that its 

 lumber is of higher average value. Under normal conditions the 

 practice of holding sound, thrifty trees until they reach the stumpage 

 realization values of from $5 to $10 per M board feet (shown below the 

 lower heavy line in table 4) is likely to result in very satisfactory earnings. 

 The probability of its doing so depends on the length of time it takes 

 trees of a given diameter class to grow to the next higher diameter class. 



Table 5 shows how gross compound interest earnings vary according 

 to the number of years required to grow from one diameter class to 

 the next higher, when realization values change as in the loblolly 

 pine stands on which data in table 4 are based. The top line of 

 compound interest earnings opposite 4 years shows the gross interest 

 gained when any diameter class changes to the next higher, if the 

 change takes place in four years. The rates earned if the change 

 takes six years are shown on the second line, etc. The faster growing 

 of the 12- to 18-inch loblolly pine trees grow 2 inches in 4 years in 

 some localities and do so commonly in 6 to 8 years. The heavy line 

 drawn downward through the table separates the diameters and 

 growth rates which earn 6 percent or more gross compound interest 

 from those that earn less than 6 percent. Taxes and other costs 

 usually amount to from 1% to 2% percent of capital value, so that 

 trees that earn 6 percent gross earn about 4 percent net. In general it 

 is believed good business to hold trees as long as they earn 4 percent net. 

 For loblolly and short! eaf pines this indicates a guiding diameter limit 

 of about 17 or 18 inches. Well-formed, sound, rapid-growing trees 

 above that limit continue to earn 4 percent or more net, while smaller 

 trees of poor growth earn less than 4 percent net. Thus finance as 

 well as silviculture indicates a flexible diameter limit to guide cutting. 

 In regions of exceptionally rapid growth the lower limit of earnings 

 that justify holding a tree may perhaps be set higher than 4 percent 



TABLE 5. Gross earnings on timber investment due to tree growth 



1 Values are those given for loblolly pine in Virginia in table IV. They are based on a logging and milling 

 study made in 1929 (9). 



2 Percentages shown in the 12-inch diameter column represent earnings due to growth from the 12-inch 

 into the 14-inch diameter class. The percentages of course apply only to the trees that remain alive through 

 the period required in each case to make the 2-inch increase in diameter. No deduction has been made for 

 the expense of holding the trees during the respective periods. This item usually amounts to 1)4 to 2)6 

 percent of the capital value. 



