914 A NATIONAL PLAN FOR AMERICAN FORESTRY 



the present capitalization rate of the whole. All this capitalization 

 now enters into the balance sheets of individual and corporate 

 owners, and cannot be eliminated or reduced except as a present loss. 

 The maintenance of these values therefore represents a vital problem 

 to thousands of individuals. Maintenance and even increase, if 

 soundly based, is socially valuable, since where there is value care 

 will be exercised. From the standpoint of the public and of the pri- 

 vate owners, sound measures will be those that maintain values. 



The policy of hasty liquidation of this investment has proved a 

 costly failure, owing to the impossibility of placing this huge volume 

 of timber on the market, in a short time, at a price that would recover 

 all operating costs plus a sufficient depletion charge to return the 

 investment. Large areas in the region are too inaccessible for profit- 

 able operation under any combination of price and operating-cost 

 conditions that has yet occurred. Further than this, within the past 

 few years studies of costs and returns from logging and milling oper- 

 ations, of the type described later in this chapter, have proved con- 

 clusively that in virtually every type of forest in the region cutting 

 the small trees usually results only in loss. These studies have 

 indicated that in accessible stands not more than 60 percent of the 

 volume is suitable for cutting under cost and price conditions as of 

 1926 to 1929, and that in all probability less than 50 per cent of the 

 total volume of all stands is operable under conditions of those rela- 

 tively good years. If this estimate approximates the facts there 

 remains 20 to 25 years' cut, under present economic conditions, of 

 accessible financially mature timber. Under a selective cutting 

 policy it may be necessary to slow down the cut to avoid overburden- 

 ing the market with high-grade products. 



The selective removal of this timber within that period would 

 leave ample time for the remaining trees to grow into such sizes and 

 values as to provide a like cut for the ensuing 20 years. This pro- 

 cedure would constitute a complete reversal of the policies in effect 

 to the present date. It would make unnecessary the recovery, from 

 operations of normal annual volume, of depletion charges which now 

 amount to more than $30,000,000 annually (12&). Depletion would 

 remain in some properties. In others, including areas cut over in 

 the past but restocking with new growth and areas on which stands 

 left after selective cuttings are developing, value increases would be 

 accumulating. The history of forest values in other countries war- 

 rants the belief that this constructive policy might, if adopted, 

 preserve unimpaired the larger part of the capital values of privately 

 owned forests in the Pacific Coast States. 



SAWMILL AND LOGGING INVESTMENTS 



Colonel Greeley (13\ estimates sawmill and logging investments 

 in the Douglas fir region at about $300,000,000. If this ratio of 

 timber investment to operating investments hold throughout the pine 

 and redwood regions as well as the Douglas fir region, the whole 

 investment must be in the neighborhood of $500,000,000. Here 

 again the source of the original capital is of interest. Some of the 

 capital was brought in from other regions. A considerable amount 

 was raised by bonding timber tracts or by borrowing from banks. 

 Past cutting of timber was the source of a large amount. This last 

 is especially true of investment in logging railroads, which can often 

 be paid for currently as they are gradually extended into the timber. 



