A NATIONAL PLAN FOR AMERICAN FORESTRY 925 



Assuming a $3,000,000 debt against the tract, bearing 6 percent 

 interest, will make it representative of the region. With the $300,000 

 a year applied to taxes (2 cents per M board feet on the timber stand- 

 ing, which equals $60,000 the first year and diminishes as timber is 

 cut) and to interest ($180,000 the first year and diminishing as principal 

 of debt is paid), and to principal ($60,000 the first year) it will take 

 till 1956 to liquidate the debt. The income from a little more than 6 

 years' cut belongs to the operator. Discounted to present value at 6 

 percent interest, it yields an equity in the tract worth $454,130. 



The second method involves liquidating high-value stumpage at 

 the rate of 100 million board feet a year for 15 years. After that the 

 cut is to be dropped to 50 million board feet a year on a sustained- 

 yield basis. The average log value from trees over 40 inches such as 

 will be cut the first 15 years is $11.34 per M board feet and the net 

 stumpage realization, with tractor instead of steam logging, is $6.08 

 per M board feet (1932 depression prices and costs). For the first 

 15 years $608,000 a year is available to pay taxes and retire debt. 

 After 15 years the income will be reduced both because of reduction 

 in cut and because of lower value of material. Taxes are as under 

 the other method except that they are cut down faster by removing 

 high values, and the debt is entirely retired by 1938. The income 

 from 1938 to 1962 belongs to the operator (except for tax deduction). 

 Discounting these values at 6 percent to present value gives the 

 result $2,821,924. In addition there will remain after 1962 a sus- 

 tained-yield forest yielding 50,000,000 board feet per year. 



It must be admitted that the tract on which these calculations are 

 based is unusually well situated, close to deep water, but the prin- 

 ciples involved apply in like manner to most of the remaining large 

 tracts of virgin timber in the Douglas fir region. The returns will 

 vary, but in virtually every case liquidation is the surest method 

 devised for destroying values. 



Although it seems self-evident that an operating method which in a 

 few years destroys the current productivity of a tract capable, as in 

 this case, of producing a sustained yield of 50,000,000 board feet per 

 year must destroy large financial values, definite and reliable figures 

 showing the real extent of such losses have hitherto been lacking. 

 The figures presented here, since they are based on depression condi- 

 tions, are undoubtedly ultra conservative both for liquidation values 

 and for sustained-yield values. 



COAST REDWOOD FORESTS 



The coast redwood forests present problems similar to those of the 

 Douglas fir forests. Lower-value species are associated with the red- 

 wood, so that the value of individual trees, varying both with size 

 and with species, has a very wide range. These forests contain such a 

 great proportion of large fine-quality trees that a selective logging 

 practice partly on a group and partly on a single-tree basis is indicated 

 which will permanently liquidate perhaps one half the capital value. 

 The remaining growing stock would support at least the major portion 

 of the investments in logging railroads, mills, and towns. Any com- 

 plete liquidation policy would lead to proportionately greater capital 

 losses in this region that in the Douglas fir region. No stand table is 

 available for this type. 



