FEDERAL AID IN ORGANIZING FOREST CREDIT FACILITIES 



By BURT P. KIRKLAND, Principal Forest Economist 



THE PURPOSES TO BE SERVED 



It is common knowledge that speculative capital is seldom lacking 

 for investment in matured stands of timber. Very largely as a 

 phenomenon connected with the liquidation of speculative forest 

 investments, an excess of capital has flowed to the support of logging 

 and sawmilling operations. These have been relied on as the most 

 effective means of liquidating timber investments, especially if no 

 effort is made to balance production or avoid waste. In making 

 these investments little attention has been paid to the possibility of 

 integrating different wood-using industries in numerous localities 

 without the use of additional capital. It can hardly be maintained, 

 however, that any form of wood utilization has suffered in the aggre- 

 gate for lack of capital, although the capital has not always flowed 

 to the plant locations economically most desirable. On the whole, 

 capital investment has been directed to the purpose of utilizing 

 existing timber supplies like a store of minerals. It has been so 

 managed as to^destroy rather than to preserve the forest resource. 



This discussion deals with the problem of supplying capital for 

 continuous forest production. In the section of this report entitled 

 " Status and Opportunities of Private Forestry," it was brought out 

 that a relatively small portion of the existing capital investment in 

 forests is being directed toward sustained-yield operation. To insure 

 continued forest productivity new objectives need to be set up in 

 the management of this capital. New capital investments in exten- 

 sive forest areas will be needed before growth can be restored to 

 satisfactory levels. It seems apparent that credit capital, obtained 

 on terms appropriate to this type of enterprise, could materially 

 facilitate placing the remaining forests on a continuous-yield basis. 



NATURE OF INVESTMENT IN FOREST ENTERPRISES: 

 THE PRESENT INVESTMENTS 



As was stated in the section of this report dealing with the status 

 and opportunities of private forestry, 80 to 95 percent of the invest- 

 ment in producing forests is represented by the growing stock and 

 soil, which economists dealing with the factors of production call 

 "land" or " natural resources." Business men include these ele- 

 ments under the term " capital," and from the business standpoint 

 do not distinguish them from capital such as is represented by the 

 forest improvements created by labor or the investment of money. 

 In this discussion the term "capital" will be used in this inclusive 

 sense. 



When the first white settlers landed within the territory now inclu- 

 ded in the United States there were in this territory some 800 million 



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