1134 A NATIONAL PLAN FOB AMERICAN FORESTRY 



30 percent of the value of the property, nor should all such loans 

 placed aggregate more than 25 percent of the forest mortgage loans 

 outstanding. Interest rates on second-mortgage loans might exceed 

 the rate on the last sale of long-term bonds by 3 percent. Amortiza- 

 tion within 10 years should be required. 



The purposes for which loans might be granted would include the 

 following : 



1. Such measures as are designed to improve the productivity of 

 organized forest properties, including restricting cut to permit build- 

 ing up growing stock, fire protection, and necessary silyicultural 

 measures. (When loans are made for these purposes on immature 

 forests or on forests the cutting of which should for any reason be 

 deferred, arrangements may be made to advance the loans in annual 

 installments over periods as long as 20 years. No annual installment 

 should exceed the amount required to meet costs for that year.) 



2. To assist in the orderly marketing of timber already mature or, 

 in exceptional cases, to withhold from the market timberlands which 

 it would be economically injurious to throw on an overburdened 

 market. 



3. To assist in acquiring tracts and assembling them into units of 

 economic size and location for continuous-yield operations. 



4. To assist in constructing permanent transportation systems 

 within the confines of forest properties concerned and to connect 

 them with common-carrier transportation facilities. 



5. In exceptional cases, to assist in acquiring, rebuilding, or con- 

 structing manufacturing plants necessary for complete and economical 

 utilization of forest raw material from the property concerned, includ- 

 ing such facilities cooperatively owned by owners of adjacent holdings. 

 No loan should be granted to provide manufacturing capacity that, 

 combined with the capacity of efficient plants existing in the locality, 

 would be excessive in proportion to the present or soon expected sus- 

 tained yield of the forests of the locality. Judgment on this element 

 should be based on reports of competent technicians. 



RECOMMENDATION 



In view of important pending changes in the commercial banking 

 systems and possibly in other financial institutions within the super- 

 visory field of the Federal Government, and in view of the desirability 

 of thoroughly examining the operating methods of institutions with 

 similar purposes in order to utilize their experience to the utmost, it 

 is recommended that a study looking to the establishment of an 

 organization such as is outlined above be undertaken cooperatively 

 by the Forest Service and the Federal Farm Loan Board, to be 

 completed at the earliest practicable date. 



NOTE. The foregoing discussion has been reviewed by Paul Bestor, Farm 

 Loan Commissioner, John H. Guill, member of the Farm Loan Board, and A. F. 

 Garden, chief appraiser of the Federal Farm Loan Bureau. 



