THE PACIFIC NORTHWEST 81 



1. The rate of interest demanded of the investment is one 

 of the most important factors. This is because such long 

 terms are involved. The charges compound with prodigious 

 rapidity toward the last. In any other business paying 6 per 

 cent, compound, the maximum investment per acre given in 

 the preceding table, that of a land value of $7.50 and a 30- 

 cent annual charge for 80 years, would earn $1,317. A 75- 

 year forest then harvestable should have 56% M to the acre, 

 but this would have to bring over $25 per M to pay as well. 

 On the other hand, the same deposits earning 4 per cent 

 would only amount to $338 in the same period which would 

 be equaled by timber at $6 per M. 



2. For similar reasons, the length of time before cutting 

 lias much to do with profit or loss. The compounding of 

 carrying charges eventually outstrips the production of ma- 

 terial to a degree which can be offset only by the most rapid 

 rise of stumpage values. 



3. The greater the investment, the more marked the above 

 effect and consequently the tendency to market an inferior 

 product. A 60-year rotation is indicated by a majority of the 

 conditions shown. 



4. A comparatively slight increase in annual tax or fire 

 charges may make the difference between profit and loss. 

 Roughly, stumpage must bring $1 per M more to compensate 

 for each 10 cents an acre for taxes at 5 per cent or for 7 cents 

 at 6 per cent. 



5. If the land is salable for $5 an acre or more it cannot 

 be made to pay 6 per cent compound interest under the most 

 favorable conditions, unless the stumpage received exceeds 

 $6. At $5 stumpage and with reasonable taxation it will pay 

 5 per cent if it escapes fire. 



6. Thirty cents an acre is apparently about the maximum 

 annual carrying charge which will permit a 6 per cent profit, 

 even with very high stumpage prices. Consequently, while 

 present taxes on cut-over land are seldom prohibitive, there 

 must be reasonable certainty that excessive increase will not 

 occur. 



