114 PRACTICAL FORESTRY IN 



likely to be at an actual loss. Whether he has made money on the 

 original crop has no bearing; nor has his being rich or poor, resident 

 or alien. His cut-over land presents a distinct problem to him. 



In the first place, its sale value represents an investment. He may 

 sell and reinvest the money in any business which looks inviting 

 perhaps in standing timber. Presumably he can get ordinary business 

 returns, 6 per cent or more, and continue to reinvest these returns. 

 Therefore if he leaves this money in forest iand for 50 years without 

 return, for every dollar so tied up be must get $18.42 at the end of 

 that period if he is to make 6 per cent on the investment. And this 

 applies not only to the present value of the land, but also to any 

 added expense he incurs in modifying his cutting methods, or in 

 replanting, in order to insure reforestation. If both together amount 

 to $5 an acre, he must net $92.10 at the end of his 50 years in order 

 to make 6 per cent. 



So far no complaint can be made. But if the land is to produce a 

 second crop it cannot be loft to take care of itself, as it might were 

 it being held for speculative purposes only. It must be protected 

 from fire and trespass. And since the interest and principal invested 

 will amount to so much for so long a period and be totally lost in 

 case of destruction, the protection must be adequate, practically 

 amounting to insurance. The annual cost will vary greatly according 

 to locality, class of timber, and the enforcement of fire laws, but will 

 be from 1 cent at the minimum to 15 cents at the maximum in bad 

 seasons. If all cost of protection and administration is placed at 

 only 5 cents annually, for the sake of illustration, this represents 

 another investment constantly increasing and compounding, which, 

 at the end of 50 years at C per cent, will amount to $14.51 an acre. 

 Consequently, adding that to his original investment which will have 

 become $92.10, he must net $106.61 to make his 6 per cent. 



How TAXES ENTER THE PROBLEM 



Let us now consider the influence of taxation. We have assumed 

 the land to be valuable for forest growing only, and in calling his 

 investment $5 an acre included some cost of insuring reforestation. 

 Place this at $2 and leave a land value of $3, to be fully taxed at 

 30 milbs for both state and county purposes, which is perhaps a fair 

 average. This represents the third form of his investment, or 9 

 cents an acre invested annually and left unavailable for 50 years, and 

 will amount at the end of that time, at 6 per cent, to $26.13. He has 

 now to clear $132.74 an acre, besides being always in danger of total 

 or partial loss from fire, and during all this time 7ia. to have the 

 money, made in some other way, to meet nil the annual payments. 

 But no injustice appears, for he has been taxed on an equal basis 



