interest at 6 per cent, the final tax becomes 16% per cent. If timberland 

 were valued and taxed annually according to the income it produced, the 

 two methods would yield exactly the same amount of tax. 



As a matter of fact, the present method of taxing is not applied in 

 the scientific manner outlined in Case 1, so that the two methods would 

 give still more widely divergent results in practice than those indicated in 

 the subsequent tables. The tax on yield (Case 2) is higher than the common 

 tax for the shorter periods (except for small yields and low stumpage 

 prices) and lover in the longer periods. Since the tax on yield is graduated 

 according to production, it takes the same proportion of the income at all 

 periods, while the general property tax takes an* increasing proportion, and 

 must sooner or later force cutting. In other words, the present system of 

 taxation tends to undertax young growth and overtax larger timber. 



The tax on yield falls at a time when the owner of the timber is best 

 able to pay; hence, unlike the general property tax, it has no tendency 

 to make him cut when the market is overstocked or before the timber has 

 reached the most profitable cutting stage. 



RATE OF INTEREST. 



Kates of interest depend largely on the degree of confidence in the 

 investment, or the risk involved, and also upon the ease with which the 

 money invested can be recovered. Thus, government bonds net about 2 or 

 3 per cent; well-secured bonds of established corporations, 4 or 5 per cent; 

 real estate mortgages, from 4 to 6 per cent; industrial stocks, from 5 to 7 

 per cent. Farm rents in older communities are regarded as satisfactory by 

 local capital if they give a net income of 4 or 5 per cent. 



Forest land is usually the poorest land in the region. Often it 

 could be used for no other purpose. A forest investment is a long time 

 one. With proper protection it is safe and requires little attention upon 

 the part of the investor during the time that it runs. Four per cent is 

 satisfactory in a wide variety of investments which are attended by small 

 risk and extend over a long time. For these reasons 4 per cent has been 

 chosen as conservative in forest calculations. The effect of higher rates of 

 interest is also discussed in connection with the tables. 



THE YIELD. 



For white pine, loblolly pine, and yellow poplar the yields are based 

 on tables compiled from actual stands on good forest soil of various ages 

 and fully stocked, such as should result from planting. For longleaf pine, 

 red oak, and Douglas fir the yields are based on extensive growth studies 

 and on estimates of the number of trees~per acre, calculated on a knowledge 

 of their requirements and carefully checked with other species of similar 

 requirements, whose normal stand per acre is known. The figures assumed 

 for both of the above groups are supported by data on growth and yield 

 published in the report of the National Conservation Commission. The 

 average sire of the timber is given in diameter at breast height, the standard 

 point of measurement. The yield is stated in thousands of board feet of 

 square-edged lumber. Thinnings which will be necessary from time to 

 time should pay their cost and in some cases give net returns which are 

 not included in the tables. The common practice in New England is to 

 cut round-edged lumber from second-growth white pine for the box factories. 



