204 TIMBER VALUATION 



instances be put in good silvicultural condition. A still more 

 striking illustration is furnished by the freight rates on north- 

 western lumber. Since no difference is made in the rates on clear 

 and common lumber, the profits are much greater on the former 

 and only the good butt logs are taken out of the woods. The 

 second grade logs rot in the woods and the slabs are burnt at con- 

 desirable expense. 



Stumpage Prices. — Using the formula that stumpage prices 

 should equal the difference between the average sale value of the 

 various grades obtainable from a stand of timber and the sum of 

 all the costs of logging, manufacture and transportation including 

 a fair profit, the determination of stumpage prices would appear 

 simply a matter of mathematical calculation. There is, however, 

 still another factor that needs to be considered. This is the lag 

 of stumpage prices behind fluctuations in lumber prices. The 

 main reason for this is that standing timber is not at present an 

 easily negotiable commodity. Forest conservation has not as 

 yet reached the point where timberland is considered as first class 

 security. Fires, insects, fungi, uncertain labor conditions and 

 inclement weather must be circumvented before stumpage can 

 be converted into ready cash. Consequently, when lumber 

 advances there is no immediate rise in stumpage prices because a 

 standing tree has to go thru many processes before it yields boards. 

 Furthermore, the cost of these processes may have increased 

 to the point where any advance in the price of the finished prod- 

 uct is absorbed. long before the stumpage price is reached. For 

 example, a 40 per cent increase in lumber prices has no prospect 

 of effecting a similar rise in stumpage figures when there is a 100 

 per cent increase in the cost of food and wages. This condition 

 actually prevailed during the Great War. 



How much difference there should be between the rate of 

 change in lumber prices and the rate of increase or decrease in 

 stumpage cannot, of course, be definitely stated. It depends 

 upon various factors which differ with the locality and season. 

 In general, however, it may be taken as a safe rule that the 

 stumpage price determined by formula needs discount by an 

 amount sufficient to allow for probable changes in costs. The 



