232 FINANCIAL ASPECT OF AFFORESTATION 



several methods of presenting a statement showing the 

 financial result of such a crop. Some of these methods are 

 correct, but others, though plausible and often made use of, 

 are, unfortunately, absolutely incorrect. 



FALLACIOUS METHODS OP PRESENTING FINANCIAL 

 STATEMENTS. 



Initial Outlay Credited with the Income which is 

 Receivable only after a Period of Years. It is of no un- 

 common occurrence for those who seek advice as to the 

 probable profits that may be anticipated from any planting 

 operations, to be advised of the annual revenue derived from 

 continental forests, and to be told that a similar annual 

 return may be expected on an outlay of only a few pounds, 

 spent in planting and fencing. 



For example, an owner who contemplates planting is 

 told that the revenue from some existing forest is i, IDS. 

 per acre per annum. Then he is advised that the cost of 

 establishing a crop will be perhaps S an acre ; that the land 

 is now valued at 12 an acre; and that, on this proposed 

 investment of 20 an acre, he may hope to secure the same 

 returns. An increased rental of (say) i, with an additional 

 capital expenditure of only 8 ! Over 12 per cent, interest! 

 What more profitable undertaking can be embarked upon ? 



Another method, often employed, is to suggest that the 

 net annual return on the initial outlay will be equivalent to 

 the value of the final crop, divided by the number of years in 

 the rotation, it being presumed that the various sums of 

 money received from time to time from the sale of thinnings 

 will be equivalent to the annual outgoings. 



And again, yet another method, often adopted, is to 

 assume that the gross annual return on the initial capital 

 invested per acre is equivalent to the value of the average 

 annual production of timber per acre, and that, if from this sum 

 a deduction of from 2s. to 4.5. be made, on account of rates and 

 other annual outgoings, the remaining sum will be equivalent 

 to the net annual return which the investment will yield. 

 The following example will illustrate these two latter 



