A NEW FACTOk IN FOREST FINANCE 



1001 



A NEW FACTOR IN FOREST FINANCE 



By W. T. Christine. 



NEVER before in the history of the lumber in- 

 dustry of America has the question of finance 

 commanded so great a share of the attention of 

 operators. 



Conditions have called for continuing increases in plant 

 and timber investments. The unit of value of timber, 

 the price per thousand feet, is steadily advancing. Log- 

 ging equipment and logging railroads cost more today 

 than formerly. The outcome has created an imperative 

 demand for more working capital. 



When this need first became manifest it was met by 

 the issuance of bonds secured by a mortgage on the 

 timber and mill property of the operator. 



In many cases the results of the bond issues have not 

 been satisfactory, due to restrictions in operations arising 

 from the conditions imposed by the bond house. This 

 fault may be attributed to the fact that the banker did 

 not understand the necessities of the lumber business, 

 nor its opportunities for profit. 



Forest finance is a much deeper and broader question 

 than the people of America have realized. Forestry is 

 practical under present conditions when it is profitable ; 

 and then only. 



Present day forest finance is extremely practical in 

 character. Money is loaned to owners of timber and mill 

 properties who are worthy of financial aid. Some of 

 these loans are straight mortgages ; others are evidenced 

 by bond issues, which likewise are mortgages. 



One of the largest transactions of this character placed 

 upon the market this year was the bond issue created and 

 sold by the recently organized James D. Lacey Timber 

 Company, of Chicago. This was a loan of $3,000,000 

 secured by the property of the Brown Corporation, of 

 Portland, Maine. The Brown Corporation constitutes 

 one of the component companies of the Berlin Mills Com- 



pany and the Burgess Sulphite Fibre Company, of Berlin, 

 New Hampshire. These companies represent an organi- 

 zation founded in 1852 and purchased by William W. 

 Brown in 1868, since which date they have been in con- 

 tinuous and profitable operation. The three companies 

 today represent an investment of about $30,000,000, 

 with annual sales averaging $12,500,000. 



They use their timber economically. If true conserva- 

 tion is the wise and close use of timber, then these com- 

 panies stand well in the fore rank of the conservationists, 

 with a record of 90 per cent of tree utilization, against 

 the ordinary sawmill record of 35 per cent to 40 per cent. 



This bond issue was put on the market and sold at a 

 time when the banking houses of America were disin- 

 clined to consider new securities of any kind. The accom- 

 plishment was due to the standing of the company offer- 

 ing the bonds and to the further fact that the interests of 

 both maker and buyer were fully protected. It is the 

 ability of the James D. Lacey Timber Company to protect 

 both the bond maker and the buyer that places it in the 

 van of lumber financiers. 



James D. Lacey Timber Company is a development of 

 James D. Lacey & Co., a firm which for thirty-five years 

 has been an active force in the purchase, sale, cruising, 

 valuing and development of the timber of North America. 

 The members of this firm also have been active in estab- 

 lishing and operating sawmill and logging enterprises. 

 They understand the needs of the operator, can approxi- 

 mate the credit to which he is entitled and appreciate 

 the latitude that should be given him to make his business 

 profitable. The new organization will have at its com- 

 mand all the wealth of data assembled by James U. 

 Lacey & Co. It would be virtually impossible to dupli- 

 cate this information as the firm's records cover every 

 timber producing locality in the United States, eastern 

 and western Canada, Mexico, and portions of South 

 America. 



When work of this important character is undertaken 



James D. Lacey, 

 President 



(JlllCi;i<S OK JA.VIiCS U. LACKY A.\'D CO.MPANY 

 Wood Beal, 

 Vice-President and Treasurer. 



Victor Thrane 

 Vice-President 



