2 FOREST VALUATION 



3. Prices. A price, when expressed in terms of the common 

 standard of value, is the amount of money accepted in exchange 

 for a unit of goods. Until the actual exchange is consummated 

 the price is not definitely established, but exists merely as an 

 appraisal or opinion in the mind of the prospective buyer or the 

 present owner. Prices resulting from exchanges are agreements 

 between two persons as to the value of a unit of property. 

 Market prices originate in centers of trade and form the basis 

 of numerous transactions. Prices are therefore of human and 

 mental origin and are established by economic causes which 

 influence the opinions of the majority of purchasers and sellers. 

 While in the main, prices move in response to supply and demand, 

 yet the fluctuations in price of certain forms of property, such 

 as real estate and stocks, demonstrate that it is possible to 

 create market prices either higher or lower than circumstances 

 justify, by influencing general or public opinion through opti- 

 mism, misrepresentation, or concealment of facts. 



4. Values. Value may be denned as the price of a given 

 unit of wealth, multiplied by the quantity or number of units. 

 Thus the value of a given quantity of cordwood is the price per 

 cord multiplied by the number of cords on hand. This defini- 

 tion holds good if prices are accepted as the final standard of 

 value. For finished products, especially staple commodities, 

 actual prices established by exchanges may be taken as deter- 

 mining value. But for forms of goods in an unfinished state, 

 or for productive wealth, such as land or growing timber, prices 

 furnish only contributory evidence of value, which in many 

 instances is entirely misleading. The very fact that prices for 

 finished products are the basis of value indicates that the value 

 of productive property must be derived from that of its products. 

 Ignorance of the true productiveness of property, and of the 

 mathematical relation between this income and the value of 

 the property, is the principal cause of divergence between current 

 prices and true value for such forms of wealth as forest lands 

 and young timber. 



5. Demand. The influences which determine prices are 

 twofold, corresponding roughly to the two persons concerned 



