VALUES 5 



9. Prices of Raw Materials and Natural Resources. Raw 



materials, such as pig iron or wool, are valuable to owner or 

 purchaser only for further manufacture. A lowering of the cost 

 of production makes it possible to sell these products more 

 cheaply, but scarcity and increased demand may completely 

 offset this tendency and cause higher prices. The value of raw 

 products is derived directly from the price of finished goods. 

 Logs and timber stumpage derive their value from retail and 

 wholesale lumber prices. Property used for production is valu- 

 able only because of its products. The value of agricultural 

 land depends upon its adaptability for certain kinds of farm 

 crops, and upon the prices these crops will bring. The market 

 price for lumber is the source of value for forest land. 



Prices for land should therefore depend entirely upon future 

 income derived from its products or use. Costs already incurred 

 for clearing or improvements are not considered, for if land is 

 worth either more or less than the cost of clearing, its value 

 and not its cost will fix its price. If two grades of land, one 

 good and one poor, cost the same amount for clearing, they 

 will still sell for entirely different prices. Both the owner and 

 the purchaser of land desire it merely for its future use and 

 income. Sale is seldom forced, since the owner can probably 

 make a living by developing and using the property. The price 

 paid for such property thus depends upon expected income whose 

 value is determined by the prices of the products which the land 

 yields. 



10. Future Costs. While costs already incurred do not 

 determine the value of productive wealth, future costs which 

 intervene between the present moment and the final attainment 

 of income must be subtracted from the value of this income. 

 If it can' be shown that the future cost of obtaining income 

 exceeds the future value of the income, the property itself will 

 be worthless. Thus the value of standing timber is the margin 

 left after subtracting from the sale value of the lumber the esti- 

 mated costs of logging, manufacturing and transporting this 

 lumber to market. At present prices, nearly all standing timber 

 has a stumpage value, but in the past only the most accessible 



