INVESTMENTS AND COSTS IN FOREST PRODUCTION 69 



age. When stumpage is owned, logged and manufactured by the 

 same person or corporation, both costs and net profits are based 

 on the total operation. Frequently an owner of stumpage will 

 contract the logging and do his own milling. Both logging and 

 milling may be contracted, the owner receiving the final net 

 revenue from sale of lumber. Or, the owner may sell his 

 stumpage, permitting the logger and mill man to make what 

 profit they can. On the books of a firm operating with their 

 own stumpage, a technical separation of costs is made between 

 stumpage, logging and manufacture. The total profits as well 

 should theoretically be distributed between these three depart- 

 ments, but for practical purposes this is unnecessary. Where 

 desired, the "value" of stumpage is charged as a cost against 

 logging. By increasing this value, logging costs are advanced 

 in the same proportion, and the profits disappear into stumpage 

 values, without in any way altering their amount or character. 

 But should stumpage be owned separately, and its sale constitute 

 a transaction taking place between different firms, the costs and 

 profits arising from sale of stumpage are actual. 



Forest production as a separate business, or even as a separate 

 department of the general business of lumbering, is completed 

 with the sale of the timber or products on the stump. This 

 separation from lumbering is illustrated by the operations of 

 the United States Forest Service, which performs no part of 

 the logging or manufacturing. 



When an owner of forest property finds it necessary to engage 

 in logging and manufacturing, he should separate the costs 

 and profits of these enterprises from the profits on growing or 

 holding his timber. Often the owner is in position to log his 

 own timber. Th'is may result in securing a combined or total 

 profit far in excess of the receipts obtainable from sale of stump- 

 age. In general, lumbering, to pay as an enterprise, requires 

 large tracts and a supply of timber which will last for a reason- 

 able period, and the owners of small tracts must either sell 

 their timber on the stump or contract for its manufacture. 



91. Proprietary Accounts in Forestry. Proprietary accounts, 

 showing the amount of capital invested, and the income and 



