7 2 FOREST VALUATION 



ownership and cost account, calls for a revaluation of land ( 61 

 and 62). 



Bare land suitable only for forest crops does not command 

 a high price (96). 



96. Standing Timber. By definition, real estate comprises 

 land and all that stands thereon. A purchaser of land acquires 

 all permanent improvements. These improvements may be 

 sold separately, but always with the stipulation that they are 

 to be removed within a given time. 



Standing timber is part of the real estate, and a purchase of 

 land includes the timber, unless excepted by the owner subject 

 to removal by him. Timber stumpage is sold by the owner on 

 contract which allows the purchaser a definite time for removal, 

 failing in which, the purchaser, in certain states,* loses his right 

 to the timber. These timber rights sometimes run for periods 

 of twenty years and while in force constitute a lien on the 

 property. 



By the time a crop of timber is large enough to cut, its value 

 greatly exceeds that of the land. Virgin timber, containing ma- 

 terial of high quality, shows a still greater excess of value ( 184). 

 In the past, lumbermen were quite indifferent to land values, 

 regarding the title as desirable only because it made them inde- 

 pendent of restrictions as to time and rate of cutting. What 

 they purchased was the timber. Yet timber, whether young or 

 old, is a "vanishing" asset. It must be converted eventually 

 into income, and is subject to losses. Owing to the difficulty, 

 in some cases, of distinguishing between the value of the land 

 and of the timber, and the great preponderance of the latter 

 value, the cost of standing timber is usually regarded as a cap- 

 ital expenditure. Bonds may be issued, with this standing 

 timber as security, provision being made to retire these bonds at 

 a rate to more than keep pace with the cutting of the timber. 

 Such bonds are in this sense paid out of "capital," as this "capi- 

 tal" is converted into income. Bonds could not be floated on 

 timber which was not about to be, or in process of being, cut. 



* This subject has caused extensive litigation, and has resulted in conflicting 

 practice. State supreme court decisions must be ascertained in each locality. 



