FOREST STATICS BALANCE SHEET PROFITS 115 



for which may be substituted 



For a normal forest ( 109) the forest per cent is obtained by 

 methods identical with those applied in Formulae N 3 and N 4 . The 

 value of such a forest (F 2 ) divided by its cost, which is either 

 the cost of purchase or of production ( 109), gives the basis for 

 the following formula 



(N 6 ) 



130. The Relative Importance of Profits in Private versus 

 Public Forestry. In Chapter III it was emphasized that for 

 very long periods the operation of the laws of compound in- 

 terest requires the lowering of the rate of interest, "p per cent," 

 used to gauge the relative value of investments. It is easily 

 shown that enterprises running for periods of over 50 years 

 cannot earn to exceed 4 per cent except under the most favor- 

 able circumstances, although the specific net profits above 

 cash outlay may exceed this outlay by several hundred per 

 cent (53 and 128). 



Private industry cannot be expected to undertake the business 

 of forest production on a scale commensurate with our future 

 needs, lor the following reasons: 



1. A higher rate of interest is required on private than on 

 public undertakings. 



2. The average business life of an individual is shorter than 

 the period required to produce a forest crop. 



3. The private enterprise depends for its existence solely on 

 profits, while the public undertaking includes the benefit to the 

 community as the principal item of income, and may therefore 

 be conducted at an actual money loss and still be justified. 



4. In many instances, lands are already the property of the 

 state or nation, and no cost or interest on land need be charged. 

 The sole cost of public forestry in such instances is the sum of 

 actual outlays for protection and silvicultural measures. 



5. Public forestry can and should be conducted on a very 



