126 FOREST VALUATION 



will have the same value whether computed as a cost or as a 

 capital value. To compute this value under actual conditions 

 in this country, either the standard rate of interest for many 

 sections must be very low or a negative soil value may have 

 to be used, which is perfectly practical. The method is so 

 foreign to our ideas of finance that it should be discarded in 

 favor of the more intelligible plans of utilizing actual costs and 

 sale value, or of discarding altogether the subtraction of inter- 

 est on soil as a deduction from damages. 



137. A Basis of Damages : Cost of Replacement. The 

 objections to the use of cost of replacement as a measure of 

 damages are that it does not represent the true value of the 

 property nor measure the loss (i33&, 68). Its merits lie in the 

 certainty of the figures, derived as they are from past experience. 



Very young timber or reproduction may be completely de- 

 stroyed by fire. It has no sale value, except, rarely, for Christ- 

 mas trees. The expectation value of such young stands is 

 difficult to compute. But the cost of planting and the annual 

 charge for protection and administration can be easily deter- 

 mined. 



Assuming that the trees have been completely killed and that 

 no further expense is needed to prepare the ground for a new 

 crop, the cost, including interest on soil, the use of which is 

 lost, will be, for a years, 



(C + S c + E) i.op* - (S e + E). (A) 



By substituting the capital value of soil for S c , this cost be- 

 comes equal to the expectation value of the young timber 

 ( 127). But this value S v is even more unreliable than the ex- 

 pectation value of the young stand ( 116). If S e is charged 

 as a cost, it will be determined by the price paid for the soil, 

 or the sale value of similar bare land in the vicinity. 



Where, as in government forests in the west, land has no 

 purchase price, the practice is to omit this item from cost. The 

 cost of the crop then becomes 



