FUTURE VALUE OF FOREST PRODUCTS 197 



In Washington it was shown that Douglas fir stands yielding 

 65 thousand board feet per acre at their maximum, deteriorate 

 to 25 thousand feet in 100 years, an average annual loss of 400 

 board feet in volume alone. Similar losses are occurring in all 

 over-mature stands regardless of species or locality. 



186. Closeness of Utilization. Present volume of standing 

 timber is expressed in terms of the quantities actually utilized 

 rather than the cubic contents of the stand. A future increase 

 in the closeness of utilization thus has the effect of increasing 

 the apparent volume of the stand. Its effect on future income 

 is of similar importance to that of actual growth in volume and 

 quality. In regions where markets for the poorer grades are 

 uncertain, these grades are seldom manufactured or included in 

 an estimate ( 172). The future increase in merchantable volume 

 from closer utilization alone is a large factor. 



In addition to the gain in volume per tree the total merchant- 

 able yield of the stand is increased by removal of smaller trees 

 and of species formerly unprofitable. 



187. Price Levels; General Price Changes. General changes 

 in prices, caused by fluctuations in the value of money (3) 

 would raise the cost of logging and milling in equal ratio to 

 the value of the product. When the ratio of profit to costs 

 remains the same, stumpage values will increase, at the same rate 

 or per cent as will prices for lumber. For instance, should 

 lumber, now worth $15, increase to $20, or 33^ per cent, stump- 

 age value worth at present $3 should then be worth $4. In 

 this case costs might be assumed originally as $9.60 and profit 

 $2.40, or 25 per cent of cost. An advance of 33^ per cent in 

 prices of supplies and labor would bring costs up to $12.80, and 

 25 per cent profit would equal $3.20, or a total of $16, thus 

 leaving the required margin of $4 for stumpage. 



Prof. Irving Fisher predicts an average annual increase in 

 general prices of 2 per cent per year for the next fifteen years.* 



188. Price Levels ; Changes in Prices of Forest Products. 

 The prices for a given product will depart from the average 



* American Economic Review, Sept., 1912, Vol. II, No. 3, p. 553. Managing Edi- 

 tor, Prof. Davis R. Dewey, 491 Boylston St., Boston. 



