190(1 



FORESTRY AND IRRIGATION 



173 



assessments are always based on the 

 actual value of the forest, or on the 

 earning power of the land, that is, its 

 yield. 



The first principle in all these laws is 

 that the forest shall be considered and 

 rated apart from the land upon which 

 it stands. This principle finds univer- 

 sal acceptance in theory at least, 

 though the practice differs in the va- 

 rious, countries, and is based upon the 

 fact that a forest is a crop of many 

 3'ears' growth and represents the own- 

 er's savings the accumulated capital 

 and interest on a time. investment. This 

 fact is as obvious here as it is there, 

 and in my opinion makes it necessary 

 for' us to admit that in any piece of 

 forest property the soil alone is realty, 

 the growing trees are reinvested in- 

 come that is personalty. 



To illustrate : A man has two fields. 

 On one he raises corn, and year by 

 year puts the value of the crop in bank 

 or buys securities, which he holds and 

 on which he pays, or should pay, a per- 

 sonal property tax. On the second field 

 he plants trees ; they thrive and make 

 a good growth, but at the end of the 

 season they are not convertible into 

 money as the corn crop was. So it is 

 for many years. The tree crop is made 

 each season, but must be left on the 

 stump until enough wood is accumu- 

 lated to make it salable. Suppose the 

 farmer, instead of selling his corn, had 

 put it into a crib and added the second 

 and third and each succeeding year's 

 crop to the first ; would he not accu- 

 mulate personalty in the crib of corn ? 

 He does the same with the product of 

 his trees, but the result shows this 

 difference : The crib of corn earns no 

 increase ; it represents only simple in- 

 terest on the land ; it is not like the 

 money in bank that might have been 

 obtained by selling the corn, which 

 would earn compound interest by be- 

 ing reinvested with the accrued inter- 

 est every year. In the growing for- 



est, however, the increase in value is 

 reinvested ; the owner expects his trees 

 to yield him a profit on the capital 

 which they themselves represent, as 

 well as on the capital which the land 

 represents. But the two values that 

 of the trees and that of the land are 

 distinct. 



It is thus evident that because the 

 tree grower must reinvest his annual 

 crop in stumpage it is no reason for 

 considering it real estate. In the view 

 that forests can be reproduced, trees 

 are virtually movables, and the prac- 

 tice of rating them a part of the land 

 is the fundamental error in every 

 American State. 



Theoretically it is as proper to tax 

 growing grain as growing trees ; but 

 since the grain matures in one year, 

 while the trees require many, and all 

 our fiscal arrangements are based on 

 annual returns, the trees should be 

 taxed though the grain be exempt. 

 Here, however, comes in the second 

 principle in the taxation of forests, 

 that it is unjust to require the owner 

 to pay so long as the forest yields him 

 nothing. There is no equity in making 

 a man's other property carry his im- 

 mature forest. In practice this works 

 out in various ways. Most of the Ger- 

 man States have not yet made the 

 principle effective, but Baden exempts 

 newly established forests from tax for 

 twenty years (law of 1886). In Aus- 

 tria they are exempt for twenty-five 

 years (law of 1869). In France three- 

 fourths of the land tax is remitted for 

 thirty years, b In connection with these 

 laws it should be remembered that for- 

 ests in Europe begin to yield salable 

 material when they are from 20 to 30 

 years old. In most parts of the United 

 States the productive period begins 

 later because there is no market for 

 small wood. 



This principle of exemption or re- 

 bate is familiar enough in this coun- 

 try, where undeveloped property of all 



rrTlie forests of the German States, for instance, are estimated to have 75 per cent, to 

 85 per cent, of their value in the timber and 25 per cent, to 15 per cent, in the land. M. 

 Endres, "Forsten," in Conrad's llandworterbuch der Staatswissenchaften, 1900. 



b M. Endres, Die Bestenerung des Waldes, in Forstwissenschaftliches Centralblatt. 

 p. 509, 1899. 



