STUMPAGE PRICES 215 



amounts to a large sum. In other words forestry is one of the 

 few businesses in which no proper idea of the real cost of doing 

 business may be obtained unless due allowance is made for 

 interest charges. In merchandising and manufacturing on the 

 other hand the main items of expense are the cash outlays for 

 material and labor and interest charges play a relatively unim- 

 portant role. Interest is, in fact, a comparatively modern in- 

 vention. Certainly the business man of 100 years ago worried 

 little about interest, overhead charges, and depreciation. For- 

 estry, a very new form of enterprise, is ultra modern in this 

 respect. Consequently it must know what the net return will 

 be after deducting all interest and charges for depreciation and 

 other forms of overhead expense. The only kinds of business 

 which are at all comparable are long time, conservative invest- 

 ments sought by those who wish a steady, sure income over a 

 long period without the risk and bother of shifting their funds. 

 The rents from an office building are an excellent illustration. 

 Built to last for 50 to 100 years without radical alteration the 

 main items of expense are the interest on the original cost of 

 construction, the constant repairs to prevent depreciation, 

 yearly taxes, annual insurance, premiums and administrative 

 costs. Such a' building gives a net return, when all these items 

 of cost have been deducted, of not more than 3 or 4 per cent 

 for long periods. In other words the capital is as safe and en- 

 titled to the same rate of return as funds invested in a savings 

 bank. Government bonds are, perhaps, an even better illustra- 

 tion of what net income actually is. The recent Liberty Loans 

 were floated at 3 per cent or more and at periods could be bought 

 at enough below par to make the interest rate as high as 4 or 5 per 

 cent. But no one expects them to remain at par. The Civil 

 War loans did not and there is every reason to predict that both 

 the Victory Loan and the three Liberty Loans will soon be 

 selling for enough above par to bring their net return down to 

 2 or 3 per cent. And this will be a true net return barring per- 

 haps the cost of the safe deposit box in which they are kept. 

 They are not subject to taxes, they do not depreciate, or need 

 repairs or insurance. 



