34 PRACTICAL FORESTRY IN 



ing long term investment. It is the balance of these factors 

 that determine their opportunity. Assuming rate of timber 

 growth to be equal, present fire and tax conditions classify 

 them in relative advantage about as follows : 



1. Owners of large holdings of virgin timber who can 

 meet carrying charges by occasional sales at a profit over 

 their purchase price, but will not sell much more than is 

 necessary because all they can afford to hold is advancing in 

 value. Such owners have more or less land deforested by fire 

 or their own milling operations, and will incline to sell only 

 stumpage without land. This land is not easily realized upon 

 at present, and for the speculative reason stated, they will 

 continue in business long enough to grow a new crop on it. 

 The larger their holdings, the greater the certainty of this 

 and the cheaper, relatively, the cost of protection. Moreover, 

 concerns dealing with large and long term investments can 

 consider a lower interest rate. 



2. Owners with less facility for making an actual profit 

 through growing timber, but desiring to maintain a milling 

 business. Even if the cost of growing approaches or equals 

 the value of the crop, they will be able to count on continued 

 manufacturing profit. 



(Both of the above classes face a possibility of so heavy 

 a tax on their virgin timber in some instances that they will 

 be obliged to cut it and go out of business. This is unlikely 

 to occur generally, however, for tax reform is almost inevita- 

 ble, and it would have a compensatory effect of enhancing the 

 value of the second crop.) 



3. Owners whose holdings are not large enough to keep 

 them in business until a second crop matures but are ad- 

 vantageously located. Second growth need not be mature 

 to have a value. As the present supply diminishes, available 

 coming supply will gain a high expectation value which can 

 be realized upon. The profit it offers will be largely de- 

 termined by its proximity to market and especially by its 

 proximity to established mills which see their own supply run- 

 ning short and have failed, through inability or lack of fore- 



