242 FINANCIAL ASPECT OF AFFORESTATION 



In comparing the foregoing tables it would appear that, 

 if a high price (e.g., 32) be paid for the land, it would be 

 more advantageous to have a long rotation of 100 years, than 

 a short rotation of 38 years. 



Such, however, is not the case. But it serves to illustrate 

 the inadvisability of adopting this method of showing the 

 comparative financial results of works of afforestation ; and 

 it also shows how misleading calculations may be, unless all 

 points be carefully considered. 



The two cases are not directly comparable. The apparent 

 advisability of the long rotation is explainable thus : 



In both cases the planting, etc., cost 8, and the land is 

 worth 32, and up to the end of the 38th year the results 

 are practically identical i.e., 2f per cent, compound interest 

 has been earned on the initial outlay. However, had the land 

 been worth nothing, the 8 spent on planting and establishing 

 the crop which may be termed the " live " capital would 

 have earned over 6 per cent, compound interest; but the 

 large proportion of "dead" capital in the land (e.g., 32) 

 brings the interest earned down to 2f per cent, compound 

 interest. Now, if the rotation be continued to the looth year, 

 the interest earned for the next 62 years on the "live" 

 capital, which is now a far greater sum than the value of the 

 land, and which is represented by the value of the net credit 

 sum, less the value of the land at the end of the 38th year, 

 is very much more than 2f per cent. say 5 per cent, for the 

 next 20 years, then 4 per cent, then 3 per cent, and finally 

 at the end of the rotation, perhaps only ij per cent, or 2 per 

 cent so that, as the proportion of dead capital is com- 

 paratively small from the 38th year, an increased rate of 

 interest beyond the 2f per cent, is shown on the total capital 

 both live and dead capital by the end of the looth year. 



Now, in order that the two cases may be made directly 

 comparable, it is necessary that the calculations should be 

 spread over the same number of years. 



By this means, the result of a succession of 38-year 

 rotations up to the looth year may be directly compared 

 with the result of the single loo-year rotation. 



Thus, a succession of 38-year rotations for 100 years, on 



