356 UNITED STATES FOREST POLICY 



It was during this period that the conservation movement gained 

 great momentum ; and the establishment of the forest reserves gave 

 an impetus to this speculative fever. The public reservations and the 

 discussion of future timber shortage were generally interpreted as 

 pointing to higher values ; and speculators hastened to secure avail- 

 able timber lands before they could be withdrawn. Many persons 

 unfamiliar with the industry, and less conservative than experienced 

 timbermen, were encouraged to invest in stumpage. Some speculators 

 and timber companies took advantage of the boom in timber values 

 in capitalizing their holdings for borrowing. 



A concrete measure of the speculative activity during this period 

 is found in the present capitalization of stumpage in the western 

 states. The assessed value of private timber lands in California was 

 about $51,000,000 in 1916; in western Oregon and Washington, 

 $170,000,000, exclusive of the considerable quantities of stumpage 

 on areas classed as "unimproved lands" ; and in the "Inland Empire," 

 approximately $140,000,000, or, for the whole Northwest, $358,- 

 000,000. Considering the basis of assessment in the several regions, 

 and the prevailing price of stumpage of average quality and acces- 

 sibility, the rated value of the private timber lands in California, 

 Oregon, Washington, Idaho, and western Montana today is probably 

 not far from $1,100,000,000. Such capitalization, built up mostly 

 within two or three decades, involved extensive use of borrowed 

 money. Much of this was secured through a conservative mortgaging 

 of assets, bodies of timber in some instances being bonded to finance 

 the construction of sawmills and logging railroads. There was much 

 unsound financing, however. Timber was often heavily mortgaged 

 to provide funds for further purchases, and the process repeated with 

 each new block acquired. Manufacturers sometimes bought addi- 

 tional timber with earnings which should have been used to reduce 

 indebtedness or improve their plants. 



The early borrowing was usually in the form of short-term notes, 

 at the high interest rates characteristic of undeveloped sections of 

 the country ; but, about 1905, a special form of security appeared- 



Lumberman, Aug. 7, 1915, 1: Review of Reviews, May, 1916, 583. See also a Brief 

 on Behalf of the National Lumber Manufacturers' Association, May, 1916, 23 et 

 seq.; and Cong. Rec, Apr. 19, 1916, 6459. 



