RESULTS OF OUR FOREST POLICY 357 



the timber bond, issued as a first mortgage upon timber holdings and 

 manufacturing plants. Bonds were usually to be refunded serially by 

 setting aside a stated sum from the proceeds of lumber sales. The 

 common interest rate was 6 per cent, but expenses in issuing such 

 securities, and their usual sale below par, often made the actual cost 

 of the capital 7 per cent or more. Bonds, in series running for ten or 

 fifteen years, had the disadvantage of prescribing in advance the cut 

 of lumber necessary to meet futurities, regardless of the condition- 

 of the market. 



The capitalization of timber was, broadly speaking, a slower and 

 saner process in the southern pine belt than in the Northwest. Large 

 holdings were slower to develop. For a long period timber ownership 

 was well distributed, and many mills bought but small quantities of 

 stumpage from time to time; but about 1905, competitive timber 

 buying began on a large scale, and stumpage values went up rapidly. 

 Many bond issues were floated in connection with large timber pur- 

 chases between 1905 and 1912. In an investigation of twenty-seven 

 companies in this section, timber bonds aggregating $39,000,000 

 were found outstanding. In 1914, an analysis of 108 companies, in- 

 cluding ten that were free from debt, showed a total indebtedness of 

 over $52,000,000 — $1.11 per thousand feet on the timber repre- 

 sented. 



I COST OF TIMBER OWNERSHIP 



Interest charges were not the only charges to be met. Taxes have 

 had to be paid, regardless of whether the property was bringing in 

 any income or not. The tax burden has varied greatly in the different 

 forest regions, but most investigators have been of the opinion that, 

 through underassessment and lax administration of laws, taxes have 

 not been a very heavy burden in most regions. Occasional gross in- 

 equalities in assessment, however, and uncertainty as to the future, 

 have doubtless been something of a menace to lumbermen and to the 

 stability of the industry.*^ Cost of fire protection has added slightly 

 to the carrying charge. This cost, however, including such fire losses 

 as may occur, rarely exceeds one tenth or one fifth of a cent per 



43 Sunset Magazine, Apr., 1916, 35: Jour. Pol. Ec, Dec, 1915, 971. 



