FACTORS OF SE 37 



generally small in forestry and their importance in the business is 

 easily overrated. 



Where cheap protection means unreliable protection, the kind 

 that fails in danger season, the saving in current expenses is the 

 proverbial penny wisdom. As appears from the formula, the capital- 

 ized expenses E affect the income or the income value of the soil 

 uniformly; they are constant regardless of rotation and so do not 

 cause the maximum of income value to come either earlier or later. 



A glance at the formula shows that whenever E is greater than 



Ta(i.op r - a ) etc. c(i.op r ) 



(i.op r i) 



the business is carried on at a loss and the income value of the soil 

 becomes negative. 



5. The rotation, r, affects the value of the crop and in this 

 way the net income and income value. In spruce, pine, maple, etc., 

 a five or ten year rotation would mean a final cut of mere brush of 

 practically no value. Even a twenty year rotation would in most 

 cases not even pay for the plantation. For these short rotations 

 then, Se is negative regardless of quality of land or management. 

 In the above cases the business would just about pay expenses at a 

 thirty year rotation ; the income value would continue to increase and 

 reach a maximum at about eighty years. After that the expenses, 

 planting and current expenses, together with the discount would 

 grow faster than the timber and Se would decrease, in spite of the 

 fact that the final cut would be larger at one hundred years than 

 at eighty years. 



The following figures for spruce site III (Endres, p. 275) illus- 

 trate this : At three per cent Se is : 



Age, or rotation years 30 40 50 60 70 80 go 100 no 120 

 Income value of land 

 per acre, Se ..... $ 14 13 38 53 59 59 56 51 46 41 



which shows that even in the German forest and at three per cent 

 a rotation of thirty years leads to loss and negative value of Se of 

 $14 per acre ; that Se increases with increase in rotation up to sev- 

 enty years, declines after eighty years and reaches a value of $41 

 with a 1 20 year rotation. 



6. The interest rate, p, which is assumed in these calculations 

 greatly affects the results. If in the sample case outlined above the 



