EXAMINATION OF PROPERTY 43 



assured by the creation of a sinking fund, the 

 maker of the bond issue being required to deposit 

 with the trustee a certain amount of money be- 

 fore the trees are cut down for each 1,000 feet 

 of timber to be cut. Accompanying the pay- 

 ments to the sinking fund is a sworn statement 

 showing by the same descriptions used in the 

 trust deed and the timber estimators ' plats, the 

 lands from which the timber is to be cut, and 

 further certifying under oath that no timber 

 has been cut on the lands mortgaged without 

 proper payment having been made to the sink- 

 ing fund. The maker of the bonds further 

 agrees to give free access to all the property, 

 books of account and vouchers for the purpose 

 of checking the correctness of any such state- 

 ments. As these statements are under oath, if 

 they are false, the maker will make himself 

 liable to criminal prosecution. 



"Through the operation of the sinking fund 

 in the timber bond issues the equity grows 

 larger from year to year as the bonds are paid 

 off, without taking into consideration the an- 

 nual increase in the value of the standing tim- 

 ber. In the case of one large southern lumber 

 company the bond issue was made on the basis 

 of $2 per thousand feet stumpage. Under the 

 terms of the trust deed this company was re- 

 quired to pay into a sinking fund $3.50 per 

 thousand feet for timber cut. Through the 

 operation of the sinking fund in that issue the 

 debt decreases from year to year until the last 



