26 BULLETIN 950, U. S. DEPARTMENT OF AGRICULTURE. 



stumpage. Money paid for stumpage is returned to the manufac- 

 turer in a few months, as he markets his product. The price fixed 

 by these reappraisals may be more or may be less than the cost of 

 similar private stumpage bought at the beginning of the sale and 

 carried to the same time, with the increases due to interest charges, 

 taxes, and protection. The stumpage cost of privately owned timber 

 necessary as a backing for a pulp and paper mill would increase at 

 a constantly accelerating rate per unit of volume because of the com- 

 pounding of interest. The influence of this factor is so strong as 

 to make the purchase of National Forest stumpage, to be paid for 

 practically as cut and at its actual current value, preferable from a 

 strictly business standpoint. In fact, this principle of reappraisal at 

 intervals during the life of the contract has been accepted as reason- 

 able and satisfactory by applicants who are now negotiating with 

 the Forest Service for pulpwood in Alaska. 



STUMPAGE PRICE READJUSTMENTS IN CANADA. 



The principle that the public is entitled to the price increment on 

 the value of its property is recognized in the various forms of pulp 

 licenses and sales in British Columbia, Ontario, Quebec, New Bruns- 

 wick, and Nova Scotia. In each Province the timber acquired by 

 individuals is subject to a " royalty," which is increased by " orders 

 in council." This right to increase the royalty is equivalent to the 

 right to readjust prices on stumpage in the Forest Service contracts, 

 and is freely exercised in the Canadian Provinces wherever it is 

 deemed necessary. In some Provinces the change is possible only 

 at certain stated intervals. 



FINANCIAL STANDING OF PURCHASERS. 



The objects of the financial requirements are: (1) To secure as 

 purchasers bona fide operators having adequate financial assets to 

 carry out sale contracts successfully, and (2) to eliminate speculators 

 and promoters who risk no capital of their own, have little per- 

 manent interest in the success of the enterprise, and seek profits pri- 

 marily from the formation of a new company or the manipulation 

 of its stock. 



These requirements will not be so enforced as to prevent legiti- 

 mate promotion or the financing of National Forest sales in part 

 with borrowed capital by responsible men in accordance with con- 

 servative business standards. Evidence as to financial standing will 

 be required before advertised timber is finally awarded and the con- 

 tract furnished to the successful bidder for execution. Informa- 

 tion as to required assets will be given in response to inquiries at 

 the time timber is being advertised, in order that the prospective 

 bidder may be informed as to the showing required. 



