130 REPORT OF THE FORESTRY COMMITTEE 



ordinary business returns, 6 per cent or more, and continue to reinvest these 

 returns. Therefore, if he leaves this money in forest land for 50 years without 

 return, for every dollar so tied up he must get $18.42 at the end of that period 

 if he is to make 6 per cent compound interest on the investment. And this 

 applies not only to the present value of the land, but also to any added expense 

 he incurs in modifying the cutting methods, or in replanting, in order to insure 

 reforestation. If both together amount to $5 an acre, he must net $98.10 at 

 the end of his 50 years in order to make 6 per cent. 



So far no complaint can be made. But if the land is to produce a second 

 crop it cannot be left to take care of itself, as it might were it being held for specu- 

 lative purposes only. It must be protected from fire and trespass. And since the 

 interest and principal invested will amount to so much for so long a period and 

 be totally lost in case of destruction, the protection must be adequate, practically 

 amounting to insurance. The annual cost will vary greatly according to locality, 

 class of timber, and the enforcement of fire laws, but will be from 1 cent at the 

 minimum to 15 cents an acre at the maximum in bad seasons. If all cost of pro- 

 tection and administration is placed at only 5 cents annually, for the sake of illus- 

 tration, this represents another investment constanly increasing and compounding 

 which, at the end of 50 years at 6 per cent, will amount to $14.51 an acre. Conse- 

 quently, adding that to his original investment which will have become $92.10, 

 he must net $106.61 to make his 6 per cent. 



Let us now consider the influence of taxation. We have assumed the land 

 to be valuable for forest growing only, and in calling his investment $5 an acre 

 included some cost of insuring reforestation. Place this at $2 and leave a land 

 value of $3, to be fully taxed at 30 mills for both State and county purposes, which 

 is, perhaps, a fair average. This represents the third form of his investment, or 

 9 cents an acre invested annually and left unavailable for 50 years, and will amount 

 at the end of that time, at 6 per cent, to $26.13. He has now to clear $132.74 an 

 acre, besides being always in danger of total or partial loss from fire, and during 

 all this time has to have the money, made in some other way, to meet all the annual 

 payments. But no injustice appears, for he has been taxed on an equal basis with 

 other producers. If his acre yields 20,000 feet (the maximum to expect) worth 

 $7 a thousand, he has made his 6 per cent, the community has gained a resource, 

 and every one is satisfied. - His land has been taxed fairly and as he now has a 

 crop to sell he can perhaps even afford to pay a tax on it also, although, if the land 

 has been fully taxed, there is no just reason why he should have to do so, any 

 more than does the farmer on his potato crop. Strict and logical justice requires 

 either that he shall pay no annual land tax, but a fair yield tax ; or a fair land 

 tax and no yield tax ; or both taxes correspondingly reduced. 



But this is just what cannot legally be done under the general property tax. 

 By failure to recognize that the growth produced is a crop, distinct from the land, 

 grown at the owner's effort and expense, and returning no revenue until ripe, 

 the law now compels the repeated annual taxation of the owner's effort to an extent 

 very likely to amount to confiscation. It has been seen that even under the fair 

 system outlined in the preceding paragraph, forest growing is not more than 



