352 REPORT OF THB forjjstry committee 



wholesome demand under present conditions, or where there are technical prob- 

 lems demanding experiment and the training of officials. This does not require 

 forcing by any sacrifice of good principles, however. Without such sacrifice it 

 will probably soon satisfy States and Congress as to revenue. 



ARE PEICES TOO HIGH OR TOO LOW? 



THIS question has necessarily been touched on in most of its bearings 

 already, with the intimation that no general reduction of price is warranted 

 for the purpose of unduly stimulating business or influencing the price of 

 private or State-owned timber. On the other hand, there are occasionally reported 

 over-valuations in individual cases, especially in comparing quality, species, accessi- 

 bility and like value-factors, which tend to prevent or delay sales, or cause actual 

 loss to over-sanguine customers, with doubtful benefit to anyone. There is an 

 attempt to systematize the system of pricing upon a basis of probable profit to 

 the purchaser, rather than upon comparative prices and carrying charges of com- 

 peting private timber, which upon analysis seems to verge closely upon being 

 more in the nature of contracting the cutting of- Government timber than that of 

 a straight sale. Its success is largely dependent upon local demand for the privi- 

 lege of using the Government supply, and can hardly be said to be demonstrated 

 if the sale of large quantities everywhere is an object. So far it has certainly 

 been conservative, not encouraging disposal to any dangerous extent yet meet- 

 ing, as a rule, all urgent requirements for national forest timber. In detail it is 

 a policy of considerable complication and indefiniteness, in actual effect it tends 

 to a middle-of-the-road safety not undesirable, perhaps, while a clearer policy is 

 being arrived at. 



There is one point, however, that should be clearly emphasized for the bene- 

 fit of those who assert that by appraising its stumpage closely in pace with ruling 

 private prices the Government is upholding the speculator. Carrying costs make 

 such a comparison wholly illogical. In an extended private operation, the costs of 

 investment, taxes, etc., bear an interest which compovmds to prevent any profit on 

 the stumpage itself, aside from any manufacturing profit, unless there is a 

 doubling every year in what the purchaser can realize upon it. A national forest 

 purchase covering a like period carries no such costs, not even for investment, for 

 payment is in instalments upon actual scale of the timber as it is cut and turned, 

 therefore at the same price would net the purchaser all the increase of value 

 required to make his private competitor come out even.. The term would not 

 have to be very long to permit him to pay double the highest private price. This 

 situation is met by a sliding increase on the instalments and, whatever the opinion 

 on the basis of this increase as practiced, it clearly governs. In all long-term sales 

 it might be adapted to an appraisal much higher than speculative private prices and 

 leave such appraisal without any undesirable influence. Finally, the law itself 

 requires competitive bids and specifically forbids sale at less than appraised actual 

 value. 



