CRITICISM OF SE 59 



c. The third criticism is that the calculation is a failure as soon 

 as "reasonable"' or "current" rates of interest are employed. This 

 point has been discussed under "Rates of interest." As pointed 

 out, current rates of interest are normally far above what large in- 

 dustries and business actually make. On the basis of six per cent 

 farming in the United States is a losing business, though the farmer 

 pays this as a current rate. The forests and their growth depend 

 on natural laws and have nothing to do with interest rates. The 

 only use of an interest rate in the study of these forests and their 

 growth is to serve as a measure. We can use five per cent and have 

 all values of Se negative and still secure a very good comparison 

 between different tracts of land, between different species and meth- 

 ods of treatment. But these negative values while making possible 

 this comparison will give a distorted picture of things ; they will tell 

 the truth and yet mislead. The absohite values will be correct so 

 far as the five per cent basis goes but they will show a good safe 

 business bringing in millions and giving paying employment to 

 thousands as being a losing enterprise. 



This same criticism was amplified by pointing out that this form 

 of calculation on a basis of ordinary interest rates would lead to a 

 ridiculous and disastrous shortening of rotation. In part this was 

 provoked by enthusiasts in mathematics who actually argued for 

 such shortening of rotation. That shorter rotations were needed 

 most authorities agreed but rotations of forty or fifty years in spruce, 

 etc., were evidently wrong and the practitioner saw this. The mis- 

 take was one of judgment in estabhshing the value of timber. As 

 stated under rotation, the maximum Se for Saxon spruce with pres- 

 ent prices would come at about fifty years. At present the great 

 body of timber offered to the market is larger than is produced in 

 fifty years and the prices of the smaller, less useful stuff are pur- 

 posely kept up by not offering too much of this kind of material. 

 If the Saxon state forest should go to a fifty year rotation this 

 small stuff would at once become a drug on the market and what 

 seemed profitable would prove a loss. 



But this merely proves that in deciding on the proper rotation 

 and consequent final yield, it is necessary to use some judgment and 

 consider the demands of the market. 



Good material, clean stuff, fourteen inches in spruce, etc., need 

 not fear depression in prices. Its market is practically unlimited in 

 central Europe and therefore the rotation is set to produce this ma- 

 terial. 



The calculation of the income value of the land devoted to for- 

 est is not mere formula, in fact the formula may well be dispensed 



