FOREST FINANCE 28 



The undertaker's gain or loss disappears when the financier introduces 

 a rate of interest at which the discounted expense equals the discounted yields. 



n. — ^The forest dividends show what actual rate of interest the owner has 

 made in the past or may earn in the future on his investments. The 

 actual rate of interest introduced in the financial equation causes any 

 undertaker's gain to vanish. 



The forest dividend is deeply influenced by the price increment of trees 

 (improved means of transportation; enlarged markets, etc.) i 



In the forest, it is difficult to distinguish between actual revenue drawn 

 from the forest and capital withdrawn, since the trees are capital as well as 

 product. In conservative forestry, careful stock taking is required period- 

 ically, BO as to show the actual status of the investment. 



PARAGRAPH XII.— MATURITY OF TREES. 



I. — ^In the botanical sense, wood fiber is mature almost after the conception 

 of the cell. 



A tree 3 inches in diameter is physiologically just as mature as a tree 

 3 feet in diameter. 

 The highest stage of botanical maturity is the so-called heartwood. 



n. — From the people's standpoint, timber must be considered mature at a 

 time at which it is best adapted to general usage in the wood consuming 

 industries. The older the tree gets, the larger is, on the whole, its diver- 

 sity of utility. The rotation best adapted to supply the industries of a 

 country is called the "technical rotation"- 



m. — ^The sylviculturist regenerating the forest from self-sown seed cannot 

 select a rotation which does not allow the trees to profusely propagate 

 their kind. In coppice woods, since the sprouting capacity decreases 

 with increasing diameter, the rotation must be so low as to allow of 

 luxuriant production (sylvicultural rotation). 



IV. From the financial standpoint, trees or forests must be considered mature 



when the net true interest obtained from them ceases to bear a sufficient 

 ratio to the sale value of such trees or forests. 



Wherever the woods are stocked with even aged and even sized trees, 

 all of the trees reach maturity at or about at the same time. 

 The primeval woods of America do not exhibit, usually, such even aged 

 conditions. The American forester had better speak of the maturity of trees 

 than of the maturity of forests. 



Factors infiuencing the maturity of trees in America are, pre-eminently: — 



a. The price increment, which, in the case of large trees, far exceeds 



the volume increment and value increment. Stem analyses and 



volume tables are of little value, consequently, for the financial 



diagnosis of primeval trees. 



