3i FOREST FINANCE 



PARAGRAPH X.— SALE VALUE OF WOODLANDS 

 IN U. S. 



It is custonuiTy to buy timberland merely at the price of the stumpage 

 itanding thereon. The purchaser neglects: 



that he can not cut all of the timber at once; and such parts, as 

 he cuts only after some years, should not be assessed at full value ; 

 that taxes, etc., accrue, whilst the timber is cut gradually; 

 that an expense for legal and timber investigations must be covered; 

 that timber values might be destroyed by fire; 

 that there is danger of fool-legislation against alien corporation*. 



a) that soil has value; 



b) that stumpage prices (and merchantability, hence volume) will 

 increase; 



c) that there is a second growth already at hand; 



d) that local means of transportation increase; 



e) that taxes might be decreased, and that protective legislation will 

 come; 



f) that freight rates decrease; 



g) that population increases, also demand; 

 h) that new uses are found for wood; 

 i) that investments in forestry are remarkably safe, compared with 



stocks, bonds, etc. 



j) that the agricultural value of the soil increases, absolute forest soil 

 becoming absolute farm soil, as the years go by; 



k) that forest pasture, chase, minerals (rock, clay), waters and water- 

 powers promise an increasing revenue. 



PARAGRAPH XI.— GAUGING THE MERITS OF AN 

 INVESTMENT. 



The Success of a business (in farms, mines, forestry) is evidenced by its 

 net gains. 



Expenses and yields can be compared either by forming their difference 

 which comparison shows an "entrepreneur's'' gain or loss; or by forming 

 their ratio which method shows the actual dividend obtained from the business. 

 I. — Entrepreneur's gain and loss. 



Influencing factors are: — 



a. Lapse of time. 



b. Constellation of economic conditions. 



c. Personal foresight. 



d. Sate of interest introduced into the calculation. 



An undertaker's gain may be figured out retrospectively or prospectively. 

 An undertaker's gain is fictitious until, the property changing handi, it 

 can be demonstrated to be a fact. 



