FOREST FINANCE 21 



2. The upper limit is the actual effect of the investment for which means 

 and bounds do not exist. If the investment cannot be duplicated 

 (Standard Oil), the rate of interest becomes a personal matter being 

 governed by the capitalization which the owners choose to adopt. 



Vin. — ^The net or true interest 



1. has the tendency of equalization 



A. in loans, because interest is merely the price of such loans re- 

 sembling the price of any other commodity; 



B. in investments, because universally remunerative investments 

 are soon over-crowded by competition where duplication is pos- 

 sible. Where this is not possible, there abnormal revenue is at 

 once capitalized, the new capital value being added to the ori- 

 ginal ("watered investments") ; 



2. has the tendency of sinking because the wealth of the nations is 



rising at a faster rate than the chances at remunerative employment 

 of wealth. 



IX. — Justification of Interest. 



1. The Church, since 326 A. D., has condemned interest after Luke 

 VI : 35. In the early Christian era, loans for consumption only were 

 known, not loans for production. 



2. After Adam Smith, the capitalist would not care to take any risk, 

 temporarily parting with the full control of his property, if he did 

 not see any inducements. 



3. After Senior, interests are payments due to the owner for abstaining 

 from the immediate consumption of his property. 



4. After Marx and La Salle, interest is cut-off from the wages properly 

 belonging to the wage earner. 



6. Merely natural capitals (deer, buffalo, trees, grass lands) produce 

 annually. Thus, interest on capital is natural, — is part of the econ- 

 omy of nature. 



X. — Rate of Interest in Forestry. 

 1. Conservative Forestry. 



a. There is no "(lib)" or "(Ifd)" to be deducted from the gross 



rate of interest, since there is no risk and no influence on the 

 investment due to the declining purchasing power of money. 



b. The rate of interest compares favorably with agricultural interest 



because the products of the forest can be stored free of cost, 

 and are exposed but little to drought, inundation, boll weevil, 

 etc. If the products are killed by storm, fire and insects, 

 forestry can bring them to the market, usually, at a scarcely 

 reduced price (see American Lumberman, September 19, 1908). 

 The rate of true interest in conservative forestry is about 2}^% (in Sax- 

 ony, on an average for the year 1906, 2 VlO%; see Thar. Forst Jahrbuch, 

 1907, Ist issue.) and compares very favorably with 4% on bonds and 6% on 

 industrial investments. 



