FOREST FINANCE 13 



in the aggregate investment, again depends upon local conditions and upon 

 personal opinions. 



Forest investments, in this connection, do not play any exceptional part. 

 In agriculture, e. g., the final investments are composed of soil, improvements, 

 roads, clearings, live stock, machinery, buildings, etc. Liliewise, mining in- 

 vestments do not consist of mineral soil merely; but, in addition to soil, of 

 machinery, buildings, railroads, shafts, etc. 



A forest must be considered "normal" when the investment which it rep- 

 resents has reached, for the time being, in the owner's opinion, the highest 

 stage of relative remunerativeness, with all of its (the investment's), 

 components balancing in proper equilibrium. Naturally, the owner alone 

 can decide whether this stage is actually reached or not. 



PARAGRAPH V.— TAXES. 



In America taxes usually depend upon the market value of a taxable 

 object and amount, in the wooded states, to about 1% ad valorem of the same. 

 If the market value "V" of a given forest grows at the annual rate of "x%" 

 during "n'' years, the taxes (theoretically at least) increase likewise at the 

 rate of "x%"- They accumulate at the rate of "p%" in such a manner as 

 to amount, at the year "n", to the sum total 



V 1.0x° — LOp" 



X Xl-Ox (M) 



100 l.Ox — 1.0p 



Case I: x equals p 



Then the aft-value of every single tax payment equals, 



V 



(LOx") 



100 



The summary of the aft-values equals 



n \ [l.Ox° 



<100 ) 



or n% of the forest aft-value (which is VXl.Ox"). 

 Thus, if "n" equals 25, the taxes consume }4 oi tJie aft-value; if "n" 



equals 100, the taxes consume the entire aft-value. 

 Case II: x is smaller than p 



Then l.Ox" is much smaller than l.Op"; the summary is much larger than 



V 



(LOx") or much larger than 



100 



n 



the part of the forest aft-value. 



100 



Thus, if "n" equals 26, the taxes consume more than 3^ of the aft-value ; 

 and if "n" equals 100, the taxes consume more than the entire aft- 

 value. 



