32 BULLETIN 1496, U. S. DEPARTMENT OF AGRICULTURE 
STABILIZATION OF FOREST TAXATION 
The forest-tax situation 1s showing improvement in the region. 
All the three States have now passed special forest tax laws. 
There is no denying that the valuation of forest land for pur- 
poses of assessment is very haphazard. While some land may 
receive as low a valuation as $1 to $1.50 an acre and the young 
growth not be taxed at all, in other places land entirely bare of 
tree growth is assessed far in excess of its real market value. With 
no standard by which such forest land should be taxed, too much 
play is allowed for personal opinion, the needs of the township or 
county for revenue, and similar considerations. Even without 
special forest-tax legislation the present property tax, if based on 
a reasonable and true valuation of forest land, could go a long way 
to remedy the situation. As the forest-land owners devote more 
and more of their cut-over land to growing timber, a change is 
bound to come through which the land will be assessed at its true 
value and subjected only to its just share of the taxation burden. 
FINANCIAL ASPECTS OF TIMBER GROWING 
There is a general misconception of the cost of timber growing. 
For some reason timberland owners consider the reforestation of 
their cut-over areas as an entirely separate financial operation from 
the rest of their timber business. From the standpoint of financial 
policy and accounting technic they look upon reforestation as a 
separate long-term investment which at the end must pay for all 
the carrying charges at compound interest and still leave a fair 
profit to the owner. 
This theory of forest finance is based on the old conception formed 
in the days of “unlimited timber resources,” that the forest is a 
mine, that the operation ends with the removal of merchantable 
timber, and that with the removal of this timber the asset itself 
is destroyed and the capital withdrawn. 
If such a principle were appled to any other continuous business, 
it would lead within a short time to the elimination of the industry. 
Any industry to be perpetuated must retain its assets intact, the 
profits being only the dividends on the capital invested. The perma- 
nent capital itself, as it is withdrawn with the sale of the goods, 1s 
reinvested in the business. For instance, a wholesale dry-goods busi- 
ness with a certain permanent capital, as it sells its goods, reinvests 
part of the proceeds in replacement of stock. Out of the annual pro- 
ceeds, in addition to replacement of the stock, are also paid the oper- 
ating charges such as maintenance of buildings, insurance of stock, 
sales costs, and transportation. If it becomes necessary to build a 
new warehouse the interest on the capital in the warehouse and 
depreciation are paid out of the current business. The same is true 
if the business is financed by bonds; the interest on the bonds and 
the sinking fund for their redemption come, in any sound business, 
from the current revenue. 
If the lumber industry is to be converted from an industry which 
destroys its assets into an industry with a permanent invested capi- 
tal in growing timber, it must inevitably adopt the same principle. 
