LOGGING PRACTICE IN THE LAKE STATES 33 
Timber growing as a permanent business must consider reforesta- 
tion of the logged-off lands as a part of its timber operations and as 
an absolute condition for continuous forest production. 
The maintenance of the cut-over land in a productive state and 
stocked with trees of all sizes is as much a necessity for the lumber 
industry as it is for the wholesale dry-goods merchant to keep on 
hand a full stock of his goods, or for a manufacturer of high-grade, 
air-seasoned lumber to keep on hand stacks of lumber at different 
degrees of dryness. In each instance the replenishment is a charge 
against the annual proceeds of the business. 
As a matter of fact, the lumber industry is already regularly rein- 
vesting the proceeds from its current business, by putting these into 
stands of mature timber. The migration of the lumber industry from 
the Northeast to the Lake States, to the Southern States, and to the 
West is a concrete illustration of this process. The reinvestment of 
proceeds in the productive power of the cut-over lands in the same 
region does not therefore involve any new financial principle. It 
moreover has distinct advantages. Investment in old timber is be- 
coming increasingly difficult because of shortage of supplies, and in 
time it will become impossible. The timber purchased must be car- 
ried for many years, yielding to the owner meanwhile only the ad- 
vantage of possible increase in stumpage values. Little is to be ex- 
pected from increase in growth or increase in quality, for the timber 
1s past maturity. On the contrary, there may be actual loss through 
physical deterioration. Reinvestment in the young growth on the 
cut-over land in the same region provides three sources of increase 
in value: (1) The increase in growth; (2) the increase in quality 
with age; and (3) the increase in stumpage value. If to this is added 
that the investment in the cut-over land is already made and must 
be carried anyhow, reinvestment in second growth in the same region 
should from a financial standpoint prove more attractive than invest- 
ment in old timber that is past maturity. 
Forestry can not, any more than any other business, be shown to 
be highly profitable if investments in reforestation of logged-off 
land are to be treated as a separate operation from the standpoint of 
financial policy and accounting technic; if they are to be computed 
at a high rate of compound interest, the proceeds from which at 
the end of the period must cover all the carrying charges in addition 
to a certain profit. 
Compound-interest charges are justifiable only when a forest-land 
owner, having removed all the merchantable timber from his prop- 
erty and being no longer a timber producer, decides to invest in cut- 
over land. Under such conditions there is no annual income, and the 
money put into reforestation must be considered purely as a long- 
time investment. Such investments are, as a general rule, not at 
present attractive to private owners and can best be carried out by 
the Federal Government, States, counties, municipalities, and other 
public agencies. 
Without attempting to show just how profitable timber growing 
may be to going timber concerns, an illustration is given here of the 
manner in which financial computations should be made to deter- 
mine the possible profits under certain conditions. 
