236 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
the rest, it has been necessary to build up theoretically, from yield 
tables and other data, Income and cost factors for constructive forest 
enterprises in selected regions of the United States. Attention will 
first be given to the experience of the Keene forest. 
THe YALE Forest at KEENE 
The Yale Demonstration and Research Forest near Keene, N. H., 
was started in 1913, with a small acreage. Additional tracts were 
purchased until, December 31, 1930, the forest comprised 1,149 acres. 
A careful record of all receipts and expenditures was kept by the 
director of the forest, the late J. W. Toumey. These receipts and 
expenditures have been analyzed and are now available in published 
form (106). ‘This analysis is used, together with miscellaneous forest 
data, to find the value of the forest, to estimate the profitableness of 
the under taking, and to discover the influence that taxation has had 
on this profitableness (106, pp. 61-70). The important data may be 
summarized as follows: 
Valueas iol Decry Sle 9 SOM setae oi See ei ree eee ene ee $51, 088 
Total purchase price, dates between 1918 and 1930_________________ $39, 420 
Valuéiincrement; 1913-30: ache a Gide Sa ie CERNE ee $11, 668 
Netiincome before taxes; 1913-300 20s Sagls Eat ee eee eee $1, 896 
MAKES, LOLS SOE 5 Use WS I Sa) ae aR OS oe 0 al SO ek ee ae $6, 973 
iNet income-after: taxes,.1 913-30) (deficit) 22 ys 4 oe ee ee — $5, 077 
Net income after taxes plus value increment, 1913-30_____________-_- $6, 591 
Annual rate of net income plus value increment, 1913-30: 
Before; taxes lau th) sony! ok a eee see eet a dies Rarer percent __ 3. 0 
ACCT CARES oe 2. ce N er ge CN POU Ne RAL Gy heey Se a Man re ie dots 1.5 
Estimated future annual rate of net income, beginning with 1931 
Belore taxes 52 cs sole hip Se OUNe ee Bt emma eUe percent __ 4.8 
AT ber taxes 52600 Mirela oe tn on cee tc Aaa aes ge ee sa pe el doupes 3. 0 
Estimated future tax ratio, beginning with 1931_____________- doxs2e 37 
Currenttaxes, UGSQ shh 8 Si een RE RRR A Bs ac a $924 
True value tax TR GS LOS Oe oie ore al gr a na eS percent_-_ 1.8 
Assessed value, 193020 TE PR SRE as OAS $26, 900 
Assessmentiratio; 1M9S0M3 i says ie OP Lee tthe hey naa percent__ 53 
All of the above data, except the last two items, are obtained or 
may be computed from the reference cited. The assessed value item 
has been furnished separately by the Yale University School of 
Forestry. The assessment ratio item is computed from the assessed 
value and the true value items. 
The truly tremendous effect of taxes on rate of return is obvious 
from the data given. Were the forest entirely tax exempt, it would 
earn 4.8 percent on its present value; while under the present system 
it earns only 3 percent. Taxes absorb 37 percent of all prospective 
net income before taxes. The tax ratio would have been still higher 
were it not for the fact that the forest starts out, not from bare land, 
but from a going forestry business yielding current income. The Yale 
forest is thus transitional between the extreme deferred-yield (bare 
land) and the annual sustained-yield forest. 
CONSTRUCTIVE INCOME AND COST FACTORS 
In the absence of going forest enterprises with detailed records 
available for analysis from the taxation viewpoint, it is necessary to 
turn to theoretical examples. In dealing with such cases it is necessary 
in order to show the effect of taxation over a complete income cycle to 
assume that the value of the growing stock at any time equals the cost 
