FOREST TAXATION IN THE UNITED STATES 263 
These facts are instructive as bearing upon the relative importance 
of interest, taxes, and other carrying charges. 
While interest is generally a much more important carrying charge 
than taxes, there are cases here and there where taxes may exceed 
interest. It has been shown in an earlier part of this section (table 
87) that in 9 Minnesota townships, in 4 Wisconsin towns, and in 1 
town of New Hampshire, taxes are more than 3 percent of the esti- 
mated value of forests. In these cases taxes actually surpass interest 
at 3 percent. But these are all exceptional cases, and the forests 
located therein are principally cut over. Taxes probably are the most 
important factor leading to the cutting of those few remaining rem- 
nants of old-growth timber in these localities, but the amount of 
timber so affected by taxes is undoubtedly a very small percentage of 
the total stand of old-growth timber in the United States. The con- 
clusions drawn above from the Oregon and Washington data may be 
taken as fairly typical of the situation in the regions where old-growth 
timber is still important. Interest based on a very conservatively 
estimated value appears to be relatively about twice as important as 
taxes as a charge for carrying merchantable timber. Also it should 
be noted that only pure interest is considered in this calculation. 
Where part of the capital is borrowed, there is an additional carrying 
charge, also termed “‘interest”’ in ordinary business usage, which 
consists of the difference between pure interest at 3 percent and the 
actual payment on the borrowed capital at the usual rate of 6 to 8 
percent. 
It should be perfectly clear from the foregoing analysis that the 
factors which should govern the owner’s decision as to the time of 
cutting are all in the present and future, not in the past. Past costs, 
whether original purchase price, interest on the investment, taxes 
already paid, or any other costs, have nothing to do with the question. 
The owner should base his decision on present realizable value, future 
yield, and future interest, taxes, and other carrying charges. It cannot 
be too strongly emphasized that the decision to cut or to hold should 
not be at all affected by the amount of the original investment or by 
costs already incurred. Determination of the factors upon which the 
owner’s decision should be based requires the exercise of judgement. 
The present realizable value of the forest is a matter of appraisal. 
The realizable value at some future date and the intervening carry- 
ing charges are in the future. Their values must be estimated by 
judgment of the future; that is, by prophecy or speculative judgment 
in the broadest sense of that term. Above everything else the owner’s 
judgment will rest upon his prophecy as to future values of forest 
products. Next in importance comes estimation of the future carrying 
charges, among which interest generally occupies the predominant 
place with taxation ordinarily in second place. 
There can be no question of the validity of the principles thus 
developed. It is true nevertheless that there may in particular 
instances arise counteracting influences that will prevent the owner 
arriving at the decision that would normally be to his best interest. 
Taxation may sometimes force cutting which the owner would not 
otherwise find advisable, as the only possible source of money with 
which to pay the annual taxes. Of course, if the owner has no other 
resource, he must realize on part of his timber to pay his taxes, whether 
heavy or light, unless he is to be excused from annual taxes alto- 
