McNary Act to include nonfarm owners, who ac- 
count for more than half of the private acreage, 
and by accelerating the Federal aid. 
4. A federally sponsored forest credit system 
should be established to make long-term loans on 
terms and conditions suitable for forestry purposes. 
Such credit should be adapted to the needs of pri- 
vate forest operators and made contingent upon 
sound forest practices. 
Forestry is the only major form of land use for 
which suitable credit facilities are not available. 
Although currently the demand for forest credit 
seems rather limited, the Forest Service believes 
that in the long run a system of forest credit adapted 
to the long-term nature of forestry would be an 
important aid to forest conservation. Such forest 
credit is needed, for example, to enable owners to 
consolidate holdings for more efhcient management 
and protection; to facilitate stand improvement; 
to provide forest administrative, protection, and 
utilization facilities under sustained-yield manage- 
ment; to enable owners of young timber to pay 
carrying costs and thus prevent sacrifice of immature 
or economically unripe timber; and to refund un- 
duly burdensome loans. 
Most loans from private sources have been for 
fairly short terms and predicated on the liquidation 
of timber without regard to forestry considerations. 
By contrast, the capital required for the forestry 
purposes outlined above should be made available 
at relatively low cost and for sufficient periods to 
enable repayment in part from deferred timber 
yields. Only by Federal action can a forest credit 
system be established that will meet these require- 
ments. 
Such a system of forest credit should be estab- 
lished within the farm credit system through a 
forest credit bank or other arrangement to assure 
needed autonomy and responsibility for this field 
of credit. New legislation is needed to facilitate 
this measure. 
Further study should be given to the practi- 
cability of a system of more liberal credit in con- 
nection with the rehabilitation of small, badly 
run-down properties which require considerable 
capital expenditure with long deferment of income. 
5. Provision should be made for a federally spon- 
sored insurance system to reduce the risks inherent 
in forestry enterprises. Insurance agreements 
should require that insured property be managed 
under good forestry principles. 
Losses from fire and other destructive agents ac- 
celerate timber liquidation and discourage the 
flow of capital into permanent forestry enterprises. 
To minimize the risks of such losses, low-cost forest 
insurance is needed. It is also needed in conjunc- 
tion with the proposed system of forest credit be- 
cause the hazard of loss, particularly by fire, is one 
of the most important factors which may prevent 
borrowers from meeting loan commitments. 
Forest fire insurance at practicable rates is not 
available through the commercial insurance com- 
panies. Studies by the Forest Service have indi- 
cated the feasibility of commercial insurance, but 
after several years private companies have not de- 
veloped the business. The need for very broad 
coverage, the nature of the risks, and uncertainty 
regarding suitable rates are doubtless partly ac- 
countable. It seems clear that Federal sponsorship 
of forest insurance is needed if it is to be made 
available within a reasonable time. Final determi- 
nation of the best Federal arrangement for pro- 
viding forest insurance needs further study. 
6. Forest-cooperative associations should be en- 
couraged as a means of strengthening forest enter- 
prise and achieving good forest management, 
particularly on small holdings. 
The value of cooperative associations for mark- 
eting and processing farm products has been amply 
demonstrated. ‘This economic device should also 
be of benefit to farmers and other small owners in 
their forestry activities. In many situations col- 
lective action may not need to go beyond the 
marketing of the timber, and the large farm pur- 
chasing cooperatives might logically extend their 
activities into this field. But under certain condi- 
tions the opportunity for good forestry could be 
enhanced if the cooperatives also owned and oper- 
ated processing plants. 
Until forest cooperatives become more widely 
established, Federal leadership, with State coopera- 
tion, will be needed to make organization studies 
and demonstrations; to provide technical advice in 
business management, manufacture, and market- 
ing; to promote sound forest management; and to 
furnish loans on favorable terms. 
More attention might well be given through the 
existing facilities to the development of the most 
promising types of forest cooperatives. In addi- 
tion, the Secretary of Agriculture might well be 
authorized to stimulate and assist through their 
formative years a limited number of experimental 
associations of the processing type by new legisla- 
tion which would provide: (a) Liberal low-cost 
8 Miscellaneous Publication 668, U. S. Department of Agriculture 
