being 1 percent for each year that has expired from 

 date of classification for the first 12 years and there- 

 after 12% percent. 



Cut-over lands have been classified under this 

 legislation in only two eastern Oregon counties, 

 Deschutes and Klamath. From 1930 to 1939, in- 

 clusive, 208,269 acres were classified, of which 

 39,467 acres were later declassified and 51,497 

 acres acquired by the Federal Government were 

 withdrawn, leaving a net total of 117,305 as of 1939. 

 This and approximately 13,000 acres classified in 

 Klickitat County, Wash., in 1932 constitute the 

 entire area classified in both States. 



The most urgently needed action towards more 

 equitable forest taxation includes: (1) More ac- 

 curate assessment of forest properties, placing in- 

 creased emphasis on their income possibilities and 

 their treatment in natural operating units; (2) revi- 

 sion of local government organization and operation 

 to fit the needs of scattered rural populations in 

 areas predominantly forest; and (3) enactment and 

 effective administration of a special forest tax law 

 which would equalize the tax burden on deferred- 

 income forest properties with that imposed on prop- 

 erties yielding a regular annual income. The last 

 is urgently needed because of the preponderance of 

 virgin forests not covered by laws mentioned in the 

 preceding paragraph. 



Solution of the forest tax problem must come as a 

 part of a general reform in local government and 

 taxation, but adoption of one of the three forest tax- 

 ation plans developed in the Forest Service publica- 

 tions already cited (6, 7) would produce substantial 

 benefits. 



The problem, being chiefly concerned with the 

 property tax, is primarily a State responsibility, but 

 its solution vitally affects the economic status of 

 forestry on privately-owned land and therefore is of 

 national concern. 



Financing Long-Time Enterprises 



The liquidation method of exploiting forest re- 

 sources is encouraged and in some cases forced by 

 private banking policies which demand rapid 

 repayment of credit advances. Private forestry 

 needs an available supply of long-term credit at 

 low interest rates. Conversion of a private opera- 

 tion from liquidation management to sustained- 

 yield management often means that not only 



must the present financial structure based on short- 

 term liquidation financing be replaced by a stable 

 financial structure, but also additional properties 

 may have to be acquired to build up growing- 

 stocks and consolidate holdings, and logging and 

 milling facilities must be modernized or shaped to 

 fit the new management policy. 



Forestry is the only major use of land for which 

 adequate credit facilities are not available. Farm- 

 ing and stock raising, the major uses of land unoc- 

 cupied by forests, are more generously provided 

 with credit facilities chiefly because of action by 

 the Federal Government. The Farm Credit 

 Administration, the Home Owners Loan Corpora- 

 tion, the Federal Housing Administration, and the 

 Reconstruction Finance Corporation provide credit 

 for all forms of rural and urban land use except 

 forestry. Private credit quite reasonably is not 

 available at rates and terms that will encourage 

 conservative forest management. The public con- 

 cern in this objective is great enough to justify 

 making Federal credit available at low interest 

 rates, as with other objectives deemed in the 

 public interest. 



Insurance for Standing Timber 



The fear of disastrous loss of capital investment 

 through destruction of timber by fire and insect 

 epidemics is a real obstacle to private forestry and 

 encourages rapid liquidation. Insurance against 

 this loss at reasonable premium rates would effec- 

 tively remove this obstacle. In a study of the 

 feasibility of commercial fire insurance in the 

 Pacific Northwest recently published (16), com- 

 mercial fire insurance at rates within the reach of 

 the private operator is judged feasible under cer- 

 tain reasonable conditions. Establishment of favor- 

 able conditions rests upon at least the partial solu- 

 tion of the other economic and physical problems 

 discussed here. No systematic studies have been 

 made of the feasibility of insect epidemic insurance, 

 but the need for it is as urgent as forest-fire insur- 

 ance or more so. 



The threat of major fire catastrophes such as the 

 Tillamook Fire of 1933 in the Douglas-fir region 

 probably accounts for the reluctance of insurance 

 companies to enter this field actively. In order 

 to break the deadlock that exists, participation by 

 the Federal Government may be necessary. 



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