G. PRINCIPLES OF FOREST ECONOMY. 



It is possible to carry on forest production, to grow and market forest products, without 

 making a special business of it. 



The farmer can manage his wood lot so as to produce and reproduce a valuable wood crop, 

 'applying all the art of silviculture without any special bookkeeping or other business organization. 

 If he performs his own labor and counts it nothing, and if he use his own wood crop in his buildings, 

 fences, or in his stove, or can sell it to his neighbors, and if he keep his wood lot on the rocky 

 part of his farm or where it serves as protection against damage from winds or waters, he can 

 make forest growing at least indirectly profitable without much effort. 



The case is different when we go into forest growing as a business for the market and for 

 revenue, for profit on an invested capital, and on expenditures. Then it becomes necessary to 

 adopt more systematic procedures, to organize, as in a large mercantile establishment, the business 

 in detail, to adopt proper methods of bookkeeping, to keep control of income and outgo, so as to 

 insure the profitable running of the business; and, as in all properly conducted business enter- 

 prises, the adequacy of the capital employed and of the margin realized must enter into 

 consideration. 



Besides the purely technical care of the productive forces to secure the best quantitative 

 and qualitative production of material — the highest u gross 77 yield— there must be exercised a 

 managerial care to secure the most favorable relations of expenditure and income, the highest 

 "net 77 yield, a surplus of money results without which the industry would appear purposeless, at 

 least from the standpoint of private enterprise and investment. 



Carried on by government activity for reasons of general cultural advantages, the "net yield 77 

 or money profits may be considered secondary, perhaps be dispensed with, and it may even appear 

 rational to carry on this industry like any other form of public works, at a loss. Nevertheless, 

 even in that case, it would be desirable to organize and systematically carry on the business, to 

 keep account, compare, and bring into relation the results with the efforts,- to measure the cost. 



The manner in which such systematic business organization and accounting is done must vary 

 according to the conditions and peculiarities of the industry, and hence it differs widely in the 

 different industries. Thus, although agriculture and forestry, both having to do with productions 

 of the soil, would appear of similar nature, yet the conditions of production vary so widely that 

 their methods and problems of management and of accounting must also differ considerably. 



In both these industries there is required a fixed and a working capital ; but while the 

 agriculturist has this outside of land and houses, in movable condition, or can in a short time — at 

 the end of each season — make most of it movable, the forest manager has his working capital 

 mostly bound up, immovable, represented in the growing timber, the accumulation of many years 7 

 growth, which may or may not be ready for harvest. 



The length of time with which forestry has to calculate in the creation of its products is an 

 element which introduces problems into the calculation of future yields, both gross and net, 

 unknown to most other industries and difficult to solve. A further difficulty, also peculiar to the 

 industry, is the fact that it can not be readily determined what part of the forest ought to be left 

 as working capital and what part should be harvested; there is no definite time, naturally 

 determined, when the harvest is ready, and the question as to which part of the growing timber 

 should be left standing for further accumulation of products to be harvested involves compli- 

 cated technical as well as financial and managerial considerations. 



Furthermore, there are difficulties arising from the manner in which forest growth develops, 

 in estimating or determining the accretions in quantity and value of the crop, and difficulties in 



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