PRACTICAL FORESTRY IN THE PACIFIC NORTHWEST PROTECTING EXISTING FORESTS AND GROWING NEW ONES, FROM THE STANDPOINT OF THE PUBLIC AND THAT OF THE LUMBERMAN, WITH AN OUTLINE OF TECHNICAL METHODS TEXT

Service of practically pure fir on about 400 areas in thirty-five different age stands from 10 to 140 years old, ranging along the western Cascade foothills from the Canadian line to central Oregon. Since reforestation investment is likely to be confined mainly to the more promising opportunities, only such growth was measured as gave an average representation of the better class of the two should all the general territory covered be graded in two quality classes of all around ability to produce forests. On the other hand, care was taken not to represent the maximum of the better class, data being taken only from permanent forest land and not from rich potential agricultural land which might show unfairly rapid forest growth. The average areas were actually measured and the number, age, form, diameter growth, height growth, board foot contents, etc., of all the trees on them were accurately determined. Trees 12 inches in diameter 4-1/2 feet from the ground were considered merchantable, and it was assumed they could be used to 8 inches in the top. From this data were prepared tables and diagrams showing the average development of trees and stands under fairly favorable conditions in the region west of the Cascades. This gave the following yield per acre: Age of Stand. Feet, B. M. Age of Stand. Feet, B. M. 40 12,400 90 70,200 50 28,000 100 79,800 60 41,000 110 90,300 70 51,700 120 101,500 80 61,100 130 113,000 Let us see how these figures can be used in answering the primary question of the prospective timber-grower: "Will it pay to hold my cut-over land for a second crop?" Obviously no certain answer can be printed here, not only because no uniform stumpage prices or carrying charges can be predicted but also because individuals may differ as to what profit is necessary to make the investment "pay," so it will be necessary to analyze the situation so each may select the premises which suit his own case and judgment. The investment made by the holder of cut-over land is of two kinds; that represented by the land which otherwise he might sell, putting the proceeds at work in some other business, and the annual carrying charges which otherwise he might also invest differently. The sum obtainable by investing the money available by sale after logging, adding to it yearly the sum required for fire prevention and taxes, and compounding both at a satisfactory interest for the entire period, is practically the cost of holding the tract for any given number of years. By calculating this cost upon a basis of one acre, and dividing it by the yield board measure which the same period will produce, the cost per thousand feet of growing a second crop is arrived at. Against this may be set the gross return from the same expected yield at any given stumpage rate. The yield at the end of a 50-year investment will not be that of a 50-year forest, however, for although the carrying cost begins at once, the new forest requires a few years to become established. No exact figure can be set for this, for some seed will sprout the first year and some blank spaces may persist several years, but in the tables to follow five years has been allowed for an average. Consequently, instead of calculating on a 28 M yield as the return at the end of 50 years, as indicated in the yield table on the preceding page, the 45-year yield of 20-1/2 M is used, and similarly for the other periods of 60, 70 and 80 years. These four rotations only will be considered here, for in less than 50 years second growth will probably be too small to be cut at the highest profit, while after 80 years the investment compounds so heavily as to make it improbable that increasing stumpage values will compensate. Three interest rates have been used in the first table to follow: 4, 5 and 6 per cent, compound. Forest calculations at lower rates are often seen, but it is not believed that less than 5 per cent will be satisfactory to private owners and many will insist on 6 per cent. The fair standard is what the owner can make in other business today, and since he can reinvest his income in the same business, it is reasonable to figure at a compound rate. A few examples are given to show how similar calculations may be made with any set of investment and stumpage factors which appeal to individual judgment. The second table, prepared from the first, shows at a glance the price that must be received for Douglas fir to make it pay either 5 or 6 per cent compound interest under a range of sixty different conditions of original investment and annual cost. It should be borne in mind that, although present land value is made a charge, the value of the land at the time of harvest is not considered. This value is certain to increase greatly in the long periods involved. Taxation charges will be against it as well as against the timber. Indeed much land is now held without any regard to possible second growth. It should be assumed therefore that any profit in forest investment shown will be _increased_ by the sum obtainable for the land at the end of the same period. Cost per M of growing Cost per M of growing Douglas fir resulting Douglas fir resulting from every $1 per acre from every 1 cent per acre originally invested. of annual carrying charge. --------At the end of--------- --------At the end of--------- 50 60 70 80 50 60 70 80 Years. Years. Years. Years. Years. Years. Years. Years. At 4% $ .35 $ .30 $ .33 $ .41 $ .074 $ .068 $ .078 $ .098 At 5% .56 .53 .65 .88 .102 .101 .126 .172 At 6% .90 .94 1.27 1.87 .142 .152 .208 .309 Example 1: With land worth $2.50 an acre at present, and an estimated carrying charge of 3 cents a year for protection and 20 cents per taxes, what stumpage price for a 50-year crop will pay 5 per cent compound interest? 6 per cent? 5% 6% 2-1/2 X .56 = $1.40 2-1/2 X .90 = $2.25 23 X .102 = 2.35 23 X .142 = 3.27 ----- ----- $3.75 $5.52 Example 2: With land worth $5 an acre at present, and stumpage estimated to reach $7.00 in 60 years, what is the maximum annual carrying charge per acre which can be paid during this period and permit a 5 per cent return? A 6 per cent return? 5% 6% Gross return = $7.00 Gross return = $7.00 5 X .53 = 2.65 5 X .94 = 4.70 ----- ----- $4.35/.101 = 43c $2.30/.152 = 15c Example 3: Assuming that stumpage will be worth $6.00 in 50 years, and that public enlightenment will keep the annual fire and tax charge from exceeding 20 cents, what price obtainable for cut-over land today, made to earn 5 per cent compound interest in some other business, is as profitable as keeping the land for a second crop? If other business would earn 6 per cent? 5% 6% Gross return = $6.00 Gross return = $6.00 20 X .102 = 2.04 20 X .142 = 2.84 ----- ----- $3.06/.56 = $7.07 $3.16/.90 = $3.51 FUTURE STUMPAGE PRICES NECESSARY TO MAKE DOUGLAS FIR SECOND CROP PAY EITHER 5 OR 6% COMPOUND INTEREST ON INVESTMENT. Maximum Original Investment $7.50 an Acre. Maximum Annual Carrying Charge 30c an Acre. ------------Cost per M Feet----------- Taxes and 50 year 60 year 70 year 80 year Original protection rotation rotation rotation rotation investment paid yearly (20.5 M (35 M. (46.6 M (56.5 M per acre. per acre. per A.) per A.) per A.) per A.) (cents) - - 10 $2.40 $2.35 $2.90 $3.90 | | 15 2.95 2.85 3.50 4.80 | $2.50 < 20 3.45 3.35 4.15 5.65 | | 25 3.95 3.85 4.75 6.50 | - 30 4.45 4.35 5.40 7.35 | | - 10 3.80 3.65 4.50 6.10 5% | | 15 4.35 4.20 5.15 6.95 Compound < 5.00 < 20 4.85 4.70 5.75 7.80 Interest | | 25 5.35 5.20 6.40 8.70 | - 30 5.85 5.70 7.05 9.55 | | - 10 5.20 5.00 6.15 8.30 | | 15 5.75 5.50 6.75 9.20 | 7.50 < 20 6.25 6.00 7.40 10.05 | | 25 6.75 6.50 8.00 10.00 - - 30 7.25 7.00 8.65 11.75 - - 10 3.65 3.85 5.25 7.75 | | 15 4.40 4.65 6.30 9.30 | 2.50 < 20 5.10 5.40 7.35 10.85 | | 25 5.80 6.15 8.35 12.35 | - 30 6.50 6.90 9.40 13.90 | | - 10 5.90 6.20 8.45 12.45 6% | | 15 6.65 7.80 9.45 14.00 Compound < 5.00 < 20 7.35 7.75 10.50 15.50 Interest | | 25 8.05 8.50 11.55 17.05 | - 30 8.75 9.25 12.60 18.60 | | - 10 8.15 8.55 11.60 17.10 | | 15 8.90 9.35 12.65 18.65 | 7.50 < 20 9.60 10.10 13.70 20.20 | | 25 10.30 10.85 14.70 21.75 - - 30 11.00 11.60 15.75 23.30 These tables bring out a number of very interesting primary facts: 1. The rate of interest demanded of the investment is one of the most important factors. This is because such long terms are involved. The charges compound with prodigious rapidity toward the last. In any other business paying 6 per cent, compound, the maximum investment per acre given in the preceding table, that of a land value of $7.50 and a 30-cent annual charge for 80 years, would earn $1,317. A 75-year forest then harvestable should have 56-1/2 M to the acre, but this would have to bring over $25 per M to pay as well. On the other hand, the same deposits earning 4 per cent would only amount to $338 in the same period which would be equaled by timber at $6 per M. 2. For similar reasons, the length of time before cutting has much to do with profit or loss. The compounding of carrying charges eventually outstrips the production of material to a degree which can be offset only by the most rapid rise of stumpage values. 3. The greater the investment, the more marked the above effect and consequently the tendency to market an inferior product. A 60-year rotation is indicated by a majority of the conditions shown. 4. A comparatively slight increase in annual tax or fire charges may make the difference between profit and loss. Roughly, stumpage must bring $1 per M more to compensate for each 10 cents an acre for taxes at 5 per cent or for 7 cents at 6 per cent. 5. If the land is salable for $5 an acre or more it cannot be made to pay 6 per cent compound interest under the most favorable conditions, unless the stumpage received exceeds $6. At $5 stumpage and with reasonable taxation it will pay 5 per cent if it escapes fire. 6. Thirty cents an acre is apparently about the maximum annual carrying charge which will permit a 6 per cent profit, even with very high stumpage prices. Consequently, while present taxes on cut-over land are seldom prohibitive, there must be reasonable certainty that excessive increase will not occur. The carrying charges shown in the second table cover both fire protection and taxes, as by reading the 15-cent line to include a 10-cent tax and a 5-cent fire patrol. The investment charge may be used to represent sale value only, or sale value plus any expense incurred at time of logging in order to secure reproduction, such as leaving salable material in seed trees, or planting. If desired, any owner may make a similar calculation on any other valuation better fitting his own situation. The table is not intended for universal use but merely as an illustration of how forest calculations may be made. WHITE PINE Too much space would be required to give a similar table for all western species, even were as good yield figures available. Roughly speaking, however, western white pine, under conditions thoroughly favorable to it, may be expected to make as good a yield as Douglas fir, and the above fir table will not be far off for it. A probably higher stumpage value should offset any lesser production. HEMLOCK Western hemlock is of somewhat, but not much, slower growth when coming in on open land as an even-aged stand. No yield table based on the same merchantable standards as the fir table quoted has been prepared, but the following is fairly safe to include all trees 14 inches in diameter used to 12 inches in the top: At 50 years, 2 M per acre; at 60 years, 22 M; at 70 years, 33 M; at 80 years, 40 M. The absence of a 40-year figure, and the sudden jump between 50 and 60 years, is because very few hemlock trees reach 14 inches at 50 years, but a large number of 12 and 13-inch trees pass into that class during the ten years following. Any yield figures for an even-aged forest show a similar jump at the point where the stand as a whole reaches the determined minimum merchantable size. For the same reason these hemlock figures are not very far less promising than those given for fir, for at corresponding ages the latter include 12 and 13-inch trees and all trees are considered merchantable to a top diameter of 8 inches. SPRUCE Since no systematic study of Sitka spruce second growth has been made, it can only be predicted from knowledge of its habits that while in favorable situation it will yield as heavily as Douglas fir, in other localities its growth in early life is slower and less regular, making it less likely to produce a good crop before the carrying charges become burdensome. If this proves true, taxation rates and land values will be extremely important factors, offset to some degree by a smaller fire hazard and the probability of high stumpage. REDWOOD For redwood we also lack good figures for any considerable range of conditions and ages, for redwood growth which followed burns does not exist and there are no very old cuttings. Government studies on the northern California coast prove conclusively, however, that this is our most rapid growing native commercial tree. In thirty years, in fair soil, it will produce a tree of 16 inches diameter, 80 feet high, and some existing 45-year stands run 20 to 30 inches on the stump and about 100 feet high. Reckoning 14-inch trees as merchantable, to be used to 10 inches in the tops, a 25 to 30-year second growth after logging near Crescent City was found to have 2-1/2 M feet to the acre and the future increase should be very rapid. There is little question of the profit of growing redwood, provided the difficulties described elsewhere of getting a dense crop started are overcome. PROFITABLE THINNINGS In addition to the yield of saw timber to be expected when the second crop reaches manufacturing size, there will be a market in many cases for material obtained by thinning. It is perfectly fair to compound for the remainder of the rotation any net profit so obtained and to set it against the carrying charges. In many cases it will go far to turn an apparently losing investment into a very profitable one. Moreover, the proper thinning of growing stands not only utilizes material which would otherwise die and be lost before the main harvest, but actually improves the quality of the first yield. In obtaining the figures previously quoted the Forest Service found that the average Douglas fir stand at 40 years contains 410 living trees, most of them between 6 and 15 inches in diameter. At 60 years there are but 265 trees, 145 having died and decayed in the 20-year interval which were suitable for ties or other small timber products. The remaining trees would have been improved by thinning to prevent this loss, for the greatest diameter growth is made when the stand is open, and the ideal is to have just the density which will get the greatest wood production and still result in proper pruning and clearing of the trees. Commenting along this line Mr. T. T. Munger, who conducted the investigation, says: "That thinnings are silviculturally practicable and financially profitable in the Pacific Northwest has been demonstrated. In the vicinity of Cottage Grove, Oregon, many fully stocked even-aged Douglas fir stands now about 50 years old, most of them forming a part of ranches. Many of these stands have been cut over in the last 10 years and all the material then large enough for piling or mine timber cut out. This removed about 20 per cent of the stand. At the present time many of these same stands now contain much material valuable for small piles, ties and mine timber, yet the crown canopy is as dense and the trees as close and fine quality as though no cutting had ever been done in the stand. In fact, some of the 50-year old stands have already been cut over a second time, and each time with decided profit to the owner and no damage to the forest. From one 10-acre block of second growth now 50 years old, situated 7 miles from the railroad, already 32,000 feet of mining timber and about 100 50-foot piles have been taken out, yet the stand is now in good condition, and in a few years more of the smaller trees can be removed without infringing on the yield of the final crop. The material from these thinnings was worth at the railroad about $80 per acre." CONCLUSIONS Throughout the preceding pages on the financial promise of timber-growing in the West, the attempt has been not to give conclusions but to state certain known facts regarding tree growth and indicate how these may be used in arriving at conclusions based largely upon the conditions and judgment of the individual owner. In many cases they will do little more than suggest further investigation necessary. The Western Forestry & Conservation Association and, doubtless, the District Foresters for the Forest Service, will be glad to discuss such work and assist if possible. There are, however, several conservative deductions to be made: 1. The Pacific coast states contain large areas having species and climatic conditions peculiarly favorable for forest-growing as a business. The rapidity and quantity of yield insure profit under conditions which would be prohibitive elsewhere. 2. In many cases, perhaps in most, a second crop can be started with little initial expense. 3. There is much land of no value for any other purpose. 4. Even if the owner does not care to hold his land long enough for another crop, or if he is prevented from doing so at some future time by excessive taxation or other prohibition, its disposal value will be greater if it bears young forest growth than if it does not. 5. Stumpage values are certain to advance greatly and their advance will be governed largely by these factors: