This arrangement makes it possible to secure large tracts of National Forest timber at a very slight initial outlay and to hold them with almost no interest charges. The other usual carrying charges, namely, taxes and fire protection, are eliminated. The timber is protected from fire by the United States throughout the life of the contract. The money deposited to secure cutting in advance of the execution of the contract may be credited towards the amount to accompany the bid.
Stumpage Rates. The minimum stumpage rates applicable in each proposed sale are determined by a careful study of the conditions in the particular case. Stumpage rates are the actual market value of the timber. They are based upon the quality of the timber and the character of its commercial products; the estimated cost of logging, transportation, and manufacture; the investment required on the part of the operator; the selling value of the product; and a fair profit to the purchaser. The estimated profit depends upon the size and the permanency of the operation and the degree of risk involved. The cost of brush disposal, protection of young growth, logging only marked timber and other requirements of the Forest Service is fully considered in appraising stumpage rates.
Timber is ordinarily appraised at the rates indicated for the most valuable products to which it is suited and for which an established market exists. Merchantable dead timber is appraised at the same rate as green timber of the same species unless it is clearly shown that the products manufactured from it command a lower market price or that logging costs are higher.
Cutting Period. Ordinarily the cutting period allowed in each sale is only sufficient to permit the removal of the timber at a reasonable rate, approximately equivalent to the working capacity of the plant. Sales of accessible timber usually do not exceed 5 years in length. However, in the case of inaccessible tracts requiring a large investment for transportation facilities an exception is made and periods of from 15 to 20 years may be granted.
Readjustment of Stumpage Rates. In all sales exceeding 5 years in length provision is made to have the stumpage rates readjusted by the Forester at the end of three or five year intervals to meet changing market and manufacturing conditions.
Figure 68. An excellent illustration showing the difference between unrestricted logging as practised by lumbermen, and conservative logging as practised by the Forest Service. In the foreground is the unrestricted logging which strips the soil of every stick of timber both large and small; in the background is the Forest Service logging area which preserves the young growth to insure a future supply of timber for the West. Bitterroot National Forest, Montana.
Refunds. Deposits to cover or secure advance cutting or to accompany bids apply on the first payment if a sale is awarded to the depositor; otherwise they will be refunded. Refunds are also made to the purchaser if the last payment is in excess of the value of the timber that is cut.