The valuation of American timberlands

Preface

This book is intended to supply certain information needed by the investor, timber cruiser and student of forestry. In other words, it aims to give for the continental United States and its outlying territories the principal facts regarding the timber resources. Hawaii has been omitted because its timber is useful mainly for its protective value and cutting in the commercial sense is only possible on a very limited scale. Likewise, the Canal Zone is not attractive to either the sawmill man or timberland investor by reason of the restricted area of American territory.

The investor will find data which will not only enable him to form a notion of what the examination of a tract should cost but he should also get the salient features of the general type of which his particular holdings are but a small part. This work tries to give those basic facts upon which a superstructure of detailed knowledge concerning a particular tract may safely be erected.

To the estimator or timber cruiser, likewise, it cannot take the place of first-hand observation as far as the appraisal of any given area is concerned. It should, however, show him what to look for and help him to keep that sense of proportion without which his reports may easily give a wholly wrong impression.

For the student of forestry it should fill an additional purpose. Few attempts have previously been made to gather together in one volume descriptions of the forest types of the United States. We have simply had detailed studies of isolated regions. With these latter as a basis, however, an attempt is here made to evaluate American forest conditions and compare the forest types with each other. This leads inevitably to the application of the principles which the student has learned in his courses in protection, silviculture, utiHzation and management. In other words, it is hoped he may here acquire some of the local color necessary to give vividness to the framework of fundamentals he has convi PREFACE

structcd in the classroom. The book was written to serve as supplementary reading in this way.

A forest type as here used is an area which has essentially the same chmatic, topographic, and soil conditions, and hence tends in the long run to have the same composition. A subtype is a subdivision of a forest type in which the composition is uniform.

A word of explanation seems necessary in regard to prices now that the War has so radically disturbed all our preconceptions of market values. Obviously it is impossible to keep such a work as this absolutely up to date. Care has, however, been taken to give dates for all prices cited as that proper allowance may be made. In general it may be said that the prices of 1920 are roughly double those of 191 5. Furthermore, wherever possible, costs are expressed in terms of man and horse hours as well as dollars.

Acknowledgment is, of course, due the Forest Service for its courtesy in allowing the free use of its large store of data.

Table Of Contents

Page

I. Northern Spruce Type i

II. Northern Hardwood Type i6

Chapter I Northern Spruce Type

General Conditions. — To this type of timberland belong the North Woods of Maine, the upper slopes of the White Mountains, the higher Green Mountains, the summits of the Adirondack and Catskill Mountains, and the northern swampy parts of Michigan, Wisconsin and Minnesota. Furthermore, a slender string of isolated spruce-clad peaks extends southward along the backbone of the Appalachian range and consequently some spruce is found in Pennsylvania, West Virginia, Virginia, North Carolina and Tennessee. The distribution of the type is shown graphically on the accompanying map.

Thruout its range spruce is most abundant in a cool, moist climate with long winters and heavy precipitation. Seldom is the growing season more than four months long and the annual precipitation must be at least 40 inches or supplemented by slow drainage. This means that there is an abundance of moisture available for tree growth because the long winters inhibit runoff and the cool summers are unfavorable to rapid evaporation.

These climatic conditions only occur on the steeper upper slopes of mountains and in flat swamp land. On both sites the soil is shallow but the spruce is well able to make the most of the scant foothold with its flat, widely extended root system. Likewise its common associates are trees of similar habit like the balsam, paper birch and yellow birch. However, by reason of its greater adaptability to such untoward conditions, spruce tends to crowd out its competitors and form nearly pure stands if given time enough. Hence the subtypes are generally transition types caused by fire or cutting. The more imporant of these and their composition by volume and number are:

NORTHERN SPRUCE TYPE COMPOSITION OF SUBTYPES — SPRUCE TYPE

Virgin subtype

Cutover subtype

Burn subtype

Number

Volume

Number

Number

30 10

Per cent 80 10 10

15 40

Balsam

Paper Birch. . . .

ICX3

The virgin subtype varies considerably in composition with the altitude. At the upper edge of merchantable growth there is a large admixture of balsam, while at the lower edge where it merges into the hardwood type yellow birch and paper birch are the important associate species. The composition percentages given above are most representative of conditions in the middle of the altitudinal range of the type. There spruce is the dominant species, numerically and in volume, while balsam, paper birch and yellow birch are merely unimportant associates. An average stand is loM feet B. M. per acre although stands of 20 or 30M are not uncommon. In the virgin subtype little damage is the rule, not because there are no serious enemies but for the reason that fire, insects and wind may wipe the subt3rpe out, but they seldom affect it in a moderate degree. It is a case of total immunity or complete destruction. When the subtype is dry enough to burn the fire usually kills the young trees, jumps to the crowns of the older timber, and also eats up the shallow layer of soil. In the same way wind makes wide swaths or throws over the timber on entire mountain slopes if it once gets a leverage on a stand of spruce. Likewise, the great insect enemy of this species, the spruce beetle {Dendroctonus piceaperda) is a believer in no halfway measures. Working in large colonies it systematically kills all the timber that comes in its way. Fortunately little fungus damage occurs in this subtype.

The culled, cutover and burned subtypes are the result of various degrees of lumbering and neglect on the virgin subtype. The culled stands are few for two reasons. In the first place even the early logging was comparatively clean because where it paid to cut the spruce on the upper slopes at all it was worth while taking nearly all the stand because it was of uniform size. The most recent logging has, of course, been clean because the demand for pulpwood furnished a market for all material down to a top diameter of four inches inside the bark. Furthermore in cases where culling has been attempted in the virgin spruce subtype much blowdown has invariably resulted and the final outcome been identical with clean cutting.

The cutover subtype is then the most common where the logger has reached the spruce type. Even the paper birch has often been cut in order that the spruce and balsam might be rolled down over it. As a result this subtype is usually completely stripped of its standing trees. What cannot be marketed is left to rot on the ground. Fortunately, however, tree growth quickly reestablishes itself if fire is kept out. First, pin cherry and paper birch take possession of the ground and then spruce and balsam come up under their shade. If given time enough the two latter species distance the two first-named short-lived trees and the stand becomes nearly pure softwood. Furthermore, competition between the spruce and balsam is commonly more favorable to the former because of its greater persistence. The balsam is very subject to heart rot — Polyporus schweinitzii — and it is rare that a tree over 15 inches in diameter survives.

The restocking of the burned subtype is not rapid since fire is peculiarly destructive in the spruce type. Usually the weather is too cool and moist to permit fires to start but in droughts the thick layer of humus becomes very inflammable. Especially is this the case where logging has opened up the stand and left debris. Some of the most destructive fires in the unusually lurid forest-fire history of the American continent have been in the spruce type. Such fires are combined top fires and ground fires. Everything is consumed and only the bare rocks are left. Examples of the results of such fires are furnished by the bald summits of Monadnock, Chocorua and Baldface in the White

Mountains and the recently cutover and burnt slopes of Mt. Mitchell in North Carolina.

OPTIMUM GROWTH IN loo YEARS

Balsam. . . .

Paper birch.

Inches lO II

Feet 70 83

Density

Trees 415

Yield per acre

Board feet 7400

This table shows the optimum diameter and height growth for the important species in this type on a rotation of 100 years. The density and yield per acre are also given. From these it is evident that the short growing season is not favorable to rapid diameter and height growth and that the stands per acre are only heavy by reason of the great density of the trees. There is a marked difference between the northern spruce and southern Appalachian spruce. The latter grows faster in diameter and height but the trees do not stand so close together. Generally speaking the most profitable rotation for this type is at least 125 years.

Timber Valuation. — There are several factors which make estimating in the spruce type comparatively easy. The tracts are usually large so that boundary difficulties are not serious. Furthermore, the stands are uniform, the species few and damage slight. On the other hand the tracts are usually inaccessible so that the cost of subsisting an estimating party is high. Supplies frequently have to be brought in on men's backs because horses cannot be used off the roads. Even these are in many cases impracticable for hauUng except when covered with snow. Another obstacle to cheap work is the roughness of the mountain slopes upon which the spruce grows and the density of the undergrowth. As a consequence an average day's work in this type is 24 strip acres — i chain (66 feet) wide and 240 chains long. However, only a small percentage of the tract need be actually covered in this way. Only on very small tracts is more than a lo per cent estimate necessary. Ordinarily 5 to lo per cent is sufficient because the tracts are large — over 500 acres — and the subtypes uniform in composition and density.

On account of the lack of roads and trails it is frequently difficult to lind a suitable place for a base line from which to run the estimating strips. Usually, however, roads or trails are better than survey lines because they are easier to travel. When selected the base line should be surveyed and stakes set at equidistant points, measured in a cardinal direction and not along the base line. In fact the distance along the trail used may be several times that in a cardinal direction on account of the twists the trail makes to avoid rough going. From the stakes on the base Une the estimate strips should be run across the valleys, preferably in a cardinal direction. The object in running them across the valleys is to avoid an overestimate by getting an undue proportion of the better timber in the valley bottoms. By using a cardinal direction possible compass errors are avoided because it is much easier to keep the Hne straight when a cardinal direction is used than when the lines are run at an angle less than 90 degrees.

This strip method of estimating is, of course, not the only way to determine the contents of a stand. It is, however, generally considered the best and its costs may fairly be considered standard. Obviously an experienced local estimator does not need to traverse a tract as carefully as one unfamiliar with the local conditions. He relies on his judgment more because he has had an opportunity to check it by the results of local logging. But his fees are based on the cost of a strip survey.

For spruce and balsam pulpwood is the use to which the smallest timber can be put so that the minimum merchantable limits for these species are determined by the sizes which the pulp mills will take. The present minimum standard is a stick four feet long and at least four inches in diameter at the top end. Since at least two such sticks must be obtained from a tree to pay for felHng, trees less than six inches in diameter breast-high are considered unmerchantable. For sawtimber alone the limits are higher. At least six inches in the top and 10 inches breast-high are the usual requirements. Suitable tables giving the volume either in cubic feet or board feet will be found in Hawley and Hawes' "Manual of Forestry," John Wiley and Sons, Inc., New York City. Only tables based on diameter breast-high and total or used lengths should be employed because there is great variation in the height of both spruce and balsam according to the depth of the soil.

For the other important species in this type, paper birch, yellow birch, beech and sugar maple, volume tables will also be found in the Manual of Forestry. With them total height is an unreliable factor and only usable length is a safe indication of their merchantability. This may be estimated in either i6 feet log lengths or in units of lo feet according to the volum'' table and the way in which it is worked up.

The cost of estimating spruce tracts is determined first of all by the percentage of the stand estimated. As explained above this need seldom be more than lo per cent on account of the uniformity of the stands. The second factor, roughness of topography, cuts down the area possible for a crew to cover in a day. However, 24 strip acres is a reasonable average day's work. Hence the work ought not to cost more than 15 cents an acre and can frequently be done for half that figure. This should include the preparation of a report showing the amount, quality and value of the timber, the way in which it can be logged and a contour map of the tract,

Stumpage Prices. — Stumpage prices tend to approach the difference between the cost of logging and manufacture and the average sale value of the lumber. Fluctuations in these factors are not, however, reflected at once in the stumpage prices. They are inclined to drag behind the increases in lumber prices and be unaffected by declines. This is well brought out by the following figures from Compton's ''Organization of the Lumber Industry":

Average Stumpage Values for Spruce

PerM

1890 $1 74

1899 2.26

1904 370

1907 .';.49

Hence, for the calculation of future prices such figures can only be used as a check and guide. The costs of the different steps in logging and manufacturing must be known for each tract and the sum of these plus a margin of safety deducted from the average sale value. This requires a knowledge of the methods of lumbering and sawmilling and makes necessary their description in some detail.

On account of the inaccessibility of the spruce stands logging jobs are almost invariably carried on by large camps located close to the place of cutting and only connected with the outside world by a slender thread, the rough tote road. Spruce stands are usually in mountainous regions where farms cannot be hewn out of the wilderness. Consequently their logging is no job for the farmer's spare time. If he does it at all he must go back into the mountains, build a camp and stay with the job with single-hearted devotion. As a matter of fact the typical operation is a large one in which the camps house 30 to 60 men and such a one will be described to give a notion of the methods employed.

The first step is the estimate of the watershed or valleys to be logged and the accumulation of sufiicient topographic data to determine where the main roads must go, whether driving can be employed and the approximate cost of logging. This information should be secured by the estimators. The figures given above for the cost of estimating contemplate a report which should cover the following points : —

Amount of timber by logging units.

Quality of timber by logging units.

Topographic data (preferably in the form of a contour map).

Logging costs by principal watersheds.

Method of sawmilling and estimate of cost.

Estimated sale value of finished product.

Such a report enables a lumber company to plan its own operations intelligently or let contracts wdth exactness. The latter method is more common in Maine, New Hampshire, Vermont and New York because there are many jobbers who possess great skill in this work. In fact they are generally able to log more cheaply than the lumber companies themselves because their supervision is closer, their overhead expenses are small, they make scant allowance for depreciation or interest on investment and are content with small returns per thousand feet. In the southern spruce regions conditions are different. Seldom have the local inhabitants acquired the experience necessary to contract for themselves so that the lumber companies are forced to run their own camps. For simplicity's sake a contract job in the Maine woods will be taken as the type and after it has been described local variations in other parts of the country pointed out. Assume then that Bill Jones contracted in 1914 to yard on the river bank of the nearest drivable stream two million feet of spruce and balsam. Since the haul from the stump to the yard was only four miles he agreed to do it for $5 per M. He needed a crew of 60 men and started felling by October i in order to get the timber down and skidded before the deep snows came. For his labor he hired his neighbors as far as possible and then filled in with French Canadians who came south for the winter after the Canadian harvest had been garnered. A picked crew of choppers was first sent into the woods to build camps and clean out the roads. Then the main crew came in. It was divided up into choppers, teamsters for the skidding teams, tote teamsters, barn tenders, a cook and cookees, a blacksmith, a scaler, camp clerk.

The first job was to fell the timber and bunch it up for hauling on two sleds. The methods employed varied with the steepness of the ground. On level and moderate slopes ordinary skidding practices were followed. A single horse or a pair bunched the logs on to skidways from which they could be rolled onto two sleds. On steep ground the procedure was difierent. Two sleds could not be used to advantage. The only safe way was to drag the log out on a single bobsled with only one end of the logs up. Bare ground was preferable to snow because slower and hence safer. Furthermore, the spruce commonly stood so densely on such steep slopes that it was easy to make up a bobsled load by merely rolling the logs onto the sled without any preliminary bunching. In fact in many places the timber was felled into the roads which were not more than loo feet apart so that the horses did not need to get out of the road. For example, on the Henry operations in the White Mountains and the Perley and Crockett job in North CaroHna two sleds were not used at all. A single bobsled brought the logs off the mountainside directly to the railroad. On less steep ground, however, the two-sled is the standard method of getting the logs from the skid ways to the railroad, drivable streams or mill. This sledding can, of course, only be done after there is plenty of snow. Hence the usual practice in the North Woods is to complete the felling operations by Christmas if possible and then put in January and February hauling. This gets the logs out of the w^oods before the river opens in the spring and ready for the drive in March and April.

The following figures were average costs, in 191 5 :

PerM

Hauling to railway or river, 2 miles 2 . 00

Drive or railway haul to mill, distance 10 miles i .00

$6.50

Felling costs are relatively high because the timber is small and usually found on rough ground. Skidding is shown as a separate cost altho as explained above it is frequently merged into the hauling as a single operation of " yarding." A charge for twosledding to the railway or drivable stream is included to make the estimate conservative although sometimes it is possible to yard directly into the drivable stream or railway with a bobsled. Likewise, the distance taken for the railway haul or drive is rather longer than the average to avoid the possibility of having costs which are too low.

Expressed in terms of man hours and horse hours per M these costs would be as follows:

Hauling, 2 miles 5 7

Driving or railway haul, 10 miles 4

Total 15 II lO NORTHERN SPRUCE TYPE

To attain these figures the felling crew must cut 6M per day if composed of two men and 9M if there are three men. In skidding this assumes that one team will bunch at least 5M board feet per day. The hauling costs are on the basis of a daily output of 3M board feet or live round trips hauhng between 500 and 600 board feet each time. The driving and railway haul costs cannot be expressed conveniently in terms of a day's work but the figures given are at least conservative. In all the operations except hauling by railroad the labor costs constitute 80 to 90 per cent of the entire charge. On account of the large amount invested in roUing stock the labor costs are but 40 per cent of the cost of operating a railroad.

For pulp wood there is a well established market in the log form so that it need not be followed further than the mill. Prices ranged before the War from $7 to $10 per cord unpeeled. Peehng usually increased the price a dollar a cord. For converting board feet into cords a factor of 500 board feet is safe or in other words there will be found to be about two cords of pulpwood in a thousand feet of logs. Accessibility is the main factor in pulpwood values. New York State \vith a shorter freight haul for its paper pays better prices for pulpwood than New Hampshire or Maine.

Spruce destined for sawtimber cannot be safely valued in the log but must be carried thru the sawmill. Then its value becomes a simple matter because eastern spruce is well graded with Boston and New York as the principal wholesale markets. Milhng charges added approximately $3 per :M to the costs of logging so that exclusive of stumpage spruce lumber should not have cost above $10 per M to get ready for the market. The prices paid in October, 1916, at Boston for the principal grades of spruce were as follows:

PerM

Frames 8 inches and under $28 . 00

Random 22 . 50

Cover boards 20. 50

The average price, however, was seldom over $25 per M because it was unusual to get more than 40 per cent of frames. A diagram showing the recent changes in spruce lumber prices is given in Fig. 3.

II Yellow pine

10,845,000,000

5,820,000,000

2,200,000,000

Oak

2,025,000,000 pine

1,875,000,000

Western vellow

1,710,000,000

1,125,000,000

Maple

815,000,000

Gum

765,000,000

C>T>ress

630,000,000

443 ,000,000

400,000,000

Birch

370,000,000

Larch

355,000,000

Beech

290,000,000

Yellow poplar

290,000,000

Cedar

245,000,000

Tupelo

237,000,000

213,000,000

Basswood

200,000,000

Ehn

195,000,000

Cottonwood

175,000,000

Ash

170,000,000

111,000,000

100,000,000

Walnut

100,000,000

Balsam fir

82,000,000

Sycamore

30,000,000

12,000,000

All other kinds

60,000,000

Grand total

Fig. I

31,890,000,000

Lumber

Production, 19

Computed by U. S.

Forest Service.

Bulletin 845.

As stated above the stumpage price of any tract should be the difTerencc between the average sale value of its timber and all costs of logging, manufacture and selling. On small jobs such

Fig. 2. Distribution of the Northern Spruce Tpye calculations are simple but where large initial investments are necessary for railroads, roads, driving improvements, mill machinery, etc., the problem is exceedingly complex because the exact influence of interest and depreciation must be determined. The most complete discussion of this subject is to be found in the U. S. Forest Service Stumpage Appraisal Manual. For our purposes it is sufficient to state the principles involved. Actual stumpage values for spruce and balsam range all the way from $2 to $8 per ]\I according to the accessibility of the tract in question. Between 1900 and 1907 there was an increase from $2.26 to $5.49 per M, or a rise of 143 per cent. The percentage of balsam also influences the stumpage price of a tract. Fortunately, however, this inferior species seldom makes up more than 25 per cent of the total stand except in immature stands only large enough for pulp wood. It is a relatively short-lived tree which has to yield in the long run to spruce. Consequently there is seldom enough to greatly depress the value of a tract.

Land Values. — Land values in this type are impossible to determine from current sales because the . timber is never sold separately. However, members of the New Hampshire Timberland Owners' Association have agreed to the taxation of their clean-cut lands at $2 per acre so that that figure may be used as a minimum valuation. From the productive aspect it is easy to show that spruce land is worth at least $3 an acre using a 3 per cent interest rate and assuming that there will be a yield of 15M feet in 100 years worth $150 an acre. Losses from insects, fungi, etc., will be ofi"set by possible intermediate yields from thinnings.

Very little of the soil in the spruce type has any value for agriculture. Even as j^asture in the Southern Appalachians it is not a success. The soil is so thin and the slopes so sharp that grass takes hold very slowly and cannot prevent washing. Furthermore, the climate is so rigorous that only the hardiest northern crops can survive. However, arguments and illustrations of this kind are superfluous. The facts prove the case. Scarcely I per cent of the entire type, north or south, has ever been cleared up for either tillage or pasture in spite of the keen demand for agricultural land that there has been in the northeast and southeast.

Titles. — Title questions are relatively simple because the tracts involved have usually been handled in large units. There have commonly been grants of thousands of acres issued to one patentee. Hence their history is easy to trace. Claims of title are, however, sometimes obscure from the fact that the tracts of

$65 PER M

$25 PER M BOARD FEET

mountain land upon which spruce grows have only recently had a merchantable value and their early owners were lax in recording transfers and alienations. Breaks in the chain of title are not uncommon either due to simple failure to record sales and

LAND VALUES I^

bequests, thru the unperfecting of the claims of minor heirs, or because of unliquidated liens. Squatters also form another frequent source of annoyance. In many cases they have been allowed to use uimiolested parts of large tracts for such long periods that they have acquired rights of possession.

Chapter II Northern Hardwood Type

General Conditions. — This is the type of timber which Hes immediately below the spruce type — the beech, birch and maple belt. It is seldom abundant above 3000 feet above sea level but is the important type in northern Maine, the lower slopes of the White and Green Mountains, the Adirondacks and Catskills, and is represented southward along the backbone of the southern Appalachians by isola,ted islands of timber. In the Lake States it is found in Michigan, Wisconsin and Minnesota.

The climate is characterized by a longer growing season than that of the spruce type, less precipitation, more rapid runoff and flyoff and hence less available moisture. Only two of these climatic factors may be expressed absolutely. The growing season is at least four months and the total annual precipitation exceeds 35 inches. The other factors have not yet been accurately measured so that only comparative statements may be made.

Since the type occupies lower elevations than the spruce type the slopes are less precipitous, the surface less stony and the soil deeper. The absolute range in elevation varies, of course, with the latitude. In the northeast a range between 2000 and 3000 feet in elevation is the rule, while in North CaroHna the northern hardwoods do not occur below 3000 feet above sea level. On south and west exposures the t}q3e does not extend so low but reaches higher elevations on account of the longer growing season as compared mth northern and eastern exposures.

The greater depth of the soil as compared with that of the spruce tj^pe has already been mentioned. This would naturally follow from the fact that the hardwoods are further down the slopes where the accumulation of talus is deeper. They flourish particularly well on the southern slopes of the White and Green Mountains, the Adirondacks and the Catskills where the glaciers