Interest and Credit Costs in Forest Restoration

The Copeland Report contained proposals for organizing a Forest Credit Division in the Farm Credit Administration (then the Farm Loan Board) with authority in its field corresponding to the authority of the Federal Land Banks and other F.C.A. divisions in their respective fields. It was conceived that the addition of this division would enable the F.C.A. to provide virtually complete credit facilities for all types of crop land use. Only forests capable of immediate sustained yield operations and of meeting amortization and interest charges on a self-sustaining basis would be eligible for credit under these plans which are still being studied by the Forest Service and the Farm Credit Administration. In contrast to the above the authors of this article propose an independent agency to provide subsidized loans on forests that have been depleted of their growing stock and therefore cannot provide returns to meet current interest or amortization charges. They point out that in such circumstances compound interest charges necessarily accumulate in the form of capital costs until the forests involved have been rehabilitated sufficiently (often a 25- to 50-year job) to yield substantial net earnings. Federal forest conservation districts are proposed to constitute the basis for such loans and for forest rehabilitation measures. The authors point out that the field of forestry is without doubt the largest national industrial field that has not been provided with any publicly organized source of credit capital. Discussion of forest credit proposals should continue until a workable program has been completed and public opinion developed to back it.