point I am trying to bring before you is that restriction is not entirely taken from the stockman, and he is not in an absolutely free range to do as he wills with the grazing on the forest or with the resources of the forest.

A great deal has been said about the commercial value of the forest, and we are continually seeing comments not only in the papers, but everywhere, as to whether or not the Government is deriving the commercial value from grazing upon the national forests. "Commercial value" is a term that is rather difficult to decline and also to determine. But any charge that was first placed upon the grazing of the national forests, that supported the administration of the grazing on the forest, plus a commercial valuation on that grass, because when this charge was first placed upon the forest that charge was reflected in the invested value of the land dependent upon the use of that range.

Perhaps I could illustrate that more clearly by a concrete example. In the early eighties, in one particular section of this State, land was purchased for a ranch on a river bottom not adjacent to but within proximity of the forest reserve. Outside holdings were also purchased with that land, consisting of isolated tracts here and there, mostly water holes, which controlled the outside land, and the State land leases were taken over with the property and tranferred with the property. That was before the time that the forest reserve was created. What had been the lands on the forest at that time or what is now the forest were common usage. Isolated tracts were also purchased on what is now the forest reserve at tax sales and so on, in order to protect one's land and to make it as near as possible under existing conditions what would determine your area in which to run stuff.

The Forest Service came in the early nineteen hundreds and placed a charge upon the use of the grazing in that forest, and in return for that charge they not only took over the administration of that, but also the leasing power and keeping off trespassers and defining lines and so on. It is unnecessary for me to go into the details. But the initial value paid or the invested value put into that property not only purchased the right to the actually patented or deeded land, the price actually paid not only included the right to use that land. but it also included the right to use the outside adjacent land or leased land, and the use of what is now the forest reserve, and the man selling that property said, "I will charge you $20 an acre," or whatever the charge was, and in that $20 he included that potential right of the purchaser to use this forest reserve.

When the forest reserve placed a charge on the grass that charge basis reflected itself in the invested value of the original purchase. and then it put a commercial value on that range at that time. It is true there should be a charge placed on the forest which would pay the cost of the actual administration on the forest. But since that time that charge has been increased approximately 300 per cent, with a corresponding reflection of value in the invested value of the property dependent upon the use of that range.

So the stockmen have been paying the commercial value of the range since the first charge was placed upon the range, and they are to-day paying more than the commercial value, and I will venture to say-this statement may be somewhat broad, but I will venture to

say that if 90 per cent of the stockmen were to sell out to-day and then charge off their invested values in their lands on their books they would be bankrupt.

Senator JONES of New Mexico. Does the conclusion nec ssarily follow that the value of that range was deflected in the purchases of 20 or 30 years ago?

Mr. CHALMERS. Why not, sir?

Senator JONES of New Mexico. For the very reasons which you have been stating to us. Twenty or 30 years ago that right to use that land was a precarious one. It had no definiteness. It had no definite tenure. Certainly not beyond one year. But if you now give an absolute right of r.newal, does that not give a different value to that grazing right from what it had 20 or 30 years ago?

Mr. CHALMERS. Yes, sir; but can you tell me this: With that absolute right of renewal, can you turn around and sell your property that you invested in 20 or 30 years ago for the increased valuation which that right is supposed to give to it?

Senator JONES of New Mexico. Well, does that not depend upon many different factors?

Mr. CHALMERS. Absolutely, it depends upon a great many factors, but I consider that this is one of the major factors in the valuation of that property.

Senator JONES of New Mexico. What you say if limited in its effect to the operation of one factor in the cattle industry I agree with absolutely. You are perfectly logical. But you overlook the fact, it seems to me, that there are many factors which enter into the prosperity of the cattle industry.

Mr. CHALMERS. Granted, sir; in this discussion I meant to confine myself only to that one factor: The use of dependent property in correlation with the forest reserve.

Senator JONES of New Mexico. The reason that I am dwelling upon this was to meet your proposition that the commercial value of this grazing right had already been fixed, and that that had been established, and was established back there years ago. But the fact that you can not sell your ranch now for as much as you did then, does not seem to me to be dependent entirely upon the increase of the grazing fees on the forest reserve. There are a vast number of factors that affect the cattle industry to-day which did not affect

it then.

Mr. CHALMERS. True. I will grant you that. But I still make my contention, sir, that this one factor is a very major influence an acre 20 or 30 years ago and it now costs you more to run your year around, not only on the forest but on your own patented land, and on the forest as a whole, that by placing a charge on the forest you automatically increase the invested value

stuff the

in that $5 an acre.

Senator JONES of New Mexico. As I said, you are perfectly logical, and that is one factor, but when you recall that you are only paying 70 cents a year per head, and when you further recall that

must be

apparent that that increase from 20 cents to 70 cents had

not cut very much figure in the matter.

Mr. CHALMERS. True, sir. My contention, though, also is that if we can stabilize even this one factor we are going to do a great deal for the stabilization of the entire industry.

Senator JONES of New Mexico. I think you would do much; yes. Mr. CHALMERS. Continuing along this same line. Under the present system if a man either intends to purchase or sell his property he takes, under the regulation of the Forest Service, a necessary reduction for protection of the forest. That is another factor under the present system of regulations which tends to decrease the value or the invested value of his property. And, as I said, I believe that a large majority of the men would be bankrupt if they charged off their invested land values.

Furthermore, this has tended to produce this policy, that to-day in the livestock business if it were possible to sell out it would be a great deal more reasonable to run stuff on leased property and not own any property at all than it would be to be a landowner as under the existing circumstances. Now, that most assuredly is not a healthy, economic condition throughout the country.

That just about in detail concludes what I wanted to bring out on the forest reserve, which, briefly summarized, is that the stockman should be given a legal right to this resource of the forest.

Senator JONES of New Mexico. Well, now, I appreciate fully the position which you take, and it is a condition which I would be glad to see realized. But are you not confronted with this, though: To grant these permits to a definite area of land, or in effect in perpetuity, because that is what it means, it amounts to this, that the Government of the United States is holding title to that land for your benefit, and it is holding it free from all taxation for your benefit. The amount of rental which you want to pay is a normal amount. It has been insisted here that the rental should only reach the point of the cost of administration. Do you think that that would be fair to the rest of the country?

Mr. CHALMERS. Tell me this, sir: How many men could afford to either purchase or even pay the taxes on that land if it were given to them and still continue in business?

Senator JONES of New Mexico. Well, I am not familiar with your local conditions here enough to answer that question. But I should say this, if your tax assessor does the right thing, and the land has no more value than you indicate, the taxes ought not to be high. Is not that one of your troubles here, when it comes to the taxation of these grazing lands, they have been putting too high a value upon them?

Mr. CHALMERS. That is very true in some localities, but then, on the other hand, if the title were to be given gratis to a stockman, and he had the absolute title to that property, such a tremendous amount of area is necessary for the range production of livestock under normal conditions that I doubt very seriously, even with the reduction in taxes, if a man could afford to own it, much less pay anything for it, and pay interest on his initial investment.

Senator JONES of New Mexico. Now, the testimony taken thus far seems to indicate this, and it has been reflected in the testimony we have listened to here to-day, that if a man had private ownership of land that he could handle it as he pleased, and could handle his stock as he pleased, and could fence it, and it would be much

more valuable than this common land. Well, now, if the scheme which you are advocating were put into effect would it not have virtually just that operation, to make that privately owned land, at least so far as the control of it for cattle purposes is concerned, and would not that give it a value which it has not got now, and would it not give to it a value which ought to pay some taxes?

Mr. CHALMERS. Under those circumstances, sir, if a man had a right to the use of a certain allotment of range, any improvements that he made on that range would be to his benefit. Most assuredly. Just the same as any improvements that he makes on his own privately owned land are to his benefit, and to his benefit alone. But if you increase the overhead cost of production to the extent where you make that land more valuable, and place it on the tax rolls, why it appears to me on the face of it that one is merely trading ends. One is now giving the title to a man and making him pay taxes on it, or else he is giving him a sufferance right to use this on a charge basis.

Senator JONES of New Mexico. Well, does not that same thing apply with the man who does own his property, and whose land is more valuable by reason of the individual ownership? Mr. CHALMERS. True.

Senator JONES of New Mexico. And that comes to the question of whether you should tax improvements on any land or not.

Mr. CHALMERS. True, sir. But a man owns so much deeded land to-day upon which he is taxed. That land is dependent upon the use of this outside land. If it is necessary for that individual operator to control or have the title to this outside land his entire holdings would necessarily have to be cut down to the invested value that he could carry, or a fixed valuation which he

owner or

could carry.

Senator JONES of New Mexico. Well, now, it appeared in the testimony yesterday that an individual with a fenced pasture could better afford to pay 10 cents an acre for the use of land which would require 30 or 40 acres to feed one animal, than he could to run it in the forest reserve at a nominal charge. And the reasons for that. statement were that individual ownership added so many advantages to the situation that he could afford to do it. Now, then, if you divide up your national forest for grazing purposes and the remainder of the public lands for grazing purposes, and absolutely made them in definite areas as you are advocating, why then would does not have to-day and a value which could afford to pay taxes? You not give to that land by that mere act of law a value which it Mr. CHALMERS. The actual land would have that value. The operator would not, however, be able to pay that value.

Senator JONES of New Mexico. Well, but the testimony of all the witnesses is, and I think you will agree, that if you have absolute domination over a piece of property it is worth much more than

this indefinite right which you have now.

Mr. CHALMERS. True, it is worth a great deal more, sir. But perhaps we are discussing this from a different standpoint. Say that I have a right to-day to graze 6,000 head, and I have dependent property enough upon which to run those in winter, and I raise enough feed to keep those 6,000 head through the winter. I am

43213-25-PT 12

-11

granted a permit on the forest for 6,000 head upon which to graze in summer. My taxes to-day are based upon the patented land that I own, and I prorate it on that 6,000 head of livestock. If I were given title and had to pay taxes for sufficient outside range to run that corresponding 6,000 head of livestock, the great majority of the men in the industry would not be able to do it.

Senator JONES of New Mexico. Well, you are making that statement, I suppose, based upon the theory that you would have the same assesssed valuation on the outside lands that you get on the lands on which you pay taxes now?

Mr. CHALMERS. Yes.

Senator JONES of New Mexico. Well, I do not think that would follow. If you could put a tax on all these lands, why it seems to me that you would necessarily lower the valuation or the rate. of taxation, one of the two.

Mr. CHALMERS. Well, then, to accomplish the same end, as under these recommendations that I have advanced here to-day, sir, if the charges made on the forest over and above the cost of administration were returned to the States in which they were collected, you have the same effect as to reduce taxation.

Senator JONES of New Mexico. Well, that would depend upon this consideration, whether under your individual ownership you would pay more grazing fees than you are paying now? Mr. CHALMERS. In assessed valuation on that land?

Senator JONES of New Mexico. Yes.

Mr. CHALMERS. That is a hypothetical question, sir.

Senator JONES of New Mexico. It is. But the plan which you propose is to allot these lands on an area basis for an unlimited tenure of years at a grazing rental not much in excess of the cost of administration, and you withhold those lands from taxation for all times. I should just like to have the people of this county consider that proposition, of whether they want it or not. I can understand you cattlemen might possibly want a thing of that sort, but there are a good many people in this county besides cattlemen. Mr. CHALMERS. Quite true.

I believe that is all that I have to present at this time.
Senator CAMERON. Thank you, Mr. Chalmers. Mr. Haley.

STATEMENT OF E. F. HALEY, SHEEP RAISER, RIFLE, COLO.

Senator CAMERON (presiding). Mr. Haley, will you give your name and your occupation and your residence to the reporter, please. Mr. HALEY. E. F. Haley; Rifle, Colo.; sheep and ranching.

Senator CAMERON. Mr. Haley, have you a statement you would like to present to the committee?

Mr. HALEY. Yes, sir.

Senator CAMERON. Go ahead and present it in your own way.

Mr. HALEY. All right, sir. I am a member of the Leadville-Holy Cross Wool Growers Association, and we have prepared a sort of a platform that we have agreed on, and I will just read it [reading]:

1. Declaration of the existence of grazing rights to be hereafter recognized as possessed by present permittees on the national forests and those who, during the past three or five years, have been regular users of the public domain and dependent property adjoining the public domain.