PULSE OF THE IRRIGATION INDUSTRY. 



THE BEAR VALLEY SITUATION. 



IN a peculiar sense the affairs of the great Bear 

 Valley Irrigation Company, of Redlands, Cal., 

 are just now the concern of the financial side of the 

 irrigation world. This company had been paying 

 dividends of eight per cent, upon 500,000 of preferred, 

 (another $500,000 in the treasury unsold), and of fifteen 

 per cent, upon $3,000,000 of common stock. Very 

 naturally it was generally quoted as a conclusive argu- 

 ment in favor of investment in irrigation securities, in 

 many prospectuses issued in the interest of other 

 enterprises. Under these circumstances the failure 

 of the Bear Valley Company produced widespread 

 consternation, and the argument it formerly furnished 

 to the promoters of irrigation enterprise suddenly 

 became an argument of a different kind. Neverthe- 

 less the fact remains that Bear Valley is a type of 

 good irrigation projects and that it ought even yet to 

 illustrate the value of irrigation as a safe form of 

 investment when in the hands of conservative men. 



THE COMPANY'S CONDITION. 



The Bear Valley Irrigation Company has a bonded 

 and floating debt of a little less than $1,000,000. 

 There will be required to complete its plant and to 

 fulfill its present water contracts about $1,000,000 

 more, according to Chief Engineer Wm. Ham. Hall. 

 The property would easily stand a bond of $2,000,000, 

 and such a loan should be readily floated at six per. 

 cent. It is to be remembered that between $2,000,000 

 and $3,000,000 of actual money has been invested in its 

 capital stock by eastern and foreign shareholders. 

 If from proceeds of bond sales the indebtedness were 

 paid and the plant completed, the company would 

 then have an annual income as follows: 



From " Class A" water certificates $ 7,200.00 



From sundry other contracts 1.800.00 



From 100,000 " Class B " certificates, (@ $2.78 each) .. 278.000.00 



$287,000.00 



Its annual expenses would be about as follows: 



For maintenance $50,000.00 



Interest on bonds 120.000.00 



Dividend on preferred stock 40,000.00 



$210,000.00 



This would leave a balance of $77,000, but it is not 

 to this source alone that holders of the common stock 

 may look for dividends and bondholders for the 

 creation of a sinking fund. The completed plant will 

 furnish water, according to Engineer Hall's estimate, 

 for 100,000 "Class B" certificates, of which 25,000 

 remain to be sold. They are in demand and will 



probably sell readily for $50 each. The company has 

 also $500,000 of preferred stock, $500,000 of the Ales- 

 sandro Town Company stock (generally believed to be 

 worth its face) and 10,000 acres of very valuable land. 

 A statement of these resources would look as follows: 



2.1.000 "Class B'' water rights at $50 $1,250,000.00 



Preferred stock in treasury 500,000.00 



Alessandro Town Co 500,000.00 



I rrigation District Bonds 400,000.00 



10.000 acres of land at $100 net 1.000,000.00 



Total #:.650,000.00 



If these assets be reduced to cash the $2,000,000 

 bonds would be retired and a surplus of $1,650,000 

 remain for investment, yielding an annual income of 

 $99,000 at 6 per cent. Under these conditions the state- 

 ment of income and expenditures would stand as 

 follows: 



EXPENSES. 



For maintenance $ 50,000,00 



8 per cent, dividend on $1.000,000 preferred 80,000.00 



6 per cent, on $8.000,000 common 180.000.00 



$310.000.00 

 INCOME. 



From water rentals $287,000.00 



6 per cent, on $1,650,000 surplus 99,000.00 



#:!86,000.(K) 

 Balance to surplus, $96.000 



If water is available for another issue of certificates 

 the dividend on common stock could probably be 

 carried to eight or ten per cent. Can the above 

 results be realized? Undoubtedly, with good manage- 

 ment. There would be required (1) a good local man- 

 ager who understands the practical side of the irriga- 

 tion industry; (2) a trustworthy engineer of economical 

 tendencies; (3) a competent financial agent; (4) a live 

 colonization promoter who could settle the lands with 

 actual residents and planters. The first two places 

 are easy to fill. As for a financial agent, the peer of 

 Chas. W. Greene in this department has not yet been 

 discovered. As for the colonization manager, Frank 

 E. Brown is showing the whole world how to do it 

 just at this time with his Lake View Colony. 



MR. GREENE TO MR. BROWN. 



THE AGE has not entered into the history of the 

 company and the causes of its present embarrass- 

 ment any further than it is necessary to go in order 

 to prove that the unfortunate situation is no reflection 

 on the intrinsic merits of irrigation securities. But in 

 the last number the open letter of Mr. Brown was 

 published. It contained a reflection upon Mr. 

 Greene's management as the immediate cause of the 

 failure. To this Mr. Greene replies as follows: 



