A TYPE OF IRRIGATION INVESTMENT. 



239 



England, Scotland and Switzerland. It attracted 

 that class of investors who seek security rather than 

 extraordinary returns, and they paid handsome 

 premiums for this stock, so that the large dividends 

 represented only a reasonable return upon the in- 

 vestment. The list of stockholders in the company 

 includes hundreds of people, their holdings ranging 

 all the way from a single share to large blocks of 

 stock. It is thus evident that Bear Valley won the 

 confidence of the investing public to the merits of 

 irrigation in the truest sense. It carried the new 

 industry beyond the boundary of speculative oppor- 

 tunity to the solid ground of proved security and 

 established profits. 



THE FAILURE AND ITS EFFECT. 



And yet, after creating a market for a new class of 

 securities and becoming the accepted type of a new 

 and promising industry, the Bear Valley Irrigation 

 Company suddenly ceased to pay dividends, became 

 entangled in law suits and judgments, and, early in 

 December last, woke up one morning to find itself in 

 the hands of a receiver. The event was one of far- 

 reaching consequences. It affected not only those 

 immediately interested as owners of its stock or 

 patrons of its water supply, but it was felt wherever 

 irrigation enterprises were in process of development 

 and wherever irrigation securities were being offered 

 for sale. It was felt for a time not only that the Bear 

 Valley Irrigation Company had failed, but that the 

 irrigation industry had failed. The disaster occurred 

 in the midst of widespread financial panic, but 

 the panic was by no means responsible for it. If it 

 had been, then irrigation investment would indeed 

 have disappointed the hopes of its friends, for the 

 mountain stream continues to flow and the gardens 

 and orchards to flourish when times are bad as well 

 as when times are good. 



Neither the company's income nor earning capacity 

 was in anywise injured by the financial depression. 



THE CAUSE OF FAILURE. 



There is no difference of opinion concerning the 

 causes of the failure among the many disinterested 

 minds who have patiently and conscientiously studied 

 its methods and its history, its values and its pros- 

 pects. The Bear Valley Irrigation Company was 

 wrecked by the under-development of its industrial 

 opportunities and the over-development of its stock- 

 jobbing possibilities. It would be unprofitable to 

 enter now upon the story of its tortuous operations. 

 Some time it may be interesting to discuss it as a re- 

 markable reminiscence and to weigh the acts of in- 

 dividuals; apportioning among them the credit and 

 discredit which was accumulated in a few brief years 

 of extraordinary financiering, engineering and pro- 

 motion. In the midst of much adventurous specula- 



tion and unscrupulous manipulation, there was a 

 good deal of creditable achievement. This is an 

 aspect of the matter, however, not properly related to 

 a consideration of the Bear Valley enterprise as a 

 type of irrigation investment. What the financial 

 world wants to know is the true value of a representa- 

 tive property in a new field of investment and indus- 

 try. The millions which went into the enterprise 

 were attracted by the strength of the general proposi- 

 tion that a large and certain water supply in an arid 

 country furnishes exceptional security for capital, 

 and that lands practically worthless in their natural 

 desert state become enormously valuable when 

 brought under a good system of irrigation. The phil- 

 osophy which underlies all irrigation investments- 

 and the economic facts on which our new civilization 

 in the West is being built up, were never more 

 forcibly stated than in the attractive literature and 

 convincing verbal presentation employed by the pro- 

 moters of this typical enterprise. And it is this- 

 philosophy and these facts which are on trial to-day 

 before the investing public. It is in this aspect alone 

 that the present and future of the Bear Valley proper- 

 ties can be discussed with any real profit to the 

 reader. 



THE PHILOSOPHY OF IRRIGATION INVESTMENT. 



Wherever the cultivation of the soil is a profitable 

 pursuit, and such cultivation is impossible because of 

 insufficient rainfall, the artificial application of water 

 becomes a necessity. And yet within the lines of 

 this simple statement there is a wide range for dif- 

 fering conditions. These may exist in* localities sep- 

 arated only by a distance of a few miles. In one 

 locality there may be an abundance of water, while 

 the products of the soil are common varieties com- 

 manding comparatively small profits per acre. In 

 another locality water may be scarce and difficult to 

 control, while the products of the soil are very valu- 

 able. In both instances there is an opportunity for 

 investment in works of irrigation, but the possibili- 

 ties of profit will be much larger in one instance 

 than in the other. Manifestly water must be most 

 valuable where it is most scarce, and land most val- 

 uable where its products will earn the highest re- 

 turns per acre. The element of security would be 

 the same in both localities, but it would be much 

 more pronounced where the provision of a water 

 supply would create the largest values. The con- 

 trol of the water supply in such a neighborhood is 

 practically a mortgage upon the productive ener- 

 gies of the entire community dependent upon it. No 

 form of investment can be more secure than one 

 guaranteed by necessary human industry. The 

 higher conditions of irrigation investment are no- 

 where better illustrated than in Southern California, 

 There land in cultivated orange orchards is worth 



