BEAR VALLEY MATTERS. 



no inquiry from disinterested sources."* Nothing could be more 

 unjust or further from the truth. From the first offering to the 

 last there was the most thorough publicity. More than a half 

 million publications were distributed; the public press of New 

 England, and wherever else the stock was offered, was largely 

 used, and the most thorough investigation was invited, every- 

 where and always. A large party of agents and investors was 

 taken to Redlands, and spent a week looking over the entire 

 works and over all the territory to be reclaimed. Examinations 

 were made by experts, and, at the instance of investors, often 

 and over again, and the sales were made to many of the most 

 careful and experienced investors and financiers of this and 

 other countries. 



In fact, your own admission that the Bear Valley enter- 

 prise was so constantly quoted, and exerted so great an 

 influence in attracting the attention of investors to this class 

 of securities, is a flat contradiction of the statement and innuen- 

 does referred to. 



The result of each and every examination, with the one notable 

 exception by Mr. Crouch, was the same, and now the united 

 opinion of all who have previously examined it is confirmed by 

 your announcement that a jury composed of " keen European 

 minds, representing the most conservative element of foreign 

 investors; men of ripe judgment from Eastern States, accus- 

 tomed to rigid standards in the estimation of values and earning 

 capacities; men of large affairs from Chicago, who are in the 

 habit of penetrating financial propositions to the core; Califor- 

 nians thoroughly familiar with all the local conditions related to 

 the value of land and water; lawyers specially skilled in the legal 

 questions involved in the complicated affairs of the Company 

 and the plans proposed for its reorganization; still other parties 

 brought to its councils broad knowledge of irrigation in its world- 

 wide aspects, and were able to compare this typical enterprise 

 with all others of prominence in various Western States and Ter- 

 ritories. This was the character of the jury which passed upon 

 the merits of Bear Valley, and weighed in its scales the various 

 elements which enter into the problem of irrigation investments. 

 The examination ivas thorough, rigid and merciless. The re- 

 sult, as will be seen, was the triumphant vindication of irrigation 

 securities as a class." 



Then, to make the application more direct, you go on to com- 

 mend the special features of the Bear Valley Company's works 

 its "bold and successful engineering," "the character of the 

 irrigation methods it has introduced the most perfect in the 

 world," " the character of the communities which have been 

 built up under these beautiful canals." Then you prove the high 

 value of its water supply conclusively, I think and estimate 

 the value of the lands which the Company owns with a view 

 to their reclamation, putting upon it a higher valuation in the 

 assets than I have ever represented. Your statement of the 

 earning capacity of the Company fully confirms my judgment 

 and representations. 



It is gratifying, indeed, to me, to see Messrs. Allen and David- 

 son directly committed to estimates which were controverted by 

 Expert Crouch, upon whose report the action was taken which 

 precipitated this catastrophe. 



Naturally, no one will find a deeper interest in your discussion 

 of these statements than myself. The original plan of the Bear 

 Valley organization, as published in the Redlands Orange Belt 

 for December, 1890, and published by authority of the directors 

 of the Company, was mine, and I am proud to claim it. It 

 was not the fulfillment of but the departure from its contract 

 promises, and the utter disregard of the obligations the direc- 

 tory assumed which is responsible for the unfortunate collapse. 

 The principle enunciated is a very simple one that construc- 

 tion shall be provided for from the sales of the capital stock 

 alone; that earnings from all sources shall be subject to the 



*THE AGE stated precisely the contrary. Bear Valley was 

 publicly placed on the market, of course. EDITOR. 



charges for maintenance, and any surplus shall be divided 

 among the shareholders, subject to reinvestment at their pleas- 

 ure. And it is a correct principle which has been affirmed and 

 approved by the opinions and acts of leading financiers in this 

 country and Europe. 



Upon the representations then made to me by the leading 

 directors and officers of the Company, the capital provided for 

 was considered ample for all construction necessary to fulfill its 

 contracts with the districts and individuals, and for a consider- 

 able additional water supply. 



It was clearly stated that the capital of $4,000,000 would provide 

 for the purchase of the property as it then stood, with $2,400,000 

 of the common stock. The property as transferred to the new 

 Company scheduled at a cost valuation as much as the total of 

 the stock, and, if valued on such a basis as you now adopt, would 

 have amounted to more than double the amount paid for it. 



The balance of the stock, $600,000 of the common and $1,000,000 

 of preferred, was to be sold to realize the funds for construction. 

 I was employed to make the sale because of my experience and 

 previous success and standing. My contract was in BO sense 

 a secret one. The commission allowed 15 per cent. was pub- 

 licly known; it was not excessive, because I paid from it all 

 advertising and traveling expenses as well as sub-commissions. 

 The latter were uniformly 5 per cent, to local agents, and 2 per 

 cent, additional to general agents, all advertising for their benefit 

 being paid for by myself, in addition to the cash commissions 

 named. 



How successful I was in selling the stock is attested by the 

 above analysis of the shareholdings. That I believed in what I 

 was selling is also attested by the same facts; had it been other- 

 wise, the sales would not and could not have been made. Again I 

 remark, it is exceedingly gratifying to find my judgment so fully 

 confirmed by the verdict of so competent a jury. 



It may not matter to you, or to the parties who are managing 

 this scheme of reorganization, what the causes were which led to 

 this disaster, but it is a matter of vital importance for those who 

 see this valuable property slipping out of their grasp just when its 

 value is shown to be so great. 



It appears to me that you can hardly escape the responsibility 

 which your relation to the great industry which THE IRRIGATION 

 AGE represents imposes on you by such an avoidance of a dis- 

 agreeable duty. No one knows better than you what those 

 causes are and where the blame should lie. 



You say "there is no difference of opinion concerning the 

 causes of the failure among the disinterested minds who have 

 patiently and conscientiously studied its methods and its his- 

 tory, its value and its prospects. The Bear Valley Irrigation 

 Company -was -wrecked by the under-development of its indus- 

 trial opportunities and the over-development of its stock-jobbing 

 Possibilities" 



Here is the kernel of a very serious charge. Who did it? Who 

 was responsible for it? Why do you avoid the statement and 

 discussion of such facts? Everything done is matter of record. 

 You can place the blame if you choose. You decline to appor- 

 tion " the credit and discredit which was accumulated in a 

 few brief years of extraordinary financiering, engineering and 

 promotion," while you admit that " in the midst of much adven- 

 turous speculation and unscrupulous manipulation, there was a 

 good deal of creditable achievement." You choose to make the 

 parties entitled to the credit share in the odium of this outrage- 

 ous failure. This is not an injustice to me alone; it is especially 

 a wrong to Mr. Hall, whose engineering accomplishments there 

 are in advance of any hitherto achieved in this country, and which 

 have received high enconiums from foreign engineers of large 

 experience and highest professional standing. 



You say on page 227: "Its managers capitalized the future 

 and clipped coupons from their imagination." If they did these 

 things there were liable to punishment under the law, and had 

 you examined as to the facts you must have found the statement 

 tb be untrue. You have evidently overlooked the fact that such a 



