418 



THE IRRIGATION AGE. 



a mortgage on the water right purchased, and on his equity 

 in the land to secure the deferred payments. 



These deferred payment contracts, which mature serially 

 in from one to ten years, are deposited usually on the basis 

 of one and one-half to one, or $1,500 in such contracts to 

 each $1,000 of bonds so issued. These mortgages and con- 

 tracts are deposited in escrow with some responsible Bank 

 or Trust Company, designated by us, which acts as Trustee 

 under the issue. 



CORPORATION BONDS OK LANDS IN PRIVATE OWNER- 

 SHIP. 



This class of Irrigation Bonds is issued by a Corpora- 

 tion for the purpose of acquiring or constructing water rights 

 and irrigation systems. 



The bonds are a mortgage lien on all of the property 



means that for each $1,000 bond the trustee holds farm 

 mortgages to the value of $1,500. And those mortgages 

 cover farms worth three times as much. Then back of each 

 $1,000 bond will be First Mortgages on land worth $4,500. 



That would seem to be ample security. Yet the bonds 

 are additionally secured by a first mortgage on all the prop- 

 erty owned by the Irrigation Company which issues them. 

 As the proceeds of bond issues go into the property, this 

 mortgage on the Company's property is a material consid- 

 eration. 



These farm mortgages are not usually given by owners 

 of large tracts of land. In these irrigated regions, farm 

 land is exceedingly fertile, and small farms intensively cul- 

 tivated are the rule. A few owners may give mortgages on 

 160 acres, but far more are owners of 10 and 20-acre tracts. 



Dam, Head-gates and (.'anal of Canyon Canal Company, Payette River Valley, Idaho. This system furnishes water to the Emmet Bench destined 



to become one of the best fruit sections of the irrigated west. 



owned by the Company. In addition, they are secured by 

 mortgages on the land to be irrigated. These mortgages 

 or trust deeds are given by the farmers owning land subject 

 to irrigation, to secure deferred payments on water rights 

 purchased. Such mortgages are usually in serial form, and 

 they are deposited with a Trust Company, which acts as 

 trustee for the bondholders. For each $1,000 bond issue 

 there usually is deposited with the trustee $1,500 in these 

 mortgages on fertile agricultural lands. 



For illustration Suppose (he owners of farms mortgage 

 their land for one-third of its value to obtain a water right. 

 Then these mortgages are deposited with the trustee at the 

 rate of one and one-half to one, to secure the bonds. That 



In buying a water right for his land, a farmer is re- 

 quired to pay 10 per cent cash. He agrees to pay the balance 

 in nine annual payments, with interest. The mortgage on 

 his land is given to secure this agreement. That is why 

 Irrigation Bonds are usually issued with serial dates of ma- 

 turity. The payments made by the farmers are used to 

 retire the bonds as they fall due. This is a far better plan 

 than the accumulation of a redemption or sinking fund as 

 employed in some other forms of bond issues. The propor- 

 tion of security in the hands of the Trustee is always main- 

 tained until the last bond is paid. 



As the early bond maturities are paid, the security be- 

 hind the balance of course becomes more and more ample, 



