14 



THE IRRIGATION AGE. 



It is a most wonderful and rich empire 

 that is being created out of these arid 

 History western plains. So positive and immense 



of These have been the values that have been cre- 

 Securities. a ted during the last few years by irriga- 

 tion that the conservative East would 

 not at first believe the reports as they came. However, 

 there were a few financiers of discernment who went 

 out over this country and made thorough investigations 

 into these new values. These men brought back with 

 them the whole story and today it can safely be said 

 that of all the newer securities that are being offered the 

 public irrigation bonds properly issued and properly 

 safeguarded are the most acceptable to the banks, in- 

 surance companies, trust companies and fraternal or- 

 ganizations and private investors of the East. 



Accordingly we cannot mark this popularity with- 

 out comment. It is deserved, for the values behind 

 these bonds are large and the ratio between the loans 

 and the values are much more attractive than those 

 farm mortgage loans which we, in the East, are familiar 

 with. As a matter of fact irrigation bonds when 

 analyzed are nothing more nor less than farm mortgages. 

 They go farm mortgages one better however, because 

 the largeness of the total issue means the placing of 

 the loan in many hands, thereby making a market and 

 tending to convertibility of the investor's assets. 



The Western States have greatly benefited 

 Investor in j n their development during the last few 

 Irrigation years by the various laws which have been 

 Securities passed to encourage the rapid develop- 

 Safeguarded. ment of the country and to attract and 

 protect the Eastern investor. The first of 

 these laws was the Carey Act, the second the Reclama- 

 tion Act, and lastly most of the Western States have 

 passed laws by which Municipal Irrigation Districts can 

 be organized. 



These last named bonds are perhaps the most popu- 

 lar at the present time for the reason that they are a 

 pure municipal obligation. The bonds are voted by the 

 freeholders of the district in the same manner as are 

 the school and paving district bonds with which we are 

 all familiar. The bonds are payable from taxes which 

 are levied by the county assessor and collected by the 

 county treasurer on the same extension with the other 

 general taxes of the county. 



The following letter from Hon. Charles D. Hayt, 

 former justice of the Supreme Court of Colorado, con- 

 cerning this particular class of bonds is very pertinent. 

 It shows how thorough has been the work of the finan- 

 ciers whose names are so closely connected with this 

 great development of our Western country: 



"Answering your inquiry as to my opinion concern- 

 ing irrigation securities, I will say that I have had a great 

 deal to do with such securities in recent years, particu- 

 larly as to the class known as irrigation district bonds; 

 and from such experience will say that I regard such 

 bonds as among the best and safest securities that have 

 been placed upon the market, as such bonds are used for 

 the purpose of supplying the lands in the district with 

 water rights and with a system of reservoir for storage 

 and ditches to distribute the water upon lands in the 

 district. In other words, the investor, in addition to the 

 security upon the land, has the additional security upon 

 the property created as the result of the bond issue. 



"The law was framed in the first place to attract con- 

 servative eastern capital, and also to make the payment 

 of the principal and interest convenient and easy to the 



land owners. Experience to date has proven the law to 

 be very satisfactory. I see no reason why these bonds 

 are not equally as attractive to the investor as those other 

 bonds which are usually designated as A-l. 



"The principal questions the investor should satisfy 

 himself upon are the water supply and the legality of the 

 bonds. The water supply should be passed upon by some 

 irrigation engineer of experience and established reputa- 

 tion, and the investor should satisfy himself that a re- 

 liable authority has passed on the complete procedure 

 leading up to and authorizing the issue of the bonds." 



One cannot deal with a subject of this 

 Caution to kind from the banker's view point with- 

 Buyers of out a word of caution. An old maxim 

 Irrigation of conservative bond buyers is "Bonds 

 Bonds. should only be purchased from conserva- 



tive and reliable institutions." This is 

 basicly true concerning irrigation bonds. Considering 

 the income return as indicated by the general market 

 for these securities there is no more attractive purchase 

 among any bonds than the irrigation securities being 

 offered the public. For this particular reason the in- 

 vestor should stop and consider his security very care- 

 fully. 



It would be impossible to conceive that every irriga- 

 tion project in this Western country would be a suc- 

 cess. As in all business ventures experience has proved 

 that there must be a certain percentage of failures. 

 There is also a tendency when a certain line of invest- 

 ment is proving attractive to investors for the less re- 

 sponsible and promotional institutions to take advantage 

 of the public sentiment as a whole, and often securities 

 will be brought to the public that are weak and do not 

 even merit attention. In fact the older and better 

 known institutions throughout the country are flooded 

 today with unfeasible irrigation projects. 



And so the investor must look to his investment 

 along this line as in every other line and the questions 

 that he must ask are the following, and if each of these 

 questions are not well answered he will do well to let 

 the security in question alone. 



First Is the water supply ample? 



Second What is the effect of water on the land? 



Third Where is the land located, has it a market for 

 its crops, what are the railroad facilities? 



Fourth Is the land already sold and owned by the 

 people who will farm it, or is it subject to future coloniza- 

 tion? 



Fifth What is the character, reputation and experi- 

 ence of the banking institution offering the bonds. 



If these questions are well answered there can be 

 no doubt of the immense value in back of the bonds. 

 In such instances the security will run from six to ten 

 times the amount of the indebtedness represented by 

 the bond issue. Surely this is ample protection to the 

 investor. The investing public appear to have arrived 

 at the position where they appreciate these values. It 

 would seem that irrigation bonds were the investment 

 opportunity of the East. 



Send $2.60 for The Irrigation Age, one year, and 

 the Primer of Irrigation, a 260-page finely illustrated 

 work for new beginners in irrigation. 



