74 



THE IRKIGATION AGE. 



THE CAUSE OF THE PRESENT STATUS 

 OF IRRIGATION SECURITIES. 



By A. L. Fisher.* 



The present status of irrigation securities and the 

 failure of so many irrigation projects in the West is 

 directly due to the desire for exorbitant profits on the 

 part of the promoters who organized, and the bond 

 houses who financed the different schemes. Add to 

 this, the fact that none of the projects that failed were 

 given the proper investigation and, the cause of the 

 failures may be easily traced. 



It is quite probable that a number of those who 

 have been instrumental in bringing out projects will 

 take issue with both of the above statements, and, to 

 refute the first, will point to the fact that most of the 

 promoters and bond houses that brought out the vari- 

 ous schemes, "hit the rocks," and many of them are 

 there yet. That is very true, and is probably as it 

 should be in view of the methods used. 



In very few of the projects not over fifty per cent 

 of the money obtained from the sale of bonds was 

 put into actual construction. In some cases the amount 

 did not reach over thirty-five per cent. The balance 

 was divided up as bond discount, representing the 

 profit to the house handling the bonds, and an amount 

 ranging from twenty per cent up to as much as the 

 house could "conscientiously" take^ construction profit, 

 large legal fees and numerous items of outlay such as 

 operation, engineering, etc. 



On many of the projects the bond house organized 

 a construction company or, at least, held a large in- 

 terest in the company which took the contract. The 

 word "took" is used literally, because the contracts 

 were not given to competitive bidders, but the entire 

 job was undertaken for the entire bond issue, this 

 amount being fixed by the construction company and 

 the bond house, and was a matter in which the people 

 of a district had very little to say. It is true they had 

 to vote at a legal election on the contract and bond 

 issue, but they always voted it. 



The reason that so many of the sponsors of these 

 projects are in a bad way financially, is that in their 

 eagerness to float as many as possible they used the 

 money due one project to start another, and became 

 entangled in their own nets. 



Regarding the lack of proper investigation, it 

 will be pointed out that exhaustive reports of a very 

 satisfying nature were made by prominent engineers. 

 and opinions rendered by leading attorneys, and that 

 the reason for the failure is that the people bene- 

 fited by the irrigation system will not pay. 

 As a matter of fact, the projects were so over- 

 loaded with profits and the construction work dragged 

 out over such a length of time, that the people, how- 

 ever, willing they might be, were unable to pay. That 

 stumbling block proved their undoing, and, in all busi- 

 ness sense, should have been a matter to receive the 

 most thorough investigation. 



The reports mentioned have gone very extensively 

 and technically into the matter of water supply, soil 

 conditions, markets and transportation, yet a search 



Mtond Department, Interstate Savings Hank. Denver. 



through their pages fails to reveal any detail as to the 

 character and financial condition of the people under 

 the system, and their willingness and ability to meet 

 the obligations they have taken upon themselves. 

 In a number of the projects upon which bonds have 

 been sold, not more than fifteen voters participated 

 in the organization of a district, and voted a million 

 or more dollars indebtedness upon themselves as cheer- 

 fully as they would attend a general election and vote 

 for the man of their choice for a public office. After 

 all, when it comes to the final analysis, it is the people 

 who have to pay and five times the quantity of water 

 on three times the quality of soil will not make a pay- 

 ing irrigation project, unless the settlers on that proj- 

 ect have a proper realization of their responsibilities 

 and willingness, energy, ability and a chance to meet 

 them. There is no bank in Chicago or elsewhere that 

 would loan a large sum of money, as a business propo- 

 sition, to an industrial concern on its assets alone. The 

 ability and standing of the owners and the quality of 

 the management have as much to do with making the 

 loan as the physical value of the assets. Yet large 

 loans have been made upon irrigation projects, the 

 men who made the loan evidently forgetting that wa- 

 ter and land have small value separately, and their 

 value, when one is applied to the other, is only deter- 

 mined by the intelligence and energy used in such ap- 

 plication. 



Irrigation is the greatest factor in the develop- 

 ment of the West. The ditches and canals are the 

 arteries that carry the life blood of Colorado and her 

 sister states. Colorado, with over $50,000,000 as the 

 value of its agricultural crops in 1912, is commanding 

 attention as one of the great agricultural states of the 

 Union. Ninety per cent of this value was created by 

 irrigation, and it is folly to say that irrigation develop- 

 ment must lie dormant, because the greed and lack of 

 foresight of a few have served to bring into disrepute 

 a great industry. 



The man who makes two blades of grass grow 

 where none grew before, is a benefactor, but before 

 the full measure of his benefaction is conceded, let us 

 be sure that the grass is growing and will continue 

 to do so. 



It has been suggested that Colorado and the 

 other western states where irrigation development 

 has suffered, should clean house. That may be true 

 in a measure, but a considerable assistance in the house 

 cleaning should come from those who are genuinely inter- 

 ested in all that makes for the good of the country at 1'irge. 

 The settlement of the West, and the production of foodstuff, 

 sheep and cattle, all of which means the irrig'ition of arid 

 lands, is of vital importance to everybody, everywhere. 



Let the owners of these failures fall upon '.hose who 

 instigated them and not upon the states that were forced to 

 submit to their depredations. The business of reclaiming 

 and Settling the western lands should go ahead with a renewed 

 impetus, but strictly as a business and not as T gambling or 

 bond jobbing scheme. 



Promotion and excessive bond and construction profits 

 should lie eliminated and every effort nnde to get the price 

 of water down to a basis where it will be no hardship for 

 the people to pay. Investigation along all lines should be 

 thorough and by people who understand how to make such 

 investigations. Under these Conditions the returns upon the 

 capital invested would be ample, and the increase in business 

 of all lines, by reason of such development, would ne felt 

 for all time to come. 



