THE IEEIGATION AGE. 



147 



IRRIGATION AND IRRIGATION 

 SECURITIES 



L. L. McCLELLAND, President J. S. & W. S. Kuhn, Inc. 



Sufficient time has elapsed to enable a fairly 

 close analysis of the actual results accomplished by 

 irrigation during the past six or seven years. Much 

 space was used in magazines and newspapers in 

 1906, 1907 and 1908, outlining the wonderful results 

 to be obtained by segregating and developing the 

 semi-arid lands in the western states, and making 

 them "blossom like the rose" by means of irrigation. 

 Reclamation enterprises inaugurated by the govern- 

 ment naturally stimulated the interest of private in- 

 dividuals and of corporations in irrigation projects, 

 and many companies, having aggregate capital run- 

 ning into the hundred millions, were organized with 

 an expressed purpose of irrigating large tracts of 

 land. The investing public was importuned to buy 

 the securities of those companies and, for a time, 

 there was a ready market therefor. As usual, there 

 was no differentiation between companies which 

 were organized for the purpose of selling securities 

 or those which had the definite purpose of carrying 

 out the promises made in their prospectuses. The 

 idea was abroad that any project that had irrigation 

 as its basis must necessarily be successful. Ap- 

 parently little consideration was given to the time 

 required to complete projects, nor of the great ob- 

 stacles to be surmounted. The situation was com- 

 plicated by the flotation of some companies whose 

 organizers were not scrupulous, and the failure of 

 a few houses which had marketed round blocks of 

 securities naturally created a suspicion that irriga- 

 tion was foredoomed to failure. At the beginning, 

 there was considerably more enthusiasm than was 

 warranted by actual conditions and, after failures 

 occurred, opinion swung too far in the opposite di- 

 rection. 



Judging from the established record of irriga- 

 tion, the proportion of successes compares favorably 

 with that in any other new line of endeavor. A 

 brief reference to the history of our manufacturing 

 and transportation industries shows that, in their 

 early days, failures were numerous and, in many 

 instances, preconceived ideas had to be abandoned. 

 But this did not prevent ultimate realization. Irri- 

 gation presented opportunities and difficulties en- 

 countered were not more trying than experienced 

 by pioneers in other enterprises. Of course, ample 

 capital, good business judgment and efficient man- 

 agement were imperative. Companies equipped 

 therewith had more than an even chance of fulfill- 

 ing promises. That a long list of companies organ- 

 ized when the movement was at its height in 1906, 

 1907 and 1908 has been definitely successful is ap- 

 parent from official documents. For instance, the 

 1912 report of the Idaho State Land Department 

 gives in detail results accomplished in that state. 

 The amount expended by all companies from their 

 inception to November 1 last was $22,845,000. Sev- 

 eral companies have been in operation for the past 

 four to seven years and the wealth of the state has been 



increased many fold by the settling and cultivation 

 of lands within the irrigated districts. Irrigation 

 has been a success in Colorado, in Washington, in 

 Oregon, in California and in other states over a 

 period extending from 5 to 25 years, and the value of 

 lands within the areas affected by irrigation has 

 risen enormously. The evidence demonstrates that 

 failures have been almost exclusively due to (1) 

 improper selection of land for irrigation, (2) to in- 

 sufficient water supply, (3) to lack of experience, 

 (4) to imperfect organization, (5) to poor manage- 

 ment, and (6) to inadequate capital, and that success 

 has been obtainable by the exercise of business 

 acumen. 



Irrigation is a business proposition pure and 

 simple and should not be considered from any other 

 angle. Success or failure depends on the same prin- 

 ciples underlying other enterprises, among which 

 might be mentioned sufficient capital, proper inves- 

 tigation, honest construction, capable organization 

 and efficient direction. In irrigation, the physical 

 success of the proposition does not necessarily mean 

 financial and agricultural success. Dams, reservoirs, 

 canals and ditches may be of the best possible con- 

 struction, and abundance of water may be available 

 for supplying all requirements of the acreage in the 

 property. It is, therefore, highly important that the 

 right kind of settlers be attracted to the land and 

 also that the settlers be educated in proper methods 

 in farming irrigated land. Herein lies the great ad- 

 vantage to holders of securities of companies owned, 

 managed and operated by the same interests which 

 brought out and distributed the bonds, and whose 

 ultimate profit is primarily dependent on revenues 

 derive after the retirement of the mortgages or am- 

 ple provision made for their liquidation. 



Underestimating the cost of construction has 

 been a contributing factor in the failure of a number 

 of companies, but the expenditure of three times 

 the original estimate by one company in Southern 

 Idaho did not prevent that corporation's success, be- 

 cause ample capital had been supplied, wise selec- 

 tion of land for irrigation had been made, and the 

 management had met all requirements of the situ- 

 ation. This goes to prove that the exercise of sound 

 business judgment in segregating the acreage and 

 in securing abundant water supply more than 

 recompensed for the greater expenditure in con- 

 struction. The same statements can be applied to 

 other projects with some modification. The three 

 Kuhn propositions in Idaho were built for about 

 $750,000 under the original estimate of $8,750,000, 

 but an experience of over 30 years in public utility 

 construction in all parts of the country gave their 

 engineers an advantage not generally possessed. 



Operation of irrigation companies embodies the 

 same essential features as required in merchandis- 

 ing, manufacturing and transportation. Irrigation, 

 as a business proposition, dates back to the begin- 

 ning of time and its rewards have exerted no little 

 influence in preventing prosperous and populous 

 countries from becoming waste places. Crop fail- 

 ures are improbable when the irrigation system is 

 properly handled. Ordinary carefulness assures 

 abundant harvests at all times, whereas the non-irri- 

 gated farm yields according to the caprices of na- 

 ture in the amount of rainfall annually distributed. 



