236 



THE IRRIGATION AGE. 



legislation for irrigation by State and municipal 

 agencies, as has been so well argued here by Gov- 

 ernor Spry of Utah and others, are the effective su- 

 pervision and keen interest of the people next to the 

 land and their local officials. There is another, leg- 

 islation recognizing State rights and co-operation 

 in local matters is popular just now and easier to 

 get. 



There is a third reason ; it is the right policy, 

 and under proper restraints, it should prevail. 



I pass now to the question of Capital. 



There are probably $25,000,000 of our irriga- 

 tion securities, created within ten years, now in 

 default ; these are held by our brethren in the East 

 or by insurance companies and banks who repre- 

 sent widows, orphans and poor, saving people. You 

 would be amazed if you knew how many are owned 

 by farmers. Behind these securities stand the in- 

 vestment bankers, who, so long as those securities 

 remain in default, will return a firm, though polite 

 NO ! to every application for further loans, and the 

 whole country East of the Missouri River is of the 

 same mind. This is the first condition the Eastern 

 people think should be remembered and remedied. 



The present condition in this respect is the di- 

 rect result of the debauch in irrigation projects 

 which swept across the country and almost 

 swamped the financial markets from 1904 to 1910. 

 It resulted in many of the failures and losses of the 

 last four years, precisely the experience of the ca- 

 nal and turnpike schemes of 1825 to 1840, and the 

 railroads from 1840 to 1870, which largely con- 

 tributed to the great panics of 1837 and 1873. We 

 are fortunate in the fact that the country, now 

 grown rich and great, has been able to swallow and 

 digest the dose without a panic and this in spite of 

 its increase caused by the great industrial expan- 

 sion in the East and the war panic in Europe. The 

 lesson to be gained is the knowledge and assurance 

 that we are a financially great nation, though not 

 yet independent. 



This gives us the right to hope and expect the 

 recovery of a market for our securities, but it must 

 be under different conditions, and I hope and be- 

 lieve it will be on better terms. 



Now what of the Hope. 



One of the immediate and greatest results of 

 the Irrigation slump was the organization of the 

 Investment Bankers Association of America, com- 

 posed now of nearly 500 of the best financial houses 

 in the country, including the bond departments of 

 all the great banks, as well as the true bond buyers 

 and distributers. 



It is this organization which we must reckon 

 with and satisfy. Fortunately it is composed of 

 intelligent, earnest and honest men, wWo are will- 

 ing, yes anxious, to be convinced. This association, 

 once convinced, is all that we need financially and 

 it will be the greatest possible help not only finan- 

 cially, but in every direction in colonization, legis- 

 lation and markets. 



Now what is needed to persuade the Invest- 

 ment Bankers' Association? 



Well, first of all, character. The present repu- 

 tation of irrigation securities issued in most part by 

 private enterprises but also by local municipalities, 



is, as the result of many failures, utterly bad, and 

 chiefly, though not wholly, because of the incompe- 

 tent, reckless and dishonest nature of their promot- 

 ers. 



We must substitute a different class of pro- 

 moters. In place of the private exploiters and in- 

 competent and dishonest managers, we must bring 

 forward public or publicly supervised and regu- 

 lated enterprises, so guarded as to convince the 

 bankers that the future will not be like the past. 

 We must supplement this with legal safeguards, 

 free from appeals or reversals by courts or local 

 prejudice, or future political changes or economic 

 changes, so that the investor who surrenders and 

 risks his all for a small return that we may make 

 all the profit, may be perfectly assured that not he, 

 but we, take the risks of the investment, and that 

 the community honestly, promptly and efficiently 

 will yield him his return and enforce his rights. 



What is necessary to this end? 



First: The establishment of competent and ef- 

 ficient boards of engineering and farming ability 

 under State control. 



Second : The adoption of sound principles and 

 policies, according to the needs of different locali- 

 ties and their establishment in permanent form. 



Third: Co-operation, and the standardization 

 of methods of financing and payment. 



Fourth : The creation of State or municipal 

 agencies to determine upon each improvement as 

 a local matter and then the commitment to the 

 State of the registration of the securities issued in 

 such way, that they will be forever after free from 

 attack, and secured by the power, the policy and 

 disposition of the State to enforce the levy and col- 

 lection of the taxes for their payment, both interest 

 and principal, without requiring State or other guar- 

 anties so that local jealousies and diversity of in- 

 terests may be avoided. 



The first and second conditions precedent which 

 I have mentioned have received ample discussion in 

 this conference, and I need not comment on them 

 again. 



First, then, I speak of co-operation in publicity 

 and financing. The irrigation States constitute for 

 this purpose one community and should recognize 

 first of all this fact, and the permanent value of co- 

 operation, the strength there is in unity of purpose, 

 methods and effort. Establish an amply supported 

 bureau, maintained in common by and for all the 

 States to deal with the public and the bankers' or- 

 ganizations, and employ only the best advertising, 

 legal and financial talent obtainable, scientific, non- 

 partisan and able and pay them well. 



The States, co-operating through competent 

 agents, must harmonize their own differences and 

 plans and standardize and make uniform their pro- 

 posed methods of finance. They must adopt gen- 

 eral principles and forms, as to amount of bonds, 

 forms of securities, sinking fund methods, length 

 of time and rates of interest, so that there will be 

 harmony of purpose and effort and no unfair com- 

 petition of one with the other. 



Assuming its practical value, the project should 

 be a local enterprise, locally desired, conceived and 

 (Continued on Page 244.) 



