104 



THE IRRIGATION AGE. 



would only guarantee the interest on the bonds and 

 let the irrigation district build the project without 

 Government supervision, and exclusively handle the 

 funds raised under such guarantee. But under the 

 plan I have to offer the Government would be not 

 only behind both principal and interest, but would, 

 at the same time be amply protected, as it would 

 have charge of the construction work and exclusive 

 control of the management, together with the col- 

 lection of the construction, operation and mainte- 

 nance charges. 



Should this plan be followed, each irrigation 

 district, or municipality would build its own project; 

 each, as might be said, would "fly with its own 

 wings." No appeal would have to be made from 

 time to time for funds; no money would have to 

 be advanced by the Government, except perhaps a 

 small fund say from twenty-five to fifty thousand 

 dollars with which to make the surveys and which 

 eventually would be returned by the project. Every 

 available project would build itself without the 

 necessity of having to call upon the Government 

 for money before doing so. There would be no 

 necessity for going to Congress from year to year 

 seeking appropriations or anything of that kind. 

 With the Government's aid thus secured, the peo- 

 ple could in this manner float their own bonds, and 

 secure the required funds at a low rate of interest, 

 of from three to three and a half, and not to exceed 

 four per cent per annum. 



Now, we have listened to an able discussion 

 on the Rural Credits Bill, under which money is 

 loaned with which to handle your crops at the rate 

 of five per cent. Is it unreasonable then to ask for 

 a loan with which to place the water upon the farm 

 with which to raise these crops, at the same or a 

 lower rate of interest? Perhaps the better system 

 would be to let the rate be the same as provided 

 in the Rural Credits Bill, five per cent, and set aside 

 two per cent annually of the receipts under that 

 rate as a sinking fund with which to redeem the 

 principal, which under what is known as the amor- 

 tization plan would pay off the principal within 

 about thirty-five years. This would only extend 

 the present reclamation payment period a few more 

 years. Instead of the Government advancing you 

 the use of money for twenty years at what is in 

 effect five per cent interest and then making you 

 a present of the principal, as the real estate firms 

 mentioned last evening advertised the Government 

 is doing under the Reclamation Law, this plan 

 would only be an extension of about ten or twelve 

 years in which to pay interest and be made a pres- 

 ent of the principal. (Gong rings.) 



JUDGE KING. What was that? (Laugther.) 

 Well, ladies and gentlemen, I understand that the 

 first bell rings three minutes before you are through. 

 But fortunately it rang just as I was through. Now, 

 I am ready to close for fear someone will throw 

 at me the snowball which I invited a few minutes 

 ago. I thank you. (Applause.) 



JUDGE CARROL B. GRAVES, of Washing- 

 ton : Before Judge King takes his seat, may I make 

 sure of his position and inquire whether in his sug- 

 gested modified form of the "Jones Bill" it is pro- 

 posed that the Government guarantee the bonds or 

 only the interest on the bonds? 



JUDGE KING : I thank Judge Graves for call- 

 ing my attention to that feature. 1 could very easily 

 have utilized my other three minutes by further 

 clarifying that point. In response, will say that un- 

 der the plan I last discussed the Government would 

 guarantee both the principal and interest. The guar- 

 anteeing of the interest alone is another proposition 

 which 1 think would be practicable, except that it 

 might make a difference of one-half to one and a 

 half per cent in the interest to be paid. 



That is another one of the proposed plans, and 

 it constitutes one of the main features of the "Jones 

 Bill." I have heard that plan advocated and ex- 

 tensively discussed, and I believe if the Govern- 

 ment would guarantee the interest on the bonds 

 and not the principal, that within itself, would en- 

 able the procurement of the necessary funds and 

 at a rate of not to exceed four per cent (provided 

 the Government controlled the project), because 

 every man who might invest in bonds would know 

 that he would at least get back the principal in 

 interest. The interest in the end would amount to 

 as much as the principal, provided the time of pay- 

 ment is made twenty-five years at four per cent, 

 or twenty years at five per cent. The purchaser 

 of the bonds could say he was taking chances on 

 losing the principal or running the risk of losing 

 the interest. In either event he would in the end 

 have returned to him the full sum advanced. Or 

 you could call it a guarantee that he would receive 

 half the principal and half the interest ; whichever 

 plan you want to term it, the final result would be 

 the same. You may call it either the payment of 

 the principal or payment of the interest, whichever 

 term would be preferable, providing he should lose 

 either or lose anything at all. 



I think, in practice, it will be found that when 

 they shall have paid the interest for the full period 

 of time it is not likely that the district will permit 

 itself to default and lose all moneys it has invested. 

 So, under either proposition, I think the investor 

 would feel safe and the plan would prove a success. 



The principal criticism I have of the "Jones 

 Bill" is that the project is not carried on under 

 government supervision and that, under that plan, 

 we might become confronted with some of the dan- 

 gers with which the people have had to contend in 

 the cases of corporate or private enterprises, to 

 which I referred in our debate last evening. 



Does that answer your question? 



JUDGE GRAVES: Yes, sir. May I just in- 

 dulge in one remark one minute? 



CHAIRMAN TRUE: Certainly. 



JUDGE GRAVES : I am not saying that as a 

 matter of discussion, but as a matter of suggestion. 

 After the Government has examined the project and 

 pronounced it feasible, if it then undertakes as a 

 matter of Government function to guarantee the 

 interest, why should it have any control over the 

 operation of the canal? I will grant that it might 

 have supervision over the construction of the work 

 so as to see that the plans which it had approved 

 were carried out. 



Now, I have this thought in mind : In my state 

 and in most of our sister states there is a custom 

 that once bonds are floated and sold, the collection . 

 of taxes to pay the interest and principal is not 

 vested in the hands of the district officers. When 



