136 



THE IRRIGATION AGE 



AN INTERESTING LETTER 



Addressed to a Member of Congress by Mr. F. D. Catlin, a Prominent Attorney of Montrose, Colo., Concerning 

 Recent Hearings Before the House Committee on Irrigated Lands 



Hon. 



Montrose, Colo., June 7, 1917. 



Washington, D. C. 



Dear Mr I have read with interest the 



several parts of the reports of hearings before the commit- 

 tee on irrigation of arid lands, and have just received 

 and finished reading Part 6, which contains certain state- 

 ments that seem to me reveal a misapprehension on the 

 part of several of the parties to this hearing. 



As you know, we of the Uncompahgre Project, are vi- 

 tally interested in the questions before your committee. I 

 have resided here for over 32 years, and have been per- 

 sonally connected with the loaning of several millions of 

 dollars on farm mortgage securities, and we have for 

 clients, nearly a million dollars now in force, some of 

 which are on lands and water rights within the Uncom- 

 pahgre Project. We also own lands under the project, 

 and we know, or ought to know, the exact conditions 

 here, both from the owner's standpoint and the standpoint 

 of the money loaners. And we are also deeply interested 

 in the success of the Farm Land Bank loans, as we believe 

 that they will bring a greater prosperity to our country, 

 both directly and indirectly. As loan agents, we are not 

 afraid of the competition of the government, because whe 

 ever the government will loan at 6 per cent or less our 

 clients will also do the same, and as stated by Mr. Norris 

 in Part 6, there has been a reduction of at least 1 per cent 

 in interest rates here since the passage of the Farm Loan 

 Act in anticipation of the effect of the government loans, 

 although none have yet been made here or near here, 

 and it is still questionable whether any will be made under 

 the project or not. But the community has received this 

 benefit of a reduction of from an average 8 per cent inter- 

 est to an average 7 per cent interest. And when it reaches 

 fi or 5 per cent, as I have no doubt it will, we expect our 

 superior facilities for the quick handling of loans and de- 

 tails of payments and general accommodation of the bor- 

 rowing public, to still do our share of the business. 



Therefore, we are anxious for your committee to suc- 

 cessfully solve the question between yourselves and the 

 Farm Land Board, so that our project settlers may receive 

 such borowing credit as they may be entitled to, and the 

 lowest possible rates of interest. All of which will tend 

 to a greater general prosperity. 



I, therefore, want to call your attention to several 

 features of Part 6 of the hearings wherever the views ex- 

 pressed do not seem to be clear, or the parties do not 

 fully understand the real difficulties. In the letter of .Mr. 

 Norris, page 140, we are pleased with the statement: 



"These reclamation projects were undertaken and car- 

 ried out honestly and with the best of intentions, but it 

 would seem as if in many cases there was a failure to 

 consider the economic conditions that would confront set- 

 tlers, and the government failed to give to many of these 

 settlers the financial cautions or to extend to them the 

 financial assistance that are generally extended by private 

 individuals or corporations feeling a proper responsibility 

 for the success of settlers whom they establish on coloni- 

 zation projects." 



And again on page 138, Mr. Norris splendidly says: 

 "If a private corporation had treated a lot of people 

 as the government has treated a lot of the settlers on the 

 irrigated lands, that corporation would be under indict- 

 ment today, all done with the best intentions, but the con- 

 sequences have been most cruel." 



I will try to confine my references, explanations and 

 statements to conditions as they exist on the Uncom- 

 pahgre Project. But I believe the same conditions practi- 

 cally are found on most of the projects. 



The object of your inquiry, as I understand it, is how 

 to permit settlers on irrigation projects to obtain the 

 benefits of the Farm Loan Act. Messrs. Norris and Lob- 

 dell clearly state that the board will not accept second 

 mortgages, and, therefore, the reclamation lien must be 

 waived as to Farm Land Bank loans. I cannot imagine 



it is really intended for the purpose of waiving the lien 

 for the benefit of the Farm Land lianK as such, but to 

 procure credit and assist the settlers; and it does seem to 

 me that if a way can be found and an amendment devised 

 that will accomplish the purpose, that it should be to 

 waive the lien for all investors who will supply moneys 

 for the same purposes stated in the Farm Land Bank 

 law, at the same or a better rate of interest than is re- 

 quired by the Farm Land Bank. For it seems it does not 

 need argument to say that when the Farm Land Bank 

 has accomplished its purpose, and private investors are 

 ready to loan at the same or a lower rate of interest, than 

 the Farm Land Bank, that the Government will be willing 

 to retire from the money loaning business: and it would 

 not seem that it could be intended to favor the bank for 

 the purpose of aiding it in competition, but only for the 

 purpose of aiding it to aid settlers, and that any one else 

 who will aid the settlers in an equal or greater degree 

 should receive the same protection and inducement from 

 your efforts. 



While Mr. Norris on page 138 refers to money loan- 

 ers as "sharks," after the common epithet applied thereto, 

 had it not been for the assistance of the people who have 

 been willing to loan, even at a high rate of interest and 

 on this project 8 per cent has been the average rate on 

 real estate, settlers would have suffered much more than 

 they have, which has already been sufficiently grievous, 

 and really with the failure of encouragement or co-opera- 

 tion from the reclamation people, and the hog-tied condi- 

 tion of the settlers as to their titles and ability to give 

 security, the name more appropriate to be applied to those 

 who have had the temerity to loan to them, even at high 

 rates of interest, should be "another kind of fish with a 

 round mouth and a strong suction." 



Now although Mr. Norris implies on page 143, and 

 Mr. Little emphatically states on page 139, that unless 

 the amendment in question can be efficient, "that -if that 

 way of solving it, there is not any way of doing it at 

 all," I feel sure there will be found a way, and equally 

 sure that it will not be by the way of the amendment pro- 

 posed. Mr. Norris repeatedly says that if the lien were 

 by way of a contract or bonded indebtedness due from an 

 irrigation district payable by annual assessments through 

 the county taxing machinery, that under the ruling of the 

 Farm Loan Board it would not be considered such a lien 

 as to prevent accepting farm mortgages in such district 

 as being first mortgages or first liens. But this, it seems 

 to me, is not a well taken position, with all due regard 

 to the opinion of Judge King, for the reason that by ex- 

 perience we know that an irrigation district or a county 

 that is so heavily laden with bonded indebtedness as to 

 make conditions unsatisfactory and prosperity to the set- 

 tlers impossible is no place to invest money. And we 

 do not believe that the Farm Land Board will be differ- 

 ent than other investors in respect to this. We refer 

 you to the irrigation districts of Delta County, Mesa 

 County and Montezuma County in Colorado, which are 

 nearest us, and therefore of which we have best informa- 

 tion. No loan company or loan agency or private in- 

 vestor will consider a loan under these districts. And 

 we are credibly informed that the same condition is every- 

 where. The nature of the indebtedness of an irrigation 

 district is different from a bonded indebtedness of a 

 school district. It is always greater in proportion, and 

 the method of foreclosure is so arbitrary that investors 

 have no desire to place funds where they can have the 

 title sold out from under their mortgage without even 

 foreclosure or a day in court. We find that 50 per cent 

 or more of the assessments for interest and maintenance 

 and operation in these districts is delinquent, and the 

 property sold for taxes, and the title rapidly expiring by 

 way of tax deeds. We don't expect the Farm Loan Bank 

 will be less conservative than the loan companies, but if 

 there is any difference that a greater care will be ob- 

 served, as Mr. Norris repeatedly says, they will take no 



