IRRIGATION DISTRICT OPERATION AND FINANCE. 21 
private sale. The statutory provisions with reference to private sale 
and to exchange of bonds for construction or for completed works 
differ in the several States, some of the laws allowing the directors 
considerable latitude and others imposing restrictions. In several 
States such matters as the use of bonds for construction purposes, 
disposal of bonds at private sale, disposal at less than a certain per- 
centage of par. etc., are subject to approval by the State bond com- 
mission. Provisions as to the price at which bonds may be sold or 
otherwise disposed of range from par down to 85, while two States 
have no minimum price limitation. 
The difficulty of attempting to establish by legislation bond yields 
which will stand the test of a fluctuating market has appeared in the 
operation of irrigation districts generally and has caused several 
States to make their statutory provisions on this point more liberal. 
In California, for example, the Wright Act provided that bonds 
should bear 6 per cent interest and should not be sold below 90. 
which feature was amended in 1897 to provide for 5 per cent interest 
and no sales at less than par, and was again amended in 1913 to 
make the interest rate not to exceed 6 per cent and to remove the 
minimum selling price limitation. A single rate of interest fixed by 
statute has proved to be a detriment to some districts at times when 
they could otherwise have secured a lower rate, for to secure the 
equivalent of a lower interest rate the districts would have had to ask 
for larger premiums than many bond buyers would be willing to offer. 
Neither excessive premiums nor excessive discounts are attractive to 
bond investors. Restrictions against trading bonds at less than par 
were circumvented in many cases during the speculative eras by 
setting excessive valuations upon irrigation works and then exchang- 
ing such works for district bonds ostensibly at par. The nearest 
approach to a solution of these problems, without at the same time 
injuring legitimate development, has been in the liberalizing of 
selling price and interest requirements and in safeguarding the secu- 
rity by investigations and reports by State officials. 
Refunding bonds. — The majority of the States authorize bonds to 
be refunded. Funding issues in some States may similarly be 
exchanged for outstanding interest, warrants, or notes, or sold to 
take up such indebtedness. 
While the refunding privilege has been used in the financial reor- 
ganization of districts in several States in order to take up overdue 
bonds and interest at a discount, nevertheless the fact of refunding 
does not by any means imply insolvency on the part of a district. 
As a matter of sound business policy certain districts have refunded 
maturing bonds, which they could well have paid in full, because of 
prevailing market conditions which would have required the farmers 
to mortgage their farms at higher rates of interest or to call in loans 
bearing higher rates than the district bonds were canying, in order 
to provide the district with funds to take up such bonds. Certain 
funding issues of this type have sold at a premium, whereas the 
original issues which they were designed to take up had sold at 95 or 
96. the higher price of the funding bonds being due to the increase 
in the security resulting from the district's development. 
THE BOND MARKET. 
The market for irrigation district bonds during the 35 years of 
district history has undergone extreme fluctuations and on the whole 
