NRLF las sm LIBRARY OF THE UNIVERSITY OF CALIFORNIA. GIFT OF Class^ D O 0) H 0) to z CM > I* < K o 1 BAN K B K B w p 5 8 U r. ~ O O Js IRRIGATION BEING A BRIEF TREATISE COMPILED FROM AUTHORITATIVE SOURCES AND CON TAINING THE FULL TEXT OF THE "CAREY ACT." - 4 I k /L O ^ COPYRIGHT 1908 BY j. S. & W. S. KUHN Compliments of J. S. & W. S. Kuhn, Incorporated Pittsburgh^ Philadelphia, Chicago and St. Louis. Contents. Note - Page 1 Arid Lands of the United States " 5 "Irrigation" " 11 Some " Irrigation" Legal Features " 15 The Carey Act - '' 19 Development of Irrigation " 27 The Largest and Most Successful Irrigation Project in the United States The Twin Falls Tract ' 35 Opportunities for Investment afforded by Irrigation " 57 193425 s . S.J c rt U OJ rt fa 1) C O CO O jd CO i (5 The Carey Act. By far the ablest Irrigation legislation, and that most far- reaching in its effects, calculated, at the same time to encour- age the investment of private capital, by securing its repay- ment, after providing for a liberal compensa- Carey Act tion, and to attract settlers, through afford- Comprehensive ing them full protection against pernicious and Just. speculative, or ineffectual "schemes," and by vesting them, eventually, with the proprietor- ship of the Irrigation system, upon payment therefor at a fair value on easy terms, is the Federal Statute, known as the "Carey Act." This Act, for which Senator -Carey of Wyoming was sponsor, originally passed in 1894, and twice amended, stands today the culmination of laws, evolved after an experience of forty years, under whose just and comprehensive provisions, the reclamation of all the remaining irrigable lands bids fair to be secured, as soon as capital shall receive the proper presentation and the progressive farmer the word. This legislation was enacted by Congress, Reasons for through its realization of the enormous the "Carey Act." wealth, hidden in the agricultural resources of the Public Lands barren wastes of arid tracts, though they might appear. The work of reclama- tion, under the then existing laws, was too gigantic for individ- ual or corporate capital, and attended with too great risk to warrant its hazard, and irrigation, on alarge scale, was as yet too much in its infancy, to warrant the vast necessary expenditures by the Government. Rather than delay development, how- ever, the plan was conceived for the Government to assist in this work, by donating 1,000,000 acres of Public Lands in each of the arid states, to the states themselves, in consideration of the irrigation and settlement of not less than 20 acres in each 160 reclaimed, whether at the hands of the respective common- wealth, or through contract with private corporations. 19 The act in detail works out as follows: Workings of the A certain tract of Government land having "Carey Act." been determined upon as suitable for reclama- tion, the corporation desiring to construct irri- gation works thereon, for the purpose of reclaiming the land under the act, files with the State Board of Land Commission- ers its application, together with its proposal for constructing the works. This application must be accompanied with a de- tailed plan, covering the proposed works, including an estimate of the cost of construction, and showing the source of the water supply, and that filings for the water appropriation have been made, also the terms per acre at which the perpetual water rights will be sold to settlers. These plans must be approved by the State Board of Land Commissioners, and the water supply must be thoroughly examined and reported on by the State Engineer. The State then makes application, to the Secretary of the Interior, for a segregation of the lands embraced in the application, submitting the exact plans for the proposed system, and if after due consideration, the Secretary of the Interior complies with the request, the State Board enters into a contract with the corporation, covering the specifications, as set forth in the application, the corporation giving an adequate bond for the faithful performance of their part of the contract, and the work proceeding under the direct supervision of the State Engineer. These safeguards as to the feasibility and effectiveness of the project, innure to the benefit of both the investor and the settler, preventing ill-advised undertakings on the part of the former, and affording the latter protection in the character and quality of the works, and in fixing a fair valuation to the cost of the individual water rights Under authorization of the United States Government, and upon the segregation of the lands to be irrigated, the state creates a first and prior lien in favor of the corporation, under which none of the land may be sold, until the purchaser has acquired from the corporation, at the stipulated price, cor- responding water rights, or shares in the carrying capacity of the canals, sufficient to deliver the water required for the irri- gation of his land. These water rights are purchased on terms 20 of a certain amount in cash down, and the balance in deferred payments, the settler giving his promissory notes therefor, secured by a first lien on the land until finally paid, these repre- senting virtually purchase money mortgages. Patents from the State may only be issued when the settler shall have actually settled the land, and cultivated at least one-eighth of the acre- age. The settlement must be accomplished within six months, and the cultivation completed within two years, after the water has been made available for irrigation. The land also may be sold only in divisions of not less than 40 nor more than 160 acres. The strong security to the corporation for the return of its investment, will be noted in the above, since a first lien is created on all of the lands, which must be immediately cultivated and settled by a large body of individuals, thus dividing the re- sponsibility for prompt payments and assuring an increased valuation to the land, such as naturally attaches to the lands of a settled community. Through these provisions also, the speculative holdings of large tracts of land is prevented, and bona fide owners are ob- tained, each directly interested in the development of the land. A further feature of the "Carey Act" vests the proprietor- ship of the irrigation works in the settlers, upon payment there- for to the corporation, who will have then received back the original investment, and the profit, as contemplated in the orig- inal application. The terms of transfer are usually stipulated in the contract between the State and the Corporation. It is hard to conceive how a more comprehensive law could have been framed, just alike to the capitalist and to the settler, nor a plan more calculated to effect the results contemplated for it. The following extract from the Rules and Regu- Text of the lations of the State Board of Land Commissio tiers "Carey Act." of the State of Idaho, sets forth in full the "Carey Act," and its several amendments. "Section 4 of the Act of Congress, approved August 18, 1894, entitled, "An Act Making Appropriations for Sundry Civil Expenses of the Government for the Fiscal Year ending June 30, 1895, and for Other Purposes," (28 Stat. 372-422) authorizes THE GREAT DAM AT MILNER, IDAHO The gates extend 530 feet along the crest of the dam whose total length is 2000 feet. the Secretary of the Interior, with the approval of the Presi- dent, to contract and agree to patent to the states of Washing- ton, Oregon, California, Nevada, Idaho, Montana, Wyoming, Colorado, North Dakota, South Dakota and Utah, or any other states, as provided in the act, in which may be found desert lands, not to exceed 1,000,000 acres of such lands to each state, under certain conditions. The text of the act is as follows : "That to aid the public land states in the reclamation of the desert lands therein and the settlement, cultivation and sale thereof, in small tracts to actual settlers, the Secretary of the Interior with the approval of the President, be, and hereby is, authorized and empowered, upon proper application of the state, to contract and agree, and from time to time in each of the states in which there may be situated desert lands, as defined by the act entitled 'An Act to Provide for the Sale of Desert Land in Certain States and Territpries' approved March third, eighteen hundred and seventy-seven, and the act amendatory thereof, approved March third , eighteen hundred and ninety-one, binding the United States to donate, grant and patent to the state free of cost for survey or price such desert lands not exceeding one million acres in each state, as the state may cause to be irrigated, reclaimed, occupied, and not less than twenty acres of each one hundred and sixty acre tracts cultivated by actual set- tlers, within ten years next after the passage of this act, as thoroughly as is required of citizens who may enter under the desert land law. "Before the application of any state is allowed, or any contracts or agreement is executed, or any segregation of any of the land is ordered by the Secretary of the Interior, the state shall file a map of the said land proposed to be irrigated which shall exhibit a plan showing the mode of the contemplated irrigation and which plan shall be sufficient to thoroughly irrigate and reclaim said land and prepare it to raise ordinary agricultural crops, and Shall also show the source of the water to be used for irrigation and reclamation, and .the Secretary of the Interior may make necessary regulations for the reservation of the lands applied for by the states to date from the date of the filing of the map and plan of irrigation, but such reservation shall be of no force what- ever if such map and plan of irrigation shall not be approved. That any state con- tracting under this section is hereby authorized to make all necessary contracts to cause the said lands to be reclaimed, and to induce their settlement and cultivation in accordance with and subject to the provisions of this section; but the states shall not be authorized to lease any of said lands or to use or dispose of the same in any way whatever, except to secure their reclamation, cultivation and settlement. "As fast as any state may furnish satisfactory proof according to such rules and regulations as may be prescribed by the Secretary of the Interior, that any of said lands are irrigated, reclaimed and occupied by actual settlers, patents shall be issued to the state or its assigns for said lands so reclaimed and settled: Provided, that said states shall not sell or dispose of more than one hundred and sixty acres of said lands to any one person, and any surplus of money derived by any state from the sale of such lands in excess of the cost of their reclamation, shall be held as a trust fund for and be applied to the reclamation of other desert lands in such state. That to enable the Secretary of the Interior to examine any of the lands that may be selected under the provisions of this section, there is hereby appropriated out of any moneys in the treasury, not otherwise appropriated, one thousand dollars/' In the act making appropriations for sundry civil expenses of the government for the fiscal year ending June 30, 1897, and 24 for other purposes approved June 11, 1896, there is, under the head of appropriation for ''surveying public lands," the follow- ing provisions: "That under any law heretofore or hereafter enacted by any state, providing for the reclamation of arid lands, in pursuance and acceptance of the terms of the grant made in section four of an act entitled, 'An Act Making Appropriations for the Sundry Civil Expenses of the Government for the Fiscal Year Ending June Thirtieth, Eighteen Hundred and Ninety-five,' approved August eighteenth, eighteen hundred and ninety-four, a lien or liens is hereby authorized to be created by the state to which lands are granted and by no other authority whatever, and when created shall be valid on and against the separate legal subdivisions of land reclaimed for the actual cost and necessary expenses of reclamation and reasonable interest thereon from the date of reclamation until disposed of to actual settlers ; and when an ample supply of water is actually furnished in a substantial ditch or canal, or by artesian wells or reser- voirs, to reclaim a particular tract or tracts of such lands, then patent shall issue for the same to such state without regard to settlement or cultivation: Provided, that in no event, in no contingency and under no circumstances shall the United States be in any manner directly or indirectly liable for any amount of any such lien for liability in whole or in part." The limitation of time in the above quoted section 4 was modified by section 3 of the Act entitled "An Act Making Ap- propriations for Sundry Civil Expenses of the Government for the Fiscal Year Ending June Thirtieth, Nineteen Hundred and Two, and for Other Purposes," approved March 3, 1901 (31 Stat., 1133-1188) which provides as follows: "Sec. 3. That section 4 of the act of August eighteenth, eighteen hundred and ninety- four, entitled, 'An Act Making Appropriations for Sundry Civil Expenses of the Government for the Fiscal Year ending June Thirtieth, 1885, and for other pur- poses,' is hereby amended so that the ten years' period in which any state shall cause the lands applied for under said act to be irrigated and reclaimed, as provided in said section as amended by the act of June eleventh, eighteen hundred and ninety-six, shall begin to run from the date of approval by the Secretary of the Interior of the state's application for the segregation of such lands: and if the state fails within the said ten years to cause the whole or any part of the lands so segregated to be so irri- gated and reclaimed, the Secretary of the Interior may. in his discretion, restore such lands to the public domain." Fattened on Alfalfa and Field Peas. 25 8. S> J 2 -a "Development of Irrigation, The modern development of irrigation in the Primitive United States has its foundation in the grad- Irrigation ual absorption of the public lands in the humid and semi-arid regions, half a century since. Then it was that the pioneer on the arid lands, locating his ranch near some source of water supply, with his own appli- ances, began to construct ditches leading from the mountain creeks, and by them irrigated his farm. His ingenuity and toil thus enabled him to secure crops on the lowlands along the rivers. Those who followed later on, found the lowlands along the small streams, preempted, and were obliged to establish their farms at greater distances from the streams, involving greater expense in conveying the necessary water. This led to the combination of farmers in jointly Co-operative constructing main canals from the streams and Ditch Asso- rivers, and subsequently dividing among them- ciations. selves the flow, and thus came into being the "co-operative ditch associations," and later the formation of "municipal irrigation districts." The demand for irrigation constantly growing, Irrigating with the salutary results in evidence , was met by the Companies, organization of companies for the purpose of building ditches and reservoirs, and delivering water to users through rentals. These at first were on a small scale. As questions of law and equity arose and legislation was enacted, recognizing certain rights or establishing precedent, capital was encouraged by the gradually increasing protection afforded it, until such safeguards have since been established, that there are now in operation, large enterprises of private cor- porations, operating under the strong provisions of the Carey Act, and works of the Government, fostered under the Reclama- tion Act, which are gigantic in their engineering undertakings, and which involve the expenditure of millions of dollars in a single project. 27 It has been estimated that approximately Government 10,000,000 acres of arid land have already interest in been reclaimed, for the most part through Reclamation. private and corporate enterprises. The Gov- ernment, however, has, in later years, become alive to the enormous benefits which accrue to the Nat ion, through the development of its agricultural resources, and has appropri- ated over $30,000,000, which is being expended in reclamation projects already under way, and is preparing to expend as much again in this most profitable investment. And well it may, for, according toC. J. Blanchard, Esq., Statistician of the Govern- ment Reclamation Service, the 3,198,000 acres already re- claimed, or in process of reclamation, together with the 3,270,000 acres additional now contemplated, will add forthwith over $200,000,000 to the taxable property of the people of the United States, and will provide substantial homesteads and gainful occupations for 80,000 families. Nor does this take into consideration enhancements in land values and in population, through the subsequent development of the several areas re- claimed, but is estimated on values at the time of the completion of the several works. It is well recognized that lands in completed Values of Irri- irrigated districts rapidly enhance in values, gated Land. as development proceeds. It is hard indeed to find improved land selling for less than $50.00 per acre, and orchard land may bring as high as $2,000 per acre, as it has in California. In Eastern Washington, in the lower Yakima Valley, improved land, suitable for small fruits, is selling at prices reaching $1,000 per acre, and at Lewis- ton, Idaho, where cherries are very successfully grown, land has sold as high as $1,500 per acre. On the recently developed Twin Falls Tract in Southern Idaho, agricultural land has brought as high as $300 per acre, and in small tracts as high as $600 per acre. A step further will include the valuations of all the col- lateral development associated with the settlement of the desert the steam railroads and electric lines, so essential for transportation, the telegraph and telephone system 29 THE HARNESSING OF THE MANY NATURAL WATER-POWERS. Power House of the Great Shoshone and Twin Falls Water Power Company. Salmon Falls of the Snake River. industrial necessities with their demand for power, which will involve the harnessing of the many natural water powers to be found scattered through the arid regions. All these enterprises will require the employment of thousands of skilled and un- skilled laborers, who, with their dependent families, will naturally add to the home market demand for the products of the irrigated farms. And so the $200,000,000 already referred to may be more properly said to represent a future addition of $1,000,000,000 to the taxable property of the Nation. Among the more notable of the Govern- Some Govern- ment projects, which appear in the last re- ment Reclamation port of the Reclamation Service, may be Projects. mentioned, The Salt River Valley project near Phoenix, Arizona, with an irrigable area of 270,000 acres and involving the construction of the mammoth Roosevelt Dam, with a capacity of 1,300,000 acre feet, this being the largest dam in the world. The allotment from the Reclamation fund, for this project, arrounts to $4,539,161, half of which has already been expended; The Yuma project in California, now well under construc- tion, with an irrigable area of 92,000 acres; The North Platte project of Nebraska- Wyoming, with the Pathfinder reservoir, having a capacity of 1,000,000 acre feet; $3,300,000 has already been allotted to this project; The Truckee-Carson project in Nevada, with the irrigable area of the first unit 200,000 acres, and for which $3,700,000 has been allotted; The Shoshone project in Big Horn County, Wyoming, with an irrigable area of 125,000 acres; The Klamath project in Oregon to irrigate 236,000 acres; The Payette-Boise project of Idaho, having an irrigable area of 372,000 acres, the first division of which is soon to be completed, and The Minidoka, Idaho, project recently completed in the Snake River Valley, and having an irrigable area of 130,000 to 150,000 acres. In this project water is carried at the present time to about 80,000 acres by gravity, and will be pumped on the balance at some future time. These projects, though only part of the Government's present undertakings, will serve to give some idea of the scope of the Government's interest. To sum up briefly, the Reclamation Service, which was organized the same month as the Panama Canal Commission, has dug 1,815 miles of canals, or nearly the distance from New York to Denver. Up to January, 1908, it has excavated 40,000,000 cubic yards of earth and rock, or one-third the total excavation required for the Panama Canal. It has erected 214 large structures, built 611 miles of wagon road in mountains and heretofore inaccessible regions, excavated 10 miles of tunnels and has surveyed and mapped an area larger than the combined area of Massachusetts and Rhode Island. Under the provisions of the Carey Act over Extent of 2,000,000 acres have already been segregated, in- Carey Act volving an expenditure of over $20,000,000. Idaho Projects. alone has now exhausted her 1,000,000 acres do- nation, followed, however, closely by Wyoming, in which between 700,000 and 800,000 acres have been segre- gated, while Montana with 400,000 acres, Oregon, and Colorado are the only other states, where any considerable progress has been made. Among the private irrigation projects operating The Twin Falls under the Carey Act, the Twin Falls develop- Pro ject. ment on the Snake River, in Southern Idaho, stands out conspicuously, as the largest and most successful irrigation project of any kind in the United States. In combination, the development of the south and north sides of the river, represents a segregation of 425,000 acres, over half of which acreage is already settled, and over three- fourths of which has already been sold. As the Twin Falls project is so noteworthy, and as the Twin Falls North Side is practically a continuation of the project on the South Side of the Snake River, and is of especial interest to the reader of this booklet, the development will be treated in detail as an example of what may be accomplished by "Irrigation ' 33 bfl OH *"? bJD The Largest and Most Successful Irrigation Pro- ject in the United States- -The Twin Falls Tract. The year 1903 dawned in Southern Idaho, ''Land of Sun- shine" where that writhing and winding river, aptly named the Snake, hisses through its canyon, walled with massive sides of rugged lava rock, to see stretched out for miles on either side, vast wastes of treeless desert plains, bristling with the bushy sage, and shunned by man and beast. The year passed by, and then appeared the tented camps of a busy swarm, with transit and chain, or drill and shovel, preparing the way for the marvelous transformation scene so soon to follow. Then, too a house, or rather bungalow was built, and with it swaths of sage brush cleared the nucleus of a future city center of a thriving land. In 1904 prospective settlers came from north, and south, and east, and west, and viewed the land, selecting here and there their future homes. And now another year had passed, the spring of 1905 had come, when, at the Milner Dam, the mighty heart of all the re- gion around, the gates shut down, the water rose and filled the dam, and then began to back, and then to spill. And soon were slowly opened other gates, and from them spurted streams, which, coursing through canal and ditch, two hundred miles of arteries and veins of that vast desert waste, brought vigor to the languid soil. And then it was that, with the water's rush, extend- ing out to all extremes, the pulse of that great sleeping tract began to beat, the stupor now forever gone. The sallow sage brush scale peeled off, and in its stead the green alfalfa grew, or maybe fields of wheat, or corn, or oats now pushing out their shooting blades, or later radiant with their golden grains. And everywhere sprang signs of life. The spell was off, and in the place of that long dormant waste, arose a strong and healthy fertile land. Such then is the chronicle of events, transforming the largest single tract of desert waste, so far attempted, into farms, prolific with luxtiriant crops and fruits. 35 The entire city of Twin Falls, Aug. i, 1904, and Main Street, Twin Falls, 1907, Hotel Perrine, Twin Falls. The daily arrival of children from the Twin Falls tract at the Bickel School House. Since then ho:r.es have dotted the landscape at frequent intervals all over the tract, to house the 2,500 settlers' families, and half a dozen substantial towns have been established, with populations of from 1,000 to 3,500. The County Cassia has been divided, and the town of Twin Falls is the county seat of the new Twin Falls County. All manner of modern conveniences attach to this City of town, including an excellent water supply, sewage Twin Falls and telephone systems, electric light and power. It boasts of several hotels, one of which, erected at a cost of $100,000, is hard to find equalled in any other town of similar size. The school facilities are excellent, and in keeping with the liberal policy of the State of Idaho, jealously guarding the education of the young. There are three banks in Twin Falls, one national and two state, with deposits of over $500,000. Town lots, 25 x 125, command from $1,500 to $7,000. Its mercantile houses do it credit, and manufactories are being rapidly estab- lished, with the recent acquisition of electric power, and as fast as the supply of labor can be depended upon. Such a town then is this, three years old, substantial in all its elements, and yet with a growth only consistent with actual demands, far removed from pernicious speculative "boom." Seventeen miles below Twin Falls, on the western edge Buhl, of the tract, is the town of Buhl, at the present time terminus of the Minidoka & Southwestern Railroad, which runs through the tract, joining the Oregon Short Line at Minidoka, 75 miles above. This railroad was constructed at a cost of about $1,000,000 simply to meet the demands of this tract, and it is said to be today the second best paying branch of the Oregon Short Line. At Milner, 20 miles east of Twin Falls, a town of Milner. 1200 at the present writing, and where the great dam is located, the electric line now building from Gooding, on the Oregon Short Line to the southeast, will form a junction with the Minidoka & Southwestern. The devel- opment of this town is proceeding on industrial lines. Its close proximity to hydro-electric power, its railway connections, and its river navigation (for the Snake River is here navigable for 37 CO < practically every project of note in the country." Said Con- gressman Mondell of Wyoming: "Your water supply is illimit- able and the method of diverting and distributing it is superb. You have a magnificent stretch of land. I have not a single criticism to offer." "All you need is a Pennsylvania Dutchman to farm your lands," declared Congressman A. F. Cooper of Pennsylvania. "We have seen many projects on our journey, but none of them suits me like this one. The soil, the climate and the water sup- ply are first class, and your citizens are evidently people of brains and capital. I am not authority on irrigation, but I do not need to be, to appreciate your magnificent project ; a schoolboy could do that." Congressman Reeder of Kansas, could speak with author- ity, being familiar with irrigation for years. "As an old irri- gator," he said "it was easy for me to become enthusiastic over the Twin Falls project. It is an enterprise I want to remember. Your water supply is secure and ample; your land is fertile and easy to irrigate; and your climate is such that people may live here in comfort the year around." Such corroborative evidence may be heard from all who visit this tract. They come with doubting minds, they see, they hear, and with conviction of the miracle, they turn away again with keen regret that word and pen so utterly fail to de- scribe this truly greatest wonder of the age. Company House at Milner, Idaho. 55 Typical Farm Houses on the Twin Falls tract. Opportunities for Investment Afforded by "Irrigation." While Irrigation bonds have had a place in the The Carey Act investment market for many years, being responsible principally the issues of "municipal irrigation for invest- districts," or those of corporations organized ment possi- to supply water to land owners at a stipu- bilities of lated rental for irrigating purposes, not until Irrigation the passage of the Federal Carey Act in 1894, Securities. and its vitally important amendment in 1897, was there any special protection afforded the investor in irrigation securities of private undertakings, beyond that which might obtain in each individual case on its own merits. Investors until then, therefore, naturally held aloof from a class of securities, which placed the layman at such a disad- vantage in determining the relative security afforded by each offering. And properly so, for certain essential features might be lacking which would render the project unsuccessful, causing the bondholders to foreclose on a property which might prove of little merit. It was, therefore, for this reason that the United Elements of States Government evolved a plan for the en- Success are couragement of capital investment in irrigation Guaranteed, securities, resulting in the passage of the ' 'Carey Act." Reclamation projects operating under its provisions are guaranteed liberal safeguards to the investor: (1) A sufficient water supply, and its proper distribution over the tract to be irrigated (2) A climate and soil suitable for agricultural pursuits. (3) Stability and completion of the irrigation works, which must be constructed under the supervision of the State, and whose completion is guaranteed by a substantial bond. (4) A statement of the estimated cost of the works, and the margin of profit contemplated in the sale of the water rights . the maximum price of which to settlers i? fixed. 57 (5) Perfect titles to the land, direct from the Govern- ment and the State. (6) Eventual proprietorship of the irrigation system by the land owners each water right purchased representing a share in the Irrigation Company. (7) A first and prior lien created by the State, on all the segregated land in favor of the irrigation company. (8) A settled community of improved and developed farms of 160 acres or less, each. All the elements necessary for success are thus assured to " Carey Act" irrigation projects. This has been made possible by the earnest endeavor of the United States Government, , to encourage its citizens to assist in reclaiming the arid lands, by affording them security for the return of their capital, together with proper compensation for its use. There are, of course, features which render "Carey Carey Act Act" projects more or less desirable. These are projects those which bear on the attractiveness of the irri- of gated district to prospective settlers, and which con- relative tribute to a reasonably quick sale of the land and worth water rights, through which the irrigation company is reimbursed for its investment, and secures its profits. Among these collateral features are the relative pro- ductiveness of the soil, advantages of climate, the market for products, the transportation facilities afforded, the character of settlers, the educational opportunities, and the cost of fuel and power. In addition to the obligation of the irrigation Special se- company and the security afforded, by the mort- curity af- gaging of its works, (including dams, reser- forded voirs and canals, and its right to distribute water through and sell its shares), the bonds of "Carey Act" "Carey Act" projects are further protected through a first features. and prior lien, on the entire segregated tract, created by the state, in favor of the Company. This lien provides that the lands of projects under this Act may be sold to settlers by the state, only after the settlers shall have 58 purchased a corresponding amount of water rights, or shares in the Irrigation Company, at a price representing a proportion- ate cost of the works, together with the profit permitted by the State. To facilitate the colonization of the land, the water rights are usually sold on terms of a definite payment down, and the balance in annual installments. A still further security is thus made possible as the basis for a bond issue by the Irrigation company, in that the purchase money mortgages, given to the company by the settler to secure the deferred payments, may be pledged with a trustee, giving the bondholders the additional security of first mortgages on individual farm lands. As the installment payments are made on these purchase money mort- gages, the equity in the mortgages correspondingly increases. Moreover, the value of the land securing the mortgages invari- ably increases with the development of the district, so that where the original mortgage represents say 80 per cent of the first cost of the undeveloped land, after, say, four or five installment payments have been made, the mortgage lien represents perhaps only one-half of the original cost, and may be only five or ten per cent, of the then actual market value of the land securing the mort- gage. This feature of increasing security, renders the long ma- turities of the serial bond issue, especially desirable from an investor's standpoint. With perfect titles afforded through patents from Perfect the state, and with the validity of the mortgages titles unquestionable, (since the original lien is created assured. by the state under authorization of the United States Government), the only element open for consider- ation, in establishing the security presented, is the sufficiency of the margin of equity, and the stability of land values. A recent report of the Reclamation Service gives Land the average value of lands reclaimed by the Govern- Values. ment as $47.00 per acre. The terms upon which Gov- ernment project lands are sold to settlers are much less attractive than those of the lands sold under Carey Act pro- jects. It stands to reason, therefore, that the average value of the latter lands should considerably exceed this figure. As a matter 59 of fact they do, and it is a rare instance where any improved land, in any irrigated district, can be purchased for as little as $50.00 an acre anywhere. On a newly irrigated district the lands bring from $75.00 to $300.00 an acre, and as development proceeds, the values enhance, until $300.00 no longer seems a high price for good agricultural land. Orchard land is in demand at much higher figures, it frequently changing hands at as high as $2,000 per acre. The reason for this is due to the prolific soil of irrigated land, the absence of crop failures, the abundance of sunshine and the regulated moisture making scientific farm- ing possible, and assuring future crops, many times in excess of those grown in the humid regions. A farmer may dispose of his eastern farm at a price for which he can purchase three times the acreage on a district about to be irrigated, and upon it, when the water is "turned on," produce crops three or four times in amount per acre those produced by his former farm. In this way he not only doubles or trebles his income, but in- creases it maybe eight or ten times over. The magazines and newspapers of the coun- Increasing try are active in extending a wider interest demand for in irrigated lands, and the wide awake farmer Irrigated Land. of the East and Central West is becoming alive to the vast opportunities presented, and is settling upon the new lands, leaving his worn-out farm for his less progressive neighbor. At a recent opening of a tract in Idaho by the Twin Falls North Side Land & Water Company, over 48,000 acres of land were sold in one day, to nearly 1900 settlers, representing forty of the states of the Union. The demand today for irrigated land is greater than the supply. Thousands of United States citizens have been aroused to settle the irrigated districts in the Canadian- Alberta Province, owing to the limited area of irrigated land in this country. It seems that, as fast as an irrigated tract is opened for settlement, the land is quickly occupied. Little doubt, therefore, can exist regarding not only the stability of present values of irrigated lands, but of the certain increase in values, as the demand for the lands grows, with the increasing appreciation of their real worth. 60 With this question disposed of, the bonds of irrigation com- panies, which operate under the provisions of the' 'Carey Act," and which pledge the individual settlers' purchase money mort- gages with a reasonable margin of equity attaching, present, as a class, an opportunity for an exceedingly safe and conservative investment. In addition to the fact that they are secured by individual farm mortgages, their issue is of a necessity based on cost values, and is not susceptible to valuations fictitious or ''watered." With crops insured against failure from drought or flood, with strikes and lockouts, conflagration and financial panic, no factor to the irrigation farmer's success, prompt pay- ments may be with the utmost certainty depended upon. In the relative security value of the several Relative classes of investments, first place is conceded position of to Government bonds, and those bonds which investments. have been legally issued by substantial munici- palities. Such securities are based on the sov- reignty of the State, and the prior claims of taxation. Second only to these are first mortgage bonds secured by real estate. Their relative value is determined by the sufficien- cy of the margin of equity, the marketability and stability of values of the property mortgaged, and the responsibility of the mortgagor. There is further entailed upon the investor how- ever, scrutiny of property titles and position of the lien. In this class may be properly included irrigation bonds of com- panies which operate under the "Carey Act," and which pledge as additional security the purchase money mortgages received from settlers. Such bonds have distinct points of advantage for Advantages investment purposes over many local mortgages: over (1) The sufficiency of the margin of equity is Mortgages, usually ample, even based upon values of the land in an undeveloped state, and these values, as has been shown, invariably increase greatly with development. There is no danger then of basing the margin of equity on a high valuation, which is likely to decrease, wiping out the margin, as is not infrequently the case in mortgages on city property, even in the most substantial cities. The price of irrigated farm 61 and orchard land is on the increase, the price of farm land in the East seems to have passed its maximum. (2) The demand for the irrigated lands of ''Carey Act" pro- jects is such as to guarantee an assured market for the proper- ties under mortgage, practically eliminating all possibility for the necessity of "buying in" the property under foreclosure, for self protection. (3) The question of title is eliminated, inasmuch as the title to the irrigated lands under mortgage is received through patent from the state. (4) The position of the priority of the mortgage is absolute by Federal and State enactment, there being created a first and prior lien "which said lien is in all respects prior to any and all other liens created, or attempted to be created by the owner or possessor of the lands." (5) The responsibility of the mortgagor is a question passed upon by the Secretary of the Interior, as well as by the State Board of Land Commissioners, before granting the application, and is further assured by the filing of a substantial bond with the state. (6) The convertibility of irrigation bonds is usually much more readily effected, than in the case of any individual mort- gage, on either farm or city property. Granting that the above statements cannot Certain Irrigation be successfully disputed, the bonds of "Carey bonds rank Act" irrigation projects, which pledge the next to settlers' mortgages as additional security, Government and take rank as a class., in point of security Municipal bonds, next to Government and municipal bonds. As the security now afforded the investor in irrigation bonds becomes more fully appreciated, and more widely known, it is certain that irrigation bonds will within the near future sell at relatively much higher prices. Especially is this so in view of the recent financial disturbances, which have warned the careful investor, to seek investments remotely removed from the in- fluences of speculation, and direct dependence upon industrial development. 62 Farm lands are the basis of security for Farm Products the irrigation bonds now under con- Always in Demand. sideration ; and farm lands supply a necessity at all periods, whether of pros- perity or depression. The 80,000,000 people in this land must depend on the products of the soil for food, and other nations, as well, must look to this country to supplement their food and provender supplies. Mr. J. J. Hill, the well known railroad pioneer and developer of the Northwest, is quoted in a recent speech as saying "The greatest resourcefulness of this country lies not in her iron and steel, nor in her gold and silver, but in the ' fertility of her soil, and its development in agricultural pursuits. " President Roosevelt in his message to Congress of Decem- ber, 1907, says "Irrigation should be far more extensively de- veloped than at present****** The work of the Reclamation Service in developing the larger opportunities of the Western half of our country by irrigation is more important than almost any other movement. ' ' With the Government active in the performance Opportunity of its share, in adding to the general prosperity, for investor through the reclamation of the arid lands, en- to couraging capital by the enactment of protective participate. laws, and donating millions of acres of its lands, and with prospective settlers only awaiting the call, it remains for the capitalist and the investor to avail them- selves of the invitation to assist in the great work, by familiar- izing themselves with the subject, and by lending their money in this cause, where they are certain not only to receive it back again, but to be liberally compensated for its use. REPUBLIC BANK NOTE COMPANY PITTSBURGH, PA- UNIVERSITY OF CALIFORNIA LIBRARY, BERKELEY THIS BOOK IS DUE ON THE LAST DATE STAMPED BEIiOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. MAR 31 MAR 31 1925 JUI/19 1930 - 24Apr'57J N MAY 29 57 SENT ON ILL JAN 30 1998 U. C. BERKELEY 15m-12,'24 193425