Historic, archived document

Do not assume content reflects current
scientific knowledge, policies, or practices.

‘| Washingion, D. C. September 22, 1923

—

IRRIGATION DISTRICT OPERATION AND-FINANCE_.,

By

WELLS A. HUTCHINS, Assistant in Irrigation Economics
Division: of Agricultura! Engineering, Bureau of Public Roads

i aw a om a. oe @2 6 ee jm, e« = 6 © oF a ee) a eo 6. dy 0\X@ Je 6 wo C''e @ be

EMRE OR Ss is C otal oi L sol wig a velo) Wika a6. eo fatwie ds whee
Present Status ef Irrigation Districts
Reascns for Success er Failure

ofan @.! a ag he, 6 Fap ata dip e761 9 .@ OX Ae), Be) ee. 8.1%

Mo aware) che sa ieite ie a je! aoe: wa era leita os mole: foie fe

NEC Mad ek eile tes of Ok abe valle dtm lol ele? wigielint oer ee
EE SUE cic bes at te ee ae el FS UD a Sb he
BEUUPONOG 5 Se ee cies a ee ee le SE ee sey Se Tae a eee t taYichcd peat ne
LR SR aa ne ne a OF ae a Ly MID aR ee
IITians ke ee St ars Ne yale midi oso op eles 27
IRI Pret Laat ote te 6 oy Pay. ita tad’ pew eliel wate 31
ARORA Tel cS wc fa eae eee ae a wien Bie oleae aes 33
EEO ay og? HERI i i Pel ee: Ee ee ee eee ae Fe | ~
rn NNN of 2b F608 a di) cio dara we Bia die eleldjiaie.e wie 4l
RRS os te et odo Sr Sia sn am leh eteie 2) distor pve tw ate 54

WASHINGTON
GOVERNMENT PRINTING OFFICE
1923

<7 pa = aN ee

o
- #

UNITED STATES DEPARTMENT OF AGRICULTURE

BULLETIN NO. 1177

Washington, D. C. . September 22, 1923

IRRIGATION DISTRICT OPERATION AND FINANCE.

By Weits A. Houtcuins,! Assistant in Irrigation Economics, Division of Agricultural
Engineering, Bureau of Public Roads.

CONTENTS.
Page. Page.
RS Sep ey ee ee eee 1 | Finance..... ait Miadsnetedwedas. i ooisc2 <2 13
Nature of irrigation districts...............- f°] Shate SOpPOrVIsION. 2, 3225) 2-452 -6e50-cr -b-a 27
Present status ofirrigation districts......... 21 pee imnmetal ail on an onc we ae eae 3h
Reasons for success or failure-.....-.---....- 6 | Relations with the United States._......_.. 33
egies iormrarion._-_ = = eek 9 }. Other saliestt features_-_...:....2------.-.-- 36
cul DE 2 Oe ee a ee ee 11 | Irrigation district development-............ 41
| SES ee ee ee ee 12 | Summary and conclusions............-....- 54
:
| : INTRODUCTION.
> Thirty-five years have elapsed since the passage by the California

, Legislature in 1887 of the Wright Act, authorizing the formation of
: irrigation districts. During this time the district movement through-
out the West has encountered many changes of fortune, but it is
more widespread and economically important to-day than ever
before. As a result of two periods of district speculation and failure
there still exists in some quarters a belief that all irrigation districts
are speculative enterprises and a consequent prejudice against invest-
ing in district bonds. On the other hand, the district is now so
popular in many of the Western States that tendencies have some-
times developed recently toward organizing projects which may
contain the elements of failure. It is hoped that the data presented
and conclusions reached in this bulletin may disabuse the minds of
uninformed investors who cling to the idea that all irrigation districts
are unsound, and at the same time may be o/ value to State officials
and to communities contemplating the formation of irrigation districts
in pointing out what the experience of other communities has shown
to be the essentials of, success.

NATURE OF IRRIGATION DISTRICTS.

The irrigation district may be defined as a public or quasimunici-
pal corporation, organized under State laws for the purpose of pro-

1 The earlier work of the department on irrigation districts was done largely by or under the direc-
tion of Frank Adams. The more recent field work has been done by Justin T. Kingdon, Guy Ervin,
Harold A. Wadsworth, and the author. i

2 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

viding a water supply for the irrigation of lands embraced within its
boundaries, possessed of power to issue bonds, and deriving its
revenue primarily from assessments levied upon the land.

The fundamental attributes of an irrigation district are:

(a) It isa public corporation, a political subdivision of a State,
created under authority of the State legislature through the county
governing body at the instance of the landowners or citizens, as the
case may be, of the particular territory involved. Being public and
political, the formation of a district is not dependent upon the con-
sent of all persons concerned, but may be brought about against the
wishes of the minority. In this respect the district differs funda-
mentally from the voluntary cooperative or the commerciai irrigation
company.’ |

(6b) It is a cooperative undertaking, a self-governing institution,
owned, managed, and operated by the landowners or citizens within
the district. Supervision by State officials is provided for to the
extent of seeing that the laws are enforced, and in most States
is extended in greater or less degree over organization, plans and
estimates prior to bond issues, and construction of works.

(c) It may issue bonds for the construction or acquisition of irriga-
tion works, which bonds are payable from the proceeds of assessments
levied upon the land.

(d) Hence, it has the taxing power. Each assessment becomes a
lien upon the land. While the ultimate source of revenue, therefore,
is the assessment, an additional source frequently provided for is the
toll charged for water. Other revenue may in some cases be obtained
from the sale or rental of water or power to lands or persons outside
the district.

(e) Finally, the purpose of the irrigation district is to obtain a
water supply and to distribute the water for the wrigation of lands
within the district. Additional authority is granted irrigation districts,
almost without exception, to provide for drainage. In some States
districts may also develop electric power. These additional powers,
however, are subsidiary and are intended to make more effective
the principal function of the organization, which is to provide for
irrigation.

In recent years other types of districts for irrigation purposes have
been authorized in several States, in addition to the usual type of
irrigation district to which this discussion refers.

Table 1 summarizes by States the irrigation districts formed to
December 31, 1921, and Figure 1 shows their location.

2 The constitutionality of the irrigation district law was upheld by the United States Supreme Court
in the case of Fallbrook Irrigation District v. Bradley, 164 U.S. 112, decided November 16, 1896. Fora
discussion of the legal nature of the irrigation district, reference is made to the Handbook of the Irri-
gation District Laws ofthe Seventeen Western States of the United States, by Will R. King, chief coun-
sel, U. S. Reclamation Service, and E. W. Burr, district counsel, U. S. Reclamation Service. This
publication contains a discussion of the powers and functions of irrigation districts, with references to
decisions of the courts, and abstracts of the various irrigation district statutes in force in 1919.

Mperatas 22.7 tes 22” A
Under Construction..._____- °
Preliminary Stage___-___._. io
_ Wie. 1. Irrigation districts in the United States as of December 31, 1921, showing all active existing

districts. Inactive districts, even though legally alive, are not included.

4 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

TABLE 1.—ZJrrigation districts formed in the United States to December 31, 1921, by States
and by years. 1

3\8 eae’ wl. 1g d|2|%
Year. ‘A EF ald | abl fe (AS a|8&i/alsaA A
SISISISISISISISISIEI/SIiFlao lB lalalale
SIZIElEISISISISIRIBI SIE SISlS 181518
a = So | oO Hilo |e o | ® & o}+ a | x io) ° °
SE IM teopo tS lao peer e S.@ | Bol =] oO ioe eee
aS ey eee oy ee ene [RON hein eS (Se a) ee ek Pe Pe Maree Ped 4
TEN ae 7h MOS Ged te Ue aes otk Spee | SAL ES A Sg Be 7
O00" Ee ey eee Boles ols 1 eee ee Sti, ee Ot 2s elt 2A eat ae) ae 6
Tes 0 St RR See ae eae Eg Shee A Al IW (Bac |S | ee | Md AR ge Rey Lec Ct (Een We 15
“Ee SS Oe eas ae eine TE fae Gh Cs ed OS eae” Ce |S Pe Maen) RR PR, ANS eee, TSS 15
_) eats 3 obec aed eee iene See edo Sina: ana a
12S ee rl Maire EA Pc «aks Raa, eta NR VOR MER ED Pn BR) Rg a a a oe) LS 4
2 eae NR [es (eGR (Re Deeiy| Weil VRC, WOE eee (Pane SNM Terre a ONT (oro. od RE RE SS
bo ee ee rh Rao eee a A yO ME J CO |e ra) ay A WE) oA lel |= ae Se 10

TR ps LM aA es Se, Seer ee oe ee ore RS PDE ae
Cop ee REG « ais EN > peer (4 UR Pape Ls A fd a TT PN P.
aia: S788 ee: he Ae | od SS 2 ee St. ce 4
(5D aaa aan ae Sard PRBES utaks Ni laren ESS EOD ie Po ed aan eel. ee oe ea eS
‘1 Sa os ee se 5 pe Viper gd i (SMM PAP ee FA pad a eae | cote (Sev 1
nee 2 Go ek eee, AeA. Aeon Tie les 1h ie es eed Wao ca PN NS Oe 3
a |. Mn ae ee pe ce Hl head hn Oe et PR? Re Paes Ae es EMS 3
CE CSS ee Bie RS SS Fs ioe | EP Fs |e Se ieee RR) Be et AS ee ees BE Se 2 3
Fe: Ea aa ies teas’ erat bs ex GS ee TIS ae ee ee |-coahthe| 2 aalte. a. ela 9
15 Sh ay OE Se aes eta, A |e AES Py) TOs, 2 ieee aeeeoet ele we sy 6
mre Se? be | nh ay Salle 1 29 NOS Sal aS oe Sa ie at 8
eS cepts comed a teat Bede ee oe PE ae aa ie A I ca eee ceed ees ee | | aad 6
itp ee a A ee ee ei or (ES ay Res fi fs pest ey We Oe JE al 7
OMe heen opie u Oh Pics’ CRE = (RG aA 4a 19 |o iw) oo ett LPG 4s lee ee eee 41
CSRS ea IR ai hin gn 2 2s IPM ocak el aR te ead ds | ee elie Mel ee aa 29
A iliac i ay SOS PA ee eae Bet DS te eh es AO eed Ib 23
Lh ice Eis YS i a v5 Wi Pa Ws oS Na ica a i oor ig eS eee ES TS 29
"se Ee a ee a Ves Ke ae BA A BT Pe ey ees es rie ga esse 22 20
a ee es eee tr h63\: 1 Dg een (ee 3 La eee a eee 14
Nis os etd Fe Way ae a (eal El) Sool Nt & Fo ilies, PES 20
Peat Bvntosc eters oe tase ae | <2 seee|ees 1 Oho oi SL 2 5 29
7) Ai NS pe rie bak 5) ea ag £00) Aiea 3 rm ee a, 1/@/@)| 4

Ui ae Se eS Ee 14 Bp £1 SB 1 a} 1 7 eee i

Theat a eee 1404-44 1 Hetet Vas) 8 3 Ea ome eee Oe Nea, gee De 2 61
fis ae Se eS ae ona 18 | 15 1°1-19;) 43°) *2 41 1193 Bl 2a adehoe.e 1135
oT i eS 1S eet TS sg oe Pete hee Reh ba Bil aalie, 9 sasgieess 34
Staats | has pa P| ee eee
Patalon. 4.00 54 §..|127 | 88 | 4166 | 69 | 39 | 75 ee. G1 | > Ge} 2iet Oo 1 | ae ee ae

1 Trrigation district act passed.
PRESENT STATUS OF IRRIGATION DISTRICTS.

A number of irrigation districts had been formed prior to 1910,
there being a period of marked development in California from 1887
to 1893 and to a lesser extent at a later date in a few other States.
About 1910 interest began to revive in California, in which no district
had been formed since 1895, and also in Washington, and developed
shortly afterwards in Arizona and Texas. Progress was slow for a
few years, however, due to the unwillingness of eastern and middle
western investors to consider irigation bonds and to the necessity
of disposing of bonds almost entirely to local people familiar with
the merits of the enterprises issuing them. In the meantime such
additional safeguards had been thrown about the formation and
bonding of districts in California that gradually a fairly dependable
market began to be built up there, and by 1917 and 1918 urigation
districts in a number of States began to find it possible to market
their bonds. Bonds of districts which already have established
values behind them are now disposed of much more readily than
those issued to provide for future development, the effect of which
is that present-day development by irrigation districts is generally
conservative.

IRRIGATION DISTRICT OPERATION AND FINANCE. 5

The increasing favor in which irrigation bonds have recently been
held has been accompanied by a corresponding increase in the number
of districts formed throughout the West. In the two years 1919 and
1920 there were created 156 irrigation districts, or more than one-
fourth of the total number formed to date. This activity has taken
place mainly in California, Washington, Oregon, Idaho, and Montana.

RQQQQANAAANAAAAAAAD

a

of,
Y
iY
| g
C
iI
3 |
: = Year of Formation

Fic. 2.—Status of irrigation districts in the United States, December 31, 1921, by years in which
. formed. The symbols are not superimposed, the height of each column representing the total
number of districts formed that year.

_ The year 1921 showed a very marked decrease in the number of new

_ districts organized, but on the other hand witnessed the sale of more
_ bonds than any previous year.

The accompanying chart (Fig. 2) shows the status on December 31,

1921, of all irrigation districts organized to that date. Table 2 sum-

marizes areas included in all irrigation districts in the several States.

TABLE 2.—Areas included within irrigation districts organized to December 31, 1921, and
. areas irrigated, in acres.

eps Approxi-
Status of districts. ae Ta EoleeronS

: irrigated

State. Under Prelimi- districts. by
Operating. con- nary Inactive. districts,
struction. stage. 1921.1
Arizona Pel ad Hens Mo oes TSRO4A0 Whe eek ee 177, 575 91, 000 286, 615 2,300
Geabiormint cas! ose. ese. 1,931, 696 250, 060 1,699, 073 1, 675, 451 5, 556, 280 1, 263, 500
Mgrage ei Gosh os. os cme lorete sete bee 1,338,038 | 1,995, 355 345, 200
__ = SRA Ses a eee 552, 902 112, 590 299, 660 119,507 | 1,084, 659 421,300
I slay SE seh TN ng ade ee NG ee oa ved aceon noececloeeen stance
(US 0G el ee ee 143,715 20, 548 591, 360 70, 486 826, 109 85, 700
ea 229, 369 78, 500 3,314 120, 900 432, 083 207, 400
_ . Se SS ee 350000" |S. aot eras BLVOOO! lnsise ceeee ces 382, 500 70,

ieee Mexicg. 2.5 522.02... LA Sh 2g Vat ee gee [are bg Da 26, 400 163, 002 17, 100
Pore MAkOta)s a 2206 2s oso: De FNS | PS ek Pk eer SE i Oe ee PY pee 01 eR ee ee
Sa aE eS SR See CaS ee PB BOON SSL «tease. 2, O00 Mis oa ew eeeaects
ZS SEU 5 a 337, 266 54, 752 1,031, 556 585,320 | 2,008, 894 124, 800
4 Be the SAREE SE ae! So Re (CIR ee eC RONNIE, LAR at De a
02 eee 437, 871 157, 000 4, 853 109, 179 708, 903 155, 700
| eee eee 465 S86) | soee<s 2k 2) 2 229, 601 88, 673 365, L60 31, 800
| Washington .................. 253,335 37,447 | 1,204, 190 251,422 | 1,746, 394 109, 600
SS 43,250 55, 000 108, 000 100, 790 307, 040 23, 000
3 EE Op 29 eS 5, 165, 750 765,897 | 5,384,182 | 4,577,166 | 15,892,995 2,857, 400

_ | £xclusive of irrigated areas within districts which had not taken over the management of the irriga-
tion systems.

6 BULLETIN 1177, U. §. DEPARTMENT OF AGRICULTURE.

Integrity of irrigation district bonds.—The effect of the two eras of
district promotion for speculative purposes has sometimes been the
lacing of greater emphasis upon defaults than a study of the whole
istory of irrigation district bonds shows to be justified. Asa matter
of fact the principal and interest of 71 per cent of all bonds sold by
irrigation districts in the United States to December 31, 1921, have
been paid when due although a large percentage of these has been
issued in recent years and consequently no payments of principal
have yet become due. The status of all bonds sold to December 31,
1921 is as follows:

Per cent.
eld mleral: oss s 4 ss a on a eee ele en oO ee ee ee ee ee:
et ietieation: 2.0. Sorte tes Re ae ee ee Se ee 2
Wetautied . .... .. Ss. oes< esse sobiciew Sc Petey Seen, eee Bee oo aD 1
Compromised. .. 2. 65S S5 a Soe Sn wee ee a eee gee 16
Hxpecied.to be compromised: ...o2 2... - 52.52 See eee ces es cee | ey O02 OD 7
Interest and principal always paid when due...........-.-... 83,693, 493 71

Total bonds sold; - 22523-02030 Hee eR Cees et ee, ae 100

REASONS FOR SUCCESS OR FAILURE.

ELEMENTS OF SUCCESS.

The successful irrigation districts are those in which, in addition
to securing and distributing water effectively, sufficient annual income
has been derived from the soil to pay interest and maintenance and
operation charges promptly and to retire the principal of the bonds
as due. To assure such annual income, the following elements have
proved necessary: (a) Productive land; (6) sufficient water; (c) reason-
able capitalization; and (d) adequate land settlement.

Irrigation districts which have been fortunate in the above
qualifications have almost invariably succeeded. Some such districts
have suffered reverses, such as damage to the irrigation system,
unduly severe marketing conditions, etc.; but few cases have occurred
where sound district enterprises have been unable to withstand
temporary misfortune.

CAUSES OF FAILURE.

Past causes of failure of irrigation districts may be reduced to the
following general classes:

Opposition of principal financial interests—Some of the earliest ©
districts met disaster or at least years of obstruction because of the
inclusion of too much land belonging to persons opposed to district
organization. The principal weapon of these landowners—attack
upon the constitutionality of the law—is no longer available, but
there are other ways in which they may prove obstructive. How-
ever, due to the present sounder footing upon which the district
stands, cases have occurred in recent years in which such opposition
has been successfully disregarded. This cause of failure, therefore,
while still to be reckoned with, is not so pronounced as it was some
years ago.

Inclusion of unproductive lands—Inclusion of large areas of land
pc incapable of bearing their share of the burden of taxation

as resulted in trouble to some districts. It is the area that is
actually irrigable and capable of producing satisfactory crops that in
the last analysis is responsible for the district debts. So-called

IRRIGATION DISTRICT OPERATION AND FINANCE. 7

“shoestring” and ‘‘spotted” development, resulting in disproportionate
maintenance and operating expenses, has likewise been unfavorable
to success.

Before public lands were made liable to inclusion within irrigation
districts, some districts which had placéd too great dependence upon
the voluntary incorporation of such areas found themselves em-
barrassed by the lack of revenue therefrom.

Inadequacy of water supply.—Inclusion of more land than could be
adequately irrigated with the available water supply has been a
fruitful source of trouble to districts. Remedying such a situation
necessarily involves a higher acreage cost than anticipated, either by
securing additional supplies of water for the entire area or by
eliminating portions of the district and concentrating all the water
and all the cost on the remaining portions. In some cases this has
not been fatal, but the wide margin allowed in other cases between
the early productive value of the land and the cost of the irrigation
system has been sufficient to cause failure.

Overcapitalization.—A frequent condition found in irrigation dis-
tricts promoted for profit has been the unduly large difference
between the actual cost of construction and the price the settlers
had to pay. In other words, a system costing, say, $30 per acre

_ has sometimes been sold to or built for the settlers for $45 per acre,

the difference of $15 per acre, or one-third of the bond issue,
constituting promotion profits. Legislative attempts to prevent
overcapitalization by providing that bonds should not be disposed of
for less than 90 or 95 or even par did not hinder promoters from
placing excessive valuations upon the works and trading them for
district bonds at what purported to be a legal figure. The difficulty
with such an overcapitalized district was that the additional charge
of $15 per acre sometimes represented the difference between success
and failure.

Faulty engineering.—Unwise location of irrigation works, faulty
design and construction, poor choice of materials, etc., have been
responsible for some of the troubles of irrigation districts, but have
been far less prominent as causes of failure than have most of the
other causes enumerated. The science of irrigation engineering has
developed more rapidly than have the solutions of some of the other
problems that districts are confronted with.

Insufficient settlement of land.—Settlement of sufficient land to
provide revenue for district requirements is vital to the success of any
wrigation district. Irrigation enterprises of all types are dependent
for eventual success upon the same thing; but the method of
financing an irrigation district through the disposal of bonds makes
the early settlement of land especially important, for the district is
dependent upon its own efforts for money to operate the system and
must in addition provide for interest payments on bonds. Capital-
ization of interest on the bond issue eases but does not wholly
relieve the situation. It is very essential that the district become
self-supporting quickly. Coupled with such necessity is the need for
having the right kind of settlers from the standpoimts of industry,
adaptability, and some degree of financial means. Lack of adequate
land settlement or capable settlers has been a source of trouble in a
number of districts, has prevented the financing of others, and has
proved to be one of the greatest obstacles in the way of success.

8 BULLETIN 1177, U. 8. DEPARTMENT OF AGRICULTURE.

There is a possible field here for public aid in land settlement, which
is still somewhat in the experimental stage in the few States that
have taken it up.

Under this heading may be classed also those districts for which
there was no economic justification and which failed to attract
settlers in sufficient numbers to be of substantial assistance.

Past conditions permitting unfeasible undertakings.—That irrigation
districts have been allowed to be formed and financed under conditions
conducive to failure has been due in past years largely to overoptimism
of landowners, manipulations of promoters, connivance of certain
bond houses, inexperience in district possibilities and limitations, and
absence of official restraint. The fact that bond investors did not
discriminate sufficiently between speculative and nonspeculative
bonds made possible the flotation of issues with little security beyond
a purely prospective value. In certain speculative districts, with one
or more of the necessary elements of land productivity, water,
reasonable capitalization, and rapid colonization lacking, the inability
to meet payments led to demoralization and failure to create the
required security. Inasmuch as bonds of those districts had been
sold to the ultimate investors on practically the same basis as bonds
of districts in already proven communities, instead of being sold on the
basis of aspeculative investment, the failures reacted very unfavorably
upon the sale of nonspeculative bonds as well.

At the present time what the district can and can not accomplish
is better known than it was. The temper of the bond market during
the past 10 years has not been such as to sanction the financing of
questionable schemes on any great scale, and in any event the effects
of State supervision have been beneficial in making known the opinions
of qualified State officials as to feasibility and in preventing the
formation of certain districts considered to be unfeasible.

WHERE THE DISTRICT HAS SUCCEEDED.

Some district enterprises in which the security for the bonded
indebtedness remained to be created have attained success because
they have combined the features necessary to rapid development of
the land and production of income. But the proportion of districts
of this type that have proved successful from all standpoints is small
in comparison with the proportion in which at least a fair amount of
the security existed at the time of organization. Supplemental
development of itself is not conclusive upon adequacy of the security,
nor does new construction necessarily imply a speculative enterprise;
yet the present status of districts formed, respectively, for supplemen-
tal and for new development, as shown in Table 8, page 10, is indicative
of the fact that districts of the supplemental class have more generally
attained their ends. Furthermore, though there are shining examples
to the contrary, the class of districts formed for extensions, better-
ments, and other supplemental purposes has provided many more
cases of prompt payment of obligations than has the group organized
fornew construction. Supplemental development implies some prior
development through which values have been created and irrigation
works constructed and put into operation, together with a certain
amount of income already accruing from the benefits of irrigation.
As the irrigation district 1s dependent upon revenue, it has followed
that conditions making possible immediate and adequate revenue

ee ee

AE eee ee es

IRRIGATION DISTRICT OPERATION AND FINANCE. 9

have gone far toward insuring financial success. Supplemental
development has more often embraced such conditions.

As a general rule, therefore, the successful districts have been those
formed for purchase and operation by the landowners of constructed
systems which were ‘‘going concerns’’; for extension of existing
systems to cover adjacent unirrigated lands; for improvement of
existing systems; for providing needed additional amounts of water;
for contracting with the United States on Federal reclamation
projects for payment of construction and operation costs and for
future operation; and for building new urigation systems in sections
already productive under dry-farming methods, or where development
has followed rapidiy. In any event, the irrigation districts that have
succeeded have embraced the essential elements of productive land,
sufficient water, reasonable capitalization, and adequate land settle-

ment.
PURPOSE OF FCRMATION.

The original purpose of the irrigation district was the construction
of irrigation works. Although the Wright Act gave the districts the
alternative power of purchasing irrigation systems, nevertheless it
was the need for new development that resulted in the formation of
districts during the first few years predominantly for the construction
of new works. In fact, 41 districts, or 75 per cent, of the 55 districts
formed in California and Washington during the first seven years
were intended for such purpose.

As time went on the district organization was employed for
other purposes, such as the acquisition of existing irrigation works by
landowners who were dissatisfied with the managment or who thought
that they might operate the system more economically themselves;
or the extension of existing systems to include adjacent unirrigated
areas; or the improvement of existing systems; or the development
of additional supplies of water needed for late summer irrigation by
communities already served with a partial supply, a condition which
often arises in sections undergoing transition to more intensive

development. All of these purposes presuppose a certain amount of

development prior to the district formation, and bonds issued by
such districts usually have had ample security behind them to insure
regular payment of interest and lquidation of the principal at
maturity.

Of course such classification of irrigation districts is subject to
exceptions, for districts intended for absolutely new construction have
often been formed in sections where high land values had already
been established independently of irrigation and where the districts
were not essential to the success of the communities, or where cir-
cumstances were otherwise favorable to speedy success. On the other
hand, some districts organized to take over existing works have faced
uphill tasks because of the insufficient settlement of land, shortage
of water, inclusion of too much additional unirrigated land, or other
causes. The success of a district has in most cases been dependent
upon the relation of its development to the times when its obligations
fell due. The advantage, therefore, has been in the majority of cases
with districts formed for supplemental purposes.

Table 3 gives the number and present status of all irrigation dis-
tricts formed to date in each State for the two main classes of develop-

00483°—23

)
~_

O° ~ BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.
ment, and the accompanying chart (Fig. 3) gives the respective rates

of formation of these classes to the present time. Attention is
called particularly to the percentages of totals given in the last line

MeL LLL LTTE ees eas

880 ———= Total Number of Districts

S70 -—-—=—Supplemental Development .or
A Acquisition of Existing Systems

560 sereseeee New Development

CCC
CULTS NANG,
COTE IRSSAET

oe ee ae

1887
888
/889
/890

Year of Formation

Fic. 3.—Rate of formation of irrigation districts in the United States according to the type of prc-
posed development. Points on each year-line represent the number of districts of each class and
the total formed that year.

of the table, which indicate a much more favorable situation gener-
ally in the class of districts formed for supplemental! purposes than
in the other class.

TABLE 3.—Status December 81, 1921, of irrigation districts in the several States classi-
fied according to purpose of formation.

Purpose of formation.

Supplemental develop- All districts.

Entirely new develop- ment or acquisition

ment. existing works.
State. ; ms ae b> ; be b
| EE/S | ob |R8/S | » |e8ia | |
£ Seles] § 8 |selae| 2 /csle5/ g
a by ne ; = g me : = nS ary :
a eee) 2S |S eee eee Wa) See eae
a |auleal s S Qa jaunleul & is) a |aalgu g 6
SoS Ay na & So 2 AY et om t=) py 4 a
ISSNUACION |S se ae ees oe tales. 4 3 8 type de els dees eae 1 ean ee 4 3 9
GaANiONMIas 5. . 5 scceisce 8 14! 341! 61 29 6 | 21 10°} - 66°) 37) Ur) a4) aay,
Coloradionee f) 0 6ek 2 .k Gileecesyf ria. 33.) 39% S20 esse 16H. 86) F262 eee eee 49 | 75
LEG EA 0 sae tee ee 6 1 9 6 22 31 4 id 2 47 37 5 i9 8 69
KéanmSas sesso. S20. oh oe oc [ie ld Pa eae SESE Se ee ee ae |
MONG AIA rape oh o8 2 Ahsckyas 19 5 26 22 2 8 3! 35 24 2 27 8 61
INS DESS Kite Soc een 3, AY Peers Se eee 4 8 21 3 2 5 31 25 3 2 9 39
EA aie a a 8 orEh cb Soot SSeS CIR LT Sales | Rie OA ey ae Cae 2 aes 4 Bh |: Sse Biieieee 4
INE WeeVieCxICOMe os. oo seer citten alt cesta oad 7? 2 Se eS ae [ee | ey 4 BAe S eare Ea Se 2 6
Norns Dakotass-t2.-etiine ols sik hele SSeS ee Ja\| Sige P| SSS eS 2 2 fia ee en al fe 2
GVH OMMA Pees - res eae| ooee [ese sa Pare olise cae aaa a eee bh es3.-2 1 ee eee Se DL olceinee if
OTerOM ses ee ie See 8 4 | 15 GetSsanele: tr 16 De Sane ee 5 | 31 8 | 66
South Dakota. 232 $0) e eel ee cel) oe ale co 255 2) a a ee ce ae ee ee a
PREG eee ee Pe. nee = Pe aes oe 1 3 13 1 1 2 17 153 3 i 3 20
ane ea eS te LANs Be 3 Spe ont 4 5 6 4ace2t 7) 3 16 igi ee 7 7 21
Washington - ...... 0... 9 L408 Oi Biel wok 6 9 5 | 5i | 40 7| 27) 14] 88
UVORMUG <i. oes e ne 1 Up) (eee Ua 3 4 2 1 Bia ee ee 6 3 1 3 a elo
Total <<: 4224 = 46 134 79 | 110} 248 | 198 24 80 48 | 350 | 244 37 | 159 | 158 | 598
Per cent of total. ./18.5 | 5.2 |31.9 |44.4 | 100 [56.5 | 6.9 |22.9 |13.7 | 100 |40.8 | 6.2 |26.6 |26. 4 100
' t

a

IRRIGATION DISTRICT OPERATION AND FINANCE. 11

THE ELECTORATE.

The qualifications required of voters at irrigation district elections
vary widely in the several States. The California rule has always
been that such qualifications shall be those prescribed by the general
election laws of the State. Early experience in California indicated,
however, that great harm might be done through the voting of bonds
by persons who might be called upon to shoulder none of the burden
of paying off the indebtedness—in other words, by electors who
owned no land—with the result that in the revision of the Wright
Act in 1897 provision was made for presentation of a petition signed
by a majority of the landowners, representing a majority in value
of the lands, before the directors could call a bond election. The
petition is no longer required in California, although a majority
mstead of a two-thirds vote is sufficient to authorize bonds if such
petition has been presented, and the directors must call an election
if petitioned. Furthermore, it is now optional that the petition be
signed by 500 persons, either electors or title holders, representing at
least 20 per cent of the value of the lands; for in very large and
populous districts it was found that the majority provision involved
so much time and expense that the business of the district was
seriously hampered, and that in any event the very nature of such
districts required less stringent regulation of bond issues. The
Kansas law requires a petition by three-fifths of the resident land-
owners before a bond election may be called. The present Idaho

~ law imposes the qualifications of the general election laws and resi-

dence in the district upon district electors, with an additional land-
holding qualification when voting on the question of issuing bonds
or otherwise incurring indebtedness.

The other 14 irrigation district States impose property qualifications
in one form or another upon all district electors. These various
requirements, in addition to ownership or possession of land or of
some stated acreage of land within the district, in most cases include
residence in the district or at least in the State, and in several in-
stances also include general election qualifications or citizenship. Cor-
porations, executors, administrators, and guardians are sometimes
allowed to vote. Four States impose no residence qualification at
all. Voting according to acreage is allowed in Colorado, Montana,
and Wyoming, and according to acre-feet of water allotted to the
land of the elector in Utah. Oregon formerly permitted a vote for
each acre of land, but in 1917 limited each person to one vote.

_ Colorado’s experience was just the reverse, the new law of 1921 author-

izing voting according to acreage. For two years Nevada had in
effect a system of voting according to dollars of assessment of
benefit, but changed to one vote per elector in 1919.

Almost all of the States, therefore, limit the right to create indebt-
edness to those persons whose lands are to become responsible for it,
but only a few States recognize the vital interest of landowners living
out of the State. Some difference of opinion exists as to the wisdom
of allowing voting according to acreage owned. On the one side it
is argued that an irrigation district is a business corporation rather

_ than a governing ey and that its affairs should accordingly

be conducted along parallel lines, recognizing the right of the majority
minterest to control. On the other hand, proponents of the plan

_ of limiting individuals to one vote contend that the small landowners

12 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE. |

are as vitally interested in the district as are the large holders, and
that the plan of giving a vote to each acre puts control of district
affairs in the hands of a few large landowners.

The really important feature at the present time, however, is the
very general recognition given to the interest of the landowner in the
creation of district indebtedness. The irrigation district has but one
end in view—the development of a community through the irrigation
of its agricultural land. All persons in the community are interested
in its development, but those persons whose lands are to be made to
pay for the entire irrigation development are necessarily most deeply
concerned.

MANAGEMENT.

The management of an irrigation district 1s vested in a board of
directors or commissioners, who must usually be landowners and
electors in the district. The directors are elected in whole or in part
every year or two years, and, except for the collection and custody
of funds by county officials or by elected district officials, are solely
responsible for the conduct of district affairs. They may appoint
and discharge at will ail officers and employees of the district except
those whose election is provided for by statute. In California, where
the handling of funds is in the hands of the district, the assessor,
collector, and treasurer are elected officials. In Idaho, on the con-
trary, the assessor, whose duties are performed by the secretary,
and the treasurer are appointed by the directors. Again in Texas
the assessor-collector may be appointed by the directors or elected
at their option. In all of the States directors have the respon-
sibility either of levying assessments or of initiating proceedings
therefor, as well as of authorizing expenditures.

The number of directors depends in some measure upon the size
of the district. Some States authorize only one officer—usually
three—but others allow some latitude either to the original petitioners
or to the electors after organization in determining whether the num-
ber of directors shall be greater, the highest number allowed in any
State being nine. Owing to the wide range in size of irrigation dis-
tricts (the smallest in the United States containing 42 acres and the
largest 603,840), it is realized that some latitude in the size of the man-
aging board is desirable, for a large board of directors makes the
management of a very small district unwieldly and cumbersome,
whereas a small board may not afford adequate representation in a
large district of divergent needs and conditions. The usual practice
is to lay out the district into divisions as nearly equal in area as prac-
ticable and to choose one director from each division. :

The powers of the board of directors are usually set forth at great
length in the statutes. In the execution of their policies the directors
are given extensive authority to appoint employees on the scale
desired. Owing to the nature of an irrigation district, which requires
construction of works at certain times and maintenance and opera-
tion of the system at all times, the services of an engineer are
always needed, highly trained services a great deal of the time, and
practical experience always. So it has come about that the district
engineer is frequently the principal executive officier as well. Some
large districts have found it advantageous to employ a general man-
ager of executive ability, and usually of engineering training and
experience, who is placed in charge of all phases of the district’s oper-

IRRIGATION DISTRICT OPERATION AND FINANCE. 13

ation. The Texas statute specifically encourages the appointment
of a manager.

The irrigation district has frequently been criticized on the ground
_ that it places the disposal of great sums of money in the hands of

_ persons whose experience has generally been limited to the handling
of amounts applicable to farmimg operations. Undoubtedly it is true
that very few districts are able to secure men as directors who have
handled millions of dollars. It is also true that irrigation is a
business, and that it is to the interest of every landowner to have

the business conducted as economically as possible. In actual
practice it has frequently occurred that the lack of experience of
directors has proved costly in their financial dealings and in the
unwise expenditure of funds. The selection of directors from political
considerations has also been decried. But these problems are
incident to the conduct of any self-governing institution, and so long
as the irrigation district remains self-governing its efficiency will
depend upon the choice of directors who are able to combine business
ability with public spirit and who are broad-gauged enough to leave
the administration of details to employees more capable than
themselves of performing such duties.

The actual character of the management varies greatly in different
districts, and many examples can be cited of careful and altogether
high-class management. In probably the greater number of oper-
ating districts the character of the management is but a reflection of
the progressive spirit of the farmers composing the electorate. After
discounting the activities of the ever-prevalent ‘chronic kickers,”
the farmers usually get, sooner or later, the kind of management
_ they really want.

ee era oe

gh et C1

eh ee

FINANCE.

The irrigation district secures revenue for the construction or
acquisition of irrigation works, their annual maintenance and oper-
ation, and for all general purposes primarily by means of assessments
levied upon the land. Each assessment becomes a lien upon the
land when !evied, and its collection may be enforced by delinquent
_ tax sale or in some cases by a suit at law. Other and secondary
_ methods of raismg revenue are through tolls charged for the actual
use of water, through the sale or rental of water to lands outside the
_ district, and the sale of electric power generated by the district.

____ In order to spread over a series of years the burden of paying for
_ the wrigation works, the district may borrow money through the
_ issuance of bonds, or may contract with the United States for the
_ construction or acquisition of an irrigation system. The interest and
_ principal of the bonds and the installments due the United States
are payable from the proceeds of annual assessments. Current
_ expenses are taken care of, pending the collection of assessments, by
_ the issuance of warrants and in some States by negotiable notes.
3 Financial officers.—Although the irrigation district is responsible
for its own financial condition, the services of county officials are
utilized to greater or less extent in most of the States for levying
and collecting assessments and disbursing district funds. California,
_ Idaho, and Texas, however, provide complete district machinery for
_ handling financial matters and make the district entirely independent
of the county so !ong as the district continues to levy assessments to

4, ~ tetwe

ee

14 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

pay its debts, failing which the county is obliged to step in. The
Kansas statute provides for a levy by the district, but is silent as to
collections. In Arizona, Colorado, New Mexico, and Utah the
district directors determine the amount of money necessary to be
raised, but. the county commissioners levy the assessment after the
county assessor has made up the roll, and the county treasurer
collects the taxes at the same time and in the same manner as
collections of general taxes are made. The county treasurer of the
county in which the office of the district is located is ex officio
district treasurer. In the other States these fiscal duties are divided,
the usual procedure being that the district levies the assessment and
certifies the assessment roll to the county assessor or county clerk, as
the case may be, for addition to the county roll, the county treasurer
making collections in the usual way and transmitting the receipts to
the district treasurer or ex officio treasurer. In several of these
States the county treasurer of the county in which thé district was
orginally organized is charged with the duty of paying the interest
and principal of bonds, while collections on account of assessments
for general purposes are turned over to the district treasurer to be
disbursed by him.

There is no fundamental distinction, therefore, between district and
county handling of funds im so far as the usual responsibility of the
district directors is concerned. Whether the directors actually levy
the assessment or not, it is nevertheless their duty at least to initiate
proceedings looking to procuring revenue through the proper channels
and to authorize expenditures. The only difference is that some
States have put the existing county financial machinery at the
disposal of the irrigation district.

Accounting.—¥ or the purpose of accounting, each statute prescribes
certain funds, the most usual series consisting of the bond fund,
including money received from the collection of assessments for
payment of interest and principal of bonds; the construction fund,
money received from the sale of bonds or from collection of construc-
tion assessments, to be used for construction of works; the general
fund, revenue for the payment of current expenses; and the United
States contract fund, money received for making payments due
under Federal contracts. Several States prescribe a single fund called
the bond and United States contract fund for money received on
account of payments due on bonds or on Federal contracts. Other
names are sometimes given to funds for substantially the above |

urposes, and additional funds are often provided. The reason for
fedine definite funds is to insure the use of money for the purpose
for which it was obtained. Statutory provision sometimes exists for
transferring money from one fund to another.

ASSESSMENTS.

The nature of the irrigation district tax—that is, whether it is a
general tax or a special assessment—has been the subject of some
controversy and of several conflicting decisions by the courts. This
matter becomes of very live importance when bondholders’ remedies
are involved, for if the district tax is in the nature of a local assess-
ment, land on which an assessment has been paid is thereby relieved

of the lien for that assessment and may not be reassessed for more
than its proportionate share because of the failure of other land-

IRRIGATION DISTRICT OPERATION AND FINANCE, 15

owners to pay. Where this view prevails, bondholders can not look
to the liability of the district as a whole, but im case of default are
limited to the purchase of tax-sale certificates on delinquent land.
On the other hand, if the tax is considered a general tax and the
district as a whole held liable, then paying lands may be assessed
over and over again until the district obligations are discharged.
The one view, therefore, is favorable to the landowners and the other
to the bondholders. Several of the statutes have made provision for
releasing individual tracts, either completely or conditionally, from
the lien for construction assessments upon paying in advance their
roportionate share of the total cost, thus definitely restricting the
Sikes of the indebtedness to the remainder of the land. The reme-
dies of bondholders are strengthened in several States, however, the
Oregon law providing, for example, that in case of default the bond-
holders, or the United States in case of Federal contract, may take
possession of the irrigation works and operate them during the
default, while Washington under similar circumstances permits the
creditor to take possession and use the property until the lien can be
enforced in a civil action, as in case of foreclosure of a mortgage. ,

Assessments are levied annually at the times prescribed by the
respective statutes, in order to raise money for paying the interest
and principal of bonds, or to provide a sinking fund for retirement
of the bonds when due; also for payments due the United States,
other obligations of the district, rentals due, and for maintenance and
operation and all general purposes. The amount that may be raised
annually for maintenance and general expenses is sometimes limited
by statute. Special assessments must usually be authorized by vote
of the electors. Some of the statutes provide for levying a greater
amount than needed—usually 15 per cent—to cover anticipated
delinquencies.

Several States authorize the receipt of bonds or coupons in satis-
faction of the bond fund levy for years in which such obligations fall
due, and in some cases the receipt of warrants in payment of general
fund levies.

A usual statutory provision is that the assessment lien for the pay-
ment of bonds or for payments due on contract with the United
States shall be a preferred lien to that for bonds subsequently issued.

METHODS OF ASSESSMENT.

While all irrigable lands within an irrigation district are liable to
assessment, and in some cases nonirrigable lands as well, there are
several methods of determining the amounts to be assessed against
_ the respective tracts. One method is customarily in use in each
State, though it is sometimes provided that districts contracting
with the United States may levy assessments pursuant to the terms
of such contract.

Ad valorem method.—The original Wright Act of California pro-
vided that all real property in the district, mcluding improvements,
should be assessed for irrigation district purposes at its full cash
value. In 1909, however, the legislature exempted improvements
from taxation in ali districts thereafter organized and provided that
existing districts might come within the new provision by vote of a
majority of the resident title holders. Most of the operating districts
in which assessments were being levied proceeded to take advantage

16 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

of this plan. Nebraska and Oklahoma follow the present: California
plan, White Texas provides for taxation of all property in the dis-
trict—real, personal, and mixed—and Kansas all real estate depend-
ent upon the works for irrigation. Assessments may be apportioned
in accordance with the benefits in California in case of payments to
be made to the United States, and in Texas in case of districts elect-
ing to become ‘‘conservation and reclamation districts.”’

Some of the California and Nebraska districts have made °n ap-
proach to assessment according to the full cash value of the land,
but the valuations arrived at are in most cases not proportionate to
the market values. That is, although higher valuations are some-
times placed upon lands close to cities and towns and along impor-
tant highways, nevertheless nominal valuations are eae
assigned to lands lying above the ditch system or impregnated wit
alkali, thus followmg to this extent the benefit method of appraise-
ment. Many districts in these two States adopt only two or three
classifications, and some value all farm lands alike.

Uniform rate per acre-—In Oregon, Colorado, Montana, Arizona,
and New Mexico all lands within an irrigation district are assessed
at the same rate per acre. In Oregon, however, reclamation of the
lands may be by units and the assessments apportioned accordingly,
provided the State engineer approves such plan. This has not yet
been put into effect in any Oregon district. Another exception to
the Oregon rule, and one which has been satisfactorily put into opera-
tion, permits assessments, except for operation, maintenance, and
drainage, against any tract which has an appurtenant water right
not yet acquired by the district to be in the same proportion to a
full assessment as the additional water right to be supplied by the
district bears to a full water right. In Montana, furthermore, in
case of pumping to different elevations, maintenance and operation
assessments may now be levied at a different rate for each elevation.

According to benefits —Assessments are apportioned according to
the benefits received in Idaho, Washington, North Dakota, South
Dakota, Nevada, and Wyoming, and in California and Texas under
the circumstances above referred to. The Idaho plan involves a
single apportionment of benefits after a bond issue has been author-
ized, which apportionment is subject to confirmation by the court -
and which as finally confirmed is the basis of all future assessments
to pay the principal and interest of the bonds or assessments levied
in lieu of such bonds. The Washington apportionment, on the other
hand, is made annually. The Nevada plan follows that of Idaho, .
but allows a reapportionment in particular cases in later years pro-
vided the security for the bond issue is not thereby decreased. °

The application of the benefit principle in the many operating irri-
gation districts in Idaho and Washington has been far from uniform.
In some districts it has been assumed that all irrigable land is
equally benefited and that nonirrigable land receives no benefit, with
the result that all of the cost has been assessed at a uniform rate per
acre against the irrigable land. In other districts it has been decided
that all district land, whether irrigable or lying above the canal
system, is benefited either directly or because of the enhanced value
of the community as a whole, in which cases the construction cost
has been apportioned against irrigable and unirrigable lands in the
ratio of, say, 10 to 1. Sometimes, but not often, several grades of

IRRIGATION DISTRICT OPERATION AND FINANCE. rT

irrigable or of nonirrigable land have been established and differ-
ent benefits assigned. In several cases where districts took over
existing systems embra‘ing tracts upon which only partial water-
right payments have been made, the unpaid amounts were added to
a flat rate per acre in determining the amount of benefits to assess
against such tracts. In at least one instance of drainage construc-
tion by an irrigation district two classes of benefits were assessed, one
amount against lands directly benefited and the other against lands
indirectly benefited. Adjustments for preexisting partial water rights
and seepage conditions have also been made by this method. —

According to water allotment.—In Utah, prior to district formation,
a determination is made by the State engineer of the maximum
amounts of water which may be beneficially used upon each 40-acre
tract, or smaller tracts if in separate ownership, in the proposed dis-
trict, which allotment, as finally revised after organization when the
amount of water available has been determined, is the basis for all
assessments and tolls. In actually making such allotment existing
water rights are listed, soil and subsoil classified, depth to ground
water measured, and the water Meficiency ascertained.

Comparison of methods of assessment.—A certain amount of flexi-
bility in determining the proper amounts to be assessed against dis-
trict lands is obtainable by either the ad valorem or the benefit
method. Theoretically the ad valorem method might seem to require
a rigid application, yet in actual practice the district assessors have
frequently departed widely from a strict interpretation of the law,
even to the extent in some cases of valuing all farm lands in the dis-
trict year after year at the same rate per acre. The ad valorem
principle does not readily lend itself, however, even under a liberal
interpretation, to the organization into an irrigation district of a
community in which varying degrees and values of water rights
already exist, unless the district is prepared to purchase such rights,
nor to a community composed of distinct units requiring radically
different construction costs. The method of assessing according to
benefits is designed to take care of varying local needs and conditions.
Greater adaptability in determming benefits is of course possible
where the apportionment is made annually, or where a reapportion-
ment is permitted in particular cases in subsequent years, than where
the allotment of benefits is made only once for all time.

On the other hand, the two opposite extreme views on assessment
are represented by the methods of assessing at the same rate per acre
and according to acre-feet of water allotted, neither of which would
seem to allow of deviation from the fixed rule. The one view is that
the irrigation district is a unit in its community of interest, involving
equal benefits to all lands, with the result that each acre should bear
a share of the burden equal to that of every other acre. The other
idea is that the quantity of water received from the district is the
measure of interest each tract has in the district, and that a tract
receiving 4 acre-feet per acre is benefited twice as much as one
entitled to 2 acre-feet per acre. Both Oregon and Montana, as above
stated, have recently permitted modifications of the uniform rate
plan. The Utah plan of assessing according to water allotments has
been in force since 1917 only and has not yet been sufficiently tried
out in extreme cases to warrant conclusions as to its operation.

50488°—23——3

18 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

Operation costs— Tolls —The basis for securing revenue for oper-
ating purposes is frequently different from that upon which con-
struction charges are apportioned. While all irrigable (and some-
times nonirrigable) lands in an irrigation district are made liable for
the cost of building or acquiring the irrigation system, nevertheless
a sentiment sometimes prevails that lands not using water should
not be required to bear so large a proportion of the cost of main-
taining sh operating the system as lands to which water is actually
delivered. Insome States this distinction may be made in the annual
assessment for general expenses, and in others it is made possible
only through the imposition of tolls.

The ad valorem method in Texas does not apply to assessments
for maintenance and operation purposes. For such purposes, one-
third to two-thirds of the estimated expense for each year is charged
at a uniform rate per acre to all land capable of being irrigated and
the balance to all persons actually applying for water. In the exercise
of statutory authority, some of the Texas districts take promissory
notes in advance from applicants for water and hypothecate these
notes in order to secure money for operating expenses.

Where assessments in Idaho districts are levied for maintenance
and operation purposes, they are required to be in proportion to the
benefits received from the maintenance and operation of the district
works rather than proportionate to the construction cost. This
makes it possible to charge general expenses in whole or in part to
lands using water in any year. Idaho has a further provision that
in cases where works were constructed by the United States under
the reclamation act, operation and maintenance assessments shall be
levied according to the number of acre-feet delivered during the
preceding season, with a minimum charge upon each irrigable acre
for not less than one acre-foot.

New Mexico provides that in districts formed to contract with the
United States, the portion of operation and maintenance costs to be
collected by tax shall be not less than one-fourth nor more than two-
thirds of the total.

Most of the States give district directors the discretion of fixing
rates of toll for water in order to defray the expenses of organization,
the operation, repair, and improvement of canals constructed and in
use, salaries, and other current expenses, or of levying assessments
for such purposes, or of employing both methods. Tolls may some-
times be made payable in advance of water delivery, but this is
seldom done (except through the hypothecation of notes in Texas

districts) owing to the fact that money for the payment of tolls is —

often available only upon the sale of crops which that particular
water was used in producing. In one Idaho district the quantity of
water used during the season is the basis of charge for water master’s
and ditch riders’ salaries and for repairing an occasional break on the
canal system, and the area of land irrigable is the basis of assessments
for maintenance and all general expenses. Three of the older Cali-
fornia districts which have now no bonded indebtedness derive all or
nearly all of their income from tolls and several others use both tolls

and assessments.
BONDS.

The outstanding feature that distinguished the early Wright Act
districts from those authorized by the early Utah law was the power

IRRIGATION DISTRICT OPERATION AND FINANCE, 19

to issue bonds. This feature probably commands more widespread
interest in irrigation district activities than does any other phase of
its operations. That the bonding privilege has been the outstanding
inducement toward the formation of districts is indicated by the fact
that 83 per cent of all districts now in operation or undergoing
construction have voted bonds, and that 79 per cent of all such
districts have sold all or portions of their bond issues.

The bond of an irigation district contains a promise to pay a
definite sum at a definite date, with attached interest coupons payable
annually or semiannually, the security lying in the district’s power
and duty to levy annual assessments upon all of the lands benefited
in order to secure funds for paying the principal and interest as due.
In case of neglect or enol of district or county officials to levy
such assessment, bondholders may compel such levy by mandamus
proceedings.

Bonds must be authorized by vote of the district electors, prior to
issue, in all States except Montana and Wyoming. In Montana,
however, a petition must first be filed with the district commissioners
by a majority in number and acreage of the title holders. In
Wyoming, after the assessment for construction has been confirmed
by the court, the district commissioners without further authorization
may issue bonds not exceeding the amount of the assessment. An
investigation of the feasibility of proposed plans is a prerequisite in
some States.

Validation.—So vital is the question of the legality of district
bonds that the California Legislature early provided a means whereby
the directors of a district could bring a special action in court to
determine and confirm the validity of proceedings leading up to and
including the bondissue. ‘This feature has been adopted by the other
States with the sole exception of Kansas, some of which States make
the bringing of such action mandatory. The strength of this meas-
ure lies in its assurance of determining the legality of bonds prior to
their sale and before such legality can be called into question against
the interest of purchasers: The various statutes also provide that

roceedings in connection with assessments, contracts with the United
tates, and other acts may be tested in the same way.

Certain bond issues in large amounts sold during the first six years
of irrigation district operations in California, and in 1911 in Colorado,
were subsequently declared null and void by the courts. With the
ample means now provided for assuring validity, there would seem
to be little need of a repetition of this experience.

Interest rates—Capitalization of interest—Most of the statutes pre-
scribe that irrigation district bonds shall bear interest at a rate not
exceeding 6 per cent per annum; three, however, provide that the
interest rate shall be 6 per cent, and several laws fix the limit at 7 per
cent. Bonds issued in behalf of local improvement districts are
usually authorized to bear a higher rate of interest than the usual
district bonds. In most States interest must be paid semiannually,
usually on January 1 and July 1.

In order to give irrigation districts an opportunity to get on a
paying basis before demands for interest shall fall due, it is now

rovided in the majority of the States that the first one to four years’
interest may be included in the amount of the bond issue.

20 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

Denominations.—Although several of the State statutes contain no
provisions as to denomination of bonds, most of them fix maximum
and minimum limitations. ‘The minimum wherever provided is $100
and the maximum either $500 or $1,000. Three States require the
amounts to be multiples of $100.

Denominations are determined in individual cases by the probable
class of investors. Several districts, for exceptional reasons, have
adopted 8 or 10 denominations ranging from $100 to $500, but the
sreat majority, due to greater convenience and consequent less expense
of handling, have limited their issues to 3 or 2 or even 1 denomination.
Large investors prefer the larger denominations as a matter of con-
venience, while persons with smal! amounts to invest can be reached
only with the smaller bonds. In States which permit bonds of $1,000
denomination to be issued, bonds of this size are frequently combined
with $100 and $500 bonds. Where $500 is the maximum, it has been
the general practice to use that figure for most of the bonds issued,
with often‘a small percentage of the issue in $100 denominations in
order to attract the small investor or to comply with statutory
requirements for retiring certain percentages each year. |

Maturities —Irrigation district bonds have practically all been of
the serial type, a certain percentage of the issue maturing each year.
In some States it is legally possible to have the entire bond issue fall
due at one time; but, particularly in districts only partially settled,
the advantage of spreading the principal payments over a series of
years has resulted in the use of serial maturities in most cases. Some
statutes provide that certain percentages of the issue shall be made
to fall due in a certain series of years, but the varying conditions in
different districts have caused most of the State laws to allow the
electors or the supervising State officials more or less. flexibility in
fixing dates of maturity. Entirely different conditions obtain, for
example, in a comparatively new and only partly settled district,
which usually has the added burden of a considerable discount added
to its capitalization, from those found in a community sufficiently
developed to command a ready market for its bonds and capable of
discharging its indebtedness within a short term of years. The one
district is benefited in having its principal payments deferred until
the income from the land becomes sufficient to take care of them,
while the other reaps the advantages of having to pay less for its
loan and of eliminating the unhealthy effect of postponing payments
unnecessarily.

Many of the States do not allow irrigation district bonds to run for
more than 20 years, although several allow 30 or 40 years. 3

The statutes are not uniform in their use of the words ‘‘issue”’ and
“‘series’’ in connection with bonds. Some define an issue as the
whole amount of bonds authorized at any election and a series as
the part of an issue maturing in any year, while others call a series
the amount authorized at an election and an issue the portion of a
series sold at any time. In most States, however, ‘‘series”’ is used
in connection with maturities, and ‘‘issue,” whether specifically
defined in the statute or not, commonly refers to a single bond
authorization.

Disposal of bonds—Bonds may usually not be sold without a
prior advertisement for bids, although in several States the advertis-
ing may be dispensed with if par can be secured for the bonds at

IRRIGATION DISTRICT OPERATION AND FINANCE. 21

private sale. The statutory provisions with reference to wih! 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 pomt 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 circum¥yented 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-
evettion of districts in several States in order to take up overdue

onds 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 im loans
bearing higher rates than the district bonds were carrying, 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 beimg 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

22 BULLETIN 1177, U S: DEPARTMENT OF AGRICULTURE.

has been much more sensitive to district failures than to district
successes. The earliest districts, after considerable effort, found an
outlet for their securities in this country and in foreign markets.
The failures of the early nineties, however, made the disposal of bonds
on any great scale practically impossible for some years. But bonds
continued to be sold in small quantities, mainly to local buyers, until
the revival of interest in irrigation development during the first
decade of this century caused a ready sale of irrigation securities in
the Chicago and eastern markets upon the recovery from the finan-
cial depression of 1907. ‘Then came the second series of district fail-
ures, coupled with the failure of a Chicago house which had been
financing Carey Act and district enterprises, the net result of which
was a second collapse of the market.

The present market is limited by several factors, important among
which are the small amount of correct information on irrigation dis-
tricts among bond investors east of the Mississippi and the prejudice
against such bonds, particularly in the East and Middle West, as a
result of the defaults mentioned. Most of the districts that defaulted
10 years ago were speculative enterprises. Many sections in which
speculative bonds were sold are too far removed from irrigation cen-
ters to keep in close touch with irrigation district affairs and to learn
of what the good districts are really accomplishing. Only in the
irrigation States of the West has the district come into sufficiently
close contact with the public to retain recognition. The old preju-
dice against buying district bonds is still found even in some sections
of the West; but in several States, by a long process of education,
strengthened by satisfactory records of local districts, markets have
been built ~ capable of absorbing most of the sound local issues and
some issues from neighboring States. Faced by the possibility, how-
ever, that local markets may not prove inexhaustible, those inter-
ested in the financing of large projects are turning their attention to
means of overcoming eastern prejudice and reestablishing the market
there. Within the past year a few issues have been SE in Chicago,
St. Louis, and New York.

Irrigation district bonds, which are sometimes referred to as
“municipals,’”’ usually bear higher interest rates and sell to net
higher yields than do the true municipals. Municipal bonds as a
class are much more numerous, older, and more seasoned than dis-
trict bonds and have outgrown the effects of early cases of default.
Likewise the element of hazard, which enters in greater or less degree
into agricultural and reclamation undertakings, is less pronounced in

the case of municipalities. These factors necessitate a greater amount »
of advertising for district bonds, the cost of which, together with

other greater expenses of handling, selling risk, etc., makes the mar-
gin between the price dealers pay for the bonds and the price at
which they sell them to the ultimate investors usually greater than
that for good municipal bonds. This margin grows smaller in the
case of old settled districts with established reputations.

Measures taken in recent years to strengthen State supervision
over district activities, and particularly to provide for State certifi-
cation of bonds of feasible projects, are generally thought to have
had a very beneficial effect upon the salability of bonds. Most bond
houses in States which have provided for certification handle only

IRRIGATION DISTRICT OPERATION AND FINANCE. 93

certified issues. While the bond house relies upon its own investi-
gation of the desirability of taking the issue, as well as upon the
State report, the fact of certification makes the issue more attractive
to the average investor and is consequently an important selling
oint.

i During the last few years a tendency has developed toward elim-
inating the word “‘irrigation”’ from the official designations of irriga-
tion districts and substituting some equivalent term, such as “‘ water
conservation,’’ ‘‘water conservancy,’ or ‘‘ water improvement.”’
Some of the recent statutory amendments permit and others require
the new terms to be used. These changes are designed to afford
districts an opportunity to prove the merits of their bond issues
without having to encounter the initial handicap still attaching to
the term “irrigation ’’ in some places.

The fact that irrigation district bonds, in common with other
municipal and quasi-municipal securities, are exempt from Federal
taxation is thought to have had an important bearing upon the more
active market in recent years in sections where districts are favor-
ably known. In some States such bonds are free from State taxation
as well.

CHARACTER OF IRRIGATION DISTRICT BONDS.

Speculative or nonspeculative character.—Bonds of irrigation districts
may be divided into t wo general classes on the basis of the character
of the enterprises issuing them. A district which includes lands valu-
able enough without irrigation to furnish adequate security for its
obligations, and which is sufficiently developed to insure revenue for
making all payments promptly, may issue bonds which are truly an
a ORE AiSctucing investment. On the other hand, a project which
has no security to offer beyond that to be created with the proceeds
of its bonds, whether honestly conceived or otherwise, is essentially
a speculative undertaking. Bonds issued by districts of these two
classes have borne approximately the same rates of interest and have
carried nothing else on the face of the bonds to indicate the extent
of the security. Furthermore, in the periods of indiscriminate buying
of irrigation securities, bonds of speculative districts often retailed,
at prices comparable with those of sound bonds, to purchasers whose
intent was to invest rather than to speculate. It was the failure to
discriminate between these types of security that permitted so many
questionable undertakings to be financed during A oa periods.

The theory of State certification of bonds as legal investment for
bank and trust funds is based upon a recognition of two distinct
classes of irrigation bonds. The application of this theory, by putting
the purchaser on his guard, tends to make more difficult the sale of
speculative bonds from States which have provided for certification.
In such States, therefore, while feasible projects of the speculative
class may still organize as districts, the failure of the bonds of such
districts to bear State certification carries the implication of a possi-
ble lack of adequate immediate security.

Financial reorganizations.—W hile some projects contained so little
merit as to result in complete abandonment, others unable to meet
early obligations were sufficiently worthy to give promise of eventual
success if relieved of part of their burdens. Certain enterprises of

24 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

this sort met difficulties because settlers failed to arrive in sufficient
numbers and with adequate means to put the land on a paying basis
in time to meet the interest charges. The bondholders under such
circumstances, realizing that to pursue their legal remedies would
merely result in forcing the settlers off the lands, agreed in certain
cases to write off a portion of the debt in order to assure ultimate
payment of the balance. Financial reorganizations involved pooling
the interests of bondholders on the one hand and landowners on the
other, negotiations between the two groups, and surrender and
cancellation of overdue bonds and interest coupons at an agreed
discount. Bondholders were often widely scattered and some bond-
holders and landowners were opposed to any compromise, so that
it was not always possible to bring all interested parties into the
agreement. ‘The procedure in such event consisted in selling bonds
and coupons of proper maturities to the landowners for use in paying
taxes, thus releasimg the lands covered by the agreement from the
lien for those taxes and leaving the bondholders not in the agree-
ment to obtain satisfaction from the lands not so covered—a solution
legally possible where the district tax is held to be a svecial assess-
ment rather than a general tax.

PRESENT STATUS OF BONDS.

Figure 4 shows the status of all bonds sold to December 31, 1921,
seoregated by years in which actually sold. The disposition of these
bonds has been as follows:

OWtsualcine DSC. Ol Een on be nee 22 be tee ee age oe $104, 921, 223
ELC CENMC na ee eee re ae Ee eee Ue, See ee 5, 091, 070
Déclaréedillegal .2 vsle0. AU2A VAG eid. 2) ian 3, 369, 350
Canceled after compromise -..-- - i). - die aatedest- sy 4, 536, 900
Discount on bonds refunded after comptomise........... 497, 900

Potal dondaisola 10... GON OtLaawy le eeoi TAI 8! 118, 436, 443

For purposes of comparison irrigation district history has been
derided” into five seven-year periods and of the total amount of bonds
sold during each period the percentage paid when due, compromised,
defaulted, etc., has been ascertained. ‘The results are shown in Fig-
ure 5. When considered in connection with Figure 4, which shows
the volume of bonds sold from time to time, the chart contains a
striking summary of the history of irrigation district bond integrity.
The first and fourth periods, as well as the latter part of the third,
were times when speculation was rife. The more satisfactory situ-
ation during the fifth period is partly a result of more effective State
control, State certification of bonds, greater discrimination on the
part of bond buyers, and more general conservatism in the promotion
of districts.

Table 4 contains a summary of the bonded indebtedness of all irri-
gation districts in the United States to December 31,1921. The last
column shows for each State the average outstanding bonded debts
per acre of all operating districts which are fully financed to date;
that is, of all districts which are “ going concerns”’ and which have
secured the necessary funds for their present purposes.

}
I
'
\

oe

4

IRRIGATION DISTRICT OPERATION AND FINANCE. 25

20

[J] Held illegal
iS In litigation:
] Defaulted

Compromised or expected to
be compromised

0 Interest and principal always
paid when due :

oO

Millions of Do/lars of Bonds So/d
oO

mE

HATE
er |
BEET

1890 i895 1900 i905 I10 i91
Years in which Bonds Were Sold

Fic. 4.—Status December 31, 1921, of all bonds sold by irrigation districts in the United States.
The symbols are not superimposed upon each other.

Held ilfegol.. E=3 = Defautted_._.. E=3 Expected to be compromised.......----.------ es |
An litigation... BEEZ Compromised. AEE Interest and principal always pard when due.{__|
27% __ 8% 1%

NE : (83)
FIRST PERIOD SECOND PERIOD THIRD PERIOD FOURTH PERIOD — FIFTH PERIOD
1887 — 1893. 1894 — 1900 1S01 —1907 1908 - 1914 isis: 2)

Fic. 5.—Comparison by seven-year periods of status of irrigation district bonds sold to
December 31, 1921.

50488—23—_4

——————— ee ee a a OLLI AAL LLL ALLL ALLL eee eee
.
:
4
=)
fam! «
4
=
Oo fie Cen SE Bee |
a
fj 068 ‘988 ‘E | 661 LI £02‘200'9 | 6&2 0€ Tot ‘6FE ‘6 | ELE £22 1Z61FOT’ | SHADER ‘SIL Lop Lor 18S. (wo es UBOUL 10 [BIOL
(oe) SS SS SS ees, Sl sd -_—————— | SE | SS Ss ES
LT 092 ‘&F £ LI 092 ‘ef € 1g OSL ‘SbT 9 00 ‘STL 000 ‘196 O00 167). tia, oS ee BuTUrod
Ea 699 LET 1g L 606 "986 OF 98 68" ‘E80 ‘T | 29 O&F “66F ‘9 O€h 208 ‘9 OG O18 86 iigend eee oot ieee “WO SUTYST AA
A 0€ 18 CE g 0€ I8¢ "cg ¢ (ee €28 ‘ESI Or 00T ‘090 ‘T 009 ‘OST ‘% OG0-L10: 7 “lest "Bae Sa abet yey
‘ ‘ «
= £% 118 GPF Il IZ TL8 ‘92S La £% PSL ‘SEG 9T 000 “68 ‘OL 000 ‘£00 ‘TT OOO 26S. CEs A) oo nS een eae oe kl F- 3 as ;: ane
BO Sika Gass Cem te coe pts ee ee to tee TSS al has ies tea! © Ka Be es ot (Panacea igre gain (a coal te a re Se ale ti | Eg a ta vail Ina sah eer gS GL ae a vyoyVd YANO,
AH LE 080‘ 18T LT 61 098 “168 12 oh 980 ‘Z0¢ 82 008 ‘LEP ‘2 008 ‘9€9 “2 OOD 10608 ee” een eeap et ee “*** U0S0IQ
a eo 5 alipoek Soe ie Eb ERC (IO SS ea pe Sicha Rio's) aie eas ie ab at ae sera ee Sistatieltnsn sain oS )o=iaic.=/| gieieapagee = “In aic’= c)| ee ates> o sinie 2 o\e'e'e6 [FRc So - “Bem - Ss BULOYRIAO
a Il ZL8 ‘FT T 8 ZLS ‘EZ Zz 6I ZLE ‘FL p ¢ ‘ Yer dy (een Gee nM a ail IST Ie eI ; pie near
cL ee 4 ol 000 “98T 000 ‘98h 000 ‘OSh T . OoTXOT MON
Ps oa es A Se Usted as te anaes 962 ‘061 i g 962 ‘061 I 008 ‘ZF 008 ‘ZF i eae ee ee BpCLoN
61 66L EL 8T 61 622 ELT 8I 9L 691 ‘062 62 28 ‘OE ‘E 289 ‘TST ‘F Che, 96Gb, itiee. yp See a a BISCIQIN
ae. 28). 666 ‘TS 02 1% 666 ‘18 02 02 FEZ ‘12% rE 002 ‘112 ‘% 00S ‘862 ‘Z DOD OF ie |e era vueyUOW
BAe ARs ae see e[eet eee e [ete c eee ec| reece cece ec[ese eee ee|ecseceeeee|eceeerttecee| neceeee|ineeersccteees[anetscetcreeccferesccntrtecee|screeece ress sees eset seeseeeessees Spee TE
5 eI TSS Ai 8% ia! 198 ‘988 1€ €& 029 ‘069 bP OSL ‘PER ‘S OORDLEG . 1pie OLB 2S |S ee oe ee “-OUvpy
0¢ G6 ‘12 bz G% OF0 ‘128 b& ce S16 ‘12 ‘T | 6¢ Ua px0.0c.. | Ur, 88.90 |-O09- CEL co |" ee 88 ee OpBi10]o;)
‘ ‘ ‘ ‘ ‘ ‘
‘fom, 8a 912 $68 T | OF 02 $06 * 228 G | 8F 6% 289 ‘968 E | #8 190 ‘9TL ‘GF 1&6 ‘$99 ‘OG 10 6F OM CC Bee ae BIUIOFITC)
~~ rg _ | OF8 &T I F$ On 81 4 oes 180 “OZT 9 00¢ ‘Oz$ 00¢ “OL$ G16 S29 oS. |) - eee SO ee vuoZzIIy
us ‘alan dad *Saloy salon Lad *Salov *aL9p Lad "SALI
fi abviaapy abn.waa y abpLaa Y
= ee 1 fee ae —
popttoq oq | 20
. i & " 2 *10q *pajoa : “10q_ |. *DIod 5
4 surpueys ery. -UInN Tio oly -unn | spuog Bolly sane surpurysjno PIOS poj0A
-yn
iB esas o1819
*818p 0} poouvuy *SUTpueysjno : 4
ATINY 840]1}8}P Zuyyv10d O spuog JUIAvY s}oIysIG Spuod Pej0A SupAVy $70}17S}q pad

26

*T66I ‘1 waquiasag ‘saqn7G panug ay) ur sjrysip uoyvbhiie fo ssaupajqapur papuog fo iimumung— yp AIaV,

IRRIGATION DISTRICT OPERATION AND FINANCE. 27

STATE SUPERVISION.

The policy of requiring State officials to inquire into the desirability,
from a public standpoint, of forming an irrigation district first re-
ceived legislative sanctioninIdaho. The failures of the early nineties
had caused the California Legislature in 1897 to make more stringent
the conditions precedent to formation and bonding of districts without,
however, imposing outside control. But Idaho in the same year,
1897, required the State engineer to examine and make an advisory
report upon plans of each district prior to a bond election, and in
1907, after having tried several different checks on the formation of
districts, settled upon the plan now in effect. With the sole excep-
tion of Kansas, the other States having district laws have since pro-
vided for State supervision in one form or another.

CHARACTER OF SUPERVISION.

Control by the State applies in certain cases to the formation of
the district and in others to plans and estimates formulated later.
One theory is that no irrigation district should be organized at all
unless there is ample indication of its feasibility and the sufficiency
of its proposed water supply. The other thought is that the forma-
tion of districts should be encouraged to the end that machinery may
thus be provided for the actual investigations of feasibility and water
supply, but that actual construction of works or issuance of bonds
shall be subject to State approval. With reference to bond issues,
one plan is to have the State investigate and report prior to all pro-
posed issues, and a further plan is to establish certain standards
which bonds must conform to if they are to receive State approval
as investment for certain types of funds. The usual supervision is
advisory rather than mandatory.

Organization.—In Idaho and California investigations and reports
are required prior to the formation of irrigation districts, which
reports if adverse are sufficient to prevent formation unless three-
fourths of the landowners petition otherwise. The organization peti-
tion in Wyoming must contain an engineering, water-supply, and
land report bearing the approval of the State engineer. Ph Texas
the State board of water engineers hears the petition for organization
of any district lying in two or more counties and may grant or deny
the same, its decision being final; but the county commissioners court,
subject to appeal to the district court, has jurisdiction over the for-
mation of districts lying wholly within one county. Districts in
Oregon and New Mexico may be formed at will, but must go to the
State engineer before proceeding further. In Washington the director
of conservation and development sits in an advisory capacity with
the board of county commissioners on the question of organization,
the board’s discretion, however, extending only to fixing district
boundaries for which a water supply is deemed available. Montana,
which has provided for an alternative type of irrigation district organ-
ized and functioning under State supervision, has imposed no restric-
tions on the formation of districts of the older class. In Utah the
State engineer is required to make a water survey and allotment of
water to each 40-acre tract in the proposed district, or smaller tract
if in separate ownership, before the district may be declared organ-
ized. In Nebraska, Oklahoma, South Dakota, North Dakota, and

28 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

Colorado investigations and recommendations are provided for by
State officials prior to district formation, but are not conclusive upon
the district electors, the purpose being simply to make known the
conclusions reached.

In actual practice the State engineer or other corresponding official
receives a copy of the petition from the county body or from the
petitioners, checks the preliminary plans, and as a rule either visits
the proposed district in person or sends a deputy to make such actual
field studies as time and available funds may permit. Comparatively
few proposed districts have been completely disapproved by the
State. However, it is not unusual for the State engineer to call
attention to the lack of certain information or to require additional
data or the elimination of certain tracts of land before granting
approval.

Plans and estimates—Idaho, Nebraska, California, Oklahoma,
South Dakota, North Dakota, Arizona, and Colorado have all pro-
vided that the plans and estimates of the district directors formulated
before issuing bonds shall be reviewed by State officials, but have
not made the resulting State recommendations binding upon the
districts. However, the California and Arizona statutes provide that
districts issuing bonds to carry out any plans approved by the State
may make no material change in such plans without the State’s
consent. In Oregon both plans and completed work must be approved
by the State engineer. In New Mexico, where the report on water
supply must be approved by the State engineer, with an appeal from
his decision to the courts, no bonds may be issued until the report
shall have been approved by the State engineer or the courts. The
disposal of bondsis subject to partial control by the State in California,
Oregon, Utah, Nevada, and Arizona, and to full control in Montana
in case of those districts operating under State supervision.

State supervision over plans and estimates upon which bond issues
are to be based necessarily goes farther than over the question of
formation of the district, for it involves definite costs of construction,
which are sometimes dealt with only in a general way when organ-
ization is being considered, and is deeply concerned with security for
the bonds. It sometimes occurs that the bond issue proposed, and
which the State is to inquire into, is inadequate to complete the con-
struction called for, in which case it is the function of the State to
revise the estimates and recommend a greater bond issue. Likewise
the maturities proposed may not be best suited to the particular type
of district. That is, a comparatively undeveloped district may S
proposing to issue short-term bonds which it would have little like-
lihood of being able to retire when due; or, on the other hand, a well-
settled district, fully able to discharge capital indebtedness at an
early date, might plan to throw a heavier burden upon posterity
than justified. Proper maturities are advised in such cases.

Security for the bonds involves many factors, important among
which are the value of the land, adaptability of certain crops, poten-
tial earning power, relation to markets, sufficiency of the water supply,
feasibility of the plans, limitation of indebtedness, degree of settle-
ment of the land, and character of the settlers. All these influences
must be considered in determining the proper amount of bonded
indebtedness to be created against a district to insure prompt pay-
ment of the interest and principal. While the district electors and

IRRIGATION DISTRICT OPERATION AND FINANCE, 29

district officers in any given case may be perfectly capable of decid-
ing the amount of indebtedness they wish to incur and may use good
judgment in reaching their decision, nevertheless it is the modifying
influence of a public viewpoint, shaped by a knowledge of State-
wide conditions and past experience and unhampered by purely local
considerations, that the various statutes on this subject have at-
tempted to provide. Such examination is usually made by the State
engineer, though in several States by commissions composed of the
heads of the engineering, banking, and legal branches of the State
governments.

Certification of bonds.—A step farther in the matter of State control
over bonds of irrigation districts is the certification of such bonds as
legal investment for funds in which the law allows county, school,
and strictly municipal bonds to be invested, and the consequent
elevating of certified bonds to a higher plane than those not certified.
Submission of bonds to the State for such purpose is voluntary, but
in most States districts that have had any bonds certified are for-
bidden to issue further bonds without certification.

The principle of State certification was first worked out in Califor-
Nia in 1911 and has since been introduced into Oregon, Utah, Nevada,
Idaho, Colorado, Montana, and Arizona. It grew from a desire to
provide a wider market for sound irrigation district bonds and to
put them on the same basis for investment purposes as bonds of
other public corporations; in other words, to give notice to the world
that the State has investigated the bonds of a particular district and
approves them as investment for trust and savings funds. Indirectly,
by setting a high standard for such bonds, the State makes it more
difficult for bonds of undesirable districts to find a ready market than
might be the case otherwise.

he California plan, upon which those of the other States are based,
is as follows: The directors of a district who wish to have bonds
certified make application in prescribed form to the California Bond
Certification Commission, composed of the attorney general, State
engineer, and superintendent of banks. The commission makes an
investigation dealing with water supply and water rights; fertility
of the soil, susceptibility to irrigation, probable duty of water, and
probable need for drainage; feasibility of the irrigation system;
reasonable market value of water, water rights, and all irrigation -
works owned or to be acquired or countractell with the proceeds of
the bond issue; reasonable market value of the lands in the district;
and ascertains whether or not the aggregate amount of bonds of the
district, including those under consideration, exceeds 60 per cent of
the aggregate market value of lands and water, water rights, and
irrigation works owned or to be acquired. No bonds may be certified
if the aggregate amount exceeds the 60 per cent limitation. If the
commission's report is favorable, the bonds thus approved are cer-
tified by the State controller, whereupon they become a legal invest-
ment for all trust funds and for funds of all insurance companies,
banks, trust companies, and State school funds, and enjoy the same
ie as bonds of cities, cities and counties, counties, school
istricts, and municipalities with reference to purposes of investment
and deposit as security for the performance of any act. As many
consecutive issues of bonds may be certified as the commission may
deem proper, but no subsequent issues are permitted without cer-

30 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

tification. No expenditures may be made from the proceeds of cer-
tified bonds until the commission shall have approved a schedule of
proposed expenditures. Irrigation district bonds certified under this

lan constitute approximately one-fourth of the total amount of
bonis now on deposit with the State treasurer of California as security
for the deposit of State funds in banks.

The State of Oregon has made the sale of bonds, or the ability
to sell them, a condition precedent to certification in order to avoid
flooding the market with unsold certified bonds.

To July 1, 1921, the following total amounts of bonds had been
certified in the several States:

MITOINS is ee nn mp cB ne 32 ee ee Re ene ae eae
recom! 500, 6 ASIA Uk Shee. SM Oe See ee ee ee nn oe
Utaboe . oil). lds. .bed esd. 66, O41 2000 - Miggp ieee 600, 000
Nevada... so~it -wintlt sales rior wud eh ene 400, 500

Total St. OAT MIG OMe, Pee Se a Oe Sa ee eee

OPERATION OF STATE CONTROL.

State control over district activities has advanced slowly in the
face of opposition by many established districts, by persons who
have plead the influence of political considerations upon decisions of
State officials, and by others whose viewpoint has been purely
speculative. Efforts made in Colorado, and recommended by each
succeeding State engineer, to provide some check upon the rapidly
increasing speculation in district bonds during the first decade of
this century came to naught largely, it is stated, because of the
influence of persons interested in unhampered promotion of irrigation
districts. But the prevailing tendency has been to strengthen State
control, rather than to limit it, because of the salutary influence it
has exercised in restraining the promotion of ‘‘wildcat’’ enterprises.
An effective State supervision makes the financing of a project
without engineering or economic justification very difficult. The
various State officials, in administering district affairs, have very
ey shown their feeling of public responsibility in guarding the

tate from the consequences of possible failures.

While the statutes are the foundation for State supervision, never-

theless the administrative policy of each State is equally important,

for States having the same general statutory provisions often exercise
different supervision. Some flexibility exists, for instance, in deter-
mining the economic feasibility of a project, a matter of the utmost
importance, particularly when the certification of bonds is under
consideration.

During the larger development of recent years a practical difficulty
has arisen in supervising district expenditures. In California par-
ticularly, with its large amount of certified bonds, this condition has
led the State engineer’s office to consider installing a uniform system
of accounting for expenditures from the proceeds of such bonds.
Most of the States now require their State engineers or corresponding
officials to be kept informed of district activities through reports
made annually and sometimes on more frequent occasions. It has
Bree very important from the State engineer’s standpoint that he

e kept in touch with all matters pertaining to organization, bonding,
progress of construction, and general operation of irrigation districts;

——————

IRRIGATION DISTRICT OPERATION AND FINANCE. 31

for he is the official whom custom has placed in closest contact with
district operations and upon whom devolves most of the State's
responsibility.

STATE FINANCIAL AID.

The question of public aid to irrigation districts for the purpose of
stimulating or making possible needed development has been under
discussion many times. Efforts made from time to time to induce
Congress to provide for Federal guaranty of district bonds have not
yet been successful. A number of the States, however, have granted
statutory authority for the investment of State funds in irigation
district bonds, and several have actually made such investment.

Utah.—Utah in 1911 authorized funds derived from the sale or
rental of State lands to be used in purchasing irrigation district
bonds. Apparently this was not a well-defined policy of public aid
to districts, for it was accomplished merely by enlarging the scope of
investment of State land funds and introduced no new features.
total of $90,200 was invested in bonds of three districts during the
next two years. As two of the investments proved unsatisfactory,
the amendment was repealed in 1915. The State has since disposed
of its interest in one of the districts at a nominal figure.

California.—In 1915 and 1916, when the market in California
was less favorable than it became later, the State purchased $75,000
of certified bonds of two districts from the teachers’ permanent fund
and school land fund. Two objects were in view—to make a good
investment, and to aid the districts in sellng bonds by showing the
bond-investing public that the State had confidence in the districts.
In 1920 and 1921, $65,000 of bonds of three districts were bought
for investment purposes, partly at a premium, from the compensation
insurance fund.

Nebraska.—For several years Nebraska has been making purchases
of irrigation district bonds from the permanent school fund. To
date $271,000 of bonds of six districts have been purchased. The
question of aid to districts has not figured prominently in these
purchases. They have been made from the standpoint of the most
satisfactory investment of the school fund, with preference to local
securities.

Washington.—Washington has developed an announced policy of

anting aid to irrigation districts through the purchase of their

onds. To this end the legislature provided in 1919 that the State
reclamation revolving fund, raised by an annual levy of one-half mill
upon all taxable property in the State, might be used for investment
in bonds of reclamation districts, including irrigation, diking, and
drainage districts. To July 1, 1921, $497,000 of bonds of six irrigation
districts had been purchased.

Owing to the limited amount of money made available, Washington
has not been able to carry its policy far, but has begun to formulate
principles which in time may have a far-reaching effect upon irrigation
development within the State. The fund is a revolving fund in the
sense that the State intends to sell these bonds as soon as a market
develops for them and to apply the proceeds to the development of
other districts. District bonds are bought by the State at 90, which
is the lowest price at which they may Tegally be sold, on the theory
that the State is buying these bonds as a matter of assistance only

32 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

because no other purchaser can be found, and that if the district can
sell the bonds elsewhere for more than 90 it has no need of State
assistance. In other words, some incentive is given the district to
seek purchasers in the open market. The director of conserva-
tion and development construes the law to limit such purchases to
development purposes, rather than to include improvements needed
by already developed communities. Up to the present time the
State has in no instance bought the entire bond issue of an irrigation
district. The purpose has been to give limited aid where possible
by buying partial issues at 90 and reselling them at the same or
higher figures when the development thus made possible shall have
enhanced the security for the bonds and made them more attractive
to private investors. The difficulty with this plan, however, is that
partial assistance does not always accomplish the purpose sought,
particularly if the district is unable to dispose of additional bonds;
and it is now felt by the administration that the State could be better
served by taking a single project and seeing it through than by
spreading smaller amounts of money over a number of projects.

The Washington officials investigate a district very thoroughly
before buying its bonds, inquiring particularly into the water-supply
and engineering features, soils, and general feasibility. The market
value of the land without water is not considered, however, owing to
the fact that areas in need of reclamation in eastern Washington
have often only a nominal value without irrigation. The prospective
value of the land when put under irrigation is the criterion. The
State of course reserves to itself the right to exercise close super-
vision over the expenditure of funds turned over to the district for
such bonds.

Oregon.—In Oregon a different form of State assistance to irri-
gation and drainage districts was put into effect in 1919. This
involves the payment by the State of interest on district bonds for
periods of not to exceed five years. The purpose is to give districts
an opportunity to get on a paying basis before any ernie for
interest shall fall due. To this end it is provided that the money
advanced by the State for payment of interest shall be repaid after
the maturity of the last bond on which the State has paid interest.
Funds are obtained by the State for such purpose by the sale of State
bonds upon which the districts benefited are required to pay interest,
so that the State, although lending its credit, is fully reimbursed for
expenditures. The amount of indebtedness that the State may incur
for this purpose is limited to 2 per cent of the assessed valuation
of all property in Oregon. To August 1, 1921, the interest on
$4,042,500 of bonds of four irrigation districts had been paid and
State bonds in the amount of $390,300 had been issued to finance
the payments.

Administration of the Oregon method is in the hands of the com-
mission designated to handle the certification of bonds, viz., the State
engineer, the attorney general, and the superintendent of banks.
The law does not require, as in the case of bonds considered for certi-
fication, that the aggregate.amount of all bonds shall not exceed
50 per cent of the aggregate market value of lands, irrigation works,
etc., for the aim of this policy is not to duplicate the purpose of bond
certification, but rather to give assistance to districts not yet able to
stand on their own feet. Its purpose is development, rather than

nal

IRRIGATION DISTRICT OPERATION AND FINANCE, 33

improvement. Along this line a prerequisite not required in the
case of certification is a complete survey of acreages irrigable, farmed,
cleared and irrigated, cleared and dry farmed, and unreclaimed. A
further showing must be made of all acreages that will be for sale if
the reclamation works are built and that are covered by specific
agreements between the owners and the district for sale at fixed
prices, preference in their purchase being given ex-service men and
women.

Other States—Recent attempts have been made in three other
States to provide public financial aid for irrigation districts. The
State engineer of Wyoming, in the fifteenth biennial report, published
in 1920, made very strong recommendations for State assistance in
financing sound irrigation projects on the ground that the need of
further irrigation development in Wyoming is urgent. In Montana
an initiative measure to provide for financing irrigation districts to
the extent of $20,000,000 by the issue of State bonds and use of the
proceeds in purchasing irrigation district bonds was defeated at the
general election held November 2, 1920, by the comparatively close
vote of 76,949 to 68,785. The last legislature of Arizona submitted
to popular ballot a constitutional amendment authorizing the issuance
of State bonds in aid of irrigation districts, which owing to certain
technical difficulties did not get to a vote.

So while no State has yet gone far along the line of developing its
irrigation resources through the medium of public aid to irrigation
districts, nevertheless recent developments in Washington, Oregon,
Wyoming, Montana, and Arizona indicate the trend of thought on
this subject. Two different viewpoints have governed the purchase of
district bonds with State funds— investment and development—and
the selection of bonds has varied accordingly. Where the prime
motive has been investment, the State has chosen bonds satisfactory
from the standpoints of security and net return and has made pur-
chases mainly in small blocks. On the other hand, where the benefit
to accrue to the State from the development of resources has been
sought, in addition to or aside from the benefit of a good investment
of State funds, the conclusion has been reached that the public funds
should be placed where they would do the most good, even to the
point of purchasing bonds much of the security for which remained
to be created and of assuring the project that the State would carry
it through to completion.

RELATIONS WITH THE UNITED STATES.
UNITED STATES RECLAMATION SERVICE.

The most prominent relations between irrigation districts and the
Federal Government have been with the Reclamation Service. Dis-
wats which have had such dealings may be subdivided into two
classes :

(a) Districts formed at the instance of the Reclamation Service
on reclamation projects, as substitutes for water users’ associations, —
“for the assumption as principal or guarantor of indebtedness”’ of
project lands to the United States.

(6) Districts which have contracted with the United States, under
the provisions of the Warren Act, for the purchase of water supplies
or for the construction of irrigation or drainage works or both.

X

34 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

The water users’ associations were mutua: stock companies com-
posed of settlers on reclamation projects, designed as mstruments
through which the Reclamation Service could deal with the settlers
and through which the settlers could eventually operate the systems.
While successful in some eases, the associations failed generally, from
the standpoint of the Reclamation Service, to give complete satisfac-
tion. Voluminous bookkeeping was involved, for every landowner
had a separate contract and required a separate account. Further-
more, the only remedies in case of nonpayment of charges were
individual suits, and there was no means of compelling lands within
projects which had not applied for water rights to contribute their
share toward operation and maintenance. On the other hand,
disadvantages to the settler lay in his inability to secure a Federal
farm loan even on private land while the water-right contract remained
a first lien, and in the necessity of including the contract in any
abstract of title.

For these reasons the Reclamation Service came to favor the
irrigation district as the more serviceable organization through which
to deal with project settlers. The irrigation district plan offered one
contract in place of many. The Government would no longer be
concerned with individual accounts, and collection of charges would
become a part of the district or county machinery provided for
collection of taxes. Furthermore, the Reclamation Service was able
to call the settlers’ attention to the greater ease and cheapness of
making collections through the irrigation district machinery after
they should have taken over the control of the irrigation system.
To this end the policy has been pursued in recent years of securing
amendments to the State laws providing for contractual relations
between irrigation districts and the United States, and of urging
settlers on many of the projects to adopt the irrigation district in
place of the existing water users’ association. The result has been
that all of the States except Kansas that have irrigation district laws
have now authorized districts to cooperate with the United States, and
that districts have been organized on many of the Federal reclama-
tion projects. The only districts that have taken over the man-
agement and control of the project systems are Minidoka irrigation
district, Idaho, and several small districts operating as independent
units of the Yakima project, Washington. The functions of the
other districts consist solely, at the present time, in guaranteeing
and collecting charges due the Waited” States, or in representing the
project settlers prior to the execution of contracts for the repayment
of existing or future charges.

While the forms of contract between these districts and the United
States have varied, the essential features of agreements for complete
substitution of irrigation districts have been the dissolution of water
users’ associations where they have previously existed, the discharge
of liens contained in stock subscription contracts, and the assumption
by the irrigation districts of all indebtedness due the United States,
the charges to be collected by the districts under their general taxing
power. In actual practice thereafter the Reclamation Service deter-
mines the annual amounts due for various purposes and the district
levies assessments to meet such charges and turns the money over
to the United States at the times provided in the contract.

4

per

IRRIGATION DISTRICT OPERATION AND FINANCE, 35

Districts of the above class, with the exception of King Hill rriga-
tion district, Idaho, which has had a unique history, have been
formed at the instance of the Reclamation Service on the reclamation
projects proper. Other irrigation districts, however, originally formed
independently of the United States, have found it to their advantage
to contract with the United States for the purchase of water supplies
or for the construction of irrigation systems without strictly becom-
ing a part of any Federal reclamation project. .The Warren Act,?
passed in 1911, authorized the sale of water in excess of the require-
ments of the authorized projects to individuals and various types of
associations including irrigation districts, and the cooperation of the
United States with such bodies for the construction and use of iri-
gation systems. Districts of two classes have contracted under this
act—those needing total or partial supplies of water, other provision
having been made for construction of works, and those which desired
irrigation or drainage systems to be constructed by the Reclamation
Service. Up to the present time, in addition to the fact of securmg
financial aid, the greatest advantage to the districts of this plan over
that of disposing of bonds in the open market is that interest has
not been required on deferred payments. The United States has also
reaped benefits from these contracts. Wider markets have thus been
secured for water developed, to which end the Reclamation Service has
been willing to construct systems for districts adjacent to projects to
the extent of available funds. Furthermore, in connection with the
drainage of Boise project, Idaho, the Reclamation Service has been
able to construct drainage systems for neighboring irrigation districts
that have beén of material benefit to the project as a whole.

It was the original policy of the Reclamation Service to require
the deposit of bonds to secure the payment of contractual indebted-
ness over a period of years, but with the clarifying of State statutes
on the subject the assessment for payments called for in the contract
is now considered a sufficient lien upon the land. The only districts
required to deposit bonds were the first ones to enter into such con-
tractual relations in Yakima Valley. Wash.

UNITED STATES INDIAN IRRIGATION SERVICE.

District relations with the Indian Service have been very limited.
Contrary to the policy of the Reclamation Service, the Indian [ri-
gation Service has not encouraged the formation of irrigation districts
on the Indian projects. The needs of the case, of course, are different,
for the reclamation projects are designed for eventual operation and
repayment by the settlers themselves, whereas the Indian projects
may continue under Federal operation indefinitely.

Nevertheless it was felt by the white settlers on Yakima Indian
Reservation, Wash., whose lands comprise a large portion of the
Wapato project, that an organization was needed through which to
deal with the Indian Service. So an irrigation district was formed
there to include the ‘“‘ white” lands and any additional lands that
might thereafter come into white possession. For the present the
sole function of the district is to afford a medium through which the
white settlers and the project management may consult.

336 U.S. Stat. 925.

36 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

There have been only a few cases of cooperation between irrigation
districts and the Indian Service in the construction and ownership
of irrigation works.

UNITED STATES GENERAL LAND OFFICE.

Relations with the General Land Office deal with the inclusion of
public lands in irrigation districts. Prior to 1916 the various State
courts that had passed on the subject held conflicting views as to
the liability of public lands of the United States for district obliga-
tions, both before and upon the issuance of patent. But the situa-
tion was cleared when Congress in 1916 passed the Smith Act, 4 which
subjects both unentered and entered, but unpatented, public lands
to the district lien in districts approved by the Secretary of the In-
terior and not comprising a majority acreage of unentered land.

An irigation district desiring to come within the provisions of the
Smith Act is required to submit an application to the local land office
containing data on organization, water rights and water supply, plans
and specifications, and to file maps upon which land ownership is
classified. Where the unpatented lands lie within a Federal recla-
mation project, the application is referred to the Reclamation Service
for a report as to feasibility, otherwise the General Land Office makes
its own investigation of feasibility of the irrigation system. Upon
approval by the Secretary of the Interior, the irrigation district files
with the local land office a list of assessments against each legal sub-
division of public land. Although unentered land is not subject to
tax sale, and the United States does not become obligated for
assessments, nevertheless these charges constitute a lien against the
land which must be removed before entry is allowed. Entered but
unpatented land, however, may be sold for taxes, in which case the
purchaser assumes the rights of the original entryman.

In connection with applications for Carey Act segregations and
desert land entries the General Land Office has had occasion to in-
vestigate a number of irrigation districts.

OTHER SALIENT FEATURES.

APPORTIONMENT OF WATER.

The purpose of the irrigation district is to provide a water supply
for the irrigation of lands included within its boundaries. This pur-
pose includes distributing as well as procuring the water supply.

The first question that naturally arises under water distribution
deals with the amount to be delivered to each user. Where an irri-
gation district takes over a going irrigation company, it usually takes
it subject to any existing rights of individual tracts to receive defi-
nite quantities or proportionate quantities of water. But if a new
system is to built, or additional land included, or additional supplies
of water obtained for already wholly or partially irrigated lands, it
then becomes necessary to determine just how the water is to be
divided. Some of the States have not legislated on this subject other
than to provide that the directors shall adopt rules and regulations
for the equitable distribution of water.

439 U.S. Stat. 506.

IRRIGATION DISTRICT OPERATION AND FINANCE, at

The California law has always provided that district lands shall be
assessed at their full cash value, and that water shall be apportioned
according to the ratio of the last assessed valuation of each tract to
the total district assessed valuation. In other words, the more val-
uable a tract the more water it is entitled to. The same rule holds
in Nebraska and Oklahoma. However, water has seldom been actu-
ally apportioned according to this plan, for to enforce such provision
strictly would result in giving a totally insufficient quantity of water
to a tract of porous soil, with a normally high water requirement, yet
which might be so low in fertility, or so far removed from transpor-
tation facilities, that its assessed valuation would be relatively low.
_ Other States provide that water shall be distributed pro rata; that
is, an equal amount to each acre. Still other States, of which Wash-
ington is an example, require that the board of directors shall pro-
vide for ‘‘the equitable distribution of water to the lands within the
district, upon the basis of the beneficial use thereof,’ which is the
end that most well-conducted irrigation enterprises strive to attain.
The Utah provision for an allotment by the State engineer before the
district organization, with a final revision after organization and after
the amount of water available has been determined, 1s a refinement
of this principle in that it embodies a survey of all existing water
rights, classification of the soil, determination of the water deficiency
on each tract, and a resulting determination of the amount of water
to be supplied by the district to each tract.

Authority to charge tolls for water, which is granted by most of
the States and which has been taken advantage of to some extent,
offers a means of apportioning water in any particular year according:
to the needs of the water users.

Irrigation districts are often given conditional authority to sell or

Tent excess water to outside lands.

EMINENT DOMAIN.

An important power granted by all the State statutes to irrigation
districts is the right of eminent domain—the power to condemn land,
water, water rights, and other property necessary to the purpose of
the district. In California an irrigation district, in common with
other political subdivisions, may take immediate possession upon
bringing eminent domain proceedings and depositing the required
security. California furthermore authorizes an irrigation district to

condemn the use of property of another irrigation district so long as

it does not interfere with use by the district first acquiring the prop-
erty. Under this authorization Waterford irrigation district in 1915
instituted proceedings to acquire the right to enlarge the main canal
of Modesto irrigation district for the conveyance of water to the
Waterford lands, but the case was settled without going to trial.

DRAINAGE.

The right to construct drainage works is now generally recognized
to be as vital to the success of an irrigation district as is any other
of its powers. Although such provisions were not included in the
early district laws, the experience of all types of irrigation enterprises
has brought the question of drainage of irrigated lands very much to
the fore and has resulted in effecting legal means in practically all of

38 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

the States for the undertaking of drainage by irrigation districts.
Up to the present time, however, comparatively few irrigation dis-
tricts have done drainage work on any great scale. Very frequently
only portions of districts have become affected by the rise of water,
in which cases the general tendency has been to afford local relief
only and to leave preventive measures to the future; for the possi-
bility of future injury has proved to be a far less potent incentive to
the expenditure of money for drainage construction than has the
injury that has already become visible.

In such sections as Yakima Valley, Wash., the numerous irrigation
districts have been largely relieved from the consideration of drainage
problems by the widespread existence of drainage districts. The
important thing naturally is to get the land drained by whatever
kind of district is most practicable. Without reference to the merits
of either type of district in any given case, however, it is highly
advantageous for an irrigation district to be allowed to construct
drainage systems. In certain cases, for example, relatively small
amounts of such work need to be done. Again, it may prove easier
and speedier to accomplish such work by an existing organization
than to organize another district to do it. Furthermore, with the
knowledge of what has happened elsewhere, the simultaneous con-
sideration of irrigation and future drainage problems by a new irri-
gation district may result in an ultimate saving of money. Finally,
as a matter of self-preservation the power of an irrigation district to
relieve its own water-logged lands and make them valuable again is
of the utmost importance.

The Reclamation Service has cooperated with adjoining irrigation
districts in drainage construction on Boise project, Idaho; Klamath
project, Oregon, and North Platte project, Nebraska. Such coopera-
tion, which has been in addition to drainage cooperation with irriga-
tion districts on the projects proper, has consisted usually in the
construction of drainage works for the irrigation districts as parts of
the general project drainage systems. In other cases the right to
discharge drainage water from district systems into the project ditches
has been the subject of contract.

Instances of drainage construction by irrigation districts, financed
either by special assessments or by bond sales, are found in a number
of the States, particularly Nebraska, Idaho, Oregon, and California.
The plans of certain recently organized California districts have con-
templated drainage construction as an integral part of the districts’
engineering plans and the use of the drainage water for the irrigation

of other lands.
ELECTRIC POWER.

The development of electric power by irrigation districts and its
use either within or without the districts are authorized in several
States as a means of making the irrigation plan more effective. As
yet, however, very little advantage has been taken of this authority.
Several districts in Oregon and California propose to tide over the
initial years of operation through revenue derived from the sale of

ower. A different phase of the subject appears in the operation of

‘uma irrigation district, Arizona, which has fulfilled its sole purpose
of organization by constructing a transmission and distribution
system for the delivery of power purchased from a company for use
by individual pumping plants within the district.

IRRIGATION DISTRICT OPERATION AND FINANCE, 39

INCLUSION OF MUNICIPALITIES,

Cities and towns may be included in irrigation districts and assessed
for district purposes in California and certain other States, but in
other States may not beso included. In Oregon, for example, resi-
dence property may not be included in districts, but city or town

roperty used or suitable for agriculture is subject to inclusion. The
justification for including town lots, which may themselves never be
irrigated, is that some municipalities owe their existence in whole or
in part to the success of surrounding irrigation districts and should con-
sequently be made to share in the districts’ upkeep. While the dan-
ger has sometimes been feared of the control of district affairs by city
residents, particularly in California where the general election laws
apply, nevertheless it usually happens that city residents take much
less interest in district affairs than do the farmers and have seldom
been known to control affairs for their own peculiar advantage.

The right to include and assess town lots has been misapplied in
one Nebraska district which has leaned too heavily upon revenue
derived from town assessments and is consequently involved in litiga-
tion over the matter.

INCLUSION OF PUBLIC LANDS.

The inclusion of public lands in irrigation districts is of course at
costae of the Federal or State Governments holding title to such

ands.

The question of including public land of the United States has been
discussed heretofore under the relations of irrigation districts with the
General Land Office. As stated, congressional authority now exists
for the inclusion of unpatented land under certain conditions at the
discretion of the Secretary of the Interior.

Several States also, recognizing the possible hindrance to develop-
ment by withholding State lands from inclusion in irrigation districts,
have made provision for such inclusion under defined restrictions and
under the supervision of the proper State officials. Such provisions -
usually deny the right of districts to assess the State, but either
grant liens similar to that contained in the Smith Act or authorize
the State land offices to contract with individual districts for the pay-
ment of assessments by the State.

LOCAL IMPROVEMENT DISTRICTS.

The plan of permitting subdistricts to be organized for local im-
provement purposes within irrigation districts was first worked out
in Washington. It was proposed at one time to organize one large
irrigation district to include all lands irrigated from the Sunnyside
Canal system of the Reclamation Service in Yakima Valley. This
system serves lands under widely divergent conditions, embracing
gravity and pumping systems and areas more lately put under irriga-
tion which are reached by more costly construction than that needed
for the earlier irrigation. If this entire system were included in one
irigation district there would be certain units under heavier con-
struction and operation costs than other units. This situation gave
prominence to the idea of authorizing the users under one lateral or
other unit of an irrigation district to make repairs or reconstructions
or to construct extensions themselves and to handle the cost of so
doing. Such local improvement would also include drainage work.

the Yakima project. Altogether, to July 1, 1921, there had been

‘of work to suit themselves, leaving any repairs to be done by the

40 BULLETIN 1177, U. 8S. DEPARTMENT OF AGRICULTURE.

In 1917 Washington authorized the creation of local improvement
districts within irrigation districts. Provision is made for the formal |
organization of such a local district by petition of the owners of one-
fourth of the acreage to the board of directors of the irrigation district
and hearing before the board of directors, or by initiation of proceed-
me by the directors themselves, a protest by a majority of holders of
title to lands within the proposed local district being sufficient to
prevent formation in either instance. No local government is: pro+
vided for, all affairs being handled by the central board of directors, |
who adopt plans, issue local improvement district bonds, and consum-
mate the work. ‘The bonds may bear a higher rate of interest (8 per
cent) than the usual type of irrigation district bond and are an, obli-
gation of the entire irrigation district. The cost of such local impreve-
ment, however, is assessed in the usual way against the lands benefited.

The local improvement feature has been put to use by 5 districts:
in Yakima Valley and by 4,in other parts of the State, the most
extensive use having been in Sunnyside Valley irrigation district on

formed 40 local improvement districts in these 9 irrigation districts,
The average size of the local districts, with the exception of one of
disproportionate size formed to cover an entire irrigation district, is
230 acres. To the above date there had been issued against. such
districts $378,876 of local improvement. district bonds, of which
$17,912 had been redeemed. |

A further application of the local district idea in Sunnyside Valley
irigation district is in the formation of ‘‘ maintenance districts,” a
type of organization not provided for by statute but which has proved
very satisfactory in this case. The purpose of the maintenance dis-
trict is to distribute the cost of maintenance on laterals as equitably
as possible beyond the point where the Government maintains them.
No permanent construction is handled. The farmers do the canal
cleaning themselves, choosing a local foreman and arranging the time

————
en

urigation district. The maintenance cost is assessed equally to the
lands benefited.

Utah and Nevada have also made provision for the formation of
local improvement districts, and New Mexico has done so in case of
districts formed for cooperation with the United States. The Utah
and New Mexico plans are based upon that of Washington, but the
Nevada plan differs in many peat details. In none of these States
has anything material yet been accomplished by local districts,
“sep one was formed in 1919 in Walker River irrigation district,

vevada.

EEO EE nl

COOPERATION WITH OTHER DISTRICTS.

Irrigation districts are sometimes authorized to cooperate with
other districts, in the same State or in adjoining States, in the con-
struction, acquisition, and operation of irrigation systems. There
are numerous instances of intrastate cooperation, particularly in Cali-
fornia, Oregon, Washington, Idaho, Colorado, and Nebraska, of which
the most notable examples probably are the building of La Grange
dam by Modesto and Turlock districts and the Goodwin dam by
Oakdale and South San Joaquin districts in California. Cooperation
between districts in adjoining States, however, has been limited to a
few cases in lower Snake River Valley in Idaho and Oregon, The

=
z
q

J

a

IRRIGATION DISTRICT OPERATION AND FINANCE. 41

way has been paved for eventual cooperation between districts already
formed on some of the interstate projects of the Reclamation Service
when the districts shall have taken over the operation of the irrigation

systems concerned.
DISSOLUTION.

The fact that every district formed is not destined to become
operative, and that operating districts may eventually outlive their
usefulness, has called for some means of providing for their legal dis-
continuance. The Wright Act made no provision for dissolution,
but subsequent legislation in California and other States has provided
for dissolution of districts by the courts, or by the county governing
bodies, or by the districts themselves. No district may escape its
obligations through disorganization, and the decree of dissolution is
dependent upon liquidation of indebtedness.

Of the 158 irrigation districts in the United States classed as inactive,
58 have been formally dissolved.

‘IRRIGATION DISTRICT DEVELOPMENT.

EARLY UTAH DISTRICTS.

The first irrigation district legislation in the United States was
enacted by the Territory of Utah January 20, 1865, providing for
irrigation districts within counties, but making no provision for bond
issues. This law was immediately put into operation, with the result
that a large number of such enterprises were formed during the fol-
lowing quarter-century in various parts of the Territory. No attempt
has been made to ascertain the exact extent of operations under this
law, for the present investigation has been concerned primarily with
the type of district first authorized by the Wright Act; but it is
known that the number of early Utah districts was large® and it is also
apparent that very little in the way of actual construction was accom-
plished by them.® Such districts, then, while created on an extensive
scale in an effort to provide a more satisfactory means of organization
for irrigation development than had been devised up to that time,
had small share in the irrigation achievements of the State and have
been generally forgotten in the communities in which they were
organized. The few that still exist are thought of rather as companies
and bear little analogy to the present-day irrigation districts.

THE WRIGHT ACT.

Following a number of unsuccessful legislative attempts to provide

for public irrigation enterprises, and in response to a demand from

farmers of San Joaquin Valley, Calif., for a means of organization by
which an obstructing minority could be compelled to contribute to
the cost of building an irrigation system, California in 1887 passed
the Wright Act.’ This law provided, briefly, that 50 or a majority
of freeholders owning lands susceptible of one mode of irrigation
from a common source and by the same system of works might pro-
pose the organization of an irrigation district by petition to the

5 George Thomas, in the Development of Institutions under Irrigation, states that a conservative esti-
mate would place the number of such organizations at about 100.

§ U.S. Department of Agriculture, Office of Experiment Stations Bul. 124, recounts numerous wnsuc-
cessful attempts to build irrigation works under this law.
7 The history of irrigation districts in California from 1887 to 1915 is given in Bulletin 2, California

Department of Engineering, by Frank Adams.

A2 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURF

board of county supervisors, which petition, if sufficient in form,
must be granted. Thereupon the supervisors were required to call
an election at which all electors in the area described were allowed
to vote for or against the organization of the proposed district, and
for district officers, an affirmative vote of two-thirds of those voting
being necessary to authorize formation. If declared organized, the
board of directors of the district was given power to acquire, by pur-
chase or condemnation, the necessary property, water rights, and
irrigation works; to call elections on the question of issuing bonds,
at which a majority of the votes cast was sufficient to authorize a
bond issue; to issue and sell bonds in the amount authorized and to
use the proceeds for the purchase or construction of irrigation works;
to levy annual assessments to meet the interest and principal of out-
standing bonds, and to call elections on the question of special assess-
ments; and generally to manage and conduct the affairs of the district
to the end that a system of irrigation works should be constructed
or purchased, water delivered, and the district obligations paid as due.

The essence of the irrigation district law, then, was the permission

iven to a part of the residents of a given area to incur indebtedness
i which all the lands in such area were held lable. Fifty or a
majority of the landowners might propose the organization of a dis-
trict; but once organized, a majority of the electors voting at any
bond election, whether landowners or not, might bond the district
in any amount they pleased. The advantage thus given to groups
of small landowners is obvious, and just as apparent is the certainty of
resulting opposition of unwilling owners of large tracts to a scheme
of things which had not yet been tried in the courts and which was
soon seen to involve constitutional questions. If those who wished
irrigation could have built systems to cover only their own lands,
much of the early litigation would have been avoided. But the
situation in San Joaquin Valley which gave birth to the Wright Act
resulted from the decreasing yields of grain due to farming the land
year after year to this one crop and the consequent unprofitableness
of dry-grain farming on small areas while large acreages could still
be made to yield a profit. At the same time the cost of bringing
water to the small areas alone might be prohibitive, yet be entirely
within reason if spread over additional adjacent areas. It, was to
remedy such conditions, and to enable the needed additional areas
to be brought within districts, supplied with water, and taxed to
pay their proportion of the cost of irrigation, that the irrigation
district law was placed: on the statute books of California.

As above stated, much litigation arose over the formation and
bond issues of the early districts. The objecting landowners claimed
that the sale of their lands for district taxes constituted an infringe- .
ment of the Federal Constitution in that it involved taking property —
without due process of law. The California State courts held
repeatedly that neither the State nor the Federal Constitution was
violated, and although in the first Federal case to pass on the question —
the circuit court held the Wright Act unconstitutional, the United
States Supreme Court in 1896 reversed the decision and established
for all time the constitutionality of the irrigation district law. The
broad ground was taken in this decision that in a State like California,

8 Fallbrook Irrigation District v. Bradley, 164 U.S. 112.

IRRIGATION DISTRICT OPERATION AND FINANCE. 43

embracing millions of acres of arid lands, the irrigation and bringing
into possible cultivation of such areas is a public purpose and a
matter of public interest, not confined to the landowners or to any
one section of the State, and that an act of the legislature providing
for irrigation may well be regarded as an act devoting the water to
a public use. The court held, furthermore, that the detailed procedure
provided for in the act furnished due process of law.

In the meantime, and while the ultimate fate of the district law
was still a matter of conjecture, Washington, Kansas, Nevada, Oregon,
Idaho, and Nebraska, in the order named, had enacted similar statutes,
following for the most part the phraseology of the Wright Act, but
altered to suit local conditions. There was no immediate reaction
to the Supreme Court decision in the enactment of additional laws
or the formation of new districts, but with the constitutionality of
the law thus established the way was paved for the ever-increasing
development which began a few years later. All of the Western
States, including the tier of States from North Dakota to Texas,
have now passed irrigation district laws embodying the principles
first expressed in the Wright Act.

With the changes that have taken place since the enactment of the
early district laws and the experience the States have had with the
actual operation of districts, it has been inevitable that frequent and
radical alterations and additions should be made to the original laws.
Even at the present time, although the fundamental principles of the
irrigation district type of organization may be considered: as well
settled, there are many details of formation and operation that are
still undergoing change.

EARLY DISTRICTS UNDER THE WRIGHT ACT.

Three States soon followed California in passing irrigation district
statutes, but actual operations prior to 1895 were confined to
California and Washington. Little was accomplished at this time in
Washington, for only two of the seven districts formed issued bonds
and none did much in the way of construction. In California, how-
ever, extensive operations were carried on, the results of which may
be summarized in the statement that 49 districts were organized, of
which 26 went beyond the point of organization and seriously
attempted to function, and that only 8 of these have survived to the
present day, 6 of the 8 having been compelled to pass through
financial reorganizations before their survival became assured.
Furthermore, of the $7,917,850 of bonds issued by the early districts
only $2,000 was paid in full, $2,601,000 having been refunded at
varying discounts, $2,589,800 compromised at various figures and
canceled, $2,126,750 held illegal, and $598,300 with no settlement
yet effected.

With an initial handicap of this magnitude to be overcome, the
present extent and increasing favor in which irrigation districts are
held are the best testimonials that could be offered to the inherent
soundness of the irrigation district, properly safeguarded, for certain
types of irrigation development. After all, this early record is no
worse than those of many other pioneer undertakings, and when one
reads of the deliberate repudiation of obligations by certain States
and municipalities when hard pressed financially, and of the extensive

_ losses in railroad and other corporate investments in the early years

44 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE,

of their activities, it is realized that the difficulties in which so many
irrigation districts became involved, before the idea of speculation
became generally superseded by that of effective State control, are
not unique in financial annals. a2

A great many of the early districts were involved in litigation on
one point or another, largely as the result of the opposition of
landowners unwillingly included, although the earliest districts were
undoubtedly bona fide enterprises and free from speculative features.
After a few years, however, speculation and promotion of irrigation
district schemes became rife and brought with it the train of misfortune
that usually follows such unhealthy development. It is true that
the bonding of irrigation enterprises was a new departure in irrigation
development in the United States and that much had to be learned
of the soundness of and security for such bonds; but it is also true
that excessive optimism, fraud, carelessness in the matter of water
supply, and the use of this new means of promoting land sales entered
largely into many district enterprises. On the other hand, some
legitimate and entirely feasible undertakings that were started were
carried under in the reaction that followed the panic of 1893. Several
of the feasible districts managed to weather the storm and eventually
to effect bond settlements which have been the forerunners of their
present unquestioned success.

THE PERIOD OF CONSERVATIVE DEVELOPMENT.

Following the close of the first and generally disastrous phase of
development no districts were formed for some years in any
State but Nebraska. With the beginning of the present
century, however, irrigation district activity began in Idaho and
Colorado, shortly followed by Oregon, on a very conservative scale
at first, but eventually increasing m extent, particularly in Colorado,
until by the end of the first decade very many districts of a speculative
character were issuing and disposing of bonds. Although no definite
date can be assigned as marking the close of the second period of
district development, owing to the fact that it gradually merged
into the third phase, the years 1906 and 1907 represent approximately
the turning point.

The conservatism shown in the formation and bonding of irrigation
districts and the good that resulted during this period, while not so
spectacular as the financial failures of the preceding and immediately
following years, are deserving of more than passing comment. In
Nebraska and Idaho, and to a less extent in Colorado, the district
was used largely for the purpose of taking over and reconstructing
existing irrigation works, issuing bonds directly in payment for the
works in some instances or selling them locally for improvements,
the bonds thus being issued against an already established security
and with an already developed earning power sufficient to pay the
interest and principal of the bonds in addition to the cost of main-
taining and operating the irrigation system. Such districts generally
succeeded. Several Nebraska districts have completely discharged
their bonded indebtedness, and others in all of the States mentioned
have paid interest promptly and have retired such portions of the
principal as have fallen due. This situation affords a striking con-
trast to the two eras of speculation in irrigation district bonds.

IRRIGATION DISTRICT OPERATION AND FINANCE, 45
THE PROMOTION PHASE.

The third phase, or second period of promotion, reached its climax
about 1910 and ended two or three years later. The principal ac-
tivities were in Colorado, but extended to Wyoming, Utah, Idaho,
and Oregon as well. Colorado, however, for reasons stated below,
provided the most fertile and extensive field for speculation and fur-
nished most of the financial failures.

The promotion of irrigation districts at this time was not an isolated
feature of irrigation development but was practically contempo-
raneous with Carey Act development m the Northwest. Activities
under the Carey Act were largely centered in Idaho and Wyoming,®
in which States there were not so many speculative district enter-
prises. On the other hand, the irrigation district idea claimed most
of the attention of Colorado promoters. Speculation in irrigation
projects was prevalent at the time and became identified with the
urigation districts in Colorado because of the lack of safeguards then
provided by the irrigation district laws against its abuse. The pro-
moter was not working alone in his efforts for large and immediate
profits, but was ably seconded by landowners and bond dealers, many
of whom had but one thought in mind—to exploit the situation to its
utmost extent, and then ‘“‘to get from under.” The result was a
repetition of the early California experience, with a nation-wide dis-
crediting of irrigation securities which affected good irrigation bonds
as well as poor ones and from which the wrigation bond market has
not, even yet, fully recovered. Not all Colorado districts organized
at this time were of this type. Many were perfectly worthy and
feasible enterprises, but the effect of the large number of defaults
and compromises on the investing public has greatly overshadowed
the fact that Colorado has some excellent districts that have paid all
obligations promptly as due.

et ens

DEVELOPMENT IN THE SEVERAL STATES.

URN Se a oer a

: The foregoing discussion has dealt with irrigation district develop-
ment in the Western States as a whole. The extent and rapidity
of development in each State are shown in Tables 1 to 3, inclusive,
and the character of such development is here briefly summarized:

Arizona.—The first irrigation district law of Arizona was approved
May 18, 1912, and the latest complete enactment was in 1921. The
small amount of development that has yet taken place has occurred
mainly in the lower Colorado and lower Gila Valleys near Yuma and
in the territory bordering the Salt River Valley project about Phoenix.

Califorma.—The conditions which led to the enactment of the
Wright Act March 7, 1887, and the operations under that law have
already been touched upon. In 1897 an entirely new law was passed
which as amended is still in force. Among other changes made by
the act of 1897, the procedure for formation of districts and for issu-
ing bonds was altered in an attempt to avoid further district disaster.
For 12 years after this reenactment no new districts were formed in
California, the main activity being concerned with winding up the
affairs of insolvent districts and with solving the problems still faced
by the few old districts that proved sae

* Irrigation under the provisions of the Carey Act. By Guy Ervin, U.S. Dept. Agric. Circular 124.

46 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

The second period of activity in California began about 1909, in
which year two important districts were formed to extend an irrigated
area contiguous to the successful Modesto and Turlock irrigation dis-
tricts, and since 1913 has continued unabated. Due to the bitter
lessons learned in the early years, the weak features of the old districts
have been generally absent from those more recently formed. The
State has jealously guarded its good name and the State engineer
has refused to sanction a number of enterprises which appeared to
him undesirable. But interest in irrigation development by districts
has been so widespread throughout the State during the past four or
five years that the disappointed petitioners in some cases have suc-
ceeded in overriding the State engineer’s disapproval and in haying
their districts organized. Especially during the period immediately
following the war, irrigation districts were being organized on an ex-
tensive scale and were finding the disposal of their bonds a compara-
tively easy matter. It became possible even to sell some bonds
which had been refused certification by the State. But following
the change in the general economic situation during the early fall of
1920 there became evident a more conservative attitude on the part
of the bond-investing public and consequently greater discrimination
in the choice of irrigation securities. As a general rule now the
market will not absorb uncertified issues.

The majority of districts formed during the first period were located
south of the Tehachapi, but by far the greatest activity during the
present period has been confined to Sacramento and San Joaquin
Valleys. A few recently organized districts have been located in
southern California and a few in the northeastern section of the State.

In spite, therefore, of mistakes made and damage done in the
early years, much has been accomplished under the irrigation dis-
trict law in California, notably in the reorganization and extension of
existing systems and to a lesser degree in the development of new
enterprises. The early antagonistic influences are not now active.
The adaptability of the district law to given conditions and the
advantages and limitations of such type of organization are much
better known than they were 35 years ago. Certain early mis-
takes—particularly the construction of works without adequate
engineering investigation or economic justification, and the promotion
of districts in wholly undeveloped sections where established values
furnish inadequate security for bond issues—are much more care-
fully guarded against than formerly. While the financial condition
of afew of the newer enterprises was unsatisfactory in 1921 asa
result of the drop in prices of farm products the year before, such
condition was exceptional. On the other hand, many successful
California districts bear testimony to the adaptability of the irriga-
tion district, properly safeguarded, for conservative irrigation develop-
ment.

Colorado.—The first district act was approved April 12,1901. The
latest complete enactment came in 1921 as a result of the efforts of
the irrigation district finance commission, which had been created in
1919 to examine into the causes of success or failure of Colorado dis-
tricts with a view to recommending means for preventing further
failures.

Early development in Colorado was generally conservative and
dealt, largely with the extension and improvement of existing systems.

IRRIGATION DISTRICT OPERATION AND FINANCE. 47

It was not until 1907 that the formation of irrigation districts for
new development began to take place on any considerable scale.
About that year, however, when interest in irrigation was becoming
widespread and was attracting an increasing amount of attention
from eastern investors, it began to appear that large profits might be
made through the reclamation of areas on the plains east of the
Rocky Mountains. Sufficient time had elapsed since the early Cal-
fornia failures to lessen the prejudice against irrigation district bonds,
and Carey Act bonds in the meantime had been selling well, so that
with the recovery from the financial stringency of 1907 it became
ossible to market such securities with comparative ease. There-
ore, with no control on the part of any State official to act as a
check, the allurements of large returns visualized by promoters, bond
dealers, and landowners led during the next few years to the
rapid organization of irrigation districts and to the issuance of bonds
and expenditure of the proceeds in many cases without adequate
water-supply and engineering investigations. Some projects were
fraudulently financed and constructed; others were entirely honest;
but the general tendency of the times was to overestimate available
water supplies, and it is this feature that has led to most of the
troubles from which districts formed at that time have suffered.
Finally in 1912 and 1913, following the default of interest on bonds
of several districts and the failure of an eastern bond house which
had been financing Carey Act and district enterprises, it became
impossible to dispose of further district bonds. New development
by irrigation districts practically ceased in 1913 and to the end of
the year 1921 had not been resumed.

All district activity after 1907 was not by any means concerned
with speculation. Several of the most successful districts in the
State were organized during that period, and other thoroughly com-
mendable projects were proposed but were unable to sell bonds.
Over against the failures of this period of speculation, with their
unfortunate effect upon legitimate irrigation district development in
Colorado and other States, must be set the records made by many
very successful districts in Colorado which have accomplished much
in the way of reconstructing and extending irrigation systems and in
providing additional water supplies for the irrigation of late-season
crops. It is not questioned in Colorado that the irrigation district
has proved well adapted to this form of development. Eleven Colo-
rado districts, with a combined original bonded indebtedness of
$2,939,000 have already redeemed nearly one-fourth of this amount
and several others are about to begin bond redemptions.

Most of the irrigation districts in Colorado are found in the valleys
of the South Platte, the Arkansas, the Rio Grande, and the Colorado
(formerly known as the Grand River), the largest number having
been formed in South Platte Valley. <A few districts were located in
other portions of eastern Colorado and in the extreme northwestern
and southwestern parts of the State.

Idaho.—The first district act was passed March 9, 1895, and the
latest complete enactment is found in the Idaho Compiled Statutes of
1919. Development did not begin until 1900 but has been fairly
steady since then, only one year having passed without witnessing
the formation of at least one district. The greatest interest in the
formation of new districts was in 1920.

AS BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

During the first decade of the present century, which was a period
of great activity along all lines of irrigation development in the West,
comparatively few irrigation districts were organized in Idaho and
they were essentially conservative enterprises. At the same time
Carey Act projects were being initiated on a large scale and the
widespread interest they created, coupled with the fact that conditions
were not quite ripe for financing irrigation districts, caused the idea
of new development by means of districts to be lost sight of tem-

orarily. The type of early district development is shown by the
fact that 11 of the first 13 irrigation districts were designed to take
over the ownership and operation of existing irrigation works, and
that these 11 districts are to-day and always have been among the
soundest financially in the entire West.

About the year 1909, which marked the height of similar activity
in Colorado, irrigation districts in Idaho began to share the attention
of promoters with the result that 3 of the 4 districts formed in that
year and 11 of the 20 districts organized from 1909 to 1913, inclusive,
were connected with the development of entirely new projects.
Since 1913, however, there has been comparatively little activity of
this type in Idaho, for most of the districts formed since that time
have had in view either the taking over and operation of existing
projects or the construction of storage reservoirs to supplement
water supplies for at least partially developed areas.

The great majority of districts lie in the Snake River Valley from
st. Anthony, in Fremont County, to Weiser, in Washington County.
A few are found in the valleys tributary to Snake River, and still
oe in the extreme southeastern and northwestern parts of the
State.

The number of irrigation districts in Idaho that have not been
successful is remarkably small. Four-fifths of the districts actually
operating were formed to take over irrigation systems in already
developed communities, and these districts are the ones that have
had the least trouble. Cases of failure to meet obligations in this
sroup are very few. On the other hand, the districts formed to
construct new systems or to purchase newly constructed irrigation
works in relatively unsettled communities have often been hard
pressed to meet their obligations and in some instances have been
unable to do so. Hence the general use of the irrigation district to
purchase and operate going concerns, or to provide funds for
extensions and improvements, or to furnish supplemental water
supplies for late irrigation, in communities where the security behind
the bond issue has been already established and where settlers have
been sufficiently numerous to carry the burden of taxation, has
undoubtedly been one of the greatest factors making for success.
Then the provision for even a limited measure of State supervision
over the organization and plans of construction has certainly acted
as a check upon ill-advised schemes. Prudent and economical
management and a capacity for getting together have also saved the
day in more than one difficult undertaking.

Kansas.—Although Kansas has had an irrigation district law on its
statute books since March 10, 1891, no district, so far as could be
ascertained, has ever been formed in the State. All of the larger
urigation projects had been constructed and put imto operation
before the law was enacted and development since that time has |

IRRIGATION DISTRICT OPERATION AND FINANCE. 49

been carried on largely by individuals. The lack of interest in this
subject is reflected in the composition of the irrigation district law,
which was passed at a time when legislation affecting districts was
in its infancy and which has been practically unchanged since that
time. Radical amendments or a complete reenactment would be
necessary before irrigation district development could take place on
any considerable scale under present economic conditions.

Montana.—Montana’s first irrigation district law was approved
March 4, 1907. Two years later a new law was substituted which as
amended is in force to-day, and which is found in the Revised Codes
of 1921. An alternative method of organization and government
under State supervision was provided in 1919 for such districts as
should elect to come within the provisions of the irrigation com-
mission act.

Development that has already taken place has been almost en-
tirely concerned with improving and enlarging existing irrigation
systems, and little has been accomplished by districts in the recla-
mation of arid lands. General interest in irrigation in Montana has
been rather spasmodic and has usually resulted from the effects of a
series of droughts upon the dry-farming communities of the State,
which helps to explain the fact that 36 of the 61 districts organized
to date were formed in the two years 1919 and 1920 after a series of
three dry summers. On the other hand, interest in irrigation is apt
to lag in times of high market prices for grain. So it is questionable
whether all of the projects for new development now proposed will
be carried through in case climatic conditions and prices in the im-
mediate future shouid be more favorable to the production of dry-
farming crops. The most sustained demand for irrigation district
development in the past has come from those sections of the State
where farming under irrigation has been carried on for some time.

The history of irrigation districts in Montana deals largely with
those organized in the earlier years. Most were conservative enter-
_ prises formed in response to a real demand for the district type of
organization, and in the main they have been successful. Some have
encountered serious difficulties which have been traceable in part to
a divided interest in irrigation, but most districts have been able to
pay their obligations promptly.

Districts are scattered over many portions of the State, a large
proportion, however, being found in Yellowstone Valley.

Nebraska.—Although the seventh State in point of time to pass an
urigation district statute, Nebraska was the third to witness the ac-
tual formation of districts and was practically the only State in which
districts were being organized in the last five years of the nineteenth
century. Following a series of disastrous droughts during the early
nineties, the irrigation district law was approved March 26, 1895,
practically contemporaneously with an irrigation code, both as the
outcome of insistent demands upon the part of farmers in the western
part of the State. Interest was immediate and widespread, with the
result that nearly half of the 39 districts formed to date were organized
in the four years following the passage of the act. But with thereturn
of favorable growing seasons in 1898 and succeeding years, interest
began to wane, particularly in the easternmost areas, so that 9 of
the 18 districts organized up to that time were soon abandoned.

50 BULLETIN 1177, U. §. DEPARTMENT OF AGRICULTURE.

Although the marked effect of wet and dry years upon district history
in Nebraska has continued, all of the districts formed since 1900 are
active to-day. The latest complete district law is found in the
Revised Statutes of 1913.

All but three of the operating districts lie in the North Platte
Valley from the Wyoming State line to the city of North Platte and
depend for their water supply upon the North Platte and two northern
tributaries. The other districts are on Lodge Pole Creek and on South
Platte and Republican Rivers. Most of the now inactive districts
were located along Platte River and in the Loup River drainage basin.

The geographical position of Nebraska on the border line between
the humid and semiarid regions of the United States has had much
to do with the character of irrigation district activity in the State.
The influence of droughts upon early district activity has already
been pointed out. Since 1900 the recurrence of seasons unfavorable
for dry farming has not stimulated to any extent the formation of
districts fornew development. But due to the fact that irrigation in
some years is not necessary to the successful production of crops,
many farmers accustomed to use water only in dry years refused to
pay assessments to the canal companies in seasons when water was
not needed, with the result that the finances of the companies suffered
severely. This situation led directly to the formation of irrigation
districts to take over the canal companies and by the use of their
taxing power to compel the payment of assessments in every season.
The districts so formed have been much more successful than were
the companies they replaced. Then the districts often bought out
these systems at cost or less than cost, so that there were no large
promotion profits to be absorbed. The district enterprises for the
most part are small, there being only one in operation covering more
than 15,000 acres and most of them ranging from about 2,000 to
8,000 acres in size. Engineering problems have not been complicated,
the supply of water has been generally sufficient for the amount of
land to be irrigated in an average season, and maintenance expenses .
as a rule have not been high, with the result that interest on outstand-
ing obligations has for the most part been paid promptly as due and
a large part of the principal indebtedness has been retired.

Nevada.—The first irrigation district act was passed March 23, 1891,
and the latest complete enactment was in 1919. Sens has been
confined to the past few years and has been quite limited in extent,
only two districts being in operation, of which one covers the lands
of Newlands project. All districts organized have been designed to
cover partially irrigated areas. |

New Mezxico.—The first law was enacted March 18,1909. In 1919 _
two separate acts were passed, one relating to irrigation districts not
cooperating with the United States and the other to districts formed
for the purpose of such cooperation. bees iy ©

There has been no period of great activity along irrigation district
lines in New Mexico. The two earliest districts were abandoned
without material accomplishment. Three of the four districts now
operating were formed for the purpose of taking over existing iriga-
tion works and the fourth to succeed the water users’ association on
the New Mexico portion of Rio Grande project. OS fae

North Dakota.—This State, the most recent to enact irrigation
district legislation, placed its law on the statute books March 8, 1917.

oe i

:
3
=
:
%

IRRIGATION DISTRICT OPERATION AND FINANCE. 51

Only two districts have been formed, both in connection with Federal
reclamation projects.

Oklahoma.—The Oklahoma statute was approved March 29, 1915.
The only district yet organized was formed in connection with the

roposed construction of Lawton project by the Reclamation Service
in 1917. Construction was deferred, however, owing to the estab-
lishment of a military post at Fort Sill and the need there for all
available water, and has not yet been resumed, so that for the time
being the district is inactive. :

Oregon.—The irrigation district law of Oregon was approved Febru-
ary 20, 1895,the latest complete enactment being in 1917. Little
development took place for some years after the passage of the first
act. Beginning with 1904, however, there have been three distinct
periods of activity, namely, 1904 to 1906, 1910 to 1913, and 1915 to
the present time. The most pronounced activity has been since 1916.

More than half of the active districts are still in preliminary
stages, due in part to the fact that some are of very recent origin,
but largely because of the difficulty of selling bonds. The State has
done much to further legitimate irrigation development, and through
the reenactment of the district law in 1917, the provision for certifi-
cation of ponds, and lately the new departure in the matter of pay-
ment by the State of interest on district bonds, has made possible
the sale of large amounts of bonds and the development of numerous
projects. But districts have been formed and bonds voted on such
an unprecedented scale during the past few years that the irrigation
district bond market, never an eager one at best, has been un-
able to absorb so many issues. The result has been that some dis-
tricts formed even for supplemental development have found the
disposition of their securities more difficult than had been antici-
pated and others for this reason have delayed voting bonds until the
market should appear more favorable.

With a few scattering exceptions the Oregon districts fall into six
general groups: (1) Hood River Valley; (2) Umatilla and Columbia
River Valleys; (3) the inland plateau; (4) Rogue River Valley; (5)
Klamath Valley; (6) Snake River, Malheur, and smaller tributary
valleys. The last-named area has been the scene of several attempts
to provide for irrigation on an extensive scale, only one of which has
been accomplished. District development in this area is closely asso-
ciated with that on the Idaho side of that portion of Snake River
Valley, involving cooperation and the use of common water and
power supplies by districts on both sides of the State line.

In spite of the large number of irrigation districts in Oregon, the
life history of most of them has been so short that generalizations as
to their operation can not be readily made. Some work has been
unwisely done, and some districts, in common with other types of
irrigation enterprises, that have had to depend upon the return from
hay and grain crops have been hard pressed financially during the
recent period of low prices for such products. However, with very
few exceptions the Oregon districts have met their bond obligations
when due.

South Dakota.—The district law was enacted March 2, 1917. As
yet no districts have been organized, although the formation of two
is contemplated.

52 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

Texas.—Texas first provided for the creation of irrigation districts
on April 15, 1905. The law has been twice completely reenacted,
the latest revision having been in 1917. Practically all development
has taken place since 1913 and has been fairly uniform, having been
predominantly for taking over and improving existing irrigation
systems.

"The largest group of districts in the State is found in the lower
Rio Grande Valley from McAllen to Brownsville. All of the systems
in this region were originally built, independently of each other, as
parts of land-selling enterprises. After a few years of operation,
however, some of the irrigation companies became financially involved
and it became necessary for the settlers to take over and operate the
irrigation systems in question, which led to the formation of eight
urigation districts. These districts have almost invariably made
extensive improvements and enlargements and one has reconstructed
its irrigation system on such a scale that the work has amounted
practically to new development. All systems in the valley derive
their water supplies from the Rio Grande by pumping.

A smaller group of districts lies in Pecos Valley and tributary
valleys in Ward, Reeves, and Pecos Counties. These districts were
all organized to take over going concerns and generally to improve
them and to provide additional water by storage. The remaining
districts are found in Wichita County, in the Gulf coast counties of
Matagorda and Nueces, and on the Rio Grande project in El Paso
County.

ae ileaiian has been made of the early Utah districts. The
last of the early district laws was repealed in 1898, and it was not
until March 22, 1909, that a law based upon the Wright Act was
passed, which law was completely revised in 1919.

The law of 1909 was enacted at a time of widespread district
activity in the Rocky Mountain States and resulted in the rapid
organization of districts in Uintah Basin of Utah. Very little real
development was accomplished at this time, however, and there was
no further activity until 1917. The years 1920 and 1921 brought
forth considerable interest along district lines, all districts proposed
being intended to provide for the further development of communi-
ties already partially supplied with water. The greater part of the
district activity has been centered in Cache Valley, Salt Lake Valley
in Weber and Davis Counties, Utah Valley,and Uintah Basin.

With one exception the early districts faced great difficulties.
Although nearly all were formed to acquire irrigation systems already
partly constructed, nevertheless most of them were located in pioneer
communities and suffered from lack of adequate transportation and
oreat distance from markets, excessive overhead costs, lack of capi-
tal, and damage to the canal system. One early district, however,
and most of those formed within the past few years have been more
favorably located.

Washington.—With its enactment of March 20, 1890, Washington
was the first State to follow California in authorizing the creation of
irrigation districts. The law then passed was nearly identical with the
Wright Act, but included also the amendatory and supplemental
California acts of 1889. The latest codification of irrigation district
laws was in 1915.

IRRIGATION DISTRICT OPERATION AND FINANCE. 53

The history of irrigation districts in Washington parallels to a cer-
tain extent that of California, although the early experience in Wash-
ington was neither so extensive nor so disastrous as that in California.
District development occurred only in these two States in the early
nineties, was affected by the financial panic of 1893, ceased in both
States at about the same time, and was revived almost simulta-
neously a decade and a half later.

Little was accomplished by the early districts. Interest was
revived in 1911 and has since been continuous, the greatest activity
haying occurred in 1917 and 1920. The Washington districts fall
mainly into the following five groups: (1) Puget Sound region; (2)
Okanogan, Methow, Columbia, Wenatchee, and tributary valleys in
Okanogan, Chelan, and Douglas Counties: (3) Yakima and Columbia
River Valleys in Kittitas, Benton, Franklin, and Walla Walla Coun-
ties: (4) Walla Walla Valley; and (5) Spokane Valley. By far the
most extensive development has taken place in Yakima Valley and
has been closely identified with the activities of the United States
Reclamation Service on Yakima River.

There have been very few district failures in Washington, and not
more than one district at the present time is failing to discharge its
obligations as they become due. This fortunate situation is due in
large measure to the conservative character of development that has
actually taken place and to the fact that relatively few bonds have
been sold for construction of irrigation systems where the value of
the security did not exist prior to the bond sale. The principal
district activity has occurred since the failures elsewhere during the
first decade of this century and has been influenced by the fact that
bond investors were no longer ready to lend money freely toward the
reclamation of arid land. As a matter of fact, the United States has
financed the construction of five of the nine operating districts which
have developed new works, and only one of the others was constructed
in a community where high values had not already been established.
This attitude on the part of bond buyers is reflected in the fact that,
aside from obligations contracted with the United States, the amount
of money loaned to irigation districts since 1911 has been $4,321,530
for supplemental development as against $1,046,900 for new develop-
ment, of which latter figure 60 per cent was furnished by a railroad
company which was interested in the development of a project and
25 per cent additional was used only fer preliminary expenses and
the acquisition of rights by other projects for the actual construction
of which bonds have not been sold. Another comparison in point is
that the area included in operating districts in which new develop-
ment was undertaken is 36,000 acres, whereas there are approxi-
mately 1,014,000 acres in undeveloped projects under district organ-
izations the reclamation of which must await the sale of many millions
of dollars worth of bonds. Irrigation district achievement in Wash-
ington, therefore, while very considerable, has been overwhelmingly
along the lines of the reorganization and betterment of existing
irrigation systems.

Wyoming—The irrigation district law was first enacted February
19, 1907, and was completely revised in 1920. Early activity
practically ceased in 1911 with the collapse of the bond market and
was not revived until 1920. Only two of the seven early districts

54 BULLETIN 1177, U. S. DEPARTMENT OF AGRICULTURE.

are operating successfully at the present time. These two districts
disposed of bonds for construction in already settled communities,
whereas those districts formed to finance development in pioneer
communities have had great difficulties. Activity durmg the past:
two years has been of a conservative type.

SUMMARY AND CONCLUSIONS.

The irrigation district is a public, cooperative organization for
providing water for irrigation and taxing the land to pay for it.

The Wright Act of Calitdtivin, passed in 1887, has provided the

basis for irrigation district legislation in the 16 other Western States.
~ To December 31, 1921, 598 irrigation districts had been organized
in the 17 Western States, of which 244 districts were then in opera-
tion, 37 under construction, 159 in preliminary stages, and 158 inac-
tive. The area covered by the 598 districts was 15,892,995 acres.
In 1921 approximately 2,857,400 acres were irrigated by districts.
Fifty-eight per cent of all districts were formed for supplemental
construction or the acquisition of existing systems and 42 per cent
for entirely new development.

Qualifications of voters at district elections in most States include
property qualifications, particularly in creating indebtedness.

The irrigation district is managed by an elected board of directors,
composed usually of landowners and electors. Finances are handled
in some States by district officials, in others by county officers, and
in still others by both district and county officers.

District assessments for cost of construction or acquisition of works
are based in some States upon the value of the land, are uniform
upon all lands in others, are apportioned according to the benefits
in still others, and in one State according to water allotment. The
ad valorem and benefit methods afford the greater flexibility in levy-
ing assessments. Assessments for cost of operation are sometimes on
a different basis and may usually be supplemented or superseded by
tolls for water.

Bond issues must usually be authorized by vote of the electors.
Interest rates, denominations, and maturities vary according to stat-
utes. Experience has led certain States to make selling price limita-
tions and interest requirements less stringent, leaving the security to
be safeguarded by State supervision. Refunding bonds may be
issued in the majority of States.

The bond market has at times been extensive and at other times
practically nonexistent. It is confined at present mainly to the
irrigation States, though a few issues have been sold recently in
Chicago, St. Louis, and New York. Efforts are being made to rees-
tablish an eastern market.

Irrigation district bonds have been of two classes—nonspeculative
and speculative. Defaults have been confined largely to the specu-
lative group. Seventy-one per cent of all bonds sold by irrigation .
districts to December 31, 1921, had been paid when due, both as to
principal and interest. During the period 1915-1921 less than 1 per
cent of bonds sold were unpaid, due largely to more effective State
control, State certification of bonds, greater discrimination by bond
investors, and more general conservatism in district promotion. To
December 31, 1921, $118,436,443 of bonds had been sold, of which
$104,921,223 were outstanding.

;
<
,

Yee: ery ur.”

IRRIGATION DISTRICT OPERATION AND FINANCE, a5

Supervision over district activities by State officials is general.
Supervision applies to formation of districts, to plans and estimates
of construction, and to certification of bonds as legal investments
for trust and savings funds. State control has exercised a moderat-
ing influence upon the organization and financing of districts and
made the promotion of unfeasible projects more difficult.

Financial aid to irrigation districts, in the interest of development
of the State’s resources, has been granted to a limited extent in two
States and is engaging attention in other States.

Districts have cooperated extensively with the United States
Reclamation Service in connection with Federal reclamation projects
and have superseded the water users’ associations in some Cases.

Distribution of water is pro rata to all lands in some States,
according to beneficial use in others, and according to the value of
the land as provided by several statutes. Actual practice has seldom
developed a distribution according to land values because of possible
inequities.

Districts are granted the power of eminent domain, construction
of drainage works, and sometimes development of electric power.

Municipalities may be included in districts in some of the States.
Public lands of the United States may now be included under the
provisions of an act of Congress. Several States permit State lands
to be included.

Local improvement districts within irrigation districts may be
organized in four States and have been put into successful operation
in Washington.

Cooperation with other districts in the same State is not uncommon.
Cooperation with districts in adjoining States has seldom occurred.

Districts may be legally dissolved upon liquidation of indebtedness.
Fifty-eight districts in the United States have been dissolved.

Failures among urigation districts have resulted from opposition
of principal financial interests in the district, unproductive lands,
inadequate water supply, overcapitalization, faulty engineering, and
principally from insufficient settlement of land. Formation and
financing of districts under such conditions have been due to over-
optimism of landowners, manipulations of promoters, connivance of
some bond houses, inexperience in district possibilities and limita-
tions, absence of official restraint, and marketing of speculative bonds
without their true character being known to purchasers.

Successes among irrigation districts have been mainly among dis-
tricts formed for acquisition of going concerns, extensions, better-
ments, cooperation with the United States, and for new construction
in partially developed communities or in sections where development
has followed rapidly.

The essentials of success have proved to be productive land, suffi-
cient water, reasonable capitalization, and adequate land settlement.

ORGANIZATION OF THE
UNITED STATES DEPARTMENT OF AGRICULTURE.

| Secretary of Agriculture... . .-.5:.5< ¢b.>-2 >=) HENRY, C,-WABLLACE.

| PSSTSEOTL OCCTOLGTY. -. car. 2s ee a OL Ua eS

| Director of Scientific Woes RC eee et Ol iigl OI SEU ES
Director of Regulatory eS a We ce. aeons
Weather Bure@t. 2. 3. cue den cs ee eeeehes URABDES I: MARGIN. (hier
Bureau of Agricultural Economics............ Henry C. Taynor, Chief.
Bureau of Animal Indusiry .. 2.22. 220.2--2.: J Onn RK. Mower, Clie.
Bureau of Plant Industry... ........2--- +.-.-.55 WimitaMA..Tayior; ‘Chie,
TES DOF DUCE. <a a! «nw Han Qe, Sahel ste ni Reon eee WO Le Ee es
Bureau of Chemistry ....--.--------+-+------:-- WALTER G, CAMPBELL, Acting Chief.
BUG Of SOUS: on ew ce be agen ds colnceacce? SMURTON, WiHttnm Y, Chie.

| Bureau of Entomology... ....<.-.is-2---2-+/. lO. Bowarnp, Chiefs

i? Bureau of Biological Survey ......-.-.-----.-- E. W. Nexson, Chief.
Bureau of Public Roads..........--......---- THomas H. MacDona tp, Chief.
Fixed Nitrogen Research Lakoratory RG RECT cake F. G. Corrrety, Director.
Division of Accounts and Disbursements. ...... A. ZAPPONE, Chief.
Division of Publications. ..-.......:-.------- Epwin C. PowrEu., Acting Chief.
POTION Al) Sate ee wn mis ob wor 43 BS ae ad es oe ORB BB ARyere daar
pintes Relations Service i.e: wli-2/s dagen eee eos As Ge Daun; Director:

_ Federal Horticultural Board. soy wee ban CL. Magram Chomman

Insecticide and Fungicide Boge fide ltwys de i Ar OOR et hala.
Packers and Stockyards Administration. ......- Pree MorriLu, Assistant to the
Grain Future Trading Act Administration. .... Secretary.
Office of the Solicttor.. 2.........-+-.-------- R. W. WiatiAms, Solicitor.

This bulletin is a contribution from

Bureau of Public Roads..................---. THomas H. MacDonauxp, Chief.
Division of Agricultural Engineering...... S. H. McCrory, Chief.

ADDITIONAL COPIES

OF THIS PUBLICATION MAY BE PROCURED FROM
THE SUPERINTENDENT OF DOCUMENTS
GOVERNMENT PRINTING OFFICE
WASHINGTON, D. C.

AT

10 CENTS PER COPY

PURCHASER AGREES NOT TO RESELL OR DISTRIBUTE THIS
COPY FOR PROFIT.—PUB. RES. 57, APPROVED MAY 11, 1922

V

any - sa. 8

ra oy ‘c Le :

© get ay wh ee Sep
wr 7 » a)

a la er '