Los Angeles herald., 1891-10-26
IRRIGATION DISTRICT BONDS.
An Opinion on Their Quality by a
Financial Paper.

A Boston financial paper, the United
States Investor, contains the following
editorial on irrigation district bonds
In current issue OF the Investor the
question of irrigation bonds as an in
vestment was reviewed at considerable
length, and in the survey of the subject
broad view was taken; but there still
remain several points to consider of
great Importance, some Of which are
peculiar to this class OF securities alone,
and which are worthy of careful and Sc
rious reflection.
As agriculture is always the pioneer
of civilization, and as irrigation in the
western part OF the United States is the
indispensable accompaniment of agri-
culture, surely every tradesman, every
manufacturer, and all the railroad in
terests west, are as vitality interested in
this progress in irrigation as is the
farmer who invests his labor, or the
capitalist who invests his surplus
wealth, in the great network OF bitches
now spreading themselves over the vast
area of arid lands in the great, far west.
Thus while irrigation is essentially a
western problem, the east and the
south, sharing in one common proprie-
torship the public lands, make the
question national one and one oI tran
scendent Importance. The irrigation
congress, which recently assembled at
Salt Lake, Utah, was practical demon
stration that irrigation is neither mar
row nor sectional question. The at
tendance was large, and very
showing that this vast project
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is rapidly gaining confidence everywhere
and that it must be accomplished. In
view OF the Importance this question
has assumed, and that to carry on many
of these canal enterprises, bonds have
been issued and have been offered and
are offering to investors east and west,
let us consider few important features
surrounding these securities.
Irrigation bonds are a good invest
ment, just as western mortgages are a
good investment, providing due inquiry
has been made regarding several ques-
tions which directly affect their strength
and permanency. First among these
the character and quantity of land irri-
gated should be known to the intending
purchaser OF bonds, and secondly there
should be no doubt whatever as to the
quantity and permanency of the water
supply. If the bonds are issued by cor
porations, as are those in many portions
Of Colorado, Kansas and Nebraska, not
only are these points necessary of con-
sideration, but many of those which al
| feet ordinary water bonds, such as the
correct bonding OF property, etc.
In California, where the process of ir-
rigation has reached higher degree of
perfection than in any other state in the
Union, irrigation bonds are issued by ir-
rigation districts according to certain
statutes enacted by the Legislature.
When these statutes are complied
with, the bonds are legally
issued. The law provides six
per cent interest on the bonds and
twenty years for their repayment, with
fully retiring the bonds at the end of
twenty years. In California scme
$14, 900 of irrigation bonds have
been issued and about $4,000, 900 have
been sold. The number of acres bonded
is about 5000, 900, and the average per
acre of bonded debt is trifle over So.
The author of the California irriga-
tion law, Hon. @. @. Wright, in COM
menting upon the act authorizing the
issuance of district irrigation bonds and
the supplemental act thereto, known as
the Confirmation Act,' says: "This
law contains peculiar feature, that of
at once confirming the validity of the
district organization and the legal status
of the district bonds"
The confirmation is decree by the
superior court in which the district is
located upon suit brought by the direc-
tors of said district as to the status of
the bonds issued by said district in ad-
vance OF said bonds being thrown upon
the market. After the decree becomes
final no objection can be made before
the courts as to the validity of the dis
trict organization or its bonds. This
method of procedure is being made use
of in the case of every district in order
that its bonds, before being put on the
market, shall have full legal strength
and standing.
California irrigation bonds differ from
those of other states in that they are a
municipal bond and follow the law oi
public, not private corporations. They
are, moreover, direct first lien upon
the land and follow title to the property
the same as municipal taxes.
In considering the question Ct invest
ing in irrigation bonds issued by dis
tricts, 1t is important that one should
ascertain whether the bonds are issued
under a reasonable basis of land value,
that the lands of the district are not
bonded for more than they are worth,
and as to whether the people who re-
side within the irrigation district voted
largely for the issue. Ii all these feat
ures which we have cited are considered
and on examination are found correct,
and when the laws of the state are under
stood, it would appear that there need
be little danger OF distrust as to the
safety of irrigation bonds. But as is the
case with every bond of new character,
the basis of value has to be understood
before the security becomes attractive to
investors. Irrigation is a peculiar but
important branch of modern American
enterprise. 1t is necessary and essen
tial and securities issued on so firm a
basis ought to be as safe as govern
ment bond.
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