The herald., 1894-01-23

| AlessandrO, in Riverside county, were
founded. Later it was found desirable
20 consolidate the land company and the
water company, and the Bear Valley
Irrigation company was incorporated
with capital Of $4,000,000. OF this
stock $500, 900 has been sold.
when the original stock of the two
companier was called in the stockhold-
ers had issued to them six times the
amount of stock in the new company
that they held in the old companies.
Yet the original stock had not been paid
| for at it's face value.
"After the consolidation OF these COM
| panies Charles E. Greene was appointed
| financial agent of the new company,
with full power to act, and was sent to
Europe to dispose of the stock. He was
to have a commission OF Is per cent.
His commissions have amounted to
about $l80,0O0. The methods which
Mr.. Greene pursued are peculiar. In
placing the stock on the market he
guaranteed a permanent annual divi-
dend of Is per cent on the common
stock. The preferred stock has a guar
aDteed dividend OF per cent. 1t will
be seen later that the company cannot
hope to pay over per cent on its entire
stock. Whenever a good sale of stock
was made the agent would raise the
price and thus, first offering the stock
at $l05, he advanced it from time to
time until he sold a few shares at $3.50.
OF course the pledged dividends were
not heavy on sales at that figure, but on
the stock which had paid in bat about
$40 the SIS annual dividends were an
immense profit.
1.-The Bear Valley company placed its
land III the Alessandro tract on the mar
ket first at $50, and from time to time
advanced the price until it reached
500, at which figure very few sales
were made. Suddenly the land was
taken off the market, and it was an
nounced that Mr.. Greene had contract
ed to sell the land within four years for
S400 per acre, and he was to have a
commission of Is per cent.
Soon after the land was put upon the
market the Allesssndro irrigation dis
trict was formed, embracing the 2l,5OO
acree, and the district issued bonds to
the amount of $50 per acre. A little
later Perris irrigation district WAS also
formed, and the land heavily bonded.
These two districts then traded
their bonds for "Class B' water certifi-
Gates of the company. These certif-
Gates are novelties. They are not titles
to water. They are not receipts for pay
ments tor the use OF water. They are
simply records of bonus paid the COM
pany for the privilege OF buying water.
There ia hardly prosperous colony in
Southern California where the annual
water rate reaches 80 an acre each year.
In the majority of cases the rate is from
50 cents to 81, but in the Aessandro and
Perrie irrigation districts the agreements
call for the payment OF over So an acre
per annum for all time to come, and,
besides, the districts paid in bonds $50
an acre for the privilege of buying water
at that rate.
1.-The worst OF the business is that
| those bonds were turned over to the
company without any security that the
company would keep it's agreement to
deliver the water, and the bonds were at
| once hypothecated to secure money
| with which to pay the enormous divi-
bends of the company. In this way
the bonds have enabled tbs payment OF
about 81, 900. coo in dividends, and there
is as yet delivered to the two irrigation
districts about 10 per cent OF the water
which the company mas agreed 70 fur
nish.
There is another feature OF the
trouble. When the land was purchased
by the company it placed a mortgage of
about $25 per acre on it to secure pay
ment of the purchase price. The mort
cages could only be lifted from the land
in blocks, and when the land was cold
the company was not in all cases able to
lift the mortgages, but waited until
there would be considerable body OF
| land sold in block. Thus many poor
men who bought snd paid for 1O-acre
tract two or three years ago still have
resting on them mortgages which must
be paid in the near future.
THE company has not lacked in an
effort to deliver the water to the irriga-
ton districts, though all things were
made subordinate to the one object of
paying enormous dividends. After
paying these dividends it plunged into
DEBT to carry out its pledges.
! Frank E. Brown, the chief engineer
whose genius had made the company,
and r. j. Waters, whose business man
sgement had greatly reduced the in
debtedness of the company during the
year in which he served as general
manager, had both strenuously opposed
the 15 per cent dividends ia the face Of
the heavy responsibilities facing the
company. At last, as matters grew
worse, there came a direct conflict be-
tween Greene and Messrs. Brown and
Waters. The former, by the aid of the
English stockholders, carried his point,
and the two latter gentlemen quietly
dropped out of the company.
I'm addition to the financial agency.
Mr.. Greene became president and
general manager, and thus, having mat
tens wholly in his hands, he entered
into contracts for 100000 worth of
work ON tunnels, canals. etc., depending
on the future sale Of stock to meet the
obligations.
During the few months of his ad.
mnistration the indebtedness of the
! com pany has grown from about $500, 900
to about $950,O00. There is about $780,
600 OF increased assets to partly Offset
this increased indebtedness. The bal
ance at the increase is due to the pay
ment of dividend OF Is per cent.
1.-The financial affairs OF the company
are about as follows:
Stock issued.... ...... ............ SIS, 500 OOO
Necessary 10 com plete the plant to
keep existing contracts. 100000
Indebted ness. ...... ............... 10000
Total liabilities. Sc, 200, 900
The company has $4,000 acres of
market value Of $1,000, 900. 1t owns
sufficient water to irrigate $4,000 acres,
giving it, at its excessive rate, posi-
Bile gross income of $500. 900, of which
probably $3.50 900 would be net, subject