Arizona republican., 1898-05-17

Total fixed interest charge .. .S9S, 700
 Ths sources of income for the pay
 ment of this tremendous interest charge were as follows: Income from the rental of water, income from the operation of ranches, income from the
 sales of land, income from the sales of water rights.
 You will recognize that only two Of these constitute earnings, pure and simple, to-wit: the income from the
 rental of water and the operation and
 rental of ranches. Part of the income from the sales of lands and water
 rights might be considered as earn | ings, but primarily they would consti-
 ute fund for the redemption of the ] bonds, as their sale reduces the as sets of the company and therefore
 the security of the bonds by just so
 much
 The average annual earnings of the
 company from the two sources, above l referred to, for the past five years,
 have been as follows:
 Rental of water and service. .S27 ,S93. .67
 Rental of ranches and water
 rights -. ... ..... 8,147.77 Total ..S36 O464 fl As against these net earnings I find that the average annual earnings have not been sufficient to pay the gross 1 annual operating expenses, much less the interest on the indebtedness of the company, so that part of the operating expenses and the entire interest on its debt has had to be met from the pro- ceeds Of the sales of water nights and lands, and if in any year the proceeds from these sources were not sufficient, the interest must have been met with borrowed money. or savings from the operating expenses of the company. and the latter of course must eyentu- ally mean insufficient service.
 This contingency we have deter
 mined to avoid in the future. and have therefore planned to reduce our an- nuai fixed interest charge to less than l5 per cent of what it formerly has been. Under the plan of reorganiza- tiOn, the first mortgage will be limited to $300,OO0 at 5 per cent. It may be that not over s2OO.OOO or s250, 900 of this amount will be used The other securities will be income bonds and stock. The interest on the income bonds will be payable only out of the net earnings of the company, so that if in any year the income is not suffi- cient to pay the interest, this will not work to the disadvantage of the farm CT. In other words the committee is fully determined that the rights of Ehe water consumers shall be of pri- mary importance.
 The committee next turned its at tsntioh to the msans of increasing the annual earnings of the company and we find with an expenditure of not more than $40,000 an electrical power plant can be constructed on the line of cur canal, which will utilize the water power and net a handsome in come on the investment. It is not the intention of the committee to have the new company engage in the busi- ness of furnishing electric lights, power, etc., at retail. Not at all! We intend to transmit the power to the city limits and dispose of it at whole sale to distributing companies We intend also to commence a vigorous cultivation of the lands owned by the company. Idle lands are a tremen- dous source of expense. Taxes ac- cumulate rapidly and values are soon eaten up; and last but not least, if we find that we are enabled to more efectually serve the water consumers, We will ask them for slight increase in the water rentals, but we shall first