Arizona republican., 1921-10-16

of the loan at the rate of $50 per acre; $35,0O of similar funds loaned out at the rate of s3215 per acre upon lands partly ready for culti- vation. The figures, the well known actual value of desert lands and the cost and difficulties of retaining such lands even with water avail able, are subjects too well known and too wei understood to require comment, Tie facts as above pre- sented tell their own story to a well informed public fully cognizant of what these facts really mean when applied to intrinsic value of lands of that class as the basis of any loan at al. These well proven facts will all support the assertion that the making of these loans was at l=ast an unfortunate use of trust funds.
 cannot sanction any fuPther loans upon similar land. I believe 1 ap- preciate the trust imposed upon all state officers when congress granted school lands, and other institutional land grants, as permanent trust fund, the income and profits of which to be a heritage to the future people of this state. No one should fail to recognize the rule that trust funds in general are not to be de- voted to speculative enterprises. Con- sequently. state trust funds cannot be so devoted, with any approval or sanction upon my part, so far as that approval may be necessary as an initial step thereto.
 Finally, and for reasons which ap- pear above, I must emphatically dis approve the proposition of any fur ther loan to the Central Finance cor poration upon the land security of- fered.
 Furthermore, I believe the records and facts will warrant a full inves- tigatiOn of ali matters connected with the loan of $75,000 already made, and that immediate steps should be taken to the emu of protecting the state against loss through that loan, for loss there will be, unless some means be found of collecting that loan other than through an enforce ment of the mortgages as against the lands mortgaged.
 All of which is respectfully sub mitted.
 Very sincerely.
 RUDOLPH KUCHLER,
 State Land Commissioner.
 The following is the letter from the Central Finance corporation that inspired the governors inquiry of Commissioner Kuchler:
 Asks Second Loan
 Central Finance Corporation
 Phoenix, Ariz., June 29, 1921. State Loan Board,
 Phoenix, Arizona
 Attention Governor T. E. Campbell Gentlemen:
 This letter is in regard to a loan desired by the Central Finance cor poration on some of its Maricopa holdings.
 At present the state loan board have approximately $6S, 900 in loans on different parcels of land owned by this company. Forty thousand dollars of this amount is on 500 acres of unimproved land. We now owe interest on some of this and will owe more interest on the first of July. This loan is $50 an acre, and in our proposition we would wish to reduce this per acre amount by taking it up in the new loan.
 The corporation owns under con- tract 4,6S0 acres of land on which the money was due the 17th of June. To pay the taxes, interest, contract etc, to completely clear this title and put the proposition in shape will require $64,000. The length of time needed can be made two years or more, at the discretion of the board. This amount is $13.55 per acre. It will be possible then to make a second mortage to the state as additional security behind these $50 per acre loans. In other words, if the state can make this total loan, the total loan on the land will be in- side of a fair valuation. The land is worth $50 to s35 per acre on sale.
 It is essential for the Central Fi- nance corporation to retain this 4,6S0 ;scres of land in it's proposition. Working out of the affairs of the Central Finance corporation are con- tingent upon the development and sale of it's Maricopa lands. It owns something over 14,000 acres. If this 4,6S0 acres are cut out of the tract and lost at the low price of it's mort gage, it will injure the affairs of the corporation and, consequently, the value of the securities owned by the corporation.
 We are working on a plan to de- velope this land through some con- tractors in California, wherein they take up the present loans in units | and develop the land to a high state of cultivation. This development to l