river, adjoining the boundary line on the American side. They bought the intake structure, machinery, and equipment there; they bought such portions of the system as lay in Imperial County north of the boundary line, and the canal known as Central Main, about 20 miles long, and the west of said main, 26 miles long. They bought whatever water rights the former concern had, and they bought all the stocks in the Mexican Co. which was operating the system south of the line.

Mr. SINNOTT. Was that purchase made by your irrigation district? Mr. SWING. Yes; it was purchased by us in this way: We having nothing but bonds which were of uncertain marketable value, we entered into a contract with the Southern Pacific, whereby the Southern Pacific agreed to bid the property in at whatever price we stated, we being present at the sale and directing their bidding, and they were to take our bonds for the price of which they bid in the system. Mr. SINNOTT. They bid in?

Mr. SWING. The Southern Pacific Co. put up the cash and took our bonds.

Mr. SINNOTT. Then, you have control over that canal running into Mexico?

Mr. SWING. In a way which I will explain later on. It is a rather imperfect control.

Referring now to the Imperial irrigation district, all the land in Imperial Valley susceptible of irrigation by gravity flows from the existing system, amounting to 584,700 acres, has been organized under the laws of the State of California into an irrigation district called the Imperial irrigation district; and it is by means of this instrumentality that the people own and operate that part of their irrigation system lying in the United States. About 400,000 acres of this land has been reclaimed to date and is now the home of some 60,000 people. During the year 1918 there was shipped out of the Imperial Valley, at a conservative estimate, $40,000,000 worth of farm products.

In this pamphlet which I have laid upon your desk is the statement in the back that Imperial Valley produced over $50,000,000 worth of farm products in 1918. My figures are based on what was shipped out, and the difference in the figures has been estimated as what was consumed by the people in that valley themselves. I think with that explanation the statements found in this little pamphlet are quite accurate.

Mr. BROOKS. And also the difference in the statements as to the stock going in and coming out.

Mr. SWING. We are the winter-feeding ground for a great many cattle brought in from Arizona and New Mexico and fattened in an average of about three months, and then shipped out to Los Angeles and to Kansas City and sold, and I have made the allowance for that, too; we are only entitled to the additional weight put on, and we do not claim the credit for steers raised in Arizona and New Mexico.

The canal, which supplies this land with water, heads in the Colorado River at the Rockwood intake, about 13 miles north of the international boundary, thence crossing the line almost immediately makes a long detour through Mexico and recrosses the boundary line into the United States at several points about 50 miles west of

its origin. Aside from the intake, practically all the main canals and principal works are situated in Mexico, the title and management of which are, by requirement of Mexican law, vested in a Mexican corporation called the Compania de Terranos y Aguas.

The CHAIRMAN. What distance is water conveyed in the Alamo River?

Mr. SWING. The point on the international boundary line where it recrosses into the United States is about 50 miles west of where it first crosses at the rives. The canal itself is about 60 miles long. The 10 miles additional is because of the route.

The fact that the Imperial Valley's irrigation system is located almost wholly in a foreign country and subject to the caprices of the chaotic Government of Mexico has given rise to grave problems which not alone endanger its progress and prosperity but which menaces its very existence.

The predicament in which Imperial Valley finds itself is not of its own choosing, nor of its own creation. The get-rich-quick promoters of the early California Development Co. in the very beginning deliberately forged the shackles of slavery for the unborn Imperial Valey, in order to give themselves the maximum opportunity for gains with the minimum liability for their acts.

The scheme devised by these men for exploiting the Imperial Valley was as follows: The California Development Co. would divert the water from the Colorado River at a point within the United States. This would give them the benefit and protection of the laws of the United States and at the same time, as they did not care to place themselves entirely at the mercy of Mexico, the American intake gave them an effective check by means of which they could control the source of water if Mexico became unruly, for the Mexican lands are also dependent upon this system.

The physical control of the water thus diverted was then at once passed across the international boundary line to a subsidiary Mexican corporation called the La Sociadad de Yrrigacion y Terrenos, the entire stock of which was owned by the California Development Co. The former company was the companion company for the old California Development Co. It went into the hands of a receiver the same time the California Development Co. went into the hands of a receiver.

Under the laws of California a corporation appropriating water for sale and distribution is subject to regulation by the State. But by getting the water out of its control and out of the United States, the California Development Co. would avoid this interference with what it considered its private affairs. The Mexican company, which at all times was beyond the reach of American laws and courts, transported the water through Mexico and back to various points of advantage on the boundary line, where the water was sold and delivered on such terms as it chose to make.

The question of who should buy the water, however, was not left to chance. On the contrary, the California Development Co., with an eye to its own interests, in advance of the arrival of the actual settlers, organized various mutual water companies, each with its own locality to serve, put in dummy directors, and then caused these dummy directors, to bind their companies and their stockholders to be the future settlers, by executing whatever contracts the pro

moters desired. In every instance these mutual companies were required to enter contracts to buy their water perpetually from the Mexican Co., and from no other source. Also the water companies were compelled for inadequate consideration to turn over their entire capital stock to the California Development Co., which, having a monopoly, required all water users to buy stock in some one of these mutual companies. To the settlers it sold the stock at the highest obtainable price.

The mutual water companies were also organized as a convenience and protection to the promoters. It saved them the friction and annoyance of having to deal with the individual water user by making these former organizations responsible for the collection of the water rentals from the settlers. Then, too, the mutual water companies were used as a buffer between the actual water user and the supplying corporation to enable the latter to further avoid any liability from loss from possible water shortages. The reason for that is that neither the California Development Co. nor the Mexican Co. made any contract with the water user direct; they only dealt with the mutual companies.

Therefore, if the farmer suffered a loss on a crop he could only sue the mutual company which was obligated to serve him with water, and if he got judgment against that company it would only be a judgment which he and his neighbors would have to pay, and probably the mutual water company would not be liable, as it could deliver only such water as it received from the Mexican corporation, and this mutual company could get nowhere with a suit because it neither owned land nor crops. Therefore its case in court would be only a case to secure nominal damages, and to get that it would have to go into Mexico where the company, with which it had a contract, existed. The first step in the scheme to defraud American citizens and rob them of their birthright to use the waters of an American stream in reclaiming American lands to make American homes, was a contract which, on December 28, 1900-this was before there was any water drought in Imperial Valley-these promoters caused their American corporation, the California Development Co., to execute in favor of their Mexican corporation, the Sociadad de Yrrigacion y Terranos, whereby the American corporation agreed to "to perpetually deliver to second party a sufficient amount "-in fact, all; there was no one else to deliver it to, as you can see from the topography of the country-" of the water diverted by party of the first part from the Colorado River to enable second party to furnish water for the irrigation of the lands situated in Lower California and in the State of California, United States of America, which are irrigable by gravity flow from the system of canals so constructed." The contract further provided that all users were to have the same water rights, Mexican lands equally with the American.

The CHAIRMAN. How did they get a permit under those conditions?

Mr. SWING. They did not have to secure a permit at that time. They just posted a notice and said "I file upon 10,000 second-feet of water and intend to put it to beneficial use." That was the old law before the creation of the present Water Commission.

The generosity and magnanimity displayed by these gentlemen toward Mexico in disposing of the waters of the Colorado River

can be best explained by the mere statement that these same gentlemen, through their Mexican corporation, owned 100,000 acres south of the boundary line and irrigable from their Mexican canals, while their American corporation did not own a single acre in the Imperial Valley. Thus they were the beneficiaries of their own benevolence.

The right of the California Development Co. to divert and dispose of any of the waters of the Colorado was based upon an appropriation or filing made for that company under the laws of the State of California, which laws required the appropriators to put the waters to a beneficial use within the State of California. The California Development Co. did not contemplate itself putting the waters to a beneficial use. It had to rely entirely upon the use the American farmers in the Imperial Valley would make of the waters in order to perfect its title. Yet, strange to relate, this contract contains no provision to insure the return by the Mexican Co. of any of the water to the United States. As far as the California Development Co. is concerned it ceded to the Mexican Co., without reservation, all water diverted by it. It undertook to give the Mexican Co. water, its right to which was dependent upon the water being put to use within the United States. In other words, it attempted to give away something to which it had no title.

Furthermore, in this contract this private corporation assumed the treaty-making powers of the United States, and undertook, without the consent of our Government, to appropriate all the waters of the Colorado, cede the same to a Mexican corporation, and allow this Mexican corporation to divide the water according to its own private interests, between the United States and Mexico.

Mr. SINNOTT. Do you mean they actually appropriated all the water, or made a paper filing?

Mr. SWING. A paper filing claiming 10,000 second-feet, which is in excess of the amount of water in the river eight months in the year. The presumptiveness, as well as the utter futility, of their act must have been apparent to the promoters, as we find them on February 8, 1904, seeking congressional confirmation of their right to the waters of the Colorado River. (S. 4193.)

Mr. TAYLOR. Did they ever get it?

Mr. SWING. No, sir; the United States would have nothing to do with it. To have done so would have confirmed to these promoters a monopoly of the water, legalized this scheme to grant the same to the Mexican corporation, recognized and affirmed its division of the waters of the Colorado between the United States and Mexico, and vested the Mexican lands with equal water rights. At the hearing of the bill the settlers of Imperial Valley were represented by Hon. William E. Smythe, who protested against its passage. The bill did not bcome a law. When it became apparent that no favorable action was going to be taken upon this bill, the president of this company, who was here before the Committee on Arid Lands, made this remarkable statement at the close of the hearing:

I want to worship at our own altar and receive a blessing from the shrine of our own Government. Yet, gentlemen, if you compel me I will go to other sources for support.

The United States Government having repudiated the scheme of these promoters, they then turned to Mexico and on May 7, 1904, a contract or concession between the Mexican Secretary Fomento,

the secretary of the interior, and the Sociadad de Yrrigacion y Terranos was entered into. This contract was approved by the Mexican Congress and proclaimed by the Mexican president June 7, 1904. This concession confirmed and perpetuated, as far as the Mexican Government could confirm and perpetuate, the scheme which these promoters had already devised.

Mr. HAYDEN. Have you a translation of that concession?
Mr. SWING. Yes.

Mr. HAYDEN. Will you put it in the record?
Mr. SWING. I will.

(Concession found in appendix as Exhibit D.)

Mr. WELLING. Have you stated that these men, now owning the Mexican concession and the Mexican land, are the same men who owned the original California Development Co.?

Mr. SWING. They were identical. By the terms of this contractnotice that this is simply a contract between the Mexican Government and the private Mexican corporation-they can change it or the Mexican Government can change it, but the district can have nothing to say about it. The Sociadad was authorized to transport through Mexico the waters of the Colorado River, diverted by the California Development Co. in the United States; also to divert the waters of the Colorado River in Mexico, should occasion require, provided always that the Mexican lands should be furnished their needs up to "one-half of the volume of water passing through said canals." It gave the concessionaire company the privilege of disposing of the other half of the water elsewhere, not naming the place, and it put them under no obligations to return any of the water to the United States. It has been variously estimated that there were between 700,000 and 800,000 acres in Lower California irrigable from the Colorado River. In that connection, it is true that the river now is overflowing a large part of this land embraced in this 800,000 acres, but the Southern Pacific Railroad offered to put it back and keep it back on its old route for $1,500,000.

Mr. SINNOTT. When you refer to Lower California, you mean in Mexico?

Mr. SWING. Yes, sir. So that they can at a reasonable cost make use of this great quantity of land which approaches approximately 1,000,000 acres.

The contract or concession also provided that the grantee should always be a Mexican corporation, subject to the jurisdiction of the Mexican courts. Rights of foreigners were never to be alleged under any circumstances, and no diplomatic foreign agents should ever make any representation relative to the contract. The company and all of its acts were subject to supervision by a Mexican inspector appointed by Secretary Formento. The contract became null and void if any foreign government or state acquired any interest in it.

Thus the exploiters of Imperial Valley sold out, as far as they were able to sell out, the rights and interests of American lands and citizens for the advantages it gave them personally and to their immense land holdings in Mexico. These men have long since passed off the scene of action, but the chains they forged will continue to bind the people of Imperial Valley in subjection to foreign interests as long as their canal system remains in Mexico.