Mr. TAYLOR. I do not think that is any of their business. We have the right to appropriate water wherever we find it.

Mr. SMITH. I think it will be well to get that information as to whether or not there are any treaty relations on the subject.

Mr. TAYLOR. Other States are using water from the rivers that rise in Colorado. We try to use the water in our own State, and they try to compel us to let the water run out of our State down into their country.

The CHAIRMAN. What would be a parallel case is the situation in the Milk River Valley, in Montana, as affected by our relations with Canada? That is an analogous or parallel case.

Mr. SMITH. In that case the Government does not allow them to use the water, and there are negotiations pending about it.

Mr. HAYDEN. The storage works on the headwaters of Milk River were in the United States, and the water had to pass into Canada and out of the Dominion again for use in the United States.

Mr. SMITH. Unless this plan is adopted you can not irrigate those 400,000 acres of Government land.

Mr. TAYLOR. This bill provides for building a canal in the United States and spending our own money for irrigating our own lands. Mr. WELLING. If Lower California was a State in the Union, or under the supervision and control of the United States Government, you would still want this California canal bill?

Mr. KETTNER. Yes, sir.

Mr. WELLING. You would have no need for it then, would you? Mr. SMITH. You would not get the additional 400,000 acres irrigated.

Mr. WELLING. The only justification for this measure is the fact that we are having some irritating trouble or controversy with Mexico about getting water?

Mr. KETTNER. No, sir; it is impossible to irrigate the Imperial Valley with the present ditch.

Mr. WELLING. If the United States Government owned and controlled and governed Lower California, would you still want the canal?

Mr. KETTNER. Yes; to reclaim the 400,000 acres and to raise the water high enough to continue the irrigation of the Imperial Valley. Mr. WELLING. That is the question that has been the subject of diplomatic discussion between the United States and Mexico—that is, the right to run it around through their territory.

Mr. LITTLE. If this canal should not be built, could the present works be so extended and enlarged as to cover the ground you anticipate will be reached by the canal that you now are projecting?

Mr. KETTNER. It would be impossible to enlarge them for the reason that the reclamation project known as the Yuma project would, perhaps, be affected by raising the water in the river in trying to force water into the Imperial Valley ditch.

Mr. WELLING. Is it not a fact that your present diversion dam is wearing away and eroding, and that you must move from the site your present diversion works?

Mr. KETTNER. Yes, sir.

Mr. LITTLE. Is that the dam that takes the Mexican water?

185833-20-2

Mr. KETTNER. They take the water out of the Colorado River in the United States, and then it goes through Mexico.

Mr. LITTLE. This dam that Mr. Welling refers to will not supply sufficient water?

Mr. KETTNER. No, sir.

Mr. LITTLE. Is there any evidence that those Mexicans use in transit water that you think you ought to have?

Mr. KETTNER. They take one-half of it.

Mr. LITTLE. Is not that the immediate reason why you are asking for this new dam; that is, because of the fact that the Mexicans can take water away from you down in their country?

Mr. KETTNER. No, sir; it is because it is impossible to continue the irrigation of the Imperial Valley without encroaching on the Yuma project.

Mr. SINNOTT. The sole purpose of this bill is to secure financial aid?

Mr. KETTNER. Yes.

Mr. TAYLOR. Does the construction of this new contemplated canal imply the abandonment of the present canal entirely?

Mr. KETTNER. I would prefer that you ask that question of the engineers. I simply want to show the committee how the Government has embarrassed the people of the Imperial Valley with reference to this project. If I am correctly informed, Imperial Valley raises about as much farm products as all of the other Government irrigation projects put together.

The CHAIRMAN. Do you mean all California projects?

Mr. KETTNER. No, sir; all of the reclamation projects. Imperial Valley produced $40,000,000 worth of farm and garden products last year.

The CHAIRMAN. You ought to be careful about comparing it with projects in other States.

Mr. KETTNER. I want to show the wonderful reclamation work that these people have accomplished, and I want to show how the Government at different times has retarded their work.

Now, Mr. Little, and other gentlemen of the committee, I hope you will give very close attention to what I now have to say, and I will close very shortly. If you will remember, the Congress, in its wisdom, established a farm loan banking system. The people of Imperial Valley hailed that with joy. They were paying from 10 to 12 and I believe as high as 14 per cent for money. They applied for loans, and there were a few loans granted there. Then the president of the farm loan bank, Mr. Joyce, of Berkeley, Calif., had an investigation made, and found that the property there was not what you would term a certainty, or a good loan. That was after full investigation by a committee. They turned down the Imperial Valley and would not permit any more loans made. That notice. went throughout the country, and these people were placed in a position. where they could not sell their bonds. The Government itself has taken away the limited credit they had before, because they will not permit farm loan banks to loan money in Imperial Valley, because it is considered unsafe. I have a letter that I would like to read into the record. It is from Mr. W. H. Joyce, president of the Federal Farm Loan Bank of Berkeley, Calif., and it reads as follows:

Mr. ROBERT HAYS, Holtville, Calif.

BERKELEY, CALIF., May 21, 1919.

DEAR SIR: Replying to your letter of the 18th instant, I do not know that I can add anything to my letter of May 12, as I tried to make it clear in the second paragraph that we were not sufficiently satisfied as to the water and flood conditions in the Imperial Valley to resume operations in that region. I do not doubt that the value of the crops moved out of the valley last year is The question is, Will such values continue without interruption throughout the long period of our loans, and have we a sufficient assurance of this fact in view of the unsolved problems in that district?

enormous.

Yours, very truly,

FEDERAL LAND BANK OF BERKELEY, By W. H. JOYCE, President.

As you will see, these people are in a position where they must have help from the Government.

Mr. TAYLOR. Is the land bank out there composed of people who do not know anything about irrigation, like the one in Kansas that we have to deal with?

Mr. KETTNER. No, sir.

Mr. TAYLOR. Our Federal farm loan bank is in Kansas and they do not know anything about irrigation. Therefore, they prefer to lend their money on land in Kansas to lending it in Colorado.

Mr. KETTNER. Mr. Taylor, I would like to inform the committee that Mr. Joyce is a resident of Los Angeles, and he thoroughly understands our country, and we have nothing but irrigated lands. I do not believe there is anyone here who, if he wanted to loan money, would loan it in the Imperial Valley at the present time, because we do not know what will happen there unless the people get relief of some kind.

Mr. SINNOTT. How many acres are under the Government project there?

Mr. KETTNER. There are none at all.

Mr. SINNOTT. I mean in the project in the valley.

Mr. KETTNER. The land was originally withdrawn to be placed in a Government project.

The CHAIRMAN. That is the basis of President Roosevelt's message?

Mr. KETTNER. It was restored about three years ago.

Mr. ROSE. Three or four years ago the land under cultivation that had schoolhouses and other buildings on it, or about 200,000 acres, was restored.

Mr. SMITH. How many acres are irrigated and under cultivation in the Imperial Valley?

Mr. ROSE. Our records show 410,000 acres in crops last year.

Mr. SMITH. And you have about 400,000 additional acres that could be put under irrigation?

Mr. ROSE. We have over 500,000 acres. We have a possibility of about 500,000 acres which would come under the present canal that is not now irrigated.

Mr. KETTNER. Mr. Chairman, I do not wish to take up any more of your time. I would like to have the committee call on Mr. Shaw

now.

Mr. HAYDEN. You referred a moment ago to a certain report made by the Federal Land Bank. Have you any more than just the conclusions of that report as given in the letter which you read, or has

the entire report been made public to the people of the Imperial Valley?

Mr. KETTNER. Perhaps Mr. Shaw could tell you. He is a banker. Mr. Shaw, have you seen the full report of the Farm Loan Bank to the bankers of Imperial Valley, or rather to the proposed borrowers? Mr. SHAW. I have not seen that report. Mr. Leibert can probably tell you about that.

Mr. KETTNER. Yes; Mr. Leibert, when he comes before you, Mr. Chairman, will be able to explain that, and with your permission I would like to have Mr. Shaw heard next.

I wish to thank you, Mr. Chairman, and the members of the committee.

The CHAIRMAN. We will be glad to hear Mr. Shaw.

STATEMENT OF MR. O. N. SHAW, HOLTVILLE, CALIF.

Mr. SHAW. I feel, gentlemen, that we ought to have more of an elementary explanation of the physical situation or of the physical conditions relating to Imperial Valley, so I wish to call your attention to the map, that we may thoroughly understand what we are talking about. This [indicating] is north on the map. This yellow line represents the international boundary line between the United States and Mexico, Mexico being to the South. Imperial Valley, or what is now known as Imperial Valley, was at one time an arm of the sea. It was formed from an alluvial deposit brought down by the Colorado River. As this alluvial deposit was made it finally formed a barrier across the arm of the sea, leaving the portion now known and designated as Imperial Valley, or most of it, which is within the United States, below sea level. Therefore the portion of Imperial Valley in the United States we will assume was an inland sea at one time, which finally dried up from evaporation and from other

causes.

Mr. LITTLE. Some of it is there yet?

Mr. SHAW. There is some of it there in the northern section of the valley and is known as Salton Sea. Its surface is about 234 feet below sea level.

Mr. SMITH. That is the Salton Sea. I mention the name so that it may go in the record.

Mr. SHAW. Yes. The river flowing as it does across the international boundary line toward the south, flows on to the Gulf of California.

In 1891 and 1892 plans were made with a view to the formation of an irrigation project covering the district now known as the Imperial Valley. By surveys is was found that the fall of the land was toward the Salton Sea from all directions, and therefore it would be easy to bring the water from the Colorado River, which is on a high ridge, to water this lower area or Imperial Valley. I will not at this time mention any of the political phases as to the formation of water companies, only mentioning here the physical situation. The water taken out of the Colorado River at about one mile or such matter, north of the international boundary line, carried through a canal to the international boundary line, crossing the same, and was then dumped into an old arroyo or wash, known as

Alamo Channel or Arroyo, that had been made by overflow water from the Colorado during flood times. The water was carried through this wash now known as the Alamo Canal, to Sharps Heading, a point approximately 50 miles west of where water first entered Mexico.

The CHAIRMAN. Pardon me, by the Alamo Canal do you mean the Alamo River?

Mr. SHAW. The Alamo Canal to Sharps Heading. The arroyo as it continues from Sharps Heading on toward the Salton Sea is called Alamo River.

Mr. HERNANDEZ. It is really an old arroyo.

Mr. SHAW. Yes; it is an old arroyo.

Mr. LITTLE. That canal was built by a company of American citizens, was it not?

Mr. SHAW. Yes; I will not say that what is now known as the Alamo Canal was built by them because it existed there previously, and I have referred to it heretofore as an old arroyo, but it was used as a means for conveying the water. From Sharps Heading water was distributed to different portions of Imperial Valley.

Mr. LITTLE. Did you say it ran through that natural channel for 50 miles?

Mr. SHAW. Yes; the length of this canal is about 50 or 60 miles. Near the boundary line on the Mexican side at Sharps Heading diversions were made through different canals carrying the water to Imperial Valley, the present irrigated area being represented by this light color [indicating]. The area of irrigable land in the Imperial Valley is about 586,000 acres on the American side, of which about 415,000 acres was in crop during the past year. On the Mexican side of the line or in Lower California water is used for irrigation purposes by interests owning lands there. Mr. LITTLE. They are mostly Americans?

Mr. SHAW. Mostly Americans. As a matter of fact, the records made a few years ago show that the lands in Mexico were owned principally by one corporation. The records mentioned, however, that there might be as many as 21 landowners. The corporation mentioned owns about 900,000 or 1,000,000 acres of land in Lower California, Mexico; also there are other corporations there owning millions of acres.

Mr. EVANS. What would happen to those people if the water was diverted above them where you propose to take it out? What would happen to those people owning land in Mexico?

Mr. SHAW. That is just what we are coming to later. I wish to say here that in making the diversion from the Colorado River the promoters of the project made no provision for a dam or wier across the river for turning the water into their canal. They did not consider such diverting facilities necessary. Instead they assumed that as the land lying near the river was lower than the river itself there would be no difficulty in drawing water through any sort of a makeshift intake system into the California Development Co.'s canal.

Mr. LITTLE. What is the California Development Co.?

Mr. SHAW. The California Development Co. was the corporation organized for the purpose of promoting and exploiting the Imperial Valley irrigation project.