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Wouldn't it be to his interest to maintain the present conditions down there?

Mr. YAGER. We have been trying to build an all-American canal and get out of Mexico and away from Mexican control.

Mr. BARBOUR. But I understand your purpose in building the all-American canal is so that you can get credit down there.

Mr. YAGER. And get away from the Mexicans. Mr. BARBOUR. And until this decision was made by the Farm Loan Board not to extend you credit, you had not contemplated in the near future of building an all-American canal? If they had loaned you money down there you wouldn't have been interested in building an all-American canal right now?

Mr. YAGER. The situation there is that the Mexicans are getting their water at the expense of American lands on one side, and capitalists are reaping a harvest by reason of this condition on the other side, and Imperial is in fact robbed on all sides.

Mr. BARBOUR. Then your purpose to build the all-American canal is not dependent upon or the result of the fact that the Farm Loan Board wouldn't loan you money?

Mr. YAGER. No; not entirely. The purpose of building the allAmerican canal is to sever ourselves from the Mexican interests. When I say Mexican interests, American capitalists that have gone down there and absolutely control it, and Mr. Harry Chandler is one of the largest controllers of this scheme. As long as he can control the bond market he can get his water for practically nothing, for when we go to get credit to build our own canal he says, “ We will prevent them from getting credit to build that canal, and we will get our water for what we want it.”

Mr. BARBOUR. Therefore, if you build the all-American canal, you control both the water and the credit?

Mr. YAGER. Yes; we want to get the water system away from the control of Mexico.

Mr. HAYDEN. It is perfectly clear that it would not be necessary to urge this legislation if the Imperial Valley had good credit. There is now in force a contract between the Secretary of the Interior and the Imperial Irrigation District which provides for the construction of an all-American canal. They say that the reason why. the Imperial Irrigation District is not constructing that canal is because they can not raise the money. The last time he testified Mr. Rose said they could get but 83 for their bonds; to-day he says they can get 95.

Mr. YAGER. And one reason why they have depreciated our credit there is so we can not go ahead and control our own water supply, but making our water supply depend upon them. They have physical control of the water in a foreign country and consequently control Imperial Valley credit.

Mr. Rose. The Farm Loan Board did loan in the Imperial Valley until this all-American canal movement was started. They withdrew afterwards. Since Mr. Yager filed this paper here representing the Coachella Valley and since this bill has been introduced they have withdrawn from Coachella Valley. But what I want to say is this: That there is an area of land on both sides, on the Mexican side about a million acres, land unirrigated, about a half million on the

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American side that is unirrigated—there isn't enough water in the Colorado River to irrigate both. We are attempting to build this canal and get it for ourselves. Mr. YAGER. As Mr. Rose ‘has just said, after the introduction of this bill and after the Coachella Valley became interested in seeing that the arid lands of that valley were brought under irrigation by an all-American canal the Farm Loan Board has withdrawn loans from the Coachella Valley, which they were up to this time making. Here is a letter of date July 30, 1919, addressed to Mr. C. W. Lenox, secretary-treasurer of the Mecca National Farm Loan Association, Mecca, Calif., which is in the Coachella Valley. This letter reads:

DEAR SIR : We have your letter of July 26. We can not see that it would make any difference if we were to send an engineer appraiser in your district now. His report would be indeterminate, and the only methods which we could determine the water supply in the Coachella Valley is to wait and see after some time has passed that more land has gone under cultivation and more wells put down, which will be true in the next few years.

We are disinclined to change our position, and you must accept that letter as your instructions.

Yours, very truly,
THE FEDERAL LAND BANK of BERKELEY,
By A. W. HENDRICK, Secretary.

Mr. HAYDEN. What was that letter? Mr. YAGER. That was a letter in response to a letter from the Farm Loan Association of Mecca to the bank at Berkeley asking that an engineer's report of the water conditions of the valley be made before refusing loans in Coachella Valley. Mr. HAYDEN. Has the Berkeley Land Bank made loans in the Coachella Valley Mr. YAGER. Yes, sir. Mr. HAYDEN. What is the reason why the Federal Land Bank does not make loans there any more? Mr. YAGER. They go ahead and state that their position in the Coachella Valley is similar to that in the Imperial Valley. Mr. HAYDEN. The conditions are not similar. You obtain your water entirely from underground sources in the Coachella Valley. The Imperial Valley obtains its water from the Colorado River, so there must be a different reason. Mr. YAGER. Let me read you a letter from the Treasury Department, Farm Loan Board, August 18, 1918, addressed to Mr. Kettnear (reading): MY DEAR CoNGRESSMAN : In reference to your favor of the 1st instant, relative to the matter of Federal farm loans in the Coachella Valley, Calif., I beg to quote the following from a communication received this morning from out Berkeley bank on this subject: “This country is supplied with water by means of artesian and pump wells, and if this supply should fail the land would be utterly worthless. To some degree the same conditions apply here as they do in the Imperial Valley. Everything depends upon the water. “In other localities, where there is a reasonable rainfall, the land would still have a substantial value for the purpose of dry farming, even though all artificial means of obtaining water should fail. “In the earliest stages of our progress we made some loans in the Imperial and Coachella Valleys, but as the board knows, we have aways felt a little uncomfortable about them. “There is not enough history back of the wells of the Coachella district, nor enough information at hand relative to their permanency, to justify a Sufficient feeling of assurance that the water supply will continue indefinitely.

“ With this condition in mind, as it applies to the Imperial and Coachella Valleys as well as to some other regions of our district, our board of directors made certain rulings, which we spread upon our minutes, a copy of which is herewith inclosed.

“Allow me to add that until through some investigations by governmental or other authority is made, which will certify to us that the water supply of the Coachella Valley may be relied upon as being permanent, it will be useless to send our engineers to make an investigation, as there are no reports so far made which could be deemed conslusive on this subject."

Taking all the factors into consideration that we must when making longtime loans, so that the integrity of our bonds will be maintained and the benefit of the system secured to future generations, I am sure you will realize the necessity for the position taken by our Berkeley bank in this matter.

We would be very glad to receive authoritative evidence of the permanency of the water supply in this valley, and if this should be done I assure you there would be no difficulty of this section receiving the benefits of this system.

Mr. HAYDEN. The man who wrote that letter has evidently confused the two situations in Imperial and Coachella Valleys.

Mr. YAGER. That was written by W. W. Flannagan, Farm Loan Board secretary.

Mr. HAYDEN. Mr. Flannagan evidently did not understand the true situation out there. There is but this much in common, that farmers must irrigate in the Imperial Valley and farmers must irrigate in the Coachella Valley. Without water in either valley you can not grow crops. But the essential difference between the two valleys is the source of their water supply, whch in one case is from wells and in the other from the Colorado River. Somebody must have expressed a doubt as to the availability of the supply of water underground in the Coachella Valley. Some one has suspected that at the present time you are using more water than the supply warrants, and that if the development continues, there will not be enough water for all the lands in cultivation. The Federal land bank says that its engineers can not determine that fact—they must have a report from some governmental source. It seems to me that the next step the people of the Coachella Valley should take would be to induce the Geological Survey or some other department of the Government to make another investigation of the underground waters there to ascertain whether or not the total amount of underground water is being exhausted or not.

Mr. YAGER. That very report has been made by Mr. Mendenhall and the farm-loan bank has been advised of that report.

Mr. HAYDEN. How long since was that report made?

Mr. YAGER. That was made several years ago, and is entitled “ Waters in the underground district of Indio region "--I forget exactly. :

Mr. HAYDEN. Does that report express any doubt as to the adequacy of the supply of underground water in the Coachella Valley ?

Mr. YAGER. In short it states that it has a most valuable and good underground supply.

Mr. HAYDEN. But in a desert country all water supplies under the ground and on top of the ground are limited. It is true in every case that if enough wells are drilled and enough pumps are used they will lower the water table until finally some wells on the tract will go dry. When was the report to which you referred made?

Mr. YAGER. Several years ago; 1905, I think. I am not sure.

Mr. HAYDEN. That is nearly 20 years ago. What you need to do is to get the Director of the Geological Survey to send competent engineers to make another underground water survey in order to ascertain the changes that have taken place since 1905.

Mr. YAGER. We have asked for an engineer's report on the underground water supply of Coachella Valley, but there has been nothing done. In view of their statement of their position on the Imperial situation and their statements regarding Coachella Valley's situation, we can draw no other conclusion than that they are influenced by the interests of Los Angeles when they say they can not make these loans; in other words, a lot of Los Angeles capitalists are well aware that I am in possession of information which, if publicly expressed, would not redound particularly to their advantage.”

Mr. HAYDEN. I do not think you are justified in that conclusion that there is a collusion between the officers of the Federal land bank and certain Los Angeles interests to prevent farm loans being made in the Coachella Valley.

Mr. SMITH. Do you not think it is safe to say that these Los Angeles people interested in Mexico who are getting water for nothing would have a tendency to discourage getting any more land under water in Imperial Valley ?

Mr. HAYDEN. Whether more wells were dug in the Coachella Valley could not affect the Los Angeles people interested in Mexico in the slightest degree.

Mr. Smith. But where you combine those two, you give an allAmerican supply.

Mr. HAYDEN. When the all-American canal is built the Coachella Valley can get an adequate supply of water from the Colorado River, but if they could get enough water from wells they would not have to obtain any water from the Colorado River.

Mr. SMITH. If I understand the two situations, the Mexican interests get all the water they want now under existing conditions largely at the expense of the settlers up in the Imperial Valley. So, as long as they have that condition continuing it is natural for them to discourage an all-American canal, which would make it necessary for them to help construct storage facilities for water they might need.

Mr. YAGER. Exactly. There are 155,000 acres in the Coachella Valley and 219,000 acres on the east-side mesa that could be irrigated from the Colorado River. It was not until this bill was introduced here that the Farm Loan Board withdrew loans from the Coachella Valley, for, of course, the building of an all-American canal would require the Mexican lands to pay for their water.

Mr. HAYDEN. That may be true, but I think you are unfair when you charge that they did that with a purpose of

Mr. YAGER (interposing). I am not trying to charge the department with any misconduct or any misdealings. I present the facts that exist. They charge themselves with it, as I see it. I can put no other interpretation on a letter of that kind.

Mr. HAYDEN. You have presented a letter here with respect to the attitude of the Federal land bank of Berkeley toward the Imperial Valley, and you are now trying to stretch that letter to cover the Coachella Valley, where the conditions are not the same.

Mr. YAGER. Well, that letter was written by the department.

Mr. HAYDEN. That was a letter written by Mr. Flannagan, the secretary of the Federal Farm Loan Board.

Mr. YAGER. But we are bound by it.

Mr. HAYDEN. But the other letter which you presented was from the farm loan bank of Berkeley as to why they will not make loans in the Coachella Valley.

Mr. YAGER. We are attempting to get loans and these letters I present show their attitude. I think their position is not a tenable position. I think it is deplorable that this department of our Government should so discriminate against American lands and American interests and so disclose their position in letters of that character.

Mr. SMITH. Have you, through your representatives in Congress, ever attempted to get from the Farm Loan Board an expression of opinion as to why these loans have been turned down?

Mr. YAGER. This letter I have just read was in answer to Mr. Kettner's letter asking that an engineer investigate conditions in the Coachella Valley .

Mr. HAYDEN. A farm-loan engineer is no authority on underground water, and that is probably the reason why the land bank says it would be useless to send their engineer there. What the bank wants is a representative of the Geological Survey to ascertain whether or not enough water has been taken out by wells in the Coachella Valley to materially reduce the available supply. If the danger line has been reached the bank is justified in withholding loans.

Mr. YAGER. But they give no such reason. They say our conditions are similar to the condition existing in Imperial Valley, and I think I have shown plainly enough why they refuse to loan there. They have refused to send an engineer to investigate the water supply in the Coachella Valley.

Mr. HAYDEN. I understood you to say that Mr. Kettner asked the Farm Loan Board to make that investigation and they said that their engineers could not do so. Mr. Kettner undoubtedly will request the proper bureau of the Government, which is the Geological Survey, to make another investigation of the underground waters of the Coachella Valley, as they did in 1905. If that is done and the report is satisfactory, the Berkeley bank will be justified in again making loans.

Mr. Rose. They say it will take many years to make that investigation.

Mr. HAYDEN. I have seen so many letters written by officials here in Washington, 2,000 or 3,000 miles from the actual situation, that I am justified in the conclusion that they do not always know what they are talking about.

Mr. YAGER. These officials seem to have accepted Mr. Chandler's word regarding our situation without any investigation.

Mr. SMITH. Do you know whether or not the Mexican interests contemplate further extension of their irrigation projects or do they feel they have reached their limit?

Mr. YAGER. Permit me to take that up right now, if I may. There is an effort being made by certain interests to build the first leg, which will cost $7,000,000, for the purpose of connecting the Laguna Dam with Hanlon heading; that is a continuation of the present

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