"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 engi

neers 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.

system by permitting the Mexican interests to have the Laguna Dam as a point of diversion rather than be interfered with by the Yuma. project. That effort is being made, as I say, and it was only a few days ago that I was approached by Mr. Corey, an engineer of the Interior Department, who came before this committee in a secret session and testified, what to I don't know. However, he suggested that the interests get together and build that first leg of the canal in view of the opposition of the different departments.

Now, I think that the people of Imperial and Coachella Valleys can not oppose that too strongly, and for this reason, that we would then be providing Government legislation to put through a proposition furnishing Mexican lands with the Colorado River water, a continuation of the present system.

The Imperial irrigation district has mapped out within its territorial limits about 584,000 acres, some 410,000 acres under cultivation. The 584,000 acres is the entire amount they can irrigate from that system. So that if they had all the land of that district under cultivation they wouldn't irrigate more than 584,000 acres. To-day there is being put under cultivation acre after acre in Mexico, and just as fast as they can bring in Chinese and Japanese foreigners to put it under cultivation they are doing so. We would then be limited to the amount of land we could cultivate by that system, but would permit them to continue to develop their land so far as the water supply goes and without them paying any charge or anything else. In other words, it would be a continuation of the same deplorable conditions that now exist of developing Mexican lands at the expense of American lands, only it would be sanctioned by Federal legislation. The Mexican interests are permitted to develop their lands while ours stay bare. This proposition to put that one leg through as proposed by the same Mexican interests is directly against the development of the arid lands of the United States.

Mr. SMITH. The expenditure of the $7,000,000 to build the first leg would not be of any special benefit to the Imperial Valley or Coachella Valley?

Mr. YAGER. No, sir. I would say to build only the first leg would be greatly to the detriment of Imperial and Coachella Valleys. Mr. SMITH. But it would be used in connection with the proposed all-American canal?

Mr. YAGER. Well, it would be practically a part of it because that is practically on the same route as the all-American canal, but let that present system be connected up with the Laguna Dam and our land outside of the Imperial irrigation district consisting of 500,000 acres will not get the benefit of the waters of the Colorado River. That is one of the purposes of the all-American canal to irrigate this additional land, and unless this legislation provides for all of it this purpose is defeated.

Mr. SMITH. How was it proposed to get the money to build the first leg?

Mr. YAGER. To be raised in the same manner as provided in the bill I presume.

Mr. ROSE. We could get that if we would buy our own bonds.

Mr. YAGER. But this first leg proposition alone prevents the building of an agricultural empire in the United States that would be unequaled in the world.

Mr. HAYDEN. If any legislation at all passes the bill will authorize the construction of a canal to connect the Laguna Dam with the Imperial Valley to irrigate lands in the United States. Such a canal must be built some time and, first or last, the main canal will extend from the Laguna Dam down to the border. If there is to be a division of water with Mexico, the division will take place within the United States and the balance go over the border. There is to be no legislation which will provide for nothing but the construction of the first leg of the canal.

Mr. ROSE. But without you provide the means whereby the entire all-American canal can be built we would be blocked. We do say that without provision is made to build the entire canal it will be blocked. Mr. YAGER. We are so anxious that this legislation be enacted to give us our own water supply at our own expense entirely on American soil and sever our partnership with Mexican interests and permit us to build up the arid lands of that section. I can see no reason why objection should be made for doing that.

Mr. HAYDEN. Mr. Yager, you have twice made reference to severing partnership with Mexico. I would like to get your view as to how you are going to prevent the flood menace from the Colorado River which makes it necessary to go into Mexico to control the flood waters.

Mr. YAGER. I would like to say this in regard to the flood waters; that is a condition which is being enlarged upon by Mexican interests as one reason for the prevention of this legislation if possible. If we are permitted to build up the lands there and use more water of the Colorado River and if storage is provided it will regulate the stream of the Colorado River and the flood menace will be practically eliminated without going into Mexico to do any protection work.

Mr. HAYDEN. Sufficient storage work could not be constructed on the Colorado River for a great many years to absolutely control that

stream.

The tables of the flow of the Colorado River show that the difference between low and high water is so enormous, the flows are so difficult to control, that as a practical matter for many years to come it will be necessary to maintain levees in Old Mexico to prevent the inundation of the Imperial Valley. You suggested at the beginning of this hearing that we should build an all-American canal, assert our rights to take all the water out of the Colorado River, and allow the Mexican lands to go absolutely dry if the water is needed to continue irrigation in the United States. After such a dry season has passed do you think that the Mexicans would be in a frame of mind which would permit our going into their country to repair the levees when the next flood comes?

Mr. YAGER. Well, if protection work is needed, it would be to the benefit of Mexican lands as much as ours, and I think Mexico would want a treaty with the United States to help bear the expense of this protection work.

Mr. HAYDEN. And when we negotiate that treaty you get right back into partnership with them again. You were talking about dissolving partnership with Mexico.

Mr. YAGER. I would not consider an agreement to maintain a protection levee in Mexico a partnership relation.