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extent of 120,000 acres. Now, those water contracts would result in his collecting in $1,200,000, and his having outstanding contracts against those people who had made that first payment of sufficient additional money to pay the estimated cost of this whole construction. Mr. LITTLE. It sounds awfully big. Now, do you feel sure that that is a reasonable proposition or is that just dreamland? Mr. TALLMAN. Our proposition was this, that at such a time as Mr. Rose's company had gotten the $1,200,000 in the Treasury, had paid the Government $200,000 to apply on the claim of $960,000, and had outstanding contracts for enough more money to build the project with these first payments made, that that was a pretty good start on financing the enterprise. Now, whether it was a practical thing or a dream, that was the plan that we were going to try out. Mr. TAYLOR. That was his company? Mr. TALLMAN. That was his company. Mr. SINNOTT. That compelled him to raise enough money to finance the thing. Mr. TALLMAN. Of course, there was more than 120,000 acres. We put that as the limit to start with. Now, briefly, that is just what the Rose contract was. Mr. Evans. What has occurred since to throw any doubt upon the reasonableness of that contract entered into at that time? Is there any reason to doubt that that can not be carried on ? Mr. TALLMAN. I don’t think there is. I went over that the other day and came to the conclusion that it was still a feasible scheme. Mr. Eva Ns. Can you conceive that there is any reason to doubt its practicability? Mr. TALLMAN. Well, I should say in this connection that from the very first we always advised Mr. Rose and everybody in connection with this matter that the entire Imperial Valley should be developed as a unit, as it was clearly evident that to distribute the large cost over this entire area would be more economical and likely to succeed. Every opportunity was given the Imperial irrigation district to come in and take part in that contract, or to become a party to it, and it is my recollection that at the very last minute before the Secretary signed that contract, a telegram was sent to the officers of the district asking them if they had any objection or if they wanted to come in, because we fully realized that there was going to be ultimately the necessity of the Imperial district making a new point of diversion. Mr. LITTLE. At that time, of course, it was evident that it would cost a lot of money to survey and experiment around, and they didn't care to take the chance? Mr. TALLMAN. Well, they came on very shortly afterwards with a delegation, and wanted to do something. They considered it imperative that they should have a new diversion point, and the Secretary then took up the matter with them and eventually that led to a contract with the Imperial irrigation district, which I find has been put in your hearings here on page 245. Perhaps you are familiar with it. Their idea and their necessities simply required that they connect up here to come down here [indicating], and go straight down across here to connect with their existing canal sys
tem. They were not interested in this [indicating], except as the reclamation of those lands in a unit scheme would naturally carry some of the burden of the immense cost of these works up here [indicating]. Mr. TAYLOR. Perhaps you had better tell us a little bit about what that contract was: what was its nature and extent. Mr. TALLMAN. That contract was very much like Mr. Rose's contract in some respects—in many respects. Mr. TAYLOR. Did it conflict with it, or supplant or supersede or revoke it, or have any effect upon the Rose contract; and if so, what? Mr. TALLMAN. Well, it gave consideration to it. In a sense it conflicted. The original contract said it was made subject to it, and paragraph 11 Mr. LITTLE (interposing). I didn't get that. Which original contract said it was made subject to what? I didn't quite follow you there. Mr. TALLMAN. The first draft of the contract with the district. Mr. LITTLE. Oh, yes; I see. Mr. TALLMAN. That provided that their contract was subject to the Rose contract. I think that, you said, was afterwards taken out? Mr. FINNEY. Yes; that was changed. Mr. TALLMAN. But I find a provision in the Imperial Valley contract in section 11 which states: That the United States reserves the right to arrange for the connection with and use of Laguna Dam on such terms as the Secretary of the Interior may deem expedient, by any other irrigation enterprise, district, corporation, or individual; also of the headworks and main canals and the other governmentally constructed works, works constructed jointly by these parties after proper enlargement and modification on terms herein stipulated, without, however, impairing the utilization of said dam, canal, and other works to the extent necesi. to irrigate the land within the boundaries of the Imperial irrigation district. Mr. LITTLE. That would seem to reserve the right to the Laguna project, would it? Mr. TALLMAN. Well, the situation was this: They were not necessarily inconsistent with each other; they conflicted simply to the extent of this piece of canal down here and over to here [indicating]. They both wanted to take water from here to here. Now, of course, they could not both have a separate canal in the same place, but it was perfectly simple for them to enlarge one canal so as to supply them both, and that is the only actual conflict, as I recall, on the ground between the full operation of the two contracts. Mr. LITTLE. Right there, Mr. Commissioner, it seems to be evident that legally they could both build, but practically never but one of them, would they? Mr. TALLMAN. As a practical matter we felt all along that necessarily if these two contracts operated separately they would be forced together by some means or other to build a single canal. Their own interest would make it absolutely necessary that they do that, because it would be prohibitive if they built it otherwise, and by throwing their funds together, of course, they could build it much more advantageously. Mr. TAYLOR. It would be mutually beneficial to them to work together.
Mr. TALLMAN. Of course it would. Mr. TAYLOR. And there is no reason why they should conflict? Mr. LITTLE. When was this last contract made? Mr. TALLMAN. It was made a long time before it was finally ratified by the district. I find it dated the 21st day of October, 1918. I don’t know when the district finally ratified. Mr. Rose. The 11th of December, 1918, was the first draft; and then it went on and was finally ratified in the fall. Mr. SINNOTT. Did Mr. Rose's plan contemplate the smaller canal? Mr. LITTLE. That applied to 1919? Mr. SINNOTT. Did his plans contemplate a smaller canal? Mr. TALLMAN. Well, possibly—yes; it naturally would be, because it did not contemplate the irrigation of so much land. Of course, those plans for that canal were to be submitted and accepted by the department. Mr. Little. May I ask a question there? There was a bill presented here by Mr. Kettner, I believe, for the Government to sort of O. K. a $50,000,000 bond issue. Was that in furtherance of the Imperial Valley Irrigation Co.'s contract with you? Were they the people that were to get the authority to issue that $50,000,000 worth of bonds, the Imperial Valley people, or was it the Laguna people? Mr. TALLMAN. The bill, as I recall, was one to authorize the Secretary of the Interior to take the bonds of various irrigation districts that would be formed, and if they found them satisfactory they would be deposited in the Treasury, on the basis of which the Treasury was to furnish funds to the extent of $50,000,000. Mr. LITTLE. Who were they to furnish them to; the Laguna project or the last contract? Mr. TALLMAN. None of them under that. That was a different scheme to finance this whole proposition. It might or might not be consistent with these various contracts we have told about— that we have referred to. Mr. WELLING. Mr. Tallman, how long was it after the Rose contract was perfected and signed by the Secretary of the Interior that the Imperial irrigation district obtained their contract with the Secretary? Mr. TALLMAN. Well, the Rose contract was signed in July, 1918. Mr. GATEs. July 6, 1917. Mr. TALLMAN. In 1917, and this other contract they did not finally get together on until the fall of 1918. Mr. WELLING. One year later. Mr. GATEs. It was not ratified by the vote of the district until January, 1919. Mr. TALLMAN. I think the Imperial district, though, had delegations up here pretty shortly after your contract. Mr. Rose. They got their contract December 11, after I signed mine July 6. Mr. SINNOTT. I have been called out for a few minutes. When you were advocating this Imperial Valley bill I don't recall whether or not you were seeking any protection then for your company? Mr. Rose. We did not need it. The contract provided for the selling of that land and applying not less than $10 an acre for anybody who came and bid. That did not interfere with us, because it would have allowed us to bid against anybody else for a little piece of land and would have allowed us to construct our system. But under the new bill it is different. We have argued all the time that that land should be sold to the highest bidder, and under the original Kettner bill it could have been sold. Mr. LITTLE. Do I understand that if the original Kettner bill went through, you did not ask any favors of anybody? Mr. Rose. Absolutely, I would have taken my chances with anybody, but class legislation came in and shut me out, and I feel differently about it now. Mo, SINNOTT. Now did Mr. Rose's plan contemplate a smaller canal? Mr. TALLMAN. Naturally it would be smaller, because it would not have to provide for this supply at all [indicating]. Now you asked me about this contract with the district. It has a number of provisions in it different from the Rose contract. There is a chance to develop power here and somewhere along about here |indicating], and that power development is all provided for in that contract. That contract provided for a joint development, each to furnish part of the money, and they were to get joint benefits from that power development. The Government had primarily in mind the use of the power development for pumping operations over on its new project known as the Yuma-Mesa over here [indicating], which has just been recently sold. Mr. LITTLE. You reserved the right for the Government to use that power, didn't you? Mr. Rose. Part of it. Mr. TALLMAN. Yes; part of it. It provided for the use of what they needed over here for these pumping operations. Mr. WELLING. Are the Yuma-Mesa lands comparable in their value to the East Mesa lands in the Imperial Valley? Mr. TALLMAN. I am unable to speak from personal knowledge. I think they are about the same. Mr. WELLING. What did the Yuma-Mesa lands bring? Mr. TALLMAN. The minimum price for the land and the water contract, I believe, was $225 an acre. I am told they have just recently been offered for sale and a large part of them have been disposed of on that basis. They paid 10 per cent down, I believe. Mr. FINNEY. Part of them brought more than that. Mr. TALLMAN. I say the minimum price was $225. Mr. WELLING. Now those lands to-day, that sold at that price, are high and dry and above every available source of water unless it is pumped. Mr. TALLMAN. Yes. Mr. WELLING. Now if the East Mesa land were sold under a similar contract, wouldn't it bring enough money for the Government to go ahead and build this all-American canal itself? Mr. TALLMAN. I think so. Mr. LITTLE. Well, for heaven's sake, why don't they do it? Mr. TAYLOR. Because we have got a lot of knockers over there in the House all the time, and we can’t do anything practical and sensible.
Mr. TALLMAN. The Rose contract in effect contemplated the same thing. Under the law we could require more for the land, but the charge is made for the water contract, and it gets the same place. The Rose contract contemplates the financing of the proposition on the land itself. Mr. WELLING. I want to get that straight, Mr. Tallman. If the East Mesa lands were sold to-day under the same terms that the Yuma-Mesa lands were sold a year or two ago—two or three months ago—would the returns from the sale of those o plus whatever rights the Imperial irrigation district received in the improvement of their water system, be sufficient money to finance this whole scheme? " . Mr. TALLMAN. Well, that is an engineering problem. I think it would, Mr. Welling. You have got here some 200,000 acres. You would not have to sell it for as much as they sold that. Suppose you sell it at $100 an acre flat. Mr. WELLING. That is $20,000,000. Mr. TALLMAN. There is $20,000,000. The CHAIRMAN. You mean $100 without water right or with ? Mr. TALLMAN. With the water right—as a minimum price. I understand there is altogether under this large high-line canal scheme—how many acres of Government land? Mr. Rose. There are about 400,000 acres of Government land where the title still remains in the Government, but about 250,000 acres unentered public land subject to sale. Mr. TALLMAN. Two hundred and fifty thousand acres unentered public land? Mr. ROSE. Yes. Mr. TALLMAN. And there is a lot of other land entered that would have to carry its part of the burden under any scheme devised. Mr. Rose. Yes; there is about 500,000 acres outside, and about half of it would have to bear the burden. Mr. WELLING. Are you familiar, Mr. Tallman, with the terms of the so-called Smith bill, 12013? Mr. TALLMAN. I have read it, Mr. Welling. Mr. WELLING. Does that contemplate the development of that area under a plan similar to what you have outlined for the sale of these lands? Mr. TALLMAN. In some respects; in other respects not. It is similar in that it seeks to finance it out of the land in advance. It is different in that the Government has absolute control of all construction—in fact, it does the construction with the money which it gets. Mr. WELLING. Is the Government going to do the construction work on the lift of the Yuma-Mesa project? Mr. TALLMAN. Yes. You asked me, though, if it was different, did you not, from these contracts? Mr. WELLING. Oh, no. Mr. TALLMAN. You want to know if the Smith bill was the same as the Yuma-Mesa Ż Mr. WELLING. Yes. Mr. TALLMAN. The principle is very much the same; yes. Mr. WELLING. What is the objection to proceeding on the theory, then, of selling the lands and allowing the receipts from the sale of lands to finance the project itself?