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Mr. FINNEY. You see, nearly all of these plans contemplate taking the water out of the Laguna Dam and bringing it around onto American territory to a point in the Mesa, so it is a matter largely of financing, you see, a matter of handling the land.

Mr. Evans. Then you think the Rose plan would have been an improvement over the old way?

Mr. FINNEY. Yes; anything would be better than the present method of water supply.

Mr. LITTLE. Isn't it unfortunate that any difference of opinion has arisen between those people down there?

Mr. FINNEY. It is very unfortunate, naturally. But I still think that the businesslike method is to utilize the assets that we have, namely, these Government lands.

Mr. WELLING. You are not in favor of giving anybody a preference right, but you do advise that we go ahead and sell those lands?

Mr. FINNEY. I am not in favor of giving anyone a preference right, unless it would be a general preference to soldiers to buy at the top price?

Mr. WELLING. It would not be objectionable to give the Rose interests preference rights on a small territory of land for a month or two months or three months—whatever the term might be ?

Mr. FINNEY. No; they would not ask for that, as I understand it; and I don't think anyone should have the preference if we are going to use the lands as a basis of financing the project. I think these Government lands should be put up and sold substantially on the Yuma-Mesa plan. Then the Imperial Valley and the Coachella Valley and other districts interested could supplement that, and the thing could be built jointly.

Mr. Evans. Then the Smith bill covers your ideas?
Mr. FINNEY. Yes.

Mr. LITTLE. Why isn't the sensible thing to do to go ahead with any of these projects and get rid of the Rose outfit by agreeing that out of whatever does come out of the Treasury they will be paid whatever they should be paid? Isn't that a sensible way out of it?

Mr. FINNEY. Well, that would be one way of disposing of the Rose interests.

Mr. LITTLE. Then they will have their money back and they won't have much kick coming. They will have some glory out of it, and will get their money back, and nobody else would kick.

Mr. KIBBEY. I will say, Mr. Little, that is entirely satisfactory to the Imperial Valley.

Mr. TAYLOR. That might be done, but how can we legislate to settle this matter of Mr. Rose now? How can we disregard what he says and what the other side says—how can we go ahead arbitrarily and settle this, in view of the fact that he has a contract now? We really do not possess any such province, as I see it.

Mr. FINNEY. Mr. Rose's legal rights would be determined either in the department or in the courts, I think.

Mr. LITTLE. Mr. Kibbey has just said it would be satisfactory to them, and it might be arranged definitely, a definite amount which this committee, of course, would have to fix, that would go to the Rose people.

Mr. FINNEY. That would only be necessary, Judge, in the event that this particular bill was agreed upon. If the original Kettner

bill, or the Smith bill were agreed upon, I understand that Mr. Rose has no claim at all, because he thinks he could work out his own salvation.

Mr. LITTLE. Of course, if Mr. Rose gets his money back, that is about all he will get anyway. Some of them that begin things never make anything out of it, and if Mr. Rose gets his money back he will be satisfied, I suppose, fairly well. Mr. Kibbey says that they will be well satisfied. Now, why don't we go ahead and put it into the bill and quit fooling with it?

Mr. FINNEY. We might provide a monument for him, too [laughter].

Mr. LITTLE. Oh, yes-probably they will give Rose a monument for starting it—after he is dead.

Mr. SINNOTT. Mr. Finney, when you speak of Mr. Rose's equities, you mean legal equities or moral equities?

The CHAIRMAN. Contractual, you mean? Mr. FINNEY. Well, equities arising out of the efforts he has put forth to develop that situation, and there are equities arising out of the contract which is not terminated. That contract is in a state of suspension, as it were. It was entered into—he made these preliminary investigations which the Secretary might or might not accept. The Secretary did not accept the investigations as conclusive, but entered into the second contract with the Imperial Valley and authorized the further investigation to be made. In the meantime, this Rose contract seems to be in sort of a state of suspense.

Mr. WELLING. Do you think that the Smith bill violates the provisions of the Rose contract?

Mr. FINNEY. No.

Mr. WELLING. Does it violate the conditions of the contract with the Imperial Valley Irrigation Co.?

Mr. FINNEY. No.
Mr.TALLMAN. I think it does, Mr. Finney.
Mr. WELLING. And Mr. Rose is satisfied with the Smith bill?
Mr. FINNEY. I understand so.

Mr. LITTLE. You think if we put a provision in that bill to pay Rose what he actually has invested—what his people have investeddon't you think the committee had better fix it? There is no use in fooling around about this thing. That would get rid of him forever, wouldn't it?

Mr. FINNEY. It would take care of his equities.

Mr. LITTLE. That would satisfy the other people, and that would be a mere button in the sum that will come in.

Mr. FINNEY. That will be one way out of it, assuming you want to pass this particular bill.

Mr. BARBOUR. What effect would that have on the fund, Mr. Finney, so far as having money with which to do the construction work?

Mr. LITTLE. $75,000 wouldn't be very much out of all the money involved here.

Mr. BARBOUR. If you take a certain amount of this money that you get from the sale of lands and pay it to Mr. Rose, what is going to be the effect upon the funds needed to pay for the construction work?

Mr. FINNEY. I understood Judge Little's proposition was not directed toward the Smith bill, but this bill here, which makes no appropriation at all.

185833—2027

Mr. BARBOUR. I understood that it applied to any of the bills.
Mr. LITTLE. Get it out of the returns that come in.

Mr. FINNEY. We would have to sell $75,000 worth more of bonds under this bill.

Mr. WELLING. You don't want to force any money onto Mr. Rose; he don't want any money under the Smith bill, not a cent. I understand that he is willing to surrender his contract if the Smith bill were passed by Congress.

Mr. LITTLE. That would be satisfactory to the other boys, too.

Mr. WELLING. That is, I have heard it intimated here that he was in favor of the Smith bill; and if so, it seems to me it involves the cancellation of any contract he has with the Government to build the canal.

Mr. FINNEY. I understand his theory is that he can take care of himself under the original Kettner bill or the Smith bill, build his own laterals to the district where his people are interested, but under this bill, which gives a specific preference to the State and to the soldiers and makes no provision for preference to him, he would not have any preferential rights, and he could be provided for either by giving preference for land or a payment in cash, as you suggested.

Mr. LITTLE. To come out of the lands when sold ?
Mr. FINNEY. Under this bill it would come out of the bond fund.

There is one feature about this bill that the Secretary did not mention in his report, and I just merely wanted to direct attention to it. The bonds are those issued by the districts, irrigation bonds, running for 40 years. Now, they are not guaranteed by the United States, differing from the original Kettner bill in that respect, but they are to be sold by the Secretary. Now, of course, that don't create any legal obligation on the part of the United States, but there might be sort of a moral obligation. If the Secretary sold these bonds the purchasers might say the Government sold them and the Government should make good in case there is any default.

Mr. LITTLE. But there is so much red tape around the Government that they never really would be seriously hurt.

Mr. WELLING. I would like to ask Judge Finney if he believes, as Commissioner Tallman does, that if the east mesa lands were sold under the same form of contract that you are now selling the Yuma mesa lands, that the receipts would be sufficient to finance this project?

Mr. FINNEY. No; not to finance the entire project. The receipts would be sufficient, added to the contributions, which the Imperial district and the Coachella should make, to amply finance it, in my judgment.

Mr. WELLING. And therefore it would finance itself if we just set the wheels in motion to permit that to be done?

Mr. FINNEY. I think so.

Mr. KIBBEY. May I ask a question in that connection? Suppose, Mr. Finney, that the lands do not come up to your expectations; suppose that they do not sell for enough, but they have been sold; then what happens ?

Mr. FINNEY. Well, it would simply be a matter of the lands contributing a larger amount.

Mr. KIBBEY. Well, but they have already been sold.

Mr. Litovernment should might say the GT

Mr. FINNEY. I am speaking now of the Imperial irrigation and other districts.

Mr. KIBBEY. The Imperial irrigation district and the Coachella district would have to pay the difference between what those lands sold for and the amount due.

Mr. FINNEY. But that is not quite correct, because the Government, if it sold these lands under the Yuma plan would not be dealing only with land values; we would estimate the cost of putting water upon the land, that water-right proposition, just as we did in Yuma. We fixed the water-right cost there at $200 an acre. Then we would put a minimum price on the land, so that our estimate, if anybody bought the land at all, he would have to pay his proportionate share of the water right.

Mr. KIBBEY. You would make that estimate before the land was sold?

Mr. FINNEY. Certainly, and it would be high enough to cover the cost.

Mr. KIBBEY. You are not in a position to assure the commitee that those lands would sell for even $50 an acre, are you?

Mr. FINNEY. I don't know a thing about the lands.
Mr. LITTLE. What do you think about that, Mr. Kibbey?

Mr. KIBBEY. I don't think they would average that amount, Mr. Little, to be honest. When you figure out the cost of leveling those lands, figure out the distance that they are now from railroads, comparing them with Yuma, I don't think it is possible that any man without an absolute assurance of getting water, would give $50 an acre for them. Even if ultimately assured of water I don't believe he wants to take a chance and hold those lands for four or five years and pay taxes upon them before he can even get water.

Mr. FINNEY. I think you are mistaken, Mr. Kibbey. If the Government undertook this plan to put these lands up for sale under the Yuma plan, the purchaser would have an assurance that the lands would get water.

Mr. KIBBEY. Well, he would have to be assured that the Imperial Valley was going to issue its bonds and the Coachella Valley was going to issue its bonds, and he is buying upon an estimate then, and would have to wait four or five years for water.

Mr. FINNEY. I have been pretty well convinced by the statements that you and others have made to me of the value of Imperial Valley lands.

Mr. KIBBEY. Of the improved Imperial Valley lands.

Mr. FINNEY. Yes; you have told me about crop returns there and led me to believe that they were valuable lands.

Mr. Rose. I would like just a second to answer Mr. Kibbey's question, and that is this: If you sold the lands and didn't get money enough for them, they would be in a position to organize a district and file their own bonds for the deficiency. That is one way of doing it, and another thing is this, gentlemen, there have been school lands sold as high as $25 or $30 an acre, which money didn't go into the fund to build a system but went into the private pockets of somebody with no guarantee of water. In addition to that, you are not selling the land exactly; you are simply collecting enough on all the land to get the system; you are simply putting up the money to make the land valuable.

acre for thembsolute assurandon't think it now from Tahveling those

Mr. WELLING. What do you believe is the value of those lands? Mr. Rose. I believe those lands under those conditions would sell anywhere from $100 to $125 an acre, and sell readily. I know I have seen Imperial Valley land actually given for the crop on it for one year, to the tenant. But that is because they don't have any water supply, because they are subject to a bunch of vultures in Mexico, but you build a good water system, and I will tell you right now those lands will sell, sell just as quick as the Yuma lands did, and will sell in sufficient quantity to build that system. You can't get away from the facts in this case.

Mr. KETTNER. Mr. Chairman, I think I should give a little short history of this whole affair, so that the committee will understand it.

The different bills that have been endorsed by the Secretary of the Interior and by his officers may seem inconsistent to you. They are not. The Secretary and the department have done everything in the world to help out the Imperial Valley people. I represented that district for some seven years. When I first came on here I found exactly where they stood and I told their officers at that time that the Imperial Valley had no substantial water right. They thought they had and they took that position—their attorneys claiming that they had a State right that was superior to the Government right for Yuma. The results speak for themselves.

Mr. WELLING. If the Kettner bill were found to be impractical, do you think the Imperial Valley, or the people of the State of California, would demand the passage of the Smith bill?

Mr. KETTNER. Gentlemen, as I stated before, I don't care whether my name is connected with the bill or not, if you will grant relief to Imperial Valley.

Mr. WELLING. But do you favor the plan—what I wanted to get at was this: Do you favor the plan of making the lands in the Imperial irrigation district, added to the Government lands on the East Mesa and the lands in the Coachella Valley, do you favor making those lands pay for the entire project?

Mr. KETTNER. No; I do not. The Imperial Valley is willing to pay its share.

Mr. WELLING. I know, but I say the Imperial Valley plus the East Mesa lands and the Coachella lands. Do you favor some scheme that will make them pay for the entire project, independent of any financing on the part of the Government?

Mr. KETTNER. I think they will pay for themselves, I have no doubt in the world that they will.

Mr. WELLING. But your bill, Mr. Kettner, provided for a bond issue which was to be guaranteed by the Government.

Mr. KETTNER. Not the last bill.
Mr. WELLING. But it has some bonding features in it.

Mr. KETTNER. But those bonds are not subject to the income tax, and I have satisfied myself that those bonds would sell readily on the market to-day at par.

Mr. KIBBEY. Before you adjourn, Mr. Chairman, may I suggest one thing to Mr. Kettner? At the Berkeley conference, every organization in the Imperial Valley was represented. Every organization was there. It finally resulted in a unanimous approval of the resolution, which is a part of the record here, approving the amendments suggested and now incorporated in H. R. 11553.

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