It is the history of every virile and progressive nation that in time all its land capable of subjugation to the plow becomes occupied. We are in such a period now. Our principal reservations, consisting of natural tillable land originally set aside for the Indians, whom the country has considered its wards, have all been opened for settlement, so that even this pre-empted land is now largely occupied by white settlers.

But our population continues to grow. With its growth there has arisen a serious need of our arid lands for agricultural purposes. Of such land we have enormous stretches. Efforts are now being made to reclaim these lands by bringing water to them by artificial means. Not only are we considering means by which the parched sands of our various desert areas may be made to blossom, but we are also hard at work planning how our swamp lands may be redeemed for agricultural exploitation by draining them of their stagnant pools and bayous.

Our population has grown so large that every square foot of ground that can be reclaimed by artificial methods is worth saving. It matters not whether this can be accomplished by irrigation or by drainage.

Our Government early recognized the possibility of reclaiming its deserts by harnessing mountain streams and turning their waters to beneficial use. The Government has already spent millions of dollars in building giant reservoirs for the storage of water, and ditches to carry this water to lands which needed it in order to become productive.

Irrigation is by no means a modern science. It is almost as old as the human race itself. The ancient Egyptians of the Nile Valley depended upon it as early as in the time of Ptolemy and had developed it to such a point that their country was virtually the granary of the ancient world. With us, however, irrigation is a somewhat new problem, as it was not necessary for us to go to the length of artificially watering land while there yet remained open for settlement plenty of land well-watered by nature.

Private capital also, always keenly alive to opportunities for profit, has seen opportunities in the work of reclaiming our large arid land areas. What the Government could do, capital felt it could do also. The result has been that within the past few years a considerable number of privately organized irrigation projects have sprung up, capital for which has been raised by the sale of irrigation bonds. As this class of bonds constitutes by no means a seasoned investment, it should be most carefully considered before being selected as a profitable and safe medium through which to make investments.

Already a large number of these projects have failed because the men back of them were inexperienced in this particular field and allowed their optimism to becloud their better judgment. It requires more than the mere building of reservoirs and ditches to assure the financial success of an irrigation project. Not only is a continual supply of water requisite but also the certainty of a sufficient number of farmers to settle the land. Likewise, these farmers must know how to cultivate successfully land supplied with water by artificial means, as the method of farming irrigated lands is wholly distinct from that followed on lands nourished by rainfall.

Classes Of Irrigation Bonds

As irrigation bonds are a distinctively new security, it is interesting to know on what they are based and how they are issued. Broadly speaking there are four general classes of such bonds:

1. Private corporation bonds.

2. Corporation " Carey Act" bonds.

3. Municipal district irrigation bonds.

4. United States irrigation bonds issued as part of the reclamation service.

Private Corporation Bonds

The capitalists behind private corporation bonds aim to raise the money required to construct their reservoirs, ditches, and canals by the sale of first mortgage irrigation bonds. They incorporate a company which is to own all the facilities for storing the water and carrying it to the land. They stake out the acreage for which their company is to supply water. They then sell to newcomers the water rights for a fixed sum per acre. To make the illustration clearer I will assume that they ask $40 an acre for their water rights. This gives the settlers perpetual rights to the use of a certain quantity of water for their land each season. To secure these water rights the farmer gives a mortgage on his land. These mortgages are the collateral pledged to secure the holders of the irrigation bonds, and as the farmers pay off their mortgages in easy installments, the bonds are retired serially at different maturities. The stockholders in these companies expect their profits from what is left after the bonded debt is cleaned up.

All this of course is feasible. Experiments have proved that the chemical elements in desert land, when properly watered, give the ground a richness and fertility which make these lands prolific producers of certain agricultural products. The Twin Falls section of Idaho is a very excellent example of the large measure of success possible from the application of intelligent irrigation. Not only has this section of the state prospered in an exceptional degree by harnessing the mountain streams and diverting their waters to the dry lands where they are most wanted, but, as a direct result of the large agricultural population thus brought in, a number of prosperous towns have sprung up which would never have existed under any other conditions.

But the mere presence of water in arid countries is not always a guarantee that dependence can be placed upon a sufficient supply in dry seasons. Desert streams are likely to thin out at the most critical time. Herein lies one danger likely to threaten an irrigation project. Skilled engineers of long experience are necessary to gauge the quantity of the water supply, to build reservoirs in the right places, to construct economically the necessary ditches and canals so that there will be no likelihood of their clogging up with the shifting sands in the near future. Even then all these provisions do not make for absolute safety of irrigation bonds. There must also be the certainty that there is no legal flaw in the rights to the water supply; also that there will be no disappointment in the sale of water rights sufficient to provide enough acreage to redeem all the bonds and pay all the interest. The mere fact that a reservoir is constructed, and all the ditches and canals, is not in itself a complete assurance of the safety of irrigation bonds, for the farmer is supposed to pay off his water rights in easy payments covering a stated number of years and he can do it only by obtaining his water regularly.

A dry season is likely to cause an irrigation company to default on its interest because it will be unable to collect from the settlers their payments, unless behind the projects are financial interests strong enough to see it safely through an off season. Likewise until such projects are completed and settlers for the land secured, the irrigation bonds it issues, properly considered, are construction bonds, that is, bonds of an uncompleted enterprise whose interest must be provided out of the treasury of the company until it is in a position to earn revenues.

There are no bonds more speculative than bonds of this character. In fact the interest their holders receive, in most instances, comes directly from the very money they pay in for their bonds. Because of this element of uncertainty, it is of vital importance that the financial standing of the backers of an enterprise, no matter what its character, be carefully weighed, to determine whether they are strong enough to finance their project to com-pletion. However bright the prospects may appear, no enterprise can take advantage of them until it is first completely financed. For the risk investors must assume in a project in the process of construction, they should, in all fairness, receive, in addition to the bonds they buy, a certain proportion in stock as a bonus, for they speculate on the chances of success, and should financial difficulties arise, which is always a possibility, they face an assessment in an effort to raise the money to put the enterprise on a going basis again. A stock bonus is the usual form of compensation for those risks.