ented government land, which is in course of preemption, the proportion necessary for bond interest and bond redemption, and thus absorb the rights of the bondholders. They will continue to improve the property beyond actual necessities, issue warrants against these improvements and take these warrants in payment for their assessments, not through the treasurer of the district, but direct, through board meeting actions notifying the treasurer that tax has been abated, and thus defeat the possibility of the separation of interest from maintenance by the treasurer who has to pay the coupons.

SEVENTH: They maintain their records in such an unsatisfactory condition that the bondholders cannot get evidence of intention of fraud upon which to base court rulings and decisions.

EIGHTH By the time the first assessments have to be made for the redemption of bonds, which is usually after a period of ten years-supposedly made for the purpose of giving the settler a chance to get his farm in such condition that it will produce sufficient income - the country is so tax-ridden, the assessments are so high and the feeling between the farmers and the bondholders is so acute that settlers begin to leave the district, especially those who have not made good, increasing the burden of those who remain.

NINTH: With all the foregoing difficulties there still remains the possibility of lack of water because the water must be apportioned over the entire number of settlers, regardless of what they pay, and if they desire more water they cannot at any price purchase or obtain it. Each farmer is entitled to so much and no more. The one may use it; the other may not use it; yet the one needing it cannot obtain it in a legal manner.

TENTH: Aside from this there is the possibility that, through drought or legal proceedings by other districts claiming priority, the water may become scarcer and scarcer, or the district may have been organized upon water rights which are merely paper rights. This defect, of course, does not appear until after the bonds have been outstanding a good many years and the number of settlers has increased, thus causing a scarcity of water, through increased usage.

Having pointed out the defects, the question now arises as to how these may be remedied, because it is a foregone conclusion

that the land will continue to be settled, that water will be needed and used and that proper systems will have to be built for that purpose.

It would seem that government administration of these affairs would be preferable. Whenever attempted this has proven greatly beneficial; yet the government cannot possibly at least for a good many years to come control all irrigation systems and manage them. Therefore, private capital and private institutions will continue to exist.

Numerous irrigation districts have attempted to overcome the difficulties, and one may be mentioned that seems to have solved the problem, or at least to have surmounted a number of the obstacles mentioned.

Take as an example a district that now exists, has been operated for some years and upon which bonds are outstanding and in default. The following plan of reorganization, I believe, would remedy the defects above mentioned.

First of all, a new corporation should be organized which should be a mutual company providing for election of the management of the district, much as directors are elected by stockholders of a corporation. This method will do away with the expensive statutory provision of elections and advertisements.

This mutual company issues stock sufficient to have for distribution a share of par value of one dollar for each acre of the district. Each holder of a share is entitled to his equal proportion of the entire supply of water and should pay there for annually a maintenance charge or assessment equalling a pro-rata share of the entire expense.

The company will then pledge all its stock to a trustee appointed by agreement between the bondholders and the company. The bondholders of the irrigation district are then required to deposit with the trustee all the bonds and receive trustee's certificates therefor.

There is also deposited by the mutual company a so-called voting agreement by which the company agrees to permit the trustee for the bondholders to elect, if so desired, managers for the ditch company who are agreeable to the bondholders and will protect their interests.

The bonds are then returned to the district treasurer who cancels them and marks them "paid." Thus the mortgage created

by the statute on all the lands is destroyed and the district automatically ceases to exist without election or legal proceedings.

In case the settler originally owned a water right and transferred it to the district in payment for bonds, he may surrender his bonds and obtain his stock in the mutual ditch company fully paid up, and thereafter be liable only for the annual payments for maintenance. In all other cases the settler would have to buy his mutual ditch stock if he desired water. If he did not desire water, he would not have to buy any stock and could defer the buying of the stock until such a time as he would need water. In other words, during the process of building or paying for the land, and the land remaining uncultivated or idle, he would not be burdened with payments for the cost of water. The moment, however, that he desired water he would not have to buy at once all the water for all his land, but only so much stock as would water whatever he could cultivate or reclaim from the prairies. Reclaiming or pioneering is a process usually spread over a good many years, because it entails work and heavy expense to reclaim virgin land from the prairies.

He would buy the stock from the trustee and the trustee could give any kind of terms for payment, according to the policy of the trustee or the necessities of the district to be colonized. One man could get a long time; another one a short time; the third one might pay cash. The stock would be held as collateral security and, if desired, for the unpaid portion of the purchase price a mortgage could be taken on all or part of the land in any amount desired by the purchaser. The stock would be sold at current market prices. If it were, let us say, $50.00 originally, after a few years this amount should be increased by the interest on the $50.00 and the annual assessments which would have been passed without payment by the settler. Thus all future settlers could obtain their water and would be put on an equality, namely, the original price plus accrued interest and maintenance charges.

The above mentioned mortgage given on the land would only be a mortgage on the particular piece of property in question and would have nothing to do with the water stock, because both the water and the land remain independent divisible properties, unlike an irrigation system, where the mortgage is always attached to the land. The farmer could sell his stock at any time and thus get rid of the despised mortgage on his land; and he could do this

at any time he desired, probably realizing some cash in addition. In other words, the water stock is negotiable and can be sold at any time, realizing to the farmer, if he wishes to quit or change his methods, what he has paid. Under the statutory irrigation district this always remains impossible. It is, therefore, easier for the farmer to liquidate and move away under this suggested plan of operation.

If he finds that he needs more water than his proportionate share per acre of the entire system, he can buy water shares from another man and thus get more water. It is well known that land planted into orchards needs only a tenth o fthe water that alfalfa needs, and it would be unreasonable to tax orchard land with the same price of water as alfalfa.

The money paid to the trustee would be proportioned among the bondholders of the original district in any manner they might agree upon among themselves; in fact, trustee's certificates could be made payable in series and by years exactly as bonds are payable under the statutes. The payments to be made by the farmer for his water stock could be amortized so that he would know beforehand how many payments he had to make annually and that all payments would be the same. It would not be necessary to state to the farmer that he was paying so much for principal and so much for interest. Interest incites the farmer very much as taxes do the laboring man-he feels that he does not owe anything and that he should not pay.

It is well known that there is no vested title to water unless the water is used; therefore, title to water can be lost through non-usage, which is exactly opposite to title to land; which always remains with the original holder unless sold or pledged. Loss of title to land does not work automatically; there is always necessary an act, or the absence of a specific act, to divest its title; whereas title to water is divested automatically through non-usage.

It might happen therefore that the mortgages given in payment for the water stock would become valueless by failure of consideration in case the managers of the mutual ditch company would not deliver water to the settler whose land was mortgaged in payment for water stock.

This may seem remote, but it is known from experience in the present irrigation districts that farmers will resort to all

kinds of subterfuge to defeat the bondholder. Why should not they do the same if they have the management of the original company whose duty it is to furnish the water? For this reason, the management of the mutual company should remain with those who originally owned the bonds, until all the bonds have been paid. This can be accomplished through the voting agreement which I have mentioned.

The amortization of a thousand dollars or the cost of, say, twenty shares (at $50.00 per share) of mutual ditch company water stock, sufficient to irrigate twenty acres, would be about $87.20 a year for twenty years. This payment would be sufficient to cover annual interest on the thousand dollars at six per cent and would repay the principal of one thousand dollars (invested at 6%) at the end of twenty years. This would, therefore, give a selling price of $50.00 an acre for water and would mean about $4.36 a year an acre for the purchase price of the water stock. Adding to this a similar amount for the purchase of the land and, say, seventy-five cents an acre annual maintenance charge would give an annual payment to be made by the farmer of $9.50, and at the end of twenty years he would own his stock, his water and his land and have nothing further to pay than the seventy-five cents per annum for the maintenance of the district. Such an amount is about equal to the rental charge of ordinary farm land without buildings thereon, which in the west is anywhere between five and fifteen dollars an acre.