3. RUPERT MSON SIAOLB-TAXI IRRIGATION DISTRICTS ...

/ A , ,?,.:v 17; 125 ')'-3. RUPERT MSON

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SIAOLB-TAXI IRRIGATION DISTRICTS,

Am

HWIQIPAL BABTBRUPTCPJ

A l l uses of t h i a manuacript ere covered by

an ag~eement between the Regents of the Universi ty

of California and 3. Rupert Mason, dated Apr i l 18,

1958. The manuscript is thereby made avai lable

f o r researah purpoaea. A l l l i t e r a r y r i g h t s i n the

manuscript, including the exclusive r i g h t t o

publish, are reserved to the General L i b ~ a r y of

the Universi ty o f C a l i f ~ r n i aa t Berkeley, No p a r t

sf the manuscript may be quoted f o r p u b l l ~ e t i o n

without the u p i t t e n permission o f the Universi ty

Librarian of the University of California e t Berkeley,

&riga t ion d i s t r f ~ t sere an often-atudied example of

the a b i l i t y of l s a a l landowners, when faced w i t h e phgsiael

problem tso l a r g e f o r 'individual solution, t o band to-

gether under enabling l e g i s l e t i e n by the state t o build,

pap ?or, end administer expensive g u b l i t works for the

benefi t of the included territory. Insdequat e na tu ra l

water supplies, the f a i l u r e of pr ivate water companiels t o

supply enough water a t sconomical3.y Feasible prioes, and

the mluotanse of the s t a t e and federal governments t o

enter I n t o publie works project8 of l o c a l importance

forced the would-be cultivatars of California f a f e r t i l e ,

but seasonalfly ar id , land8 t o turn t o l a e a l eooperation i n

order t o irrigate their lsnda. The hydroelectria power

whiah was a by-product of their resemofrs soon brought

the diatriote Into the power f i e l d am w e l l , When s t a t e -

wide p~snn%lpgp~ovedneCussaPy, h?rig$tian d i a t r i o t 8 end

similar waber-use districts b e a m an integrel pert of the

s t a t e water program and were the gublia bodi6a with whleh

the^ FedaPsl Raolaaratian Bureau would negotiate end contraet .

It wss J. Rupert & a d s mputatian as a leading f inena ie r

of i p ~ 2 g a t I o n B i a t r i c t a i n t h e i r e a r l y deys t h a t l ed t o thb I

following aeries of intez?views,

J, Rupert Mason was aotive i n the purahase end d i a -

t ~ f b u t i o nof nnuaiaipal bmds i n California a f t e r 1907,

when he same t o t b s t a t e a s an agent for W e W e Harris dG

Company of Cbioago, H i r Sen Franeiaao flm of J, R, h a o n

B Company speaiellsed in l r r i ga t f on d i s t ~ i e t bonds u n t i l

PIr. b a o n ' s rett;immnt in 1927, During those years he was

eloaely i n contact with ths groblsme of finanaing water-

development d ia t r i a ta . After hi8 retirement from busi-

ness, he traveled throughout the world etudying i r r iga t ion

developments and took an active in t e re s t i n Amriaan water

projecta such aa the Colorado River projeot.

The parsaage of the Federal Munioipal Bankruptoy Aat

t o a id public aubdivisiona i n f ineneie l d ia t reas brought

tire Bason beak into the i r r iga t ion d l a t r i o t f i e ld , this

t ine ea the anremitting opponsnt of t h i s legislat ion,

which )be deemed unconstitutiona1, destructive of the good

cred i t of the i r r iga t ion d l r t r i e t r , and unfair t o the

pupehaasru o f bonda, many of whiah ha had personally s o l d

and sonre of' whlah hb held hlmaelf. AL about the ram

tins he beeame oonvlneed of' the a r o ~ n e s so f b n r g George's

p a l i t ioo-econ&~ ghilarophg of the SSngle-Tax and since

1937 he haa been sr leader in the Single-Tax movemant, both

i n the United States end abroad,

The following intemiews =em ta?e-meo~ded during

the spring rand summer of 1957 in Mr. Masonts study i n his

Japanese-decorated h~mein San Branciaco, where he was

rcsuuperating froin a heart attack that temporarfly l i m i t e d

.hi8many publie aativities. J. Rupert Wasen, a solidly-

bui l t man of nredium height, greyhasred, with striking blue-

green eyes, was 71 years old a t the time of the internlaws,

yet h i s fndeiaCigaSflity, his enthusiasm f a r subj e u t ,

his frequent jokes, and h i8 deppe? clsthing belied b o t h

h is years and his reaent illneaa. Surrsunded by h i s books

on eamomlos (many of which he colclld quate in substantial

portions), f i l i n g oases f111of brieTs, irrigation diatr ict

materfala end correspondence, and the l a t e a t foreign m d

domestio periodicals, he discussed with Willa b u m his

many experiences and ideas, So earnest was he i n hi8 can-

vict ions and ao dedicated t o presenting the facts and me-

sons therefore, ss he saw them, that the interviewar were

only bmugh2 t o a close at a reesonab2e time by the entry

of F'ula. Mason, dmased in a Japanese khona, her red hair

p i l e d etup her head, bring* in papaya sherbet or cookies

81ld t 8 8 r

Nason l a ter carefullg. went wer the transcrrip-

tions of the bterviews, which had previously been edited

for contimity by the interviewer, tidding Further in forma-

t l o n where necessary. This se?iea of interviews was part

of a larger aeries undertaken by the Regional Cul twa l

History Project, under the d i r e u t l m of Dr. C o ~ i n n aOilb,

P;o raaord f o r posterity eyewitness aeumnts of signif icant

phases of Californiats hfstary during the twentieth een-

tury.

Willa K. S e u

Regf anal Cultucal Hi8tory PrejeatUnive~aityof California Library a t Berkeley Has 5, 1958

~ G X ~ I N GWITH ~ I C 3 P A LB C D S

Working in California for X. W. Harris 3s Ca,

hrohsndiaing Bean Spray Stock

Boulsen Wireless Carporstion Financing

3, 3. W O B & CO. QF Sm PRABCISCO, I ~ I G A T I O I J DISTRICT BOND HOUSE

Absence of Conrpebition for Eerly Irrigation D i g trict Bonds

Type a i Transaotl~ns Reaale UndsrwritiagJoint Aaestm8s

Othe~Bond Dealers

San Frenarisao Pf mntsial Wchmges

'DefeulBe in B b 3920*r

Retiremsnt from Bueinerr-1927

COMM3NTS OH THE IRRf(3ATION DISTRICT ACT

Finanoial Proodaiona

S t a b Senator L, L, D e ~ e t t

D i s triota Seeurf %la8 Coanniasion

Land A s r e r m n t a va. Water Tellr

Publie va, Private Diat~ibutionof Hydro-eleetria P ~ F

Feather River Proje~t

Leaders in Celifornia8s Water Developmnt

WIICIPbL DEFAULTS bElD TBE FEDERAL MUNICIPAL BAl!?KRVPTCY ACT

~ s o a ' aOpinions on Other Plans t o -0% Diatriat Defau l t s

Paasage of the Federal k n i o i p a l Bankruptcy~at--19%

Opinienr of Bond Attorney8 Regarding the Federal Mtmlelprl %nkTuptey Aet

Opinion 61 Pteon Regarding the Unconstitu-t iona l i ty of thb P e d e ~ a lhnAo%palBenkmp$ey Aats

Opinion on Ilaminiatration of Tax-reverted bnaa

Jamor I. C)illetttr California Irrigation and Reolamat;ian D i s t r i o t a Bandholders Aesooiatian

P~ovidentIrrigetian Dist P i a t

--

TABLE 03' CO-TS (60nt . )

Nevada Irrigation Dietriot--Refinancingunder S t a t e Laws

Why Xunicipal Bankruptcy fa Agafnat the General Welfare

IRFUOIITIOH DISTRICTS ASSOCIATION

Opinia~son Taxation and Looal Oover-nt Central VaUeg Projecrt Opgarltion Bo Fedora2 A i d ts Local

QovernarentPwferenee for Ad Vale-w Land Tex Belief in Free Trade

PRO B03Q PUELICO ACTIVITIES

Boulder Canyon P m jee t

Marginal Land Removal vsl S a i l Bank

Heteh Hetehy and the Raker Act

Alien Lsnd Law and Raetriative CovenanCs

braury Herald vs. Hoarre Casre

BEGIE3EIIHG WITR F40E3ICIPAL BONDS

i

H. V, Harris & Go, or Chicago

Barn t I t d I lke . t o find out about the bond bualnesa in the

I PLsonr

early 1900ta.

Bp first job in tha field o f municipal bond f inanoe

was i n the Chicago Saving8 Bsnk and Trust Company in

1904, i n the bond department, A t the age of fourteen

I uent t o sahool in Switzerland and then took a

i I

I 1 !

~ a w t

bioyale t r i p through Europe alone, then I oame back

and atbanded St. John's M i l i t a r y Academy f o r one

year, and then atarted t o work. I had wanted to

get ~ 5 t h8. w, arr l s dc Coqany, but Harris df dn't

,employanyone under eighteen and I was not efghteen,

s o f took thla jab in the bond department of the

bank* I kept on trying to -get with Earrls and a f t e r

about sir monthe I mede it, deapi ta my youth.

why did JOU s e l e c t bondti, bond aellfng, as your

Naaonr xhst was myaotherta choice. Ey mother had written a

big inauranae po l i ey on the life of one of the Harris

I Mason: partners and she knew a g ~ o dd e a l about the fim,

She wanted ns t3 g e t with them, They were, without

question, the highest class, moat reputable, and

mast importeat bond iouae i n the h i b d Statea In

those days, In the f l a l d of municipal finance they

parhaps d i d m o m business than any o t h e r two houses

put together.

Were you par t imlar ly intereated i n finanaial mattera?

Well, yes, it fascinsted me, I had never forgotten

w h a t my grandfather had told me abut Bow public

acho3la were financed, It was a aubjeot that seewed

t o me very fundamntal t o the general welfare. I

was always attracted t o the f i e l d a f public imprave-

msnts end public a f f a i r s , It attracted me much m o m

than the ordinary iinanoing a t helping a company g e t

ahead, although I d i d have aom valuable experience8

In the f i e l d o f private financing a f t e r I left Harris.

& i d Harris hnndle a l l kinds of bonds, or mainly

munioipala?

Mainly launieipala, bat thsg a l s o handled railroad bonds,

V e ~ yfew industrial bonds, but.many railroad bonds in-

oluding internban e l e e t f i c railway bonds whioh in

those days were very fashionable investments.

Beum: You mentioned that Harris d i d n ' t l i k e t.:, handle muni-

c i p a l bands of cities that were trying t a operate

their own wa te r systems.

Mason: Not only they d i d n ' t l i k e to, but them uaa an absolute

blackl ist . Any e l t y or t o m that even talked about

wishing t o own !and operate i ts mmlcipal water system...

the inatructionb, as I reeell then, that EIarris gave

us were that they wouldnrt touah any bonds iaaaed by

that oity, whether f o r a aitg Bal l or any ather pur-

pose. If the aitj was so "sac ia l i s t ioR as t o have en

idea that it wanted to have Its gwn municipal water

aupply, that c i t y waa "unsefe" t:, lend any mgney to ,

Baum: Was this becarwa they thought the c i t y wea unsafu or

thay wanted t o chastise the c i t y and prevent other

cit iea from doing that?

Halon: *hey w M t e d t o o b s t l w the eity. They b e l i e v a d that

water lsuppllea in the city should be aupplled by a

p ~ i v s t soo~porat lan,and mast of them were in tho80

days

Worldng in California for I.Y. HarFia & Go,

Baumt Whg d i d you eome out t o California?

Mason: The circumstances were b r i e f l y this, I had been working

in the Chicago head office of the A. W e Harris end

h s o n t Company end aut af the clear sky one of the vice-

presidents called me Dver and asked me, 'Bupert;,

how would like to go to California?" I bad never

been i n California and I had no idea what the assign-

ment; might invalve, but the idea a t t rac ted m e . I

said, "When would you w i s h m6 t o go?' He said, when

aould you be ~eady?" I said, "I em ready,'

My mather l ived in fieuYork, 1 l e f t e day 3r

two l a t e r and wrote and told her w h a t I bad dme.

Baum: Oh, she had moved away fmm Chicagcr.

Masan: Yea, she was looking f o r "bigger fishmS.n Sew York.

Baum: S t i l l in the inauranee businsaa?

glaaont Oh yes. She had skimmed 8- pretty rich cream of f of

the Chicago market and you kncnr, the grass on the o f h e r

hill is alwaya greener,

I adune t o Lo8 A w l e s for Harris, They had a

m a l l ofiiae in Lo8 Bngelas with a manager end e book-

keeper and 8 stenog~apher. I4y job was general a l l -

around work, Hy f i r a t job was t o c a l l on some of the

Htired mflllonairers who h a d been ust tom era of Har~*Zs

in the h a t ; and who had made timir fortunes and re-

t i r s d to Pasadena, Redlanda, Santa Barbara, and other

neighboring placea. I aontacted such m n as G. S,

Myera of Liggett and Myers Tobacco, who had sold out

t o American Tobacco fgr some fartg mill ion, they sa id ,

and built himself an Italian villa i n Redlends with

so l id go ld door knobs. He was a wonderfully congenial

old gectlemen who had stayed in harness s o long that

he had l o s t his health, he hed no hobbies, he couldn't

enjoy good books, he didnt t underatend much about

muait. I nat many retired gentlemen who were some-

what in that aanm uondltlon and i t gave me a very

vivid lesson in how not to l i v e If you could help it,

Also, my job was t o attend bond sa les and b i d on

different bond issues. 1 remember buying f o r b r r i a

an issue of 8 B l i U i ~ nand a half county courthouse

bonds from Sacrasento County. %8e bonds had been

advertised as 4s bonds nvltnring In one to forty years

aerial ly , but the ebout that

which fortieth of the bonds was to be paid off each

gear was to be det8mdned by lottery, I got t o Saure-

m a t o two deyr before t b 8110 8 d g ~ ta bf8i~stbX?s.

f asked Oh4 attorney for tha uounty t o telegraph the

bond attorneys i n Hew York if it vould be legal for

the oountg to determine in advanas ef the a a l e whfeh

f o ~ t , i e t hof .the bonds should be paid off eaah year,

end draw the l o t s before the 8ale . me New York

attorney r e p l i e d t h a t it muld 58 perfectly legal. So

the county pessed a resolution that bonds number ane

t o for ty be paid off the f irat year, forty-one t o

eighty the aecond year, and they w e r e straight t;ne t o

f o r t y year maturiky bands.

why had they sett led on this lottery i d e a in the rirst

place?

Tha* is one of those mysteries t h a t I aevex- aaked too

much about, but I found that condition end it was auah

that ft kept everyone else from bidding on the bonds.

They oouldnit buy the bonda for leas than par and if

the bonda were optional on any interest date p a

couldn't have gotten more than par for the bonds.

That w a n t they were not attractive beaause they

eouldnrt be 8old for m D r e than met .

Did you menage t o negotiate the lottery ahead of time

without letting the other Fond bidder8 know about it?

It wematt a question of not le t t ing them know. None

of them showed' up, noae of thorn asked. They j u a t

gassed the sale up aa an unfaviting thing t o look into.

It looked thet way t o Harris but I said, 'Let ma go.

I've jus t got a haoh. I think I See 89'Rlething h0-

unusual. i n th i s notice of sale," Well, the ordinary

P!ason: p r o f i t ia a tranaactfon of that kind would have been

i about 1.4 gr~ss,but on acceunt of' the g e c u l i a ~c i r -

cumstancea thew was nearly a f i v e paint p r o f i t margin,

When the other bond houaes found a u t how sleepy they

had been, X t h ink eome of their buyers got called

down p r e t t y hard,

Baum: Then how d i d Herria pay you? Did you ge t e uammiasim

OF were you working on a aalaryt

Mason: I was working on a sa la ry , Harris never paid aammis-

sionl¶

I remember another time, the Ci ty of Sonora waa

sel l ing mom bonds and the office i n Lo8 Angelas had

mailed e b i d up f o r the bonds, A f t e r the bid had

l e f t they checked the bid and f3und that they had made

1 a rrerious mfstrke. Instead of the b i d r e a d i n g 'ws wil l

i pey p a pas end accrued i n t e r s a t togethex with the I

pmmim o f ao mueh f o r the bonds' and whom they should I

have m i t t e n in the premium they mate in the grosr

amount holuding th8 premium that they were offeaing

for the bond issue, So I had t o get on the t r a i n a d

go from Lea Angelea to Sonora. It was qu i t e a Journey.

I went up on the Owl t o Tracy and had to ahange traina

st Tracy f o r Oakdale and change t r a ina a t Oakdale, for

Sonora, and it took the b e t t e r p a r t of t w o days and

i j ;?4ason: taro nighta, I g o t there just in time t o p u l l the bid

out and put i n another b i d which d i d n vt ccrntain that

mistake. Those were the days when getting srmnd i n C a l i -

fornia was no easy matter,

I re~mtiberI was in on the deal when Harris bought

the twenty-three nil l ian Log Angeles-Owens niver Aque-

duct bonds. Those bands were put up for sale right

during the Panio of 1907. #our and e h a l f percent

bonds were not worth more than p8r, that was the rate

of interest thay bore, and they cguldntt be bought

below par. The c i t y council met and invited b i d s and

h q e d for bids f o r two weeks and no bids uere received,

Pinally they met one day end a large envelope uas

received marked "sealed B i d for Twenty-three Million

Bonds." Thsy were a l l rubbing their hands end hoping

a t l a s t this was a bid, I t was ell very formel, 'we

offer yau par end accrued intereat together w l t h the

premium of r o mueh and we furthemore agree t o take up

and pay for the bonds a t the ret e of one dollar down and

one dolls~a year, Signed 8. E m Horse and ComwJust

some joker.

Well, that broke the fce and then started some

aerioua negotiations and we bought the bonds.

3eltm: I thought Harris was against municipally w n e d wster?

:%son: That was s3me years before,

Sarris headed the s v d i c a t e that bought that

twenty-three million h n s River Aqueduct bond issue

of Loa Angalas. Harris headed the syndicate that

bought the first California State Righway band issue

of eighteen mfllion in 1911, Harris was the biggest

d e a l s r in municipal bonds a the U n i t e d States,

Baum: I wanted to ask p u what the effect8 of the Panic of

1907 were out here on the coast?

Meson: They were very severe, of course.

Baum: It wasn't jpat a Wall Street ?ante?

~ ~ a k a n t Heavsm no. It had no more t o do with Wall Street

than i t d i d with a t h e m t a r . Any contention that

that panic wars e Wall Street penio would be l i k e

saying the reason e person got sick was because of

the thermometer.

Baum: You mentioned Chat them wsre no biddera for the Loa

Angels8 bonds. Was the publ ic . investing in 19073

Mason: 80; the public was verp aldCtiah.

'In 1907, Csllf'ornie leu required all s te te , a l l

c i t y , a l l county bmds and the interest p a i d on them

t o be paid in gold coin. I remember the f i m t ti- I

I Mason:

I

i I I

I

ran up a g a i n s t that, t:?e 7 sent me over to the city

t r e a s l ~ r e rof Los anrjeles t~ cash some Loa Angeles c i t y

bonds that h a d metured. The c i t y t r e a s l l r e r counted

the bonds and s t a r t e d pushing twenty d o l l a r go ld

pieces a t m e . I aaid, D ~ a n t tyou give me a check?"

He s a i d , "Bope, you have t o take it in gold." I s a i d ,

*Can't you g i v e m e pape r money?" Be sa id , *lJo9 I

have to pay yon i n gold.* Well, there were over t h i r t y

thouaend d o l l a r s in gold sad I had t o hire an expreas

wagon t o haul t h e blooming gold coins over t o the

bank. That was the law.

Well, in 1907 the l e g i a l s t u r a passed a l e u +r-

m i t t l n g the a t a t e t r e a s u r e r t o accep t bonds of c i t ies ,

s c h o o l districts, coun t i e s , end so on ea a e c u r i t y f o r

s t e t a d e p o s i t i s . That was something I had no know-

ledge of b e f o r e it became a law and I know Harr i s had

no hend i n the l e g i s l a t i o n , but it was mama f r o m

heaven bscauae here was the Way it worked. I mamubar

e m i l l i o n d o l l a r Oakland bond i a a u e which Harria

bought and I set out to se l l those bonds. brets h w

I d i d it. I would go t o a bank end say, 'You buy a

hundred thousand d o l l a r s wor th of these bonds and pu t

them up w i t h the s t a t e treasurer and he ' l l g ive yau

ninety tbousend dollars i n twenty dollar g o l d pieces

a s a laan," 'dell, banks i n those days were ?aying

scr ip t , they weren't paying gold a t a l l , So any bank

tha t could g e t gold t o pay t h e i ~depositors, why they'd

pay ten percent premium just t o get the gold coin and

be able t o sayi "We pay gold on demand t o o a r deposi-

tors.* Why, those bonds just melted l i k e snow. I

couldn't diah them out f a s t enough. And out of the

f i r s t hundred s t a t e deposits tha t were made, the s t a t e

treaaumr t o l d m e t h a t 1 pertsonally negotiated over

s ix ty of them. There were several million dollars

i n gold t ha t the a t a t e treasurer in that way cf~au-.

l a t e d in to the banks end a m of those banks still '

boast about how they peid the i r depositors In gold

right through the panie.

You were r very young man in 1907 t o be negotiating

these big deela.

Yes, I was, I don't understand yet just how it happened.

Of aourre, f had very eble guidance. Mr. W. J, Sahmahl.

was the manager' of C h s Hsrrir office in Caliiornfa.

Sohmhl, a raisleadlng nrms, ma quite a la rge men, he

held the worldra meord i n discas thFowing and he was

a p r 0 t 6 ~ 6of of Alonro Stagg and bad gone t o the

Mason: Universfty o f Cizicago when Stegg was athletic pra-

fesaor there, b e f ~ r ehe came t o C a l i f s r 5 i a . I had

very able @dance and i t was an lnvalusble education

t a work for H8rris. &rri8 i s s t i l l considered about

thrs tops Ln the investment banking world.

Mason8 In 1907 He W. Harris and Company incorporated as

the &ria Trust end Saving8 Benk. 7nder I l l i n o i s

Bankfng lava no savings be& was a l l m e d t5 have

branch offf ces, which meant that brrfa couldnt t keep

their California office open, They inv i ted me t o

corns back to Chicago, but I had had a little t a s t e of

California and I thought I l iked i t better out here.

So I remlned in California.

Baumr This was in 1907 t h a t you l e f t %miss

Brrurnr Wasn't it 8 l o s 8 t o &]?ris *O have t o d o away w i t h

their braneher in ather ste tea t

Mason: Yes, except that they were aepsrately organized in

New York and Boston, In Hew Pork the fimntsnme

was Herris, Forbes & Campany, and i n Boaton the firm's

I name was Harris, Hal l Coqeny, So those eorp~ratlons

9: heednowiswkr,aent h eLaterkept on. the Har~ia

Trust and Savings cane t o C a l i f o r n i a and main-

t a i n e d ~ f f i c e shere, not a s bracch af?ices but saxe

a ~ r a n p m n tI don' t understand c lear ly . 3ut F ? r ~ i a

kept their f inger in the California s i tuat ion.

But i t would have been a terrible handicap to

try t o operate here representing Lfarria in competi-

tion with ~ o l l i mand b l a e y with o f f i c e s on the

ground, t o get Chicego's permlsaion befo-re yau could

buy bonds 2r get their okay before you c m l d confirn

them, was too big o f e handicap,

So Scbmahl and David E, Bradley and I all decided

t o remain in California. A man named 8. C. Barroll

had years before been with ~ a r n i send l e f t Harris some

gears before t o found H. C, Barrol l 3t Company in

Chicago which specialized in timber 'bonds and he became

the b a a i n g timber bond dealer in thm untted States.

'hen he sold his business to Clark L. Pools, which

berme Clark L. Poole 3c h n ~ a n yin Illinois, end

Berroll moved t o Lo8 Angeles t o retire. When he

l e a ~ n e dof the Eiar~ischange, he offered t o put up a

hundred thousand d o l l a r s t o start Schmahl and Bradley

and ms i n business and call it Barroll & Company.

A N N O U N C E M E N T

We Announce the Organization of

A CORPORATION

Capital $100,000; t o deal in Government,

Municipal, Railroad and Corporation

B O N D S A Specialty will be made of BONDS issued

throughout t h e Pacific Coast States and

adjacent Sta tes and Territories.

President, H. C. BAKROLL. formerly of H. C. Barroll & CO.. Bankers and Bond Dealers, of Chicago.

Vice-President, W. J. SCHMAHL, formerly Manager of the California offices of N. W. Harris & Co., Bankers and Bond Dealers of New York and Boston.

Secretary, C. E. WOODSIDE, formerly Manager Bond Department of the Los Angeles Trust Company.

MR. J. R. MASON. formerly with N. W. Harris & Co., Bankers, will represent the House in San Fran- cisco and Northern California, pending the open- ing of San Francisco offices.

LOS ANGELES OFFICES:

415 -416-417-418 H. W. HELLMAN BLDG. Phones: Main 6544-Home A 6544

b a a n : %ep sent me t o San Francisco and I had an o f f i c e here

The business was very p o d , We uderwrs te cumerous

power company bonds auch a s the M t . Whitneg. end

Eleatpic Company and the Nevada California Electrle

Company,

Baum: Were you speaializing in public a t l l i t i e s ?

Hason1 Rot specializing. We a l s o handled the Rindge Land and

Haviga tion Company bonds in Stockton, j o i n t account

with W, R. S t a a t s Campany.

I remember Elko County, Nevada, advert i sed $100,000

worth of 6% bonds t a build a court house. That was

when f was with Barroll and ~ompany. And 1 went t o

Elko a eouple of days before the sa l e , I contacted

the leading banker In Blko end impressed on him that

it would be good p u b l i c i t y if he put in e b i d for the

bonds and buy the issue in his bank88 name. It would

look a8 though the bank was baak of the o o ~ ~ t y ,

%a idea appealed t o hb. f raid, "1Paw, . pau can aafely

put i n a bid f a r the bonds withaat any eonditian about

l e g a l i t y beeanad if later on Zt &: oat t h a t the

bonds a r e illegal, goa knew the oounty offielole w e 1 1

enough so they wauldn*t insist on you taking i l l e g a l .' banda. So' you put your bid in as a f in offer t o buy

Mason: the bonds without sny c ~ t d i t f o n s , " & said ell right.

Well, on the day cf the sale e i s h t b i d d e ~ ssh3wed ap

in Elka, I remember, one of thern was rep~esenting

Rol l ins and he thought the t h i n g t o do W 8 8 t o get on

the good side of the Board crf Superviso~s. He offered

to buy them a few drinks, but the ir mpaoity was much

better than his end when it cams t o the aale, he shwed

up "three aheets t o the wind.' fie had in the high bid,

about 108. 'fhs bank's b i d was about 102. And o t h e ~

bids in between, kt anyway, the banker, when the bids

were a l l opened, got up and said, 'Now gentlemen, y o u f l l

notice that a l l these other bids are not bids e t a l l )

they are merely requeats for an option on the bonds

because they are a l l subject to a t t o m y f a approval.

If they bug the bands and for some reason find they

don't went t h e m , they' l l simply tell you the ir attor-

neys wan' t epprave them. You not1ce mine is the only

ma1 bid." So m e of the aupervisorr moved t o award

tM bonds t o the bank. Thia young. f e l l o w f m Rollios,

by then he was on his feet , but a l l he could do was aput-

+arc b y awarded the bonds t o tha bank.

]B~PPI: Elmre d i d you o m e 2 0 T

Masont f had a contract with the bank. I had agreed to pay the

bank something f o r putting I n the bid.

Ba-an: So the banker was real13 b i d d i n g fop you in his name,

Mason: Yes, And after the sale it tu~aed3~'; that 30ll ins

had an order for ths bands from the Woodmn aZ the

W o ~ l dand Rollins had t o g e ~ tthe bonds, They had

already aold them t3 the Woodmen of the World, So I

t u & a s d around and made a deel with Rollinst man, and

ea I mmeniber, *ere waa about aix point8 on a ~ U A -

dred bond8 that Rallina was wi l l ing t o pay. 1 paid

the bank a colamlsaion for having bid.

But those are l i t t l e back-atage d e t a i l s that made

l i f e sgioy. Buys like that don't happen any nore.

Bond aales, today ere more 1- turning out Fords, just

routine. There are very few opportunities f o r 'ingen-

uity , '@

Berroll was a men who didn't need money and a f t e r

a t i n s , this happened in Lo8 Angelas, the f i r a t thing

I k n a w M r . Berroll uas willing t o sell o u t the baainess

i f we wanted f t @P .close it up, 'Pbsy decided In Loa

Angel08 not t o M y hiPa ou*. I didn't w a n t t o go brek

t o Los Anplea so X stuek out my ahingle here in Sea

BFarmisee.

Baumz H w long d i d you work w i t h Brrrmll dc Company?

Hr~esont A p p r d m t e l y two yeara. Barrel1 8: Company made good

money. It got somewhat involved, nothing bad, but it

got t o taking a good deal of Mr, Barroll 's t ime and hs

Masm: preferred not t o have so mch to do.

Bsum: How much initiative d i d they a l l o w you up in the San

Francisco office? D i d yau have t 3 telegraph down

them before you bid? Bow f a r could you go 3ut on a

limb an your own?

Mason: Well, I don't remember that there was any specifia

limit on that, I: do know that oftener than not I

would c m e acrosa a block o f 'bands and I would be

able t o sell them before I had t o buy them,

Baum: Well, thatrs no l imb, You couldn't l o s e , (laughter)

Mason: Xo. But it was another opportunity t o gain experience

which young fellows almost never get nowadays, When

I hung out my own ahingle there were no Ablue sky laws,n

no llcense required, no minimum cap i ta l neceasary.

It was l i k e when I wunt to Europe when I was

iaurteen, Bo pessports were needed, no v i sas , no

ctxotaras anywhere, It uaa anothbr world. The same in

Californle, you had en opportunity t o be free.

b bonds ttmt Barroll bc Co. handled e l L turned

out good. B a r ~ o l lwas an old hand in the bond busl-

nasa. Later on Barrel1 beeam vise-president of the

First s t i o n e l Bank i n Los Angelus, head o f the trast

Hason: department and d i e d a m 8 years l a t e r , Se l e f t a

large esta te , I called on hin a few times rhen he

was i n the bank in Los Angelas, He never seemed t o

have anything much to do, he just s a t there t o have

a desk and recelve friends when they wanted t a aume

t o say 'hello* t o bin. I think i t was an honorary

poritf on.

Merahandlsinq Bean Spray Punp Companv Stock

&son8 After I left Barroll Go, I arranged and floated the

first public offering of stock that was ever put out

by the company that is now the Food Fachinerg end

Cheniaal Company, It was then the Bean Spray Pump

Company. In Sen Jose. They wanted $300,000 end I

set up the atock isaae, got o u t the prospectus, and

the i8aue was a b i g euocosa.

Barn: You don1C raise that kind of cap i ta l by just putting

out e prospectus.

baonz Idell, p r e t t y nearly, if you h o w haw to do it.

Baumt It's ,justin puttlag togs%hsrthe prospoatn~?

Hasonr Well, themts a l o t more to it than that. But in thia

hatenee, I p a t oat 8 somuhat different proapectus,

Firs t ly , I went t o see the three leading banks in San

Jose and impressed them wit:? the f a c t t h a t the Bean

Spmy Pump Company was one of their cming industries

i n San Jose and would they be wil l ing, if I gst lrp a

proapectua, t o accept subscriptions f o r the stock a t

the different banks. Kot only would they be ready,

they would be delighted t~ d o it, they said, So the

circular went out a s though the banks had issued the

circular, you see, whioh psychologf c a l l y we8 quite

something, %e result wea that the stock, why people

just c a m p i l i n g in to the banks t o subscribe. h r e

was nothing to it. Of caourse, ths company was s m n d ,

and known t o be good and you aouldntt have done that

wfth some fly-by-night company, kt on the other

hand, if I had gone oat; t o try and peddle that ataok

from door t o door, no aat ter how g30d thd s t a c k was,,,

thereta msrchandising psyah3logy e l s o in the r i e l d of

investments.

Tha% Bean Spray Pump opem~tiongave me a l i t t l e repa-

tatton. So, after f t d haen on lay own for two or three

yeara banker told ase about the Poulaen Blireleaa

Corporation and its president, Beach Thompson, and

wanted me t3 go in and xeet Hr . Thompson, I thanked

him f~r the suggestion, In those days wireless was

considered p r e t t y Awild-cat," Well, the banker saw

me a month o r s o l a t e r end asked when I was going t o

get i n t o aee E r . Thompson. So I went t o &.Thompson.

I found Mr, 'fholapsun a very conservative, high-

c lass , able gentleman, & explained h i s ideas about

the ?oulaen Wireless Corporation, that the s tock would

not be offered as an investment but as a speculation,

He wanted m e t o c ~ n t a c t only people who could afford

t o take a r i s k , So we signed an egreeroent and organized

Thompson, Hason & Co, Ye were made the exclusive f i s c a l

agents f o r the Poalaen # i re le s s Corporation which

owned the Federel Teleg~mph Colnpeny which soon h a d

wimlssu telegraph s t a t i o n s in Sen Francisco, Loa

bngeles, Sen Diego, a l l the way t o Chicago, and doing

a commbraiel buainesr. Telegra~uby radio.

What kind of an angle d i d yon use for the ~oulaen'

Wireless st- ualea?

F i r s t l y , w e set out t o g e t the best names i n the oom-

w i t y aa d i r e c t o r s . Frrrncir Carolon, who married the

daughter o f George He Pullnuin; E, W e Hopkina, one o f

the b ig finsncers i n the early days here; George A, Pope

Hason: of Tope and Talbot Lumber; Antoine Borel o f Antoine

Borel h Co., bankem. Baying a very fine l is t af names

a s d i r ec to r s , we never printed a c i r cu la r , simply e

l i t t l e sheet, Poulsen Wireless Corporation, authorized

cap1t a l , $25,000,000. List of pr inc ipa l a f fi c e r s and

atockholders, end there was the list.

I remember s o distinctly aeliing on William 3.

h t t o n , who was president of the Firemants Fund Inaur-

ance Company. Re wea ane o f the herd, conservetive

i n v e a t a ~ s i n town, !ie was a man.,.to th ink t h a t anyone

oould aeU h i m stoak i n a wireless company, anyane

who dreamed that was having a dream, t h a t ' s a l l . 1

cal led on M r , Dtltton and put t h i s l i a t of o f f i c e r s

and p r i n c i p a l staukholders in f ron t of him and said ,

"NOW, Hr. Dutton, you know many if not e l l of these

gentlemen a s w e l l or better than I do. They've a l l

looked i n t o th i s snd decided it we8 worthy of pu t t ing

some money in%a, I t m not going Bo try t o t e l l p u

that you 8 h m l d or 8hould not, Itll simply leave t h i s

l i a t wi th yon and dwing the next few Beys gou m y

meet one OF more of them. &st ask them anything you

went. If they bought the atoak, o r .why they bought it,'

or whet they think of it. I'll come i n and see yo3 i n

P week OF ~ W O .w

Masm: I c a l l e d again in ab2ut ten days an$ Mr. Dutton

was waiting f3r m e ~ 5 t ha n aasmtment of the finest

bonds i n the ccluntry, waiting t o turn fn those bonds

and take stock i n the wireless company,

Yell , Phompaon, Mason -5 Co, d i d vary w e l l . We

raised the money that was needed, no t a l o t , of money,

but a l o t considering the ryculative type of invest-

ment we were handling, The s tory of the Foulsen Wire-

leas Corpo~at ionand the Federal Telegraph Corrrpany is

one t h a t would f i l l a book, Beach Thontpaon was e

personal f ~ i e n dof President Sun Yat-sen of China and

he had a t e n t a t i v e contract with China and t e n t a t i v e

eontracta with South America. E l s o r i g i n a l prospectus

and report on the potential f i e l d f o r the Federal

Telegraph Company waa regarOed as vis ionary in those

days, bat is conservetive when p a look back today,

Beach 'Phompaan went t o England a t the tim when

the Hsrooni company had about aloaed a cont rac t f o r

British I m p e ~ i a lWi~slassto c i r c l e the globe. Beaah

Thompson t a s t l i l e d before one of the Parliamentary

~ommitteesas t o what had been acoomplished here in

Sen Francisao and i n Honolulu with a 12 k,w. s e t as

againat a 1000 k.w. s e t of Harconita. It resu l ted in

i Mason: England not going through wlth the irlarconi contract.

%he Mpreeni stock bubble blew up, Farconi shares

dropped something t e r r i b l e end 1 believe a m e m b e r a f

t he House of Larda and some others committed sulc lde .

It was a t e r r i b l e shock t o Mapcon1 e lso ,

They were reedy t o negotfate with the Poulsen .

Wireless Oorporation for s t a t i o n s er~undthe w o r l d

when Beach Thompson returned t o tbe United S t a t e s and

shor t ly a f t e r was taken seriously ill and d i e d , The

aompany a t t r a c t e d a banker here, b r b e r t Fleishhacker,

who bought out some of the atookhaldera and g o t a big

i n t e r e s t in the company, Then whet happened I don't

know, I was out. When Thompaon died that was the end

o f Tholapeon, Mason & Co. But the Poulsen Wirelea.

Corporation became the Lnternetional Tel. and T e l .

I w o u l d auapect the stouk you s o l d made money,

Mason? O h yes, though it had i t 8 up. and downs.

But t h e feeling of being aaaociated w i t h a s g rea t

a mind a r Beach Thompson) he was an electrical engin-

eer of the top rank, A man of genitra and of great

vision,

Baumr Was he a pleasant person t o work with?

&son: Oh yes, indeed,

B i d yaq handle other w ~ r kbeside the Federal Telegraph

stock while yau were working with Thompson?

No, during the time I was easocieted with Thompson I

worked almost exclusively on ra is ing money for the

Foulsea Wirelesa Corporation. That was not over two

years time. Then Mr. Thompson d i e d and I went back t o

the old shingle,

Did you work alone, or with associate.?

Alone, I had no partners. I had assoc iates , For-

tunately the Hason a f f a i r gave me e l i t t l e

cap i t s l .

J. R* MASON S CO. O F SAN FRATICISCO,

IRRIGATION DISTRICT BOM) R O W

I r r i g a t i o n D i s t ~ i u tBonda

Him d i d you happen to decide t o spec ia l ize i n i r r i g a -

tion d f s t r f c t bonds?

I found t h a t i r r igabion d i a t r i a t a were orpharra and t h e i r

banda were orphena. None of the bond houses seemed t o

be wflling t o buy end s e l l them, Then, when I traveled

i n Modesto, the l o c a l bankers would sag, "NO, we don't

want any bonda of t h a t kind, b u t whenever you can

offer us same of our own i r r i g a t i o n d i s t r i c t bonds,

w e ' l l be intensted. ' W e l l , t h a t put an Idea i n my

heed,. "My goodness, ii the people who l i v e r i g h t here

and who should b o w beat th ink enough of them t o be

t d l l i n g t o invest in them, maybe theytm worth looking

into.' And t h a t got me s ter ted. Prom then on, I t was

love a t first sight. I loved the wrk. I loved t o

try t o make two blades of graera grow where none grew

before, f believed t h a t helping aommunitiee get

water was being constructfve i n the moat substenti~l

way possible. I go t into it and uopked morning, noon,

and night.

If I say so myself, d e s p i t e the antagonism of

moat of the banks and most of the bond houses, t h e i r

insiatenoe that irrigation was samthing unelean that

ought t o be l e f t alone...no mapeetable estate would

be caught dead with en irrfgat lan bond an its l ist , . .

I was funny, The knoaking, instead o f convincing me I

ought t o l e t the flnanaing alone, seemed t o have the

opposite ef fect .

So we kept on and we real ly made a great reeord

of aecompliabmint i n California.

I inagine the bond busineres goes mainly on your

reputetion.

Them wrtninlp I8 nothing more important then t o

hare a nputatian. In th&e days them were campara-

t ioe ly f a w fima~i n the bond burlness.

-re was not tao mueh aompeti%lonin, say, 1913, 19aT

Oh no, none to mpak of.

Bid the bmk8 hnndle bands?

Bo bank hed e bond depa~tmtnki n those days. No, 1

mmmber so distinctly Mr, neiahheoker asking m e if

I would open a bond department for the Angla Bank, He

said, ' ~ o u ' v e had experience i n California. The

bankers ell Dver the s t a t s know you, What I want you

t o for the t i m e being, you eontact these bankers yau

know and try t o g e t depoaita far the Anglo ~ank." I

eeid, RWhg, Mr. Fleiabhaker, that t8nttmy field, I

know the bnnlcnrs, yea, but frerrkly, that kind of' work

doeanlt intrigue me*mWell, let's try i t f a r a month,"

he s a i d . I forget w h a t b sa id he'd pay me in the way

of salary bnd elrpenseci, but he wanted me t o travel

over the abate end get some bank aceounta.

So, without anything In writing, I d i d , and a t the

end of the~month I had gotten several p m t t y goad ec-

aounts, but that wasn't the kind o f w o ~ kI enjoyed.

H r . Pleishhaker was i n the m i d d l e of the elaborate

negot iet ions organleing what later became the Gmat

Western Power Oornpany and that was h i 8 baby and that

was on his d a d . I f i n a l l y s a i d , "~r.FleiahPlake~,

when gou get t h a t behlnd you and yau are ready and

able t o talk business, let ma know end ltll Coma

Frankly, I ' d l ike to open a bond department for you,

but equaUy franU$, arileas we aan go ahead on the

baeia w h e r e I have e percentage Interese la the profits

of the bond department, I don*t believe I aaaLd .give you

msan:. as good service a s I could if I felt I had a personal

incentitre, N

Baumt In other worda, you were not wi l l ing t o work-on salary,

Hason: A f l a t s a l a ~ y w m l d have been deadly, I wouldnft

have been able t o work.

He agreed that would be better if he could arrange

it, ao I took a little outing end didn't c a l l on any

more banks and waited for him t o c a l l and he f i n a l l y

cal led and se ld thet the negotiations were taking

longer than he thought they m u l d and he aeemed %a be

getting in deeper instead of othrwiae and he wasnrt

a w e i t was an opportune t i m e t o open a bond degart-

ment. So i t was not until a o m $ears l a t e r that the

Anglo had a bond depertamnt* That's how I happen t o

know that none of the banks in thoae days had a bond

department.

Baum t So a l l bond dealing was dona, by prlvete bond hauses

and %hamwemntt many of %osa.

Besono Thsm uere N, We Belssy 8 Oo,, end ~ o l l l n rand Sltaatrr,

those were the only onea.

Baumt Were there more bond houses in Lo8 Angales than in

San Francticroo?

&son$ lo . The bank clearings of Sen Franeiaoo in those Baye

exceeded the bank c lear ings of Lo3 Angebes, San Diego,

OaUand, Port land, S e a t t l e , Spokane, and S a l t Lake

C i t y , a l l combined, San Francisco was b a d and

shoulders the f inancial hub of the Pacific Cosst. My,

hew we u s e d t a look d m Dur noses a t Los Angeles and

sey a l l t h e y had in Los Angeles was c l i m a t e , and farmers

from Iowa with e dol lar b i l l and one shirt and na fdea

of ever changing eSLht?~.

You mentioned that g3u f e l t that competitllon had gone

up c ~ n s i d e ~ a b l y i nduring the years that you were

business. Ghy was that?

Oh yes. That was because p e ~ p l swere investing i n

these bonda, J. Re Masan & 00, b u i l t up a larse busi-

ness, I t was lucrative. Why they would let a0 moh

good buaineas escape them f o r eo long., .I thought it

was very kind of them., but it was not long u n t i l e l l

ths band housea and banks were oompeting for these bonds.

Do you 6Mnk the bonda were safer es the pars passed?

I t g t a not safe t o say what was running through the other

peraunts mind, It l a a faot that eventually banks gen-

erally wme buging the bonda. I b l l e v e it I s safe t o

say that 3, R, Haam Sc 00. aald irr igat ion d l s t ~ l c t

ban- t o s t l a s a t 90$ of' the savings banka i n Califor-

nia. Bond dealers are human, If they see the publie

wants certain 53nds, why, they'll @ in and help

s u p p l ~ the demand. Toward the l a s t , the competitive

bidding fop tthese bands was as keen as it was f o r any

other mtdclpal bonds In Calffornia,

But when you started there was l i t t l e competition f o r

these irrigation sscuritfea.

I can't explain it, I must have been born a t the

right rnament and I m a t have arrived in California

a t the right momant Secause, so help w, 3 j u s t

found eppertunf ty laying eround In the streets.

uhst I was leading up to i s that in thoere days

when 1 was In buainess there was no inoome tax end a

man had a ohan- t o keep what he had earned. If I

had been born twenty p a r s l a t e r X would still be

working and diggfng and I oouldntt have gotten ahead

and 1 aouldnt t have ret f red.

Xn them early days it must have been dfff iault for the

i r r i g a t l ~ ndiatrlots t o get a deoant priae for their

bond8*

A13, the bands hed t o be eald a t publia s a l e and a l l

the banks and bond houses had n o t b e and were frtvdted

t;o f i l e bids,. But if you were fn en euotian room and

the auctioneer started t o sell something end yau made

%son: a modest bid and nobody t ~ f e dto raise p u r bid, it

i s n t t exactly human to raise your awn b i d . That's

about the wag it woe. lo c c m p t i t i ~ n . That was a l -

mas%true for f o u r or five years, 1914 to 1918 or 1919.

Baumt %tls when el1 the rice districts were starting t a

msrkst their bonds,

Mason: They were the least important, I never hendled any

of the rioe df strf eta, except Prince ton..C~dora-Glonn

and I c e l l that e prune dis tr i c t ,

Baum: Why d i d n ' t you handle rice d i s t r f o t a ?

Pirraont They wem handled mainly by the Anglo and London,

Par ia Ratf onal Bank and by the Central Bank of Oakland.

One of the reasons I didn't her-dlethem was becau~e

the laad wera in large holdings and I didn't believe

the land was exactly suitable Par aubdtviaion into

amall holdings. I knew too meh about bankers t o

wish t o be mixed up with t h e m e s lend operatore, and

it t m e d out that wag, 'Phe Illinate kMngs otarted

gettfng tough-4he lend waa h e l d by r s l a t l o s l y f e w

people end they simply decided t o st- paying t h e l r

taxes end it threw everything into omfusfon. !%are

was much l i t i g a t i o n involving the Conxpton-Belevan, the

P~ovident ,and the other rice distrfets, but heavens,

i

Mason:

Barn:

Mason8

try t o g e t any o f t h a t land today, It's a l l turned

out not t o be only rice land but gas and a i l lend.

But I was much less enthuaiast lo about any of the

d i s t r i c t s i n the Sacramento Valley than I was about

the d i s t r i e t a i n the San Joaquin and Southern Cali-

forn ia becauae I knew too m c h about the Sacramento

Valley I r r i g a t i o n Company, which wea financed by J, 3,

end W. S. Euhn i n the e a r l y 1900'8 and how the in-

veetops in t h a t b ig aoncern l o s t t h e i r money, T h e i r

osrnal had been acquired by the Glenn-Colusa I r r i g a t i o n

D i s t r i c t and t h a t land hed never been broken up In to

am11 holdings and vas not espeoia l ly su i t ab le fo r

small holdings, f don't think, although I aould be

miateken about thst. There a re 200,000 acres i n the

@lenn-Colnaa D i s t r t c t and no small holdings, none, Not

even today, It looks l i k e Spain.

I d i d n ' t r e a l i z e t h y had 8ue.h large holdlnga there.

Yes, you f l y aver it, you won't see any l i t t l e homes

out over t2m land, It isn't e healthy condition i n

my estimation, I know there's a greet c ~ n t r o v e r a y >

over whether small holdings a r e economically posaible

any longer, but there's an old aaying, "A man will

defend his home much b e t t e r than he w i l l h i s boarding

house. tt That's why I pre fe r e oommunity where the

people own t h e i r own homes, They're n o t near ly a s

l i k e l y t o f l a r e up and say, "We'll grr an a t a x s t r i k e . n

You handled a l o t o f reclamation d i s t r i c t bonds,

d i d n t t you?

I would say we handled o number of laraues, but by

eompsriron with I r r i g a t i o n d i s t r i c t bands I would say

I t was small.

Was t h a t because you f e l t they were not a s secure?

I n the first place, there were n o t a s many of them,

Could you maka es good a percentage on reelemation

d i s t r i c t bonds, or was there more oompetitian i n t h e .

bidding?

There was e a r l i e r competition I n the reclamation d i s -

t r i c t s , But t h a t wasn't the main reason, I remember

b idding on e number of reclamation d i s t r i c t bond i s s u e s

t h a t aoamabody e l s e g o t t h e i s sue , I wouldn't say we

were prejudiced agains t reelamation d i s t r i c t bonds.

J, R, Mason 4 Co. had become b e t t e r known es more o r

leas the headquarters for irrigat ion d l s t r i u t finane-

ing. I never t r i e d t o make 5, R, FPason & Co, e de-

partment a to re , ~t was always s smal l organizat ion

and we found d e a l b g in l r r i g s t i o n d i a t r i t t bonds gave

us p l e n t y of merchandise, kept us very aative. Me did

get a number of reclamation d i s t r i c t isauea but the re

weren't nearly a s many of them aa i r r i g a t i o n d i s t r i c t

issues. It j u s t happened the t we got s t a r t ed in t he

l r r i g s t i o n d i s t r i c t f i e l d before the reclamation

d i s t r i c t a t a t u t e s were amended. There were very few

reclamation d i s t r i c t 8 , a s I remember, t h a t had bonds

outstanding. !here was the Sacramento and Sen Joaquin

Drainage Dis t r ic t . !he s t a t e and f ede ra l government

cams i n and made good on t h a t , you know. Some of %he

warpant holders gave t h e i r paper away and those who

didn' t were paid 5x1 f u l l a t the end.

Type of Transactions

-Resale

Beum: @or the moat par t , how d i d you s e t your merchandise?

By u n d e m i t i n g bond i s sues o r by reaale?

Mason: Of courae, there was 8 grea t deal of resale. My i m -

gkesafon is t h a t there waa more volume done i n r e s a l e

Ohan i n underwriting, but our main i n t e r e s t was in

underwriting. Resale was near ly eXways done an e .

brokerage baais.

m amt Did you a c t a s a broker f o r other agents?

Mason: fn a manner af speaking, it might be aor rec t t o Bey

t h a t J, R o Mason & Co. acted as broker, We would

form a jo in t account t o buy and underwrite en i ssue

and maybe the o ther bond house would 'nave charge of

the operation end we would be a subsidiary member of

the eyndicete, And f requent ly people wauld ask ua

t o buy and s e l l bonda which they had invested in, In

t h a t regard we wauld a c t as broker f o r the c l ien t .

Beum: Then you wouldn't pu~chasethe bonds from him. You

would s e l l them for him on a commiselon besia.

Meson: T h a t would depend. If he wanted the money r i g h t sway

we would purabase the bonda end pay him an agreed

priae. If he was wi l l ing t o leave the bonds w i t h ua

on aonsignment we would s e l l them f o r en agreed broker-

age.

Whiah d i d you p re fe r t o dot

%at ' s a d i f f i c u l t question t o answer. I would say

t h a t r e g a ~ d l e s s of whieh we preferred t o do, usua l ly

when people made up t h e i r mind they wsnted t o sell e

bond, it waa because they were af ra id the Bond would

bsr worthleas toatorrow. In t h a t event they were in-

tereeted i n a oeah offer.

That Anvolved you i n a r i sk ,

To answer your question, I would say t h a t more of ten

&son: than not we d i d not a c t a3 broker, We'd buy their

bonda, t e l l them what we'd give for them and in their

a t a t e of mind, oftener khan not, they would figure, if

I dontt Lake i t today end come baok tomorraw, he may

offer lac less tomormw.

It' a a very peouliar thing psychologically about

inveatmenta, whether it's stocks or bonds, when the

market i s rising most investors want t o wait until

tworrow, thinkZng the priw may ga higher, when the

ma~ketis droppfng, Juet the opposite, they want t o

gel1 todey becrnrse tomorrow t b price may be lower.

&It they ere anxZous to se l l on a dropping market and

unwilling t o re11 on e rising market. They wait to -

am11 unti l it has reached the peek end has dropped.

When price6 are a t the bottom, that i s the time that

most Snvestora decide t o get out of their bonds end

atouka. Itm epeaking about the rank and f21s.

Baumr Did you aomebimes eat ars en investsent counselor for

your al isnts?

Mermt Hot in the ~ e n a eZnvestment eounselora operate todsy.

We fievep ahargad e fee f a r asunsel. We would give

eounrelu Very often we would have investors ask,, .

I jue t fbuad this l e t t e r , . . This is irm ~eorpeP.

McPOear, written in 1933.

Was he one of your famner clienteO

Oh yes, a very big c l ient , He would frequently con-

s u l t with me on investments, McNear is the father of

the chicken induatry fn Petalum. He b u i l t up the

ehiaken industry and operated an enormous s to re rpeci-

e l lz ing In chicken feed end everything for the chicken

induetry.

Had he innstet2 heavily In i r r iga t ion d i s t r i c t banda?

Be was one of rag b a t customera and 8 va ry wonderful

gentleman, You'd never catch him with his feet of f

th. ground. After '29 when other bondholders were A

throwing t h e i r bonds out the window, McNear played Ma

wards well and he maneged t o come out very well,

In those dogs, d i d the bond dealer f e e l maponsible f o r

the seaur i ty of the investment?

He not only felt r eenne of reeponaibRlitg, he f e l t a

uslaare. of pride. Be preferred t o handle good merchsnd-

18s.bearuae It was good burineaa to do so,

Ih bullt up a good retputotlon t h a t wry.

Cel~taialy*

T h e r e mart havo been aoms who didnt t care and who got

these investors who were not oarefhl.

Whether it was that they d i d n ' t oere or the investors

Mason: didn ' t care, f-t: would be d i f f i c u l t t o sag who were

t he rnwe gui l ty , Ffbnestly, I would c a l l on investors

and bccasionally one of them would ask m whiuh bonds

I thought they ought t o buy, When t h a t request came

I would go out of my wag t o t r y and give *hem the b a t

advice t h a t I was capable of, qu i t e regardless of whether

th i s was a p m f i t a b l e bond 3r a bond with a small p r o f i t ,

But I ' m soFry t o say, those ctlatomer3 were f e w and f a r

between, As a rule the investor would be so 8ceptIc81

of anything and everything p u m i g h t try and represent

t h a t i f he ever peached a point t o say, 'I tMnk I

might l i k e a few of these b0nd8," i f he ever hinted

tha t , In self defense I'd l e t him take the hook even

though I f e l t the bond8 weren't a s good es somot of the

other bonds on the l i s t ,

Baum: So that in selling you j u a t contacted them with yaar

list and had t 6 l e t them p r e t t y we11 pick out tht2r o m

bonds wfthouC advice f m m you,

Masons Most of them preferred t o do t h e i ~aorn selecting, the

aame a s when you go in a res taurant , you get the menu

and p r e f e r t o pick 9ut your own dirhear.

Beum: What kind of methods d i d you use of analyzing the

market when you were buying and se l l ing bonds? Haw

were you able to guess what was going up or down?

Kason: The only way a person can operate successfully is after

long experiencs. T h e art of valuing any bond issue--

how t o go about estimating w h a t ahould be bid for

differeat bond i s s u e s . . . i t ~ a unbelievable how expert

buyers have been able to became. I have seen bond

i ssues up for public bidding where sealed b i d s were

called f o r s o that none o f the bidders h e w in advance

what the 3tbrs uere going t o bid end where there

would be as many a s twenty different bids f i l e d with-

out es moh spread in the price offered es one-half

of a uent on the dollar. I have seen bids where there

wem only a few dollars dlfferenoe on en Issue of many

milllo-.

' b t was one of the first-lessons I had with Hernia,

how t o eatiffaate tkas value of a bond iasue, It'u a

f i e l d g.ou can become very expert In only by long atudy

and experience. Cornparatlvely few ever nreater f t--they

don't have the opportunity. Bmrg blg bond house hes

e buyer who can coatmsnd a good salary because he can

I Nasont make o r break them i n the buying end,

I In t ~ y i n gto e a t i m a t e what a given i rr igat ion

d i s t r l e t band issue should bring, there were many

impartant elemenla. For exampla, an i r r iga t ion dla-

t r i e t l i ke the South Montebe110 I r r iga t ion Di8ti;riot

between Lo8 Angelem and Whittier o r tha Le Canada

I r r iga t ion District between Pasadena and Glendale--

you aould sa fe ly pay more f a r those bonds than you

could for those of a m o m remotely situated aommunity

beaauae the investor oould go right out and look the

ground over.

Ba-8 Investore d i d that?

#ason$ Oh yes. If i n v e s t o ~ swant t o buy a school d i a t r l o t

bond,. they want t o know if it 's e good sahool d l a t r l a t

or one with no people and no improvemnts, Suhool

d i a t r i o t s on the west side of the Saeramnto Val ley

have alwaya had t o pay considerably higher ra tes o f

intereat when they borrow money thm s sahool d i a t r i e t

around San Franefsoo or a aity.

lfhs loeation of the eommmifyl the m a e n t s g e of

proposed borrowing t o eatiraated p s o g e ~ t yvaluesl the

population, whether 4ihe pbpulatien La mde up of

landholding families OP Juat bentants, all thoae faotors.

Baumt F i r s t of a l l , a d l s t r i e t wmXd sent out a notiae of

Baum: s a l e with a certain amount of information on it. Did

you use t h a t ea s baais f o r bidding or dLd you go t o

the d i s t r i c t and loak i t over?

Mason: Oh, w e ' d invariably go to the d i s t r i c t t o look i t

over and o fbrier than not, employ engineers t o cheek

the d i s t r i e t engineers. ~ m p l o gour own lawyer8 t o

cheek t b i r lawyers.

Beumt So it was quite expensive, even before you made a b i d .

Meaont Yea. That's pert o f t.ie ~verheado f the bond busi-

ness, Host bond houses have the ir own c i v i l engin-

eers, their 3wn appraisers, their own lawyers, They

m y incur nany thousands of dollars o f eqenaes before

they b i d , and if there are ten or twenty bidders, only

m e , of them is going t o get the 3onds end the reat all

lose the ir money. You either develop an a b i l i t y o r

stumble your wag through. T h e r e are late of bond

houses s t a r t and never get very f a r . Comparatively few

of the old bond houees have au~vived.

Bamt you s tar ted i n buainess fop yourself, did you f e e l

you had had an adequate training with Harrie and the

other ventures t o be able to estimate?

Nason! Heavens, not adequate, but it was a very s o l i d , funda-

mental experience, H a r r i s certainly was composed o f

E4aeon: the ab les t experts i n the f i e l d of municipal finance

of any organization in tize country. They were the moat

important undexwrf ters of s t a t e end l o c a l govemuaent

bonds i n the United S ta te s in those days, It was l i k e

having the o p p o ~ t u n i t y t o go t o aollege without paying

a t u i t i o n fee f o r the experience, 1've heard it s a i d

t h a t 18, W, Harris h Co, turned out mare graduates who

mads an outstanding success i n t h e i r l a t e r band o r in-

vestment f i e l d a~er s t ions - - the re wtere l i t e r a l l y hun-

d r e d s of graduates of Harris who hung out t h e i r awn

shingle, B, W, Relaey e t one t i m e worked f o r Harris,

The Barria a p i r i t survive8 today among the so-called

'old boys of He~ria." Whenaver two ex-Herria msn

meat, it's almost b e t t e r than any college f r a t e r n i t y ,

Baauat You a l s o have to b o u what t o b i d and o f fe r on rese le ,

How d i d gou keep up on tha t?

Mesont The pipe organ a t Radio C i t y with a l l the atopa and

so on, that i a nothing compared t o o t rader in a

bond house. H; ha8 f i l e s where he eon p u l l t h e l o s t

i bid and ask on almoat any bond there is. I t ' a un-

believable what a memory these traders ore able t o de-

salog. You must have a memory and a c l ea r h a d and

experlenoe.

Mason: In all the years I we8 i n business, I would soy

elmost a l l of our business except u n d e m i t l n ~was

done e i t h e r by verbal word of mouth or by telephone,

I am happy Co be able t o say thet I n a l l the year8

t h e t 3, R, Mason & Go. uas buying and s e l l i n g bonds

ora l ly , there never was an oaoaslon when anyone ac-

uused m e of g o b g bock on my word, They say t he re ' s

honor among gamblers, It's equally tmre t h a t there

1s honor among t r ade r s i n the investment f i e l d , Your

wo~di s e i t h e r good, or If you break your word, t he t

news t r a v e l s and people w i l l not want t o do busfnesa

w i t h YOU.

Boum: Do you know of any cases where the word had been

broken?

&son: I know of rasny aasea where one or the other party said

thet the word hed been broken. Ha one e v e r said t h a t

about m e thet 1 e v e r heard t e l l of , and I know I

war never sued f o r nonperformance and J never rued

anyone had bu8imss rim fop nonperformance.

When I we8 in busineas them was a l i t t l e more

sense of honor then perhapa there is today, Bankers

end brokers took pride in having a good reputation.

It was those bond houses t h a t had a good reputat ion

t h a t saw their business growing.

Baumt Did you make a market i n special issues?

Mason: You might sag we made the market i n a l l i r r i g a t l a n

issues. The newspapers for years carr ied a spec ia l

quotation coltunn containing p rac t iua l lg all the irri-

gatfon -bond issues and that quo ta t ion l ist was sup-

pl ied t o the newspapers and appeared under the nptm

of J, R, Meson Co,

Beumr On those b i d and asks, I notice t h a t d i f f e r e n t com-

panies m y have an eighth of a point o r s o difference,

How do you determine i n thet circumstance what you w i l l

bid?

Mason: S9metimes the other fellow w i l l guess b e t t e r than you

do*

Baum t Did you have t o reed many peri9dicelsP

Mason: l o t s o much. You have t o g e t the feel , My first

experience w i t h Harris i n Ca l i fo rn ia was on the road,

buying isaues and contaetlng investors end bankers

p r e t t y much sea t ta red over the Weet Ooaat. I got a

good f e e l of the Pacif ia Coast and g a r t i cu le r ly o f

Cal i fornia , whiah pert8 were experiencing growth or

standing still.

Far example, when up in the northeest corner of

California, there were two i r r i g e t i on d i s t ~ i o t a aal led

Mason: the yule and Barter Cmek irrigat ion diatr icts , I

knew enough about Luhat part of' the s t a t e so I never

even eonsidered putting i n a bid f ~ rthose bonds,

You didn't b i d f o r these bands, but w h e t would you da

if somebody came in t o s e l l you same?

Mason t Not bid,

Baumt You wouldn't buy them fsr resale?

Meson: I might undertake t o sell them as a broker, but I

would hove sold to aame other broker, I wouldnt t

have retailed them.

Then you would only re ta i l bonds that yau thought you

could stand behind e hundred percent,

We would r e t a i l bonds thst we Selieved had s o l i d quali-

t i e s ,

Did you ever handle bonda of distriuta that were not

aertPfled?

Mason: Roc never. The re were severtal d i s t ~ i c t sthat never

were able t o get the sta te certifioation, And I

thlnk perhaps same of them Curnerd out even bet ter than

aome that, wem certified.

Do you thSnk J. R. Meson b Co, was more conservative

than the D i a t P i c t s Securities C o d s a l o n in approving

bond isaaaa?

Well, I do say t h i s . J o R e Fason h Co, d e l i b e r a t e l y

decl ined t o bid o r p e r t i c l g e t e i n deal ing i n a number

af s t a t e approved d i s t r i c t bond i s s u e s which we could

have don8 and made a l o t o f money. Whether t h a t i a

becahse I was aore conservative than the o thar f e l l aw

o r not , I was c e r t a i n l y i n t e r e s t e d first and l a s t i n

t r y i n g t o b u i l d up a good repu ta t ion f o r J, R, Mason

f Co. 1 was consciaus t h a t it was o n l y a s I was suc-

c e s f u l i n t h a t regard t h a t t h e busineaa of J. R e Mason

& Co, could endure, As some wag once sa id , he uas

hanest because it waa good business t o be honest,

By law, i r r i g a t i o n d i s t r i c t s are required t o adve r t i s e

f o r b i d s th ree weeks ahead. Did e l l the d i s t r i c t ad-

here t o t h a t requirement3

Oh , yes, a t l e a s t .

Was the noticre of s a l e mainly i n newspapers l i k e the

-Bond Buyer and Well S t r e e t Journal? -Yea, and a l e o l o c a l pepera. Of oourse we w e r e aub-

a e r i b e r s t o t he press c l ipp ing service and when t h e

a d v e r t i r s m n t would appear i n aom l i t t l e country ., .

paper the c l ipp ing a s m i c e w o u l d see w e . got a copy of

the no t ice ,

Did d i s t r i c t s ever j u s t automat i a a l l p con tac t you?

&eon Challenma the ~onatitutionalitgof the fr'ederel k n i c i p a l Benkruptog A e t

Baum: I wee w o n d e r i n g If you sould give me a brief, akwono-

loglaal rccounB of your 8fforts t o g t~ tthe Municipal

Banhptey Aat annulled.

Mereon! 3: could give you e chronological eeoounC but it wouldnft

be very brief. Hr. Demey of Saeramnto asked me durfng

the &reed ease hemine; In Loe Angslsa in &he U. S.

Distriot Cour t , "Hr, &am8 are you aware that you, not

a ma6mbr of the bar8 hrve taken mom caaes t o the Su-

I preme Court of the Unit*d State8 than any lawyer in

Califor~iat" I arid that I was not ab all aware of

that, Mr. Dmmey. b said, 'Well, it*s a faat , I've 1

ehmaked.* Baum: Thia war on ths k r a e d ease?

Masont Hot only the breed ssas, l i b r a l l y dozens of others,

Oh, IVve go% fi2ea of b~leisand petitions, Look here,

is jut a smell 8aglpl.o. (look over fileo)

Bema Xi the aowt easee port have bean involved in ara too

may, perhapa gou aoPr0 oen8 nse a Wt of them am3 I

aould Snaludr P& in the dntawiewo * - hsont !&atwouldbe botbr.

h u mt When p u sag y . 0 ~wm interested in these came, I know

* See Appendix, page 350.

Baums you watahed them, but did you take pert fn them?

Mason: Oh yes. A t f i r a t the top lawyers were not only will-

ing but h e n to defend the Consti$ution and Isw se-I a w i n g the bands and I uorksd mainly wibh such out-

atanding law finms a8 Plllabury, Madiaron & Sutro end

B~obsek, Phleger & Harrison and We Coburn Cook of

Turlaak, Palmer Hutcrhenaon of Houatan, Texas, and

George S, Olay of Dil lan & Clay, x m i a i p a l band aetar-

neys of Naw York. 1 I Beum: When you worked with them, were you involved in the

I ease or d i d you h e b theni...

: &son: In some instances f waa peauniarily interested. In I a t h e ~ sI we9 only aonatftationelly interested. But

I would s t i c k an oar in, you might ray, whether I

had a geouniarg intereat OF not. AaB tbtrva one of

the ehlnga that's herd t o get a o m people t o believe,

thab my Intereat baa not been exaltmivlslg a ~eLfiaA

intarx59rt.

For example, f mebired a lektar tihis wontPng

f r o m ra attorney In Sp&me, WaaMngtw, &.Benjamin

H* USQP.Ib B ~ J I I ,"PII m p l ~ i wt a gr,PTr of the 24th

instant, Jt have not the a l i g h t e a t idea that I san

ahdm YOUP 0phiOil by eqm8a-g V ~ W SB @ K ~ % F ~ P ~t o

y ~ ,Pour extraardlnary tenacity, whieh I admire

1 nasont but d o not ahare, i n persis t ing in t h i s l i t i ga t ion t o!

which you refer, and your unchangeable oonviation tha t

I $he var ima jurists who have dealded againat y ~ uare i I wrong indioates t ha t you a r e immune t o view8 contrary

t o yours. Mevartheless, since you wrote me courtemsly,

you are en t i t l ed t o a aourteous reply,' And he goes

on,. I: haventt answered h i s l e t t e r yet, but I ' m going

t o o l t s h i m j u ~ i s t swho upheld the Constitution 88

interpreted in the ~ s h t o nease. There a re l i t e r a l l y

hundreds of deoiaiona bet-ween the McCulloeh vs.

%myland Bank and Trust Company, the old 4 Wheaten 316

ease, on ~ e o l g r o c a l imunity, Immunity of the s t a t e

borrowing powers from s t a t e control. I can c i t e him

hundmda of rulings aquarely i n point.

Baumt Yea Mr. K ~ S B F Involved i n any of these ceaea i n ttmb

1930's and 1940*a?

Msaont I think he was. I think he wes attorney f o r the

Riahland fmiga t ion Di s t r i c t up i n Washington, Inter-

eating thing about that Richlend I r r fge t tan Matr io t ,

a f t e r the d l a t r i a t hod defaulted on i t a b~nda ,tho

army amma along end eondsmns the l a n d i n the d i r t r i a t ,

ineluding the town of Richland, which has aince boaoms

*he s i t e of the Hanfard Atomlo Energy Project. And

those i r r i ga t ion d i s t r i a t bonds which ware kiaking

%80nt around a t 10$ on thd d o l l a r w e r e a l l paid off a t par

and interest by the United Statea government, If the

army hadn't oom in and the R,P,C. had been used, the

same bondholders would have l i k e l y gotten about 104

on the dollar. And aver and above paying the bonds

the bandholders cl8ilrsed they were alao entitled t o

be paid , I t went t o the united S t a t e s Supmm Court

and as I remember the excess payment t o landholde~a

over the bond payment uaa aonsbthing l ike $600,000,

Certainly, if on the dol lar was f a i r for the bonds

under an R.F.C. loan, then Uncle Sam was robbed when

the ermy paid off the bonda e t low, p l u s $600,000

boaus to tfma holdere of land who uere no longer legal

holdera o r lsnd because most of them had qu i t gaging

taxes far yeare.

Earn0 Oh, the lands were already tax deliopuent.

b e a n t Oh yea, the land faxecr had bean In default f o r tea

guers every d ir t f ia t# Lrr Oaliforda wMeh d i d

petition for bankrugtoy, either I or aktorneys I vra

working uith teak Bhs eras t o the Suprema G o a t or

th United States and in some useea twor three, wen

faw tima. And 211 ell thblss eases tha only patiCion

that tb. Snpmme C o a r t sf th. h t e d Statea granted,

Massnt efter the Bekina case, ua3 the case of J. 8, &son

vs. Paradise I r r i g a t i o n Distr lat where the o o u r t heard

the pstlClon an a minor queati3n only and ordered me

not to raise or argue the b a s h c ~ m s ~ i t u t i o n e lpoint.

So I wasn't gemaltted to present the fundamental eon-

stitut5onal queatim in the Faradzse case. &, Justice

Douglra m a t e the minion and BQr,JusOiee Douglas was

on the Seauritles Exchenge Comraisalon before he gat on

the Suprema Cow%, and es a member o f that corraaiseion

he favored the interests that would profib from m i -

oipal bankrrptey, I have 8 aopy of the report where

he supported the idea of muniaipal b a n k ~ p t o yin 1934,

Than, when he gets an ths C o u r t he get8 a chance t o en-

f o m h i s idear a f t e r they had bean disallowed by the

Court In the Aahtaa ease, always believed that PIP,

Dougkaa ehould not have pertiaipated Zn thsse bank-

rugtoy proaeedingr e f t e r the stand he had taken when

& was on tlr S u e u r i t i e ~h Exchnng. conniaaion. I

think judger have aowetima refurad t o sit in eases.*.

Bsumt Oh, many tixms.

Maeont But at leaart in &he Paradire aerr f had r unique &is-

tinabion, *. Doaglra, who mote - aze30rity oplnlan,

elasaes ma wLtb the Lane Ranger and charaaterissa ma

%son? as 'a hold-up man within the law," I've had ettbmeys

w r i t e me Pram as f a r away as South Africa on the case

and f: am tali3 Mr. Douglas maeioed letter8 esklng how

somn he admitbad in so lnarnJr words %ha%he^ was vialatfng

M a oath of offtee# t o uphold the law, and not t o

denaunos those ' w i t h i n the law.'

W h e t f have t r i e d t o do is.r s h p l y this. In the

Aahton Ca8e the 8ugmme G o a r t of the Unit;ed S t a t e s

s a i d ittar aimply Utra vim4 the authority of C~ngmsa.

It's just as muah outside their power t o legislate

upon as it would be if these were bonds isaued by a

stake of Hextoo.

Baumr Had p a %eWne part in this A s h t o n ease?

Mason$ Oh per. I was the one they sag was responsible for

t h soart's defehding the aonatitutian in the Auhton

ea88e

Barnn! Xou had rold baglds of that dlstriot;, is that right?

Hmont I *h%nkao.

~aum0 I know gorr he8 Bandled a Tot 6f those %rao wahr d#s-

t d a t bonds* ,

&sons Ye$. - X d i d not hold any of the Canmeron County bands

pe~rrma&Sythat were involo\ed tn the Ashtan osm. After

tha Ashtm deaiaion there was a petition for rehearing

Plasma f i l e d by the ettorney-generals of eleven states. Mr.

Coburn Cook of Turlock and some Houston a t t ~ r n s y s

f i l g d a b r i a r f o r ms es to why the e o w t should not

pan* the rebaring. In t h a t brief that M r . Cook

r i led, right a t tb beginning he says, ' T h i s briar

I8 f i l ed on behalf of b. R, Heaon and other bond-

holdara." T b t denial dl! the rehearing i n the Aahton

ease and the reasona why I t was denied are explained

a t length by the Suprama Court of the United S t a t e 6

In the l a t e r ease of Bruah va. Commissioner whlah l a

reported In 300 O,S. 3s-between gages 366 and 369,

Tb point i r s this, the later Bekina uass went

up on r simple dennrrmr. Ha bondholder had been

foreed t o loaa. !he d i s t r i c t had f i l ed i ts pet i t ion ,

I btit the eaurt had l a m e d ne death arentenee on the

bondr, 80 1t was too early for any bondh~ldert o com-

pla in t h a t b had aatual ly been deprived of h is oon-

r t l t u t i a n ~rights* That question was not befo~othe

I aaurt. It ptos n6t m b l l the f i n a l dear60 waa iseued

that ths bondholder oould raise the aonatitutional

quastion. W h a t : I*= been engaged i n ever rlnce th.

Bskinrs aese is t o aak t b e o w t i f they Intended t o

mvrsrrrs the dnterpwtat ian of the BoneBltutlon an-

nwneed in the Ashbon d s ~ i a l o n , end which they didn't

expressly overrule or reverse i n the Bekine oeae.

Bauntt Were you a friend of Hilo and Reed Beklnal

Mason: *es. I knew b e d better than Milo.

Baum t I wondered how o l o m l y you worked together on t h a t ease?

Masont Well, we hzed the aame attorneys Mr. Cook of hrrloek

was. also attorney for the Bsklna. In that wag we wepa

pretty alose, Mr. Bekins waa s very fins gentlaman

and he was a defender of the ConstALution if I ever

knew one,

The l i s t of d i a t r i e t a end the briefs end pe t i t ions

end aonflibting ~ourtdeciaionu would make quite a

book, I heve never doubted that 3114 of these day8

tha Sup~emCourt of th United State8 will egain ad-

Judloate e case involving the provision8 of the Consti-

tution that prohibit municipal bankruptay, I have no

doubt that one day the court w i l l reaffirm the consti-

tutional g~W6iplibupheld in the Ashton care.*

abls t o enter a s a@ i a terea ted party, aa a bodholder,

or in-atmesf them B l d you t l l e a br l s f +r p l a z a

Masons HQ, not; be* member of the bar X wmld not be

allowed t o file rn amiaua euriab br ie f ,

Baumt I imagine you would b v e t o have an at torney do it fop

9 See Appendix for quotations f rom Ashton oase,

Haaonr Yes. I f'requentlyhad tha t done, but I aolildntt haw

signed rueh e b ~ i e fmyself. But i n m a t lnstanoes

the attempt t o defend the Constitution was by J. R.

Bamt: In whloh caarr you would hsve t o awn e t least one bond.

Mason$ Oh yes, exactly, but that's an interest ing thing t h C

not everybody understands. Lota of people think if

you want the proteetlon of e court you mast hire a

lawyer. 290, the Conatitutlon guarsnteea rnyane whoas

oanstltuiiional r igh t s a re i n f ibgod , that he can go

into saur t himaelf. It weantt; that I wanted to dafend

myeelf r o mueh a s it was tha t every om of these law-

prs, big and small, gradually faded away, end advised

me t o throw up the rponge.

Baumt Did they think it r loat eausot

Maaon: lo , I belZeve it was something elso. Beaeuso not one

o r them belidves t ha t the Beklne apinlen e b n ~ dtha

C o n a t i h t i a a l 2mmualty as in6erppetad fn tbd Baht-

orad. Bnb &ere are ways ef bblnging pmsaum and I

we8 not a rieh maa by mg means, nor was it; my

petrt\nia~gpewlrr t b rupporf lawymrrr whe stauld m a k e mare

laonep &@presentingeorpmatlana.

Baumr In o t h ~words, a l l tbs f i nane i r l preasarea were rrmh

that they were not able t o defend you?

Hsaon: 1 wasnrt able to offer them a sufficient compeneatlon

t o warrant thorn i n taking the cases and run the risk

of offending the banks and the insnrancwr eompangee,

in any pos i t ion t o offer them e bet te~fee fihan they

eould make,. . For instance, Herman P h l s g e r la now one 8

of the main attorneys in the l a w fim defending the

Didiorgio Uorporat;ion and opposing t IIB federa%reclama-

t i o n 160-aore l imi tat ion alauas. MP. Phleger is no

doubt; beug paid a*.' I t d 8ay a very large fee for

hio pert in representlng ths DiGlorgio Corporation and

tho okher big landlords opposing the federal ~eihlsnrs-

tian law, I

! lkuaat So yon were ?orbed t o defend yemraelf.

I Herant Bight. I have rome very interesting lettar$ from

lawyer. %I! different garta of the world cangratulating

me on petibionr and brief8 and saying that the$ mm0l

that anyone Withat legal train-, vho n e m ~went:

t o Xaw rahosl, in f a t %n&mrfinirhsd Ugh sahoal, a d d

have ufth the rulsa and ao~lplicsationathe way

my peQL82a.w m d britbfa did. It has b e e m e tra2nlng

and appa~tunityt a rtuBy end get sxgeriencre w i t h the

CorutlCtttion that I: wmldn*t era88 tar all tb tea in

Chlace*

You skmld go doam and take your bar exams end set

y a w s e l f up as an attorney,

I t d rather not be a member of the b a ~because as it

I8 now the bar aseoeiatian aantO ex?>elme, some of

the rrttoslnsys who did defend the ~onstitutlon-re

told, N ~ a u t v eslthah got to at- representing Hasan or 8

get no mars buslnaas from us. A

The bar tc>ld them?

Bo, the flaanuial instltutlons.

Did the bar associations pat aaag pressure on your

rttoraeya?

That I don't know. That's a kind oi aeeret orgeniza-

tlae.

It a r t have taken a lot of energy,

Not only energy, but It wsa the moat sxMleratlng

and most exciting and the most wonderful elrgelcienoe

that anyone eaald ever hope to hum, t 8 fee l that you

worked f o r almaat twsney*fiva rol id years in an effart

t o pmtaet tha Oonsti%tatioa of $he Unitsd States end

t o have tha Suprsw C o u r t of the United Statea agme

vitb you and then ea.lar, m ~ a t bl a t e r t b C w t weakened.

X t UPd no$ raveree the interpredation 0,4 the Cona&i$ta-

tian,

Bondholderst Protective Co@the8

That brings us t o many questions on bondholderst

pro tec t ive committees. When you fought repudiation

i n the various d i a t r l u t s , d i d you hold bonds in thoae

d i s t r i e t u ?

Thatts the anly wry 1 eould right It ;in oourt.

Then d i d you ever jo in any bondholders' committees%

Yea, In the ease o f the LsMesa, Lemon Grove, Spring

Valley, I a o t only joined the bondholders' co rn i t t ee

but I recormwnded t h a t the bondholder8 generally do

likewise. That waa before tbs Benkmrptcy A s t o There

was a ease where the ReFoC. o f f a ~ e dsomething l i k e

60pl on the d o l l a r f o r the band8 and there were over-

lapping bonds of road d i s t r i c t s , school d i s t r i c t , moa-

qu l to d i a t r l c t s , heavens knowa w h s t al l-- that San

Diego County s i t u a t i o n was a eompliaated meas if them

ever uaa one, whieh might have t a h n a h o a t an eternity

t o l i t i g a t e es t o the p r i o r i t y of mny l iena. A t the

time the R,F,C, mde the La Mesa o f f e r and bondholders

aould g a t 6w f o r their La b a a bonds, they aould take

t h a t money end buy %wa bonds af Bereed g ~ a c t i c a l l y ,

g e t $2000 worth o f b m e d bonds for eaah $1000 worth

of La Wesa bonds.

30 you favored the bondholders taking the offer there.

Right.

And you joined the eammlttee?

I didn ' t join the eomnittee, but I didn't appoae the

oowalttee and s e n t the uommittee a letter aaying that

I thought i t was a very maaonable offer providing @

tb aaah would be qulakly fo~thablaingend 1 thought

it would be poaaible t o take the money end do be t t er

with I t ,

182d you feel this war r genuirie bondholders1 c o d t t e e ?

I don't think eny of t h e m w e r e genuine bondholderst

eamit teea. I: think -hind the scencsa the primary

push is a l l the caaer was from ths big mortgage-awning

groapr. They had most t o galn, or the most to lose ,

ym m l g h t say.

Thare was the Falo Vsrde IrpigaCfan Matr ie t Bond-

k61Uersv hamltbse that s tarted out a t h very up-and-

up intentim8r but t h a t was cmathsr exceedingly 8BIP-

plieaGed s i W 8 t i a n bseauas there were not only the

Palo Verde Prrlgation Distriat bonds, but the Pala

Verde Lsvea Dis tr idb bondr, the Pala Verile h t t a . a X

Water Oagnpang b0nd8, and the Palo Verds Drainage

Diotr lo t bonds, Bolo Verde f r ~ i g a t i a nb i s t r ia t

waa o ~ g e a l e e duurdei, a s ~ a l a lstatute. That fnrthar

Masons aoiarp1lert;ed matters*

The first bondholdeprq committee, there was no

ta lk about mpncIiat24n or aowproniiae or anything of

the kind, Than when it aame around t o the R o F , C o , the

R.F.C. oi'femd to pry aaara%hinglib 24k on the d o l l a ~

torthe Palo Verde bonda, f knew the$ uaa, of aauraa,

utterly w t o h d , ridiaulous, So I deallned the offer,

The Palo Verds aaea draggad along f a r year8 and warr i

taken two or t h e tixueia t o the Sugrszne Court of the

'Jniteb States. They f i l e d uader the o r i g i n a l Chaptar 9,

then they f s l r d under t b State Banlwugtep Aot, then

t h y f i l e d uader the amended C h a p b ~9. Bow, the Pa10

V e ~ d eD i r s B r i e t , i n the litigation between Ariaom and

C a l i r o ~ n i a , i f a elaiming bafom, the mferse of the

United Statea.Oup~emCourt that they had tlm firoat;

water rsght on the Colo~adoR ~ v ~ P *a b e d of anything

else in Califo-a or A~iscmeand *hat their, w a t a ~EL ght

when you mnt to barroot mqmy and how worthleas it is

when yoa are asked t o pay baak what you borrowed.

!ba p~oaeqdingaSrr. trb Pa10 Verde petitioner, the

lawlesa @onchatof the diatriet offisialm, the praju-

dies tn the federal courts, that provides 8 very inter-

Haaonr esting reaorcl for any Law student t o study.

Barn! Am I aormet;, a t f i r a t you thought the Pals Ve~drs

Bondholderat Gownittee was working f a r the benefit of

Meson: It was, noques*ian about it.

Baumt D i d you deposit youp bonds a t that time? 4

Meson8 10,

Baum: Later an you fee l t h a t they secegted an inferior ret-

Meson: Well, the aaaretary of that aammittee was a man named

Oeorgr S. Remy, a s I remembes, end a very ecmscientiaus

fellow he was. Unfortunately he d i e d . - B%s suocrearor

was no%a s able, not a8 pat ient , and not 8s familiar

with what had gone befern. I'm s fpa id the a d t 0 s o

kind of got s l i p p e d around. The Celifozmla eotrrt had

been very elrar about the sLrength of the l a w seataring

the bond8 end the duty of the d i a t r i a t and csounty

of'ifefrls and r o on, Under the Pelo Vezde DSstriat

law bhe dfrtr2at b x e e he8 Ba be eolleotcud -bytha

croanty 8% the aame tima and m M e P o r 8clanty taxer,

bn inhrea0ing Bhisg, r friead of 'man# had ranto

street bonds of the aity of Blytshe, whieh i a w i + h i n

and par$ o i the Pala Berde Trrigation Diatrlat. Ffe

Mason: A f t e ~thehad about @ ~ ; ~ , o Q o w o p t h o I street bonds,

Pa lo Verdle bankruptoy procsedlrsg b d juart about fin-

ished, ha goes into cnurt an8 sues on his ai$y bond8

end rpecQversfn PuX1, whfch is another flntereating

inaonsiatenuy in this bsnkruptcg.. . It WOUUbe Zkke

putting (9 ~at3,rsedthrough bankruptcy but; leaving

s t a n d tihe j u n f u ~bond@, t e l l t h e ffper-tr-mortgage holCfsr

he has to tske 2% bu%l e t the second-rnd~Bge@ ge& POOg!.

Beurnat i , ~ % ~ s dis tr ic t are $p~P#kle$lsoy that the bonds of' o

a l l over the sta te . Whs vei?t; t o the W O P ~of? B~geaf2kng

EG bcfidholds~rs protactive cax~ait;t e e ?f

&a3 son t I %kinkyoup glueaQ;itznc s ~ ibest be answered by aupply*

irrg 93s w f $h tihe p~.%n%ed o u t numberm a t e r i a l pu t by &

of the bo;ndholder)a* c o m fE t e e s , which 1 have velur(lt3a

of. There mast hdsve been a t L e a s t tw&uty.rl'&t~a r mope

of blmsa aomm9t;bea and no -kuo of them just ~l.;2k%r

Some oa" x tthem u n d s ~ w e n tsevars'l rps~~ganiaat i~nst i s

apparent now, asr we look 3sck oil it, that t h ~ eweb

ai&her a ruast%mPn@op t; maste r organizribion fom9ng

ISIS comitteeaa and dlrecttfng snd adv2sing %em end

paging %hem, Those oarnittees couldn't o p a r ~ t ewith-

out some money and slot a m of' them, X bel%mve,ever

esked s bondh~Zdeff o r suppor t .

Ma son 2

Raumt

Mason: -m1m:

I th~ughtthe bondholders would netu~allypay a ~ertksin

amount, in p ~ o p o r t i ~ r a ,perhaps, to the number sf bonds

th.ey held,

14~ybethey would have If they had been aciked, but they

werenVt asked. Very di f fe rent from the early Qatremar

GiElett eormittee,

I have r e a d that it was unemployed benke~a~OP bond

salesmen ,who duping the depress$on uouldnqt follou

t h e i r ws~ie lwork who went 9ut and o~gaszinr;sdtheme

bondholdersq com9ttees wftk the main objaa%ive bf

mskXnt~a comfssion from the bondholder$. But you

sag the bondholders dfdnBt pay them,

No,

Who do you think pefd them?

Why obviously the big rnor%t;gage-owninginterreatar,

Then, 5f t h a t is true, you f e e l thaO whole puppose

of the bcrndholdersB committees was Lo geB f;M bond-

h o l d e r s t o accept , , ,

.. a scaled-down sett le.nent, which would Smp~ovethe

mortgages. Mearly a l w a y s , in nearly e l 3 eases, the

Bank of Amstrice wss the depasltory where tihe bend-

Inolldeps were fnvlted t o deposft Cheir bonde, The

committee would select a bsnk t o a ~ tes c9epos5tb~y

Masono and In most instanaas ttrre Bank QF AaaerSeer we8 rselected.

Oh, %hlbPewe- o t b p banks ehamn, the h r f a ~ nTmst

more b h ~ n.ones, the Pac4fic BekfonsZ. .E dare say,

Bank fa Oaklsnd was depasito~yPor the Prao%denL

IrrLgatS6n Dletr iat bescauare the ei3sa9;ref. %nk in Oak-

land ha8 Borne v e ~ yl s l ~gemortgagas on Zand in the

FravSd&a&f r ~ i g e t i o nD f s t ~ i e h

Rsum: Who handled the work of these b a n 8 h b ~ ~ e ~ s ~c s m i t t e e a ?

Mason: Indiv$dual8 who wme emplopd t o a@%as setretsry f o r

the oom3ttee. They would writes ls9tters to b ~ n d h o l d e ~ s

on# c a l l upon them, Well, bi marla named George S , Henr~p

was tkes o~ihg%naf,secre6ary of the P8Xo Verde Pdlstrlct

%ondha~ds~a*Oammlttee. That was one of the vary

early onerr. George, C. Stephens wsa man chosen to

t r y t o get: in the bonds ai e nulnbea~of d l s t ~ f c t s ,

G e ~ ~ g e84;ephens used t o h ~ v eEI bond house c a l l e d

Stephens & Cs, He had h9s bondbaldera' o o m l t t e e

offices fn the Croeker Bank building here %n San

Franeiaes.

Balm: % WBS nomfnaLly for -tihe hondbabders+ Who wouLd he

negotiate ~ 9 t hrepresenting the Bfe%pfot?

P4esorrx W fth the d l s L r i < z t officfa2s.

&ium t The d i a f ~ i e toff5a1~18would handle that?

Ma son: I w b n l ~ n ~ t Ae wouldqay they would hendla i t , tell

Ohe d i r $ r % ~ toffieiela whae he wanted done.

Let$'# sag a dia$r5at waa goLng t@ mflnanee. They

would bvm, somebody n e g a t i ~ t ewith the bondho9de~s

t o $rr Lo odm t o soma settlement, and they would

e l s o b v b t o negotiete with the R r F e C . to get s Loan.

Wsm t W ~ eany ~peclal l fstswho hsnrtdZ%d that kind of

w e ~ k ?

Masons f would say that W a Z t e ~Wagner, who was seers-

tary of - Irrfgatian Distrlota Assotsfott90n and elso

a paid wplbyee of the R.P,C.

b hendjLQBIa atllnbes of districts then?

Oh yea. X @ d say he was Sn more ope~ratiansk h a n any

s%hw &a$iuMuaS

W @ P ~ehme any other %ndSviduslewhe handled a l o t sf

d f stirla0at

George Stephens was one, There were bondhouses in

Texrrp that handled the Texas irrigatlsn d i s t r l c f , ~and

b~akecsand so on,

Who were the majorlty of bondholders? We~ethey- Omdi-

viduaXs who b 1 d one OP two bonds, or bsnksl

I would aay that 90% of the bankrs In C t a l i f o ~ n i ahad

invested in IrrigetZon d i s t r i o t bonds by 1938, I

Nasant would say t b O irrigmtim die-bricst bond@were owned by

inveatora and $PUS% fund8 quake geriemS5y. 1 under-

stood %hemwarn samsrtfilng over 5000 owner$ of Imperial

I~rlgetionDietriet band8 and they wepe Qa@&tedn o t

o n l y in a a l i f s ~ n i e ibub Hew Pork and some In Europe.

The job of con%statingW bond owners end ppbting

then to send in th i r bonds and tbe job of printPng

ths bondholdera* apeeaent end aoatrect and a1X thet

c o s t a l o t af mtJRey aB8 a s s w e you tiha* no w m m p l ~ j r e d

bond salesman aou38 havie, pslld +;horn expenserr.

Baumt You f ee l that; the ?I2&jbrityf of bonds w s ~ ein *he hands

of people wPte knew abauB f i e a n c e ~ ,no% in the nrsrive

ene-bond Snv%s%o~*shenda?

Naean: As to whather it wa8 the mttjo~iLyor net, f ~ lmnnot

clear, but I Can asert~re,you that there were very few

ilnvestars who wd6~8f;oodwhat the law was behSlzd the

5anBa.

Barn', Do you think the mafarlty of Bonds were in the h n d a

of crtginal gnrahsreefs or people who had puxcfhaaed a t

par or were they in the hands o f people who bought

them st a low di~a4Untf

Fmaons ObvZousSy, many gaQ f~ightenad, eons %htdPed an8

tb2r estates had to be closed out and G b bonds were

& M o w n on the mlpk%t. ft would Ba diffkauZ%.. . you

see, 5 had gotten oue of busfness long before any of

thia heppetned so 5 wesn'b On the ins%de, BUD 1

wonder just what importance that gutiwlSon barer* %QT

this reason, e ~ c hof these bonds waa a nsgabiabXs

ina.9;rument and *he preca t h a t anyane paid f o r 8 bond

had no mXerana$ t a ite face value or l e g a l eherectsr,

Yea. Well+ I Wink the relevsnce 1s that if you herd

bought a bond a t 36$ on the dollar an8 yon were In

s bandhaZdsrkS aomwItCe, it would seem p r f e a % l yma-

sonable t a seCBle st 404 on the dollrap .rjhiX@ anyone

who had bought a% XQog! on the d o l L a ~ r , ,

Very '$me, you ape absolutaly right,

1 wgs thfatng *hat If there were many people who had

bought m t e Pow BPsaounL they would be wialing t o

force the athss bandholderrs t o set txe lab a 14w pate

and that would be s profftable t~snsactisnt a thm,

Very tme , end %ha$no doubt d i d happen in srr numbeso of

ins%ar~raaet~whPoh on3y oomgl%co tea the isrsus.

Dub pe~hap8goes some way to explerln the bondhs2de~esP

oomdl&eeo estSbno.

Y ~ B *very I even ehaC s o w Mnks the%

f a i l a d , the reoe%vs~ their ban& and somesold wme

so ld s t ~SdbeuPouspriaea. In Pact* I heard of the

bands of one d i s t ~ i c t ,the bank sold pae 409! an %he

dol lar , the bsndhs were due in sf% months, rand on

cbakina the buyer Found t h a t the money Ba pay tho

honde was already on d e p o s i t i n the bank that aoZd

1;n.e bonds.

C O U U ~ ~QD.

@ P O S ~Ine~m.p%tenCe.To3 many unforWnatsly didn4t knar

what good bonds @heyhad,

X we8 vonderfng if 9;ha mmbe~aof a b ~ m d h o l d s ~ s *

eoxi&%teed s e l k pe~samalXgin tbs s@otaI?itiesthe% Ghe

eolmitfee waa a~slganizedk o b ~ i n gin.

If %heyd i d %hey wepe a@%Lngoonkka~yt o ~rstlemallaw,

I donC% b o w S f the$ did,

Do you know f f they might have had coafXie*dng intap-

ests, such aa hoLd%ag mor%gsg%ain the came d S s t ~ f e C 7

Oh yes, 24o.E; only .[;Ira%hu t ?;hemwepis mng Bnafianae~

whore 5ig Zwndkolders pieked up bonda end a t aoxwse

t hey would turn those bonda in, In %he sem way, $f

you oould pay your federal inaome taxes a t 2$# an

the doJlar , youFd rather do %hatthen grey TOW*

GerLsialy, I ahould think Pt would 5s Ba t b % a k e ~ a s t

of the lendholdera 2n *he d i s t ~ f c tt o gat $ha bonds

turned in a t the Isweat Pa%%poaslble.

Paasont That's whet was done.

Barurn: And some of &here landholders were members of the

aomitteea?

Mason: I'm not sure if Ohey were members of the bondholders'

eonnaittee.

Baum: But they deposited their bonds ~ i g h taway.

Yikaont And they os~ t ta f s lywere on the look-out for bond8 and

f o r a time there was rn enormous seareh on the part of

landholdera for bonds a t a discount w h i o h they used

in l i eu o f csah in paying thefr assessments, That

racket war engaged in 9x1 a grand scale unt i l a t e a t

ease was brought in eourt, Shouss va, QuinleJ ( 3 Cal

2nd 357) and the o o u ~ the ld that it was not permiasable

to pry e s a e s ~ n t swith bonds or aoupons unless thodo

bonds er coupone were the first i n l ine , Tho law i a

very egeui i io about how bonds ahonld be pa id when the

d i s t ~ l c tdidn't have enaugtr money t o pry them a l l .

So rafter probably revers1 mill ion dol lar8 had been

saved to the landlords by i l legit imstely tuPning in

bandr and ooupons and getting them acwgted by fhe

d i s t r b t in lieu of money, tha court said it we8

unoonsti.t;utional but the court didn't sag it had t o

be undone. l o , nobody was even slapped on the wrist

f o r having violated the law beeausa %hatwould be

Mason: offending the feudal in te res t8 whfah, it seema the

o o u r b never like t o antegoniae, It was developing

into qui te a racket where everyone d t h land i n the

d i a t ~ i e twould simply defeul t on their assessment ia,

knowing if they defeulted the d i s t r i c t would defaul t

end that would frightan the bondholders and they would

be willing f a e l l but give t h e i r bonda away, Then,

by pieking up the bonds shetap and turning i n the bondn

t o pry Bhe assessments, they aould pay taxes f o r a

f ~ a c t i o nen the dollar , In aome s t a t e s that process

is allowed by the law,

Baumt You cen turn i n melamrtisn d i s t r i c t warrants i n l i e u

o f asseaamsnts, o . n t t you?

Masons Yes. The raolamation dia*riot law has no aueh Ira&-

led o r d e r - o f - p a p n t aammand as Seetian 52 of ths

Irrigation Dlrkriat Auto

Beuntt Do you Chink there rhould have been more adequate

governmentel eontrol over bondholdera' committees? For

the graQeeQionof the boll8h610e~.

Meaont 'Phatts net cm easy quastion. I don't believe p a can

l eg i s l a t e intelliganee bfa bandhalderr o r 5nve~ ta r s .

f wouldn*t aay t h a t bmdholdsrs eould have been per-

aueded t o hold an Lo t h e i r bondr, no lraetBer what eon-

tmla there had been over the bondholdersr c d t t 8 0 ~ 0

O f course, if the bondholders1 committees w e r e oon-

trolled by s t a t e l a w , but that wasntt your question.

These uommittees were supposed to operate in conneo-

tian ulth the federal bankmpkoy a t a t a t e and E don't

want any federal oontsol o f bondholdersB canwittees

of a state band Issue.

Yau would have favored state contrsl then?

Maybe, That's asmething I would love t a hear argued

pro and con.

Eow adequate was the control over the cananlttee by the

bondholdara who had deposi ted &sir b ~ n d s ?

Mason: They hsd no control over. the c s m i t t e e . Once y m de-

posited your bonds, they we-8 gone.

Then who was the comrJlttee? Did you j u s t sign overa

your bonds t o somebody end tbat was the and?

Why yes, From then on y9u had no voice, nothing.

No vote or control?

No, you aigned a blank power of attorney.

Bo limit as t o commission to eoarmittee members, or

coure ooataf

I don't believe there was anything o f the kind, I

t h W it uaa just s blank ~urrsnder. la , thoae agree-

mnts are quite corapliceted, small type, lengthy, I

know one Imperial b9rdholder, after the Aahton deoi-

sion he tr ied to get h i s bonds out of the eommittse.

George &rrlngton was the attorney for the cormaittee.

He was t o l d ha eouldnlt have his bonds, that1s alZ,

i oould see why even IF you were favorabla t o ~epudie-

tion and getting 50$ on the d o l l a r , you would be re-

luotant t o algn pup bonds over.

It pessreer unde~stendlngthe ease with which they g o t

bond investors t o turn he ir bond3 in t o the conmritbes,

although ia the Eerced Irrigation D l a t r i c t case for

t b fipst;... Well, they worked hard f o r cgbres or four

years, I understand, before they got even 1 9 of the

breed bonda deposited, The Pierced bondholders d i d n ' t

rrcere quite at3 madilty as some. a

D i d you try t o persuade people not t o put their bonds

in?

Yes, Irm g lad yau asked that* H e r s are some spseimen

gostoarde that were used. 'I aes ymu made quite an effort t o p~event%ham.

I wanted t o g i n them the feate es I saw them, %nr

n u t a b u . I think i t had some sffeet.

I see an this postcard yau say that they dght aontaet

ettorneg Uook. Would it k v e been possible t a o~ganiee

IMPERIAL BONDHOLDERS The owners of about $5,000,000 old and refunding bonds have

or been stampeded into the surrender of their bonds or into giv- kg any so-called Bondholders Committee their power of attor-ey. Many bondholders appeared through counsel in the Federal ankruptcy Court May 15, 1939 opposing the motions by the listria and Committee. My attorney, Mr. W. Coburn Cook, erg Bldg., Turlock, Calif.. appeared on behalf of the largest umber of Bondholders. The District's request for an injunction, staying all suits was

enied. The Coun was not satisfied that payment of interest 3ould be ordered to bondholders, until after a full consideration f the law and the facts. When, as and if any funds are ordered aid by the coun. there will be no discrimination against those lho have not "consented." For the same reason and to the same extent that you investigate

efore you invest, have you smdied all of the details in the "1939 Ian"? Do you realize that those who deposit their bonds, will or have the benefit of a Federal C o w to protect their rights. le next time this District desires "Debt relief"? Should it nally prove that our present bonds are not enforceable, what hance would there be for any holder of the "Stamped" bonds, 3 enforce his claims? Do you understand bow different the legal ights and remedies in the 1939 Plan are from those guaranteed ou in the bonds you now hold?

In the event you have consented in writing and made deposit f your bonds. and now find the plan includes conditions that ou did not understand which warrant you in changing your own arlier opinion, you might protect your interest best, for the time eing at least, by writing at once, a letter BY REGISTERED fAIL to the Refunding Agents, formally withdrawing your pproval and acceptance of the plan. Bondholders represented by counsel in the Bankruptcy Coun

nay be successful in enforcing payment of their bonds, in full. hose "consenting" are bound by the t e r m in the "Plan", rhether finally approved by the Bankruptcy Court, or not. SIB- ient bonds were represented by counsel to assure a thorough trial

of all the fam. and that the cost. per bond, will be very nominal. specially providing creditors retain counsel already representing lrge amounts of bonds.

While I sympathize deeply with the suuggle people everywhere re having to pay nxes and meet their private debts. relief 5 still possible without seeking to force creditors of the State or s Agencies to surrender general obligation bonds for bonds of n entirely different son. The undersigned. upon appointment. vill be glad to discua with any bondholder or h h attorney, the lore intimate details of this matter.

Respectfully submitted, J. RUPERT MASON.

1920 Lake St.. San Francisco .day 17, 1939

BONDHOLDERS OF THE IMPERIAL IRRIGATION DISTRICT

There is absolutely no necessity for yon to deposit your bonds. and "amrent" to their surrender. Any aaorney cam prepare your proof of daim in a few minutes, or yon can send it yourself. to the corn. The usual form in any b a h p t c y proceeding h enough. a

The exhibit accompanying the petition 6Ied by this district. showed that over 800 Bondholders refused to " m t " to their very o~mplicared "1939 Plan".

The Superior Coun at Los Angela has entered judgment in the case of Jordan vs. Imperial Irrig. Dh.. for the full amount of the demand, as prayed for in the complaint, and in the petitions in inment ion by Paafic N a r i d Bank, Mamo. Selby and Wheeler.

This judgment in no way gives a "prior and preferential pay- ment", but u for the equal p r o t d o ~ l of every bolder of original or refnnding bonds. The Supreme C o r n in Moody vs. Provident Irr. Din.. % Cal. Dec. 512, lur November ruled squarely that the h w so requires, and ruled in % GI. Dec 497 that bond- holders who had been given "prior and preferential payment" must renun the money to the dicaia, d a the same h w your bonds are issued.

Hmdre& of investon arc holding their bonk and have faith that they will be paid, as required by law. or that at the very worst, they will be no worse o f than those who surrender by "consmcing" now.

There are important points of law, ni.udby madrecent Fed- eral and State Supreme C o r n de&o(u, which may block this newest &on of the District, aided by the so-called Bondholder's Committee to force your acceplnce of their "1939 Plan", the same as they were defeated in their previous bankmprcy petition. when they tried to force the holden of old bon& w take the "1932 Plan".

Do not fail to send your matored bon& and coupons to the Din r i a Treasurer and demand payment or "rtlmping". Thir entitles you to 7% interest, until notice u w e n that h d r are available. 7% Tax Exempt is wonh some inconvmimce?

S i n d y . J. RUPERT MASON.

1920 Lake St.. San Francisco June 19. 1939

IMPERIAL BONDHOLDERS Have yon been given any hancial repon showing the present

value of the property securing your bonds, the cash on hand which belongs to you, the value of land now owned by the dis- trict, the amount of taxes due the district and unpaid, and the value of investmenu that are junior to t h e bonds you are now asked to compromise?

The California Supreme C o w ruled March 21, 1939 that the bonds you now bold rank ahead of the bonds of the county and all cities, t o w , school, road and other districts within the Irrigation District. This decision is found in 97 Cal. Dec. 348. It is now law. Whether thu will be true if you consent to the pres- ent "Imperial Plan" and you get back your bonds made subject to this plan, is important to know. No doubt, effort will be made to amend the law, quickly, so that f u m e bonds will not enjoy this advantage.

The Superior C o w recently deoded in favor'of the Imperial bondholders. on every point, but withheld the mandate only on the claim by the district that it is making an effort to secure the coosent of enough bondholden to let it He a petition for bank- ruptcy. If you have .already consented, you cun witbdrmu your consen#, by registered mail, if you act quickly. If you have no attorney, Mt. W. Cobum Cook of Turlock. Cal., is counsel for many bondholden of this and ocher Irrigation Districts. Few attorneys understand thip law, so it u important that you contact one that does, like Mr. Gmk.

In addition to the enur decisions. above, four others, wholly sustaining your bonds are found in % Cal. Dec. 497 to 512.

The court has ruled a California Irrigation Disuia is an agency of the state, whose functions are exdusively governmental, whore bonds are General Obligations, payable from unlimited ad-valorem taxes, and that no land or property owned by the Dis- t r ia is subject to taxation by any other taxing authority. I t will pay you w d to read these decisions. and understand the protec- tion guaranteed you, by the law.

The cost of water per aae, pet m u m based upon the bonds as now outstanding, u among the very lowest in the west, and no evidence has reached me that the district can not and should not be able to servicz iu bonds, without undue difticulty.

Do not fail to demand paymenr and registration of your bonds and coupons, now due or past due, so they draw interest until paid. The mmte of limicatioru never runs,until the money is collected and notice u given fun& are available, if you make this demand.

Without your "conrmc", no bankmptq c o w has jurisdiction.

Yonn sincerely.

J. RUPERT MASON, 1920 Lake St.. San Francisco. Cal.

perhaps another bondholders comit tee of bondholders

who d i d n ' t want t o turn t h e i r bonds aver w i t h o n t vofe

or any aontrol?

Oh yea. These committees were a l l volunteer, no l e g a l

status whatever, excepting ea they worn able t o get

euthari ty f ~ o mowners of bonds who deposited their

bands,

I)id you or any o t b e r bondholder attempt t o organize

a r e a l l y ~epresentativebondholderst oo;;mtittee?

i4anon: I was with Governor Gfllett In the orig inal one, yes,

3a*m$ That was an over-all me, that didn't d e a l w i t h any

speelf io d i s t r i c t . Were there any attempts made fop

specific districts? 1

How d o you mean?

It aounde l i k e this is what would happen here. If a

l o t of people w o t e t o Mr. Coburn Cook, he w u l d be

in a posibion t o orgenize them in%o a group.

Mason: There already was a so-celled bondholders' soanmittee

in Imperial. That was a very iatemstfng amamittee.

They put out a letter in 1932 a r a m they had mas a

eontract w i t h the I ~ ~ i g a t i o nBisrtPieB %hat the d i s t r l a t

would pay e l l the bondholde~s~e m u % t b e expenses.

In other words , the district was taking the bondholders~

money and g i v h g it t o the aomittee t o eend the bond-

holders e. lot of propaganda.

Bauma Do you know i f these bondholderst eommlttees t r i e d t o

aoerce nondepoaiting bondholders t o deposi t t h e i r

bondr? Frighten them?

Masont I have bean t o l d of instsncea where a man borrowed

aome momy from the benk and the banker said, "If

you don't depoait those bonds we're going t o caU your

loan," And I have no doubt there are wego of applying

pressure qu i t e insidiously without coming out openly

and saging ro and I have no doubt t h a t many investors

were e l ther pressured into depositing o r frightened

i n t o aa l l ing or depositing.

A lady who l ived i n the neighborhood here, her

husband had bought qui te a block of bonds of the

Alpaugh I r r i g a t i o n D i r t r i b t in m a r e County, I

a few bonds of that d l a t r i a t and I waanrt going t o

give them away. X oalled on her, and raked her If

she had been approauhed t o depoait b r Alpaugh bonda.

I wear going t o edviae her not t o depoalt them if I got

r ohanee. W e l l , ah6 opened up an ms, e r l d that I was

no end of a raecal f o r ever having aold those bands t o

her huaband, her bankt the Crooker ~ a t l o n a lBank, to ld

her. 80, her benk told her she was lueky if aha got

anything f o r them, She was glad t o say 8he d i d depoait

her bonds w i t h the committee and she was proud of it.

Masant She was going t o get 37# bn the dollar for the bonds.

1 With Chat I seld "Thank you,' and l e f t .

I W e l l s after y ~ uhad had a Pen experiences l i k e

t h a t it wasn't very encouraging t o go eround t o in-

vestors and try imd proteut them when they preferred

seeminglg t o believe bad reperts. Thepa was a def in i te

cempsign on t o f r ighten investors out of t h e i r bonds,

Go i n t o Prny bank i n ths 1930's and ask about i r r i g a -

t ion d i s t r i c t bmde and the banker would say, "Youtd

be t te r get out while you can beuause i f you wait u n t i l

day a f t e r tomorrow yaut l l l i k e l y get nothing,* Oh, it

W 8 8 War*

Baumt So t h a t becauae of t h i s propaganda it muld have been

almast imp@asfble t o organize a aeparate bondholderh*

oommiC~@Qhrfwas ~ e r l l ytrying t o h o l d oat f o r 100#.

PZesont Letts says instead a t t rying t o hold out f o r 1006, t h a t

wadi try- t o prs tea t bhs Conrrtitution bee818d you

canvt get 10w dollars anporn, The dol la r i s n r t worth

what it wae whun the@ "gold bondam were issued, .

Jarsea I. O i l l e t t r s California I r r iga t ion and Realmetiem Dintr iots Bondholders Association

Picraont Yourvs beard about the bondholdera committee ~rgun i sed

by f o m r Governor of California James 8. G i l l e t t , He

Masono headed the Calif3rnia I r r iga t ion and bclametian

D i s t r i c t s Bondholders Association, Here i s a c i rcu lar

l e t t e r tha t went out to the bondholders on March 22,

1935 from h i s cami t t ee , (Reading excerpta frm l e t t e r

whioh desoribes variour Z r ~ i g a t i o n Dis t r ie t Act mend-

ments aince 1931, fnaluding the California I r r i g a t i o n

D i r t r i c t s Seeur i t ie r Commiaaion Betl and ~scommndano

bondholders acaegt refurding b o d e iseubd after 1931

and eubjrat t o there serious snmndmnta.) T h l s uaao-

eist lon, headed by 61. G i l l e t t was t m l p a bond-

holderst organisatian.

B a r n t T h i s was t o proteat e l l bondholders i n a l l i r r iga t ion

d la t r f cta.

Mesont Yea. But unfortunately when the essouiation attenpeed

t o get tbs bondholders t o help the association with

expanses, even t o eontribute a nolainal e81ount.,. T h i s

i s en emazing thing, moat of the bondholders had been

t o l d t h y would be throwing good money a f t e r bad i f they

t ~ l e dt o proteot the bondr. Th6 raeooiatlon waa never

able t o gals i n enough mossy t o even buy poartaga stanrpr.

Jamar I, O l l l e t t was not a r i a ;men, Bondholdera

wouldn' t even put up $5 t o proteat a $1000 bond. It's

diffioult t 6 understand.

Mere you working with Gi l l e t t ' a aommittee a t t h a t t i m e

OF have any aonneotion with them?

Oaaarionslly they would eonault with me. I n fact , t h i s

nttlmeopaphed emunicet ian t o the bondholders, I aaw

before i t went out t o the bondholdsrs a n d I made a

feu suggeartiona which were inuorporated in the c m i -

catioa, p a ~ t i a u l a r l y on the point &st If the bond-

koldsrs rurmndemb their old bonds and accepted new

bands, the new bonds would be de f in i t e ly subject t o

the amnded provisions In the i r r i g a t i o n d i a t r i c t law

whieh would make the new bonds a mueh less-sound in-

vestmenLu.

Whet d i d the I r r i g a t i m D i r t r i o t s Assoolation think

about G i l l e t t t a oommittee? Do you r e c a l l that? ~ e + e

they friendly7

I would say thsb many of the i r r i g a t i a n d i a t r i c t law-

far8 wepe fr iendly, but not the lawyers representing

t h big morbga~~otoninglna t i tu t ions. It resmcr t o IE@,ee you dlsenaa them thbgr, that your

work during thie araniaipal badcmptcry a e t was baaed on

a philosophy.

ftts baaed on a phi3oeophy tha t 's a s deep and se funda-

mefits1 as the differenoe betcreen Thomas Serferran and

King Oearge 111,

Were any of t b other bondholders, say G l l l e t t , who

were act ive i n the same l l n e you were, were they a l s o

in te res ted i n a land tax?

Mason: They were no t s o meh in te res ted i n taxat ion a s they

were i n baa18 conrtitnOionr1 p~Intt lpl88.

Barn: You think they wepe t i e d together with a phlloeophy

as w e l l as on i n t e r e s t i n ge t t i ng t h e i r bbnds paid?

Mesonx Oh yea. T h i s c o n f l i o t went r i g h t t o the very roo t o f

thingo, %ad the Pedara l i s t essaya. What wee the

iasue? It war over what powers the s t a t e s were t o

have and what powars the central government was t o

have. That us. ea issue a t t ha t time, Wes t h a t an i s sue i n

the 1930'8 w i t h the bondholdera you worked with?

T h a t war l ame .

I Chink that warr ieeue ss f a r ss you were oon-

e e m d

We11, I wouldn't sey it wae & issue w i t h bondholders

genera1%~.

/ la talking abmb the ea t ive bondholdera, the ones

loha apposed the ~ 8 l g a lBankmaptoy Aot aa t ive ly ,

Oh, de f in i te ly , @overnorOillett and Jams I rv ine end

Read B.kJna and the better lnfora~bd bondholders, Read

c

the briefs o f Herman Phleger and o f Pillsbury, Hadison

& Sutra, defending bond owners, You'll f i n d that basic

i n a l l their briefs a l l the way through was tha juris-

dictional principle. Whether the bonds ever got paid

or not, was of seoondrry imgortenoe.

D i d you know Gilleft personally?

O h yes,

W h a t kind of a man wars he?

He wea r mapveloua, high-Integrity individual, H e

waa perhapa as sound,,, Well, he reHlinded me In some

way8 of Grover Cleveland, I ' d say that Governor

O i l l e t t w a s e gmat aonstitutional defender.

What was his oaaupetion in 1929, 19301

Oh, he he8 an e f f iae thsB be uaed t o l ike t a ga top

oelled e l a w off ice , but I don't think he d i d mu&

praetiaing. I think he had a penelon. HQ didn8t l i v e

high. He was very unaseuming, vePy modeat,

I wondered why he had taken over the championship of

the bondholderr.

Beosuse of h i8 love of the Gonrtitutian and h l r des2re

not t o see the Conatltubian violated, end therefsno

aurer way t o dsrbrog tJm Anasriean ComretituP;ion than t o

d e a t ~ o ~ r sovereign tax power end have a l l%hestates'

pawera cent-red Sn aongresr.

Barnt &or instance yourself, you sold a lot of these bonds

end I imagine yon fe l t a certain responsibility to the

peraons y m had sold them to.

h a o n 2 That iar tme,

Baumr Had Governor Gillett a l s o been engaged i n selling

i r ~ i g a t ian d i s t r f e t bonds previous t o thia tias84

Herson? Boo

Baum: Did he fee l a reaponaibllity s imi lar t o yoursf

Mas9n: Zot in the sense that he was protecting people who

b d bought bonds becauae of hla reaonm~endslfon. So, not

beaause o f that, but the responsibZlity he f e l t in try-

ing to defend and support the U.S. Constitution was

baaia in h i s mind, Tlme i s certrinlp p ~ w i n galearly

@he eotmdmaa and importance of his defense of the a

Conatitation as upheld i n a very long l i n e o f oonal8-

tent deaisions, reported in Brush vs. Commissioner

300 TJeg. 352.

Bauart I ' d l ike t o know how the R.F,C, opepatad, I under-

r tand they made a loan t o the district and the dia-

trlot was t o get in the original bande a t the deprecrl-

ated priee and then reissue new bonds t o the R.P.C. as

a s s a u ~ i t y f o r the loan from the B.B.C. D i d the R.F.C.

&urn? a c t just as a bond underwflter who offered so mush

money far these bands, in a sense?

Hasant I doubt if them were any two R.F.O. loans made under

the same term and conditions. I have a number, of

the so-aalled loan tontreets between the R.F.C. and

the difiemnt districts and each one of them has d i f -

ferent provisions. There were no sat appraisal m l e a

dhaCevor, as nearlg as I eould make at. The e o t

euthorising the RoF.Co t o make these loans d i d not

compel the 3.F.C. t o scale down the prinaipal of the

old bonds. Had the dlatricts saved money in intereat,

that would have been a refinenaing that would b v e

been advantageous t o the dfstrlct. !~!IMMIwas no

acaasion uhatsoeves t o scale dawn the prinoipal of Bill

the o ld bonds, although Mr. Jesse Jones, or maybe it

we8 &.6. 9. Ifenderaan, In one letteri tried t o am-

atrue the federal a ta tu te as nuking it tomgulaory fop

&he R.F.O. t o soale down bo%hprlnaigle and intereat.

But that wa8 not tbib language in the ?am b r g e n o y

Aet of 1933 bhst authorteed tbe R,PIG. t o make these

~ ~ 1B M

Barurnt When the ReFoCe mde a loan t o r dietriat i n return

far bonds, oraa there any p a a s l b i k f ~ ythQanother bond

house could have competed with the R , F , C , P ( h d . d they

also have purohased tha banda?

No% only was there that p o s s i b i l i t y , but there was

suah e strong poasibility that the R.F.C. wea very

trref'ul to see that n:, bond house waa allowed t o corn-

pets.

Baum: How d i d they prevent this? Oould not a c o ~ i t ytry

t o negotiate a loan with a private com?any that would

be advanta~ousto thelaselaes?

b e o n t Mot one of Urn did It. '&en that was bffered in the

case of the R,F.C.ts losn to the Paradise Irrigation

D i s t r i o t , and my attorney made a proposal for under-

writing the refunding bonds, the R.F.C. rose up In

indignation end threatened no end of trouble if thq

d i s t r i c t even thought of aueh a thing.

Baum: YOU uera not In busimsa then, were you?

Mason t ao.

Baum t You still. . oould have underwritten tm issue and diapoeed

of it?

Masont 1 eould have underwritten it end kept It, naybe.

Baumt Didn't the Nevada DSstrfct get private finanaing?

Mesont 3'48 .

Bamt It seem to me like the Nevada Distriut got an R.F,C,

of fer and then got a bet te~deal fPom a private under-

writer.

Ij Baum: !1 liaaon:

! Baum: \

Baum:

I think so, And the Imperial Irrigation District got

no R,F,C, loan.

Did they get r6f'Snan-d by a private.. ,

80. They went Wough bad~Fuptcy, but not with any

R,F,C, loan; ,

W h a t d i d th6 [email protected], do with t b bands they gat from the

d ia tr ia t t

I t was no t i m e unti l bond houscas were aamrping on the

doorstep of the R,P.C, urging the R,F,C. t o let! t h e m

buy those refunding bands. The R,B,C, d i d sell t h e m

end the R,F,C, mads a ~ d s o m sprof i t ,

what happened t o the profit? Was it returned t o the

d i st r i a t t

Heavehs, no. It went into the United Statea pea sub^

and Baa ainas been given f o forefgn governments sad

thoae Poreiga govsrmenta are not rsquired to fi-$

repudiate end ecale doun their bmda, On o w foreign

a i d prsgrem end am-away, a8 generow! as Mr. Jesas

Jones mey heve bean aacrussd of being, he was not even

a gfksr eompared t o what has ainae been dons under

ths oloak of federal aid, I t is very interesting thab

U d t e d Stetea investors in etatm and l o o a l bonds were

forced through %hebankruptoy wringer, where invastors

Ma~on: in bonds i c F ~ e n o eand &gland, Germany, I t a l y , Japan,

Spein, olnd so on... Uncle Sam extends "aid" t o those

governments without demanding t he t thsy first repudi-

a t e t h a i r tax aeeured bonds,

Baumt This R,P,C. loun was baaed on the RoFeCe's eppraiorl

o f how muah the d i a t r l e t oould pay--this 1s aacording

t o the R.F,C. - - l t had nothing t o d o with the emounft of

bonda outatanding. Do you f e e l t h a t the R,F.CO1 s

appraisal was a f a i r one as t o tho comunitgls a b i l i t y

t o pay then?

Mason: If the R.F.C.~~ appraisal waa fain, then the previous

appraisal by the Sta te Dis t r i c t Securi t ies Commission

of Cnlira~nlrwas a fraud.

Baum: Of uourss, t h a t war in mme prosperous times, a

Maaont I demur. Cal i forn ia ts population was rmoller i n 1910-

1920 and aa Californir 'r population incrueaed, the

oompetiC1on for land 5nereaaed. I t is people who give

value t o lend, 80 it sannot be sa id the t the demand

f o r land was 108s in 1930 o r 1935 then it had been ' i n

19x5 o r 1925.

Baumt Then I taka iC you think the R.F.C. put too low en

estimate on the a b i l i t y of thees lande t o pay?

Heson! I don't th ink the R o F e C o had a thing t o do ebou%

Mason: faxing the figures. The figures were picked o u t of a

hat and ware arr ived st about l i ke this : "what wlJ.1

the average bsndholdsr of t h i s district be wi l l ing t o

taka t o get some money?" B e eetilaating was dona

mainly by a Mr. Walter Wagner, who waa on the payroll

of the R*F.C, 13s their eppralaer, end was alea seere-

tary of the I r r iga t ion DistFiets Aaaociation. So he

was i n a sense t rying t o seme two mssbrs. OWiauely,

a s secretary of the Asaoaiatf on, the ware he could show

the d i s t r i c t s t h a t he bad gotten t h e i r bonds cu t d o n ,

the ma,% papalar he was i n t h e i r ews. Mr. Wagner

should never have been emplayed a s appraiser,

Beumr I know the R.F.0. claimed t h a t the amount of Wnda

outatanding had nothing to do w i t h , . , They were not'

conaerned with u b t h e ~ ?they were reducing the debt,

or paying the debt off a t par, that wes none of their

business. All they were doing was appraising the

a b i l i t y af tha land t o pay end making a loan upon tha%

ba$irs, You f e e l t ha t i a not true a t a l l ?

Masons aan you d o a m n t t ha t i n a l e t t e r f r o m !fro Headerson

or PIr. Jones or any of tlm R,B,Cb ef f ia le la?

Bainat That was in a speeah by the anator, Cbsrles B. Hender-

a m , direator of the Drainagcb, Levee, and Irrigation

DivZaim of the R,F,C,, I.DoA, minutes of October 1934..

~Nasonr Well, w t t h a l l due respect t o Mr. Henderson, who was a

very amisble gentlemen end vho I always got along ffne

w f t h , he was f f ~ s tand laart a po l i t i c ian . I have quite

a eorrsapondrsnce ffle t o and f r o m Hr, Ekndaraon. I

aaeure yon that MF. EIbndersm didn't know an i r ~ i g a t i o n

d i a t r i a t fm m s h3le in the ground. Be wou18ntt know

whetbar it had t w o l e g s or four, aatually. I would

be wflling t o wager that whatever apesch Mr, &nderson

made t o the '3[rrigetim nirtribte Association was not

written by &.Henderrson.

Baunt No, I graatmed S t was supposed t o be a statement

o f R.F.G, policy, and delivered by Mr. Eienderson,

Mesons Thet is one thing, the R 3 . Q . never had any poliay in

this regerd. 1 oan demonstrate that e learly in this

way. It didn't matter one iota whethar the bonds of

en irrigation d ia tr i c t averaged $10 an acre ar $100 an

aors, the R*P.Co aqprafsal wmild often be mare an the

bond8 reprnsen8lng $100 an eere debt then they w a d

be on bonds rspnsrntlng $10 an acre debt on land that

was the mors valuable of the -0. For example, t b

Qlenn.IColur Irrigation Diatrio$ had a debt averaging

only about $10 an aore. A8 5 remember, the BOP,&

figure was a good deal lower thnn it was en the Lehaa,

b s o n t Lemon Grove, S p ~ i n gValley bonds where the debt was

about $150 an aare. There was nb aonaiateney. It'

you@llgo down the line, ygu@llf i n d tbaC these

app~eiea lacannot conceivably bear any mlat ionahip

to a b i l i t y t o pay.

Baumt They wem t ied t o a b i l i t y t o a t the debt down ser faz-

88 p 0 ~ ~ 1 b l 0 e

Masont 'Phsywem t i ed tawho holds t b 'bonds end how l i t t l e

w i l l they take for the bonds. That was the yardstick,

nothing e l s e .

Baumt In thia apseah by Senator Henderson, he d i d say 3r

point oat that the poliay of the R.F,C, was t o make

loans on the d i r t f i a t s where t h y oould eut the debt,

beoause they only had a l w t e d amount af money an&

they wanted t o extend it t o a s mcrny diatrfats aa

possible and therefore they eoulda*t afford t o re-

finanae the more axpensive end well-flmnsed dlstriets.

bson: MeIL, Chat mshs a good-rounding talk, but the maord

woaldn*t support it.

For example, they trfed t o gsb Wrr bondholders

of the Priaceton-Cadara-GIenn Distr lat to take 59# an

the dollar. !There waa e d i r t r i o t wlth an average

bonded debt of about $10 an acre end the f i n e a t prune

orohards in California end the f f n e s t land In the

Mason8 Sacraments Valley, When George Po WeBear and one or

two other bondholders put the ir f o o t down and said,

"NO, we wont t go f o r that robbery,", ,. A number of the

Prhoston-Codara-Gle~l~lbondholders had said, " ~ l l

righb," and they got t h e i r 59#, But others said, "NO,

if you can't pay promptly oretre perfeat ly wsl l ing to

give you time." Since then the Prinaetoa-Oodore-

Glenn ha. paid off all of its d n d s r i g h t on the nose,

right on the dot.

Baum t So they got paid st par e v e n h r l l y ,

Mesont Why, yea, And the sams is tmrs o f a number of other

dir t lc iot r . The Newport Heights Irr igat ion Diatr ia t

got most of t h e i r bonda refinanced through the R.F.C.

and there was one lady who said, * ~ o , I think my

bonda are good. I don't think X ought to be ordered

t o give them awry.* And she got paid.

Baums In bheae eases I suppose the d i a t r i e t d i d nak go

through the bankruptay proeeedfng,

b ~ m t They t ~ i e d%o.

Brunat Couldn't they have forced theaa bondholders t o turn

In their bondrt

Msaont Ma, Hewport Heights, tihe court denied the p e t i t i o n for

bankrmptay, threw it out, and s a i d t a t h e d i s t r i a t ,

I

y o u haven't demonstrated that you need t o repudiate

$OUT h o n e s t contract." I mappose in some d i a O ~ i c t sif them ware only e f e w

bondholdera who didn't turn i n their bndsr, it would

be oheeper t o Just peg them o f f a t par then t o go

th~ough&at whole proceeding,

-re wasn't muoh t o the proceedings, It was just

rtliw your p s t i t i m , H O S ~af the judges,.. Ir I

said EBr, Esndersan d i d n t t h o w an irrfgation d i s t r i u t

f r o m a hole in the ground, them d i s t r i c t court

judges d i d n f t hlau if an irrigatiau d1st;riut was a

banana or just what i t was.

Did you know Jesse Jones?

Rot personally.

I suppose you uorresponded w l t h him.

Yes and no, I showed a couple of letter8 that carrlad

Jesee Jones* aleplatwe to a f~ierndwho knew Jesse

Jones and that gentleman to ld ma it was not the algna-

ture of' Jesse Jones, just on6 of his alerka who had

signail tor him, and that Jesse Jones had never been

allowed t o see one of my letters.

1

Xerced I r r ina t ion Dia t r ia t

Baum: Speaking o f appraisals of 8 d i a t r i o t t s a b i l i t y t o pay,

before t b R.F.C. came into the p io tu re them was a

study by Dr . Hurray Benediet of the Herced d i s t r i c t t a

a b i l i t y t o pay. Did you Peel Dr. Benediatta e s t h e t e

of e b i l i t y t o pap--and of oourae t h l s was under t h e i r

then-present uonditlans--was tha t a f a i r estimate, or

do you thlnk the bondholders should have had another

inveatlgation made?

Mason: I think i t was perhaps as f a i r as could be, aonsider-

ing the subjeot of the study. It was l i k e asking "How

long i a a stfin%?* It was j u s t one of thoae thinga

t h a t can't be answersd, a

B a ut So you feel the whole idea of a study l i k e this was

not scientific?

h a o n : Mot only not auient l f le , but waa as uneelled f o r aa

if you'd s t a r t out on a atudy, "What's the a b i l i t y

of federal taxpayera Ba pry ineonas taxes?"

Baum : I think Dr, Benudiet would aelecrt a famu and then t r y

t o figure o u t whet price they got for t h e i ~produot,

what t h e i r various and rundry overheads ware, end haw

mah they aould afford t o pay i n tams and still not

starve. Waantt t h a t the t h e o ~ yhe worked under?

B4eeont Thoae ere ell matters that are presumably determined

by the assesaor in eaah county end irrigation d l a t r i a t

before the valuation of the land i r entered On the

assessment roll, end anyone who feels h i s aaseasment

is out of line eompsred t o the nei@borsl va lua t im

aan appear befars the board o f eqnalisakion and get

his asaesared value adjusted. But ones thet aarreassd

value ha8 been aocepted by the pruper?ty holder, than

i t i s too l a t a f o r h i m to object t o the levy or aol-

l e c t l on of any taxes that p a r .

Baum: Then you f e e l the t i f these fem@rswere not able t o

pay, aatuelly tb ssaeaaed valuation was too high?

b a o n r No, no, no. 1 hnoe lcnowa people t o hold very valuable

a l t y l o t s , people without any monsy wha just oouldnat

pry their texs8. When gou hold land that you uan*t

afford t o hold, it i d t enstornary t o go looking f o r

b a p t o y so you a m eaeaps your land t a r

Baum: In your opinion, the eb i l i t y of the individwl on the

lend t o gay we8 l rm3avant~

Maaont Utterly. Juab asl 2rnlevrnt aa ths rbjtlity ei a

vteant-lot halder t e pry eity taxes i s imolev~nr;.

bybe hetrs on, the lend, maybe hats nab on the land.

That hasr noehing t o do with it, If he errst%w e the

land, l e t 1Qgar 'Phereta no penalty I F yon Beeide not

%sons t o pay the tax, You don't go t o j a i l ,

I think one of the most in terest ing court opin-

ions was Herring vs, Modeato I r r iga t ion D i a t ~ i o t

(95 Fed 705) . Thars the eourt quotes tb attorney f o r

Madesto a s saying t ha t the lend in the Hodesta I r ~ i g a -

%ionM a t r i o t aauld not pay the tax t h a t war due, never

w o a d be able t o pay taxea t o pay off the first isaue

o f honda of the d i a t r i e t , Sfnce uhich time the first

Issue of bonds has been all paid off and twelve o r

fourteen other fasuea have been issued whiuh h r ~ ea l l

been paid off , It l a in terest ing h i r ~ t o r i c a l l y aa an

evidsnoe or how mistaken one can be about the a b i l i t y

of 2Bnd values i n Calirornia t o supply publlo reven-.

Baum: Did you know Asaemblpaa C. Ray Rabinaon of Hercad?

Hesant Only r~ l igh t ly , He was one of the a t t o ~ n e y r i n the

Welpaed petiQion end he ma one o f the attorneys t h a t

promtad the a t a t e bankmaptoy b i l l i n 1937.

I

I %aunt Baf ore t h a t he promoted t h i s s t a t e refunding plan, a

I $55 nfllfon s t a t e ftlrrd. Yon favored that.

Eiason: Yea, I scsrtarinly was in favor of anything t h a t would

m o b S t possibls f o r families on the land t o s t ay

there, ft wasntt the f8mllies t h a t wars on the lend

who wmQ@dthir kind o f federa l bankruptay law. It

was the absentee landlords and martgageholde~awho

&son$ wanted it. The little fellows with their homes and

their f a m s r they paid their taxes,

Baw: What Bid you think of Robinson?

Mssont I'm glad you asked that, It was about ten years after

the Bekins deerision that I met Ray Robineon in Gas

Angeles and he remembered me and 1 mmmbemd him*

We had e very niea talk. % said, 'J.R., I wan* you

to know that I t m ready t o admit today that you ware

Fight. It was e mistake t o ask Oongresa t o enact

bankntptcy for the state, You just looked ahead

furthe~then moat of the rest of urs and I can t e l l

you, there are plenty o f lawyere today who wish t o

goodness they 80ttld eseape this federal Frankenetein I

that now hae the lawyers worried siak."

Provident Irrlnation Dlstriot

Bamr I know tbt sometimes tb districts took tiOle t o

large quankitles of delinquent land and then they

rented this land out. Whet happened t o tha money they

got t r a m the ren$al of the land?

Masant In the Provident Irrigetlon Distriat ease (l2CaZ (2nd)

365) the Supre= Qaurt h e l d very squarely t h a t the

~sveraweolleeted os ground rent by the d i s t r i u t i s

&son; of the same order as t b revenue frm assessmnts would

have been had ths land remeined i n private hands and

the holder paid the assssamgnt on ,$heland. But I

regret to say that acme of the lawyers for the irriga-

tion d i a t r i e t s never aooepted t h a t ruling by the S t a t e

Supreme Court and have eit;her adt lsed or allawed i r ~ i -

gation diatrlcts t o handle perventma, both revenues

cbllseted aa ground rent and revenues callected a r

asseasmenta, a s though it waa a f d l y - o w n e d empara-

tion and t o sdmlnlater, thoere bruat funde i n ways that

am a crime, accordtag t o the laws of California. The

attorneys, same of thtBm, seem t o be adamant in inaist-

fng Bheb unless absentee landlarda willingly end vol-

untarily pay the essessmsnt mqulred by Zew not only

should the diatritt never take poessaaion of land

eseheahd end ad mini ate^ the l a d a s a bsnefSa6nB land-

lord, but that the tax evader shauXd be rewarded fer

hevsng refused t o pay &e lawful taxr

Batumt Waa there no0 a PPovldent ea8ar perhapa this is the

one you are mentioning, in which W i l X i a m BPobls was

involvml in, attempting t o foroe O h e d i a t r t e t t o take

over thzwe-yaar delin~tlsntl m d r ?

Masant Well, in Provident 1 thbk pracrbfeally all the lend

Mason: had escheeted t o the d i a t r i e t under the operation of

law, There was no disaretion i n the law a t t h a t

t ime. That was before the tax-moratorium atetutear

bscam fashionable. Yes, Noble attempted t o get ths

law respected and I believe he got a l i t t l e fed up

with a l l the shenanigans golng on and I believe...

Whstbr he got paid anything far it or not I don't

know, but there was a very nice fellow named George

H. Hdbig. Whig hed a l i t t l e b a d hatz8e of h l a

OM. Bagways Mdaig took hold of the Travidentl.

c a m... Beumt Thia was f o r the bondholders.

&son; O h year, H&ig was really representing tihe bmdholders,

Ee retained Louis Bert let t sa legel aounael. Louis.

Batrtlett won evetry ease tha* bb hand led and that, of

aourae made Louis very unpopuler vith very powerful

intereata uha d i d n ' t want the i r r iga t ion dls%riat l a u

t o mesa enything.

1% was ChaB aase whsm Bartle&twas ettorney f o r

Wcbig, th Provident Land Corporat ian ra. Proridsat,

I r r iga t ion Dbtriet . Provident Land Corporation war

set up by Noble, o r H~ble'aattorneys# a s a corgoration.

3!ob1e1a o r i g h l idea was that the earparatian would

b o o m the suecessor of the Provident Irrigation D f s -

t r ia t . I believe Noble's idea was that the Provident

Land Corporation would beobme the lega l o w m ~of the

propertlea of the i r r iga t ion d i s t r i c t , but a s t o t b

deteile, I'm not sam beeaum I was aut of the country

i n those p a r s . I da know that Bartlett made r v e ~ y

able defenie of the i r r iga t ion d i s t r i a t law end he

knoak~d out e number of atrtntier t ha t were designed t o

waken the r igh t s o f bod owners,

%en; a s bad luck would have it, Bar t le t t and

MaKaig somehow were unable t o 3ee eye t o eye about

sOm8 d ~ t a l l s ,I ' m not j u a t sure what i t was, and Bart-

lstt susd MeKaig and 1 underatand he eolleoted f r o m

M&fg3crolasthing l i k e $30,000 aP $35,000 es his fee '

f o r lega l work although H&ig8 f don't know t h a t

H&ig gat anything otr* of it 8% e l l , m d 1% not

sure t h a t M&ig didn't do a l o t more vork than B e r t l s t t

d i d beeatare Ba~$lettrsbriefs, I eollclbo~etudwith

Be&le tb in helpfng him prepare the briefs, and B s r t l a t t

didnt t how v e ~ ymnoh about th. i~rigtationd i a t r i b t

law when he m e t MeKaig. I had known W. B a r t l e t t rrr

slsyo~of ~ ~ e l e yand as head of the Eas t Bey IEr;miafpcrl

U%lliby biratriet and he was an admirer of awerntw

O i l l s t t and Qaorge Berdee. It war verg uafor%anate,

I never d i d understand the r e a l Low down on why

Bartlett thought it necessapy o r advisable to sue

MaKalg.

W h i g thereupon lef t Calirarnia and I think moved

t o Nevada where he was, I understand, fairly auccesaful

fa handling big ransh deala.

D l d the bondholders ge t anything out of this?

lo,

They did refund Provident, I think, with R 0 F . C . funds.

You eant t c a l l it refund, 'lWy repudiated.

They refinanced st a much lower priue.

Why, as X mmember, I t was about the equivalent of two

oS' thme years lnteres%'wlth nothing on the prinaipal .

It war just H e r ,

If Bar t le t t got that huge fee, what was l e f t POP the

bondholders?

That's a good question and I aan l t answer S t . Jusrf;

where the m m a y oame f'mm t ha t Baplet t got I don*$

knw enough about it %0 say. Certainly, as I reaell,

the Bravldent I r r i g a t i o n Bis t r ie t , tha bonded indebted-

w a r var not aver $20 QP $30 an acm. Thepa WII no

exeuae f o r repudiating the 'bonds, f o r writing d m the

g~Zacipal. The prinaipal should have been refbndgd a t

Meson! 100% and perhapa the i n t e r e s t reduced from 65 t o 5% o r

4%. Maybe the bands a l l t o come due i n twenty years

or t h i r t y years o r f i f t y years.

Baumt I$ uould have paid oa t eventually?

Mason: Why, without any questIan of a doubt.

Bsumr I remember the Provident ease ¶.nvolved the disbursrl

o r the r e n t a l mamy end 1 think tha bondholders

wanted the money t o pay off the bands and in t e r e s t .

Haaon: That wao the only revenue the d i s t r i c t had.

188-3 I think e t that ti- there waa a quest ion that per-

haps the d i s t r i c t was expending more money than nee-

esaery in maintenance and operating eoats end I

wondered lf this w a s common, thet when the d i s t r i c t

rented out the lend they used an sxcesaive amount f a r

operation r a t h e r than attempting t o pay off a s much as

they oould on the bonda.

Maaront No, no. #any d l a t r i c t s have discovered that by aet fng

. l i k e $&anford Universi ty doee w i t h i t a so-erlled farm., . Stanford doeon't a e l l any of Its lend, S t w o r d rent8

it, end is getting ~ o m ePentast ie revenues a s lruldlord,

The I r r i g a t i o n d i a t r s o t low hag always authorized an

i r r i g a t i o n d i s t r l u t t o s e l l o r lease o r manege any

land owned by the d f s t r i c t o r reverting t o the d i s -

t r i c t f o r non-payment of easeasmenta. One of the moat

Hason: i n t e r e s t i ng royal commiaalon reports ever put out i n

the British Empire was the so-aahled Lord Uthwatt

Report, about 1944, end i n Ssobion 147 of this repor t

youlll f i n d subs tan t ia l ly t h i s reaommsndationt t h a t

whenever any i n t e r e s t i n land has passed t o a govern-I

ment t h a t i n t e r s a t should be admlnistsmd always by

way of l ease and never by way of aiBe.

Barn: When the land was leaaed by the d i s t r l o t , were the

bondholders f a i r l y t r e a t e d ?

Masons I n the Provident D i s t r i a t the main bondholder was e

man named Ivy G. Zumwalt, who was a l s o one of the

main landholdera* Oh, the more quest ions you ask, the

more my mlnd i fndu burled around in l i t t l e poekets hem

and them l i t t l e spots t h a t if m turned the spo t l&h t

on, we could uncover enough pay d ip* hers t o make

Sherloek Holmes o r J. R u f u r Wellingford, o r any over-

thrw of eny gevernwsnt look l i k e chI ld (8 play. T h i s

war h ia to ry in the suking, t h s r e t e na quest ion about

iQ

The Providen* Dirstriat was oonc+ived in a smoke-

f i l l e d room. The ~ e o r e t e vof the Provident D i a t r i a t

aommitted suiaide beaause he knew t h e d i r t r i e t was

b~eakfngthe l a w and t h a t he waa ar iminel ly l i a b l e

PZesonr and would be sent t o prison if he didn ' t k i l l himself,

L. M, Benoit was the secretaryts name.

Beum t For what crime?

Mason: For being secretary and treasurer o f ti public d i s -

t r i c t and abeytng the bankers and misappropriating

the moneys m a l a ~ i s t r e t i a n of the t a r money, whiah

is an offense againat the criminal code i n California,

Baurur And w - b t d i d Mr. Zumwalt have t o do with i t ?

Wasan: Mr. Zumwalt was the leading dealer in farm implements

and farm machinery in the Sacramento Valley, with

headquarters i n Colusa. Zumwalt had an enormous famn

implement agenay. In that f i e l d he shined and made

a l o t of money and put money i n t o land and i r r iga t ion

d i s t r i a t bonds and I don't know w h a t a l l , The Z t m u a l t

e s t a t e today came out of it, some of the most valuable

o i l and gas lands i n the Saaramento Velley was some or

the residue that came out of t h i r i r r i g a t i o n d i s C r l s t

benkruptoy. Zumwalt was a very interest ings eggreaaive

gentleman. I say gentleman beaauscb he and I never had

any word& or anything of the kind, In fact, I don't

believe he ever bought more than a very f e w bond8 from

3, R. Meaen & Co. I think he got most of h i s bonds

l a t t e r on. He was an expert fn knowing where the

duak-erhooting war best in the heakb of t b duok-shooting

country. He prefermd.. .

Beum: I imegins he got depreaiated bonds i n return f o r farm

implements.

Haaont That te r ight . He g o t a l o t of land fmm people who

had bought farm implemnta and couldn't pay for tha

implements and gave h i m the land. l o doubt about

Ohat, Not t h a t tha t is wrong a t a l l , but the p ie turs

is a ampl ic r ted p i o ~ , w i t h many shedere 'Pho

whole hlatorg of the val ley In California i n this

period, after 1929, i b % not easy t o get a proper

perapeative over the whole subject, but that perspee-

t i v e I see today, especially as we look baakwards,

is tha t ths general walfere of Califarnia would have

b e n muoh advanced had every one of thesa d i s t r i e t r abeen h e l d t o t h e i r bond cont~eet. . .

Baum t And the land h e l d by the dis t r ie t and leased aut?

Hesant Either leased out or resold, Of eourse, i f there was

doubt about the rental value of the land being ads-

quate t o pay the d i r t r i c t expaneor and balance the

d i a t ~ i a bbudget! and leave a swplur over end m d above

that, if there was m y doubt about that, the land

should have been leased end the f u l l mntal value of

the land under the law belonged first t o the i r r lga -

t i o a diatzdet, ahead o f the aaunty, ahmad of the

achoal d i r t r i e t , ahead of the s t a t e , f o r the uses and

Waa9n: purposes of the I r r iga t ion Dia t r ie t Aot and among

thoae uses and purposes f a the pagment o f t he money

borrowed f o r thoae purpoasr, That i s the Provident

deoirion,

Baus I'd lib t o hear more about #r. Z w a l t . You nan-

tioned that he wsa the b igges t landholder ie Provident.

Mesont I woplldn~tsay the biggeet, bat om o f t h ~big ones,

And alaa i n the r i o e districts, I think Zwmrlslt basme

a very large landholder and a l so hmwalt was very aative

In using matured bond8 of d l s t r io t a In l i e n of money

i n pryZng asaasaments, not only hia assesamsnts but

mybo the o t b r fe l l ewra asseasimnts end get t ing the

other fellow's land by buying bond8 a t , let 's ssp 204

on the dallal?, end using a $1000 bond whiah cos t h h

$200 t o pay o f f 41000 worth o f r~saaszaants whioh the

other fal law aouldntt pay.

Baumt Ee mst have bean verf rmpopalrr 185th hi8 neighbors.

Hnaoa: Yea and no. You'd n a b w r l l ~ rC h l n k tha t , but the

lmger Z l ive , the more it aeeras t o m your neighbors

8eltdosr ask, "How did you get i t T b , bub only, "Have you

got it?' 'Pheretr nath3ng t h a t yoxw ne ighb~raw i l l look

d m on more then ff youtrs known bo have been a l o r a r

end you engaged in the gome and d i d not cam h4ms u l t h

the b800n.

Nevada I r ~ i ~ a t i o n1)irbriat--aeiinanainp: under S t a t e Laws

I

I

I Baumt You were involved in a case ooneerning the mduotian I

of bond i n t e r e s t on Nevada I r r i g a t i s n Dia t r ia t bonds

i n 1937. Could you give m bone baukground on t hat I

d l a t r i u t ? Were you i n on tha finanoimg of thaC d i r t r i o t ! I in 19257 I

' Mason: He, I d i d n ' t par t ie lpa te i n thrt. T h a t was an under-

writ iag of D i l l o n , Read & Go. in Hew Pork, en8 of the

big New Pork bond houasr.

Baum: Dfd you b i d on I t ?

bsmt X don't helleve we d i d beaause I never regarded the

Bevada I r r i g a t i o n Dis t r i a t ae an i r r i g a t i a n d i r t r l o t

excrept i n name, L ballevrd it wra coneelved by en-'

gineera, e i t h e r B i ~ e e t l yOF indirbet ly I n the emploj

of the Paei f lc Gas and $ l e o t r i ~~mpany. And that it

waa a little i d e a of some &ever or amart fineneisrr

thaC trhs Pea i i i c dear and $laatpie Qompany, @ o d d ob-

&rfn the are of atma f a l l i n g water, a a t i n g through the

i ~ r i g a t i a ad i a t ~ i s tl a w t~borraw.oronay a t lower In-

t u ~ b a trat~o8than the mondtyw~taldhava eoet tha P. G),

dD E. i f it had b 0 ~ ~ m . dthe BtQney U i ~ e t l y *

humr This is why gou teal they wanted the i r r i g a t i o n dia-

tr;tet t o put in tM worka rather than the P, Q, &: E,?

Maaonl O h yes, obviously. If they could get the works put

i n by an organization whbse secur i t ies were tax-

exempt, it was very l ike ly t h a t the organization oauld

borrow the mmey a t lower r a t e s o f in terest .

%awn: Wemn't-many of the works already them, mining ditches?

Mason2 Some sf the smaller mrkr;, yes, had been put in in the

mlning period and the water ~ i g h t shad t h e i r or igin

i n the mining period. But t he re never was more than a

very amall amount o f land in the d i s t r i a t which was

l eve l enough t o i r ~ i g a t e . The first though* was,

ooaording t o the original prospectus which I have a

copy of, it Mas antieipe ted the 2. G, & P, v m l d pay

the d i e t r i e t e sun of money each year atore than saf-

f iaient t o met the expensea of the distriet and pag

the bonds, Than, I rearember the Atterney-Oenaral of

the e t r t s o f California accused the P. a, & E, aa one

ocoaaim in this m t t e r p raid that the P. a. E, had

not l ived up t o its contraat vith the d i a t r i e t and

had aaked for a revired contraot o r a new aontraet end

as t o whather th new cantmet warr jus t i f i ed o r not I

wouldntt attempt t o ray, but I imagine the Attorney-

General, o l d U. 8, Webb, war pre t ty able i n legal

mattera and when he accused the P, G, & E. of breaking

i t s contract w i t h the d i s t r i c t , I was alwaya wil l ing

&son8 t o believe t h a t the crld general probably knew what he

was ta lk ing about.

#hersupon they organized a bondholde~sf committee

w i t h the ides of getting in the original bonds and

issuing lower interest-bearing refunding bonda. The

old bands were a l l surrsndered by the bondholders

af ter some years of d ~ i v eby the bondholde~a' aammittee

and default by the district and thmatening t h a t unless

you d i d give up your o l d bonds and take new bonds

you'd get no mope interest a t all, your old bonds

wauld be dishonored,

I had a f e w bonds personally. They said mine

wem the laat to be turned in. I turned them in S

under a protert and def in i te ly preserved or tr ied t o

praaervs m y rfghta thut were in the bonda. I forget

the exaat languaga of Chn reservation now, but I hed

good Zsgrl rdrSue 6n how to do 2 t wit;hottt raeUy

~ a i v i n gwhatever legal remainder there war. I took

the new &If bondr under protest.

Baum; Did the distZYlbt go i g t o bankruptcry pro@eedingr t o

get the banda in?

Meson; No, thisr waa p a r s before them was any suoh federal

et u % ~ t e ,

But it wasn't very long before, they had b a n

so sucoessful in repudiating their first bond issue,

t h y deoided to try and ~epudiatatkre refunding

bonds.

There had been no cut in prlnolpal on this f i r a t re-

h d i x l g P

Nol on intarest. Then they wanted t a out the interest

again from 4% t o 3%

The ref'unding bands had been lamed, . .

Had been aut from s&%to 4%... And then in 1937 they out again the interest, t o 3&,

end a fellow n8med Livingstan p r ~ t e a ~ d and wanted

his 4%. It want t o court as John A. Livingston vs.

E. W. Robinson, Treasurer o f Nevada Irrigatim ~ i a :

triet, and Bevrda I m i g a t i ~ n Dfs tr io t . f believe you

w e r a one of the interverm~sin that and W. Golwmr Cook

was yotar attor~n6ymd A. L. GeuelT, waa Livingston'a

attorney. If must have been althez, 1931 o~ 1938. The

sam was de62dad in Fsbmarpc 1938.

l a s o a ~ l h i n e , tho meam3 #pea& 164? itself . "Fhst

Hi8svada 1itigatiUn i e a book unts i t s eb f . It is entirely

unrelafeB t o anmiaipal b a ~ t o y ,

Oh yes, this warnfit under anuricipal badmuptoy.

Meson: It vsa quite a shack to me... I turned in m~ s$% bonds

for the 4$ bond., beliering that Attorney-Cnnercl U e S.

Webb was right when he said that the d i s t r i c t had

gotten into difficulty because the P, G , & E. repudi-

s%ed its twntrast with thb d i ~ t r t e t . After I accepted

the bonds end they cams baek again and wanted ms t o

take 3%bands and I objeotsd, the court saSd in effaat

that because I had proetituted myself bnee I must

p~ostitukemyself twitme That d i d n ' t s e t too heppy.

Hy expa~iencewith f e d e r a l eourta is that you're damned

if you do and goutre damned if you dm'*, aa what can

a * p o ~ rgirlR do.

Bamo I: war jus t rather surprfaed t o aee A, 5. Cows11 ~epre -

renting: Livlngstan i n t h a t easa. Banally he repred

aented the d i & f ; d e t a .

Maaon: Y e But Isre h a v n cases, w e l l , the Be~ccaryHerald

vs. Hasre eeae 2n 1943, reported tn 138 Pear (2nd)

675* real ly +the atbarneyrs an both side8 Ohst case

[email protected] the same p a d y , It was a manu-

fetatured t e a t ease, I have never Been sure but w h a t

the Livingubdn va. R~binsonease wee not; a280 a M a -

Beumo I was wondsrlng if iat: was.

Mason8 It was quite a shack t o m.. .I t m d in my 53s bonds

for the 4%bonda, believing that Attorney-General U. S.

Webb wsa r i ~ h twhen he sa id t h a t the distr? ,ct had

gotten into d i f f i cu l ty because the P. Q. 8 R. repudi-

a t s d t t a mntraot with the B i s t r t e t . A f B e r I accepted

the bonds and they cams back agaln and wanted me t o

take 3%bands snd I objeatsd, the court ae id i n ef fect

that because I had proetltuted layself once I must

p~ostituSemyself twioe. That didntt set too heppy.

Wy experdence with f e d e s a l eourta i s t h a t ysulre damned

i f you do end you're damned if you d o n ' t , a o what ean

s 'poor girl' do.

Barn8 I war just rather surprfsed to see A. L. Cowell repre-

senttag Livingston in that ease. Uanally he repre-'.

sented the di s tr io t s .

Maaont Yes, But I*ve kneun cases, w e l l , the Mereurg Hereld

v$. Hoere beas in 1943, reported in 138 Pau. (2nd)

675# real ly %b rtQarney8 an both sides In that case

wra, ~epresentiagthe same party. It was a menu-

faatitwed t e s t case. I have nevep been sure but what

the Livingnimn VI. Rebinson ease wagl n o t elso a manu-

faaturn8 case.

Brumo I waa wondurlrig I? 1% was.

Mason? It i s necessary t o have en attorney on each side, but

i t doesn't elways follow that the attorney on e i t h e r

a i d e i a r e a l l y oompletely in aympathy wfth his cl ient .

The ease was taken t o the United Sta tes Supreme

Oourt. It waa done by the attomega, IrIr. Orrick and

Herrington and those attorneys or ig ina l ly approved ths

bonde. Theg t b y wem employed to.,, they were the

l e g a l aounrsel behind tb bondholderat cami t t ee .

First they g o t a handaome fee f o ~ approving the bond

lsaue and then they got anothbr fee for making wall-

paper oat of their opinion, I t ' a morels tha t is en-

t i m l y beyond my power t o fathom, Why, in the old

days, my goodnoas, when there was an attempt t o repud-

i a t e any kind of a manioipd bond iaaue, why, it wab

the law rlrm t h a t approved the bonds in the t i p a t

place t h a t was there t o defend the bondholders and

f i g h t f o r the plghte or the bondholdera, not t o rtap

ln and daatroy thorte righta,

Baumt War the Hevrda Dfst r ia t able t o out the i n t e rea t tha

araeond t-9

Masant Yes* ao t hem have been $me,you might ray repudia-

t i an r , by the levadm Diatr ia t , glm they have it so

>&@glad ag %hatthe next ti= they wan* t o repudiate,

when they oan get 75% of the bondholders t o agree. why,

it 's autometie,

A t any t ime d i d the Nevada D i s t r i c t go through

bankruptcy proceed1ngs?

Mason: No,

Baum t Thsn haw did they ooerce tb bondholdera?

mesonr Thetta the point Itve been trging t o make a l l the way

through, Thereta been no need for this federal bank-

mptoy. Bondholders am softies.

Bauan: But thereis rlu.ya a toughie OP so who all hold out.

Mason: All right, If you con get 90$ of pur creditors t o

say, '~e1l.l waive our rights,, , ll

Baum t You f e e l that's enough, They could afford t o pay the

10s off ,

I don't see why you wouldnt t be 90% ahead. T&reta

no law suthorising 90$ o f the bondholders t o rewrfte

the law or rewrite the bond oontract, Where much of

the oonfualan has aom in, they confulss these bands

e t h boada isauad by a ppivate corporation under a

dead of tmrt where the deed of trust may provide

that 5l$ of the bondholdera aan eoerce the 49$. Under

a deed of Bmat Ilk@that, of course gou Ban have r

eomgoaltion, you donrt need any federal permission,

but C h e f e d e r a l aourt in putting through the aonrposl-

B f on or enforaing it, would not be doing anything

contrary t o the deed o f trust, But a c i t y or county

o r irrigation d i s t r i c t bond is not issued pursuant

to a deed of truat; they are issued pmsuant t o e

atrrtuta. And there is nothing in the l a w that allows

wen 99%of the bondholdbrs t o deprive the holder of

even one bond o f the righta guaranteed t o all the

bondholders u n d e r the law. If m y of t h e m waive their , rights, the mortgage holders ere that much ahead.

Was there any advantage to the P. G o & 6. t o have this -repudiation and reissuance of bondef

That'e not an easy queetion t c mrwer. If the P o G o &

B. had lived up t o its auntsect, thsm would have

been no need t o refinenee the bndr, r o obviously

after the BiatriaO d i d refinance, I would say that '

metant that the P. (3, & E, would not have t o gay the

dis tr iet as muah money eaah p a r .

I am wondering If them i s any evidenee that tbs Bia-

t r i a t waa werkfng with P. 00 & Eo rather than bargab-

ing t o gst the bask rate posaible fram P. G , & E,

Them was a man named Wlokea?, he was the managem ~f

the dlrrtriot. 0. L. Wiaker, I believe wea his name.

He was quite voaal in hi8 criticism of the P. C3, & E.

It waaot t long u n t i l somehow Wisher found himself out

of st job. After Wisker was pushed out of the way, I

Mason: donl,t think there was much mom opposition t o anything

the P, G, & E, wanted,

Wisker had been active a t the time the d i s t r i c t

was orgsnized, Be was an engineer and I believe sn

able engheer, Also, I never heard anyone question

that Wisker waa a man of character, a man of integrity,

I b o w that he d i e d a poor man--thetas pretty f a i ~

evidenae that he was honest,

But it was a long battle, The story of t h Hevoda

D i a t r i e t and its so-called partnership with the P, G,

& $, ,my heevena, i f tat is a f a i r example of partzrer-

sup. .* Today we hear the war cry 3f the Re?ublioans,

there must be a partnarahip betueen the federal gov-

ernment and the private power aompeniea, I t would 60

just ea possrble to have a partnuruhlp between the

Interznal Revenue Departmeat and t b Inaoame-tax payera.

It i~ntta relationship of a kind that aan be a

parherahip.

B a k t ltn this Nevada Distritt, would you r a y that you feel

Chore was eolluaion between the management of the

d i s t r i a t and the P, O, Q E,, or would you just feel

tihat the relationship,.^ they attempted t o do it

honestly, but it was an ilaposeible reZationshig?

Mason: Letts put it the latter way. I always like t o give the

other fellow the benefit of t;he dou\st, I w m l d n l t

charge anybody w i t h bad intentions. f d o feel this,

however, the Hevada Irrigation bistri c t hes never

uaed their t a n g pmer Bore than r very &Id dose of

it, And sf ~ourae,whether the Pa G1 b E, advised

the d i a t r i s t not t o try end raise revenue by taxing

Chs value of the land.,,

Bemz Wouldn*t that have been an advantage t o B, (3. & 35,

if they had taxed the land rather then living off

the falling water, as they did?

Maaont Yea, but o f oourse, I believe one of the strong talk-

ing point8 In organsxing the d i a t r l c t was sowwhet A

the Erma as the P. a, & B# uaed in &is recent 'fri-

dam d e a l *ere they ran these big newspaper ads

predsirng that; the dame and eanaZs aad so on would

be f ree of east t o tho land owner,

Bawna I suppose it doaoatt make any difference t o P, G, &

B. sine. Bhey jus% psrss what t b y pay on t o the eon-

~tllll~rmyway,

%eon8 'Phatta maderstad. Any taxes on the power sompanieo

pay ape allowed by the h b l i a ZltSlit ieo Cammisaion ee

an expens@,uam as any other expense, ! P b y m y t a l k

in o e ~ t a i nadvertising about how muoh taxes P, G. & E,

pays, but that9a a figure of speech.

But they have never, t o my knowledge, done any-

thing exaepe, so to speak, get In bed with absentee

landlord& And I t seema strange that they would

e l l w thetmerelves t o get in such a a i tut ion . HI?.

M. D, Lack, who was the manager 0% their tax depart -

ment, he died two or three years ego, he waa a wonder-

ful gentleman,,. Be saw the fae ta in the wlationahip

between the power conrpanies 8nd the irPigation d i a -

tr3cta and what wa-3ld have been #ise f or the power

companies to 83. He aau it so clearly and he told

me that more than once he had tried t o diacuaa the

subject 181th the highe~apa,but he fatind #at he

uould not do so without being possibly aggllasaiv8 end

he didn't think it was perhapa prudent to be too pushy

about it, far fear they might not anly retuao t o 118-

ten, but dhop h is bead off.

Perhapa the Nevada Distr5ct is one example of thQ

effort made by a pweP eompmy, an effort af ooopera-

t5m, but haevens ta Betay, what w ~fekehioken they

pieked out tu make the effort w29hr Eedanse Bhe

Neoade IrrXgatfan Diatx4ct is not an irrigation d i e -

t ~ i a t , %re's no irrigation t o epeak of there, and

no 13kellhooC of being such a aomnvtvlity am Modesto or

i

! ! Mason:

Turlaek, It was a fringe s i t u a t i m that they tried

t o experiment w i t h .

I think Mr. William Durbr9w was the manager o f the

Nevada Districtt. Was he the m e who came in after

&, Wisker? A

Oh yea, not unt i l a f t e r Mr. Wisker.

And he waa a l so greaident o f the Irr igat ion Distrfats

Association.

I believe he was fop a time, And he was also, before

then, mnagerr af the Glem&al:lsa Irrigation Distriat,

I: think a t t h ~ti= Mr. 3wbrow we8 president of the

I,D,A., the I.D.A. was fighting P, G , t E. on the

Xodesto.,, Modesto was trying tcr p a t i n their own

power d i s t r f b i l t i a n a nd P. G, 8c E, was t ~ y l n gt o ant

the rates and so on.

I think that was rfght,

So I would presuii that 2 1 ~ . -brow ~ a agc)Ing along

w i t h the I.D.A. SR 0ppo8ing PeGw 9 E.

Well, I knew Er, Eurb~mvePy wall, an artittlly n i w

gentleman, I can only sag that Mr. Durbrow was always

such s gexztleman that X cmld never picture him very

strongly opposing any'thfng, if you know what I mean.

Why PIunielpal Bankrupteg.Act Is Against the General Welfare

Mesons Let m mad yau this statemnt by Walter Wagner.

(Reads iruin a quotation of Walter Wagner bfom the

Senate Committea an Agriedture end Forest~y ,72nd

Uongress, 1st Session, on Senate B i l l 1856, January 15, 1932, p. 18 ff. Eir. Wagner deseribs how one corpora-

/

t i on has Laken ems 200 farms on mortgag iareolorures

and t u r n e d t h e m inta carporate rams, with the o r i -

g ina l farm hoxses being turned i n t o bxnkhoussa rat he^

than housing a farm faztly. 1

And that is ?recise lg %&.at the 3uniuipal Bank-

r u p t ~ ~Act ha8 accsm?lished In California. I t has

t b ~ o u nfamil ies o f f the lsnd and tamed the farms 6nd

lands i n t a absentee-owned ca~psrstefarms, and t h a t ' s

iay abjection t o the whole municipal bankrupt~yprogram.

It has nat been a prograln 50 defena as protect or pro-

mot= the general welfare.

The diekens Of it;, usually it; i s laolred upm

auperfiaiallg wiVfiout understanding the r e a l meehanfca

and conaequenees. 1 d l 2 defy g3u t o go into eng

irrigation district tadag where the original irriga-

t i a n district bond issue uauld not be considered todey

Mason; anultra- , ultra-conservative laan. What has actually

happened i a that C,hs bondholders were rob5ed and the

benefiaiary has been mainly absentee landlords who have

gotten hold of the land which was relieved of its

obliga0ion t o pay asseasmsnta and t h a t has ~ e s u l i a din

enabling the eb8entee holder of that land to oapitalize

the priee of the tttle deed until today the cost t o a

hone seeker o f land in any of these distr icts f e many,

&i,ny timer equivalent of u k a t the dlstr iot bond issue

was, i?ad these bonds remained outstanding, they would

have been a protectior t o every home seeker.

Baum: They would hsve been a l ien c~nthe land t h a t wo~illdhave

bp-i; bhe prioe down.

&son2 Right, and the epecalator could not have worked Ma

uay in and gotten there to fence out the Bornre eeekera,

'Phatts my objection.

Bsum: I believe that's a very gcod statement of pw poai-

tion.

Ihson: I believe these were trust lands, just asmuch so as

the Bostan oomnons or 8 natimal parkl and *[;heSupreme

Court a9 S a l i f o r n i s har so r u l e d .

IIiftIGATIOFT DISTRICTS ASSOCIATION

Baumt During the years you were In business d i d you at tend

the metingar of the I r r i g a t i o n D i s t r l a t a Aasoolatlon?

PIasonz Qui te regular ly.

8amr "wf

Maaonz I guess for the same reason the p r i n c i p a l of a publie

aehool would attand a suhool teacb6ss~ eonvention, t o

t r y t o keep your e a r t o the ground and your eye on the

ba l l . Also, t o oilcoulate among the d i s t ~ f c t o f f l c i a l a

and g e t better acquainted Yith them. I th ink I can

say without any qua l l f i ee t lon that I never undertook

t o get the law amended I n vaya t h a t would mean a moke

p r o f l t e b l e s s t l v l t y fo r J. R, h a o n & Go. Perhaps I

don' t deaerv~any ored i t f o r that because f o r the

firat seve ra l yaarr 3. R o h a o n & Co, l i t e r e l l y had

a0 uompetltloa.

The m u purpose of ths I r ~ l g a t i a nD l s t r i a t a

Aasoeiatian in the years that I attended tb l r me%-

In@, when Wnlter D. Wagner was s e c r e t a r y of the

aasoa ia t loa , was fop the d l a t r l e t o f f i e l a l a t o meet

once a year and sampere t h e i r own d i f f e r e n t experiences

and benefit from each o t h s r @ s mistakes and out of It

I

4

Mason:

Baum t

Masons

B8umz

Masons

Baumt

Masont

ell ,c?evalop many ideas for amendments t o the irrigs-

t ion dis tr iat law which strengthened it, and aafe-

guarded the cowraanity. 1 don't believe there was

ever an assoofation that was more free of--let's sag,

epeeial interest influence, than the Irrigation D i s -

tricts Assoafation i n the years thet I attended t h e i r

sonvention meetings.

About what years were those?

Oh, until 1928, 1929. I forgat the first year. I

fopget when the assooiation wea organized.

~omewhe~earound 1912.

I didnrt think it went baek quite that fa^.

I think it waa very mall when it started.

Yea, and the diatrlcta were very f e w i n thoae daysc

In faat, in 1932 there was only Hodeato, Twloak, and

A l t a , I believe Impe~ialwas orgenlsed i n 1911. It

d g h t be... Imperial haa always wielded a powerf'ul

inlauenoe on the arrooiation.

On several oaoasiona an attempt was mads t o ohange

thab l a w so that it would oarrespond with the laws gov-

erning achool d i a t ~ t o t aend c i t i e o and counties and

We revenus of the diatriat would be raiaad by en

annual tax on the land velues and ths bull ding^^ und

improvements. T h a t was befare I heard of Henry George,

Maeons except I had seen billboards of the Hen~yGeorge aigar

with a man with whiskers holding up h i s Rand saying,

*I am fop Man,' Thetga all I Praew about Hemy George.

I dsre say very few of thoae attending the a~nvention

knew any mom about Henry George than I d i d , but I

remember this diatinttly., , One of the direotors of

the Imperial Irrigation Distriet "war adament. Every

yomr he would try t o raise the issw that $migation

B i atrioter should tax buildings and improvements. And

I know that every tinm he brought it up, the people

instinatively,t o a man they would In unison appose

amending the irr igat ion dis tr ict law t o again tax

, buildings and improvements.

Beum f I lmagizm they represented to a large degme the ad11

farmer who had improved h i s l a d ,

Mssont And he knew that in the irr igat ion d is tr ic t , if he

bu i l t hirtuslr r! good barn and put in orchard8 he waa

in no danger of having hi. irrigation d l ~ t f i a ttax

fncreeaed, but h i s eounty t a r would bs doubled or

trebled

Baum: When you went t o these meetings were you r e g s ~ d e da s s

participant or an on-looker?

Xs~ont f was regarded--not ea an on-looker. I d m t t know

j u a t how t o elrp~esait, whether they looked upon me

Hasonr as an uncle-I hope they didn't look upon me a s Uncle

Sam--but I was known as a pepson who had had experlance

i n underwriting and distributing bondr of dis tr ic t s

and they k n e w t h a t f had gotten money for the disttricts,

end wbm I thsd undertaken t o get the money I 'had

always delivered.

Baunrt Did they look upon you a s a friend who was going t o

perhaps be able t o help t b m fhanee, , . nclaonr Oh, yes indeed. I war persona fireta loo$.

Baumr Sometinsas financiers are looked upon as oompetitora,

from whom you would want t o g e t the higheat bid , not

a s a friend.

Masont That, o f course, is a l a o true, but i t was a rather

unique circumstance. Duting the f i rs t few years vier8

l i t e ra l l y was no competit i~n, so the opportunity t o

bite the hand t h a t f e d them, s o t o speak, wasn' t so

great as I t would be if there were mug oompetitora

looking for an wportunity t o lend t o the aownutity.

W h 5 . h they knew that I waa not in bushe68 s a l e l y f o r

my health, a t i l l they alao knew that I he8 handled a

number of deals without ~egardt o the p r o f i t because

I knew the ct~mnmityneeded the dam or canal or the

lmprovernent and could ill a f f a ~ dt o pay what the job

was really W O P ~ ~ .

Haaonr It's 1ika Ooagressman Phil Swing of the Swing-

Johnson Boulder Canyon Bill aaid in hearings in 1930,

in introduoing me t o the ~emberaof ths Roue Co-

mittee an Irrigation and Realamtion on Senate bl i l l

4323. &, Swing said,

P went to srry In aaane~tionw i t h Mr. Masan that he 2s and has been an able and distinguished friend of PO-almmtion and drainage projects for a good mng p a r a , assiatfng them fm finaneing themelvaa through the aale of bonds and even shoving hia f a i t h in t h e m by investing hi8 money.

Mr. Glover8 In whose behalf does the @ntloman appear?

Cbainnent I thlnlt Mr. Mason 28 out of businesa now. H e I s a free lance end friead and rdviaor of the people In-terested in legi8latIon of t h i s kid.

s

So that was atill my mputation In 1930, although

I had been out of bueiness for tbree p a r a .

Baumr You were still a&tendingthe 1.D.A. mestiags after ;you

went out of businare.

Batrunt I chink I na05ced gour name in attendance there a f t er

hsont Yes. T)Bb a s a o ~ i a t i o nu n d e ~ cWalter Wagner was a very

construlotivc~ organization. Wagner was an unuauelly

sompetent person, but betwees the pressure from th6

!

i i I

I Mason: mortgage interest. and the ao-called abrentee-landed

interests end the private power interests, how Wagner

remained a s sane a s he d i d remain and a s even-tern-

pered, I xsa~veled that he aould carry on a s competently

i as he d i d In the fees of s u b overwhelming and impla-1I cable oppoeition, Perhaps when he f inally acueptediI employment by the A,F,C,, he hud been through manyI

I hard battles and after awhile you get pmeh-drunk,

I never felt any ill w i l l t a w a ~ dWagner f o r going on

the payroll of the RaF,C.p but I d i d think he had a

double interest, The m o m he oould get the bonds

repudiated, the better he would stand with aertain

d i s t r i u t oSf ie i s l s who didn't think beyond the end of

their noaes, He was certainly not an impartial

appraiser, He should not have accepted such employ-

ment, in m y opinion. &It Wagner had had s very hard

tima keeping hie fInanciaL nore .abov@wa0er person-

a l l y end iQm y be #a$ he reel ly juaP kind of aaid,

'WQU, if these big mortgage aomganies and CaliSornia

Lands I Z W O ~ O F ~ ~ M I who should know w h a t ' rand other.

orha6 w a n t it thia wag, who am I, If X ern make a

deecrnt living,,. well, l i fe iaahort." And I t was,

Wagner didn't l i v e long after and I hope thab U s

final years were mare that he enjoyed l i f e , But I

II

Mesan:

II

Baum:

1 Mason:

I

I Baum:

/ Mason: !

sti l l feel he was an intemsted party as ao appraiae~.

fie certrirrly was never accused of leaning cwer back-

ward in favor of bondholdere,

I think Mr. A, L. Cowell waa one of the fcn.mdsrra of

f oaeA.

Certainly Mr, Cowell was there in the beginnkng.

Cows11 was a very able gentleman, Cowell somahow

got his m i d worked up t o s polnt where he convfneeB

hlmself th t Congress should have the authority t ot control th;, payment of local g~vemmentbands, a l -

though he would never admit that Congresa should have

the power to control the isauence of l oaa l gove~nmsnt

bonds.

B4) was for muniaiprl bankmptsy? I

Oh yea

Was he a l so for soeling doun the bond issue?

He we8 attorney fop a number o f d i e t r i o t s that d i d

bhut. O f cou~ee, he h a d nothing t o aey* I presume,

about ha% figure the RmFaCo paUed out oi the keCa

I know bhie. Omell, in the early dayr, was the

attorney in many important t e a t aasea end he wea then

in o o u r t in aupporf of the governing law as eonatrued

and interpreted by the oourta, lb nearly alway8

prevailad in the cotrrta because he was supporting the

E.lfasant State law. That; wss trtxe f o ~ Cowellmany pars .

built a p a very f ine repatation,

Maybe the prerssures we were speakfng about on

Wagner were also mare or leas felt by Mr. Cwell,

Mr. Cowell maintained a little one-by-two office in

Staukton and his of f ice was so overcrmwded wfth

Briefs and law reports end bulletins of all kinds that

he hardly had morn! t o sit d m in that porn, Bow in

the mrld Hr, Cawell ever kept his wits at all in

such d i 5 0 ~ d ~ P e miracle t a me, c a l lwas Whenever I 'd

on htw he 'd be literally sawed unl?er. E i s desk,

well, if there was eny part o f M s desk that waantt

a t least four feet deep irn documents,.. But he was

a very fine gentleman. He and I aIwoys bod very

definite mapact for each other,

Frequantly in cases where Xtd be heving tpouble

with ar diatricL he'd coma i n and defend the law end

b3ip ma find the right caaes t o FA&$ and do it

p ~ obeno ~ub%ibe. T b r e 18 no doubt that Hr. Omell,

along dth S e n a t o ~Dannett and S e n a t 6 ~Garrison and

a f e w ~ t b r a ,Bemrvea t o have a niche in Caliiorniata

irrigs0ion hall or feme.

Beum r I wanted t o ask yau about some o f the other officer8 in

the Imigation D i s t r f o t s Association, Did p u knm

S e A.

Only very s l ight ly .

Charles Larabert was pice-president then, about 1923.

I know that Gbrlie Lambert got his f'lngers into r i c 6

d i s t r i c t s in the Sacsementa Valley and helped to put

the bondholders of thoas diatr ie ta through the bank-

rmptey wringer and Char116 Lerabert cam out of the

dsel, I have been told, a very rish man, pfaking up

the l a n d re l ieved o f ita duty t o peg taxes to help

@upportthe d i s t r i o t .

Of the aasaa Lm?mr%waa h v o & ~ e din, I think the

eaaer of George H, M&ig va, Provldsnt Irrigation

Dis tr ic t and the cams of Glough vs. Cmpton-DeleoBn Ir-

rigstien Matriot, e study of the brief8 in thoee cases,

a l l state court cases, make very in%ersstbgreading.

Later the Proddent Irrigation D l s t r l a t ease went t o

the O.S. Supsomct C o w n n d w Chapfar 9 and the Campton-

Deleven Xrrlgatrl?n Bistrist oasa, after it was sap-

posed t o be a13 buttoned up, &, Reed Beus herd so=

bands and ha hadn't been notified that he only had

~ ~ $ 1 1tuo-oqclaok Tuesday t o turn in his bonds aa. e l r e

get aothing. m. Cook pertittoned the eourt t o reopen

the banbup%syproseedingst whioh they did.,, &.Bekina

Maaont was allowed to get a few eents on the d o l l a r for his

bonda instead of a complete goose-egg, But I have a

I suspielon that what he f i n a l l y got from the R,F ,C ,

for h i s bonds would not even pay the coat of printing

%he brlefe that were fnwolved, So he might have been

I better off t o have token nothing for h i s bonds, whieh

.! was the ambition 8f Bharlfe Lambert end others,

It was aerteinly true that the top m n in the

ICFemlin eould newr have been more vfcioua i n their

I attitude toward the landlords in the D,S,S,R, than I

were the aourts and soma lawyers i n their attitude

toward investors i n Cellfarnia irrigation dis tr ic t 1

bond8 , a

I Beurar I take I t you were not very friendly to Charles Lam-

bertts part in refinansing the d i s t r i a t s .

I b s o n r It certainly i s trne that f wasnrt very friendly. I I

not only wasn't very friendly, bat: 1 just never saw i

hlm, never eormwonded with him, never had snythlng

i;o do with h i m beeanare 1 had word as t o what b was

trying t o do and whet he $ a i d mbeut w h e t he was going

t o do and honestly, P d i d n t t think t h a t he would evep

be able to do whab I eemit now that he was successful

fn doing, It waantt that I WEIS unfriendly, I j u s t

thought he was telking gobbeldy-gooR; '1: have never

seen Charlie Lambert or had word of him in about t h i r t y

years, except I have heard in roundabo~itwars that he

u m e but of these bankmaptoy ?roceedings with s i t b ~

an open or a hidden interest in a Xat of land, some

of whiuh i a now salaebPe gas and oil land, Lambert

set o u O t o do a job end he had the supgort, I believe,

of the biggest mortgage interestk and some of %ha

strongest iilsaranae interests and ~ o m eof the strongerst

lega l firma...not as strong as the legal firms an o u r

s i d e t o begin w i t h , but tha t ' s the way the score orp-

gears a t the momsat,

X think a t the same time 'ulalter Wagner was secretary,

William Durbrow beorma president,

Y e s . Du~brow'a eon 18 now seamtery of the assoeia-

tion. A very nice re120w. Yes, Mr. Dnrbrar waa

managep of the Glenn-Colura Irrigation Dir t r i c t before

he beearns manager of Mevsrda Irrigation Dirtrict. If

I * m not aiataken, Mr. Durbrow was manager of the Glenn-

Coluaa ir~gationDtstriot when the l a w we8 gushed

through allowing % ~ ~ i g a t i a ndis tr iats t o gut on e

charge for water. Before then no irrigation d5atrfat

eould make e oharge f o r weter used by anyone in the

dis&r$crt, fn 1919 the law was emended t o permit the

dis tr iots t o get money by mans of an annual assessment

or by mana of a uater t o l l or both. !!%ere was the

beginning af anot'ne~Bandorater box becaum itis h e n

a struggle evep since... In sam districts the off%-

ofals wane mom of the budget pa id bg w e n s a f water

t o l l s because the more money t h a t I s c ~ l l s c t e das

w a t e r t o l l s , the smaller the land sasessment needs t o

b e e

Thatla w h a t they d i d in Xevsda Distrfc%. Tkeg hmd no

assessments e t a11 f o r aw:2ils,

Maaant Right. T h a t ' s hsbrowts philos 3phy.

Saum: mbrm i a f a r water t211sr

Mason: Yes. 1 be l i eve I'm f a i r and correct in saging that .

Naturally, if a district got i t s budget belaneed by

water t o l l s tha t would mean a tax-free r i d e for holaers

of idle land in the district*

Durbrow was the manager of Nevada a t the time they

reduoed the interest, but he didn't try t o reduee the

grinoigal?

Well, betwen you and me, Durbrgw had about as much

t o say arr t o whether the fntewst QP the principal

waa reduced as a teaeher ha8 about the cumiaulun o f

the university. D ~ r b ~ o w awas sa larfed employee of the

Nevada Xrrigation District, but the f i sca l affairs were

undoubtedly dlc ta te i l by the P. 0. 5 E,

Baumt What about the 3r~ igat ionDistricts AssoeiationP

D i d Durbrow take a strong leadership posieion there,

or d i d Wagner run the rssoafetian4

Mesons I would say V a g n e ~was much the mom inf luent ia l and

eat ive man end d i d the work. I would sag that Walter

Wagner waar the wheel borae. He was the Irrigation

Distrfcts Asaaciatian far s numbar sf years, 'fhe

&iffarent p~er idents from tima t o t ime were nice

figureheeda, but when i t cam t o doing the work and

Influencing the legislation, I think Wagner wee more

influential , He had a very good pers3nality for that

kiad of work, He was an exeellent mixer and he had a

marvelous memory for namsa. Be was an able lobbyist.

I doat t think while he was ~euretarythere uss eveP a

b i l l ahat he wented f o r the i r ~ i g a t i m dis tr ic ts , . .

I think ha got just about every bill ~IB wanted passed

and s i g n e d by the Governor6 I thinEr ha, wa8 one of

the ablest administrators I have eve^ Imam+

usxt question?

Baumt I've netsictad that you have 8aid several Mare8 %hat

w h i l e U e l b e ~Wagner was seamtary the aaaoeiatlan was

free of my speaial inbereata. Does this mly %hat

you feel things have crhanged rinoe Walter Wegmrta day?

Milaaon: No, I didn't want t o ereate that impression because,

honerstly, I have no idea how the Irrigation Distr ia t s

Assooiatim raises its budget today, whether it gets

all of its mmeg frm the i ~ ~ i g a B i o ndistzdets or gets

some money f m eo~porations. I have never asked.

Do you feel they have @hanged their policy?

Wall1 I haven't heard of the asaoeiation taking eny

d e f i n i t e atrrrd on the matte^ o f power by-p~oduot in

a good many yeape. In t b old days, when Modesto and

Turloek buiZt the Don Pedro Dm, who should dietribute

tha power was e very live snd debated question i n the

Irrtgation Districts Aasociatiort. If there has been

any suoh debate or quaation 2n reeent p e p s , I haven't

b s r d of it.

DO f e e l th6 8~80aiat i9Zljust tries t o avoid the'

question?

I don't want t o say.

f inugine they have mnb4rr on both rides.

Ilm sure they have. Wi$h e l 1 due mapereat;t o young

Bob Durbraw, uhotr a v e ~ yhigh-ulass gsntleraen, I

8snh h g l n e hxrbmw atanding up and saglng, "They

& X I eat paas,' the way Wuplner uacsd t o de. I d m f t

say he wouldat t, but he' 8 not qalee the erne type as

Wagner. Lf Wagner gat an idea he was pretty good

*%son: about supporting that idea end defending it, and when

he eal led the p5wer companies nama the way he d l d in

1932 a t the canventIan and accused them of being w i l l -

ing t o meek emmnitfes in order t o get their awn way,

that was using pretty elear lenguimge. f wouldn't sag

it was exaggerated language e t a l l because the ~ g c o r d

is quite clear.

I used t o think, magbe Wagner loved a good hard

battle. He muld stay in the fight and tA%gwould

knock him down, but he'd a3me right up again.

Baum: Bow abaut Bert S-eth mu? H e f s a p r e t t y fiery speaker,

Masant Oh yes, Bert I s a different mike-up than 3urbrow.

But Bert is comparatively a newowner.

Baum: And hersnot seeretarg. 4

%son: Ho, he's head of the Water E~ononrlosseation. Nol

Bert is a very oonrpstent, able..*and if the top

brass would lend their ear t o Bert SmA th, f think he

could help them esaape a gmat deal of very seriour

diffioultiea which em ahead if they am not vem

sarceful,

Baumt Om more question on flze 3rrlgation D 3 e t ~ i e t sAssacf-

a t f a n . After you began to fight the Muniaipal Bank-

-toy Act d i d the sssoc1aCion beeom hostile t o you

or d i d some sf them agree w i t h you?

??¶ascult

Baumt

Maaon t

Baumr

Meaans

Baum t

haont

Oh, many of t h e m agreed,

Wagner was pretty angry with you, I think.

Well, if he wpe X never k n e w ft.

At least he made some statemnts, just a few men were

trging t o prevent t h l s refhanaing that is going t o

save these mny tamumltiea, and then he mentioned

you end b o r e Covell and somebody else.

3 had forgotten that. You gee, Wagner had gone t o

wopk fop the R.F.C. end wes h i r e d t o do a job and I

waantt working for the B,F.C, or for engone, I just

d i c b ' t ehoase t o be pushed B F O U ~ ~ ~ .As I s a i d , I went

along with the refinancing of the LaFasa, Lemon Grove

end Spring Valley, 3: turned in my bonds and said,

"That sound6 lake a fair caah sffe~. ' L

Tbe~etern old saying, "You can lead a horse t 0

water, buC you aentt make h i m drinkew Btmen the R,P.C,

and the others* ragard%eas o f the ~onetStut ion, isaid,

"Your money or yoar lif'ai wetre gema make you do what

we eaylR%hat pa%a l i t t le di f fe laat aoniplexian on

-3 f kind 0f r a i d %amy801fa "bieTZL w ~ ~ U8 e t ~ ~ ~

~ouadsZ I k a a atubbam streak dn there,

Oh, L adlait ft. Stubborn as they make them. I was

going t o defend tihat Constittxtioa if f cou ld ,

Beumt D i d gbu continue your fkiendahip with i d a l t e r Wagner?

Hason: Well, I'm sure of *his. If 'J3alter~rbagnerwas r e a l l y

angry a t me, he never s a i d so t o my face 3s- let; ern

when I met h i m . "t'p t o the l a s t we never had any

wol?dJa*

Beurrrt Re m y not have been personally a q q .

bsana Ohl X l m sure he wasnt t. And I %ea nessp personally

angry a t Wagner, Ooeh, fie was an admirer 3f H i r a m

Johnson and Johnson m c e said, "A man m a t

Baumrr I cam aemss a mference to the Watianal ?4ater users

Canferenee. Walter Wagner was tfie chaimon af the

Eefinancing C a m i t t e e in 1931, Could g9u t e l l me what

that t681P 1

Maaon: I believe that was a forerunner of %he &tiom1 Re-

elamation Assooiatim, There were s number af enzbry-

onic assac ia t ions attempted.

Baums In th. spring of 1933 the aatlonal Drainage, b r a e ,

and I r r i g a t i o n Asaoaiation got through m appropria-

tian f r o m the R.F.C. f o p f i f t y million dollars t o

permit t b m t o mflnanee. Were p u at th. hearhigm

%son; No, I waa at the beerlngs in1930. * Beumr That's when the i r r i g a t i ~ ndistricts wanted Eo get

i ~ l e l ~ d e d

Masons Yes, the bill was pract ical ly mady f a r passage, but

ineluded only drainage d i s t r i c t s . MP. Wagner of the

Irrigetion D i s tr lcts Association found that I was

gofng t o be in New York end Washington and asked me

if 3; would be w i l l i n g t o try t o get irr igat ion d i e -

tritrts inel;uded in the drainage b i l l . The b i l l had

no oppo8it;ion u n t i l f t was suggested that i t be

amended t o iaelude irr igat ion diatricta end the preeaure

against the bill was rea l ly t err i f i c . I alweyo had a

fesling that it wee ths p ~ i r a t epower company influenoe

thats lrnrered the booin beruse Hodesto and Turlouk ha;d

comaittat!! lure majesty when Bhey bui l t the Don Pedm,

Dam and Bad no@ turned aver) the power t o the P, G, & E.

The P. 8. 80 E. d;tdnft want any more irr igat ion districts

* Loans fQP R e l i ~ fof D ~ e l a a g eDistricttr. Bse~lngabefore the Committee on Irrigation&Realimation, House of Representatives, 71at Congress, Third Seesion, So 4l23,'An Aet * Q Provide for the Aiding of Famreers i n Any Sta te by the Making ef Loane Be Draiaage Dietfieta, Levee Dist~iats~Levee ant3 Dreim~eDistrietsc Counties, Boards of Supervisor8 and/or Other Political Subdivisionr and k g a 1 Bntit iea, and fOF O t h e ~~urposesrffDeeember 11 and 12, 1930. Hessntrs aommnta are on pages 34-36, 51.

building dams.

Well, the Irrigation Dlstriots Asaaoiatfon a t t h e f r

annual eonvention in 1933 passed e resolution eucuaing

the power trust of being willing t o destroy communities

end that liheir grslpagantla was dastardly, It was quits

a bettla, Ths drafnage intereats were hadng smooth

aailing w i t h no oppaaition, but uhen I appeared and

teatifled, the trouble began, Aa I recall , the b i l l

that was proposed was Senate Bill 4123 end the hearings

on that b i l l contained a good nsng pages o f testimony

when they h s d m e on the stand, But I aag without any

hesitation that the bill would have gone through end

drainage districts would have gotten federal aid if

irrlgetfon districts had been loft 9ut. No drainaie

district law in any state autho~izeda drainage dis-

trist to generate or distribute hydroeleutria power,

beinage d i s t ~ 2 c t adontt b u i l d dams.

But whether i%ls drainage OF irrigation, i t ' s

all watsp eontrol and regulation. In either event,

e drainage Itnmgrovtbmnt w u ~ kor an irrigation improve-

ment work w i l l laeke the land more produative snd de-

sireeblg. It oertadnly is not consistent to day that

drainage works will be paid f03 out of the Federal

Mason: treasury while irrigation works will Be p a i d for by

the holder ~f benefited land, but that was the sckeme

they b d ready t o go.

t o get a free ride a t

mat was In 1930.

Bsumt That didn't gess.

&sons NO.

The drainage landholders were

the expense of the 0, S. Tressury.

BIOGRAPHICAL

Would mu te l l ne a little bit about yo= gcr~enla'l

My fathem wee Jews bw$s Hason. My mother was

Fpenaes Baker Hason, I was born In Des Hoines, I m a ,

Septembgr 18, 1886, I went to pnblia sahool, When

3 was qu2te young my f a t h e r had en accident and d i e d

and J was sent t o amthem Iowa t o l ive with my

grandparents, General Andrew 3. Baker, my mother's

Father. Em had been AttornepGenesal o f Iowa end he

was Pisad of the Saw firm Baker, Drake & Shants, One

of the partners, Prancf a H. Draks, later became Gov-

e n o r of Iowa and founded Dmks University ia Des

Molnes. Theodore P, Shonts latep beeam8 famou8 a8

one of the men Teddy Roosevalt gut on tha Panama

Cad& and he l a t e r became head of the Hew York City

Bai'laPays. Xy grandfather was qnite an Influen88 an

me. He gave me leetures about the Constltntian and

the ghilaeaphy of Jeffereon the6 were very unusual.

Re iznprssaed ne deeply.

mother had gone t o Chicago end gat into l f is

laeurulrce and was quite sucoessful.

Wasn't that rather unusual for a woman t o be in busi-

ness in those days?

I t was not only unusual, but my mother was unusual

even for those days. In Des Xoines she had taken up

~ i lpainting and water eelax and ohina painting and

had entries in the state f a i r . She nearly always

came home with the f i p s t prizef no matter what she

competed for, I remember, f o r three successive years

i n Chicago she won a grize ~f a trig to l e w Yorlc whieh

one of the b i g insurance companies gave t o the agent

who mate the most insuraace*

She also, of course, had been i-nfluenced large ly

by her father, who wrote one of the first volumes an

the U.3, Constitution, annotated. Later, he waa a l i o

Attorneyll(Zanera1 of the r t a t e of Missouri.

So my early education we8 pretty solid background.

Had yo= grandfather been a Populist, o r was he inter-

eated in the farmer aoverwnbs?

I believe not. 1 never b a r d that ha was, I mmem-

bar once that he came home snd gathered the family

around and said that ha had been agp~oe&sd to beeom

attorney foa* one of the l e e d i w r a f l m a d a and t h a t i t

would geean several tines the sa lary t h a t he was gett ing

as attorney-general, but fop Feaaon3 Wat he never

explained clearly, but which seemed very sufficfent t o

him, he declined the affer with thanks and staged on

as a publio defender.

Ha, as I r e c a ~it:my pandfstbr was s 33O % s m

and a Rspubliasn and a umsemative in the finest

sense sf the ward. That Is, he belisved*'?L"n'cconssmiag

the CanstiCutlon and the g ~ e a tprinciples bfaieh Tt fs

intended t o protect.

When yaa were livfng with y m ~grandfather, was your

mother there or was she away m ~ a tof the . t h e ?

Hather was in Chicago. My grandfetherts fimn stas in

Centem2lle in southern Iowa.

83 would yen say you we- mostly ~ s i s e dby your grad-

father?

For several years, yes , end very, very sensitive p a r s .

When PIIot;her was able to take ciare of me in Chfeago,

she brought rare t o Chicago. T ramember tho first

soh001 1 went t o in Chieaga waa the Theodam Parker

Sehaal. arn tha Rorth Side, s v e ~ ywonderful sehool it

turned out to bee Tha next year T signed up 8s cabin

boy on a i~eightboat, thiaking it wauld be 8 summer

saoation. The freisht boat s tarted in Chicago, wen%

I

I j Mason: through the 6mat Lakes and t o Ewope,

Baum: How old were you?

I Masont Fourteen. When I gat to Anherp, there was a letter

there P m m my mother telling me to leave the boert and

ffnd my way t o a sehaal fn Swf tzerlsnd, which 1 did.

I went fop a year t o this beautifkl school a t Vevey

on Lake Geneva, the Instftutian Sillig. It boasted

among its waduates J. Tierpont Xorgan and Lauis

~ a p a l e mand qaite a galaxy of aelebrities. I attended

that soh001 far one p a r and by tzbs end g f that; year

I had been given a wonderful excitement and incentfve,, ,

St was an internatlanal school, There vere boys there

f r o m a t least ten different countries many lang-

uages orom apoken. A t the end of the year I was adle

t o eonverse in French or Germen or I ta l ian or Spanish

just about es w e l l as English.

Then for a year after t h a t I spent mostly an r n ~

bisyule touring Italy and Ewops In general and w r i t i n g

artieLea and l i t t l e t;Nngs for newsgapera. The Chicsr~o

Daily ~ ~ i ' b u x l epan quite 8 series of t b m , "A fifterern-

yearsold Chicago boy seeing Ewope elone."

Wkg had gaar mother dec ided t o have you go t o thia

rehool?

Mason: Ny mother--many things sh3 deoided were sl-days more

or l e s a mystrsrioas t o rne a s t 9 why she diC it. biotinsr

had never been in Europe but ahe pers3nally conducted

nne through Ohe a r t ga l ler ies o f I t a l y and the Louvre

i n P a r i s and the cathedrals. By remote control she

vould t e l l m just what t o see in eaoh city and what

art gal lery end how t o get there end I t d go and flnd

that she was right.

Baumt She sounds l i k e a very atrmg personality.

Mason: She not only was that, but when she was se-rentp she

became interested in the study o f evolutian and she

s e t out to g e t the best experts i n the mrld t:, each

wr i te on his speeial f i e l d of study. She gat twenty-

" four of t h e m and put their assays together t o reed

l ike s oontinueG atary. They were all connected in a

sense. That book was called Creatf on by Evolutian.

For alx months it was pract iae l ly the best seller ic

ths country, EIer seaond book was cel led The G r e a t

Design,

The remarkable thing about it, ahe had no oollegcb

trefrring. She began her interest in evolution a f t e r

she was seventy and ehe d i d t h i s uithoul: o f f i ce equip-

mnt or private secretary, (Gets copy of' book),

(reading) Greetion by Bvolutian, edited by Frances

Baum: Hason, foreword by Henry F a i r f i e l d Osburn, Ph.D.,

Sc.D., introduction by Sir ~harlesS. Sherrington,

OaM., F.R.S.

She never remarried?

Mason: 80.

Baum t Were you her only child?

.frIesonz Y e s .

Baumo What had been your f ether8s occupation?

.%son: Eie was a merchant. 3e had a wholesale and retail

millinery establishment fn D e s Moiiws.

Bsumr And how old were you when-he died?

Mason: I think eight or nilae.

Baumr Bed yon h a d any experienae in the stare?

Mason: I had experieneo in a store. I vent to work f o r a '

l i t t l e jewelry atore in Centerville, Ky job wea t o

get up before daylight and g~ t o the s t m e and go out

t o the woodshed and get the woad a.4 bui ld a w ~ o dfire,

sweep mat t b store, take the jewelry out of tb r a f e

and put it in the S C ~ Wc88%18# fix up the window, and

have the ratope nice end warn, The boars would oome

about s quarter of n%neand 36d go off t o sehool.

Then X aomatbma cam and relieved h i n ~~ L ) Plunah and

cane and olosed up i n tha evening, put everything

back fn the aefe, put out the cat , a f e w other thlngs,

Xas~n: Lnn wiatar I 'd have t o plow ttrrougll tirs snow* The

woodshed was quite a distance from the store. And

c3erk a l l day Saturday, For doing all this, I re-

ceived the magnifimnt compensation of $1 a week.

That gave ms an ides that a dollar waa pmbtg ~ ~ P o I P -

tan** Itt8 funny how $W jpt id88kt as a boy ebant the

size of somthing and t h a t more or less makes an im-

pression & a t f a b r d t o f ~ ~ g e t .T ' t gave ne an

early understanding the t it isn't easy t o earn money,

The hawledge thet my grandfst!zer was not a

r iah man, my father had been anything but e rich man,

end my mother was e e r t a i n l j ~not rich, I had no rela-

t ives who were going t o leave rae a silver spoon. I

knew from the earliest; ti- that i t me roott hog,

or d i e and there was g o i n g t o be no Peatherbed t o

f a l l back into if I Bidnrt find out how t o paddle my

own oanoe.

123 ntg p 8 P On the b i ~ p l e in Europe, ar$ averep

outlay wae f%ve f ~ a n o sa day, m e dollar, wM* paid

SOPhotel, mi!838, ai&h%8eeingt everything.

Barn¶ You ham l i s t e d here in ystm biographiee~note Sf;, Johnt6

M l L i O s r r f t ~Acad#my, Idelaf i e l d , Wfs8onsin. When was that?

Xnssnr Yas, that waa when I g o t back from Europe, 1904. When

1 got through there I went t o work for this bank in

That's quite a school, There are a lot sf S t .

Johntr boys i n Celifornia. We have an "old boys

aaaaeIatiann that meets every now and then, Dle regale

eaoh &her with old times.

Barnt When d i d you get rna~ried?

&sosr November 8, 1915.

Baum t Thirs was when you were in businera for yourself in San

Franoiaco. How did you met your wife?

PIasont Her family had esranged a tea party end r young f e l l o w I

who was a very good friend of lgine had been invited

and somebody had euggeated that'h6bring a friend,

that there m i g h t be mom girls than fellows. So I g o t

invited. The party wes a t their home on Washington2

8Cme%right war F i r s t Aventm, My wife war very meh

aurrotlnded; f wasntt able to get very near t o her,

But aome deya l e t e ~I medo bald to telephone and was

quite stunntsdj I no more thnn asked if this waa Mira

Msabn and she mplied* 'yea it $8, Hr, M e e ~ n , ~

Bamr So she'd notiaed you,

Yes, and that was helpful, SO we h e d a lovely wedding

a t the big Epfscoprlian Chweh, Trinity Church, and

honeymooned in Del Hants in Southern California and

thet waar that,

Her family was Episeopelim?

I r m not posi t ive , My mothgr was. I wasnt t in s e ~ g

muoh on arranging where the wedding wats t o be. T h a t

was ell, 1 believe, a ~ r a a g e dbetween her mothe~and

my mother,

Bamt Y o u d m t t know what her family's religion was?

baona I'm not sum.

Baumt What was her maiden name?

Mason: Hlau Eugenic #satan, Her fether war Joaeph Maaten.

Baumt What was his businear? I

Waaoat He was an o f f i e l r l . of the Csoukes Bank. Her fatherra

father, well, on both aides they we- pioneers, Her

father's father was Jamez, K. Nseten, Among other

things# he built a r a i h o a d in Arizona, the, line $hat

O O ~ B U ~ Sthe S O U ~ ~ P ~ LP ~ a i f i ~with P h ~ n l ~ .f think

itbe about e hundred mixu Une, Her mother8a father

war^ Jmma Martel who we8 orre of the o ~ i g i n a lfounders

of the ESbernia Bank end a l s o many other institutions

and o ~ g ~ l a a 0 i o r a s ,The Pfertel Family and the Hasten

fan&Xy ere both p i o n e e ~femiliee in California.

And Mrs. Msaon was a native-born CallfarnianP

Yea. Alameda.

D i d you have any children?

Woe

Your mother l e b r moved t o Smtbrn California, BidnmC

a h ?

Yes. She l ived in London end Paris far about ten

years and then moved a t her%.

I h o w you traveled a b x a d s nuiihe~3f times In the

years fallowing y ~ u rretirement. C3uI.d you tell ma

brfefly where you v i s i t e d on those tri?s?

Mulg ffrs t t r i p t o Ehmpe was 2n 1901 and 1902. Wa

v%gitedEurope twice before my retirement fran bus2ness

in 1927, snd frequently after. I made quite a .%a&

of h n d reelsmtlon prajeata and polieiea 5n B a l e ~ t i ~ ,

Egypt, Italy, Greece, Turfceg9 Spain, U.S.S,R,, Chirra,

the k t a h Bast Indies, the Fhf lfppines, Australiar

Peru, Chile, and bx iao , e i ~ o l i n gthe globe tWee

%-a, and taking plenty ef ti= t o study on the

ground, X was a delegate t o the Pan Peaiile Oanfar-

enee f.n Honolulu in 1927, and the Plecffio 305ence

Congress a t Banduerig, Java in 1929,

what I have asen in many a r i d and semi-erld Fe-

gisna, whioh once supported great oivllfzatlona, con-

vinces me that the desert is always fighting t o re-

clsfm fts own, Henee the s5mivsl of ~ i v i l i z a t i o n

in Califarnia depends as much an the i ~ r i g a t i ~ n

system, as eny other single thing. 1 am grateful,

Indeed, that X have had a pa* in the growth of so

many oornrmniBiar in the irrigated valley8 of Cali-

fornia, Texas, and &her western dtatos.

' h a t were the preferences of your mother and pur

wandfather pslitically, especially yous grandfather?

Oh, my grendfather wart a dyed-in-tbs-wool Republican.

Your mother too?

As f a r ea she hed any Interest in pol2#sa, I 8m't

r e o a l l that her interest in that field waa very

serious+ Her interest was nore hmuafc, painting,

ehina peintirrg, water colors, ar t ,

M U 70%grow ap a d ~ ~ d - f n - t h s . . w b ~ l Retpubli8an?

f never dmamad of mything eSee. In Che 33aker fathily,

if gou had mentlaned you ewn &new 8 hmerat, f t

wmld be wiperdam ble. When Thesdars Roosevelt came on the aaene, thsm was a

egZit In the Republican party, Which a i d s were you 613

then?

b s o n t I ' m inclined t o thinkee.of aourse, I wasn't able t o

vote then, but my sympathy was ins t inc t ive ly with

Teddy Rooaevelt. Perhapa one of t h e reaaoaa, whiuh

Z was not oware of then, was t ha t Teddy Roaaevelt had

run f o r mayor of New York City and one of the other

&dates was Henry Oeorge. It was i n tha t a a m p e i s

f o r mayor t h a t Teddy Roorevelt got his first experienoe

i n p o l i t i c a l s f fa i ra . He had leom debates with Henry

George during the campaign which r~penedhis eyes. It

was from those debates that Teddy Roasevelt got many

of h i s ao-oalled "Bull Moose" ideea,

B a a : And you l iked hils "Bull kclooadc ideaa,

Mason2 I d id , yea. I thought they sounded pre t ty American,

p r e t t y eonrtf;tutiaaal. But a s Qeorgists ~ometimea

say, "Teddy never qui t@arw the eat,'

Baumt How d i d yau f e e l i n 1912 when Roosevelt was running

againat Tar$, and Wilson was mnning on the Demoeratic

bioket, )mtt had many of the reme ideas aa Rooaevelt?

h a o n t My m e o l l e a t i o n i a thaC 1 had klnd of a tough struggle,

but I: was more ine l ined t o rupport Wilaron than Teddy,

fnthe introduation of th ia l i t t l e book, How t o AbaXiah

povertp, by George L. Reoord, it t e l l a about Oaoxl* L,

Reao~dfafnfluencse upon Woodr~wWilson, and hou George

L. Reoord got ideas from Henry George. Sa isn't it

httwesting how both Woodrow Wilson and Teddy Rooesvelt

had been influenced by Henry George,

Barn$ Did you rote fcr Wilson, or do you remember?

Mason: I don ' t remember for sure, but I think I d i d .

Baum: That mat have been u blow f o r a Regtabliean.

hson: Oh, f etarted being e l i t t l e r ~ b e l ~ . ~ N o t h e r was vary

wonderful. She t r u s t e d me, and she didn't try t o

pressure me, certainly not on polit iurt end I had a

very inquisitive mind a s a boy,

I t h i n k Woodrow Willron w i l l go dovn i n history

a r a man who t r i e d and the faot that w e t r e no uloaer

t o unity i n an intarnational sense than we were when

the League of Hatiom war bur ied dogan*t prove fm a

minute that 'bJoodrow Ullsont 8 beria ideas were in e$ror,

Baum: Am you opeaking of hfr d o m r t l o poliry or h i s hague

ef Nations?

I w o u l d n t t draw too sharp a 1- between the two,

becauser X think in hi8 d a m s t i e gol io ies he was

brriaally a free Crader, buii ha was up againat f~wem.,,

on. thing that f war &everquite able t o reconail8 was

his faiXulrs t o oppore the Sixteenth Amandmanti mope

atrongly Wan he didObut mybe he didn't think %twar

pi- t o bs adopted.

1 take it J~OUfavored the League of aiotiona,

lvIasonr Z favored a forum where the leaders o f the diffe,wnt

nrtlons een meat and hold a town meeting, where the

world can look on end hear the debate, 1 don't think

any better method has Been devised fop ironing rmt

misunderatan6&ngse f rm very positive that mrve tried

tima and time egain with bullets an4 bombs and sa

forth t o k i l l fdtraar, but thhre are some i d e a s you j u s t

don't seem able t o kP11. Nothing would please me mare

than Oo h s e ~r town meeting debate between P4re Dulles

and b,Kruahabv and Mr, Wacmillan and Hr, Churchill,

Letts hear them debate.

In no sense do I think there should be r world

govsmwnt with aruper-enthority to diatate to everybody.

No, X think my idsea on that are quits w e l l preosnbd

in my eddmar in I)enzasrk in 1952. f think Ghurahill

i r right when he says i t is 0 1 t h ~eo-exiatsnoe or

amxteFmination,

P believe there i a e ecienus of' political eaonomy

whish i 8 aa emst a s the 1rai9n~eof 88t~Ullmy. f b-

lievlr that dseplp.

Baum t Do you eorzaride~yourself a Eemoerst OP B Republicoet

haon8 I consider myaelf a citisem of the world, an indepandant,

Baumt A wolcld f e d s ~ a l fat?

Mason: No, I d9drJ9t say that .

Beum: I ' m trying t o put you into a political ce t eg~ryand I

you~renot letting me,

I Bbaont Well, l t t s difficult when you can't find a be3 you

would feel eomforteble in.

, Beum? In an o ld nswapaper I ~ a a dthat you were e Roosevelt

supporter.

Masonr Yes, JI was a mxpporter of P,D,R, in tim eerly '30 'a,

before Louis How@ passed awry,

Maaon Becomes e Sinale Taxer - 1938

Barn: f * d l i k e t o get e 1itt;Ie bit about how you f i re t got

intarested in the Henry George mavemnt. When d i d

yon first real ize that you and Henry George had a o k

Co the sama uonelusimst

of rddrara of Henry horge. Judge Jaokuan He Ralston,

who was a very felaoua intermtianel lawyer, had marnp

caasa aL 'Ehe Hague* and waa one of the leading attoma-

eye for khe Amriaan Federation of IdboP* budge Ra3-

eton l i v e d in Pals Alto and he p~ometeaa p~opoaalt s

repeal the s t a t e ae lea tax in Orliio~niaand have the

a t a t e raise the maney t h a t it would otbemsiae a ~ l l s a t

Xason: from s a l o s taxes by mans of the traditional ad val5rem

t a x OD I B R ~ ~ one of She f-*ends 9i"Judgek t 1% was

Ralstan who g o t me in the caner one evening, We vem

diamss2ng the Hetch &tohg project and the Raker But,

33s name was Mi11;Lgan. He owned a r8st;auranl in San

Branciseo, down where Kit Carson is now, He ra3 a

gao6 re~taurmt;and he wea an abla th inke~ .

Be gat ma in this comer, He said, 'Me11 am,

on water an8 powe~, Supparring San F r a n ~ i s ~ ogot hold

of the Hetch Xetcrhy power and had I t s own distr/buting.

And supposing Sen Fran~iacorsduaed power rates, Even

auppoPre San Franoiseo oPfeamd to su?ply eleatrieitg

free of oort , Who uoald bnef5t4" %ell,* I said* "1t

seems to me t;he users of power would benefit,' "ha,

they #bu,Id, but let9a think a little f'urther, 32 there

was free power here, lndustriea w o a d be more attraetcsd

t o San Franeisoo, would they not?" I seid, *~ss,of

eourse, end wouldart t h a t be a good m g ? " He said,

*Yea, i C *auld be e good thhg, bat b b t s think. ff'

mom h d u u C ~ I e a100ated b8mt tlre iaduslries would need

workers and thab would inemare the population and the

competi8fan for loaatlona for homes aad businass sites

would increase. BnB what happeno whcbrr the c o ~ e 8 l t l a n

for laaetione increases?" 3 said, "Of course," ~ h y , ~

the p r i m of land would go up.* He said, 'That's

where the benefit would go."

Weal, i t h i t me, just l i k e an alarm cloek in the

middla of the night, I said, 'MY Gad, to think I've

bean so bUnd all these yerrrr, that the r e a l intereats

that are promoCing muniaipol ownership ere not aooial-

ists. The d a i g a l ornersMp movemnt wouldn't have

gotten where i t has gotten if it depended on a llttle

group of pinks. E m stupid can we bei John Randolph

fIeynss of Los lingeies, the great a p e s F o u n d m t i ~ ~ ~ ~i t

e w a out that all the t h m tiapes w a s promoting the

Los AngeZea Bureau of ? J a t e ~and ?mer Ibynes war out

auquirtng land. Huynea made his fortune out ef the

uaearmed 3.ncremnt i n land valueo. Hew popalatiun '

aQtmoted t o Loa Angelea by elmap water and power.

You think he was aware of that a l l tha tims?

WhyB if he wasnst ha was certainly Zucky, becauae he

made anough t o 8st up the Hayma Beundatian in Loa

Angcbles, which he8 a l o t of backiag, Heynes waa

never r businessman, EIs nevar manufactured anyth5ng.

While he was pushing for manleipal ownership of wafer

an& power, end lm w e b ~and power retes we= in-

crreaaing population in Los Angeles whioh inareaasd

land vrslussL he rode the areat of the wave.

;%son$ Just as simple as the*, which X was eomplatelg

ignarent of when 1 used t o b o w Dr. Eaynes and osed

I

I

I

t o work ufth t l ! o l l a n d and try end protect t h poop I

users of aster and power, thinking they were the

I

; Baumt Tbia was Sa 1936 that you became fnterested in the I

baont 1938, I b~U.6~6.

Bern? 1938, That wss the l ~ s tt i m e the Ralstan amendment I came up for 8 v ~ t e . Did you take p a r t in that cam-

paign?

Hason; Yea, X was on the list of sponsors, along ~IthOIenn

. Haover and Louis Beptlett and mng ather much t z e t t e ~

I known mmss thsn rains+ a

, B a u ~ Who were some 01 the prominent Georgista in this area 1 I a t t h a t *%ma? 1

mason: I tW 3 ean f h d a Xiat.

/ Beum: Lmia Bartlett was a Sbgle-Taxer?

1 Hasono Peltl

Baumt Is he stall a Singledaxer?

Hosanr I $hi* i t yrm put the emphasis can the word ustill."

Ee is quih *ati l l . ' Louia ha8 s b a e found an appar-

tunsty t o do quite well. He eaqu*ed some acreage a t

the aouth end of Lake lahoe, some p a r s ego, and 1

believe i t has b e o ~ mvery valuable.

I bkought 1 had 8 letterhead o f what was called

the Sales Tax Repeal.

I t m eure we have some of tha%mcatertal in t3e l i 5 ~ a r y .

On the o ld letterheads p u t l l f ind a l ist of well-knm

people here and in Southern C a l i f b m f a, although i t

we8 nothing l i k e es large a l i s t ea it should have been.

You mentioned Joseph Thompaon, o m of -the leadera of

that t ime.

Oh yesBhe's cr very enthusiaa.t;is aapitelist, and am

of the few capi ta l i s t s who knws the difference between

eapitaliexu and feudelism. aThorngeranrs sister i 8 Kathleen Harris,

Yea. Thenipson has done e great deal of work fn this

field. He i a now president of the Henry b o p * Sehool

of SootaL Seianoe of San Branaieco and 3 believe hefa

a director of the Hemy George Sehool in Hew Pork, an

ints~nationalorganization. And hera a vice*president

of" khe Zntemaeional Union for h n d Value T e x e t i a

rrnd h e Trade.

Ia that centem8 in Britein?

Yes. And of oourse, hots president of the Federal

Peaiffa $lectrla Wanufsutmng Company in Sen Francfsoo,

,Mason: whfeh is one of the uorldtsbiggest. In this pew

! issne of Lend and Librtg that jwt cane yesterday,

; I herefs a full peg0 "ktterr to ~anilfae%urers,*by Joe

I, Thampaon. He has written atme of the f ineat material I

i f have evep seen, Rb knowa that the sa-oalled sia&e

I t a x would be a a t i d n t to private enterprise end

would not f a l l an capi ta l or labor ia any sense of

the wmd, and is th8 one and edLy tax i;mt cannot

gut up the cost a9 living,

: Barn: tistsnft Yoah U p r active izem Lz those yeera?

, &ison$ Y e s , i.lo was the seoretary, ~x director 32 the Ralatcm

eanzpaign. Here 2s Zilr. Alperrs latest. He has estab-

liarhad in St. Louis what i s hewn as tlve W 1 i c Revenue

Education C O W Q ~ ~ ~"eduestienal, non-profit, nonwpolitl-

eal , Xoah D, Alper, president." H e has put ou* a cum-

ber of very nioa pemphlets. T h l s one is oalled 'Why

the Land Vabw Tax Cannot bar Shiftedfin a chaptop fron

Oh new book, Constructive Taxation for Free Enteq-

prim by Judge haha,

Tbis mo~mingcomeo from Oekland a copy of braanomie I

I Liberty,

1 I

3amg Oh, by HP. WisZer,

t r i s b a , waanRt he0

He was sotive in lrrigatian dis-

i1 Hason: Oh, end still is, fie is the main accountant for the

&son2 i r r l g e t i o n d i s t r i u t s , has been f o r f o r t y yeara. Ee,

like myselfl was sot ive around i r r iga t ion d i s t r i e t a

I and dldntt recognize the Oeo~gismunt i l samething h i t i

him, Now he's a s enthusiast io about It.,. l o t i a e , on

the third page there he has a picture of Henry &orgee

, Baum: Oh, I see you are a correspondent f o r th i s paper too. I

: Mslsont Yea. I've l n a m Lea Wisler for over f o r t y p a r s .

He's qui te a fellow, I'll taka off my hat t o hi82.

He*a @aeerioua end sinaere and honorable a s anyone

youtd ever want t:, meet. For s long time he belonged

t o the 80-celled SoaiaX Credit group, He had ttse idea

there was a possible way of a t ta ining soa ia l justice

by eontroll ing the money rsapply. Well, hats almost

dropped t h a t now. He aeas tha t th. taxing power i d a

meh more eifest i v e tool,

Southern California with Beeomntead~tionr,l s n r e d by the

CalSfomie Comdsaion of i r g r s t i ~ nand Horreing in

I 1929 i n whi8h the riagle tax sa e porrfbl. soZutiog was

~lourD&m@d*)

Baunrt Wars thfa guC out when Simon Lubln was h@ed of thats

a ~ l e s i s n ?

Hasant (looking a t boaklet) SimoaLubin m a head of the

commission, Reverend E, b. Henna wea viae-pmsident,

Paul Schar~e~nberg searetary.was

Did you know Lubinl

Hs, but I have the book on his egrioultural fnatftute

in Roms. (Prrclsher diseusaion of the Peport oa larga

landholdings. )

I'd l ike to g e B on the rseord what youtve B a n s w iLh

t b Single-Tax mmemenl, whet organixatiana youtva

partioiprted in, what writing you've done.

Letqs ass, in 1938 I, aa they aay, "saw the eaten In

'39 I attended a eanferenae i n blew Pork of the Intep-

natioael Union for Land-Value Taxation and Free T ~ a d e ,

a aasab-d eanfemnae w i t h the Henry George Scrhoal and

the Hanry QeorgeFouadation. Thsre I m b t the lead@$#

o f the Snternet;iasrl Onion fop Land-Value Taxation and

Free T r a d e and -4: F. 0 , B. Douglas, who is now Lord

Douglas o i BarZacrh end in thsr House of Lerds in Loabm

and one of the ablast pol i t iaa l eaonowiats in the

w a ~ l dan8 a vsr~p.wonderful WQPIL+P. ftw the pl?2g0lp%d)aaf

juatico lrnd aound pablie revenue srnB proteatlng private

pmpertr fawn taxation* I was invited t o make ane of

the mein speeebbi at that eonfarenee in $39. Same1

Seabwy and M s y a ~bbuerdia were the main speakers a t

Hason! the meeting. h O u a r d i a spoke for forty-five mknutes

b without notes and qaotad from Progress end Pwerts,

page artar page. 'Phe Hew York Berald Tribune and

Edew Y O P ~-Tims next morning asme out w i t h g ~ e e tBead-

l irmcsy 'Lehardia Disaiple of Hsnry ~ e o q ~ ~ s . "

They had e apeciel Henry George day for the 3ew

York World?s Fair, September 2, the Birthday sf Henry

Qeo~ge. Speaial admission tickebs were printed.

sPsryona who went intie U s World f a Fair thaO day go*

a tielcat w i t h a picture of Henry George an it. Samuel

Seabury, 8 very famous lawyer, he was LaGusrdie's

tutor and also the glen who conducted the inswanse

investigation under Bharles Evma Ihr@l880 Seabury

was t o make the wrrtlon of *he day a t the Fisw Tmk

Wosldfs Fair and errengemntr were made to give it

worlb-wide ra6io ewerage. 'Phat was the day that

Hitler merehe8 and th8 radio program had to be called

off*

Seaburg deliverad the apeeah, but the paopla who

thsrs f ~ u aEngland, Denmark, r o on, heaven&, d b

treuble they had getting becrk how. Why, the Denea

wers a v e ~di mmCh getting h-r Mr. Ashley ?fStabll,

the trsaarurer ef the Intemmtional Onloa, was luoky

to get,gassage an r flying boat end go* home after r

f e w delays. There were f ly ing boats fn thaee days, but

no afrplanea as we have now, you know.

Harssnt Well, that exper-ienee gave me en qqmrtrurity t o

get pretty w e l l a c q ~ a i n t e dTsfth some of the officials

of the International Union.

Baum: W a r a n r O that rather unusual, you had been intepested

i n the movermrnt for only one yetap and ~ C I Uwarn 11-

reedy muk;isg s mjar address.

vlbsonr Why, I had been interested in the sub3ect of gablie

finawe f o r e long time, but X hadn't *andsrstood that

it was 06o~girmt h a t Z was intemated in. As I maya

I was ahnoat letter-pepfeet when I dis~weredwhat

eumomi~eamp X belonged in.

Well* tan mars later the International Union

was hold* a canfernnee i n England, in Swermtiak,

whish $8 rfght near Shemood Fmeat o f Robin Road

fama. I sreeelved an invitatien t o attsnd, Just a.

routins invitation, and X deaided t a go, When f got

them I was aaked if I would be willing to serve m r

ohaiman of the ~ e 1 0 1 u t l ~ ~ au d t b e , Well, X had

come sompleteZy tmp~epamdfar anything of that; kiad.

I r a i d 3 tU be g l a d t o CP~. SO I was theimnsn of a

reaolutions aa~asritteeeoqaaed of e e of$isielr from

five, diframnt ~auatriea,apeeldng e v e different

languages, Luckily I. had gone t o thfr sehoob in

Swit&erland so I eould get along quite w a l l in Fmn&

and fairly w e l L -5nI ta l ian and passably ia Spanish 3r

C)ermanl so I was able t o unders5snd a smattering. And

by Jiming, we g o t together dlnd forged a declaration

of human rights t h a t has sine8 been translated in the

mat8 Xangudges end pubUahed in t h e m and cir~uleted

ovep ths globe.

Following the 8ucceas with ths ~aaolutionscorn-

rnfttee t;heg esked me if 1 would serve as preaZdsnt of

the International Unlon, w h i c h was s much bigger m-

pllIbe.

Were there many Americans there?

Oh yes, there must have been many Anerioans th8r€d.

There wers four h b d r e d and fifty plus in a l l , and sthey wem f r o m over twen&y aountriea, Ifia s t i l l

puszled ort h w much e gmet opportunity ever happened

t o c a m my way, because I t nae somt?~ing-youread

abou& In fairy bookr but never h g i n e it would hap-

pen t o you. f t waa j u e t that big e s u r g ~ i a et o BIB.

Did Mrs* Heson go witih you on pur trip t o England? -

%a, not: the6 t h e .

I ehefre6 the beat part of the Swanwiak meeting

and ah% the Danish meting ead most of the third

seebing in 2955 h a S t , Andrewa in Sootland. A t the

Hasant olase of the St. Andrews program they presented me

with this beautifully d m e saroll.,. It reads as

Resolved$ On the eighteenth day of August;, 194sr by members c& the Intematfonal Union for Land Value Tamtion and Free Trade, assembled at St. Andrewa, Scotland, that Mr. J. Rupert&son of Sen Franeisoa, ppesidant of the Union for the past six years* has during that time devsted hlms8lf mtirlngly in thfs h5gh office t o advanoing the i d e a l s o f hfsman freedom as set forth By Hmry Gsargs ~ n dt o whiah this Union ie dedicated. The terninstion of his atawerdahlp oalls fortk this expressian of appreaicrtion end gratitude far e-8 inspiration he has given and for ths duties he perfarmed with ruoh acmspicuous ability, determination, and seal,

(signed)F. A. W, Luoas, President Arthur W. Hadaen, Secretary.

Baurnt I was wondering if Mrs. Maron went with you and if bhe

waa Interested in the Henq George movement?

Masont Mrs. Maaon i s intsmsted, a s much a s I am interested

in her hobbies, and t h a t is a great deal. Hr8. Haam

playa the p i a m beautifully, Mrs. Meaen 2s very

interested 'hmy having a Mbby* buRtt her t as te is for

arb and amlrio,,

Baurnt In other wolds, arhe is not p a l i t i e a l l g ~ n ~ e d ,

Meson$ Oh, not in the slighteat, exceptfng ah6 is ebout the

moat effective... I was g o b g t o say propagsndiat,

which reminds xue about the yarn about HPS. Luee inter-

Nasont viewing the Pope, She was supposed t o have a f ifteen-

minute v i s i t and thirty minutes robled by and she

didn't come out, Tha Pope's searetary opened the door

a crack, after a half hour, m d saw Mrs. Lace in front

of the Pope with her finger gofng like this s t h i m and

the Pope w2th h i s cap on om ride end the Pope say2ng

t o Mrs. Luae, "Ebt Hrs. Luee, I already a ~atho l ia ."

bum: Do you taka part in the Hensy George Sehool here?

Melaon3 I'm a direotar, yes, and lCtm a tmstee of the Henry

George Foundation of Ilmeriae with headquarters In

• Pittsburgh.

& m i 8 Does thls involve g a h g to meetings? What do you do

for th is work?

Meson2 Yea. Well, the main thing they l i k e you to do is fit

them have a o h e e once in awhile, The H e w George

Fsnndation does most of i t a work i n Pennsylvania. They

can point w i t h great pride t o the o i ty of Pittsburgh,

which is the outstanding Ln the United Sta te8 to-

day h the way of a rebirth, Sum tb Eemy Oawga

idtar was gut Into par t ia l opa~et imin Pittsburgh, %ha

m ~ gand amok8 and a Z w have b aen eleared o u t and

Pittrburgh has experianeed a new birth end %hereb a

perhaps been mare fine new buildfng going up Zn Pittrs-

W g h than i n m y other c i t y i n tb U n i t e d States.

Mason: me, answeF is t h a t they have lowered the u i t y taxes

on buildings in Pittsburgh and incpoased the tax on

land valuea. It's just 8s simple as that,

Opinions on Taxation and Looal GOI78lZuM3Ilt

Central Val ley Project

Saumt

Mason:

Baum:

Mason:

Did you take any part in the Water and Power Act cam-

paigns, 1922, 1824, and 19261

I was friendly wlth 3udolph Spxeekles and PranJslln

3ich3srn and John R, ' % ~ s . Whilu I was an a w f u l l y

b~iegyaung fellmr, t ry lng t o nab- a lfving, in those

yeers, f d i d have a real fntereat 5n the Water and

Power Aut campaigns. I

Later on there was a discussion of the Central V d l e y

P ~ o j e c t ,a federal project, being purohased by the

etafa. I: wandered if you took any stand on that?

Oh yes, 8x1 the way t h r o w I took tile atand that i;W

Centre1 Valley Prajeot in the beginning war a u ts te

a i f e f ~and ~ihrttlldhave remained a s t a t e affair end ll

never favmed gettlng f e d e r a l &fts. I believed that

would have la poisonous effect on the project f r o m the

beginnbg and hsve always believed i;hs s t a t e ahovld

sssvrme i t s responsibility in paging for the project,

Masant

Baumr

Hasant

That's one of %be examples 1 Bad l a mind earliar when

I talked about s t a t e ~ e s p m a i b f l i t g ,not states mrighte.' You think the s ta te should handle that, end pey for it.

Def in i te ly . I think the state8 have a taxing power a s

great or greater than the federal Congress has. I see

no poealble exouse f o r the atate expecting Congress

t o pasa laws t o raise a l l the money needed f o r Congress

and eaerg s t a t e in the mion and every oountry in the

W O P ~ ~ .

Bauslt You favor the 260-ac~e Ifanitation.

Bsaaont Dsf inits ly, under t b olrcumatances, But under the

irr3gation d t s t r i a t law we got r i d of the big holdings

l a HodeaOo and Turloak without any tarbitaa~ylimitation,

Baum:

Plaeonf

The people rtha favored taking oves the Central Vallby

Prejeat by the a t a t e am those who are oppoaed t o fha

160-oom limitetion, ereatB they, largely?

Soam of them are, yes. And some of then may be eon-

fured. Tho Orange is opposed t o the atate having

aaytihirJg t o 40 with i B t vhtdh in e f f e c t i s the answer

t o the abrsntes ZandSomltsgreyer end the Grange, with-

sat ree lbbg it, i a playing the tune that the absentee

-. -

%endlard8hope theye23 keep an plaphg . 9!ha crbaentge

landlords know there cm be no federal %ax on 3and In

the Central Valley Projett unless the f ede ra l govern-

ment taxes land values e l l across the country.

So Bhe Grange and George Sehheyer, without h l a

realiraing it, a r e r e a l l y i n bed wieh the big abmentee

landlords. Itve known Qaorgs Sehbwyer f o r a long

t ime end l t ' a a t r eg lo thing t h e t George doesnrt ugdep-

rtand,. ,Wall, b a r g e never d i d l ike the i r r i g a t i o n

B l s t r i o t always apposed it. He never thought the

holders of benefited l a n d pihould gay the ooet of irri-

gation works. J u s t who he thought; should pay he never

would say, unleaa it would b Unale Sam, and h i s i d e a

is that if Uncle Sam pays f o r something, t h e t means i t ' s

r2-90.

Well, A, P. Gianaini was prejadiaed against i&i-

gotion distrlets too. O f eowse, he uas vary entkusi-

a s t i e about the grea t land reolamation projeota under

Muasolini in I ta ly , prslasd them hlghly. I donrt

quertisn A, P.98 r i n m r i t y ap the honerty of his

opidons , bsoeaae I am frank t o admi$ Chat X had r

Bllad-apotz myself in thore day#. I studied h s s o U n l t a

great Boniflea Integral. on %be p u n d , I h e w tha t it

was retmlvlng a very ~ube tan t i r r lgovernman$ subsidy,

and er I look baek on so- of my oomrssntcrl. f thought

that wea a p r e t t y good thing, (Reads from a $pee%h

v

&rma written by himaelf and published In the Pebfaerg

1935 Reerla~llation Era praising Musaollni s Bonsfiea. )

(Discussion of an art ic le by e ColmbZa h5ver-

sity prefessor, Dr, Schmidt, i n the September 1937

OoliCi,erl Science Quertel?ly, "Land Realmation in

PeaaisC 1talyts in which P ~ o f e a s a rSchmidt criticized

the land ~eclamationprogram because the cost of the

irrigation works was not charged againat the benefited

land. Ftutther diacuasion of s book by F ~ o f e s s o r

Sabmidt, The Plaw and the Sword, 1937.)

Bamo D i d you begin t o change your mlnd about 19378

Naaont Th~lttajuab abvut t he ti=.

Baumt 30 since you wrote that s ~ t l a l ein 1935 you have @hanged 1

your mfnd. Piason: Why, I waa as blind as a bat when I made thfe speeoh.

Thattar whet I was saying the other day, Bere# It4

h e n handling these irrigation d iatriet securitie8

and 1 knew. there was 8- thing good about ths d i s t r f a t 8

that had made California very dffferent ehm my other

part of the w o ~ l dI ' d ever been. I was grapbg for

what it ma. I was uam a t times. Ww, I quatad th ia

speech by Teddy Raoeevelt on federel ~eclemaOlanof.

ar id lands with a greet deal of gusto, and I was jmt

as mistaken e s Teddy was.

Maaont Why, when the Bonifiaa Xntegrsle was completed, in-

stead of oreating lsating atltivity for the people,

whatra been hapgcsning? 'Pbe U.S. taxpeger h a been

bil led to make the payments for land raalametian in

Italy , but the lend8 of the great Ital ian landlorde

are still tar42empt.

Masont Did you have en opportunity to attend the meeting -of

the Constitution Party in Sen Francisco thia,week?

Baumt 30, Aren't they mainly held together by their ideas

an revenue?

Hasant Yea, T, Coleman Andrewa is the spark plug. B4 was th4

Collsotor of Inteanal Revs-. After he r e s i g n e d hb mude a number of apeeohes end wrote a number of erti-

elea glring h i s opinion ef *he federal lnoonme tax

seatub en8 that led to r lot of peaple taking heart

wha had p~eviouelyb a n t3.moroua about even Biseuaslng

taxaktan. X wsuld say the Clonabitut2ori forty bastcal ly

Se en et;t9mpt t o i i n d our way bsok t o the Bonot3t;aCion

in fmdameatal irssp6ata. Obviauoly, the most funda-

mental paint revblves around how publia revenue a h a d

bs levied end a a l l e o b d , T h a t is tb question they

hatre been willing t o look in the face although they

Mason3 have not yet announced any egreeaaeak. There is seem-

ingly l i t t l e hope i n getting any constmctive action

out of tho bpubllaarn adminiotration,

aaumt Wsm you active i n the formetion of the Constitution

Party?

Plaaont Oh no. And I have not signed up but I f e e l v e ~ yertmmgly

wa need t o make a re-exaarinatioa o f taxation, The U,S.

Constilntian guarantees equal sights t o l i f e , liberty,

and property in the Fifth and Fourteenth hndmnta .

Hou can there be equal rfghta t o l i f e , l iberty, or

property if a11 the taxer are h i d an peopla without

any land and those hold- valuable land are allowed

@ompl@t8 federal b 8 ~0mti4~198 long 83 they hold

bhs land nnuaed and ldla? I

I reel t h a t 'P. Colanvln Andrewa h8s been me moat

ferthright ~ n dcoaregeoua m8n in public l i f e that br!

8ppea~edon ths acermrs in a long ti-+

B ~ u m t Ymtve rhawa mo sam aorzurspcradsnao f r o m A~crhibald

Boorevelt. DSd you met hln a t the C a ~ g r e s s lof Fmsdom

nsrstiogt

Waont He%, poesibly three yeers agor The Csngreae of Freedom

was the foremnnsr of' what aesms t o be emlving

the Constitution ParBy.

Baumt adrift the Congress of Freedom m e t In San Franoirrcra in

&9%?

hs0X2t Yes.

Baum: Do you think the Congress of Freedom is united on

atates rights?

Nasronr They a r e no more united an anything than is the Re-

publican perty and I would ray neither the Republican

party nor the Demoorat perty is w i t e d on anything.,

I hope ths tino never aome8 when any political perty

hea members who are ell united, about everything like

they were in Qemnany u n d e ~Eitler,

The ConstftutBon Party is in a very enbryonic

stage, I have no idea w h a t their platfcrrm ~211look

like, bat I em going t o enoourege the members of that

perby in any way I: can in the hops t h a t their efforts

w i l l at least atrrmllate dlscussian.

Beumr Would you favor mtluaiag the t o t a l s ~ l m m ta a ~ e e t e d

in t-8, or keeping the same emaunt af revenue c d n g

in and shifting the burden t o land4

%sons T h e ~ e ' sno gun living who would be happier if it were

goosible for ua to live and work toget;her without any

t a x e s . We bow f r o m experience that whenever a Irsaal

g o v e ~ n temtempla%esa a expenditurn, we eee the

forces of asonmy unite and oppoee any extraoagent

expandita~s. !l?bsame soono~nyForce8 would unite t o

opposa, any fedare1 csxpendibxrea if they knew they wem

going t o be paid f a r by en annual ad valorem t a x on the

land.

Baul.~! W h a t aspeats of government do you think am e x t ~ a v a -

gent?

Hason: I would put the brakes on all f e d e r a l a id t o ertste

gwennaenta. I would i n s l a t that statas and l o c a l

aammmSties reiso tb ir own money without handouta

fro~olUncle Sam.. If the aarsem;tnity cannot sfford t o pay

f a r an imp~oosmant,i t has no right to make others gay

f o r it,

I saw the a m trend ureap aver Gemasrig. We ware

in Gemaony in 1934 when the Reioh~tag*the oentral

g o v s ~ n t spassed a stetut;e simply uurping the

sovereign powers of the Weillarp statea. T b r 6 was no

lanepsr any state authorfty or reaponsAbility, any

r ta ta r rights, any proteation for individual right&

Fpom then on Eitlerim had no obataele. We ere los ing

the moat presioats safeguard of rights in our Coneti-

tutiori, w h i a were insured by home rule and s t a b and

1 6 ~ dPssponribiUtg for f ~ a d i t i 0 ~ U y200a a f f s i ~ s .

And meWg* not- h a happane4 in edlong time

thee 1 think dsasrvee more enthuaiastio applsarae Wan

Senator Xns~olsnddPd in flraaly opposfng fedem1

"aide t o sGboals despite the Preeidentta lnsl~tent

demand. And whn the party leader Pn the Srenate takes

Nasanr issue with the President on an f a s ~ mof that kind and

takes issue aa clean-cut end square, head on, as

Knowland Bas on educetim a i d subjea%.,. I haven't

rlueys been abXs t o agree with &owXandl a focus, but

hem is something f Wnk we e l l hsve ocearlon t o

thank &owland fOP. I be1%eve it m i g h t be the turn-

ing polnt that could ssvs us from aentrelixed and

federal control of e l l publf a csduoatrian.

1 have not alolaya been on what aoms might sag is

the ultra-eomemative side, but in a eenrea I t m not

sure that I haven't besa on the ultra-oonaemative

side in the sense of being in favor of eomerving the

most impoptant and desirable provisions in the U. 9. J

Constitution, the supremcr law of tha bnd, without

whfah there can not possible be "equal jusfioe under

law."

Qa the public aGhoo1 aegregetian lasue, &he

constitutional isma imalved $bsre %a a t bsttaan the

rame as was involved in the Muniaipal Benkmptog Aat,

Let us aay that them am school dfst-eCa bhaQ ueatt

e f f o ~ dproper schoo2heuse%and that the l a m 1 peagb

don't agprave bonds frrr e aehool BuildiPlg. In my

opinic~n, 8ha.k dm8 not entit le the 1oaal tsutpegsra

Hasant t o look t o Washington for the mney t o build the

erehoaahousc,, It is an isaue that should be settled

in the s m i t y , justi U k e the old Hew Bngland tawn

meetings. If the & m i b y decides they'd rather have

no scrhooUopaa, Bhat fr the businssa of the c m i t y ,

If tbe people in the e4nmn;mitg won't vote the soh001

bonds, Lhey*ll have no eeh@olhauseand f e r e ~people

111331want t0 l i v e in that 60rmnunitg. It's no buainssa

of Gongresa t o eoms and say, 'low, you dontt w a n t t o

put up your own schoolhauses we're going t a i n s i s t

you put one up and we'll give you the momg to d o it,

and aend in the army t o a98 that you obey the U,S,

SupFern6 Court*"

If l$w 8oulhern a t s t e s e l e a t not t o have any >

sehoaUlouses, that ianft the bualness of California

or anr btbr #tat+. Baeh ste t8 ham ts eupply eduea-

t i s n er no publie aahaalr w i l l s x i a t in Wet rtate.

Predersncs t o r .Ad Valorem Land l ax

- Barn$ f e your ob3stetion t o ineons tax srpeelally to a pro-

gresaive Ineoms %ax?

l#asona That l a one objeetian, yen.

Bamt W h e t w ~ u l dyou t h i n k o f anincome t a x a l l a t tha a m

rate, 88). a f l a t 20%~

Masont I believe i t is neoesaary to break down that w ~ r d

income, There are two Mnds of income, earned and un-

earned, and they should not both be, taxed the same.

The ad valorem land tax is a graduated tax, If one

geraan holda Zand the c i ty w i t h an assessed value

of $100 and another holds the aams aired piece of

land asseased st $1000, the person with the $1000

land would pay ten timas the t a x the person with ths

$100 pieae would gay. It would bar the sam t a x rate

per $100, so the talc would be graduated aceording to

assessed valuation. That i s the t rad i t iona l Amrfcag

'g~aduated* tax. The esaeamert poll I s the "graduat-

ing" ma~hins.

My mother used to tell a good story abuut a

butcher who miss;& a ham. He had about bwenty aharge

aaoaunta and he cbeided Co aend a11 hie ahe~geamaunts

a b i l l for the ham, feelAng tbt those who hadn't qot-

ten it, would objeot* La and behold, not arm of t h e m

objsetad, That's e little like sorrtar aeesm~ora. It

ueed t o be t h a t the board or equaliaatian day wao Che

big day of the p a r , w h a the gaopb would BIB- into

the asaeasor~sofflee t a exambe #a asaesament r o l l 8

and mke aure that; tbfr ~ 8 8 e ~ m dvalue was not out

@r11- from their &ei&Bbom.

I

1 i Mason: Thsy don't do it now. '&ep have an i d e a E t would

be pekty. Those assesarment rol ls am public property

and can be seen by enyone, but if you are milling

t o go and see whether the assessor has overbilled you,

d m t t exgest " t assessor t o look ~ u t~ ' O P Heta

often there t o look out for the friends who help him

get eleeted and he does.

I want% name names, but I -ow of Zastences in

San Prsnaisea w h e r e f ~ i e n l l l yintelcesta gat the asseasor

t o value land an the aaeessment roll a t $100 en acm

that should have been valued a t Doer $1000 an acre, It

was a very ~ l ~ e e b l e bu* d i d anybody amplainttract,

1 never b a r d o f it.

I knew the assessor in Almmda County quite well,

have known him for aboue farty years. Ha is one of the

motat donacsieatfoua end honest men I ever knew, but he

haa often told me that he Yiahee tbra would be ware

cit izen pa~tieipstiarrme¶interest, ,Hecantt person-

ally inepee* every properOp end know uheth4~tbe eaasaa-

writ roll tar the way it should He haen*%enough

budget, &Q da the jab as w e l l as he weald Ub to.

T b P U Wfit! 8 peOpb in f ~ ftw ~ b n gat m d d hide

their money under the ground, A t athes? times they

sink their money in land. When they get en idea t h a t

I

Xasan: money is losing its value, they get fnto pania. They'll

give up any axount of paper rnanery f o r somgthing they

dean las t ing ar tangible. And we * m an the brink of seeing more pe~~plernah in w i t h money t o exoh~ngefor

tit le deeds t o land a t prices that w i l l make pmsent

priees of land seem mall.

'Phat18 the way it =aka any time land values are

tslr sxsnprt.

In England there f a no tax a t a3.l csn bnd, none,

You can hold the most valuable laaatlona in the heapt

of London, and many at them are a t i l l i d l e . They wem

bombed in World Mar I and never re-built upon. Why?

beaus8 it eosta the holder nothing to hold the land 1

O U ~of U80.

Like A, A. Tisaomia here on Montgomery Street,

Be holds that whole solid blwk, 6oesntt al low enyens

t o oaaupy eny of thane stoma or offgees in that whole

=oak, except fop the l i t t l e bailding with hi8 own

of t ias in it. A alms, uxtwed blook. =y i r h6 doing

It?

I knw Mr. TiecoFnia, He was a good austomer of

5, R, Maran& Co. Beta psrfectPy frank in aayh& *AS

long as +he pnblio 2s wAlling t 6 allow people get

t b door is left bpen 3ad 1% fs looked Upan BS the

moat respectable way to get ~ioh,,,I)

Ee is gbbng to bold it until the priaea go up,

Yes , There was an itern fn the peper the e h b r day

that esm Eastern bank was negotiating t o bug the

blaek and offered hbt a fantsstia figure fop it,

Waieh he la thlnking a33ut.

Do you think the failure of the stabs t5 exercfse

t h l p 8overelgn powers hae tended t o a i d land monqnly?

beffnitely. As l a n d values become exempt taxation,f ~ m

the opportunity fbr making a p r o f i t by mrelg holding

land and not sreklng use of it haa f l s e r e d t o the point

w - r u our national anthem $8 now to put federal taxe8

on those who produee the wealth in order t o raise tbe

mmeg t o pay the absentee landlords nat to use t;Be

land, but t o "retiren it i n the ao-called "3011 Bslng,"

De gau think tha t i f the statea now levied a larger

aham of the taxes and contwibuted money t~ the federal

gmsmmant, that tihey would lay the taxes 0x1 land, or

wmaldnqb they just use inoams taxea or s a l e s taxes

tbnweloea?

T h y would as long a s they crould, fit among the

.forty-eight s t a t e a there m l g h t be one s t a t e t h a t

wauld levy texes in groporztion ta benef5 t a ~ece ived ,

I people end industry would be drawn t o that sta te

I exaatly aa khey have been dram to Puerta Riao in

I recent p a r s , and the other states would have to do

I tha same or roon lose population. Maybe some of t h e m

I would beooare depopulated. Itmnot saying that all m u l d

ever u a b up,

Belief .;Ln Free Trade

( bronr The Conatitutlen Is the auprena law of the land and

any statute adopted by any stabs legislature whioh

infringes or inpaire those inalienable individual

righta aeonred by the U. S. Constitution must be d i s -

I allowed by the aourta, f t took almost 40 p a r a f o ~

the Supreme Court o f Oalifornita to disallow the so-

ealled Alien Land Lew, over ninety years t o disellow a

statute prohibiting mixed marriegee. I t kook tha

Unitad States Supreme Court r very lang time t o d l s -

a U o w "restrictive aov~nants,~a long time t o t e l l

DuPont that they must get r i d of %heirGonerel Motora

I holdings, 1 I Baumr A l l these deaiaions you feel are progress?

Maaonr Oh yea. f haven't seen the deoision on the L)uPontII

I case, but I cann~tforget a reosnt t r i p t o Mew York

and en interview with one of the t o g ol!ficess of'

J, P. Horgan & Co, who told me that General Motors

would be greatly benefited by free t r a d e and General

Motom heada uould c9ms 3ut f a r free t r a d e just as

Henry Ford did, exaept that General Motora is con-

tro l l ed by and W m t want;e t a r i f f s . So tha&

ruling may a f f e o t our tariff paliay.

Z take i t you favor freer trade?

P ~ 8 etrade* .Completely free trade .

Xnsluding fme trade with Red ChfRa?

I believe potx should have an absolute right when you 1 2

go into s t o r s , $0 spend pm money for w h a t you1-want t o buy, regardless of uhem it was mile. Should

1

the government te l l you, you must pay more f o r it, 'or

force rou t o buy domsatio morehandiae? There are a

lob of looae thought# around today, 8uoh 88 the idea

that foreign r l d is a good idea provid-g we give

away the praduets of our f e ~ t o r l s eand farma, but if

we reoelvo anything in ret- ( h p o ~ t e )1% would be bad

f o r our eaoaomy. Gmld anyt%hlngbe mare unthinking?

'or a better underatanding of the eonruqwnms of

tariffs and o#mr ~Betl'nctionat o t r a d e , I raeoanwend

,*~rotect ionor Rrde T~sde"by Henry -urge and nE~on-

omfiu ~ a p i 3 i s w e ~by h a t i a t .

Boulder Cenpon ?ra.le,ct

: Baum: In these papers you gave -ma jrau included an 03en

letter t o President Moover e~mwntingsn t :he hos t i l -

f t y of the Depart~entof Agr.fcult?lre tr~wardreclame-

tisn, That wss in 1929. Could you enlarge on thsk?

3 i i sx l : 2 9 . , A. 31, Eyde, .the Secretary of Agriculture befom

Vallace, adother I3wa man, .. I b r e had long been a

campaign a q a l n s t i r r f z a t i 3 n and f Selieved t h a t in

the Sackgrmnd the strongest influence t h a t was

3-2933iA1gla33 r e c l a a a t i o n ma t n e inflxence of the

power c~rqanies ,a f t e r Wodesto and Turlock built ~ d n

3 e d m Dam in the 192018 end d e c i d e d to distr ibute

t!wir 3wa power. Then caae an sttack against Muscle

Shoals, bef ?re T.V,A, Seattle and Tacama already had

their swn municipal power distribution systems, and

Los Bngeles also acquired i t 8 o m water end power

system, The Saturday Evening -Post ran a r t i c l e efser

article by Geret Garrett, end othsrs attsukfng the

Reclamation Bureeu and cri t icfs ing land reclamation

and eontending that it was a waste o f money t o reclaim

lend ia the West when there were s o many ramps in

the E a s t ~ f n gbroke, On the surface it sounded

reassna'ore, but I always f e l t it w ~ u l dbe as pmrdent

to protect land frm f h o d and drwth, a s it would be

t o insure your home f~ o l nfire.

You think the pot~ercaqarmias were Sehhd thls?

Tyfere was no quesi;fon about it. W5y, fn the 1924

i h t i o n a l Electria Light Assaeiat ion eorrventim in

Atlantic City, read th6 a?eech by Gwen D, Y o u g ,

where he warned .t;:hat they were making 8 m a t &stake

attacking f e d e r a l mcla-mation and the 3 0 U d e r Dam

ppajest.

Oh, I k n ~ wthey were attacking aoulder Earn and Muscle

Shoals.

As I said, 5 don't favop cit ies going in to the

business, but if the people b u i l d a water s t a r a e

dam, i t l e just as foolish t o give away the Bower by-

product rss it muld be for A m o w t o s laughter cattle

and give away the mat end keep only the hldea.

D i d you aone fnto canteet w f th Elwood b a d ?

Year, I knew 61.wood &ad. I attended the Pan Pacifie

Reclamation and Recreation conference in Honolulu in

1929 wf th Dr. Mead. I was with mr Head in Paleatine,

58 used t o tell me about h is experiences i n Canbra,

tne cepikal o f Australia, Ee was the man most respon-

Mason: ~151sfor setting up the capital o f Australia on

"single-tax" lfnes that prevent land speculation.

Sam: Oh, he was a Geargfst?

iS'Inaanr Indeed he was, And Arthur P, Davfs, his p ~ e d e c e s s o ~ ,

W 8 8 t 0 0 a

I was w i t h Elwood Mead when he selected the site

far B a u l d s ~City , If you wanted e lot fsr hone or

business fn Boulder City, you didntt have t o pay sr>me

land speculator a bonus t o get pemisafon t o use the

site. Yould go t o the "t icket office," the oity

raanager, and examine his map o f the c i ty . Pfak out

the site you wanted, every site had a priee tag of so

mueh rent a year, Boulder City was expeeted t o Be-

come s ghost toun once the darn was built, but i n s 6 a d

af that, people found they eould go to Boulder City

and get a lovely s i t e overlooking Lake Mead for $10

or $15 or $20 a month ground rent, Mow they have

passed an act in Congress t o change the or ighel

Boulder City,. I have it here, very t e ~ ~ l b l e .The

speuulators want in,

Beurn; What sort of a man was Elwood Mead?

X-bsonf Wonderful man, I danlt think t b r e was svep a man

of more cromplete integrity and devotion t o his pasi-

tion, He took hia work very s e r f ~ u s l y . They just

Yssont don't make Elwo3d Weeds anpore . I k n ~ w32 nobody

1 3 g~ver,z.mntsemice today who stands up and defends

the general welfare the way Elwood Mead always d i d .

No, Elwmd Xeed had a great xind and a great hee~tand

a great cheracter. It pleases me nore than I can say

ishat they named Mead Lake a f t e r Nm.

And when it c m s t o namfng the dam, the fiecord

shcws that Rr. Roover never gave that dam any help,

The Boulder Canyo~Project Act was signed bg Bllesident

Coolid@, I was there, 1 worked three winters in

T2ashington, jnst an interested c i t izen. I never even

g ~ ta postage stamp f o r my t h e and tmuble, 1 ba-

lfeved in the benefits of the Boulder Canyon Project.

Reed S m ~ o t ,Senator f r o m Utah, t r i ed in 1932 t o get

the Senate t o agree t o change the nam from Boulder

Dam to Hoover Dam. I was in Washington st the time,

His suggestion was all but hooted d a m by the Senate,

A f e w days l a t e r , I was a t Las Vegas, and they we-

driving the spike t o s t a r t the branch line pailroad

from the main line to the dam, when Secretary Ray

Lyman Wilbur tr ied t o shristen i t Hoover Dam, pight

after Smoot had l o s t but i n the Senate. Boulder Dam

was the of f i c ia l . name, but Wilbur, without any authority

whatever, t r i e d t o refchrfsten i t IIbover Dam, I was as

1-m s o c : n e a r Wflbler a t the tixe as I am t a 7 ~ unow, out tnsm

in t17~3 m at LDS 7'899. And as he d r w e the s2ike

he s a i d , "1 r 6 c k ~ i s t e nyou Haover Dm." Well, he

had na more a u t h o r i t y t o do that than I had.

Baum? It didn't s t i ck then,

Mason: I?o, because Ickes saw it herd been ohanged without any

axth~rlzationwhatever. In nsne of the ~ f f fc i a l doc%-

ments was ft ever callad Hoover D m until much l a t e r ,

IS it had been correctly named, it s h ~ u l d:have

bee3 called Anti-Hoover Dam, because Fir. Zoorer would

have vetoed the legislation wfthout o quaati~n,had

Coolidge not signed it;. We knew it was sither ze t

Coolidge to sign it ar It was curtains, Ys were

never able t o get any s p p a t h e t l c help fyom Xerbert

Eoover, That's a big story taat has never been fully

written, I don't mean just Hoover's part, Iln th9,gking

a b u t the whole Ssulder Canyon Pro jec t batt le . And

the fact that a man named Samuel Ineull wss wartring

in the baakgrunnd, expecting the power to be created

in the Boulder Dslm muld drop in his lap,

Baum: Is t h a t right?

Mesont Y e s 9 he was banking on that, and when it didnft

meterialize, Inaull had extended himself i n expeete-

tian of gettiag the Baultler Dam power. Ra;7 Zpen ;di1'3ur,

IJIsabns ia~henhe became Secretary of the I n t a r i ~ r ,fl?sf, Pecm-

imxlded t h e lease 5f falling water, I heard about ft

2n Jap= and I wrote Z l r . Wilbur a l e t t e r from Japan,

and I wrote Y?, Bbaver a b u t it, Xr, 'dflhur and H-2.

Eoover r e p l i e d to my letters and this little thing,

(ahows printed brooh-we) I hed 5,000 2f tL&mmad@,

sent them Ca every congessaan m d everg senatar and

t o the leading newspapers ganerallg, W. U%15,m recon-

s i d e r e d , The raind-up was that the power companies o d j r

got sbout 9$ of the B9ulder Cam power and the govern-1-

nent installed, owns and aperates the pmer mahinerg.

The o i t y of Loa Angeles, the Yetropolitan Water District

are getting Che bulk of t h a t gawer today, At the t inre

o f the allooatlan the Edlaon Company snly @t sbout 9%.

They've been getting more sine8 due to trades and swaps

and so on wllth Mevsda and Los Angeles.

But a t first W, WflSur, under Herbert Hoover, had

the i d e s that they eould so menipulste this power that

the c i t y 0% Los Angeles would distribute none of it ,

It dtdnvt work out that way.

Baum: In this l i t t l e pemphle*, I see you printed wp a l l your

aormapondence wlth Wflbur.

Mason: Yes, I t i s t o ahow what Wilbur recomrrrsnded at first,..

I

the firs5 recommndat im was mde f a r hi2 b;7 sombodg ,

that he hadat t thmpht abont f t muh Ssfore he put

Ma aka7 on it.

This nuat have Sean a pretty ex?ensi.rre little paqhlet

far yo^ to have gr in tad up. 3ne ~f civf e a

-bono pnblico,., Yes. If them's m e thing about my eif3r%st h a t i s

funny, it's l i k e this l e t t e r fro3 PIP. Xizar, whczle he

s a s p e o t s L have 8 ?erganal interest t h a t I 'x tryfag $3

push and that I pnf t h a t fnterest a5ead af overJe,hiag

else. ?4y God, if I had been thirikiag 91" my 9kn peclai-

e r ~interest, I could and w ~ u l dhave ,%me along w P t 5

the r a b b e ~barons and c3uld have beams very rSch.

Before we leave Elmod Fead, I wandersd v b t you

thought of Arthur P. h v i s .

I think that Arthur P. 9avia snd Elwood Mead are the

fb e s t characters, the highest integri tg, that have

ever been in public semice, to my knawledga. ArtkUtn

P, Davis wos ComEtissioner of Reclamation before Elwood

Mead. They tried t o get A ~ t h u rP. D a d a discharged on

the ground t h a t he was sn engineer and that the Boulder

Dam Project needed something bfgger than en engineer.

Hason: Well, they dfdnTt get ' d m fired, but a f e w yearo l a t e r

they tried t o get Hike Straus fired frm the sane j sb

on the ground ths% he was no t aa engineer, which aakebp

an interestfng studye

Barn: 'hey just wanted t o get r i d bf both sf them,

Masono And that was just en e l i b i ,

Arthur P. Davfs later waa engineer for the East

Bay Xunicipal U t i l l i y Dlstrict %:id you 532 Oakland end

%r!.reley can thank Urn very muuh for a greet job done

there. After t l ~ s the accepted an assigiiient fa the

U.S.S,2. a& k&ed d e s i g n s3me 09 tka greatest irri-

gat ion w o ~ k sin the xorld whioh have since been eom-

l e t e d Pa T7nkistarz aad the so-tlthern per t of O . S . S . X ,

35, A r t b ~ a w o r l d inf'luence 'P. Davis was f 3 ~

g o d + Sa was EPdoad Ibad. If ws had efther of them in

the S t a t e %parbent today, we'd be doing much b e t t e ~

In UP atnzggle bo win friends and inflaenee people

around the wo~ld.

I znet 3amuel h a u l 1 in Athens a f t e r his u t i l i t y -

balding empire Eaed collapsed. I h e d known Samuel

l n s u l l $2 Chicago when he was khe *kingit of Chicago.

Among 4 t h ~ ~ that wem he gavethings t h a t he d i d good,

Chfc~goits grend opera. I e P ~ s y sthought t h a t Iasull

Fason; was a man of good intentions. George H. Reynolds was

heed of the bank i n Chicago that did most of Insul19s

financing. I was born next d o o ~t o George 14, Reynolds

in b s Moines, lows, and rng mother used to tell mrs

tA%tGeorge Re.polda was the flrst man t o change mg

diaper, Ee *baame head o f the second largest bank in

the Uni ted S t a t e s , the Continental Zank, Later , I

sew a good deal OF George RepolBs in Pasadena after

he was no longer head of the bank, T:?s strain of the

Insull f inancine; and the auddemess with which t h e

wnole Insull izoldiq-company empire disintegrated was

such a shock that George Remolds never recovered h i s

equilibrium. tIe was a pathatic person, Somthing

happened that he just dfdnjt imagine could happen, ' It

was elmoat worse than if the Wock of Gibralter crumbled

under ths Prudential Insurance Company,

Baum t D i d it effeot Insullf You s a i d you m e t h i m in Athens.

Mason: Oh yes, Inaull wea just blubbering, That's all he

could do, just blubber. He was bmka, abaalutely

broke, But it didntt effeot his a n d like it d i d

Reynolds, These t'nings Ijve seen happen t o men t h a t

wexw considered i n their l ifekixe as infallible, , ,

It" been an invaluable lesson,

iNarqina2 Lend Piemoval ss. S o i l Bank

Mason: lie were discussing the too-frequently-held opinion

t h a t there i s an averpr3duction o f foad. Obviously

there a r e g n l ~two ways t o cope with that problem:

first, by deal ing d i r e c t l y with the tenure of land

i t s e l f and second, by attempting t o govern and caner91

and d i c t a t e the crops t h a t any landholderrnay p lan t and

reap. The second approach is the one which we have

been experimenting with, but befgm t h a t secrrnd ap-

proach was a d ~ p t e d ,beginning i n 1930, I ga t qu i t e

busy urging a 3 r a c t i c a l a t tack. I became well acquainted

with Cordell Bull &en he was United S t a t e s Senator.

Cordell H u l l had made some sjeeches i n favor o f free

t rade which appealed s t rongly t o me, so I made it a

point t o eontact the Senator. We discussed not only

the advantages of free trade but the so-called farm

problem. It was a very i n t e r e s t i ng aontaet.

The suggestion t h a t I presented t o MP. B u l l was

simply this: t h a t no one can be a better judge of

whether land i s worth using, whether For pl~wingo r

building in the c i t y o r any other purpose, than the

holder of the title deed. W b n people have an old,

worn-out automobile, it isnpt considered un-American

Hason: t3 allow then t o abandon t h a t autmobi l e 3n a ,junk

p i l e and i t i s not considered American t o offer t a

subsidbe the owner of the warn-out automobfle so

that although his car w i l l r>nl$ da twa mileo t o the

gallon, he ' l l get the equivalent of twenty miles t o

the gal lon w l t h the a i d o f the public subaidy.

Eeginmlng Sn 1929 and 1930 absentee speculators

and athers who had bought or inherited land that %hey

didn't have any need f o r or use f o r defaulted their

ad valorem taxes. %vfAngbeen i n the mun9cipa3. bond

business with Harris and knowing that in some of the

states the l a w regerding delinqzrent taxes 6n lend was

very simple, very direct , and very s:ire, it 5ccurred to

m e that when the owner o f land hirnself decides t ha t the

land is not worth paying the taxes 3n and allows that

land t o s t a g delinquent longer than the time pemnitted,

that instead of allowing that land t o beeome a no-

manta land, that land should be put into a land reserve

or s o l 1 bank, If the s ta te would enter knto s contreat

with Unlrla S m , Unele Sam should advance t o tb state

the eqaioalent of the back taxes that had nst been

paid on the land and the s t a t e would seawe the f e d -

eral government with the land, It could a l s o give

Masoni the local governments the money due them and so protect

the loca l government and give the s t a t e an optian, the

first c a l l on such land, i n case gncle Sam decided ever

t o s e l l it. Sa the state c~uld make any arrangement

ft wished t o w i t h the original w r , perhaps giving

the or ig ina l owner the first r igh t t o repurchase, but

those are detai ls .

Beum: Then Uncle Sam muld pay the yearly l o c a l property

taxes.

Mason8 Right, s o the e ~ l l e c t i o nof taxes frOm landholders

would be assured, This idea was enthusiastically

approved by XP. H u l l , EIe was very h e l p h l in many

wags. I n f ac t , both he and Louis Bowe.,, (I don't

th ink F.D,R, ever made an i n r p o ~ t a n tpolicy decision

without first consulting w i t h Louis HOW^. LouAs Hoves

I understand, had been PeDoRo's t u t o r a s a boy and

Louis Howe, I believe, was a great man, although he

was a cripple and kept out b f the l imelight,) But

Louis Howe put me i n touch with F a A o Delano, wkro was

the uncle of FeDoR. and was head of the National Re-

source8 Planning Board. In September 19&, FoDoR.

earmarked twenty-f ive million d~llarat o launch the

program, but before the b a l l could get rolling there

had t o be some policy matters ironed out and an in te r -