Mr. ROSE. He did make a good report to Mexico City; but he was immediately removed. The governors down there since Cantu are just a matter of come to-day and go to-morrow. But he actually tried to cooperate; and I believe that he was honest.

Mr. RAKER. Well, he acted very fairly and talked very plainly to you, and said he would get it adjusted: so that I thought he would be able to do it.

Mr. ROSE. He thought so too, to the extent that we spent money and went down there when it was dangerous to go down there; our president and our chief engineer went down to Mexico City, and prepared all the data and information to submit to them. And when they came back they said the officials at Mexico City said to them, "We will not raise your water charge, because that will raise the charge on the tenant." And they said "There is no law to tax those people; we would like to tax those people;" but they said, "We will find some way of taking care of this." Immediately after our representatives came home, Mr. Chandler and his representatives went down there; and the thing blew up; and we never heard anything more about it.

Mr. LEATHERWOOD. I am still in the dark, Mr. Rose, as to this point. Just what is the relation between you and the American holders and cultivators of these Mexican acres?

Mr. ROSE. There are not any. Between them and the Mexican company? They are simply a customer of the Mexican company, buying water down there.

Mr. LEATHERWOOD. I understand that there are a number of citizens of the United States residing in the United States that own large areas of agricultural lands in and about these canals that you have described in Mexico?

Mr. ROSE. That is right; they are known as the

Mr. LEATHERWOOD (interposing). They are cultivating those lands?

Mr. ROSE. They are having them cultivated by Japs and Chinese and peons.

Mr. LEATHERWOOD. What is the relation between you and those citizens of the United States who own and cultivate those lands?

Mr. ROSE. Well, there is not any real relationship, when you come down to that. They own a little land down there, and politically they are very strong. They operate against us on the American side, by using their influence to attempt to control the irrigation district on the American side. To the south of the border, they cultivate their lands and buy the water; and they first started in when we built a levee; and every time we would build a levee they would step in behind that levee

Mr. LEATHERWOOD (interposing). Well, how do you hold this stock?

Mr. ROSE. The stock was originally held by a subsidiary corporation of the California Development Co., which was the corporation that sold water on the American side. It was obtained on the 17th day of June; 1904. Then both companies went into a receivership; and it was sold and the Southern Pacific took the corporation over: and the system was offered under a receiver's sale in 1915 or 1916, and then we bought out the Southern Pacific; and the Southern Pacific was the holder of this stock; and owing to the fact that the

Mexican concession provided that if any foreign government, or subdivision of any foreign government, ever became interested in the concession, or any complaint was ever made to any foreign government regarding the treatment of the private corporation down there, it should automatically cancel their concession. Of course, that prohibited the Imperial Irrigation District from becoming the record owner of that stock; and it was transferred over to the directors, and has been so transferred from time to time, as each director succeeded another from that time until this.

Mr. LEATHERWOOD. Is that the stock which you hold?

Mr. ROSE. That is the stock which I hold?

Mr. LEATHERWOOD. Now, then, the physical assets back of that stock are the agricultural lands in Mexico; those are the physical

assets!

Mr. ROSE. No: the system is the physical asset.

Mr. LEATHERWOOD. The physical asset is the system?

Mr. ROSE. The system is the physical asset; that is the only property the company actually owns-the canal system; and, of course, the levees, etc. The concession did not compel us to build

the levees.

Mr. LEATHERWOOD. The physical assets back of that stock are the canals, laterals, and the distributing works?

Mr. ROSE. Whatever there may be; yes.

Mr. LEATHERWOOD. And they are not represented by agricultural lands?

Mr. ROSE. No; the agricultural lands are separate.

Mr. LEATHERWOOD. Do these citizens of the United States who own lands in Mexico buy water from this company that you refer to? Mr. ROSE. It is the only way they have of getting it; yes.

Mr. LEATHERWOOD. And necessarily, if the agreement was carried out strictly, they would have to pay the operating and maintenance charges?

Mr. ROSE. They would have to pay any charge fixed by the Secretary of State of Mexico, which, of course, are intended to be and should be an amount equal to the cost of delivery, plus cost of operation. But they do not do it.

Mr. LEATHERWOOD. Are we to infer that these citizens of the United States that do own the agricultural lands in Mexico have interested themselves in Mexican politics to keep those charges down?

Mr. ROSE. That is exactly what I mean to say.

Mr. SINNOTT. In practical effect, the Mexican company in which you hold stock is really an adjunct of your district?

Mr. ROSE. Yes, sir.

Mr. HUDSPETH. Mr. Rose, you negotiated some time ago, you say, with the man who has this thing in his control, who is the Secretary of State and Secretary of Agriculture-which offices are combined in one person there?

Mr. ROSE. Yes.

Mr. HUDSPETH. Have you communicated with him recently in regard to an adjustment of this matter?

Mr. ROSE. Not since 1920.

Mr. HUDSPETH. Do you not think this would be an opportune time to negotiate with him?

Mr. Rose. I do not know of any reason why it would be different

now.

Mr. HUDSPETH. I do. This is a time when they are asking a great deal of the American Government. Recently they confiscated a lot of American lands in the State of Coahuila. We took the matter up with the Secretary of State here, and after some negotiations we got them to rescind the decree of confiscation, about two months ago. So it occurred to me that this would be an opportune time to negotiate the matter.

Mr. ROSE. You took it up with the Secretary of State of the United States, did you not?

Mr. HUDSPETH. I took it up with Mr. Hughes; yes.

Mr. ROSE. Well, of course, we might get results we did not want: if we got too active they might cancel our concession.

Mr. HUDSPETH. Well, it occurs to me that this might be an opportune time.

Mr. ROSE. We have attempted always to take it up with them as representatives of the Mexican company, with the Mexican Government, never bringing ourselves into the situation down there. Wherever there have been complaints made, we have attempted to try to get the complaints made by taxpayers or others, rather than the actual official district itself. We have tried to keep as nearly as we can from that, because we would not have any ground on which to complain if they took it away from us if we did; and if we did make complaint, they might try to make us pay a profit to them. in addition to giving them free water.

Mr. RAKER. Is this about the situation: This concession for constructing and operating the part of the system that is in Mexico was granted, and a Mexican corporation was organized to take it over: and the stock of that Mexican corporation is owned now by the Mexican company, of which you are one of the directors?

Mr. ROSE. Yes.

Mr. RAKER. And when it gets to the border, it is taken by another company, an American concern, that handles the water on the California side entirely?

Mr. ROSE. Yes.

Mr. RAKER. So what you want to do is to be able to be in shape to turn back and abandon the concession in Mexico, so that you will be in a position to get the water?

Mr. ROSE. That is it-and to be 100 per cent American, and be under a water law where we can enforce collection.

The CHAIRMAN. As I understand it, in order to get this concession, you had to bind yourselves not to make any complaint at all against the Mexican Government or the individual officers or ind:viduals there, regarding their trespassing on your rights?

Mr. ROSE. Now, Mr. Chairman, I did not intend to go into the early history of this thing; but I can go back and do it; and perhaps some of you gentlemen will remember some of it.

The CHAIRMAN. Well, if it would take much time, do not do it. But it seems that you are tied up with a promise that prevents you from asserting your rights, or, at least, what you would ordinarily call your rights, to your own property.

Mr. ROSE. The early developers down there got a concession, and got it through the help of this Mexican land company, on purpose

to put themselves in the position they are now in; so that nobody can complain on this side. So that is the state of the thing.

Mr. SWING. It is a corporation charter more accurately than it is a concession?

Mr. Rose. It is called a concession; but that is true; it is a charter.

Mr. RAKER. What is the name of the California company that owns the 600,000 or 800,000 acres?

Mr. ROSE. We have it here on this map [indicating]. It is the Colorado River Land Co. There is also the Water & Land Co., of Lower California.

Mr. RAKER. The Colorado Land Co and the other company that you have just named-how do they get water now from this Mexican concession company?

Mr. ROSE. Why, they tap our main canal.

Mr. RAKER. I know; of course they have to tap it if they get

water.

Mr. ROSE. Yes.

Mr. RAKER. But through what legal means?

Mr. ROSE. The Mexican concession provides that, upon demand, 50 per cent of the water is to be left for them.

Mr. RAKER. What I mean is, do they make an application for water?

Mr. ROSE. Yes; they do.

Mr. RAKER. And you furnish them so much water?

Mr. ROSE. Yes.

Mr. RAKER. And they are to pay for it?

Mr. ROSE. Yes.

Mr. ROSE. Now, why do you not shut the water off if they do not pay?

Mr. ROSE. They do pay that fixed charge; but that fixed charge is not anything like it should be.

Mr. RAKER. Oh, I see, and you are not in a position to raise the charge?

Mr. ROSE. That is exactly correct. They do pay a certain fixed charge, which is about half of what they should pay.

Mr. RAKER. Now, to get back again so that we can understand it: Why do you not go with the officers of those two companies to Mexico City and get the matter adjusted?

Mr. ROSE. We have had many conferences with the officers of the land company in the United States, the Chandler crowd; and have never succeeded in getting them to agree to anything which would hurt them; they will always agree to some adjustment which will not hurt them. In one of the conferences we had Mr. Chandler said, "Well, if you can get the water rents raised I will not holler." And when we went to Mexico City the officers there said, "We will not do that; but if you can show us a way by which we can tax the land, we will tax it." So we get in there between the two. That is where our trouble came in in the Mexican conferences. The Mexican officer said that "What Mr. Chandler is trying to do is to shove the burden on to the tenants; but if you can show us any way, through your Mexican attorneys, or otherwise, where we can tax the land, we will do it."

Mr. RAKER. In other words, here is about the situation: Those two companies and their officers are in opposition to your people, so far as the proper development of the streams and the canals in Mexico is concerned, as well as trying to keep down the charge as much as they can?

Mr. ROSE. Yes; there is no question about it. They have even opposed the method we have used of trying to protect ourselves; they have been trying to dictate on both sides of the line.

Mr. RAKER. And notwithstanding all the expense that you people have gone to and it must be five or six million dollars-you are willing to abandon that if you can get a canal built upon the American side and pay for it yourself?

Mr. ROSE. If there is not any way of getting any reimbursement at all, that is true. We hope, Judge Raker, that there may be some way fixed, within the view of the Government, by which we will be reimbursed for a fair portion of that system.

For instance, here is another item: Since 1916 we have built levees and laid tracks, etc.; and in our operation they have charged us $206,000 duty for the things that protect them; the things that are the first necessity in protecting their lives.

Mr. SINNOTT. Where is the levee that the committee rode down on?

Mr. ROSE. Down to about this point here [indicating on map]. We have extended that levee now three miles farther.

Mr. SINNOTT. What does it cost you a year to maintain that levee?

Mr. ROSE. We spend anywhere from $200,000 to $500,000 a year on it, in recent years. Now, there was a period after it went into the Bee River when that was not true; but now it is running from $200,000 to $500,000 a year.

Mr. RAKER. Over on Volcano Lake there is a levee, and a railroad from that that runs over to the mountains on the southwest, is there not?

Mr. ROSE. That is correct.

Mr. SINNOTT. Do the expenses that you have given us include all of those levees?

Mr. ROSE. Yes; they include the operation; they do not include the construction.

Mr. SINNOTT. Do the Mexican landowners contribute nothing to maintaining those levees?

Mr. ROSE. Not a cent.

Of

Mr. SINNOTT. On what ground do they claim exemption? Mr. ROSE. Well, there is no method of compelling them. course, the concession did not provide that we were to build levees. But we have got to do it; it is a matter of self-protection; and they refuse to participate, because they know that we will have to do it anyhow.

Mr. SINNOTT. And you are limited in what you charge for water? Mr. ROSE. We are limited in what we charge for the water.

Mr. SINNOTT. By the Mexican Government?

Mr. ROSE. Yes; by the Mexican Government.

The CHAIRMAN. Does the Mexican landowner get any special benefit from these levees?