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California Colonization by J.V. Mendenhall

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  • 8/14/2019 California Colonization by J.V. Mendenhall

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    Tke Eedty Bluz Book of Cd.Iifornia

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    J. V. MENDDNEALLPre'ld,tur Catilotuid Approwit IrMd,I ettletuent AseociatiotuEM Francisco

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    The E?a,ltuBlue Book ol Ca.litornin 28I

    UolonlzatlonB!! J. V. MENDENHALL

    PrelilllinarlJ SoiI ond Contou| DcLta-FinulcilLg TheWortk While Proiect-InLportdnce of Thorough PleruLing-Aatral Eteudi,on-F(Lrlning Sxlperuision-The Sale Con-trcnt-Persistent PubLicitA-Tlle CaIl to Seluice.

    ired largelyby the chamcterof the soil, ts crop adaptabiliiies,ienceof transpo ation, nearnesso markets and the quantitywateravailable or irrigation.

    must be developed efore h very impodant cost nfor-

    OLONIZATION in its truest aspects ought to include thedevelopmentof a unit of at least five thousand acres of barefalm land for subdivision nto a resident communitv of smallof from five to one hundred acres. Parcel size should be

    PREI,IMINASY SOIL AND CONTOUR DATATo determine he most lracticable and salablesubdivision otand the crops which would be most profrtable, a rough soil mapa contour map should irst be prepared. The subdivision

    ion for road builalingand other improvementsand the time andrr of expenditurescan be workd out. Many developmentprojects) failed becauseof neglect in carefully planning ahead ten oryeals with respect to improvements,operations and financing.Incidentally, the soil survev should include information about thephysicaland subsoil characteristics and about pest, nemetode, rost-period,wind and moisture conditions. The surestproof of the landi!, of course, the past crop production rcord, which should beobtairealwhen available. FINANCINC

    With the preliminary costdata and agTicuitural est informationaecured,he amounf of capital for the development,ncluding con-shuction equipment,and the time requiled for executionand finalcompletion hould then be accurately and complehensivelyascer-ralneo.At least en years s necessaryo liquidatea colonization roject,aa the averagebuyer of farr land rarely has capital more than suf-ficient to pay the initial installmeht and must therefore delend oncrop proceedsor the financial cauying ability of the Company inorder to win out. The financing should also be ample to discountinevitable ow price years that priodicallyoccur; it must allow forDossiblerop failure and shortages ue o frost, excassive eat, wind-storans,rought, loods, estsand other hszards; t must be sufiicient

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    242 The Realty Bh,e Baok ol Caklorniato cover..the cost of administration, interest and overhead uringconst lctlon. TIIE WORTII WHITTEPROJECTIt i6 assumedhat the facts thus obtained,and also nformationas [o the competitiveofle ngs of orher co]onizaiionprojecb, wilprove hat lhere s a sufl icienlmatginof profit10 ustify rhe under_rakrng. r rs. ssumedhat the beginnerwil l nol try to spoila goodslock range o makea poor tarm. The colonislmust foot the bi l land his efforls-shouldnot be handicsppedo stafl with. Moreover,sucjr rl l ,advrsed or. worse) exploitalion reacts disastrcuslyon thecommunifyand the goodnameof the Stat+- as well as th; welfareof agriculture in general.

    ADVERSEFACTORSTO BE FACEDEven after sales have been made and paJments have com_menced, there are the Jactors of death, the tendency of some buyersto give up. somelims Ior legiiimate reasons.and orher contingeniies,whrch mean hat-above all ih ines-t le CompanJshouldbe f inancedlor a,6u-t trcrentel iod and adequalely rom irs incept ion.Ordinari ly farm land rents foi ten per cent of i ts value. lnother words, to sell land for more tha:n ten per cent annualpal,menlsmeans. f a buypr is to pay out in lpss ha; 1enyears, ,ratthe and must be-syceptionallyroduct ive. hat pri.es mustbe al leastnormarly hrgh. hat tew of the ordinary hazardswil l be encounrered.rr iess haD en pel cent per annum is received n sales, t might bemore profitable to rent the land. If the lard cannot earn out ;nnualpalrrnents..it is obvious {hat the Company musl have addijionai work_rng caprtal to caTry the buyers,This payment estimate does not allow money for. the buyer toerect necessary.buildings and purchase his farming equipmen-t,andIo rmprovehts tands mLh oj"charda. r asparagus,or example,dur_lng wrrch tlme thpTe w l be a period of low crop income. Thaj is.a lanctcompanycan not safply dppendon the averagebuyer. jo paymore per annum than the land q, i l l earn over and aboveati his l i v in;expensesand a minimum for the more intensive improvement. Thi!91nnanv 6nancingmusube arcommoalatedo hjs iunalamenralon_ortron, olher Uompany in.ome. cash worklng .api jal or credi{ andrarr lrng and ol har r isks bcing dulv considered.

    AMPLY DEFEREEDMATURITINSNEEDED. Moreo-ver. .l parr oi lhp capital in\estment is ro le a211;u6 nDorrowpd uncls, hen lhe maturj{ ies oT repa}renL of thp borrowedfunds should run for not less than fifteen yeais, in order to aliscountrisks sately and conform comlortably l,o the auerago buy"r,;;biaii_;to.pay-. ' Iwcnly years s preferable. s i t is seldompossible o sel l o ital l the ranct hp t irst )par. Farm land sales al l off in an efa of de.pression, o an al lowan.eof f ire years lor the saleof thF fanawotfaglve a saler basis of .alcularion. Ten-year. equal_pa],ment,erialbonds,with t he. frsr maruriry oc(url. ingwithin u y.ai oi "o, a,." u"u_ary.rarat to a devetopment roJect, r at ipasl may lead to cost ly re-runorns.

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    The RedW Bl,ueBaok ol Cal,nforntit 283Altogetler, proper initial planning and adequate, long-term,ing are the paramount factors of successfulcolonizing.

    IMPORTANCE OF THOROUGH PLANNINGIvees,ditchss,pumps, roads, buildings, loodgates, ower andlines, transpodation landings, bridges, culverts, shade rs,property levelling, boundary monuments, community cen-picnic grounds and other improvements should rot only be care-planned but should be located finally, and ihe subalivisionlinesexactly, n the beginning. Oiherwse, later changeserill calladditional expense or new rights of way, for relocation of roadsditches and other improvements and seriously delay operationsupset financial estimates, and cause confusion and an[oyanceadjustment of taxes, land paFnents, assessments,nterest andprorated charges in land buyer accounts, hereby causing extrareadand lossof buyer confidence.Also. "hangingot land pricesgive furiher reason for dissatisfaction on the part of buyerssold.The importance of planning the order of improvements cannotovr-enphasized. Just when an expenditure should be maaleshouldgivenmuch study. Capital should be husbandedand reser.vecl, ndinte&st saved. To spendand develop only when it is necleds a safepolicy, It is poor judgment to build concrete roails or hotels, fore"xample, efore they can be used. Developitg aheaclof demand and

    before ncome or sales are safely assured has been the chief cause ofwTecKrngomeproJcls.It is further alesirable o weigh fully the value of expendituresfor various improvements to the enalthat each dollar invested willdevelopan additional equity and profit. Eech lroposed improvementBhouldbe tested a3 to its engineedng feasibility and its velug fromthe standpointSof salability and prcduction revenue. It is inadvisableb begin to sell before titles have beenperfectealand survelng com-pleteal,monuments set, subdivision maps recorded, or before a titleinsurancepolicy can be delivered with ach sale.PERSONAL'ACTOE ND MANAGEMENTITAL

    AJter planning, devising of ways and means is the second step.Thepersonnelshould be wrsely selected-accountants, engineers, armmanagrs, construction men, tractor, ditcher and other equipmentmen, supetinterdeDts, foremen, or men having the right combinationof the various kinds of ability. The actual accounting and workingprocedureshould be drawn up and put into operation. In a word, themiuagement of the enterprise is another important factor of success,Weaknesshere may leacl to failure, though the planning be perfectand the insncing adequate.ACTUAI, EXECIIIIONThe- hird vital consideration is that the actual executiod of thevork be pLacedn the hands of a good executive-resourceful, enthu-siastic, erergtic, persistent, tactful, commanding confidenceand hav-ing initiative to meet emergencies. It is inevitable that no plan will

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    2U The R?Alt! BtrueBaok oJCal,itorniawork out ideally. Many employeeand workitrg conflicts will arise.particularly in the triple effort to construct, larm and sell at the sam;time and with the seme organizatioh.

    EECORDINCOF PNOCRESSTh fou*h phase s the recording of the progrssmade or thepu,rpose .f giving publicity lhereLo, or the puryoseol reporl;ng in-teljgenl,ly to stockholders nd bondholders, nd for the purposeofutilizing experience as to cost and results as the qrork prog?esses.

    ADEOUAI! ACCOUNTING SYSTEM IMPERATIVEOur remarksas to the importanceof early and complete lanningalso apply more or less to accounting. Becauseof the variety ofactrvities n a colonization roject, the accolrnting ystemmust reallyshow more kinds of information than is ordiDarilv exDectedn anaveragebusiness nderraking. Monpy wil l bc simulrincously x-pendedon constructionand on farming operations;cor4plicated eal-ings must be had with many snd buyers;often the project may be n-cluded n a reclamationor an irigation district, and handlepart ofthe-distdct constructionaDd operation,which involvesproration ofsuch expenditures.Goodaccountingwill facilitat reporting on income ax returnsand to directors,stockholders nd bondholders. t 1'rillbe the meansof avoiding ax difficultiesandwill preventverbal misunderstandings\r i lh renants.and buyers, hjppem ndploduce ealers.Care n plan[ing the accountirg sholld be directedpsrticularlyto the cost data on subdivisionparcels, o land buyem' accounts, ocrop results and to tax matters.Capital expenditlresmust be accuratelycharged o the subdivi-sionparcels,n order to determineexactly he gain or loss or incometax purposes.ndso hat ar an:! 'parricularalesell ing cesma.v erevisedo absorbaddit ional evelopment!ork. Becausef la.k ofdetailedproperty records,numerouscompanies ave beencompelled.at great expense,o revise their records o fnd the eain or loss onindividual ales.Ihe lard salesdebtor edger shoutdcontainan accountwith eachbuyer, with opposite debit and credit columns for pdncipal, interest,taxes, insurance arld miscellaneous tems. Interest should be accruedmonthly, to enable the company quickly and accurately to preparestatementsof chargesdue. The land buyer'saccoutt should show afull and complete history of the transaction and indicate at a slancewhetheror nol thp buyer is delinquenj n the pa]'menlof one oamorFof the chargesn the special olumns.There shouldbe, of course, eneraledgercontrol accounts over-ing the classificationabovementioned. Delays and inaccuraciesnthe buyers' accountsmay lead to loss of confidence, onfusion analsometimescostly rewriting thereof.. -.A complete ubsidiary ecordof farming operations houldsho.w,in the case f share enants, he cropsraised, oral haryest.CornDanf;share,sales,shipmentsand proceeds f the Company,s hare. Com-plete record of cmp results srill be of interest to prospective anal

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    The Real,t! BIM.a aok ol Calilornio 286and aid in selling land. These figures are also useful in con-with the placing of crop insurance, settlement of losss init. and. n the caseof salecontract delinquenciescoveredby mod-

    oi assignment, for conect application oJ proceedsand promptof statements.USE OF BIJDGETSYSTEMWorking under a budget is necessary. The budgel items shou_lde wift the bookkeeping segregations so lhat comparisons can bele at freouent nlervals. Eachaccountshouldbe defned in writ-ancl rorition o[ charges e madeat the pointof o-rig:in'A budgetestimatedreceipts an-dauthorized expendituls keeps employeested and on guai'd against extravagance,prevents misunalerstand_keens utirc cash- equirements learlt in view and makesfor'arid efficiency. Budget pmblems will changeannually, andsemi-annually,'as the -proj'ect pess"s through the overlappingstaqesof construction, iarming and leasing.selling. debt reduc-and-finalcollprtion and liquidation. Almost witiout fail prelimin-costestimates rove oo low alld crop andother incomeestimatestoohigh. FARMINC SUPERVISIONThe handiing of a colonization project necessadly involves alglowledgeof farming and the making of share and cash leases. Suc-cessor failure may be detennined by the nature of lease conditions'as to termination in case of sale, as to methoals of farming, such as

    equipmenlo be used, mp of irr igal ion. depthof plowing,el iminat ionof weeclsor control of diseasesor pesls, kinds ol crops to be raised,shares nvolved, crop insurance, processing, delivery and aale, maiFtenance of preri,ises, the making of special impfovements, such aeelearing and levelling, and the requiring of conformation to the gm-erel scheme of development. The company should giv real farmDracticeservice, as many buyers will la.k the experience to succeed.This service should also include exped advice as to marletingmethods. SELI,INCAIIE LANDSuccessfulcolonization obviously requires knowledgeof the actualsellins of the land. and of the prcvisions which should go jnlo a goodfarm'iand sales conlracI-one predica|ed upon proteclion of ihe ulti-mate best interests of the buyer', the seller and the community.Receipt of the first laFnent does not mean a closeal farm lanalsale. I t but mafks jhp beginningof whal,may prove lo be a twenty-year closebusiness relationshiF in some respectsa parlnershrp. -l he;et ler has taken the des{iny of a famil} in his hands. The sett ler 'ssuccessmears proiec{ su..Fss: this js axiomatic. Conve$ely. the new-comer's failure reacts against the prestige of the tract and the dis-tr ict . Sell ing hrough rhe high pressure gentwho absorbs igh-com-

    missions,hus jEnoring this aspec( l the situat ion.usually results rr tdissatisfaction or, possibly, failure.Dlrect selling through the ctperienced farmer-salesman is moresatjsfacloryand essexpensive. n entering nto a ten or twenty-yearagreemenl'l-hatmeans both bread and butl,er lo the settler and lasling

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    286 Tke Reo,l,tgBlar,e ook ol Cal,iforni,sucress o a projecl. i t is prudcnt to deal with him direct rather thanmrough a thtrcl party, TIIE SALESCONTRACT, The nature -of. lhj! serjous. ong_tel.m, ersonalcontaci with aouyer snoutdOe u y_provided or in the contracl. lr shouldconlai[re.sTrtcllonsanctplovision! lhal will mee1, ny of the numefous con_qllons,and co-ntlngpncips hai are sure io arise. A simDle contractr{, l | rnor Desutncrent. Sompdelai ls for considerat ion re determina-:,,9L-:^",,9!9-{iglr d,lssol intp esrandprincipar limi o detnquency:ff :Ifft :"#'"*1i"",$"1!,1f|"',"J#i"j:""'""."opor aseecurirvo;mentsequi.red."""h"-;;i;il;;.'"j;;;;, :ii.:T"T ffi{'r:";ii$ii:'"TJ&11*:1,,X',ili"flX'*i"xT}l-Jin;#,lilni"i#ge.9",,.'H:1"1,"S",s,11"":ltrh?ffi'l?xs";'.r"1,*"isigr*,il",lornmuniiy ct ivit jps, oadmaintenance.""niiarion nna Ai" 'J.oi""_iffiii"i'J*ti:nJ"i#[T;i-"i$:l]ir,ii:.#il[,u"i,f;::l$".5.;'"1i;j!ix*1p::u:"i$x'f*ff it"frxlir#x'i,fr**ij *# l:ia'':o^l,iil'ifl:"i"*;;illr*"tion isrj.r.vorin.sowerrowsL'av jsrupjed o,newett aioptarl 3l the proje' l .as factional*""",Tlfi ,IilJ'!-#:itr;#X"l"iil",1li"llt{,iJ;i""ifll ilf;"1;ffi i#fl ;.}'i,,_h*'t;l,8il:.:T""'"*i:'t"":,T;1.'l;:ll".ll"l

    COLONIZAAIONSLOWDEI,:ELOPMDNT,. Ceneralpublic. inieres!and state and narional nterest in coloniz-

    ?;yt"ilil'"1i1oii;i:Xiu"lh?tfi,Ll,.,l*r*a,"*"ii.r,""r"'{" imen!n earror.racicesre ,u"" iit,,ftilii3ll,"i;"''ii"tTillifiii#hffl$llid:,:r:"J:f'fI#"Jt:iil:iHr*."Tiit:l""?liilT"3,'#"il,Jfl,'i"?:i"",1i"",r,-i?;ll"T*dl,tii:i""1'*;"]f llgf;gi{ittxffi;x:*e*iiiLlti;x',i;ff""ilystl*n***,;*:*i*,,,*si'#1'f,f{,?#:ilfd",3ti,3*3*."$"?lJl:'J"f#;l. PEESISTDNT PUBLICITY COUNTS*,."X'til]";.,lllu",#"""ff'.*Hyfft"\ff1"Usf?iff:"*H,""g;:

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    The Reel,taBkre Book of Cd,ilofiLia 287encouragement of conmunity activities; by contact and co-with the state agrflcultural departneni, the U. S. Depait-of Agriculture's bureaus, the county farm advisors, the cham-of commerce; by systematically issuiDg to the lress items ofnews interest and, quite candidly, of publicity value to thesupplementarymeansof e-\ploi{alion pen o adverliserswhotay discretion and restraint in handling such mattels in conforan-vith newspaper editorial policies. Opportunity should be Soughtplace,or to invite feature writers to prepare special magazineicles concerningdevelopmenl, rogxess,crop resull,s,human in-happenings and other matte$ of st king interest.A friendly attitude toward visitors who are merely sightseersa favorable impression that may frequently result later ining their friends or distant relatives to the propedy aBpros-is good ,will and publicity value in such side issues asipping employee and land buyer baseball teams or in glving an;ional gettogether picnic. Fair dealings with banl

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