Tke Eedty Bluz Book of Cd.

Iifornia

J. V. MENDDNEALL
Pre'ld,tur Catilotuid Approwit IrMd,
I ettletuent Aseociatiotu
EM Francisco
 The E?a,ltuBlue Book ol Ca.litornin 28I

Uolonl zatlon
B!! J. V. MENDENHALL

PrelilllinarlJ SoiI ond Contou| DcLta-FinulcilLg The

Wortk While Proiect-InLportdnce of Thorough PleruLing-
Aatral Eteudi,on-F(Lrlning Sxlperuision-The Sale Con-
trcnt-Persistent PubLicitA-Tlle CaIl to Seluice.

OLONIZATION in its truest aspects ought to include the

developmentof a unit of at least five thousand acres of bare
falm land for subdivisioninto a resident communitv of small
of from five to one hundred acres. Parcel size should be
ired largely by the chamcterof the soil, its crop adaptabiliiies,
ienceof transpo ation, nearnessto markets and the quantity
wateravailablefor irrigation.
PREI,IMINASY SOIL AND CONTOURDATA
To determine the most lracticable and salable subdivision lot
and the crops which would be most profrtable, a rough soil map
a contour map should irst be prepared. The subdivision
must be developedbefore th€ very impodant cost infor-
ion for road builaling and other improvementsand the time and
rr of expenditures can be work€d out. Many developmentprojects
) failed becauseof neglect in carefully planning ahead ten or
yeals with respect to improvements, operations and financing.
Incidentally, the soil survev should include information about the
physical and subsoil characteristics and about pest, nemetode,frost-
period,wind and moisture conditions. The surest proof of the land
i!, of course, the past crop production r€cord, which should be
obtairealwhen available.
FINANCINC
With the preliminary cost data and agTicuituraltest information
aecured,the amounf of capital for the development,including con-
shuction equipment,and the time requiled for executionand final
completionshould then be accurately and complehensivelyascer-
ralneo.
At leastten yearsis necessaryto liquidatea colonizationproject,
aa the average buyer of farr land rarely has capital more than suf-
ficient to pay the initial installmeht and must therefore delend on
crop proceeds or the financial cauying ability of the Company in
order to win out. The financing should also be ample to discount
inevitablelow price years that p€riodically occur; it must allow for
Dossible crop failure and shortagesdue to frost, excassiveheat, wind-
storans, drought, floods,pestsand other hszards;it must be sufiicient
 242 The Realty Bh,e Baok ol Caklornia

to cover..the cost of administration, interest and overheadduring

const lctlon.
TIIE WORTII WHITTE PROJECT
It i6 assumedthat the facts thus obtained,and also information
as [o the competitive ofle ngs of orher co]onizaiionprojecb, wil
provethat lhereis a suflicienlmatgin of profit10justify rhe under_
rakrng. r rs.assumedthat the beginnerwill nol try to spoil a good
slock range lo make a poor tarm. The colonislmust foot the bill
and his efforls -shouldnot be handicsppedto stafl with. Moreover,
sucjr rll ,advrsed1or. worse) exploitalion reacts disastrcusly on the
communify and the good name of the Stat+- as well as th; welfare
of agriculture in general.
ADVERSEFACTORSTO BE FACED
Even after sales have been made and paJments have com_
menced, there are the Jactors of death, the tendency of some buyers
to give up. somelim€s Ior legiiimate reasons. and orher contingeniies,
whrch mean that-above all ihines-tle CompanJshould be financed
lor a,6u-ttrcrentpeliod and adequalelylrom irs inception.
Ordinarily farm land rents foi ten per cent of its value. ln
other words, to sell land for more tha:n ten per cent annual
pal,menlsmeans. if a buypr is to pay out in lpss tha; 1en years, t,rat
the land must be-syceptionally productive.that pri.es must be al least
normarly hrgh. lhat tew of the ordinary hazardswill be encounrered.
rr iess thaD ten pel cent per annum is receivedon sales,it might be
more profitable to rent the land. If the lard cannot earn out ;nnual
palrrnents..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 to
erect necessary.buildings and purchase his farming equipmen-t,and
Io rmprovehts tands mLh oj"charda.or asparagus,for example,dur_
lng wrrch tlme thpTe w l be a period of low crop income. Thaj is.
a lanctcompany can not safply dppendon the average buyer.jo pay
more per annum than the land q,ill earn over and aboveati his livin;
expenses and a minimum for the more intensive improvement. Thi
!91nnanvs 6nancingmusu be arcommoalated Lothjs iunalamenral con_
ortron, olher Uompany in.ome. cash worklng .apijal or credi{ and
rarrlrng and ol har risks bcing dulv considered.

AMPLY DEFEREEDMATURITINSNEEDED
. Moreo-ver..il parr oi lhp capital in\estment is ro le a211;u6on
Dorrowpdluncls, lhen lhe maturj{ies foT repa}renL of thp borrowed
funds should run for not less than fifteen yeais, in order to aliscount
risks sately and conform comlortably l,o the auerago buy"r,;;biaii_;
to.pay-.'Iwcnly years is preferable.ss it is seldompossibleto sell oit
all the ranctthp tirst )par. Farm land sales lall off in an efa of de.
pression,so an allowan.e of fire years lor the sale of thF fana wotfa
glve a saler basis of .alcularion. Ten-year. equal_pa],ment, serial
bonds,with t he.ffrsr maruriry oc(url.ingwithin u y.ai oi a,." u"u_
ary.rarat to a devetopmentproJect,ur at ipasl may lead to "o,costly re-
runorns.
 The RedW Bl,ueBaok ol Cal,nforntit 283

Altogetler, proper initial planning and adequate, long-term,

€ing are the paramount factors of successfulcolonizing.
IMPORTANCE OF THOROUGH PLANNING
I€vees,ditchss, pumps, roads, buildings, floodgates,power and
lines, transpodation landings, bridges, culverts, shadetr€€s,
property levelling, boundary monuments, community cen-
picnic grounds and other improvements should rot only be care-
planned but should be located finally, and ihe subalivision lines
exactly,in the beginning. Oiherwse, later changeserill call
additional expensefor new rights of way, for relocation of roads
ditches and other improvements and seriously delay operations
upset financial estimates, and cause confusion and an[oyance
adjustment of taxes, land paFnents, assessments,interest and
prorated charges in land buyer accounts, thereby causing extra
readand loss of buyer confidence.-Also. '"hangingot land prices
give furiher reason for dissatisfaction on the part of buyers
sold.
The importance of planning the order of improvements cannot
ov€r-enphasized. Just when an expenditure should be maaleshould
given much study. Capital should be husbandedand reser.vecl,and
inte&st saved. To spend and develop only when it is ne€cledis a safe
policy, It is poor judgment to build concrete roails or hotels, for
e"xample,before they can be used. Developitg aheaclof demand and
before income or sales are safely assured has been the chief cause of
wTecKrng someproJ€cls.
It is further alesirable to weigh fully the value of expenditures
for various improvements to the enal that each dollar invested will
developan additional equity and profit. Eech lroposed improvement
Bhouldbe tested a3 to its engineedng feasibility and its velug from
the standpointSof salability and prcduction revenue. It is inadvisable
b begin to sell before titles have been perfecteal and survelng com-
pleteal,monuments set, subdivision maps recorded, or before a title
insurancepolicy can be delivered with €ach sale.
PERSONAL I'ACTOEAND MANAGEMENT VITAL
AJter planning, devising of ways and means is the second step.
The personnel should be wrsely selected-accountants, engineers, farm
manag€rs, construction men, tractor, ditcher and other equipment
men, supetinterdeDts, foremen, or men having the right combination
of the various kinds of ability. The actual accounting and working
procedureshould be drawn up and put into operation. In a word, the
miuagement of the enterprise is another important factor of success,
Weaknesshere may leacl to failure, though the planning be perfect
and the insncing adequate.
ACTUAI, EXECIIIION
The-third vital consideration is that the actual executiod of the
vork be pLacedin the hands of a good executive-resourceful, enthu-
siastic, ererg€tic, persistent, tactful, commanding confidenceand hav-
ing initiative to meet emergencies. It is inevitable that no plan will
 2U The R?Alt! BtrueBaok oJ Cal,itornia

work out ideally. Many employee and workitrg conflicts will arise.
particularly in the triple effort to construct, larm and sell at the sam;
time and with the seme organizatioh.
EECORDINCOF PNOCRESS
Th€ fou*h phaseis the recording of the progr€ssmade for the
pu,rposeo.f giving publicity lhereLo,for the puryoseol reporl;ng in-
teljgenl,ly to stockholdersand bondholders,and for the purposeof
utilizing experience as to cost and results as the qrork prog?esses.
i ADEOUAI! ACCOUNTING SYSTEM IMPERATIVE
Our remarks as to the importanceof early and completeplanning
also apply more or less to accounting. Becauseof the variety of
actrvitiesin a colonizationproject, the accolrntingsystemmust really
show more kinds of information than is ordiDarilv exDectedin an
averagebusinessunderraking. Monpy will bc simulrincouslyex-
pendedon constructionand on farming operations;cor4plicateddeal-
ings must be had with many lsnd buyers; often the project may be in-
cludedin a reclamationor an irigation district, and handle part of
the-distdct constructionaDd operation,which involves proration of
such expenditures.
Good accountingwill facilitat€ reporting on incometax returns
and to directors,stockholdersand bondholders. It 1'rill be the means
of avoidingtax difficultiesand will prevent verbal misunderstandings
\rilh renants.land buyers,shjppemand ploducedealers.
Care in plan[ing the accountirg sholld be directed psrticularly
to the cost data on subdivisionparcels,to land buyem' accounts,to
crop results and to tax matters.
Capital expenditlres must be accuratelychargedto the subdivi-
sion parcels,in order to determineexactlythe gain or loss for income
tax purposes. and so that ar an:!'parricular
dale sellingp cesma.vbe
revisedto absorbadditionaldevelopment \!ork. Because of la.k of
detailedproperty records,numerouscompanieshave been compelled.
at great expense,to revise their recordsto fnd the eain or loss on
individualsales.
Ihe lard salesdebtor ledger shoutdcontain an accountwith each
buyer, with opposite debit and credit columns for pdncipal, interest,
taxes, insurance arld miscellaneousitems. Interest should be accrued
monthly, to enable the company quickly and accurately to prepare
statementsof chargesdue. The land buyer's accoutt should show a
full and complete history of the transaction and indicate at a slance
whether or nol thp buyer is delinquenjin the pa]'menl of one oamorF
of the chargesin the specialcolumns.
There shouldbe, of course,generalledgercontrol accountscover-
ing the classificationabovementioned. Delays and inaccuraciesin
the buyers' accountsmay lead to loss of confidence,confusion anal
sometimes costly rewriting thereof.
. -.A completesubsidiaryrecord of farming operationsshouldsho.w,
in the caseof sharetenants,the crops raised,toral haryest.CornDanf;
share, sales,shipmentsand proceedsof the Company,sshare. Com-
plete record of cmp results srill be of interest to prospectivelanal
 The Real,t! BIM.aBaok ol Calilornio 286

and aid in selling land. These figures are also useful in con-
with the placing of crop insurance, settlement of loss€s in
it. and.in the caseof sale contract delinquenciescoveredby mod-
oi assignment, for conect application oJ proceeds and prompt
of statements.
USE OF BIJDGET SYSTEM
Working under a budget is necessary. The budgel items shou_ld
e wift the bookkeeping segregations so lhat comparisons can be
le at freouent inlervals. Each accountshouldbe defned in writ-
anclprorition o[ chargesbe madeat the point of o-rig:in' A budget
estimated receipts an-d authorized expenditul€s keeps employees
ted and on guai'd against extravagance, prevents misunalerstand_
keenslutirc cash-requirementsclearlt in view and makes for
'arid efficiency. Budget pmblems will change annually, and
-proj'ect
semi-annually,'as the pess"s through the overlapping
staqesof construction, iarming and leasing. selling. debt reduc-
and-final collprtion and liquidation. Almost witiout fail prelimin-
costestimatesprove too low alld crop and other incomeestimates
too high.
FARMINC SUPERVISION
The handiing of a colonization project necessadly involves a
lglowledgeof 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
equipmenlto be used,I imp of irrigal ion. depth of plowing, elimination
of weeclsor control of diseasesor pesls, kinds ol crops to be raised,
sharesinvolved, crop insurance, processing, delivery and aale, maiF
tenance of preri,ises, the making of special impfovements, such ae
elearing and levelling, and the requiring of conformation to the gm-
erel scheme of development. The company should giv€ real farm
Dractice service, as many buyers will la.k the experience to succeed.
This service should also include exped advice as to marleting
methods.
SELI,INCAIIE LAND
Successfulcolonization obviously requires knowledge of the actual
sellins of the land. and of the prcvisions which should go jnlo a good
farm'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 lanal
sale. It but mafks jhp beginning of whal, may prove lo be a twenty-
-l
year closebusiness relationshiF in some respects a parlnershrp. he
;etler has taken the des{iny of a famil} in his hands. The settler's
successmears proiec{ su..Fss: this js axiomatic. Conve$ely. the new-
comer's failure reacts against the prestige of the tract and the dis-
trict. Sellingthrough rhe high pressureagent who absorbshigh-com-
missions,thus jEnoring this aspec(ol the situation. usually results rrt
dissatisfaction or, possibly, failure.
Dlrect selling through the ctperienced farmer-salesman is more
satjsfacloryand lessexpensive. In entering into a ten or twenty-year
agreemenl'l-hatmeans both bread and butl,er lo the settler and lasling
 286 Tke Reo,l,tgBlar,eBook ol Cal,iforni,

sucressto a projecl. it is prudcnt to deal with him direct rather

than
mrough a thtrcl party,
TIIE SALESCONTRACT
The nature
, -of.lhj! serjous. long_tel.m,personal contaci with a
ouyer snoutdOe tu y_providedlor in the contracl. lr should conlai[
re.sTrtcllonsanct plovision! lhal will mee1,any of the numefous
qllons,and co-ntlngpncipsthai are sure io con_
'r{,l|rnor De sutncrent. arise. A simDle contract
Somp delails for considerationare determina-
-!9-{iglr d,lss ol intpresrandprincipar; limit of detinquency
:,,9L-:^",,9
morgase
:ff :Ifft :"#'"*1i"",$"1!,1f|"',"J#i"j:""'""."op securirvro;
ments requi.red.;"-;;i;il;;.'"j;;;;, :ii.:T"T&ffi{'r:";ii$
"""h
ii:'"T
age.
;J&11*
J:1,,X',ili"flX'*i"
ixT}l-J&# lin;#,lilni"i ##
9",,.'H:1"1,"S",s,1 ;xs";'.r"1,*"isigr*,il",f
;1"":ltrh?ffi'l?
cornmuniiyactivitjps,
road maintenance.
il
nna Ai"'J.oi""_
:ii"i'J*ti:nJ"i#[T;i-"i$:l]ir,
iffi jii:.#il[,u"i,f;::l
""niiarion

j"1i;j!ix*1p::u:"i$x'f
$".5.;' .*ff"itx"frxlir#
:x'i,ftr
*# disrrj.r.vorin.s power
**ij l:ia'';:o^l,iil'ifl:"i"*;;illr*"tion
the proje'l factional
rowsL'av€djsrupjedso,newett taio ptarl 3l .as
*""",T
Jlfi#,IilJ'!-#:itr;#X"l"iil",1li il;ilf;"1;
"llt{,iJ;i""ifl
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ffili#fl ;.}'i,,_h*'t;l,8il:.:T""'"*i:'t""
COLONIZAAION A SLOWDEI,:ELOPMDNT
Ceneral public.inieres!and state and narionaljnterest in coloniz-
,.
i r,""r"'{"oi
l*a,"*"ii.
?;yt"ilil'"1i1oii;i:Xiu"lh?tfi,Ll,.,l*r
men!
rnrearror.
praci
ices
are^,u"" iit,,ftilii3ll,"i;"''ii"tTillifi
I'fI#"Jt:iil:i
ii#hffl$llid:,:r:"J:f JHr*."Tiit:l""?li
J'#"il,Jfl
ilT"3, i,'i"?:i"",1i"",r,-i?;ll"T*dl,tii:i""1'
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l""ilystl*n***,;*:*i
gi{ittxffi;x:*e*iiiLlti;x',i;ff
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ld",3ti,3*3*."$"?lJl:'J"f#;ls
. PEESISTDNT PUBLICITY COUNTS

?iff,:"*H,""g;:
p'.*Hyfft"\ff1"Usf
*,."X'til]";.,lllu",#"""ff
 The Reel,taBkre Book of Cd,ilofiLia 287

encouragement 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 of
news interest and, quite candidly, of publicity value to the
supplementarymeansof e-\ploi{alionopento adverliserswho
tay discretion and restraint in handling such mattels in conforan-
vith newspaper editorial policies. Opportunity should be Sought
place, or to invite feature writers to prepare special magazine
icles concerning developmenl,progxess,crop resull,s,human in-
happenings and other matte$ of st king interest.
A friendly attitude toward visitors who are merely sightseers
a favorable impression that may frequently result later in
ing their friends or distant relatives to the propedy aB pros-
is good ,will and publicity value in such side issues as
ipping employee and land buyer baseball teams or in glving an
;ional gettogether picnic. Fair dealings with banl<eN,material-
and produce buyers, laborers and employees,as well as with land
count immensely. If a prospective buyer heais everybody say
projecl is good,he is hall sold.
It is worth while to keep the authorities of the vanous political
jurisdictions-boards of supervisors, r€clamation district trustees,
way conmissions and others-posted on progTess and indicate
to them that tleir lively interest fu appreciated.
Sustained attention to all these factors will make the project a
live, virile one, an accepted enterprise recognized as possessingthat
intangiblebut real asset-the fonqard urge of a gping concern.
. THE CALL TO SBVICE
For the realtor of vision, enthusia.sm,honesty, technical training
and executive ability, who b€lieves in the future and has in his heart
the love of building something plus a gooalmeasure of human strrn-
pathy to encourage the ambitious colonist through a long period to
ultimat€ slrccess,there is an urgent call to sefvice and a high money
reward in the g?eat, scarcely developedWest.