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STATE AID IN LAND 
 SETTLEMENT 
 
 AN ADDRESS 
 
 BY 
 
 ELWOOD MEAD 
 
 Professor of Rural Institutions 
 
 College of Agriculture 
 University of California 
 
 International Irrigation Congress 
 Stockton, California 
 
 SEPTEMBER 13, 1915 
 
 California State Printing Office 
 
• • • •• • •. 
 
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STATE AID IN LAND SETTLEMENT 
 
 Wlioever acquires land and creates thereon a home renders a 
 service to the State. Whoever makes the attempt is entitled to 
 all the consideration the State can safely extend.. The general 
 welfare is so largely dependent on having the growth of the 
 country keep pace with the growth of the city that more than 
 a score of enlightened democracies have made state aid and 
 oversight of land settlement a national policy. 
 
 There are important reasons why America should be added 
 to the number. The progress of rural development is at present 
 not satisfactory. The balance between city and country devel- 
 opment is not being maintained. The number of farmers in 
 some of the richest farming sections of America is decreasing. 
 In the Western third of the country, with its vast stretches of 
 unpeopled and unsettled land, cities and towns are growing from 
 two to five times as fast as the rural districts on which their 
 well-being so largely depends. 
 
 Meritorious irrigation projects are unprofitable because of 
 limited market for the water they make available. Many set- 
 tlers under these projects, after years of effort, have had to 
 abandon their homes and lose the capital brought with them. 
 The condition of many settlers remaining is precarious and calls 
 for early and adequate relief. 
 
 The Xation has no land settlement policy; there is no one to 
 whom a settler can go for official disinterested advice about land 
 values ; there is no one to direct beginners in the costly and 
 difficult work of preparing land for irrigation; there is no 
 system of rural credits or long time amortized payments which 
 are the salvation of settlers in other developing countries. 
 There are on the contrary inflated land prices; irresponsible 
 land sellers: interest rates ranging from 6 per cent to 12 per 
 cent (instead of 2^ per cent to 5 per cent in countries where 
 settlement has state aid). There are short time loans with com- 
 missions for renewals and the ever impending menace of mort- 
 gage foreclosure. If the settler w^orks long hours, lives on 
 scanty fare, wears poor clothes, and denies himself and his 
 
 798632 
 
*f<(vmily all' except •the bare necessities of existence, it costs from 
 $50.00 to $100.00 an acre to make arid public land habitable and 
 productive. If he lives decently, it costs more. 
 
 Men with ample capital will not subject their families to the 
 privations of this pioneering experience. Many who do make 
 the attempt too often fail for the lack of assistance which the 
 State could safely give. As a result, the young, virile, and 
 ambitious who, under sensible conditions, would be creating 
 homes on the land, are either flocking to the cities or going to 
 other countries which do give aid to settlers. 
 
 Present Methods Wasteful, Unscientific, and Most Unfair to Settlers. 
 
 There is no period in the life of a community so important as 
 when the land is being settled. The influences exerted in these 
 plastic years may determine its prosperity and the character of 
 its civic ideals for all future time. Settlement should, therefore, 
 be not left to chance but should be under state oversight. 
 There should be in each state a Rural Development Bureau 
 which should have a record of lands available for settlement; 
 furnish information about the fertility and productiveness of 
 land; exercise oversight over the operations of land salesmen. 
 The State should create a system of rural credit which will give 
 settlers low interest rates and long time amortized payments 
 for the money borrowed to improve and equip their farms. 
 
 We are one of the few developing countries which leaves 
 the settler to struggle unaided with the costly and difficult task 
 of preparing land for irrigation ; one of the few countries that 
 lets settlers fail when halfway through their development and 
 leave their homes, impoverished and embittered, because their 
 capital is exhausted and there is no way that money to complete 
 development can be obtained. We protect the public from im- 
 position in many directions ; we scrutinize bond issues and 
 oversee insurance companies, but do nothing to save the con- 
 fiding settler from the deadfalls set for him on every side. The 
 mess we have made of Western rural development during the 
 last fifteen years through leaving the settler to take care of 
 himself is a sufficient reason for a change. 
 
Influence of Profits from Land Sales on Rural Development. 
 
 So long as the fertile lands of the Middle West or the easily 
 watered lands of the arid West were to be had under the Home- 
 stead Act, there was no need for state aid, but about the begin- 
 ning- of this century the fertile lands were absorbed and the 
 irrigation of arid lands had become so costly and difficult as to 
 place it beyond the reach of individual capital or effort. This 
 led to the passage of the Reclamation Act, and to enormous 
 investments of corporate capital in the construction of irrigation 
 works. The settler who was to create a home on this land, use 
 the water and pay interest on the cost of development, was not 
 given the consideration his needs made imperative. 
 
 Neither the Government Reclamation Act nor the plans of 
 corporate enterprises made any provision for giving financial 
 aid to the settler in acquiring land ; or in helping him prepare 
 it for cultivation, or to protect him from exploitation by the 
 land speculator. The opinion has seemed to prevail that if 
 canals were built and water made available, settlers should fight 
 their battles unaided and pay all the costs. Both the Govern- 
 ment and corporate enterprises gave their whole attention and 
 invested all their money in building dams and reservoirs. The 
 economic problems of the farmers who were to repay this in- 
 vestment were practically ignored. This gave to the land 
 speculator a broad and inviting field and full use was made of 
 its opportunities. 
 
 The Need for Study of the Economic Problems of Settlement. 
 
 It is to be regretted that this great investment in irrigation 
 works was not preceded by an economic study to determine 
 what were the social and agricultural factors. Such a study 
 would have shown that the same need existed for money and 
 skilled practical direction in preparing land for irrigation as for 
 money and engineering skill to build canals. It would have 
 disclosed the great cost of transforming arid lands into pro- 
 ductive farms and would have, at the outset, brought Govern- 
 ment aid to settlers or warned those without capital to keep 
 away. It would, almost certainly, have prevented the exploita- 
 tion of settlers by speculators. 
 
There was, however, no such investigation. On the con- 
 trary, newspapers and magazines were filled with glowing 
 accounts of the great opportunities for settlers which Govern- 
 ment and private reclamation work were opening up in the arid 
 West. Their description of the Government's operations was 
 misleading in that it gave to the eager landseeker a belief that 
 much of this development was to be a donation and added to 
 the properly equipped homeseekers a great body of immigrants 
 who lacked capital and experience and a correct understanding 
 of the task they were attempting. 
 
 The story of what followed, when written, will be an interest- 
 ing economic history. Probably nothing has ever surpassed the 
 wide range of activities, the fertility of imagination and the 
 utter lack of any sense of responsibility on the part of those who 
 sold land to these confident, credulous, and inexperienced home- 
 seekers. As the demand for land increased, the pcice was 
 inflated from five to twenty times its original cost. Land 
 bought for $20 an acre was subdivided and sold for $ioo to 
 $250 an acre. One hundred and fifty thousand acres bought 
 on an average price of $40 an acre had its price increased by 
 subdivision to $75 and $250 an acre. 
 
 In time these land prices became purely speculative ; they had 
 no relation to productive values. It was not in any sense real 
 development. Both the State and the settler were being ex- 
 ploited. Nothing worse for the enduring prosperity of this 
 part of the Nation could have happened. 
 
 These increasing prices brought with them a staggering bur- 
 den of interest. Land selling became a more complicated and 
 difficult operation. It required more imagination, more elo- 
 quence and personal magnetism to sell land at $200 an acre 
 than had been required at an earlier date to sell the same land 
 for $20 an acre. The successful land salesman became an 
 indispensible factor. The customary commission of 23/2 to 5 
 per cent that prevails where development is of a healthy 
 character and where values are legitimate, rose to the unbeliev- 
 able figure of 25 per cent. One-quarter of the selling price of 
 the farm went to the land-selling spider who wove the net for 
 the settler fly. 
 
The records of one subdivision show that it has cost an 
 average of $70 an acre to sell land that was originally bought 
 for $35 an acre. 
 
 Commissions like these are undesirable. The sooner a sub- 
 stitute is found the better. They put too great a strain on the 
 careful regard for truth which should be the chief qualification 
 of whoever advises a settler. There is an obligation of hos- 
 pitality to those who bring their money, confidence, and industry 
 to a state to help in its upbuilding. 
 
 Abuse of the Small Farm Idea. 
 
 A farmer's success depends, in large measure, on the size of 
 his farm. It should have a living area, which means it should 
 be large enough to support the settler's family in comfort and 
 furnish employment for all its members. The acreage it should 
 have depends on the soil, the climate and the markets. In some 
 localities five acres may be too much. In others eighty acres 
 is not enough. In every case economic conditions should con- 
 trol the subdivision of new areas, but where land settlement is 
 controlled by private enterprise, where the sole consideration is 
 profit, the living area idea is subordinated to a consideration of 
 what kind of subdivision will give the largest and quickest 
 profit to the seller. It was not the future prosperity of the 
 buyer but his present ability to pay that too often fixed the 
 size of the small farm. 
 
 The Western landseeker has had, as a rule, a capital some- 
 where between a thousand and five thousand dollars. As land 
 prices rose, the acreage which he could pay for, or rather on 
 which he could make the first payment, had to diriiinish or 
 sales would end. This was recognized by those having land 
 to market, and so the farm unit was cut down from 160 to 80 
 acres, 80 to 40, 40 to 20, 20 to 10, 10 to 5. The incomes 
 promised from these handkerchief farms were not based on 
 ordinary agricultural practices, which the majority of these 
 landseekers understood and to which soil and markets were 
 suited, but on what is possible by intensive cultivation, which 
 requires exceptional knowledge and skill, and which are practi- 
 cable only where soil and market conditions are favorable. 
 
Where these conditions did not exist the lo- to 20-acre farms 
 have caused great disappointment and loss to settlers. It takes 
 more than a small acreage to convert goose land into garden 
 soil, and something more than high prices for land and high 
 interest rates to transform a farmer who knows how to grow 
 alfalfa and corn into an intensive cultivator of fruits and 
 vegetables. 
 
 In Colorado, Washington, and California and Western 
 Canada many lo-acre tracts in which settlers have invested all 
 their capital and several years labor will not afford a comfortable 
 living. They are not suited to the habits and experience of 
 the settler, nor to the markets. Many of these settlers have only 
 a meager living and very little hope of a better one. It is not 
 a basis on which a young man could start in to rear a family. 
 Whoever, therefore, has regard for the comfort and well-being 
 of those dependent upon him goes elsewhere. 
 
 I believe these conditions call for legislation; that the State 
 should exercise oversight over settlement. The Parliamentary 
 Commission which investigated this matter in British Columbia 
 has recommended the licensing of persons, companies or cor- 
 porations doing real estate business. 
 
 State Aid in Reclamation of Public Lands Indispensible. 
 
 I have recently made a personal inspection of the lands being 
 reclaimed and to be reclaimed under a score of irrigation works. 
 These included both Government and private enterprises. In 
 every case one had only to look at the land, at the settler's house, 
 at his meager and inadequate equipment, and then hear the 
 story of hope deferred and development arrested by inadequate 
 capital to realize what a serious venture it is for the unaided 
 individual to attempt to reclaim wild land. 
 
 In the first place the majority of these settlers enter on a 
 kind of development they do not understand and a kind of 
 agriculture whose methods and practices are all strange and 
 new. Before they can obtain a living income from their farms 
 they must incur large expenses not required in an unirrigated 
 country ; they must have a shelter for their families ; provision 
 must be made for a water supply for household uses; ditches 
 
nmst be dug, the land cleared, the surface leveled so that water 
 will flow over it ; often it must be irrigated and cultivated a year 
 before a crop can be grown. All of this expenditure and labor 
 is unproductive. Meantime, the settler must live and much of 
 his scanty capital is being swallowed up in living expenses. 
 
 If this preparatory work were done in advance of settlement, 
 or under a scheme in which the settler is given financial aid and 
 practical oversight after his arrival, the land would be prepared 
 for irrigation in half the time and at half the present average 
 expense ; and if settlers could secure an adequate equipment for 
 stocking and cultivating their farms, three-fourths of the failures 
 which now occur would be averted. On Government reclama- 
 tion projects this organization and this financial aid and practical 
 direction should be attended to by the Government. On many 
 private enterprises it will have to be done by the State. A few 
 hundred thousand dollars spent in building houses, in leveling 
 land for crops, and making loans to settlers would give better 
 results to the Nation and create far better social conditions in 
 irrigated areas than the expenditure of millions of dollars on 
 new irrigation works. 
 
 I have said that the condition of settlers under many of these 
 works calls for relief. On one project the average indebtedness 
 of all the settlers is $i,ooo. They have exhausted their capital, 
 reached the limit of their credit, and have no way to complete 
 the improvement of their farms. On another three-fourths of 
 the settlers must lose the fruits of years of effort and all the 
 capital spent in development if aid is not soon forthcoming. 
 On another 85 per cent of the farms are mortgaged and the 
 mortgage debt averages $50 an acre over the whole area. On 
 another project one farm has been sold, abandoned, and resold 
 five times. There are several enterprises, Government and 
 private, where aid to settlers must be had if a wholesale exodus 
 is to be averted. Out of hundreds of experiences of settlers 
 obtained from personal interviews, I will give one, which is, 
 however, typical of many. 
 
 This settler brought with him from Wisconsin $2,000, gath- 
 ered together through years of industry and economy. He took 
 up eighty acres of Government land, of which 68 acres were 
 
irrigable. He built a house at a cost of $200, and a shed in 
 which to keep his horses. He then bought furniture for the 
 house, implements to cultivate and level the ground, and then 
 began the unproductive and unfamiliar labor of fencing his 
 farm, building ditches, and leveling the land for cultivation. 
 While he worked at this the remainder of his capital was being 
 absorbed in living expenses, and before any income could be 
 obtained his capital was exhausted and he had no credit. A 
 man without food will starve to death in about nine days; and 
 he had to give up the improvement of his farm and go to work 
 for wages to buy bread. As he expressed it, he is dead broke 
 and in debt. The wages he is getting only furnish a bare liveli- 
 hood. He has no more prospect of keeping that farm without 
 some financial aid from the State than I have of flying to the 
 moon; but his two thousand dollars is there and he hates to 
 leave it and begin life over again. 
 
 I asked another settler, whose condition was equally hopeless, 
 why they had not presented their situation to the public and 
 asked for some comprehensive rehef. He said they called a 
 meeting to consider it and were afraid if they did there would 
 be no chance of selling out, and they preferred to keep still and 
 take their chances of unloading on some other ''sucker." 
 
 All of these settlers believe that if the lands were made ready 
 for cultivation and they had the necessary stock and equipment, 
 they could pay the entire cost, pay for water rights and become 
 prosperous and contented members of the community in a few 
 years. Until financial provision for doing this is made it is 
 neither honest nor humane to allow poor men to settle on 
 unimproved arid land. 
 
 State Aid in Land Settlement a Success in Other Countries. 
 
 The most pathetic aspect of this situation is the fact that 
 nearly all this hardship, anxiety and waste of time and money 
 can be averted. I say this with certainty because of a personal 
 knowledge of what is being accomplished through state aided 
 development in other countries. I was for nearly eight years 
 a member of a commission that had charge of government aid 
 in irrigation settlement in an Australian state. 
 
9 
 
 I accompanied the Minister of Lands in an investigation of 
 state aided development in Italy, Denmark, and Ireland and 
 saw in every case a return of the people to the land, a content- 
 ment and prosperity that had never before been known and a 
 new birth of patriotism and aftection for the state because of 
 gratitude for the service which it had rendered. 
 
 When I went to Australia conditions there were almost a 
 direct counterpart of those now confronting irrigation • enter- 
 prises in this country. Costly works had been built but the land 
 was not being irrigated nor the water being used. The number 
 of farmers on irrigated areas was decreasing. Men who were 
 without capital could not buy the land and those with capital 
 did not care to. The Government determined. to change this. 
 It began an investigation to determine what the Government 
 ought to do and could safely attempt. In other words, land 
 settlement was studied from the standpoint of public welfare 
 rather than from the standpoint of profit from land sales. 
 
 This preliminary study of the situation showed that the 
 success of a settler largely depends on two things : First, obtain- 
 ing a living income from his farm within a year; and second, 
 getting the whole of his land into cultivation and production 
 inside of two years. The State's plan of irrigation development 
 included, therefore, building houses for settlers, leveling and 
 seeding a part of the farms, the placing of a practical farm 
 instructor over every area of 20,000 acres or less and the lending 
 of money to the settler to complete the development. In all this 
 the public was amply protected. While the settler was only 
 required to pay a deposit of 3 per cent on the land and was 
 given 363^ years' time in which to complete payments, he paid 
 a 40 per cent deposit of the cost of nearly all improvements 
 and was only loaned up to 60 per cent of the value of improve- 
 ments made by himself. 
 
 I am quite sure that if those in charge of irrigation develop- 
 ment in this country could visit one of the Australian districts 
 and see what it means to a settler to go into a new and comfort- 
 able home, to take possession of fields from which, in many 
 instances, a living income was obtained within thirty da\> after 
 settlement, and look over the financial records of the Govern- 
 
10 
 
 mcnt and see how this is being carried out without expense to 
 the general taxpayer, it would mean an immediate end to the 
 haphazard, unaided, wasteful and costly policy that is now 
 being followed here. 
 
 As year after year I saw the settlements extend and show 
 as much progress in a year as is, as a rule, made here in five 
 years, the desire and longing grew within me to return to my 
 own country and do all that lay within my power to help 
 establish here the system that is doing so much for rural 
 development in other lands. 
 
 Conditions Favorable for Change in America. 
 
 I beHeve that the time has arrived for this country to change 
 its methods and that public opinion is favorable to such change. 
 The subjects chosen for discussion at this Congress show a 
 new understanding of the settler's needs. The great intellect 
 of Secretary Lane is united to a broad, human sympathy and 
 understanding, and his spirit is reflected in the present admin- 
 istration of the Reclamation Act. We have in our agricultural 
 colleges and experiment stations a body of trained, expert 
 advisers such as are available in few other countries. 
 
 One of the most gratifying experiences I have had since my 
 return is, however, to find in California an exhibition of its old 
 and lovely spirit of hospitality to the stranger within its gates 
 and a demonstration of the feasibility and value of organized 
 aid and direction in settlement. It owes its existence not to the 
 conscience and wisdom of the public but to the sagacity and 
 humanity of an individual. The pioneer in scientific land set- 
 tlement in California is Dr. George Dwinnell, of Siskiyou 
 County. He is building houses, leveling and planting part of 
 the farm, providing the needed equipment of tools and live stock, 
 giving the settler time to get on his feet before requiring repay- 
 ment, and is building up a community with right social con- 
 ditions and enabling families to enjoy landed independence 
 who could never pay for it if left to begin this struggle unaided. 
 
 The best part of his work is that it pays in money, although 
 he did not undertake it for profit. 
 
11 
 
 The experience of Dr. Dwinnell shows that here, as in other 
 countries, capital and organization are needed in the preparation 
 of irrigable areas for settlement, and not only pays in money 
 but in social conditions. As an illustration of that. I have 
 placed on the wall a photograph of one of the houses built by 
 the State of Victoria, one of those built by Dr. Dwinnell, and 
 one by a settler working without aid or direction. 
 
 What Dr. Dwinnell is doing, what has been done in British 
 and German South Africa, and Australia, can be done in 
 America. That is the view of a Parliamentary Commission 
 of our near neighbor, British Columbia. This Commission, 
 after an investigation of Rural Credits and land settlement in 
 this country, Europe and Australasia, have recommended the 
 adoption in their province of the Australian system, and a bill 
 appropriating fifteen million dollars to inaugurate this system 
 is now before their Parliament. 
 
 The report of the British Columbian Commission ought to be 
 widely read in this country. It says : 
 
 "The system has not only increased the output of farms, given a 
 great impulse to the agricultural industry, but has reacted on other 
 industries and stimulated trade. 
 
 "With money available on terms suitable to the industry, the 
 farmers have built better houses or remodelled their old ones; 
 brought a large acreage of land under cultivation that would other- 
 wise be lying idle; have bought and kept better live stock; have 
 bought and used more labor-saving machinery on the farms and in 
 the houses; have erected elevated tanks and windmills; * * * 
 They keep more sheep and pigs and have so largely increased the 
 revenue from their farms that they are able to meet the payments 
 on the mortgages and to adopt a higher standard of living, and a 
 better one. Throughout the country a higher and better civilization 
 is gradually being evolved." 
 
 State Aid Would Entail No Expense on the Public. 
 
 State aid and control in settlement, if adopted, must be, how- 
 ever, on business principles. Aid should only be extended to 
 actual settlers and to those equipped in experience and character 
 to succeed. There should be no donations of money. Loans 
 should be secured by liens on the land and improvements and 
 the interest rate should be high enough to make the system 
 
12 
 
 entirely self-supporting. It can do this and still be of immeas- 
 urable benefit to settlers and to the State. 
 
 To those who are fearful that the adoption of this system 
 would mean loss which the public would have to assume, I 
 would say that this will not occur unless as a nation we are less 
 capable and less honest than any of the other countries that 
 have adopted it. The remarkable fact is that in not a single 
 country has the system failed to pay its way. 
 
 In New Zealand the accumulated profits amount to $1,500,000. 
 In Denmark, where the loans go up to 90 per cent of the value 
 of improvements, there has been no loss. In Australia where 
 $232,373,200 has been loaned, there is not one among the 'j'j'j 
 members of the eight Parliaments concerned who is not an 
 ardent supporter of the system. 
 
 In the Australian state where I lived, out of over seven 
 thousand repayments due in 19 12, only ten farmers were in 
 arrears and those arrears aggregated only $468. 
 
 The Objection of Paternalism. 
 
 To the objection that such aid would be paternalism I would 
 reply that it is no more paternalism than the Homestead Act, 
 or River and Harbor improvements, or rural delivery in the 
 Postal Service. Of all governments, democracies should be the 
 ones most capable of performing and willing to perform any 
 direct service for the people which the public welfare requires. 
 
 Relief and protection for the settler is both a national duty 
 and an opportunity. I hope that the Reclamation Service may 
 be given money and authority to relieve its struggling settlers. 
 I hope that the State Rural Credit Act introduced in the last 
 Legislature of California may become a law in the next one, 
 and that this Congress will, in its resolutions, ask for a compre- 
 hensive investigation of this subject. 
 
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