We feel that had the Hinderlider, Asplind plans, as approved by Quinton, Code and Hill been carried out that according to the estimates then made the completed dam would not have cost to complete over $90,000.00, adding to this the cost of the canal system amount of $127,707.00, making a grand total of $217,707.00; whereas there was actually expended under Engineers Sellew and Fleshman the sum of $514,929.00, leaving an excess cost of $297,222.00 which amount we maintain is that much in excess of what the project should have cost. In addition to this due to the delay in the completion, of the project the stockholders lost some two seasons, which has resulted in great hardships to the community and an inestimable loss in dollars and cents.

In view of the fact that the cost of the original construction was approximately $195,000.00 and a large portion of this is still being carried as individual loans at a high rate of interest and the principal of the present state loan is $629,672.66, and in addition, there is some $80,000.00 in delinquent interest which it is impossible for the stockholders to meet at this time; in view of the enormous excess cost in the reconstruction, we feel that the only possible solution of the problem, so as to validate the loan made by the State of Arizona, and make it possible for them to be repaid the principal, and to give the owners of the project a chance to recuperate their losses, and have sufficient time in which to bring under cultivation develop and improve their farms, will be to cancel the interest for a period of ten years or more from the date of the last loan about July, 1919, and defer all payments on the principal for the same period of time.

If this is done the people will take hold of the project with a renewed determination to improve their farms and make them productive, and thus be enabled to pay off the principal sum of the money now borrowed from the State of Arizona, together with their other heavy obligations incurred for the original construction. Furthermore in this ten years of time the assessed valuation wlil increase over a million dollars, and the project will make homes possible for several hundred farmers.

We feel that if such action were taken, the principal can and will be paid, and then if the Loan Board will complete the project, as we feel it should be completed with the over $20,000.00 of funds remaining in the hands of the State Treasurer to the credit of the Lyman Water Company that then the project will be a success.

Very respectfully submitted,

J. F. CHURCH,

A. M. PATTEN,

LEVI S. UDALL,

Members of the Board of Directors of
the Lyman Water Company.

Superintendent, J. FRED JOHNSON.

Secretary and Treasurer, W. A. SAUNDERS.

Section 28. That it is hereby declared that all lands hereby granted, including those which, having been heretofore granted to said Territory, are hereby expressly transferred and confirmed to the said State, shall be by the said State held in trust, to be disposed of in whole or in part only in manner as herein provided and for the several objects specified in the respective granting and confrimatory provisions, and that the natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same.

Disposition of any of said lands, or of any money or thing of value directly or indirectly derived therefrom, for any object other than for such particular lands, or the lands from which such money or thing of value shall have been derived, were granted or confirmed, or in any manner contrary to the provisions of this Act, shall be deemed a breach of trust.

A separate fund shall be established for each of the several objects for which the said grants are hereby made or confirmed, and whenever any moneys shall be in any manner derived from any of said land the same shall be deposited by the State Treasurer in the fund corresponding to the grant under which the particular land producing such moneys was by this Act conveyed or confirmed. No money shall ever be taken from one fund for deposit in any other, or for any object other than that for which the land producing the same was granted or confirmed. The State Treasurer shall keep all such moneys invested in safe, interestbearing securities, which securities shall be approved by the Governor and Secretary of State of said proposed State, and shall at all times be under a good and sufficient bond or bonds conditioned for the faithful performance of his duties in regard thereto, as defined by this Act and the laws of the State not in conflict herewith.

Twelfth. The State of Arizona and its people hereby consent to all and singular the provisions of the Enabling Act approved June 20, 1910, concerning the lands thereby granted or confirmed to the State, the terms and conditions upon which said grants and confirmation are made, and the means and manner of enforcing such terms and conditions, all in every respect and particular as in the aforesaid Enabling Act provided.

Sec. 108. State Treasurer to Invest: The State Treasurer, with the approval of the Governor and the Secretary of State shall have the power, and it shall be his duty from time to time to invest any moneys belonging the permanent funds by this Act created and established.

Sec. 109. Investment Authorized: Such moneys shall be invested in the bonds of the United States; bonds of the State of Arizona, or of the Counties, Municipalities or School Districts thereof, or first mortgages on farms lands in the State of Arizona, or as otherwise provided in this act. Provided, that the provisions with respect to first mortgages on farms lands shall not be held or construed to prohibit investment of such moneys in farm lands, under any irrigation project constructed by the United States Government

and liable, under the United States Reclamation Act and Acts amendatory thereof, for the repayment of the construction cost of such project. All applications for loans on farm lands shall be made an blank form, to be prepared and furnished by the State Treasurer, and shall be filed with the State Treasurer; provided, that no application for a loan shall be accepted for filing by the State Treasurer unless such application is accompanied by the sworn statement of three (3) disinterested owners of land situate within the County in which the land offered as security for the loan lies, who shall set forth in said statement their estimate of the actual cash value of the land offered, together with such other information as may be required by the rules and regulations to be adopted by the State Treasurer and Commissioner. If the value of the land as fixed by the three (3) disinterested owners of land, as herein provided, is less than 200 per cent of the amount of the loan applied for the State Treasurer shall reject the application and refund the fee therefor to the applicant. If the value of the land offered as security, as fixed by the County Assessor, equals 200 per cent, or more, of the amount of the loan applied for, the application shall be by the State Treasurer transmitted to the Commissioner for appraisal and recommendation as in this act provided.

Sec. 110. Rate of Interest: None of said moneys shall be loaned for a lower rate of interest than four per cent per annum and no loans on farms lands shall be made at a lower rate of interest than six per cent per

annum.

No

Sec. 111. Loans on first mortgages on farms lands shall not exceed in amount one-half of the actual value of any tract of land the loan may cover, which value shall be determined by appraisal by the Commissioner, and without such appraisal and the recommendation of the Commissioner the loan shall not be made. There shall not be loaned on one parcel of property, or to any person, association or corporation, more than five thousand dollars. loan shall be made upon lands without the State of Arizona, nor on lands of which the appraised value is less than ten dollars per acre, and when loans are made on unimproved farm lands they shall be conditioned upon the entire amount loaned being employed, under regulations to be adopted by the Governor, Secretary of State and State Treasurer, in the improvement of the lands forming the basis of security.

Said

Sec. 112. Terms and Conditions of Mortgages: mortgages shall run for a period of not less than five years nor exceeding fifteen years; provided, that any such loan may be paid in full and discharged at any time by the payment of three months' interest in advance, in addition to the interest due at the time of said payment. In case of a loan extending over a period longer than five years, the payments for the first five years shall consist only of interest, to be paid annually, but commencing with the sixth year there shall be paid in addition to said interest, a sum which, when paid annually during the remainder of the life of the loan, will at the expiration thereof fully satisfy and discharge the debt.

Sec. 113. State Laws to Apply to Mortgages: All proceedings relating to the investment of state money in real estate mortgages shall confirm to and be governed by the laws of the State of Arizona in such case made and provided. They may be foreclosed in the same manner and upon the same notice as required in other real estate foreclosures, and when foreclosure is made by action, said action shall be brought and prosecuted in the name of the State. When any such foreclosure shall be made, the farm land so becoming the property of the State shall be administered by the commissioner for the benefit of the fund from which the moneys loaned on said land were derived, as provided by law for the administration of other lands of ismilar character.

Sec. 114. Assignment of Mortgages: The State Treasurer, by and with the approval of the Governor and Secretary of State and Commissioner, is hereby authorized and empowered to assign any or all of said mortgages, whenever in their judgment it will be for the best interests of the State so to do; provided, however, that they shall not accept as a consideration for said assignment any amount less than the principal and interest due upon said mortgage or mortgages. Such assignments when made shal! be executed by the Governor and attested by the Secretary of State with the great seal of the State of Arizona attached.

Sec. 115. Warrants on Permanent Funds: In the investment of the permanent funds as herein provided, the State Auditor is authorized to draw his warrant on the State Treasurer, payable out of the proper fund, for the purchase of the bonds or mortgages or for a loan, as the case may be, which warrant, previous to delivery to the person entitled thereto, shall be registered by the State Treasurer in a book provided for the purpose.

He

Sec. 116. Record of Investments: The State Treasurer in a book provided for that purpose, shall keep an accurate account of all investments of permanent funds, and of all payments of principal and interest thereon. shall collect all moneys due and owing on any and all of the securities held by him for permanent funds and shall semi-annually, on the first day of June and the first day of December of each year, and at such other times as the Governor may direct, make a statement showing in detail the status and condition of all such investments, and when any such moneys shall remain unpaid for thirty days after the same shall become due and payable, he shall report the same in detail at once, and whenever it shall seem to be for the best interests of the State so to do, the Governor and Secretary of State shall place the claim in the hands of the Attorney General for appropriate action, and it shall be the duty of the Attorney General to proceed to collect the sum owing and due the State, in a civil action to be brought and prosecuted in the name of the State.

Without objection the report of the Special Committee on Lyman Dam was ordered printed.

BUSINESS LYING ON THE PRESIDENT'S DESK.

A communication from the Arizona Cattle Grower's Association,

relating to Charactering of Livestock Loan Companies, etc., was read and referred to Committee on Livestock and Forestry.

Moved by Senator Sims, duly seconded, that the rules be suspended in order that the Senate may accept a motion to reconsider the vote by which Senate Bill No. 51, by Senator Colter, relating to Secretary of State, was indefinitely postponed. Motion carried by the following vote:

Aye: Senators Campbell, Claypool, Colter, Cornick, Drachman, Hayhurst, Kimball, Kinney, Moore, Roberts, Rutherford, Sims-12. Nay: Senators Gilbert, MacMillin, Phillips, Pierce, St. Charles and Mr. President-6.

Moved by Senator Cornick, duly seconded, that the Senate reconsider the vote by which Senate Bill No. 51 was indefinitely postponed. Motion carried by the following vote:

Aye: Senators Campbell, Claypool, Colter, Cornick, Drachman, Gilbert, Hayhurst, Kimball, Kinney, Moore, Roberts, Rutherford, Sims, St. Charles and Mr. President-15.

Nay: Senators MacMillin, Phillips and Pierce-3.

Senate Bill No. 51 was placed on the calendar of the Committee of the Whole.

Moved by Senator Cornick, duly seconded and carried, that the rules be suspended in order that the Senate may accept a motion to reconsider the vote by which Senate Bill No. 52, by Senator Colter, relating to Other Offenses Against Public Justice, was indefinitely postponed.

Moved by Senator Cornick, duly seconded, that the Senate reconsider the vote by which Senate Bill No. 52 was indefinitely postponed. Motion carried by the following vote:

Aye: Senators Campbell, Claypool, Colter, Cornick, Drachman, Gilbert, Hayhurst, Kimball, Kinney, Moore, Roberts, Rutherford, Sims and Mr. President-14.

Nay: Senators MacMillin, Phillips, Pierce and St. Charles-4.
Absent: Senator Elliott-1.
0.

Excused:

Senate Bill No. 52 was placed on calendar of Committee of the Whole.

Moved by Senator Cornick, duly seconded and carried, that the rules be suspended in order that the Senate may accept a motion to reconsider the vote by which Senate Bill No. 53, by Senator Colter, relating to Chattel Mortgages, was indefinitely postponed.

Moved by Senator Cornick, duly seconded, that the Senate reconsider the vote by which Senate Bill No. 53 was indefinitely postponed. Motion carried by the following vote:

Aye: Senators Campbell, Claypool, Colter, Cornick, Drachman,