holders. The president gives more time to the business of the corporation than do the other directors. He has various routine duties to perform, such as signing papers and approving vouchers; in many companies he also serves as general supervisor of affairs, for which service he receives a salary. In other cases he exercises the supervision without extra compensation.

Other officers include the vice president, secretary, and treasurer. Frequently the offices of secretary and treasurer are held by the same individual. The secretary is usually selected by the board of directors, sometimes from their own number.

A number of the larger companies designate some officer or employee as manager. In some cases it is the president-manager, or engineer-manager, and in a number of instances secretary-manager. This officer is general supervisor of all activities of the company, including operation and maintenance, construction, financing, land and farming activities, and contacts with other organizations. He reports to the board of directors. Some of the managers have had engineering training and are paid commensurate salaries.

Clerical Functions

The secretary is in charge of the clerical work incident to operating the company. He prepares and keeps the records, is usually the accountant, and frequently acts as treasurer. He countersigns the stock certificates, attends the meetings of the directors, and keeps their minutes.

The office of secretary of a small irrigation company is only a part-time job. Of the 122 companies canvassed in California and Utah in 1935, only 2 companies in Utah, 1 in northern California, and 25, or one-half of the southern California group, make the secretaryship a full-time position. In southern California the secretaries of a number of companies are also in charge of operation and mainteThe secretaries of companies in Utah who give only part time to this work are principally farmers, although some are attorneys, bankers, business, or professional men. It is not uncommon to find, in any of the Western States, a real-estate or insurance man acting as secretary of a mutual water company and receiving as part of his total compensation the rental for that portion of his office space given over to the company's use.

nance.

It was found that in 40 to 46 percent of the companies in California and Utah the secretary was one of the directors. This is not necessarily a requirement of these companies, but has usually come about because the board has chosen to appoint one of its number as secretary. A requirement that the secretary shall be a director is not to be recommended: the secretary should have definite clerical

qualifications and must be able to devote part or all of his time to these duties; and the board should be free to make its own selection of secretary from whatever source it may see fit.

The maximum annual compensation paid to secretaries of the mutual companies canvassed in 1935 was $1,260 in northern California, $2,580 in Utah, and $4,320 in southern California. The median or middle figure in the arrays of these salaries was $35 in northern California, $152 in Utah, and $690 in southern California. It was found that 17 of the companies paid no salary whatever to the secretary, these being all cases in which he was one of the directors. In some instances the director-secretary receives no compensation, but has clerical assistance which relieves him from most or all of the routine work.

MINUTES, OPERATION RECORDS, AND REPORTS

The incorporated companies all keep minutes of their stockholders' and directors' meetings. Some of these entries are typewritten, but many are in ink and occasionally some are made in pencil. Perusal of the minute books of almost any small company in an outlying region discloses considerable variation in the neatness and legibility of the minute entries over a series of years.

The operation records of some companies are in detailed form. Those companies which collect charges or tolls for water on a quantitative basis keep a comprehensive record of their deliveries of water and frequently of the diversions also. These companies usually provide office books to which the deliveries noted by the zanjeros, or ditch tenders, in the field books are transferred for the purpose of computing charges. The companies with pumping plants often keep complete records of pump operation and of water production. In fact, progressive managers and superintendents keep records of all operation activities as an increasingly valuable source of information for future reference.

The management makes an annual written report to the stockholders at the annual meeting. These are primarily financial reports; however, they frequently include statements on operation and maintenance as well. In case the operation report is not included in the written statement an oral report is made. The condition of the water supply naturally is of primary interest to the stockholders; some of the managers review this question briefly in their written or printed reports and indicate any desirable changes in policy.

Service Area and Location of Facilities of San Antonio Water Co., Upland, California

FIGURE 14.-SERVICE AREA AND LOCATION OF FACILITIES OF SAN ANTONIO WATER CO., UPLAND, CALIF.

This area is typical of companies serving highly developed citrus-producing sections.

CHARACTER OF MANAGEMENT

The character of management of these mutual companies depends upon the caliber of the directors, which in turn depends upon the material from which they are selected. There is naturally a wide range in the character of irrigation communities and an equally wide range in the quality of management. Organizations with heavy financial and operation responsibilities that can call efficient businessmen to the directorate are particularly fortunate.

Many examples of excellent management are to be found. In fact, the enterprise, skill, and efficiency of the technical and clerical staffs of some of the companies canvassed in 1935 stamped them as truly high-class organizations.

Other companies, on the contrary, are found to have one or more weak features to which attention may be profitably directed in this discussion. For example, some companies fail to keep their corporate franchises in good standing and operate simply as de facto corporations. Some apparently go along year after year with serious irregularities in their corporate procedure, ranging from failure to maintain corporate existence down to omission of some prescribed step in the procedure for levying an assessment. The difficulties caused by such carelessness are readily curable in some cases, but on other occasions they result in much confusion and expense. Several instances are known in which companies have outstanding more capital stock than they have authority to issue, a result of laxity rather than intentional wrongdoing. Some of them unquestionably have been overcapitalized, although this appears to have been the exceptional situation. Some companies have not been careful in the matter of keeping their property titles clear and have been seriously embarrassed when subsequently applying for mortgage loans.

Officers are in some instances entrusted with large responsibilities without any provision being made for keeping a check on their activities. Careless handling of financial records has caused serious difficulties for certain companies. Four organizations included in the 1935 canvass had been involved in stock frauds and a serious embezzlement, which would have been quickly disclosed if the books of the respective companies had been thoroughly audited. Secretarial work in some cases is done in a slipshod manner, a result partly of the simplicity of the organizations and partly of the practice of allowing very little compensation for such work. A number of the smaller companies dispense entirely with the services of a trained engineer in planning their construction work, because of the cost— a policy that has often proved to be poor economy.

One of the tests of good management is the care with which the board of directors selects the superintendent in charge of operation

and maintenance. This particular official has much to do with the success of the enterprise. Most directors appreciate this, but for reasons of economy are sometimes led into employing a less desirable man than their better judgment would dictate. In some places they select the superintendent annually after calling for bids; this practice is particularly undesirable if the board binds itself to select the lowest bidder. Even if the board reserves the right to reject any or all bids, the policy has an unfortunate effect upon an incumbent since it creates uncertainty in his mind as to continued employment, regardless of the quality of his work, and is, therefore, detrimental to his efficiency. The better practice is to retain the incumbent as long as he discharges his duties with entire satisfaction, and to pay him what he is worth insofar as the company is able. The detailed knowledge of an irrigation system which a superintendent acquires in the course of years of service is a valuable asset to a company.

The mutual companies, on the whole, have been conservative in the matter of making extensions and improvements and in seeking new sources of water supply.

A great deal of deferred maintenance has accumulated during the financial situation of the past few years. Much of this accumulation undoubtedly has been unavoidable; the test of management in many cases will doubtless come when the directors feel that it is financially possible to restore the system to its best operating condition, for protests from members over increases in assessments are likely to develop.

Standards of Management

The circumstances surrounding the individual companies are so varied that it would be useless to attempt setting up uniform standards of management applicable to the field of mutual companies, even within a general area.

For example, there is one company in which the investment in works and water rights is four or five million dollars, and in which the individual stockholders themselves have total investments in land and improvements greatly exceeding that figure. There is another company in which the value of the irrigation system is about $25,000 and in which the farm investments are probably $30,000 to $50,000. The first-named company serves about 1.500 orchardists and the latter about 60 general farmers.

There is every reason in the first instance for insisting that the company be operated under the highest type of management and with maximum efficiency, and that is what is done. A trained engineer of outstanding executive ability is employed as manager. In the second example every member of the company knows every other