J. Rupert Mason and the Legacy
of the California Irrigation Bonds

Bert Brookes

[Reprinted from Land & Liberty, July-August, 1984]

It was in 1975 when Eugenie Mason decided that enough was enough. Since 1929, along with many other citizens of California, she had received no income from her holding of 6 per cent bonds issued by the El Caminho Irrigation District. Not a cent of interest; not a dime off the capital. And after four decades of litigation and lawsuits, the District authorities were still stalling.

With drastic action clearly called for. Mrs. Mason sought the aid of California's Attorney-General -- and the final phase of a marathon battle to establish a basic principle in the State's lax laws had begun.

The fightl-back against official chicanery and legal gobbledegook had begun for Eugenic Mason as far back as the early 1930s, when the leading role had "been played by her husband, financier J. Rupert Mason, an acknowledged expert on California's irrigation law.

But the struggle acquired a new dimension in 1936 when Rupert Mason began to realise the extent to which the California Irrigation District Act owed its origins to the philosophy of Henry George.

Mason well knew that, under the Act, any Irrigation District in California (of which there were some 120) issuing Slate bonds to finance an irrigation scheme was required to service the bonds by making an annual levy on the value of the land benefiting from the scheme.

He knew, too, that this annual levy made it unprofitable for the owners to hold such land idle.

But he had never fully realised two other important facts.

First, that in adopting such a scheme for financing public works -- one based on "benefits received" -- California, among all the states of the world, stood virtually alone. A study of vast land reclamation projects all over the world -- in Italy, Spain, Peru, Chile, the Philippines, China, Egypt, Greece, Java and Australia -- showed Mason that, in hardly any case, was the cost of public improvements charged upon the benefited land as in California.

Ii was as if California had determined, in some form, to follow the thinking of one of its most illustrious citizens.

o Second, it rapidly dawned on Rupert Mason that it was this very process of levying a charge on land values that made the price of land in the Califomian irrigation districts lower than corresponding land elsewhere. It was this levy, entirely on its own, that made land in California more easily available 10 small farmers and home seekers than in other states of the U.S.A.

In a flash of insight, he saw that California would still be a sleepy, semi-arid land of vast Spanish-style estates -- as Spain is to-day -- had it not been for the "land-tax" provisions of California's irrigation laws.

THIS SUDDEN perception of the full significance of Henry George's leaching had a dramatic effect on the 50 year-old Californian. He joined other prominent Americans in pressing for land value taxes to replace State sales taxes. He met advocates of land-value taxation from Britain. Denmark, Australia and other countries. And in 1949 he became President of the International Union for Land-Value Taxation and Free Trade.

But well before his full awakening to the potency of land-value taxation, Rupert Mason had made his name in defending the Californian irrigation law. Since the 1890s, there had been a succession of attempts, by powerful interests. To kill or emasculate the law. In 1895, for example, landowning interests had attacked land-value taxation as "communism and confiscation under the guise of law". It had taken a decision of the U.S. Supreme Court to confirm that the irrigation law of California was constitutional.

But the landlords and speculators had kept up the pressure. Their big chance came with the 1929 economic crisis when property values dramatically slumped. Ai that time, many country mortgages in California were hold against land in the irrigation districts (which covered five million acres) and the mortgage interests appealed to the Stale courts, and then to Washington, to have the land-value levies take second place to the mortgage interest payments.

In both venues they came up against J. Rupert Mason. He fought them all the way to the Supreme Court, eventually emerging triumphant with a favourable Supreme Court ruling in 1935. But the mortgage interests had still not finished, and some years later, after a number of changes in the Supreme Court's composition, they tried again. This time they achieved some success, the Supreme Court ruling that States could set aside local government bonds in favour of mortgages if such action were sanctioned by a Federal court.

Since then, recorded Mason bitterly in 1959, "the federal courts have imposed 'death sentences' on valid, binding and unpaid local government bonds".

But in one of California's irrigation districts -- that of F,l Caminho in Tehama County -- Rupert Mason was able to continue the fight for the interests of the bondholders and for the landowners to pay their rightful dues. The El Caminho authorities had defaulted on their bonds in 1929 when, according to the Red Bluff Daily News.[1] properly values in the district plummeted below the land debt. But even though these land values subsequently recovered (and now stand at about four times the total levies due on them) the District authorities still made no move to collect the dues and pay off the bond debts.

THE CASE was still proceeding at the time of Rupert Mason's death in 1959 and might then have disappeared under a cloud of legal dust -- but for his wife Eugenic. A bondholder herself, she decided to fight on and, moreover, to call in the State Attorney-General when, after a further frustrating 16 years, the negotiations with the El-Caminho authorities broke down.

Mrs. Manson's cri-de-coeur to the Californian Attorney-General proved a master-stroke. The State lawyers filed suit in September 1976 and, before the year's end, had obtained a judgment from the Tehama County Superior Court ordering the irrigation district to pay their debts to the bondholders.

Such, however, is the snailpace of U.S. legal processes that it was not until 1982 that the inevitable appeal was heard.

The appeal court upheld the judgment and ruled that the El Caminho Irrigation District should proceed to assess the land values in its area in order to pay off the sum - estimated at over $2.4m -- which it owed to the holders of its unpaid bonds.[2] This ruling was finally confirmed by the California Supreme Court in March 1983.[1]

With the Supreme Court's decision, after eight separate lawsuits since 1938, the Masons' long struggle has been crowned with success. A special accountant is now being appointed by Tehama County to supervise the assessments in the El Caminho District.

For Eugenic Mason, the result is a complete vindication of the dogged stand taken by her husband and then by herself over that almost interminable forty years.

She told Land & Liberty: "To me, it has beerr a truly historic saga and the most important decision of the Californian courts. It sets a vital precedent in land tenure and shows that landowners are not above the State law." Certainly, throughout California today, there will be many holders of local government securities, as well as small farmers and home-owners, who would gladly drink a toast to the State's land-value irrigation law - coupled, of course, with the names of Rupert and Eugenie Mason.

REFERENCES

1. Red Bluff Daily News, 30 June, 1983.
2. Sacramento Bee, 28 October, 1982. (The Sacramento Bee is the newspaper on which Henry George worked at the time of writing Progress and Poverty in the 1870s. He was given much support at the time by James McClatchy, the newspaper's founder.)