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Water Is Gold

Mises Daily: Thursday, November 08, 2007 by

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[This article originally appeared in Liberty Watch magazine.]

Not many people know anything about Boswell Land and Farming. The Boswell family likes it that way. The reclusive family is the world's largest cotton and tomato grower, according to Yahoo Finance, growing and milling cotton on 150,000 acres in California and 50,000 acres in New South Wales, Australia.

This writer owns a few shares of the company, along with reportedly 500 other investors. But that doesn't mean we have any information. The company's shares are traded infrequently on the over-the-counter bulletin board under the symbol BWEL. But the company isn't required to release financial data and it has no interest in providing any.

To learn about the Boswell farming empire takes a reading of Mark Arax and Rick Wartzman's awarding-winning exposé, The King of California: J.G. Boswell and the Making of a Secret American Empire.

A book about a big corporate farmer probably doesn't make the average reader pine for a rainy day to dive into such a tome. But, this is a story about much more than cotton and land. While building an empire, the Boswells built a company town, affected the lives of thousands of farm workers, changed the ecology of a massive area in central California, took millions in farm subsidies from taxpayers while publicly opposing such subsidies, and to give away the investment punch line of the story, amassed billions of dollars worth of water rights. As J.W. Boswell would say, "Land is just dirt, but the water is gold."

So while Nevada and the other western states fret about providing water for future growth, Boswell could at a minimum supply a city of 800,000 families with water every year. According to Money Week, the company owns 400,000 to 2 million acre feet of water "that could be drawn up without damaging the environment." Water rights go for $10,000 per acre-foot, meaning that Boswell's water is worth at least $4 billion. The company's market capitalization is only $750 million. No wonder natural resources broker Rick Rule believes Boswell is one of the most under-valued stocks in America, even though shares trade for over $1,000 each. At a Las Vegas investment seminar a couple years ago, Rule told the crowd he believed the shares were worth $3,500 each, if the company quit farming and just sold water.

J.G. "Colonel" Boswell started all of this from the back of a jitney in 1921, with a little help from the money of his first wife Alaine. The Colonel had just left the army after 17 years and only knew one other thing: cotton. But, the boll weevil made it impossible for Boswell to return to his native Georgia to start his business. Instead, his fortune would be made at a place called Tulare Lake.

As the Colonel grew his cotton empire in the 1920s and 1930s, the needed employees came from places like Oklahoma which was being ravaged by the dust bowl and depression. The town Corcoran became a thriving company town, and the American Federation of Labor attempted to organize Boswell's workers. As if a National Labor Relations Board lawsuit wasn't bad enough, Steinbeck's The Grapes of Wrath was published, portraying central California's big farmers as shameless profiteers.

But the Colonel endured and continued to add to his empire. There would be constant legal challenges and, of course, the biggest challenge of all to agriculture – the weather. Almost like clockwork, heavy spring thaws in the Sierra Nevada range caused the Tulare Lake basin to flood every 15 years: 1938, 1952, 1969, 1983 and 1998.

The federal government stepped in with millions for flood control dams. And the government largesse wouldn't stop there. The Colonel's nephew, Jim Boswell, told the authors that the company would never accept government money, and had in fact sent money back to the government, but according to CNN Money, "Federal data compiled by the Environmental Working Group, a Washington-based advocacy group, shows that between 2000 and 2003, J.G. Boswell Co. got $16.8 million for cotton."

The Boswell farms can now be farmed with only 300 employees. Long gone are the cotton pickers who left Oklahoma, replaced by huge mechanized cotton-picking machines that are as big as houses. The town of Corcoran has died, known only as the prison town, where Charles Manson is quartered.

Jim Boswell, approaching 80, speculated with Arax and Wartzman that it's likely there "won't be any cotton growing in California 10 years from now," setting the stage for the next generation of Boswells to fallow the fields and sell water to Los Angeles.