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*
*
Roots of Reform
*
Dominance of the RailroadsCentral Pacific RR surrounded and
dominated the Bay Area, and dominated the Oakland
waterfrontSouthern Pacific Railroad acquired by the Big Four in
the late 1860sThe Southern Pacific Railroad was then granted
the second transcontinental rail routeFounded the town of
ColtonVirgil Earp and the Battle of the Crossing (1883)The
railroad gouged producers on freight costs, and thus made an
impact on many industries.
*
*
*
Progressivism: What’s in a Name?Progressivism not a specific
organization, but rather was a societal movement of reform.It
was prevalent in American society c. 1900-1920.People with
various and diverse goals would have considered themselves
progressive.
*
*
*
Progressivism (continued)Under the influence of the
Enlightenment and Darwinism, progressives believed that
humanity could be advanced and society
improved.Progressivism held a high view of human potential,
and that meant putting away old ways, and also freeing
individuals from the shackles of the modern industrial
age.Progressivism wanted to move ahead into the possibilities
of the future.
*
*
*
*
*
Progressivism (continued)In the early 1900s California and
several other states began to reform themselves, coinciding with
the transformation of the USA from an agricultural to an
industrial society; reform fromPolitical corruptionCorporate
corruption, especially the railroad in CaliforniaBetter
conditions, hours and wages for workers (Starr 143)Women’s
voting rightsHistorians call this “reformation” the Progressive
MovementChampioning values of the Enlightenment,
Progressive platforms were often pushed by the political leftThe
Bay Area left was influenced by the harder edge of Marxism;
businesses were often “closed shop”; a major center of
unionization.The southern California left was of the softer,
Fabian socialist perspective, known as the “good government,”
or “goo-goos,” group. Businesses were often “open shop.”
*
Burnette Haskell Early reformerFormed Coast Seamen’s Union
(1885); later became Sailors’ Union of the Pacific (1891),
which won reforms in 1915.Formed Kaweah Colony in the area
of today’s Sequoia Nat’l Park (1885); radical, Utopian in
outlook
*
*
*
California’s Peculiar InstitutionMigratory Farm LaborCf.
Steinbeck’s Of Mice and MenInvolvement of the Industrial
Workers of the World (IWW) (Wobblies)Ralph Durst ranch in
the vicinity of Wheatland
*
*
*
San Francisco TrialAbraham RuefPolitical bossPublic Utilities
hired Ruef as their attorneyPacific Gas and ElectricHome
Telephone CompanyUnited Railroad CompanyEugene
“Handsome Gene” Schmitz, Ruef’s hand-picked candidate for
mayor under the Union Labor partyPerpetuated the bribe-based
corporation-government relationshipOpposed by public-spirited
citizensAfter the Earthquake, President T. Roosevelt sent the
Feds in to help investigate S.F. political corruption
*
*
*
San Francisco (cont.)Earthquake—April 18, 1906
*
*
Los AngelesGood Government MovementLed by Dr. John
Randolph Haynes; “Open Shop”Opposed by Harrison Gray Otis,
editor of the Los Angeles TimesNew Charter for L.A. in
1903Includes the political instruments of “the initiative, the
referendum, and the recall” (R&B 259).
*
*
*
Lincoln-Roosevelt LeagueRepublican Convention 1906:
corruption apparentJournalists Edward Dickson and Chester
Rowell become active in promoting reform within the
Republican partyOrganized 50 other activistsDirect primary in
1909Republicans nominated Hiram Johnson, who then won the
governorship in 1910.Railroad reform ensued, as well as
women’s suffrage (1911) and labor reforms
*
*
Progressive ReformsInitiative-A procedure for citizens to
propose a law to be taken up by the state legislature or by the
citizens directly (via ballot). Referendum-A procedure for
citizens to vote directly on approval of a proposed law. Recall-
A procedure for removing a public official from office via the
direct vote of the people.
*
*
*
Progressive Reforms (cont.)Secret Ballot- Citizens’ votes are
kept secret. Direct primary-Political party nominations are via
direct vote of rank-and-file members of the party rather than by
party leadership. Direct election of U.S. Senators-Guaranteed
by the Seventeenth Amendment to the U.S. Constitution (1913),
establishes the direct vote by the citizens of a state for their
U.S. Senators.Women's Suffrage-Guaranteed by the Nineteenth
Amendment to the U.S. Constitution (1920), recognizes the
right of women to vote.
*
*
Governor Hiram JohnsonPart of team that prosecuted Boss
RuefRepublican nominee for governor and supported by
progressivesServed two terms as GovernorV.P. nominee on
Progressive ticket with T. Roosevelt in 1912
©SGRF-Economic Research Department
1
Six Megatrends Shaping the World
SGRF Economic Research
April 2017
Rising Population and Aging
Rapid Urbanization
Rising middle-class
Sustainability
Diffusion of power
Technological advance
©SGRF-Economic Research Department
2
Megatrends
Megatrends are global, sustained and macro economic forces of
development that impact business, economy, society, cultures
and personal lives thereby defining our future world.
We identify six main megatrends;
Demographic changes (Rising population and ageing)
Rapid urbanization
Rising middle-class
Diffusion of power
Sustainability (claimant change and resources scarcity)
Technological advancement
©SGRF-Economic Research Department
3
Why should SGRF adopt these megatrends as part of its
investment decisions?
Megatrends would help SGRF identify investment opportunities
that are likely to be most profitable over the longer term,
therefore enabling successful investments into growing markets.
©SGRF-Economic Research Department
4
The current world population is 7.4 billion, by 2050 the
population will be over 9.7 billion and by 2100 it could reach a
massive 11 billion people.
Demographic Changes
Rising Population
©SGRF-Economic Research Department
5
And with the highest rate of population growth, Africa is
expected to account for more than half of the world’s
population growth over the next 35 years
Source: United Nations
7
9.7
In 2015
by 2050
to
During the 2015-2050 period, half of the world’s population
growth is expected to be concentrated in 9 countries: India,
Nigeria, Pakistan, DRC, Ethiopia, Tanzania, the US, Indonesia
and Uganda.
Tokyo
World’s Most Populated city
37.8people
15,347
births
6,418
deaths
Every hour there are:
9.7b2050
Africa
Is the fastest growing continent
2.5%anualy
500m
1500
With the highest rate of population growth, Africa is expected
to account for more than half of the world’s population growth
over the next 35 years
Chronological World Population Growth
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
Growing demand for food, water, energy, infrastructure and
goods and services.
Demographic Changes
Rising Ageing Population
©SGRF-Economic Research Department
6
% of the population with 60 years or over
2050
2015
In 2015, one of every 8 people was aged 60 year or older, this
figure will rise to one of every 5 by 2050, making up 1.4 billion
from 901 million people in 2015, with old people outnumbering
children aged 0-9 years.
Growing ageing population will have social, political and
economic implications, by increasing the fiscal burden on
governments for extra spending on pensions and health care
while providing opportunities for businesses.
Source: United Nations
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
% of the population with 60 years or over
2000 Japan Italy Korea Spain Portugal Greece
Singapore Poland Germany Austria 23.3 24.1 11.2
21.4 21.7 22.8 10.7 16.8 23.1 20.399999999999999
2015 Japan Italy Korea Spain Portugal Greece
Singapore Poland Germany Austria 33.1 28.6 18.5
24.4 27.1 27 17.899999999999999 22.7 27.6 24.2
2030 Japan Italy Korea Spain Portugal Greece
Singapore Poland Germany Austria
37.299999999999997 36.6 31.4 33.5
34.700000000000003 33.200000000000003 30.7
28.6 36.1 32.4 2050 Japan Italy Korea Spain
Portugal Greece Singapore Poland Germany Austria
42.5 40.4 41.5 41.4 41.2 40.799999999999997 40.4
39.299999999999997 39.299999999999997 37.1
Rapid Urbanization
The economic power of cities
©SGRF-Economic Research Department
7
Source: United Nations, McKinsey
‫ل‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ ‫ة‬ ‫دول‬
State General Reserve Fund
According to the United Nations, almost 180,000 people move
into cities everyday
66%
Of the world population is projected to be urban by 2050, up
from 54% in 2016
1
Tokyo 37.1m
2
Delhi 30.7m
3
Shanghai 36m
4
Mumbai 27.8m
5
Sau Paulo 23.4m
Top 5 Cities by population by 2030
Top 5 Cities by GDP by 2025
1
New York
2
Tokyo
Shanghai
5
4
London
Beijing
By 2030 India will have
68 cities of more than 1m
13 with more than 4m
6 mega cities with
more than 10m
Of Africa’s population will be urban by 2050
1bn
China
590 m
India
Urban population 2030 forecast
By 2030 China will have..
221
Cities with 1m or more
23
Cities with 5m or more
380m
People will be added to the global population from China’s
cities – more than the enter population of the US today
56%
Middle-Income
Rising in middle income class continues
©SGRF-Economic Research Department
8
Source: United Nations, statista, McKinsey
3,492m
733m
689
212
1,380m
724m
620
285
114
Asia Pacific
Europe
America
192
Middle East & N.Africa
Sub-Saharan Africa
World biggest consumers
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
1.8b
4.9b
50m
2015
2030
China
India
150m
850m
1billion
425m
475m
China and India’s contributions to the
global middle class will be substantial
The size of the global middle class will almost triple from 2009
to 2030
2016
2030
of the global middle class will
live in the Asia-Pacific region
in 2030 up from 1/3 in 2009.
The emergence of a wealthy middle class will open up new
markets not just in consumer goods, but also for financial
services or the health sector, for instance. meaning, there is still
plenty of room for businesses to expand in these sectors in the
emerging world before parity with the developed world is
reached.
Middle-Income
Rising in middle income class continues
©SGRF-Economic Research Department
9
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
United States
$1.32 trillion
China
$1.3 trillion
United Kingdome
$0.2 trillion
Japan
$0.17 trillion
Germany
$0.09 trillion
$18.7
trillion
$4.3
trillion
$11.25
trillion
$0.55
trillion
Today
2025
Online sales
Non-Online sales
Global retail industry
Global retail industry is forecasted to sharply increase due to
the rise of the middle income class
Column1
0.1 0.9
Column1
0.15 0.85
Column1
0.24 0.76
Column1
0.18 0.82
Column1
0.26 0.74
Diffusion of power
Rise of those who can play the game
©SGRF-Economic Research Department
10
Source: IMF, PWC analysis
1
2
1
2
3
3
4
4
5
5
6
6
7
7
8
8
9
9
10
10
China
China
US
India
India
US
Japan
Indonesia
German
Brazil
Russia
Russia
Brazil
Mexico
Indonesia
Japan
UK
German
Franca
UK
2016
2050
E7
G7
Emerging markets will dominate the world’s top 10 economies
(GDP at PPP)
Vietnam, the Philippines and Nigeria could make the greatest
move up the GDP by PPP ranking by 2050
Vietnam
Philippines
Nigeria
Up 12 places
Up 9 places
Up 8 places
32nd
20th
28th
19th
22nd
14th
2016
2050
The US and Europe will steady lose ground to China and India
Share of world GDP (PPP) from 2016 to 2050
China
18%
US
16%
EU27
15%
India
7%
20%
12%
9%
15%
2016
EM will continue to be the growth engine of the global
economy. By 2050, the E7 economies would rise their share of
world GDP from 35% to almost 50%, with China being the
largest economy in the world, accounting for around 20% of
world GDP.
Although, advanced economies will continue to have higher
average incomes, but EM will make good progress as well,
which will open up great opportunities for long-term
investments in these markets. However, governments need to
implement structural reforms to improve macroeconomic
stability, diversify their economies away from natural resources,
and develop political and legal institutions.
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Projected change in share of world GDP (PPP) from 2016 to
2050
2016
2050
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
Advanced countries
Emerging countries
The rest of the world
2050
10
Diffusion of power
Rise of those who can play the game
©SGRF-Economic Research Department
11
Source: IMF
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
$400
bn
$1,563.5
bn
$875.9
bn
$526
bn
$681.7
bn
$526
bn
$579
bn
$1,445.4
bn
$364
bn
Next game changer
The trillion dollar economies
Note: the figures are GDP at current prices from IMF 2022
forecasts.
Egypt
Mexico
Nigeria
Philippines
South Africa
Thailand
Turkey
Vietnam
Poland
Next emerging economies game changers aside of BRICSs
High GDP growth, improved FDIs and rapid industrialization to
give rise to new lot of emerging countries, beyond BRICS that
contend to become next economic leaders
11
©SGRF-Economic Research Department
12
As the world becomes more populous, urbanized and
prosperous, demand for energy, food and water will rise. But
the Earth has a finite amount of natural resources that can be
used to satisfy this demand.
Sustainability
Claimant change and resource scarcity
©SGRF-Economic Research Department
13
Source: National Ocean Service, World Meteorological
Organization, NASA GISS Surface Temperature Analysis
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
“we can state with 99% confidence that current temperatures
represent a real warming trends.
--Dr. James Hansen
Director of NASA Goddard Institute for Space Studies
Sea level continues to rise at a rate of about one-eighth of an
inch per year. The two major causes are thermal expansion
caused by warming of the ocean and increased melting of land-
based ice.
Globally, 2015 was the hottest year on record, 2016 overturn it
and 2017 is expected to be the hottest according to the World
Meteorological Organization
Climate change is already changing seasons and weather
patterns, and more extreme weather events such as el-nino,
posing substantial risks for agriculture, water supplies, food,
ecosystems, energy security, and infrastructure.
Global Warming is happening
This is due to:
81%
Of global energy comes from fossil foil
Vehicles produce about 2.3 kilograms of carbon dioxide for
every liter of gasoline they burn, and about 2.7 kilograms of
carbon dioxide for every liter of diesel they consume.
Sustainability
Resources scarcity
©SGRF-Economic Research Department
14
Source: National Intelligence Council, PWC
50%
more energy
40%
more water
35%
more food
With climate change and rising population, by 2030, we will
need…
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
Technological Advance
©SGRF-Economic Research Department
15
Source: PWC 19th Annual Global CEO Survey
The Top megatrends, which CEO believes will transform their
business over the next five years, based on PWC survey
‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬
State General Reserve Fund
Increased comfort with technology
Competition advantage using technology
Multiplier effect of technology
Globalization effect of technology
Cheaper access to technology
This changes will come in a form of…
Series 1
Urbanization Sastanability diffusion of power
demographics technological advances 0.36 0.43
0.57999999999999996 0.61 0.77 Series 2 Urbanization
Sastanability diffusion of power demographics
technological advances 0.64 0.56999999999999995
0.42 0.39 0.23
Technological Advance
©SGRF-Economic Research Department
16
Source: McKinsey, PWC, Forbes, HBR
‫ا‬ ‫ندوق‬ ‫ص‬ ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫الح‬
State General Reserve Fund
Software that are capable of performing tasks that normally
require human intelligence, such as visual perception, decision-
making, and language translation.
Information or visuals to the physical world, via a graphics
and/or audio overlay, to improve the user experience for a task
or a product.
Distributed electronic ledger that uses software algorithms to
record and confirm transactions with reliability and anonymity.
Helps reshape finance, healthcare, government and
manufacturing
Air or water-based devices and vehicles, that fly or move
without an on-board human pilot.
Devices, vehicles, etc. that are embedded with sensors,
software, network connectivity, and compute capability, that
can collect and exchange data over the Internet.
Expected to accede $7b this year, from $2.2b in 2014.
Manufacturing techniques used to create three-dimensional
objects based on digital models by layering or “printing”
successive layers of materials
Printing
Virtual reality
Robots
Internet of Things
Drones
Blockchain
Augmented reality
Artificial intelligence
Change business model and Enable smarter business operation.
Electro-mechanical machines that automate, augment or assist
human activities.
Computer-generated simulation of a three-dimensional image or
a complete environment, within a defined and contained space,
that viewers can interact with in realistic ways.
Will impact businesses over the next 5 years
85%
Of customer interactions will be handled without human by
2020.
Analyst expect AR revenue to reach $48.7B by 2021
Drones Market=$7 billion
By 2020, while provide competitive advantage
Will replace of business operations by 2030.
©SGRF-Economic Research Department
17
Now the question is;
What is the potential positive or negative impact these
megatrends have on SGRF strategy, and what we should do (or
not) with this knowledge.
1
California and Water
A visit to the verdant beauty of Golden Gate Park in San
Francisco would persuade the visitor that this fabled city had
abundant water. In fact, the area of Golden Gate Park was once
an immense sand dune.
E. Robert Scrofani, 1992
1
California Dreamin’
Water and the emergence of a “new civilization” touted,
“making the desert bloom” (Starr 170), fulfilling the words of
the prophet:
For waters break forth in the wilderness,
and streams in the desert;
(Isaiah 35:6)
2
2
Water
The necessary element for civilization to take root
Cf. Mesopotamia, Egypt, China and India
Two great rivers of the Central Valley
Sacramento River
San Joaquin River
Two other great river sources:
The Owens River
The Colorado River
William Hammond Hall: Hydraulic engineer who wrote on
developing California’s water needs
California becomes a landmark instance in world history of
water procurement and implementation
Establishment of water districts
Based on Wright Act response to Lux v. Haggin decision
3
4
Water Rights
(and in California, it’s all about the water)
First became important with the discovery of gold in 1848
Recall the water flumes for finding gold
Incorporated into state law following the admission of
California into the United States in 1850.
4
5
Who Owns the Water?
The State of California owns all of the water in the state
Individual water rights are usufructuary
One uses the water; one does not own it
Rights to its use revert to the owner (California) when given up
5
6
Federally Reserved Rights
Because the United States reserves public domain land for
national parks and forests, it thereby reserves the right to the
water to support these areas.
These rights are senior or paramount to all state claims.
6
Forms of Water Rights
Two historical forms of water rights:
Appropriative rights
First come, first served; early bird gets the water
Enacted in California as part of the Gold Rush and mining
district laws
Entitlement is secured by use
Use it, or lose it
Recall, these were public lands in the case of the Gold Rush
Riparian rights
Based on English Common Law
Water access comes with the land abutting a river
Entitlement is secured by land ownership
In cases where the two forms come into conflict, riparian rights
trump appropriative rights
7
7
8
Battle of the Titans:
Lux v. Haggin (1886)
Henry Miller (Lux was his agent)
Claimed monopolistic control of the Kern River in the Central
Valley by virtue of riparian rights
James Haggin
Owned a large chunk of Kern County, thanks to his Southern
Pacific RR friends and exploitation of the Desert Land Act
(1877), and claimed control of the Kern River by virtue of
appropriative rights
The Court decided in favor of Miller (Lux), based on riparian
rights as superior
California Doctrine of water rights resulted from Lux v. Haggin
8
9
California Doctrine (of water rights)
The state adopted the riparian principle but accepted
appropriation rights in certain cases:
Where an individual had previously purchased state land or a
Mexican grant, the water rights were declared to be riparian;
Where an individual had claimed water from the public domain
before 1866, he had a right of prior appropriation that could be
exercised or sold as personal property.
All grants after 1866, state or federal, came under the riparian
rule.
9
10
Dual Rights (California Doctrine)
Blending of Appropriative and Riparian Rights
Pueblo Rights
Based on Mexican law
Paramount to all other rights.
Only affects a few towns in southern California.
10
11
Wright Irrigation Act 1887
California Doctrine after Lux vs. Haggin put farmers who
needed water at a disadvantage.
A man named C. C. Wright made the case for the farmers in
Sacramento.
Wright was influenced by the current arguments of
newspaperman Henry George, who argued that land ought to be
taxed, thereby discouraging unproductive, monopolizing land-
grabbing.
The adopted Wright Act allowed for the formation of
communities based on water-interests (special districts).
Following passage of the Wright Act, irrigation projects in
California more than doubled.
Henry Miller’s triumph was thus short-lived.
11
“Districts”
The outcome of the Wright Act is that communities formed
water-interest “districts,” which were enclaves that acted as
conduits of the State of California’s ownership of the water,
thus having preeminence even over riparian rights.
Financing of water-related infrastructure (e.g., irrigation canals)
came through bonds backed by land-value taxation.
As a result, individual small farmers had to contribute little
money for water-related infrastructure, while land barons, such
as Henry Miller, were taxed on their vast land holdings,
regardless of whether they were using the water.
See the paper given be E. Robert Scrofani, “The Greening of the
California Desert,” Georgist Scholars Conference, Lafayette
College, 1992.
12
12
Local examples
The Metropolitan Water District
The largest in the United States (19 million people served)
Main source: Colorado River Aqueduct (b. 1933-1939)
Lake Havasu (Parker Dam) to Lake Mathews in Riverside
Some water also comes from northern California
Riverside, founded in 1870, was early on known as the
Riverside Land and Irrigation Company
1873: L.C. Tibbets and Eliza Tibbets planted the first navel
orange seedlings in the country, the small beginning of an
incredible future.
1875: Magnolia Avenue constructed.
1882-1886: Canadian-born Mathew Gage built the Gage Canal,
bringing water from the ancient San Bernardino underground
aquifer, allowing Riverside’s citrus industry to further grow.
13
13
Los Angeles Aqueduct
(watch Cadillac Desert)
The Los Angeles Aqueduct was finished in 1913
It brought water from the Owens Valley to Los Angeles
The water rights were subversively secured
The agricultural vitality of the Owens Valley was compromised
Some of the offended resorted to vandalizing the aqueduct
Eventually, Mono Lake, a key place for migratory birds, was
nearly destroyed
With the waters from the aqueduct, the Los Angeles basin
became the land of green lawns and swimming pools beneath a
golden sun, and, culturally, became the national trendsetter of
the good, suburban life.
14
William Mulholland
Leader of the Los Angeles Aqueduct project
Head of the Los Angeles Department of Water and Power, the
“DWP.”
Later advised on the Panama Canal, Boulder Dam, and the
Colorado River Aqueduct
Disgraced with the catastrophic failure of the St. Francis Dam
15
Mulholland and O’Shaughnessey
Water to San Francisco from Tuolumne River
Engineer: Michael O’Shaughnessy
Environmental impact: inundation and destruction of Hetch-
Hetchy canyon
Water to Los Angeles from the Owens River
Engineer: William Mulholland
Water enters L.A. at the north end of the San Fernando Valley
Environmental impact: compromise of Owens Valley
agriculture.
A case of the few sacrificed for the many
Agriculture to Agribusiness
Triumph of Diversity
1
Importance of 1863-1864 drought
Devastating effect on cattle industry
People looked to agriculture as a new industry
A Bonanza in Wheat
The most important California farm product in the late
nineteenth century was wheat (1860s-1893). It became
important because:
Wheat required little or no irrigation and actually benefited
from long dry summers
Farmers knew how to grow it and it was relatively inexpensive
to grow
It was a nonperishable crop that could be transported profitably
for long distances; therefore it was shipped all over the world as
well as to the eastern United States.
From the late 1860s to the early 1890s, grain was produced in
vast amounts on the large wheat ranches of the valley.
Economic Effects
An elaborate structure for the marketing of wheat to the world
grew up almost overnight.
British and American companies bought wheat in California and
sold it on exchanges in England and elsewhere.
Isaac Friedlander, the “Grain King,” and others monopolized the
wheat industry
Hugh Glenn, who owned more than 60,000 acres of wheat land,
had many dozens of teams of eight horses pulling what was
known as the Stockton gang plow.
During the 1870s and 1880s, California wheat growing
developed into the most mechanized and structured form of
agriculture in the world and became the state's major export
industry
New Inventions:
First ever Steam powered tractors used in the San Joaquin
Valley (1886)
4
End of the Wheat Bonanza
Competition: New wheat farms started producing on the Great
Plains and in Europe, Asia, and Australia
Overproduction glutted world markets and wheat prices
plummeted.
Soil depletion: The dry farming of wheat had the peculiar
disadvantages of a one-crop agricultural economy and year after
year of such farming inevitably depleted the soil and eventually
wheat farming was displaced by other more profitable crops
Irrigation: The spread of irrigation also helped to make other
crops more profitable and by 1890 sugar-beet production led by
Claus Spreckels in Watsonville-Salinas area and the Oxnard
brothers in southern California was a dominant crop.
5
Fruit and Specialty-Crop Farming:
the benefits of diversity
Specialty crops were grown – For example, after 1870, citrus,
rice, winter vegetables, melons, and cotton.
Fragile, perishable, and unfamiliar to American farmers, the
new crops needed specific climates, soils, and handling.
In particular they required more water than nature provided.
Farming Organizations
Sponsor innovation
Combat disease and pests
Disseminate information
Lobby government
6
Fruit and Specialty Crop Farming (cont.)
California State Agricultural Society 1854
Specialized organizations
Livestock
Wine grapes: began with the missions
By 1900, 80% of the USA wine production came from
California (R&B 204)
Deciduous fruit
Oranges
The “Riverside Navel” orange
Raisins
Nuts
Sunkist (1893) association of citrus growers
7
Roots of ReformDominance of the Rai.docx

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Roots of ReformDominance of the Rai.docx

  • 1. * * Roots of Reform * Dominance of the RailroadsCentral Pacific RR surrounded and dominated the Bay Area, and dominated the Oakland waterfrontSouthern Pacific Railroad acquired by the Big Four in the late 1860sThe Southern Pacific Railroad was then granted the second transcontinental rail routeFounded the town of ColtonVirgil Earp and the Battle of the Crossing (1883)The railroad gouged producers on freight costs, and thus made an impact on many industries. * * * Progressivism: What’s in a Name?Progressivism not a specific organization, but rather was a societal movement of reform.It was prevalent in American society c. 1900-1920.People with
  • 2. various and diverse goals would have considered themselves progressive. * * * Progressivism (continued)Under the influence of the Enlightenment and Darwinism, progressives believed that humanity could be advanced and society improved.Progressivism held a high view of human potential, and that meant putting away old ways, and also freeing individuals from the shackles of the modern industrial age.Progressivism wanted to move ahead into the possibilities of the future. * * * * * Progressivism (continued)In the early 1900s California and several other states began to reform themselves, coinciding with the transformation of the USA from an agricultural to an industrial society; reform fromPolitical corruptionCorporate corruption, especially the railroad in CaliforniaBetter conditions, hours and wages for workers (Starr 143)Women’s
  • 3. voting rightsHistorians call this “reformation” the Progressive MovementChampioning values of the Enlightenment, Progressive platforms were often pushed by the political leftThe Bay Area left was influenced by the harder edge of Marxism; businesses were often “closed shop”; a major center of unionization.The southern California left was of the softer, Fabian socialist perspective, known as the “good government,” or “goo-goos,” group. Businesses were often “open shop.” * Burnette Haskell Early reformerFormed Coast Seamen’s Union (1885); later became Sailors’ Union of the Pacific (1891), which won reforms in 1915.Formed Kaweah Colony in the area of today’s Sequoia Nat’l Park (1885); radical, Utopian in outlook * * * California’s Peculiar InstitutionMigratory Farm LaborCf. Steinbeck’s Of Mice and MenInvolvement of the Industrial Workers of the World (IWW) (Wobblies)Ralph Durst ranch in the vicinity of Wheatland
  • 4. * * * San Francisco TrialAbraham RuefPolitical bossPublic Utilities hired Ruef as their attorneyPacific Gas and ElectricHome Telephone CompanyUnited Railroad CompanyEugene “Handsome Gene” Schmitz, Ruef’s hand-picked candidate for mayor under the Union Labor partyPerpetuated the bribe-based corporation-government relationshipOpposed by public-spirited citizensAfter the Earthquake, President T. Roosevelt sent the Feds in to help investigate S.F. political corruption * * * San Francisco (cont.)Earthquake—April 18, 1906 * * Los AngelesGood Government MovementLed by Dr. John Randolph Haynes; “Open Shop”Opposed by Harrison Gray Otis, editor of the Los Angeles TimesNew Charter for L.A. in 1903Includes the political instruments of “the initiative, the referendum, and the recall” (R&B 259).
  • 5. * * * Lincoln-Roosevelt LeagueRepublican Convention 1906: corruption apparentJournalists Edward Dickson and Chester Rowell become active in promoting reform within the Republican partyOrganized 50 other activistsDirect primary in 1909Republicans nominated Hiram Johnson, who then won the governorship in 1910.Railroad reform ensued, as well as women’s suffrage (1911) and labor reforms * * Progressive ReformsInitiative-A procedure for citizens to propose a law to be taken up by the state legislature or by the citizens directly (via ballot). Referendum-A procedure for citizens to vote directly on approval of a proposed law. Recall- A procedure for removing a public official from office via the direct vote of the people. *
  • 6. * * Progressive Reforms (cont.)Secret Ballot- Citizens’ votes are kept secret. Direct primary-Political party nominations are via direct vote of rank-and-file members of the party rather than by party leadership. Direct election of U.S. Senators-Guaranteed by the Seventeenth Amendment to the U.S. Constitution (1913), establishes the direct vote by the citizens of a state for their U.S. Senators.Women's Suffrage-Guaranteed by the Nineteenth Amendment to the U.S. Constitution (1920), recognizes the right of women to vote. * * Governor Hiram JohnsonPart of team that prosecuted Boss RuefRepublican nominee for governor and supported by progressivesServed two terms as GovernorV.P. nominee on Progressive ticket with T. Roosevelt in 1912 ©SGRF-Economic Research Department 1 Six Megatrends Shaping the World SGRF Economic Research April 2017 Rising Population and Aging
  • 7. Rapid Urbanization Rising middle-class Sustainability Diffusion of power Technological advance ©SGRF-Economic Research Department 2 Megatrends Megatrends are global, sustained and macro economic forces of development that impact business, economy, society, cultures and personal lives thereby defining our future world. We identify six main megatrends; Demographic changes (Rising population and ageing) Rapid urbanization Rising middle-class Diffusion of power Sustainability (claimant change and resources scarcity) Technological advancement ©SGRF-Economic Research Department 3 Why should SGRF adopt these megatrends as part of its investment decisions? Megatrends would help SGRF identify investment opportunities that are likely to be most profitable over the longer term, therefore enabling successful investments into growing markets.
  • 8. ©SGRF-Economic Research Department 4 The current world population is 7.4 billion, by 2050 the population will be over 9.7 billion and by 2100 it could reach a massive 11 billion people. Demographic Changes Rising Population ©SGRF-Economic Research Department 5 And with the highest rate of population growth, Africa is expected to account for more than half of the world’s population growth over the next 35 years Source: United Nations 7 9.7 In 2015 by 2050 to During the 2015-2050 period, half of the world’s population growth is expected to be concentrated in 9 countries: India, Nigeria, Pakistan, DRC, Ethiopia, Tanzania, the US, Indonesia and Uganda. Tokyo World’s Most Populated city 37.8people 15,347 births 6,418 deaths Every hour there are: 9.7b2050
  • 9. Africa Is the fastest growing continent 2.5%anualy 500m 1500 With the highest rate of population growth, Africa is expected to account for more than half of the world’s population growth over the next 35 years Chronological World Population Growth ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund Growing demand for food, water, energy, infrastructure and goods and services. Demographic Changes Rising Ageing Population ©SGRF-Economic Research Department 6
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  • 18. % of the population with 60 years or over 2050 2015 In 2015, one of every 8 people was aged 60 year or older, this figure will rise to one of every 5 by 2050, making up 1.4 billion from 901 million people in 2015, with old people outnumbering children aged 0-9 years. Growing ageing population will have social, political and economic implications, by increasing the fiscal burden on governments for extra spending on pensions and health care while providing opportunities for businesses. Source: United Nations ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund % of the population with 60 years or over
  • 19. 2000 Japan Italy Korea Spain Portugal Greece Singapore Poland Germany Austria 23.3 24.1 11.2 21.4 21.7 22.8 10.7 16.8 23.1 20.399999999999999 2015 Japan Italy Korea Spain Portugal Greece Singapore Poland Germany Austria 33.1 28.6 18.5 24.4 27.1 27 17.899999999999999 22.7 27.6 24.2 2030 Japan Italy Korea Spain Portugal Greece Singapore Poland Germany Austria 37.299999999999997 36.6 31.4 33.5 34.700000000000003 33.200000000000003 30.7 28.6 36.1 32.4 2050 Japan Italy Korea Spain Portugal Greece Singapore Poland Germany Austria 42.5 40.4 41.5 41.4 41.2 40.799999999999997 40.4 39.299999999999997 39.299999999999997 37.1 Rapid Urbanization The economic power of cities ©SGRF-Economic Research Department 7 Source: United Nations, McKinsey ‫ل‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ ‫ة‬ ‫دول‬ State General Reserve Fund
  • 20.
  • 21.
  • 22.
  • 23.
  • 24.
  • 25.
  • 26.
  • 27.
  • 28. According to the United Nations, almost 180,000 people move into cities everyday 66% Of the world population is projected to be urban by 2050, up from 54% in 2016 1 Tokyo 37.1m 2 Delhi 30.7m 3 Shanghai 36m 4 Mumbai 27.8m 5 Sau Paulo 23.4m Top 5 Cities by population by 2030 Top 5 Cities by GDP by 2025 1 New York 2 Tokyo Shanghai 5 4 London
  • 30. By 2030 India will have 68 cities of more than 1m
  • 31. 13 with more than 4m 6 mega cities with more than 10m Of Africa’s population will be urban by 2050 1bn China 590 m India Urban population 2030 forecast By 2030 China will have.. 221 Cities with 1m or more 23 Cities with 5m or more
  • 32. 380m People will be added to the global population from China’s cities – more than the enter population of the US today 56% Middle-Income Rising in middle income class continues ©SGRF-Economic Research Department 8 Source: United Nations, statista, McKinsey 3,492m 733m 689
  • 33. 212 1,380m 724m 620 285 114 Asia Pacific Europe America 192 Middle East & N.Africa Sub-Saharan Africa World biggest consumers ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund 1.8b 4.9b
  • 34. 50m 2015 2030 China India 150m 850m 1billion 425m 475m China and India’s contributions to the global middle class will be substantial The size of the global middle class will almost triple from 2009 to 2030 2016 2030 of the global middle class will live in the Asia-Pacific region in 2030 up from 1/3 in 2009. The emergence of a wealthy middle class will open up new markets not just in consumer goods, but also for financial services or the health sector, for instance. meaning, there is still plenty of room for businesses to expand in these sectors in the emerging world before parity with the developed world is reached.
  • 35. Middle-Income Rising in middle income class continues ©SGRF-Economic Research Department 9 ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund
  • 36.
  • 37.
  • 38.
  • 39.
  • 40.
  • 41.
  • 42.
  • 44. China $1.3 trillion United Kingdome $0.2 trillion Japan $0.17 trillion Germany $0.09 trillion $18.7 trillion $4.3 trillion $11.25 trillion $0.55 trillion Today 2025 Online sales Non-Online sales Global retail industry Global retail industry is forecasted to sharply increase due to the rise of the middle income class Column1 0.1 0.9 Column1 0.15 0.85 Column1
  • 45. 0.24 0.76 Column1 0.18 0.82 Column1 0.26 0.74 Diffusion of power Rise of those who can play the game ©SGRF-Economic Research Department 10 Source: IMF, PWC analysis 1 2 1 2 3 3 4 4 5 5 6 6 7 7
  • 46. 8 8 9 9 10 10 China China US India India US Japan Indonesia German Brazil Russia Russia Brazil Mexico Indonesia Japan UK German Franca UK 2016 2050 E7 G7 Emerging markets will dominate the world’s top 10 economies (GDP at PPP) Vietnam, the Philippines and Nigeria could make the greatest
  • 47. move up the GDP by PPP ranking by 2050 Vietnam Philippines Nigeria Up 12 places Up 9 places Up 8 places 32nd 20th 28th 19th 22nd 14th 2016 2050 The US and Europe will steady lose ground to China and India Share of world GDP (PPP) from 2016 to 2050 China 18% US 16% EU27 15% India 7% 20% 12% 9% 15% 2016 EM will continue to be the growth engine of the global economy. By 2050, the E7 economies would rise their share of world GDP from 35% to almost 50%, with China being the largest economy in the world, accounting for around 20% of
  • 48. world GDP. Although, advanced economies will continue to have higher average incomes, but EM will make good progress as well, which will open up great opportunities for long-term investments in these markets. However, governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from natural resources, and develop political and legal institutions. 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Projected change in share of world GDP (PPP) from 2016 to 2050 2016 2050 ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund Advanced countries Emerging countries The rest of the world 2050
  • 49. 10 Diffusion of power Rise of those who can play the game ©SGRF-Economic Research Department 11 Source: IMF ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund
  • 50.
  • 51.
  • 52.
  • 53.
  • 54.
  • 55.
  • 56.
  • 58. bn $526 bn $681.7 bn $526 bn $579 bn $1,445.4 bn $364 bn Next game changer The trillion dollar economies Note: the figures are GDP at current prices from IMF 2022 forecasts. Egypt Mexico Nigeria Philippines South Africa Thailand Turkey Vietnam Poland Next emerging economies game changers aside of BRICSs High GDP growth, improved FDIs and rapid industrialization to give rise to new lot of emerging countries, beyond BRICS that contend to become next economic leaders 11
  • 59. ©SGRF-Economic Research Department 12 As the world becomes more populous, urbanized and prosperous, demand for energy, food and water will rise. But the Earth has a finite amount of natural resources that can be used to satisfy this demand. Sustainability Claimant change and resource scarcity ©SGRF-Economic Research Department 13 Source: National Ocean Service, World Meteorological Organization, NASA GISS Surface Temperature Analysis ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund “we can state with 99% confidence that current temperatures represent a real warming trends. --Dr. James Hansen Director of NASA Goddard Institute for Space Studies Sea level continues to rise at a rate of about one-eighth of an inch per year. The two major causes are thermal expansion caused by warming of the ocean and increased melting of land- based ice. Globally, 2015 was the hottest year on record, 2016 overturn it and 2017 is expected to be the hottest according to the World Meteorological Organization Climate change is already changing seasons and weather patterns, and more extreme weather events such as el-nino,
  • 60. posing substantial risks for agriculture, water supplies, food, ecosystems, energy security, and infrastructure. Global Warming is happening This is due to: 81% Of global energy comes from fossil foil Vehicles produce about 2.3 kilograms of carbon dioxide for every liter of gasoline they burn, and about 2.7 kilograms of carbon dioxide for every liter of diesel they consume. Sustainability Resources scarcity ©SGRF-Economic Research Department 14 Source: National Intelligence Council, PWC 50% more energy 40% more water 35% more food
  • 61. With climate change and rising population, by 2030, we will need… ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund Technological Advance ©SGRF-Economic Research Department 15 Source: PWC 19th Annual Global CEO Survey The Top megatrends, which CEO believes will transform their business over the next five years, based on PWC survey ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫االح‬ ‫ندوق‬ ‫ص‬ State General Reserve Fund Increased comfort with technology Competition advantage using technology Multiplier effect of technology Globalization effect of technology Cheaper access to technology This changes will come in a form of… Series 1 Urbanization Sastanability diffusion of power demographics technological advances 0.36 0.43 0.57999999999999996 0.61 0.77 Series 2 Urbanization
  • 62. Sastanability diffusion of power demographics technological advances 0.64 0.56999999999999995 0.42 0.39 0.23 Technological Advance ©SGRF-Economic Research Department 16 Source: McKinsey, PWC, Forbes, HBR ‫ا‬ ‫ندوق‬ ‫ص‬ ‫ة‬ ‫لدول‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ي‬ ‫ياط‬ ‫ت‬ ‫الح‬ State General Reserve Fund Software that are capable of performing tasks that normally require human intelligence, such as visual perception, decision- making, and language translation. Information or visuals to the physical world, via a graphics and/or audio overlay, to improve the user experience for a task or a product. Distributed electronic ledger that uses software algorithms to record and confirm transactions with reliability and anonymity. Helps reshape finance, healthcare, government and manufacturing Air or water-based devices and vehicles, that fly or move without an on-board human pilot. Devices, vehicles, etc. that are embedded with sensors, software, network connectivity, and compute capability, that can collect and exchange data over the Internet. Expected to accede $7b this year, from $2.2b in 2014. Manufacturing techniques used to create three-dimensional
  • 63. objects based on digital models by layering or “printing” successive layers of materials Printing Virtual reality Robots Internet of Things Drones Blockchain Augmented reality Artificial intelligence Change business model and Enable smarter business operation. Electro-mechanical machines that automate, augment or assist human activities. Computer-generated simulation of a three-dimensional image or a complete environment, within a defined and contained space, that viewers can interact with in realistic ways. Will impact businesses over the next 5 years 85% Of customer interactions will be handled without human by 2020. Analyst expect AR revenue to reach $48.7B by 2021 Drones Market=$7 billion
  • 64. By 2020, while provide competitive advantage Will replace of business operations by 2030. ©SGRF-Economic Research Department 17 Now the question is; What is the potential positive or negative impact these megatrends have on SGRF strategy, and what we should do (or not) with this knowledge. 1 California and Water A visit to the verdant beauty of Golden Gate Park in San Francisco would persuade the visitor that this fabled city had abundant water. In fact, the area of Golden Gate Park was once an immense sand dune. E. Robert Scrofani, 1992
  • 65. 1 California Dreamin’ Water and the emergence of a “new civilization” touted, “making the desert bloom” (Starr 170), fulfilling the words of the prophet: For waters break forth in the wilderness, and streams in the desert; (Isaiah 35:6) 2 2 Water The necessary element for civilization to take root Cf. Mesopotamia, Egypt, China and India Two great rivers of the Central Valley Sacramento River San Joaquin River Two other great river sources: The Owens River The Colorado River
  • 66. William Hammond Hall: Hydraulic engineer who wrote on developing California’s water needs California becomes a landmark instance in world history of water procurement and implementation Establishment of water districts Based on Wright Act response to Lux v. Haggin decision 3 4 Water Rights (and in California, it’s all about the water) First became important with the discovery of gold in 1848 Recall the water flumes for finding gold Incorporated into state law following the admission of California into the United States in 1850.
  • 67. 4 5 Who Owns the Water? The State of California owns all of the water in the state Individual water rights are usufructuary One uses the water; one does not own it Rights to its use revert to the owner (California) when given up 5 6 Federally Reserved Rights Because the United States reserves public domain land for national parks and forests, it thereby reserves the right to the water to support these areas. These rights are senior or paramount to all state claims.
  • 68. 6 Forms of Water Rights Two historical forms of water rights: Appropriative rights First come, first served; early bird gets the water Enacted in California as part of the Gold Rush and mining district laws Entitlement is secured by use Use it, or lose it Recall, these were public lands in the case of the Gold Rush Riparian rights Based on English Common Law Water access comes with the land abutting a river Entitlement is secured by land ownership In cases where the two forms come into conflict, riparian rights trump appropriative rights 7 7 8 Battle of the Titans: Lux v. Haggin (1886) Henry Miller (Lux was his agent)
  • 69. Claimed monopolistic control of the Kern River in the Central Valley by virtue of riparian rights James Haggin Owned a large chunk of Kern County, thanks to his Southern Pacific RR friends and exploitation of the Desert Land Act (1877), and claimed control of the Kern River by virtue of appropriative rights The Court decided in favor of Miller (Lux), based on riparian rights as superior California Doctrine of water rights resulted from Lux v. Haggin 8 9 California Doctrine (of water rights) The state adopted the riparian principle but accepted appropriation rights in certain cases: Where an individual had previously purchased state land or a Mexican grant, the water rights were declared to be riparian; Where an individual had claimed water from the public domain before 1866, he had a right of prior appropriation that could be exercised or sold as personal property. All grants after 1866, state or federal, came under the riparian rule.
  • 70. 9 10 Dual Rights (California Doctrine) Blending of Appropriative and Riparian Rights Pueblo Rights Based on Mexican law Paramount to all other rights. Only affects a few towns in southern California. 10 11 Wright Irrigation Act 1887 California Doctrine after Lux vs. Haggin put farmers who needed water at a disadvantage. A man named C. C. Wright made the case for the farmers in Sacramento. Wright was influenced by the current arguments of
  • 71. newspaperman Henry George, who argued that land ought to be taxed, thereby discouraging unproductive, monopolizing land- grabbing. The adopted Wright Act allowed for the formation of communities based on water-interests (special districts). Following passage of the Wright Act, irrigation projects in California more than doubled. Henry Miller’s triumph was thus short-lived. 11 “Districts” The outcome of the Wright Act is that communities formed water-interest “districts,” which were enclaves that acted as conduits of the State of California’s ownership of the water, thus having preeminence even over riparian rights. Financing of water-related infrastructure (e.g., irrigation canals) came through bonds backed by land-value taxation. As a result, individual small farmers had to contribute little money for water-related infrastructure, while land barons, such as Henry Miller, were taxed on their vast land holdings, regardless of whether they were using the water. See the paper given be E. Robert Scrofani, “The Greening of the California Desert,” Georgist Scholars Conference, Lafayette College, 1992.
  • 72. 12 12 Local examples The Metropolitan Water District The largest in the United States (19 million people served) Main source: Colorado River Aqueduct (b. 1933-1939) Lake Havasu (Parker Dam) to Lake Mathews in Riverside Some water also comes from northern California Riverside, founded in 1870, was early on known as the Riverside Land and Irrigation Company 1873: L.C. Tibbets and Eliza Tibbets planted the first navel orange seedlings in the country, the small beginning of an incredible future. 1875: Magnolia Avenue constructed. 1882-1886: Canadian-born Mathew Gage built the Gage Canal, bringing water from the ancient San Bernardino underground aquifer, allowing Riverside’s citrus industry to further grow. 13
  • 73. 13 Los Angeles Aqueduct (watch Cadillac Desert) The Los Angeles Aqueduct was finished in 1913 It brought water from the Owens Valley to Los Angeles The water rights were subversively secured The agricultural vitality of the Owens Valley was compromised Some of the offended resorted to vandalizing the aqueduct Eventually, Mono Lake, a key place for migratory birds, was nearly destroyed With the waters from the aqueduct, the Los Angeles basin became the land of green lawns and swimming pools beneath a golden sun, and, culturally, became the national trendsetter of the good, suburban life. 14 William Mulholland Leader of the Los Angeles Aqueduct project Head of the Los Angeles Department of Water and Power, the “DWP.” Later advised on the Panama Canal, Boulder Dam, and the Colorado River Aqueduct
  • 74. Disgraced with the catastrophic failure of the St. Francis Dam 15 Mulholland and O’Shaughnessey Water to San Francisco from Tuolumne River Engineer: Michael O’Shaughnessy Environmental impact: inundation and destruction of Hetch- Hetchy canyon Water to Los Angeles from the Owens River Engineer: William Mulholland Water enters L.A. at the north end of the San Fernando Valley Environmental impact: compromise of Owens Valley agriculture. A case of the few sacrificed for the many Agriculture to Agribusiness Triumph of Diversity
  • 75. 1 Importance of 1863-1864 drought Devastating effect on cattle industry People looked to agriculture as a new industry A Bonanza in Wheat The most important California farm product in the late nineteenth century was wheat (1860s-1893). It became important because: Wheat required little or no irrigation and actually benefited from long dry summers Farmers knew how to grow it and it was relatively inexpensive to grow It was a nonperishable crop that could be transported profitably for long distances; therefore it was shipped all over the world as well as to the eastern United States. From the late 1860s to the early 1890s, grain was produced in vast amounts on the large wheat ranches of the valley. Economic Effects An elaborate structure for the marketing of wheat to the world grew up almost overnight. British and American companies bought wheat in California and sold it on exchanges in England and elsewhere. Isaac Friedlander, the “Grain King,” and others monopolized the wheat industry
  • 76. Hugh Glenn, who owned more than 60,000 acres of wheat land, had many dozens of teams of eight horses pulling what was known as the Stockton gang plow. During the 1870s and 1880s, California wheat growing developed into the most mechanized and structured form of agriculture in the world and became the state's major export industry New Inventions: First ever Steam powered tractors used in the San Joaquin Valley (1886) 4 End of the Wheat Bonanza Competition: New wheat farms started producing on the Great Plains and in Europe, Asia, and Australia Overproduction glutted world markets and wheat prices plummeted. Soil depletion: The dry farming of wheat had the peculiar disadvantages of a one-crop agricultural economy and year after year of such farming inevitably depleted the soil and eventually wheat farming was displaced by other more profitable crops Irrigation: The spread of irrigation also helped to make other crops more profitable and by 1890 sugar-beet production led by Claus Spreckels in Watsonville-Salinas area and the Oxnard brothers in southern California was a dominant crop. 5 Fruit and Specialty-Crop Farming: the benefits of diversity Specialty crops were grown – For example, after 1870, citrus,
  • 77. rice, winter vegetables, melons, and cotton. Fragile, perishable, and unfamiliar to American farmers, the new crops needed specific climates, soils, and handling. In particular they required more water than nature provided. Farming Organizations Sponsor innovation Combat disease and pests Disseminate information Lobby government 6 Fruit and Specialty Crop Farming (cont.) California State Agricultural Society 1854 Specialized organizations Livestock Wine grapes: began with the missions By 1900, 80% of the USA wine production came from California (R&B 204) Deciduous fruit Oranges The “Riverside Navel” orange Raisins Nuts Sunkist (1893) association of citrus growers 7