In San Diego, they purchased the San Dieguito Rancho (later called Rancho Santa Fe) for about $280K and planted 4,000 eucalyptus trees. To the railroad's horror, they find out that it doesn't rain much in San Diego so their trees won't grow very fast. In the future they will also find out that the eucalyptus trees aren't any good for railroad ties, but that's another story. In the meantime, they were losing $50K/year, a huge sum of money at the time. If you live in San Diego, you probably have heard of Fletcher Parkway or Fletcher Hills. These were named after Colonel Ed Fletcher (1872-1955), a major mover and shaker in the early days of developing San Diego. At a San Diego Chamber of Commerce dinner in 1911 he met Walter E. "W.E." Hodges, vice-president of the Santa Fe Railroad and President of the Santa Fe Land and Improvement Company. A discussion between the two ensued regarding the Railroad's problem with the San Dieguito Rancho land they had just purchased. Hodges was impressed by Col. Fletcher, and shortly thereafter Col. Fletcher became manager of the San Dieguito Rancho. Very quickly Col. Fletcher turned a profit, but in 1916 the Escondido flood wiped out most of the farming on the San Dieguito Rancho and there were large financial losses. The Santa Fe Railroad was interested in selling the property.
The property wasn't worth much at the time as there wasn't a reliable source of water. At the same time Col. Fletcher was working for the Santa Fe Railroad, he accepted a great financial offer from William G. Henshaw (Lake Henshaw was named after him) and started working for Henshaw plus the railroad as well. Henshaw saw a way to make money by creating dams, but didn't have the capital to do it. At Henshaw's request, Col. Fletcher hiked up the canyons through which the San Dieguito River ran, looking for places to put a dam. Col. Fletcher found a small lake on land in the Crescent Valley that was owned by Thomas Carroll and a great site to put a dam to build up water levels. On behalf of Henshaw, Col. Fletcher bought the rights to the Carroll land including the lake. Col. Fletcher then approached W.E. Hodges of the Santa Fe Railroad to see if they would finance the dam. In his discussions with the Santa Fe Railroad, Col. Fletcher argued that the dam would help the Santa Fe Railroad by having a reliable water source and their San Dieguito Rancho lands would be easy to sell. As an added bonus, the creation of a dam could also feed the coastal areas, making those lands highly valuable to the railroad. It just so happened that the coastal lands from Oceanside to San Diego were owned by the Santa Fe Railroad and those lands were mostly sitting dormant. In a letter to W.E. Hodges, Col. Fletcher argues: In addition to the town of Del Mar, unquestionably the towns of Cardiff and Encinitas will be extremely glad and anxious to secure water from this source, as at present, with the exception of Del Mar, they are suffering for want of water, and what water they have is secured below sea level, and is unfit for human consumption, almost. It is hardly necessary to call your attention again to the fact that the 800 acres of bottom land on the Santa Fe Ranch today is not worth $50 an acre, owing to the extreme danger of floods; while with the Carroll Dam completed, the land is easily worth $150 to $200 an acre. I call attention again to the fact that the Santa Fe Railroad, by encouraging and backing the project, will get the credit and benefit of the increased production on 10,000 or 12,000 acres of irrigated land, at least, which is today far in excess of the total irrigated section of San Diego County. All of this traffic will be tributary to the Santa Fe lines; and they will also inevitably receive the credit of assisting the City of San Diego to build up this tributary section. San Diego is looked upon as a Santa Fe town, dependent entirely upon the Santa Fe for its railway facilities. This development will give the friends of the Santa Fe the opportunity of showing that San Diego is fortunate in being a Santa Fe town, because the Santa Fe by this action shows that they gladly assist towns along their route in their development... ...Consequently, you can see that my recommendation of this construction is based primarily upon the immediate increase of values given to the lands of the Santa Fe Land Company, even eliminating the very large benefits that will accrue to the Railway Company.
The president of the Santa Fe Railroad agreed with Col. Fletcher's dam pitch. The interested parties formed the San Dieguito Mutual Water Company, and Col. Fletcher was elected president. Since the dam was on land purchased from Thomas Carroll, they initially called every "Carroll" - the Carroll Dam, the Carroll Reservoir, and the Carroll Canal (flume). Evidence of this name can be seen in an early project map. The Dam was designed by John S. Eastwood (1857-1924). Eastwood innovated a multiple arch dam design that was stronger and less expensive than typical dams of the day. The Dam was built by the Bent Bros., a Los Angeles-based major contractor who was involved in many dam construction projects in Southern California. According to accounts from Col. Fletcher, one night he was seated at a dinner next to W.E. Hodges when the conversation turned to the new lake and dam. "Why not call it Lake Hodges?" Col. Fletcher asked W.E. Hodges, who reluctantly agreed. However, according to the Santa Fe Railroad's official magazine, the dam "was so named by [Santa Fe Railroad] President Ripley." Regardless, as of November 1918, the dam bore Hodges' name.
In 1932, Col. Fletcher was preparing to write his memoirs and asked W.E. Hodges for his input on the Lake Hodges Dam project. Hodges responded with two letters, one a formal letter and the other an informal one. In the formal letter, Hodges says I do not think I can add anything of value to your history of water in San Diego County because whatever I might say as to the part played by the Santa Fe Railway in the building of the Henshaw and Hodges dams would only to be the effect that we were the instruments used to "make your dream come true."
In the informal letter, Hodges says to Col. Fletcher You are leaning on a very weak support if you expect anything worth while from me to add to what you will write...You know darn well that all we did was to furnish the money needed...One thing I perhaps also did was to make some of "you all" sit up and take notice as to the money value of proper planning...Even you cannot "make a silk purse out of a sows ear" so don't lay it on to me too thick.