THE MIDLAND RAILWAY.

Auckland Star, Volume XVIII, Issue 254, 29 October 1887, Page 2

THE MIDLAND RAILWAY.

THE COMPANY DEMAND A CASH GUARANTEE OF A MILLION AND A QUARTER.

POSITION OF THE NEGOTIATIONS.

(BY TELEGRAPH —OWN REPOKTEE.)

Wellington, this day. There was quite a flutter of excitement on ita becoming known that papers relative to the Midland railway had been laid on the table last evening, and directly the House rose membera rushed to secure advanoe copies of the correspondence, but none were forthcoming. I was, however, fortunate enough to secure the official copy laid en the table. The correspondence is not all published, some confidential communications having been withheld, but they were carefully selected by the Government under the impression that they contained everything necessary to convey an idea of tho position of the question. The first paper consists of an agreement entered into on 17th of January, 1885, between the Railway Board and the Agent-General, whereby tho contractors contracted to make East and West Coast Railway within ten years. The next paper is an assignment of contract by Chrystall and others with the consent of the Agent-General to the Midland Railway Company. On August 6th, 1887, the Secretary to the Midland Company informed the Agent-General that the London directors had settled the torm of tho new contract, which they had been compelled to frame in such a manner as to suit the views of the financial friends, who had practically undertaken to supply the balance of tho authorised share capital of the Company, viz., £250,000, and such an amount of debentures as may be necessary. " The necessity of seizing this opportunity without delay, after the protracted and difficult negotiations, will be sufficiently obvious, a? time is really very pressing." On August 10th last, the Agent - General wrote to the Colonial Treasurer that he had received from the Company the new draft, and would take the earliest opportunity of examining it, and reporting in respect to alterations to which the Company wished Government to agree. Accordingly on August 23rd, he wrote : " The most important alterations proposed are, a recital inserted in the preamble to the August draft declares that the land to be granted to the Company is to be 2,304,000 acres, the condition in the December draft for dividing tho cost of survey is struck out, and that the cost is to be borne entirely by the colony. The time for allowing interest on construction is to bo extonded to 1897. Tho condition in the December draft that £150,000 should be spent on the Brunrterton-Teremakau section is struck out, and the construction of it at all is made contingent on the necessary capital being obtained. The restriction in the December draft against deviating from the surveyed line is struck out, and while the lino is still to go by Arthur's Pass, tho existing surveys aro not to be binding. It is assumed that a contract containing the May amendments and the new alterations can be entered into without fresh legislation, but if any bo necessary, then it is^ to be obtained before the end of 1890> It-is*obviouß, therefore, that the whole character of the original contract of 1885, as well as the arrangement between the Company and myself last year, is fundamentally changed, and of course such a contract as is now proposed by the Company is impossible without an entirely new Act. J carefully considered whether I should telegraph to you the nature of the new provisions in the August draft, but it seemed to me that the central point in the whole matter was the same as in the May amendments, namely, a demand for^ a guarantee of the value of the land, which was a condition I did not believe the Government would agree to, and, on hearing from you that such a guarantee was declined, informed the Company to that effect."

Further correspondence ensued, and on September 7fch the Agent-General wrote to the Colonial Treasurer aa follows : —" The tone of the Company's letter of 26th of August is open to serious objections on many grounds, especially as it seema to indicate an intention to impugn the good faith of the colony. They take up, in fact, altogether new ground that the clause granting the value of the land does nothing more than express in simple and intelligible language tho terms of the original contract and the understanding on which all the. negotiations had been carried on from the nrst. They complain that the rejection of the clause is a refusal to accept the expression of this understanding m definite language, and in order that there should be no mistake about their meaning they contend that if tho land, on applying the test of actual sale, turns out to bo worth only 6s an acre, tho only possible solution is to give them more. Nevertheless, they deny that the clause is • a guarantee or that any legislation as to value will ever be required at all. ■ It did not eeem to me necessary to interpret this line of argument aa conveying an imputation such as would require immediate exposure. I preferred to recall the Company in very dttieb language to their true position* and to point out the inexpediency of asking Parliament to do what the Company themselves say will never be wanted. To this they have now replied that their argument la nofc rightly appreciated, but they replied that the clause is not a guarantee, and end by throwing upon me the responsibility by initiating any fresh proposals. As to Mr Avigdor's scheme, I need not refer to it any more, as it has been rejected by the Company. I am bound to say that I look upon the new phase into which the business has so unexpectedly entered as being very grave. The Company's position is certainly a serious one, and they may noo be able to help themselves. My letters to you for a long time past have only been a chronicle of one failure after another in their financial negotiations, and I am very doubtful whether, after such a series of failures, they will now $o;':able to get money_ at all without the guarantee. I hardly think, indeed, that they would have sent in such letters as they have now done if they had seen any prospect of getting money on other terms, and they may even find they cannot go back on wie •plan of creating a land trust. To the financiers with whom they have been dealing the demand for a guarantee seems a very simple matter. 'The colony,' they say, 1 has promised to give land, worth a million and a quarter. What objection can there be to an engagement to make that promise good to us if. the land will not sell for the money?' and having apparently made up their minds not to find the money without the guarantee, their interest will Jbe= to throw, such difficulties in the way of any dealings with new people that the Company, may be brought; to a deadlock. At 'any rate, .let tn,e assure you that the time has come whe,n the Government and Parliament should make up their .minds'as to "thii Hndit they will go to in the way of concession".' I do not think lean usefully attempt any fresh negotiations myself until I know exactly which of the many amondmentsareacceptedand which of them, besides the guarantee, are rejected; But at all events lam quite sure that nothing whatever is now

possible to the Company if the land is not allowed to be made immediately available as a security. I have therefore felt obliged to send you in the last i&rr days two telegrams in which I have endeavoured to' make the position clear within reasonable telegraphic limits, and I shall await your reply with all the more anxiety on acCotittt of tho extreme reluctance I have long had (as both the Company and the Government are aware) to be Charged with any new responsibility in the negotiation. Yet I fear there is no escaping from it) now. The Government have drafted a contract which the Company will not execute, the Company have dratted one which the Government cannot adopt, and we might go on for ever bandying amendments to and fro, were it not that the Company are in imminent danger of breaking down altogether unless there is some power to settle here in London the concessions that may turn out to be absolutely necessary for getting any more money to go on with the line*"

The correspondence closes with a mem 6 by Sir Julius Vogel that his Government had left the matter in the hands of their successors, the Augu&t agreement not having oome to hand till alter the recent general elections. When the papers were introduced by the Premier Sir J. Vogel said he wished to make a few remarks upon the subject, not in the way of objection, but rather in explanation, as without some explanation hon. members on reading the papers would be liable to misunderstand the position, After the passing of the Act of 1886, which empowered the Government to enter into a mpditied contract with the Midland Railway Company, the Minister for Public Works (Mr Richardson) and himself were charged by the Cabinet to take charge of tho negotiations which necessarily followed. After somo time a contract was arranged with tho local Board of the Company, which was to bo subject to the approval of the Home Board. As regarded that contract, he need only say at present that a material point which" the Government insisted upon was that tho railway should bo commenced not only from the West Coast, but also from the Nelson and Springfield ond, at the same time, having in mind that if tho two ends were not commenced simultaneously the railway might be confined to only one part of the island. The contract went Home to England, and the Home Board were unable to agree to it as it stood, and long negotiations ensued and continued up to tho time of the late Parliament meeting and the session expiring, The point most at stake was understood to be that the company desired that somo provision should be made by which the land should be ante-vested before the various sections were completed, in ordor to enable tho Company with greater facility to conduct its financial arrangements ; but after the end of last session it was intimated to the Government that the Company Baw a difficulty in the way of obtaining sufficient capital unless some assurance was given as to the value of the land. About the end of Juneorthebeginningof July thocontract was sent out with the alterations proposed by the Company, and subsequently in August a fresh copy, with further alterations, which reached the Government just before the elections took place at the end of September. It was impossible for the Government to deal with the matter then, and it was decided to leave a memo, for the new Government which might succeed, to the effeot that Mr Richardson and himself. (Sir Julius Vogel) wero of opinion that the proposals then made were of a naturo which could be moulded or modified into a shape satisfactory to the colony and the Company. Ho might say that the contract had nob been fairly considered by the Government, as it had not been brought) before them till after tho elections had taken place.

The "Evening Press" says:—"lf the Midland, Railway question is a trump card in anybody's hands it in in the hands of the Government, but tho simple truth is,ifc is hot a party question at all; it ia wholly a question of administration, which any Government which i 3 office must dispose of. The only difierenco between the new Government and the late .Government with regard to it is that, whereas the late Government made two attempts to pub it on a practicable basis, and totally failed, the present Government can be depended on to do what has to be done in a bueiness-like manner. There is not really, however, any very seriouß difficulty at all. That is to say, the Government and the Company are equally anxious to arrange a basis upon which the Midland Eailway may be constructed in accordance with1, the spirit of the Act of 1884. The chief or the only obstacle to that is the Goldfield Acts. It- is recognised .on all hands that the mining rights must not be restricted. Not only have the Company no desire to exclude the miners from any locality where gold may ba found, but it is of fche very essence of the success of their scheme that mining should be encouraged as much as possible. What they ask in effect, then, is that if any of their land is required for mining purposes they shall receive land elsewhere equivalent, not merely equal in area to that taken, and tho problom which the Government have to solve is where to find land which can be definitely set apart for that object. There are other points to be settled, especially for enabling the Company to acquire an actual property in their land grant, block by blockj aB they become entitled to it, so that financing may be facilitated and settlement may progress. But they ask for nothing, as far as we can see, which should be objected to on public grounds, and we have every hope that the Government will be able to submit proposals to Parliament at an early date which will be entirely satisfactory to all concerned. This will be done in the ordinary way of departmental business, and without the introduction of any party feeling or any political element whatsoever.