The Press. WEDNESDAY, NOVEMBER 13, 1907. THE WELLINGTON AND MANAWATU RAILWAY.

Press, Volume LXIII, Issue 12960, 13 November 1907, Page 6

The Press. WEDNESDAY, NOVEMBER 13, 1907. THE WELLINGTON AND MANAWATU RAILWAY.

The announcement thet the Government hero decided to give twelve months' notico of their intention to take over the Wellington and Mana■wxtM Railway, renders it opportune to review the history of what in some respects ie one of the moet interesting and successful examples of private entorpriee in New Zealand. The railway, oe most of our readers are aware, joins Wellington with Longburn, near Palmorston North, a dietanoe of 84 miles, and constitutes the ehorteet connecting link between Wellington and the North Island Trunk Railway. It m elso the ehortest route to Nepier on the East Coast end New Plymouth on tho West. Its acquisition by the State may, therefore, be regarded as almost indispensable to the successful management of the Government railways in tho North Island. It* conetnirtion was actually commenced by the New Zealand Government under tho Premiership of Sir George Grey in 1879. The financial recklessness of that Ministry, however, compelled wholesale, retrenchment and the work on the 31anawatu line, among other*, was stopped. Further than this, a Royal Commission, appointed to report on railway construction, actually reported against the Manewatu line as unlikely to prove a profitable undertaking. In these circumetancee a number of Wellington citizens took the matter in hand, and determined to float a company to carry out the work. The firet 10,220 shares were allotted on September 22nd, 1881, notwithstanding the fact that intending subscribers were informed that they were not to look for any direct return from their investment. The great idea in floating 'the company wee to open up the back country, and thereby afford facilities for land settlement, with consequent advantage to the City of Wellington. The Company waa registered in 1881; and entered into a contract with the Goverameni on March 22nd, 1882, -to complete the railway. Desperate efforts were made to raise the necessary capital, 'and thirteen Wellington gentlemen, responding to an appeal from the directors, agreed to take up 2000 •hares each. Following their example, other subscribers ce-me forward, and in a few days the subscribed capital reached £300,000. The floating of the first iflsue of £400,000 worth of debentures was carried out by Sir Julioie Vogel on behalf of the Company. In 1885, however, the affaire of the enterpriae reached a financial* crisis. The Ministry was appealed to, and negotiations were set on foot to sell the line back to the Government. At thie juncture a number of gentlemen, including the directors, came to the assistance of the Company, and guaranteed £6000 each to secure an advance from the bank to continue the construction of the line. The ceremony of driving the last spike to celebrate the completion of railway was performed by the tdren Governor, Sir William Jervois, on November 3rd, 1886.

So far, therefore, it will be seen the local patriotism and private enterprise of tho people of Wellington struggled valiantly and with success to carry out a work which ought to have been undertaken by the' Government. It is a matter for some regret, if not humiliation, to know that the Government did not even carry out loyally its engagement to the Company under the contract. Under this agreement, in accordance -with the provisions of the "Railways Construction and Land Act, 1881," the Con*. pany was entitled to endowments ol land to the extent of 30. per cewt. of the cost of constructing the railway, provided that such cost for the purposes of the Act did not exceed £5000 per mile. The length of the line was 84, miles, and the value of the land receivablo amounted to £126,375. Of this amount some £93,000 worth was allocated from lands then in possession of tho Government, leaving due a balance of £33,029 worth. The Government failed to acquire the necessary land from the natives within* the five years mentioned in the contract, and all that the company ever got was additional land to the value of £5339, ■which tho directors .Vere obliged to accept owing to the period named in the contract having expired. Up to the end of February, 1905, the company had paid in local and general taxation £118,000, equal to two-thirds of tho paid-up capital and 20 per cent, more than the total value of the land grants. Hie anticipations of the promoters as to the benefit which would be conferred on the district by the construction of the line have been more than realised. Apart from the gain to the City of Wellington, the capital value of the land served by the railway has risen from £2,566,670 in 1885 to £8,936,007 in 1906. Thanks to the admirable management of the ~oard of Directors, and the able and conscientious general manage, Mr W. M.

Hannay, the railway has proved a financial success in its working such ac the promoters never ventured to hope for. For some years in spite of the heavy load of taxation referred to, it has paid a dividend of 7 per cent., the undertaking has been maintained in the most perfect and well '.'written down," and the directors, it is understood, saw their way, when the bulk of the debentures mature next year, to pay off £170,000 worth and add this amount to the paid-up capital, thereby making each share paid up to £2 instead of £1 ac at present. The Government are in an exceptionally favourable position for acquiring this valuable property, inasmuch ac under the Act although the price is to be fixed by arbitration, no allowance is to be made for good-will. It is possible, of course, that a price may be agreed upon by mutual consent without going to arbitration, but in that case it would be necessary to pass an Act of Parliament sanctioning the sale. Sir Joseph, Ward, in a debate in the House, let fall a remark to the effect that it would cost a million sterling to acquire the railway. At this price it would be a splendid investment, since according to the last balance-sheet the gross profits from the traffic receipts, after deducting expenditure, amounted to £60,451, representing upwards of b per cent, on the capital of a million, as against 3.45 per cent., the amount earned on the General Government railways. The debentures of the company bear 5 per cent, interest, but prdbably the Government could raise the amount necessary at 4 per cent. The present debenture capital is £680,000, while the paid-up share capital is £170,000. Presuming one million is paid for the line, it is estimated in Wellington that the amount

received -by the shareholders would work out at about £2 12s 6d per share. Previous to the announcement of the Government's intention to take over the line, shares .were selling in the market at about £2 2s. The amount suggested constitutes a fair advance upon this price, although the sum mentioned, of course, is considerably below what it would be if the Government had to pay for the goodwill of the company. However, as before explained, unless Parliamentary sanction is given to an agreement outside the Act, the price wiil have to be settled by arbitration nnder the conditions prescribed, and it is useless speculating what the amount is likely to be. The Government, in any case, ■will be aure to get a moat valuable property on very favourable terms. The hard bargain which their predecessors drove in 1881 has proved far more to the advantage of the Dominion than either party at that time anticipated.