THE MIDLAND RAILWAY.

Evening Star, Issue 7355, 29 October 1887, Page 2

THE MIDLAND RAILWAY.

[From our Special Reporter.]

WELLINGTON, October 28. The contract and correspondence of the Midland Railway were laid on tho table to-night. The new documents begin with a letter from the Agent-General to the Colonial Treasurer, dated August, 1887, intimating that the Midland Company had framed a new contract to suit the capitalists who are expected to provide themoney, and SirE. D. Bellenclosesaletterfiom tlie secretary of the Company explaining that the directors have been compelled to frame a new contract to suit the views of their financial friends, who practically undertake to supply the balance of the Company’s authorised share capital (by quarter of a million), and such amount of debentures as are necessary. He adds that there is not much in the contract which has not already been discussed with F. D. Boll) and approved or suggested by him; and that, in fact, the directors accepted tho contract in that spirit, subject to necessary alterations on matters of detail. Next comes the following very important letter from Sir F. D. Bell by the last mail (dated August 23) In continuation of my letter of tho 10th inst., I beg to acquaint you with what his taken place since then in reference to the new draft contract proposed by the Midland Railway Company. For convenience of reference I propose to designate that draft as tho “ August draft,” and the c intract settled by the Government in concert with Mr Brodic Hoare as the “December draft,” and the amendments proposed therein by the Company last May as the "May amendments.” Upon careful examining tho August draft I find that it substanti illy repeats the May amendments; tut there are some entirely new provisions, of which the fallowing seem to be the most important(X) A recital is inserted in the preamble decladng that the land to be granted to the Company is to be 2,301,000 acres; (2) tho condition in tho December draft for dividing ihe cost of survey is struck out, and that cost is to be borne en irely by the Colony; (3) the tu e for allowing interest on construction is to be ex. tended to 1?97: (4) Iho condition in tho December draft that U50.000 should be spent on the BrunnerTeremakau section is stiuck out, and the construction ol it at all is made contingent on the necessary capital being obtained; (6) the restriction in the December draft against deviating from the surveyed line is struck out, and, while the line is still to go by Arthur’s Pass, the existing surveys are not to be binding; (0) it is assumed that a contract containing tho many amendments and tho new alterations can be entered into without fresh legislation, hut if any bo necessary, then it is to be obtained beferc the end of 1890. It is obvious there-' fore that the whole character of the original contract of 1885, as well ns cf tho arrangement between the Company and myself last year, is fundamentally changed', and cf course such a contract as is proposed by the Company is impossible without an entirely new Act. I carefully emsidertd whether I should telegraph to you the nature of tho 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 -viz., a demand for a guarantee ol 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 diclined I informed the Company to that effect In the meanwhile, however, Mr Avigdor, one of the contractors for the section now being built, had returned from the Colony and had informed the directors of a scheme which ho had submitted to yourself and the Minister of Public \Vorks I therefore asked the Company whether they and r their financial friends would bo prepirtd to entertain that sohrme in su'-stitution for thp May'amend mints and the Dew pjovjlioris ip thp August draft fam in communication with the directors cp the matter, and shall soon bo able ji) inform you qf tho refcujt, but I may say at once th; f I do not think there is any prospect of their entertainmg the’scheme, as thiy have bceh so long in negotiation with financiers on the basis of a land value being guaranteed. I had hoped that oil receiving Hie May amendments jop won't) have been able to send me a telegram intimating t(io decision of the Government as tp L'pafaplcclng )ho‘ vulpe of the land,'boo >uso in that »aae tlip financia) r egotlafiops on th j bafijs o ( a guarantee would have been immediately slopped, it will bo rouoh more difficult now for the Company to induce their friends to entertain anv new proposals. The directors would have sent out a cablegram to their agents saying, if the August draft was accepted, that finance was arranged, and Hut tha Belgrove and Springfield stotlon would be conm anced ; but such a message would, of course, bo futile now. The correspondence enclosed includes a letter from Mr Kennaway (secretary to the AgentlieDcpai) fo the secretary of the Midland Company, warning tj,c;p £hat the Government have no legal power to agree to i’tio now proposals without fresh legislation, and that tho Oojotiy must retain absolute control over the time, manner, and price at which the land should be dispose;! of; therefo e tbe Agent-General could not encourage the directors to hope that the amendment containing the “ guarantee ” would be accepted, and his duty was to state that tho Government must decline to entertain it. 1 The Agent-General next writes 'to the trehsurer dp, the 7th ult. tlie following letter 1 Sinot writing cm this 63rd ult. f have had further correspondence with Hie Midland company,' ([’ho tone of the Company’s letter is open to serious objeo. tion oh many grounds, es ecuily fts it eocuts to indicate an intention to iillpngi) the good faith of . tlie polony. Tb me they take up in fact the altogether new ground that the clause guaranteeing the Value t f tho find “ does'nrthing mord Unit express ili simply arid inteiligenflan&uage the terms of tho briglli il contract; and tlie understanding on wh'ch all the negdtia'ioijs have Jiecti carried on from the'first.” They comp'ain that the rejectin' of the' jdaui/e is a refusal to accept the expression ol this iindorsUnding in defini c language, and In order that there may ha no mistake as to the meaning. Th y contend, If the land on app’ying the test of the actual sale turns out worth only 5s per acre, tho only possible solution is to give them uore • nevertheless they deny that the Piause'ltra ’guarantee, oih that any legislation qs to Value will ever fo requited'at all. It did not teem io mo to be nCoesuirv trylntoi!«. re at thlslioe. I preferred forte ill the Company in ' My quiet language to th'i true potiliou, apd to ppinf put 'Hip inexpediency of asking Paillamcfit [o'(jo what life fiompany thpmselves say never would be wanted, -To tips t jiey now reply thot I heir argument is not r'gntly appreciated, but they repeat that the c ause is not a guarantee, ant) end l y throwing upon me the responsibility of ini jiting a 1 ’ y further proposals. As to Mr Avigdoi’s scheme, I need not refer to It any mere, as >t bad bom rt Jected by tbe Company. I a.» bound to say fbat T look upon the new phase into w'fiich'-Hie business has :io unexpectedly entered as being vfeVv grave.’ The <!jffic»ny;B iqsifion is c:rfahify a serious one, and they fhay hof be abjo tc help fchel(ispJv K a. yy jdttpry to yop Ipr <i longtimepaSf have oily hton ij ojjrftnicp; pf N e pii.'iip after anp.her in their financial negotiation i ,ipd ( aq, vpiy fipubtf|jl whether after such scores ol failures they wiil now be able to get tlie money at a'l without (he guarantee. I hardly think, indeed, that they wou’d have sent in such letteis as they have now done ■ ( they hc.d ccen any poepect of get ing the money b;i.add they m.-.y even find that they psnnpt' eg back'fo'fbo l}hfp of orcUm# g liud,trust. TtiS fiiiifjqeig pj(h wfjom they )taye dealjng demand the guiraniw, ilh! It gstll)) to bl'/'h ft l' e, V simple matter. "The Colony,” tney «ii', hyas jjrpmlsed to give land worth a million and a-qmrtcr, and what objec'im can there be to an engagement to mV’C that promise good to us, if tho land will sell fertile maxev?’ And having apparently made up tljefr ujiijiJs ;w to I*'iff tfie money without a guarantee of their interest, they will th'rfcty fpoh dUcuity in tho way fit Phi' dealings With npw peonTe thatrtffe Company may 1)6 brought to a (jtpdloplc. At any rate, let me assure you that the time has pfitpe WTl on the Government and Parliament should wako up their minds as to the limit they will go in the way pf tonpers’one, Ido not think I can.usefully attemul ■aw i>sV negutUtjonr myself until I.know exactly whldh of the many ay,, and which ot them, uesules the gua-autep. pro rejected, at all events, I am quite’ture that nothing whatever!) now possible l to the Company if the land is not allbwed to be made immediately available as a gqmilty. I ha o therefore fe't obliged to send you in the last fiw dpyp tv/6 telegrams, in wMoh I have endeavored to make The jiositii.n wjtrin reasonable 6< ibgraphia limits, and f ebai) await'yowr rejjjy with all the more anxiety on account of tfie extreme leluotance I have long had (as both the Company and the Government sro aware) to being charged with any nr-w responsibility lor tho negotiations. Yet I fjar U.ut t)i;rc is ‘no escaping from it now. Tho GovernthtSbt liuvc drafted a contract which the Gitnpany will not' exeente," 6liP 'fiPfiifiarjy have drafted one which the'Oovernment aanuofc adopt, ar,d we might go on for ever bmdjiig ameidnionts to and fro, were it not that the Company are’ in imminent .I .ngor of breaking down altogether, unless there Js new power to settle' here in London the concessions "that 7 fii»V turn oijl fo be absolutely ntcesfary for getting any more' money 'to go "an wyfji the lino.

Next is given a letter from the secretary of the New Zealand Midland Railway Company to thp Agent-General

1 Loudon, 2g‘h August, 1887. Sir,—My directors ore ‘duly in leCefpt of yduy Icljt-r, dated the 21st August, Jsß7) with reference' to the new contract that has been sent out to their represehtaiivps in New Zealand. 'My d) ecjtors would, iii the first place, qhj) yyp thit they consider the New ifid)apd Railway to po a' national pndprtak; jug, jpg) theyefore of moye' iipp'irtipce tfiaii an oydinarv eoiotweraisl aft} r. Tpey have jijjqerfaKen 11} • work in this spltP,' ana i„ £J;Jg epifj't fffey intend to carry it through. It is therefore with much regret and disappointment that they uotc the summary dismissal of a scheme which was produced in perfectly good filth; which was fair, clcay',' 1 apd hpsfnegs.like; which was based on the expressed views of tjjo ifew government, and which, as they are confidently jnform'epi, would hare led to such financial arrangements as would ensure the rapid construction of the railway. My directors think that such a document was at least worthy ol fair consideration, and of friendly consultation :'n order to remove doubts and difficulties, 'pfiby ay.o more impressed with this view, inaawjjcj} as yourlptfpr sfp.,aka of a gus.rgp.tee. If you will refer'anraiii to'fhe dflpjjmenl jtaMf ypu \v»jl <)nd no mention of a guarantee, and.ciiey'iisyp po wjsji to ask (or it.

My directors presume that the clause to which you o' ject is clause 3of the new contract. They have to observe upon that clause that It docs nothin;; more than express jn simple and intelligible language the terms of the aonuaU, apd qf tftp understanding upon which all the negotiations with reepegt to the building of the railway have been earned on from the first. The distinct refusal to accept the expression of this understanding in definite language, which is necessary in order that investors may know upon v.’hat basis they advance their money, must, to say tile least of if, havo a most unpleasant effect. The intent .on of the Now fceuland uovernipent as proposed in the earlier .stagto of tile negotiations was that land of the value of, 1,1,250,000 (taken at the value of land before the building of the railway) O’ Ofili be given to the Company as the railw ,y pro-■gr-iS'ed. 'Gorapicto surveys of the country were, h’lwcver, found to be absolutely warding, and many ’Opinions have bteou expressed by the 1 inhabitants of New Zeala'd with regard to the value of the land, some persona going so far as toeay that (he land Is perfectly valueless. (See Sir Robert Stout’s speech ) In this opinion my dirtotors jjp not concur. Subsequently, f n orqler to savb expense trouble, a valuation of the area withlh which the Company have the option of selecting lands was ipade by'the' S.urveyorGener.il and*aoocpted I Company, under which the Company will rebelvp 2,5,01,Cy0 acres to represent their L 1,260 000 in value. ’4 largprpqmber of acres had been suggested, but the Company wishingto raise no obstacle to the agreement, accepted the fien - e fixed by the Surveyor-General, and bis rough valuation of the respective biooks. It is impossible to ascertain with certainty the actual value of this land, and my directors are totally unable to conceive any valid objection to the proposed arrangement—namely, that if it is found that the 2,301,000 acres do not produce the minimum sum agreed upon, moro land should be given. This Je' nop- a gjmrantpo on l|ie part of the New Zealand Government. It is nothing more or less than an honorable effort to carry out an agreement by a simple and business-like method. My directors have referred to the rough preliminary notes of tome consultations which tcok piaqe | with yourself in December, 1880. These notes

intended to form the basis of a formal agreement, with the view of raising debentures on the security of the land. The negotiation was brought to a close by the arrival of contract No. 2 from New Zealand. The proposal would probably have .taken the form of a trust. The thieo first clauses of the memorandum road as follows 1. The New-Zeaiand Government to advance at once 1.000. acres out of the 2,500,030 acres 2. This land to be of a present saleable value of 1.500.000. 3. The Company not to sell the land at a price less than 10s per acre It is sufficiently obvious that the saleable value could only I. e ascertained by an actual sale, and that if on an ordinary and not forced sale, against which No. 3 clause provides, the land tumid out to be worth only 5s per acre, the only possible so ution would be the granting of more land or of better land. To this practical idea my directors have naturally reverted. O j motions are further raised in your letter, the first, that Parliamentary action will be necessary, Even if at any time Parliamentary action is required, it is not necessary that such action should be taken for years to come, and my directors have so provided in the contract. . . ~ , You were aware that ibis provision would ho inserted in the contract, and, as they understood, with your approval. My directors are decidedly ol opinion that legislation In respect to the value of tile land will never be necessary at all. The next ohj otion raised is one which my directors arc totally unah’e to follow. It appears to bo that the Company would sacrifice the land in order to arrive at the minimum sum that can be accepted, and that in consequence of this transaction no valuation and no measurements will be necessary. This proposition involves so many absurdities that it is difficult to deal with. It is manifestly the interest of the Company to sell the land at the best price possible after the value cf the land has been increased by the existence of the railway, So much is this the case that my directors would luyo thought that even suspicion itself on ■ the part of the most suspicious mind would hardly have entered here. All difficulty, however, on this head (if any should still exist in the mind ol any reasonable person) wou'd be removed by a very simple agreement, under which no land should be sold at an average price ot less than 10a per acre, except by public auction or with the consent of the SurveyorGeneral. Valuations, measurements, and other ariangetnents with regard to the transfer cf land will be necessary in any case, and that pdnt will not be further pursued. Tncsp observations answer the greater part of your letter, and my directors can only repeat thc-ir great regret at the grave mistake which appears by them to have been made by the stern refusal ol a ephemp which has been arrived at, after infinite pains and trouble, in order to secure the funds necessary for the building of the Midland Railway and thp development ol lands in New Zealand without any cost to the Co’ony, , Your Setter further goes on to speak ol Mr Avigdor. Jly directois hive had the advantage ol long cam: munication with Mr Avigdor, who, coming fresh from an interview with Sir Julius Voge}, has given the directors, so far as he was able, tbe vjaws cf the New Zealand Government with respect to the new contract. My directors have before them samp notes on this subject, made by Mr Avigdor after hia anival in England, and also the letter of yourself as Agent-General. These notes ol Mr Avigdor are useful to my directors, who note with satisfaction that there is a considerable difference between the opinions expressed by Mr Avigdor, recently arrived from New Zealand, arid bringing with him the mind of the Government, and the views expressed by yourself as the telegraphic opinions ol the Government. They trust that out of this divergence of expression some solution ol the pr sent uncertainty may ari e. My directors are somewhat puzzled to know whether, under existing circumstances, Mr Avigdor or the Agent - General is now in this respect the more accurately informed as to the views ol the Government. They have seen a memo, containing same rough suggestions, initialled by Sir J. Vogel, but these are in such a shape that it is impossible to deal with them for business transactions. Mr Avidgor very properly, in conversation, urged tgediftote'B toaob'-pftho proposals be brought, on the ground that they contained more advantageous terms to the Company than those contained in the new coni tact To this my directors have to reply that they do not wish for more from the New Zealand Government than is sufficient to enable them to raise the money for building the railway and to offer a lair comhiercial remuneration to the shareholder)). With these views, they are reluctant to reopen a difficult question' iff order to gam more advantages 'When siVflicifht (o ensjjfo the pohsttuKtion'Ojtiie railway Jias already been 'done ip the contract how sent to New Zealand, gut'they will bo ready to consider, jh the raojt' frienffly spirit, any proposals that you tpay make. The Company’s interests and wishes pnd those of tjie Government qre in truth identical. My directors havp also to observe tfiat the nasty reply and refusal on your part havp come beforp toe now contra ot can have po.-sj ,ly reached the Government in New Zealand, and without any opportunity having been given tor explanation and consultation. They still hope that after the contract has reached New Zealand the Government will see that it is one which Huy may reasonably and properly accept, and thereby secure the immediate expenditure of a large amount cf English capital in the Colony, together with the ftbuitturntfroeni of yorks at various points, as detired by the people cf New gealapd,

The Agent-General replies that one of the fundamental condicions of the existing contract is that’none of the land is to be deemed of less value than 10s »n aero. ! ■ Tlie secretary of the Company replies that the Company have done all in their power to tiheet tho views and'interests of the New Zealand Government, and must throw on the Agent-General the responsibility Of prolonged delay or increased expenditure in the execution of 'a' nation'll and 1 rrtatjpijegired um’.et taking. 1 The concluding document is S memo, by b,r J, Yogel dated 7th inst., addressed ,l Tomy successor.” It is as follows: ' '

the charge of the arrangement with the Midland Company hj s s been' in the hands of Mr Richardson and myself. Alter the Acb'was passed in IS-6 a new contract was framed; v.’ith the approval of the local Board of the Midland Company, but subject to the ratlflcatiMfi o* The {jfofno Jhe Home Board'were not able to ratify it, heiiausfe.jas they reji osented, and thi Agent-General confirmed, they could not, under iis terms, obtain the nceearary capital. The Board are composed of high cha r actered and Influential mm. The enterprise could not' ein better hands, and there is no reason to doubt but that they wish to proeerd Vrlth themilway, end will be content wi hj any ■ quitsblb aTtangetheniit that' will Cnat/la fhefil t) obtain the nCiessarjr ciditai'. ' NbgotiatiAns have been con(Shuoualy prooeeqingdnr'ri'graa'iy'rnontht.'' The'Agent(federal has actijf'for the pove hmept on thg basis of endpayorlnjr to jrrange \ylthjn the foqr corners pf the popprs glycp by tfm Legislature. fn fist the fioa-d sent opt Iff- alterations they fleered to qee made (n the omtraqt. In July one of the contractors for the Uidl'nd railway saw Ur Biohards n, and suggi s'ef modifications less onercin than those proposed by the Board, which ho th ught might prove acceptable. Mr Richardson and I so far approved of them as to saj that if the London Board were willing to adopt them he would submit them to the Cabinet, with a V)<;w to the Cabinet considering whether it tycfrjd rrcarnmci.d to parliament. This matter has ceased toThgye impprtrfhce; as t)ie Ifotpe fjoard did not adopt Ur Ayigqor’s giiggeptfohs. 'fn Augpst the Eqatd jtpepdpd and ipcil(fi.jd the altpnytfoi qfpr wi)ioh tiiay had previously te'ge;} and H f k’pd apgeptanpp by cable, but It was impossible of course to give such acceptance in tlie absence of the specific text of the alterations. The alterations proposed reached Wellington on September 19, but it was impossible to submit them $p the Government before the elections took ,piaoe, and after tb.fr clegtiops obviously the Government Cbold C.qt dps» yltj) th? te f Ur Richardson ana mysely ojd nop sifbmjt' {lieip for con: •.Mention, yho piatfpr, ffiprefey pipst be lift to our successors, tn referring <6 It [ wisj) to express the opinion (and Mr Richardson concurs) teat there should be no difficulty in putting the last proposes of the Company into a shape that will be satisfactory alike to the Colony and to the 0 mpany.

ty'he attractions proposed by the Mjdlapd ip draft of tjje ooptfijfit grp prosily indicated pi the AgentGeneral's letter of August 88, already given. In addition to those there are the following proposal^:—That the Company in selecting.their land shall not be compelled to do so on the (pjierngty block system; ,that_ the terms on ußlipH*- iftn r Hoafpr» spall’bp exercised, either by the Government on the l Owflpanys line or vice versa, shall be the payment by the party exercising such running powers to the other party 60 per cent, of the gross mileage and ft fpropOf'jaon cf all traffic receipts ,*' that the GoVernpjeni shall, 'at tfa request of thp Company, work any part of the line wßich is completed on the terms of paying to the Company 50 per cent, of the gross mileage receipts, and also a rebate of 10 per cent, of the receipts in yespegt to the traffic to or from the Company’s railways passing ovpr the Government lines; that land lib thdtvaMo or : LSO,ODO shall 'Jje specifically set apart and placed in the hands of trustees in respect to the Springfield-Brunnerten contract, and the same with respect to the 'Belsraye-seeitQP’fiaptiteot.