MEMORANDUM BY MR. ORMOND.

Hawke's Bay Times, Volume I, Issue 7, 15 August 1861, Page 5 (Supplement)

MEMORANDUM BY MR. ORMOND.

The question of the basis on which- the case of the apportionment of the debt of the Province of Wellington between the original Province and the Province of Hawke’s Bay should be grounded, is one on which, considering the peculiar .circumstances connected with it, the of the two Provinces were scarcely likely to come to any definite or mutually satisfactory conclusion. Hence it has been agreed to refer the whole matter to an impartial referee, with a view to obtaining an opinion as to what is an equitable basis on which it may he referred for final settlement to arbitration.

In stating the case of the Province of Hawke’s Bay, I will premise that all that is sought on her behalf is, that it shall be referred to arbitration with no other guarantee than that a fair and equitable consideration shall be given to the position in which she stood to the Province of Wellington prior to separation, and the circumstances under which so far as she was concerned, the loans comprising the debt were effected. Also, that due regard should be given to the fact that the district derived no benefit from these Loans, and also that the Province of Wellington, prior to separation, received a large amount from the land revenue of the district of Hawke’s Bay, of which a very small proportion indeed was expended for the benefit of the persons who contributed it. At the same time, as regards the security of the public creditor, Hawke’s Bay is aware that she is responsible for these Loans, and fully endorses the opinion expressed in Lord Carnarvon’s despatch of the 6th May, 1859, where he writes:—“Now whatever may be the equitable rights inter se of the old and new Province fa question which appears to depend greatly nn the mode in which the loan was ex-

pended) it is clear that the Creditor lent his money on security which the Borrower had at the time of the contract a right to pledge &c., &c.” (See Enclosure No. 2, Page 18.) i I will now endeavor as briefly as possible to give such information as I consider necessary to put the referee in possession of the facts and bearing of the case, as far as I can do.

First.—As to arbitration, I enclose a. copy of a Bill passed this session for the purpose of apportioning the public debt of the Province of Otago between the Provinces of Otago and Southland. (Enclosure No, 1, Copy of act to apportion the Public Debt of Otago

|&c.,&c.) With the exception of clause 15 [relating to “ When Apportionment to take effect,” which, in the case nownuder consideration, would necessarily require alteration. I see no reason to object to any principle - contained in that Bill, and would gladly accept similar conditions on behalf of the* Province ; of Hawke’s Bay, I would also point out that in the case of Marlborough (See Marlborough and Nelson Debt Apportionment Act passed in 1860) as well as that of Otago and Southland, no objection has been raised by the Representatives of those Provinces to refer then- case- to arbitration, and that the House-of Representatives has recognised the fairness of principle of this mode of settlement by passing the two acts referred to. Next.—As to the position in which the district of Hawke’s Bay stood in relation to the province of Wellington prior to the date of separation, I would refer to Enclosure N o. 2 (Enclosure No. 2, Account of proceedings of Hawke’s Bay settlers prior to separation, with reference-to expenditure of Land Revenue, liability for Loans, &c., &c.) which contains a full statement of all the steps taken by the settlers iu endeavoring to secure the expenditure in their own district of a fairshare of the Revenue they contributed, and also of their frequent and earnest protests against being made liable for loans from which they foresaw they would derive no advantage and against which they therefore took every constitutional means of protesting and objecting. Referring to the statement of account as between the Province of Wellington and the district of Hawke’s Bay which will be found in page 18 of. Enclosure No. 2, I find on enquiry that that account is incorrect. An examination of the statements of expenditure in the Province of Wellington for the years 1854-5-6-7-8, shows that the sum of >£7,919 4s. was expended on public works in that district instead of 5,075 3s. 2d, as there stated. I enclose a copy of a return obtained from the late Colonial Treasurer, (Enclosure No. 3, Return of Expenditure on Public Works during the years 1854-5-6-7-8) which shows the total expenditure on Public Works within the Province of Wellington during that period, which will substantiate the statement above made, and from which, as the different objects on which the expenditure was incurred is shown, it will be-easy to determine whether Hawke’s Bay has derived any advantage from such expenditure. Before leaving the subject of the pamphlet I would express my opinion that the statement of account (page 18) before referred to, is further deficient, in having provided for no share of the ordinary expenditure of the Province, which amounted in the period referred to to £68,416, being borne by the district ofHawke as, beyond a-doubt is both fair and reasonable. Also, that no allowance is provided for any advantage the district may have derived from Immigration and Steam, on which £41,300 was spent during the same period, and for the payment of a fair share, proportionate to advantage received, of which Hawke's Bay is undoubtedly and equitably liable. With the exceptions I have named I believe the statements contained iu the pamphlet (Enclosure No. 2) to be correct. I also enclose an Abstract of the Receipts (including Loans) and Expenditure of the Province of Wellington for the five years ended 31st December 1858. (Enclosure No. 4). From this return it will be seen that the total expenditure within the Province of Wellington during that period amounted to £262,342 but of this sum about £14,000* was expended in the district of Hawke’s Bay —credit being also given to Wellington for the share Hawke’s Bay was obligated to contribute to the ordinary expenditure of the Province, Immigration and Steam. At the same time it should be remenbered that tire contribution of that district in the shape of Revenue for the same period, amounted to £47,859 (See Enclosure No. 2, pages 13,17, and 18), cash on account of Land Revenue and Customs, and Scrip orders to the extent of £8,275. It cannot then, I submit, be shown that the district of Hawke’s Bay received anything like an equivalent to the amount she subscribed to the Provincial Treasury ; still less can it be shown that any share of the Loans for which Wellington seeks to make her liable was expended for her advantage, whilst proof is not wanting that the inhabitants of Hawke’s Bay took every legitimate means in their power before these Loans were either negotiated or expended, to protest against being made liable for them-.. In reference to the Loans themselves I append the printed correspondence laid before the House of Representatives (Enclosure. No. 5). From these papers it will be seen that not only has no regular statement of account been furnished by the Superintendent of Wellington, but that referring to his letters at pages 5 and 7, a considerable difference exists in the indefinite demands made in these let-

ters. In the letter, page 7, claim seems to be made for interest on a debt .£IOO,OOO consisting probably of the Loans negotiated with Messrs. Gladstone & Co. and the Union Bank of Australia for £50,000 each. On a reference to the return which I enclose (Enclosure No. 6, Statement of Wellington Provincial debt), it is manifest that up~to the 3lst December 1858, (/.<?., two months after the date of the separation of Hawke’s Bay, Nov. 1, 1858) the amount of those Loans then taken up, was Gladstone &Co £32 800 0 0 Union Bank ... 36!55313 IB There was also a balance of old Debentures amounting to 6,475 0- 0

.670,128 13 11 —From this statement it would appear that £7(3,000 was the’total sum raised, and perhaps expended,not only on account of the£loo,ooo Loan, but bn all other accounts up to the 31st Dec. 1858; and as all expenditure by the Provincial Government of Wellington . in Hawke’s Bay ceased immediately after separation (Nov. Ist 1858) it is difficult to imagine on what grounds the claims contained in the letters before alluded to can be substantiated.

Referring again to the printed correspondence (Enclosure No. 5) it ts frequently stated —see pages I, 7, &c.—that the 15th clause of the New Provinces Act provides for the apportionment of the public debt, as between the old and new Province, on a certain fixed basis. I would submit that the clause in question was inserted to provide for meeting the interest on any such public debt for the period that might elapse between the date of separation of any province and the next meeting of the Assembly; when the final apportionment would, as it has in the cases of Southland and Marlborough, be provided for. The evidence of the framers of the New Provinces Act, will, I believe, substantiate this reading of the clause, which the practice in the case of the other New Provinces has confirmed. I need only point to the journals of the House of Representatives for 1860 to prove that it was not owing to supineness on the part of Hawke’s Bay that a final settlement of this debt question was not' effected during that session. I have omitted to state that there are certain claims on the part of Hawke's Bay against the Province of Wellington for refunds, &c., the particulars of which I am not in possession off. The next mail from Napier will, I expect , bring the information necessary to enable me to make a statement of such claims.

On any points that I have omitted to furnish necessary information, or where my statements require further explanation, I am always at the command of the referee. Auckland,

July 22, 1861. P.S.—I have endeavored to state the case as I hold it in equity, without referring to many legal points and difficulties that I could have adduced. •This sura is made up of 7,0197 expended on public works see Enclosure No. 3, and lor the Balance see page 17 and 18 of Pamphlet, Enclosure No. 2.