THE WAIMEA PLAINS RAILWAY CORRESPONDENCE.

Otago Daily Times, Issue 7287, 25 June 1885, Page 3

THE WAIMEA PLAINS RAILWAY CORRESPONDENCE.

(FEOM ODE OWN CORRESPONDENT, i

Wkllington, June 24,

A correspondence relating to the negotiations bstween the Govornment and the Wairaea Plains Railway' Company for the purchase of the line waa laid on the tablo today.- All the correspondence Ims been published, excepting tho last letter from tha Colonial Treasurer to Mr Laary, secretary of tha company, dated IGSh June, and which is as follows : — "I have the honour to acknowledga receipt of your letter of the 11th Juna in reply to mine of the 31st March. You must not suppose because tho Government looked upon the transaction as a commercial one that therefore they would not sympathise with the shareholders in any losa they might sustain. The conditions of the purchase, not the effect of it on the [shareholders, were what the Government had to consider. In making the purchase tho Government had to determine what terms would bs likely- to bo acceptable to Parliament. "You will, I hope, permit me to say that tho calculation you have been kind enough to furnish of the position the Government would ba in if they accepted ytfur offer ia totally incorrect. Passing over tho fact that it is based oa the principlo that tho Government can borrow money cheaper than a private corporation—a fact which might equally be urged in favour of Government buying up every bueiness in the Colony—your figures are quite erroneous. They are founded on the assumption that tha Government can pay off (he whole purchase money by rcooey borrowed at 4 por cent., whereas aa a great deal more than half tho amount you ask ia represented by debonturea with a long currency, on which the interest isovor 6 por cent, which the Government would oithor have to continue to pay or give a vory jargo premium to redeem the debentures before their due dato. This disposes of the calculations you furnish. " With regard to the question of the cost of the railway, I am unable to sco that a mistake which presses injuriously on the Government and on ratepayers, should not bo as much open to remedy £3 mi3takeß of legislation, of I which you have bo bitterly complained, which affected the company. The company, which baa asked for a retrospective measure to enforce its liability against the ratepayers, can hardly deny the right to remedy a false' valuation. That the valuation waa a mistake is beyond question, because it was based on an estimate of work by the engineer^ some part of which waa never constructed. You £»y that some other works were done instead, and tha cost of the railway stands in your books at a little over tho amount of the guaran tee. Tiiia ia ft mere coincidence. It ia certain that the Government guarantee baa bean based on on erroneous conclusion. Tho fact of the Government having paid for three years _an excessive amount eurely does not bar its claim to aEk for re consideration. But you stato that the itmount is not exCoSsivo, and that you ara willing that the cost, aa it stands iv your books, should bo examined by an impartial person. This is a fair offer, which it will bo for tho Minister for Public Worka to consider, It is theoretically impossible that the mistaken estimate •on whicb tho present guarantee i 3 grounded may, by a coincidence, be wide of what a proper estimate would ahow, " But the question of examination w really .prefaced by oco of principle. The cost, as it stands in your books, includes interest and financing. The Government contend that thesa charges have no business to be taken into account. They read (he Acts to mean that tho company, when it has completed the railway, is thenceforth to enjoy a guarantee, but the coat to dato is the cost without interest. If shareholders, instead of applyiug share capita!, elect to obtain mocey by financing, they must pay for it, and not include it in the coat of the railway. That is tho view of the Govornment, and until it is settled by an inspection of tho books of the company— unless the point wore left at discretion—wo would ba un?.ble to corns to a conclusion.

"The Minister for Public Works has not considered that ha has the power to insist on a re-estimate, so that be has issued his procept for tho deficiency on the working for the year ending 31st March 18S5. You ask mo to forward to you the amount duo to yon under it. If the. Auditor-general, under tho circumstances, in contented to pass the payment I shall be content to abide by it, subject to tho right of tbe Treasury to claim in the future a return of any part thnt may bo found to bsexcessive, on account of the erroneous guarantee, Should that guarcnto-s be amended, I agree with you that if tbo company prefer keeping their property the Government should bring no pressure on tbem to soil. ''I have replied to your letter because it was addressed to mo, au was naturally tha case, because bsing in Dunedin I wrote to you on tha subject during the negotiations which were pending. The matter is, however, aow in the hands of tha Minister for Public Workß, who informs me that tbe correspondence will bo laid beforo Parliament." ■