ME. VOGEL'S MISSION TO ENGLAND.

Wellington Independent, Issue 3293, 4 September 1871, Page 3

ME. VOGEL'S MISSION TO ENGLAND.

THE RAILWaITcONTRACTS. We continue our quotations from the Hon Mr Yogel's report of the results of his mission to England, by printing the passages referring to his negotiations on the subject of railways. Oa this subject Mr Yogel says : — Daring the whole of my stay in London, I was actively engaged in negotiations with Messrs John Brogden and Sons, respecting the construction of railways in New Zealand. Those gentlemen bad, prior to my arrival, arranged to send out an agent, with a survoying staff. Their object was to cause some of Ihe lines of suggested railways to be examined, to enable the firm afterwards to make proposals to the Government for their construction, should the preliminary examinations provo satisfactory. Messrs Brogden were under the impression that the Government would, in any event, defray the cost of their agent and his staff ; find, as I understand, the acceptance of that responsibility would bare been insisted upGn by the agent, as a conditionprecedent to the commencement of surveying operations by himself and his staff. Immemediutely after I arrived in London, Mr Alexander Brogden, MP. (the head of the firm), waited upon me, and asked whether I would advise him to send out the party, and ■whether I was prepared on behnlf of the Government to guarantee its cost. I replied that I was not" prepared to make any recommendation on the subject, or to guarantee the cost of the proposed expedition, because it appeared to me that were I to do so something like an understanding would bo established that Ma firm should have the first offer to construct the railways, and that therefore a very long time might elapse whilst his agent was making investigations or Burveys, during which the Government might be held bound not to take any other steps towards the initiation of a railway scheme. It was my impression (I told Mr Brogden) that the Government were so bent upon proceeding with railway construction, that they would not be prepared to enter into any arrangements which, from their very nature, would involve tediously protracted references to England. Besides, I did not see why the Government should be at the cost of the proposed surveys, since it was distinctly provided by the legislation of last session that the Government should have their own engineer and surveying staff. T added, that I should be prepared to consider proposals for an agreement, upon the basis of which somewhat more prompt measures for the construction of railways in New Zealand might be devised. Although negotiations wore uninterruptedly continued, it was only after very great diflities on both Bides that the agreements were signed. I hand to you herewith the agreements ns signed ; together willi a letter from Mr J. Mackrell, the solicitor who acted for me throughout the negotiations, and who was recommended to me by Mr Magniac, M.P. : and also a letter from the gentleman who throughout acted as my counsel — Mr Charlos Dcnnistoun Wood, formerly Attorney-General of Victoria. I may with confidence assert that I have, on behalf of the Government, concluded an arrangement highly favorable to the colony, but one which should entail upon it tho exercise of great forbearance and encouragement towards the contractors, who, I am convinced, would not have concluded the arrangement, bad they not calculated upon tho Government affording to them all reasonable consideration and aid. The Government have the power of choosing between tho two agreements, and of adopting either or both of them, and, whichever decision mny be como to, it will be absolutely binding on the contractors. In negotiating with' Messrs Brogden, I look care that one of tho contracts should be such as to bo completely within tho limits of tho discretion already entrusted to the Government by the Assembly ; so that, whilst the commencement of wxirlca should be secured, the adoption of

tho larger contract Bhould be a matter upon which the opinion of tho Assembly could bo taken. It did not escape my consideration that, possibly, tho Assembly might prefer to enter into specific arrangements for the construction of particular railways, but, obviously, it wasnot in my power to make any such arrangements. The agreements as signed, however, not only leave to the Government absolute discretion as to the railways to be constructed ; but, from tho very nature of tho agreements, I have pleasure in stating, that should the Government prefer, in lieu of them, or of either of them, to make with Messrs Brogden specific arrangements /'or the construction of particular railways, there will be found, on the part of those gentlemen, every disposition to consent to such a course. In reality, therefore, what has been secured for the colony is —power for the Government to secure the construction of railways under the provisions of either or both of the agreements, or tho holding of a position which enables the Government to ask Mesars Brogden to substitute for the agreements specific arrangements for the construction of particular railways. At New York, I received a telegram from Mr Alexander Brogden, M.P., stating that he would leave England for New Zealand on 23rd August, and asking that the decision between tho agreements should be deferred until after his arrival in the colony. On receipt of that telegram, I telegraphed to Mr John Morrison, authorising him to inform Messrs Brogden that, although I was not able to say that the decision would be delayed, I felt sure that the desire of the Government would be to show to the contractors every consideration consistent with the interests of the colony. In order that the Government might not be prejudiced if they delayed their decision, I asked Mr Morrison to consult Mv Mackrell; and to got him to procure from Messrs Brogden such tin undertaking as would, in the event of the Government consenting to await Mr A. Brogdcn's arrivul, secure that the rights of the Government under the agreements should not be in any way prejudiced or jeopardised. On reaching San Francisco, I received from Mr Mackrell a telegram stating that Messrs Brogden had given such an undertaking as left tho Government free to decide at onco between tho agreements, or to delay the docision. I may observe that, compared with the terms offered for the large number of colonial and foreign railway enterprises that are being floated in the London market, the agreements made with Messrs Brogden are very favorablo to the colony ; and I feel sure tl.at, with proper precaution?, they will lead to the construction of railways upon advantageous terms. It may be found desirable to make somo alterations in tho agreements ; but I must repeat my conviction, that any wish in that direction on the purl of the Government will be readily responded to Messrs Brogden, who to the last expressed themselves strongly as to the terms being ralhcr harsh towards them, and hs to their hopo that agreements would bo so worked out as to put them iv as favorable a position as possible for giving effect to their various provisions I hare received from the Bank of New Zealand an acknowledgment of the deposit by Messrs Brogden and Sons of securities to the value of £25,000, for the due performance oi the agreements. Under the terms of the agreements, Mr John Henderson, C.E., Messrs Brogdon's representative or agent, has accompanied me to the colony ; and with him are Mr C. N, Bell, C.E., and Mr J. G. Deeß, surveyor. I have the honor to state thut through the progress of the negotiations with Messrs Brodgen, Mr John Morrison, agent in London ior the Government, rendered me most cordial and zealous assistance, and that I have written to him thanking him for the sume. ANTICIPATIONS LAST SESSION, AND THE TEEMS OF THE CONTRACT. No doubt, very much interest will be manifested in comparing the arrangement now entered into with Messrs Brogden, with the anticipations expressed last session as to tho nature of the terms on which it would be possible to secure the construction of railways in New Zealand. It will be remembered that those anticipations were largely based upon somewhat unreliable evidence — ouch, for example, as newspaper reports and brief sketches of the nature of certain arrangements proposed by othor colonies. lam convinced, by inquiries which I instituted in London, thut we formed a somewhat too favorablo estimate of the terms upon which we might secure the introduction of a large amount of capital for constructing railway?, under either a system of guarantees or of land subsidies. We were under the impression, for instance, that a railway was to be constructed in Tasmania upon a bare guarantee of five per cent. Although, on the surface, this will appear to be the fact, I am led to believe tint there are in tho agreement collateral provisions which materially alter its nature. Thus, as I am told, something like £25,000 for preliminary expeuscs and what is sometimes called "promotion money," is to be put down to cost of construction. Further, I am informed that tho gentleman who are entering into tho arrangement at home, have sent out to the colony insisting on a provision to the effect that the amount of discount at which they ' may find it necessary to dispose of shares or other securities, shall be considered as a portion of the construction money. I do not mention these things with any view of reflecting upon the agreement made by Tasmania : 'I merely desire that New Zealand should understand that the assertions so freely made that the construction of railways could easily be secured upon a five or a five and a hulf per cent guarantee, may be very much affected by other provisions contained in an agreement, the basis of which appears to bo simply such a guarantee. Many foreign and colonial railway enterprises are being brought out in the London market upon terms which wholly put in the shade so low a guarantee as that just stated. After I left England, I received from Mr John Morrison, copy of a prospectus of the Wellington, Grey, and Bruce Railway Company, of Canada, announcing the intended issue of £71,000 seven per cent first mortgage bonds, in which it is stated : — " Taking into account the dates of tho payment of the instalments, and the fact that the full hnlf-yenr's interest will be allowod on Ist January, 1872, the pvice of issue is in effect reduced to 88J. At this prico the bonds yield 8 per cent to the investor, in addition to tho advantage arising from the redemption fund provided undor tho agreements with the Great Western Railway Company, by the application of which tho whole of tho bonds will probably be paid ofl" at par within fourteen years." LAND CHANTS IN PAYMENT. In respect to tho construction of railways for land grants, I have to observe that J. am very doubtful whether we are likely to be able to arrange for the construction of any railway for such grants only, upon any approach to terms that would be deemed admissible. One of tho alternative agreements with Messrs Brogden does, us the Government will observe, provide for an arrangement bused on land grants, coupled with a guarantee ; only onefifth of the land to be granted King such us would be classed as "good" land, tho rest being such as it may suit tho convenience of tho colony to part with ; and there being a clear understanding that the two million acres which it was proposed to give for tho Nelson Railway might be included in the amount. Should it not bo desirable to part with tho Nelson land, and with other land of the eamo character, I do not doubt but that Messrs Brogden would consent to receive a very much smaller quantity of good laud. The laudgrant element iv this arrangement is no doubt of very much importance, inasmuch as it represents tho profit which Messrs Brogdon hope to mako, tho cost of tho railway being otherwise minimized as much as possible. Had I proposed that railways bo constructed wholly for land grants, I should have had to give, in some f^rm, a guarantee as to tho value of the k.nl to be parted with. You are aware that last year Messrs Brogden negoti-

ated for the construction of a railway in Nelson province, which was to bo paid forv wholly in land. The land was exclusively of a mineral character, and tho arrangement into which Messrs Brogden proposed to enter — but which was not carried out — really amounted to this : that, except in respect to a short railway to tho coal mine, they were to take three years to examine into tho character of the country, or, in colonial phrase, to " prospect" it; and that, at the end of three years, they wore to be at liberty to proceed further in tho matter, in which event they were to be compensated for tho expense to which they had been put, by being allowed to select 5,000 nerds of land free of cost. So that, in realty, what tho Nelson railway agreement would have effected would have been this : — Messrs Brogden would have incurred the outlay necessary for examining and surveying tho country through which the railway was to pass, they having three years for tho purpose ; and in tho event of their concluding that it was not worth their while to proceed with' the works, they were to bo recouped their expenses by a free grant of 5,000 acres of land. Thus, although tho arrangement might have led to the construction of the railway for land grants only, it would not have done so unless Messrs Brogden became satisfied that tho land they would receive was specially valuable on ac count of minerals ; and therefore the agreement was not of a character to como within the ordinary moaning of the phrase, " railway to be constructed under land-grant system." I am not taking any exception to tho proposed arrangement. On tho contrary, it was dovised with much care, find would in any case have led to the opening of the Brunner mine. No doubt, railways havo been, and are being, constructed under a system of land grants in other parts of tho world ; but in such cases the land subsidies given are enormous, the contractors are unfettered as to tho character of tho railways to be constructed, and considerable grants of money aro indirectly obtained.

I am doubtful whether the extent of land available in New Zealand is sufficient to pluce tho colony in tho position of obtaining the construction of railways for land grants only ; although I do not doubt that such portions of land as can be spared for tho purposo may bo employed as useful adjuncts in obtaining tho railways wo require.

In pursuance of instructions received from the Government, 1 have, as already reported, engaged as engineer, Mr John Curruthers The engagement will, I think, be satisfactory to tho colony ; but in the event of its proving otherwise, tho cost of rescinding tho engagement will not be very serious. Mr Carruthers was vory highly recommended, and I have no doubt that his services will bo found most valuable.