THE MIDLAND RAILWAY CONTRACT: PROPOSALS FOR A NEW CONTRACT, AND CORRESPONDENCE RELATING THERETO.

Appendix to the Journals of the House of Representatives, 1893 Session I, D-06

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1893. NEW ZEALAND.

THE MIDLAND RAILWAY CONTRACT: PROPOSALS FOR A NEW CONTRACT, AND CORRESPONDENCE RELATING THERETO.

Laid on the Table by the Hon. Mr. Seddon, with leave of the House.

No. 1 The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— No. 156, Worcester Street, Christchurch, N.Z., 15th March, 1892. I have the honour to inform you that financial and other circumstances beyond control render it expedient for the company to apply to the Government for an extension of the contract time for finishing the New Zealand Midland Eailway. The contract time is 1895, and I have to request that the date for completing the East and West Coast Section—viz., from the end of the Springfield contract to Jackson's Station, may be extended to 1898—that is, three years ; and that the Nelson Section —-viz., from Eeefton to the end of the Belgrove contract, may be extended to 1900—that is, five years. I beg to refer you to clause 42 of the contract, which empowers the Governor in Council to extend the contract time for completing the railway if satisfied that the delay has not been caused by wilful default or neglect of the company. I have the honour to submit that the possible failure to complete the railway within the stipulated time has in no way been caused by " default or neglect " of the company; on the contrary, every effort has been made by it to carry out the works within the stipulated time for completion. I must draw your attention particularly to the following circumstances which have been beyond the control of the company. (a.) The loss of time caused by the protracted negotiations for the revision of the original contract of 1885, and passage into law of the subsequent contract of 1888. (b.) The low status of New Zealand credit on the London money market at the time of forming the company, which rendered a large issue of capital at that time impossible. (c.) From the same cause—lowness of New Zealand credit—the issue by the company of £745,000 of debentures was made with great difficulty, and under restrictions as to new issues until this money was expended on works. (d.) The company's works were much delayed in reference to the subsequently obtained deviation at Lake Brunner. The delay to works for ten months, and the protracted opposition to an improvement in the railway, seriously affected financial operations, and produced adverse criticism in London on the bona fides of the colony ; and consequently postponed finance until the Argentine troubles and the Baring failure rendered these operations for the time impossible. (c.) Further delay has been caused by having to wait for the consent of the Governor to the substitution of the Incline Line for the summit tunnel at Arthur's Pass. Consent to this substitution, as provided in the contract, was asked for in August, 1891, and, although it was pointed out at the time that any further financial arrangements were impossible until the required consent was obtained, the company have not yet received the reply to their application. In asking for this extension of the contract time, which is necessary to meet the requirements of financiers and to assure them that the company will be allowed to finish their works, I must point out that it is the intention of the company to hasten the completion of the railway to the utmost of its ability. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington

No. 2. The Under-Secretary for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 30th March, 1892. Sir, — Be Midland Bailway : Proposed Extension of Contract Time. I am directed by the Minister for Public Works to acknowledge the receipt of your letter of 15th instant, applying for an extension of the time allowed by the contract for the completion of the above-mentioned railway, and in reply to state that the matter will receive due consideration when the appropriate time therefor arrives. I have, &c, PI. J. H. Blow, Eobert Wilson, Esq., C.8., Under-Secretary for Public Works. General Manager, &c, New Zealand Midland Eailway Company. Christchurch. I—D. 6.

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No, 3. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. No. 156, Worcester Street, Christchurch, N.Z., 2nd April, 1892. Sir, — Proposed Extension of Contract Time. I have to acknowledge the receipt of your letter of 30th ultimo, stating that the above question would receive consideration " when the appropriate time arrives." In reply, I must point out that for financial reasons it is essential that the extension of time should be granted at once. It is impossible for the company to proceed with any financial operations unless the contract time is sufficiently extended to enable them to show financiers that there is ample time to complete the works. This is a necessary precaution, even though the works could be finished in contract time. You will note that there is a provision in the latter part of clause 42 of the contract that such extension may be made, although the time to be extended has not yet expired. I must, therefore, urge upon you the necessity of giving the matter your immediate consideration and of letting me have a definite.reply, that I may cable to my directors, as no further financial arrangements can be made by them until this extension of time is granted and the consent to the Abt Incline received. I have, &c, • Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company, Limited. The Hon. Minister for Public Works, Wellington.

No. 4. The Under-Secretary for Public Works to the General Manager, Midland Eailway Company. (Telegram.) Wellington, 6th May, 1892. Minister directs me to reply to your telegram of 3rd instant that proposal to extend contract time is very important matter, requiring grave consideration, not only of Government but probably of Parliament. H. J. H. Blow, Under-Secretary for Public Works. General Manager Midland Eailway Company, Christchurch.

No. 5. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 13th October, 1892. In reference to our interview to-day, relative to further negotiations on the company's financial proposals which were made the subject of a petition to the House of Eepresentatives during the past session, and on which the Public Accounts Committee duly reported, to meet the objections raised by the Committee to a guarantee of interest, I now submit modified proposals on the basis of the Government purchasing the company's land-grant, and thus freeing the large area at present reserved for selection by the company, such purchase-money to be applied to the construction of the railway, and enable the company to finish the East and West Coast Eailway between Canterbury and Westland without further delay. In explanation, I must point out that the amount of land-grant defined under the company's contract for the section of railway between Springfield on the East and Brunnerton on the West Coast is £750,000 worth of land, estimated at B 1 waste-land value. Of this amount the sum of £648,250 is allocated to the line from Springfield to Jackson's, a point on the West Coast Eoad, and is the section which, when constructed, will complete, with the works in hand, the railway connection between Canterbury and Westland. Out of the sum of £648,250, £30,000 has been already paid to the company as land-grant on the Springfield to Patterson's Creek Section, leaving a balance of £618,250 B 1 waste-land value for the remainder of this section to Jackson's. This sum, worked out at the rate of 10s. per acre, gives a total of 1,236,500 acres. The sale of this acreage to the Government, and freeing the whole land-grant reserve, is the subject of these modified proposals. I have to point out that great stress has always been placed upon the fact that the.construction of the company's railway would greatly increase the value of the western lands, by developing the timber and coal trades, and that all increased value would be a large profit to the company. In offering to sell the land-grant to the Government, and in fixing upon the price of such a sale, due consideration must be given to the great increase in value which will be given to these lands by the construction of the line, and the company justly looks for a large increase over B 1 waste-land value being granted to them in adjusting these prices. To arrive at the total sum to be paid by the Government to the company for the land-grant, the acreage available is divided into eastern lands and western lands. The construction of the line will greatly increase the value of western lands, on which there are valuable forests opened by the line, valued for timber alone at £2 to £5 per acre for royalty. The timber and coal under normal circumstances would have been the most valuable asset of the company, so in fixing the selling value of this land these products must be fully considered, as they are only rendered valuable by the railway being made. It is therefore necessary to allow for them in calculating an acreage value for the western lands.

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The company have hitherto selected most of the lands earned by construction from the eastern lands; they being more readily saleable, the exigencies of finance required the conversion of landgrant into cash. It is therefore assumed that the company would in future select western lands in larger proportion, as the profits from the increased value would be much greater than those on the eastern lands. I have the honour to submit the following proposals relative to prices at which the company would sell the land-grant to the Government. These proposals are subject to approval of my Board of Directors :—■ The B 1 value of £618,250 is proposed to be allocated as follows :— JEciStBTIZ LICbTbCbS ■ £ 237,800 acres B 1 value, 10s.; selling value, 20s. (? 12s. 6d.) ... = 148,625 Western Lands, with Goal and Timber rights — 764,300 acres B 1 value, 10s.; selling value, 20s. ... ... = 764,300 30,000 „ „ 155.; „ „ 30s. ... ... = 45,000 94,700 „ • „ 205.; „ „ 40s. ... ... = 189,400 Bl value, £618,250.—Selling value, £1,147,325 It is suggested that the payment for the land-grant should be made against the certificates for work done in connection with the construction and administration of the East and West Coast line. A similar trust to that adopted for the Springfield and Nelson Sections might be arranged, to carry out the sale and purchase of the lands and payment to the company. Purchase payments might be made to the trustees in Government Stock (3-J- per cent.) at current market prices, and the trustees convert this stock into cash to meet the payments to the company. With the view of overcoming all past difficulties and adjusting all claims and differences between the Goyernment and the company, it is suggested that a new contract should be entered into between the Queen and the company. In this new contract there should be new clauses to cover the following conditions: — (a.) The bush lands on the W T est Coast to be exempt from graduated land-tax. (b.) The company's debentures to be exempt from income-tax, at least during the time interest is being paid out of capital, (c.) Local taxation only to be applicable to the company in such districts as are affected by the traffic of construction, and only during the period of construction. (d.) The schedule of maximum rates and fares chargeable by the company is not to be increased or reduced without the consent of the company. The rates and fares are not to be dependent upon the charges made on the Government railways as at present. (c.) The land-grant earned by construction and pledged on the sections under construction to remain the property of the company, although not yet selected by the company. (/.) The construction of the line from Eeefton to the end of the Belgrove Section not to be compulsory on the part of the company, but may be left for future negotiations. In the event of the Government purchasing the land-grant, as set out in these proposals, the company would be in a position to complete the East and West Coast line without further delay. The following statement of estimated cost of works and other expenditure indicates the financial position, and the further capital necessary : — £ Cost of works from Springfield to Jackson's, including extra cost for alterations on incline ... ... ... ... ... 1,090,500 Administration, and further interest on debentures to be provided during construction ... ... ... ... ... 150,000 1,240,500 Extension into the Motueka Valley at the Nelson end ... ... 30,000 £1,270,500 East and West Coast land-grant purchase price ... ... 1,147,325 Belgrove extension: land-grant, 15,000 acres at 10s., and increased to£l ... ... ... ... ... ... 30,000 £1,177,325 This leaves £93,175, or, in round figures, a further sum of £100,000 to be financed later, by the company issuing preference-shares or debentures when progress with the works has created the necessary security to enable them to do so. I trust these proposals will receive the early and favourable consideration of the Government, as it is imperative for the company to take immediate action relative to the present financial position, and its legal rights under the existing contract. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

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No. 6. The Under-Secretary for Public Works to the General Manager, Midland Eailway Company. Public Works, Department, 18th October, 1892. Sir,— Be Midland Bailway : Proposals for a new Contract. I am directed by the Minister for Public Works to acknowledge the receipt of your letter of the 13th instant, making certain proposals for a new contract to facilitate the construction of the above-mentioned railway, and in reply to state that the Government is unable to see its way to entertain the same, as they appear to the Cabinet to be quite unreasonable. I have, &c, H. J. H. Blow, E. Wilson, Esq., C.E., General Manager, Under-Secretary for Public Works. New Zealand Midland Eailway Company, Wellington Club.

No. 7. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 19th October, 1892. I have the honour to request the Government to favour me with a definite reply to my letters asking for an extension of the contract-time to complete the railway. I am in receipt of a cable from my directors asking for this information, I trust the Government will, therefore, reply without further delay. I have, &c, Eobert Wilson, ■ ' ' Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

No. 8. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 19th October, 1892. I have the honour to acknowledge the receipt of your letter of the 18th instant, declining the proposals contained in my letter of the 13th instant. I regret the Government will not entertain the offer submitted. It would have greatly facilitated negotiations and a speedy settlement of the present difficulty had the Government suggested other methods of dealing which would be acceptable to them, and such as they would be prepared to place favourably before Parliament, instead of confining their communication to a refusal of the terms offered. As it is the desire of the company to arrive at a basis of agreement satisfactory to the colony, and one that will enable the company to proceed with the construction of the railway between the east and west coasts without delay, I have now the honour, on behalf of the company, to submit further and modified proposals on the basis of the Government purchasing, by the issue of bonds, the balance of the land-grant for the section of railway between Springfield and Jackson's. The following proposals are subject to the approval of my directors : — Modified Proposals. The company to consent to the release of the entire reserve land area, and are to sell to the Government the balance of the land-grant available for the East and West Coast section of the railway, amounting to £618,250 B 1 waste-land value, for the sum of £772,812, being an increase of £154,562, or about 25 per cent. The colony to guarantee interest at 3J per cent, on £250,000 new share capital to be at once issued by the company. It would then be enabled to raise the balance of the capital required to finish the line by debentures, secured on the line constructed out of the new capital and the landbonds. It is proposed that the extra expenditure of £30,000 at the Belgrove Section should be endowed with a land-grant of £15,000 B 1 value, in a similar manner to the grant for Springfield and Belgrove Sections under the present contract. The other questions relative to taxation and traffic charges mentioned in my letter of the 13th instant, I suggest, can be discussed fully at a later period. I must request the Government to give their earliest consideration to the main proposals relative to finance, and shall be obliged if they will state in reply what modifications, if any, they wish to make these proposals acceptable, and to enable me to submit some definite offer to my directors, with a view of arriving at a conclusion relative to the future action of the company. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

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No. 9. The Under-Secretary for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 22nd October, 1892. Sir, — Ec Midland Bailway : Proposals for a New Contract. I am directed by the Minister for Public Works to acknowledge the receipt of your letter of the 19th instant, containing modified proposals for a new contract to facilitate the construction of your company's railway. In reply, I am to state that the proposals have been fully considered in Cabinet, but I am to express the Minister's regret that they are still regarded as of too unfavourable a nature to admit of their being recommended to Parliament for acceptance. I have, &c, H. J. H. Blow, Eobert Wilson, Esq., C.E., General Manager, Under-Secretary for Public Works. New Zealand Midland Eailway Company,(Limited.)

No. 10. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 22nd October, 1892. I am in receipt of your letter of to-day's date, in which you state that the proposals contained in my letter to you of the 19th instant have been fully considered in Cabinet, and that they are regarded as of too unfavourable a nature to admit of their being recommended to Parliament for acceptance. Will you kindly reply to the last paragraph of my letter of the 19th instant, and state what modification the Cabinet is prepared to accept. I beg to remind you that I have received no reply to my letter to you of the 19th instant relative to the extension of the contract time. I have, &c, - • • • Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

No. 11. The Under-Secretary for Public Works to the General Manager, Midland Eailway Company. Sir, — Public Works Department, Wellington, 24th October, 1892. Ec Midland Bailway: Proposals for Neiv Contract. I am directed by the Minister for Public Works to acknowledge the receipt of your letter of the 22nd instant, requesting a reply to the last part of your letter of the 19th instant, in which you ask the Government to indicate what modification in the existing contract they would be prepared to accept. In reply, I am to state that the Government is not desirous of making any modifications in the contract at all; any proposals for a change must therefore emanate from the company. I have, &c, H. J. H. Blow, E. Wilson, Esq., C.E., General Manager, Under-Secretary for Public Works, New Zealand Midland Eailway Company, Wellington Club.

No. 12. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 25th October, 1892. I am in receipt of your letter of the 24th instant. I have the honour to point out that two fresh sets of proposals have been submitted to you by me on behalf of the company since the Public Accounts Committee reported on the proposals submitted to them. I must refer you to the report of the Committee, which states, " The Committee recommends that any proposals which may be the result of negotiations between the Government and the company should be submitted to Parliament at its next sitting." You must be aware that it is unreasonable to assume that negotiations can be carried on entirely by one party alone, or to suppose that the company can continue to submit proposal after proposal without receiving any comment on them by the Government, beyond their reply such as you give in your letter of the 24th instant. I deeply regret that this reply should indicate an absence of any desire on your part to arrive at a friendly or mutually advantageous solution of the present difficulty which has arisen in carrying-out the contract by the Midland Eailway Company. I trust you will reconsider the reply contained in your letter of the 24th instant, and give me some indication as to the modifications necessary to render the proposals acceptable to the Government. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). f The Hon. the Minister for Public Works, Wellington.

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No. 13. The General Manager, Midland Eailway Company, to the Hon. the Premier. Dear Sir, - Wellington Club, Wellington, N.Z., 29th October, 1892. I have been in communication with London by cable, and my directors have given me instructions to submit two offers to the Cabinet. These are the best they can make with any prospect of being able to finance the balance of capital required to finish the East and West Coast line. I have sent these offers formally to the Government, but thought it better to inform you of this in the hope that you might be able to look into the question yourself. I much regret troubling you, but the importance of the business as well as its pressing nature will, I trust, be accepted as my excuse. Briefly, the offers from London are as follows : — (a.) The company to sell the balance of the land-grant for East and West Coast line for £850,000, the colony guaranteeing 3 per cent, on £250,000 new share capital. Or, (6.) The company to sell the balance of the land-grant for East and West Coast line for the Bl value —viz., £618,250,|and the colony to guarantee 3 per cent, on £500,000 new share capital. These offers will, I trust, meet your views. They are certainly a great sacrifice for the company to make in the face of the evidence sent to England in the first instance—that one block of western lands, 60,000 acres in extent, was valued at £500,000, and would bring this sum as soon as railway communication was opened. Even if the colony had to meet the entire guarantee on the larger amount, this liability would only be £15,000 per annum, which is a small sum compared with the great advantages offered by throwing open the entire reserve of 5,000,000 acres, and the profit which will be made by the Government on the Bl value of land through the construction of the railway by the company. I trust the subject will receive an early and favourable consideration by the Cabinet, and that you will be able to submit one of the two offers to Parliament next session, with your recommendation for its acceptance. I am, &c, The Hon. the Premier, Wanganui. Eobert Wilson.

No. 14. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 29th October, 1892. Upon receiving the letter of the Minister for Public Works, dated 25th (? 24th) instant, I communicated with my directors in London ; and, since then, have received instructions by cable to submit to the Cabinet two proposals, either of which I am prepared to accept on behalf of the company, subject to the approval of Parliament when it next meets. My directors desire to settle the present difficulty under the contract in a fair and friendly spirit, and have therefore stated the smallest amounts they can accept for the sale of the land-grant to the Government, and the least amount of guaranteed interest on new capital which will enable them to finance the balance of capital required to finish the East and West Coast line. I therefore trust the Government will endeavour to meet the proposals of the company in the friendly spirit in which they are submitted, and, with the desire to arrive at a prompt settlement of the question, I have the honour to submit the offers as cabled to me from London :— (a.) The company are prepared to sell the balance of the land-grant for the East and West Coast line for the sum of £850,000, to be paid to the company against engineers certificates for work done; and, in addition, the colony to guarantee 3 per cent, interest on £250,000 new share capital; or, (b.) The company are prepared to sell the balance of the land-grant for the East and West Coast line for the sum of £618,250, to be paid to the company against engineers' certificates for work done; and, in addition, the colony to guarantee 3 per cent, interest on £500,000 new share capital. I have the honour to request that I may be favoured with an early answer from the Cabinet to enable me to cable to London, as long as possible, before the annual general meeting of the company next month. I have, &c, Eobert Wilson, Engineer-in-Chief, and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

No. 15. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 4th November, 1892. I have to thank you for your telegram stating that the offer sent by me on behalf of the company will receive the consideration of the Cabinet. I see by the newspaper that these proposals are to be considered by a full Cabinet. I have to point out that it is most important that I should cable some information to my directors, before the annual general meeting on the 20th instant. Should you not have a full Cabinet meeting before then, can you tell me, unofficially, if the proposals contained in my letter to you of the 29th October last are likely to receive the favourable consideration of the Government ? and whether I may state this to my directors? I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wanganui.

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No. 16. The Hon. the Premier to Mr. Eobert Wilson. (Telegram.) 7th November, 1892. I cannot anticipate action of Cabinet by expressing such an opinion as you desire. I think, however, quite possible Government may make a proposal in reply to your letter. Eobert Wilson, Esq., Midland Eailway, Club, Wellington. J. Baelance, Wanganui.

No. 17. Mr. Eobert Wilson to the Hon. the Premier. (Telegram.) 7th November, 1892. Many thanks for telegram. Fully appreciate position. Very important to cable London before general meeting. Trust Cabinet will accept offer. When may I expect answer ? The Hon. the Premier. Eobert Wilson, Wellington.

No. 18. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 17th December, 1892. I beg to remind you that consent to the extension of the contract time has not been received by the company. This question has been before the Government for months, and on your assurance I informed my directors that this extension would be granted on favourable conditions. I request you to give this subject your early and special attention, as it is impossible to even approach financiers relative to new capital until this extension of the contract time is received by the company.' I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

No. 19. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir, — 154, Worcester Street, Christchurch, N.Z., 17th January, 1893. I have the honour to remind you that I have not yet had a reply from you as to the application of the company for an extension of the contract time of construction, as requested in my letter of the 29th October. I again beg to urge upon you that this question may have the earliest attention of the Government. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

No. 20. The Hon. the Minister for Public Worrs to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 27th January, 1893. Sir, — Ec Midland Bailway Contract: Proposed Extension of Time. In reply to your letter of the 17th instant, addressed to the Hon. the Premier, in which you ask for an early decision upon your application for an extension of the contract time for the completion of the Midland Eailway, I have now the honour to state that, in the opinion of the Government, it would be best for the settlement of this question to stand over until it is seen whether the negotiations with your company in reference to arranging for an entirely new contract lead to any practical result. I have, &c, General Manager, New Zealand Midland Eailway Company. E. J. Seddon.

No. 21. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 27th January, 1893. At great personal inconvenience, I postponed my departure for London by the last Frisco mail, being led to believe that the Midland Eailway proposals would be considered at the Cabinet meeting held yesterday, and, if I waited, should receive a reply before leaving in the " Arawa " on Thursday next. I now learn that the question was not considered in Cabinet, and that it is uncertain when the proposals will receive the consideration of the Government. I must again remind you that I have not received the formal notice of extension of the contract time, though applied for months ago. I need hardly point out to you the impossibility of my

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directors making even temporary financial arrangements until this extension of time is formally granted to the company. The delay on the part of the Government in carrying out the conditions of the contract has entailed serious loss to the company. I must leave for London on Thursday next, and trust you will be able to issue the formal consent to the extension of the contract time prior to my departure, and also to give me a reply stating definitely whether the Government is prepared to accept the latest proposals of the company, or, if not, what modifications of these the Government is prepared to accept. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

No. 22. The Hon. the Minister for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 31st January, 1893. Sir, — Ec Midland Baihvay Contract. Your letter of the 27th instant, on the subject of your proposals for a modification of the Midland Eailway contract, and stating that you had not received the formal notice of extension of the contract time, has been forwarded to me by the Hon. the Premier, with a request that I would reply thereto. The proposals of the company for a modification of the contract have several times been under consideration in Cabinet, and have again been considered this morning, and I hope that by to-morrow, or Wednesday at the latest, to be able to inform you of the decision to which the Government have come in reference thereto. As regards the extension of the contract time asked for by the company, the Government considers that it is premature to deal with this question at present, as the existing contract has still about two years to run, and it is unusual for an extension of contract time to be asked for until the original contract time has nearly expired. Moreover, it is impossible to see at present what the condition of the works on the company's railway will be two years hence, so as to indicate what extension of time will be necessary. I would further point out that the question of extension of time is also involved in the company's proposals for a new contract. I have, &c, E. J. Seddon, The General Manager, Minister for Public Works. New Zealand Midland Eailway Company, Wellington.

No. 23. The Hon. the Minister for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, Ist February, 1893. Sir, — Ec Midland Bailway : Proposals for a New Contract. Eeferring to the former correspondence on the above-mentioned subject, I have now the honour to state that the matter has been very carefully considered in Cabinet, with the result that the Government cannot see its way to accept the proposals of the company as submitted in your letter dated 29th October last. As the company is desirous of having the contract amended in its own interests, it appears to the Government that any proposals for modifications thereof should come from the company. The Government considers that it has fairly and equitably carried out its part of the contract, and that the allegations which have been made from time to time to the effect that certain provisions in the contract have been strained as against the company are entirely without foundation. The Government observes that the proposals of the company, as submitted by letter dated 29th October last, already alluded to, refer only to the section of the railway between Springfield and Brunnerton, and make no provision for the section between Eeefton and Belgrove, and would be glad to be informed what the intentions of the company regarding this latter section may be. The Government regrets to be informed that the company is unable, owing to financial difficulties, to carry out its part of the contract, but, at the same time, considers that there is no ground whatever for the company to assume that the lands to be earned under the contract will not realise the sum which the company alleges the colony has represented would be obtained ; and there is also no reason to suppose that the said lands will prove unsaleable, and thus remain on the hands of the company. So far, the lands selected have been sold at prices satisfactory to the company, and the Government sees no reason why this should not continue. Should, however, the company prefer to surrender to the Government its right to select lands, and to accept in lieu thereof the colony's debentures bearing 3J per cent, interest to the same nominal value as the land the company would- have been entitled under the existing contract to select, and make definite proposals in writing to this effect, the Government will consider the advisableness of submitting the same for the consideration of Parliament. It would, of course, be understood that any such proposals would apply to the railway from Brunnerton to Belgrove as well as from Springfield to Brunnerton, and would also involve the entire abandonment of all the company's rights under the contract to select further lands, and that, as a consequence, the whole of the lands at present reserved from sale within the Midland Eailway area

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would revert to the Government, to be dealt with under the ordinary land-laws and regulations of the colony. As stated in my previous letter, in regard to the extension of time asked for by the company, the Government considers that it is premature to deal with this question at present, seeing that the existing contract has two years to run, and it is unusual for an extension of contract-time to be asked for until the original contract-time has nearly expired. Moreover, it is impossible to see at present what the condition of the works on the company's railway will be two years hence, so as to indicate what extension of time will be necessary. I have, &c, E. J. Seddon, The General Manager, Minister for Public Works. New Zealand Midland Eailway Company, Wellington.

No. 24. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, Ist February, 1893. In reply to your letter of to-day's date, in which you state the Government cannot accept the proposals submitted in my letter of the 29th October, 1892, and desire to know what the company's intentions are regarding the section between Beef ton and Belgrove: I always understood that the Government were aware that the intention has been to exclude this section from any amended contract. These are the views of the company, which were clearly stated before the Committee of Parliament; and all negotiations must be subject to this amendment, unless the Government are prepared to accept the offer made by me, on behalf of the company, contained in letter, dated 19th May, 1892, in reference to the Nelson Section. The offer.contained in your letter under reply, which the Government make —viz., to substitute for the land-grant colonial debentures, bearing 3J per cent, interest, to an amount the same as the nominal value of land the company would have been entitled under the existing contract to select, I must submit to my directors for their consideration before any answer can be given. I intend to leave for London to-morrow, Thursday, by the s.s. " Arawa," with the view of submitting this offer, and laying clearly before my directors the position the company has been placed in under new taxation, and the method of making mining reserves, to the injury of the company and against the spirit of the contract; and further communications will be forwarded to you when my directors have decided upon their line of action relative to further negotiations or arbitration. I may, however, state that I view the offer of the Government as quite inadequate to the conditions which have arisen. In further reference to the extension of time, which, upon the authority of the Hon. the Premier, I informed my directors would be granted under reasonable conditions, I must call your attention to clause 42 of the contract, which provides for the extension of time being granted, and must request you to withhold this consent no longer, as it is impossible to make any, even temporary, financial arrangements without proof that the time available and allowed under such an extension is sufficient to enable the work to be carried out. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

No. 25. The Hon. the Minister for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 2nd February, 1893. Sir, — Midland Bailway : Be Proposals for New Contract. I have the honour to acknowledge the receipt of your letter of yesterday's date (received this morning), in which you state, inter alia, that the offer made by the Government in my letter dated yesterday, to substitute for the land-grant colonial debentures bearing 3J per cent, interest to an amount the same as the nominal value of the land the company would have been entitled- under the existing contract to select, will be submitted to your directors for consideration, and also request that the extension of time asked for by the company might be granted without further delay on the ground that, on the authority of the Hon. the Premier, you had already wired your directors that the same would be given on reasonable conditions. In reply, I have to state that you appear to be under a misapprehension in assuming that my letter contained any such offer as you refer to. What I stated was that, should the company prefer to surrender to the Government its right to select land, and to accept in lieu thereof the colony's debentures bearing 3j per cent, interest to the same nominal value as the land the company would have been entitled under the existing contract to select, and make definite proposals in writing to this effect, the Government would consider the advisableness of submitting the same for the consideration of Parliament. As regards the extension of time asked for, the Government is quite unable to understand what grounds you had for sending the cablegram referred to to your directors. The Premier, on 3 2—D. 6.

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being shown the paragraph on this subject in your letter, expressed his surprise, and stated that he had not informed you that an extension of time would be granted, but merely that the matter would be submitted to Cabinet for consideration when dealing with the other questions involved in your proposals for a new contract. With regard to the paragraph in your letter in which you state that you are proceeding to England to lay before your directors "the position the company has been placed in under the new taxation, and the method of making mining reserves, to the injury of the company, and against the spirit of the contract," I have to express my regret that you should have seen fit to write in these terms in view of the investigations and report of the Committee of Parliament which dealt with this matter last session, and also in view of the admission made by the chairman of your company at an annual meeting of the shareholders, to the effect that the Government had a right to reserve 750,000 acres of land for mining purposes—less than 200,000 acres of which has so far been reserved. I deem it necessary to correct your apparent misapprehension on these subjects at the very earliest possible moment, to avoid the possibility of any further misapprehensions arising in respect thereto. I have, &c, E. J. Seddon, The General Manager, Minister for Public Works. New Zealand Midland Eailway Company (Limited), Christchurch.

No. 26. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. Sir,— Wellington Club, Wellington, N.Z., 2nd February, 1893. Your letter of to-day's date will receive reply on my arrival in London. I must maintain that if-there is any misunderstanding relative to extension of time this rests with the Hon. the Premier. Yours faithfully, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Minister for Public Works, Wellington.

No. 27. The Agent-General to the Hon. the Premier. Westminster Chambers, 13, Victoria Street, London, S.W., Sir,— 15th April, 1893. Mr. Eobert Wilson, the Engineer for the Midland Eailway Company, has asked me to forward the enclosed letter from the Secretary of the company. He states that he intimated before leaving Wellington that all the communications should be forwarded through me, and at his suggestion I propose to cable an epitome of the terms of the letter. The Chairman of the Board of Directors has called upon me, and informs me that he is satisfied the necessary capital can be raised if the modifications now suggested are agreed to; and he is anxious to receive, at as early date as possible, an intimation as to whether the Government are prepared to submit the modifications now proposed for the consideration of Parliament during the forthcoming session. I have, &c, The Hon. the Premier, Wellington. ■ W. B. Perceval.

Enclosure in No. 27. The Secretary, Midland Eailway Company, to the Hon. the Premier. The New Zealand Midland Eailway Company, 61 and 62, Gracechurch Sir,— Street, London, E.C., 14th April, 1893. My directors have very carefully considered the correspondence which has passed between our General Manager and the New Zealand Government with respect to modifications proposed to be made in the contract of the 3rd August, 1888, in order to secure the construction of the East and West line, and to enable the Government to deal at once and without reference to the company with the lands reserved for selection. My directors regret that the Government did not see their way to accept the proposals made to them by the General Manager, and are fully sensible of the greatly-increased difficulty of carrying out the task they have undertaken caused by the action of the Government in making mining reserves ; and still more by the very extraordinary evidence tendered on behalf of the Government at the recent inquiry before the Public Accounts Committee. The reserves deprive them of a considerable portion of the most valuable land they are entitled to, but the evidence tendered by the Government discredits all the securities the company can offer to intending investors. My Board also feel that the delay in granting an extension of time has been of most serious importance, as it is absolutely impossible to find any funds at all, when they have to state at the outset that the line cannot be completed within the contract time; and, although formal application has long since been made for an extension, the Government have not given any reply. Had the company been a public enemy instead of (as it is) a great public benefit, it could not have been met with more ungenerous or unjust treatment.

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Upon considering the report of the Public Accounts Committee, the Board believe that the main objections to their former proposals were caused by the demand for a guarantee of interest upon share capital, and they have taken great pains to endeavour to find some means of eliminating this part of their request. To enable them to come to a trustworthy conclusion they have taken very eminent financial advice, and they believe that if the offer they now make is accepted by the New Zealand Parliament the company will be able to carry out its share of the compromise. I am therefore instructed to submit the following proposals for the consideration of the Government and Parliament of New Zealand, proposals which are, as my Board believes, very favourable to the colony, which will insure the construction of the East and West line, will relieve the colony from any further difficulties with the land-grant without imposing upon it any burden, and which do not contain any guarantee either of interest or of the earnings of the line, and which are at the same time the least that the company can agree to. The proposals, if accepted, will also be taken by the company as a complete discharge of all claims upon the colony in respect of the past. The proposals I am instructed to lay before you are as follows : — 1. That the time for completing the railway from Brunnerton to Springfield with the Incline line shall be extended for such time as may be necessary. The works to be proceeded with as rapidly as possible after the execution of the contract and the completion of the necessary financial arrangements. 2. That the time for completing the extension of the Belgrove line, to the junction between Norris's Gully and the Motueka Valley, be extended for two years from the signing of such contract. 3. That no time be fixed for the construction of the rest of the railway. 4. That the company shall before the Ist July, 1895, select all lands earned by the construction of the line from Eeefton to Jackson's, in accordance with the contract of the 3rd August, 1888, with proper provisions in case of any delay being caused by the Government refusing their assent to any particular selection. 5. That the Government shall, if the company so require, work or maintain at 60 per cent, of the gross receipts, the line from Springfield to the eastern side of the Incline line, until the Incline line is finished. 6. That the company's present maximum rates shall not be affected by increases or reductions of the rates on the Government railways. 7. That the company shall forthwith indicate what lands they require to be reserved for selection under the 4th head hereof, and, subject to such reservation, shall at once release to the Government all lands comprised in the Bl map annexed to the contract of the 3rd August, 1888, other than those already selected and granted, or those to be reserved under this head. 8. In consideration of this release, the Government to pay to the company in London the sum of £850,000 (eight hundred and fifty thousand pounds), by twenty half-yearly payments, on the Ist of January and Ist of July in each year, of £42,500 each, without any deduction or taxation of any sort or kind whatsoever. 9. The company to be relieved from local taxation, as recommended by the Public Accounts Committee. 10. The company to be taxed on its net income from the traffic and rentals, and not on the amount of capital expended. 11. The Government to purchase the line from Belgrove to the Motueka Valley for £100,000 (one hundred thousand pounds), within one year after its completion, and, pending such purchase, to work and maintain the Belgrove line for 60 per cent, of its gross receipts. 12. The Government to have the right to construct the line between the Motueka Valley and Eeefton, in which case the company shall afford them terminal facilities in Eeefton Station. 13. If the Government require the company to construct the line from the Motueka Valley to Eeefton, the terms shall be agreed between the parties. My directors, on hearing that these terms are agreeable to the Government, and will be submitted by them to Parliament, will send out a draft contract embodying them. My directors desire to impress upon the Government and Parliament that it will be perfectly hopeless to attempt to raise money for the completion of the line on any lower terms than those now proposed; and they request the Government to lay this letter before Parliament for its consideration, so that there may be no misapprehension on the part of any member of the sincere desire of the company to meet the views of the colony, even to the extent of abating much of its strict rights. I have, &c, .ZEneas E. McDoneel, Secretary. The Hon. the Premier, Wellington, New Zealand.

No. 28. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, 4th July, 1893. I have the honour to send you herewith six prints of the proposed new contract between the Queen and my company, and have the honour to remain, Sir, your obedient servant, Eobert Wilson, Engineer-in-Chief and General Manager, The New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

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Enclosure in No. 28. This Deed made the day of one thousand eight hundred and ninety-three, between Her Majesty the Queen (who, with her heirs and successors, is and are hereinafter referred to as "the Queen"), of the one part, and "The New Zealand Midland Eailway Company (Limited)," a joint-stock company carrying on business in the City of Christchurch, in New Zealand, and elsewhere, and having its head office at No. 61, Gracechurch Street, in the City of London, in England (which, with its successors and assigns, is hereinafter referred to as " the Company "), of the other part. Whereas, by a deed bearing date the seventeenth day of January, one thousand eight hundred and eighty-five, and made between the Queen, of the one part, and William Crystall, John Tucker Ford, George Hart, John Thomas Matson, Thomas Shailer Weston, John Honeycombe Cock, Charles Yates Fell, Henry Douglas Jackson, Albert Pitt, and James Sclanders, all therein respectively described and thereinafter collectively referred to as "the contractors," of the other part, the Queen and the contractors did mutually contract and agree for the construction, maintenance, and working of a line of railway to connect the east and west coasts of the Middle Island, from Springfield, in the Provincial District of Canterbury, to Brunnerton, in the Provincial District of Westland, so as to connect at Springfield aforesaid with the New Zealand Government railway already constructed and having its terminus there, and at or near Brunnerton with the Government railway already constructed, and connecting Brunnerton aforesaid with the Town of Greymouth ; and also a further line of railway from Brunnerton aforesaid to or near Belgrove, in the Provincial District of Nelson, so as to connect there with the New Zealand Government railway already constructed and leading thence to the City of Nelson, and connecting the same with the first before-mentioned line of railway, which two several lines of railway are thereinafter referred to as " the said railway," with all necessary buildings, railway works, and other appliances requisite for the same, and for working the said railway upon the terms and conditions and with and subject to the covenants, agreements, provisoes, or restrictions in the said deed now in recital contained; And whereas by a deed of assignment bearing date the thirtieth day of April, one thousand eight hundred and eighty-six, and indorsed upon the hereinbefore in part recited deed of the seventeenth day of January, one thousand eight hundred and eighty-five, the contractors did thereby, with the consent of the Governor of New Zealand, testified as therein appearing, assign unto the Company all that the original contract and the full benefit and advantage to arise therefrom upon the terms and with and subject to the covenants, provisoes, and conditions therein contained : And whereas by a deed bearing date the third day of August, one thousand eight hundred and eighty-eight, and made between the Queen of the one part, and the Company of the other part, a new contract was entered into in substitution for the recited deed of the seventeenth day of January, one thousand eight hundred and eighty-five, which said deed of the third day of August, one thousand eight hundred and eighty-eight, is hereinafter referred to as " the original contract." Now this deed witnesseth that in pursuance of the premises and in consideration of the covenants hereinafter on the part of the Queen and of the Company respectively contained, the Queen doth hereby covenant with the Company, and the Company doth hereby covenant with the Queen in manner following, that is to say,— 1. In construing these presents, if not inconsistent with the context, — " Lands " mean Crown lands selected or to be selected by the Company, and granted by the Crown to it in accordance with the original contract or under these presents : " Month " means a calendar month : "Original contract" means the hereinbefore in part recited deed of the third day of August, one thousand one hundred and eighty-eight: " The Engineer " means an engineer or engineers to be appointed from time to time by the Governor for any of the purposes of these presents : " The Governor" has the like meaning as is attached thereto by " The Interpretation Act, 1878." "The main line" means the line of railway from Springfield to Brunnerton, and from Brunnerton to Eeefton, mentioned in these presents, constructed, and to be contracted, maintained, and worked in accordance therewith, with all necessary buildings, works, and appliances requisite for working the same : " The Belgrove line " means the line of railway constructed, and being and to be constructed, from the Government railway at or near Belgrove, in the Provincial District of Nelson, towards the Motueka Valley : " The Bullor lino " means the line of railway connecting the Belgrove line with the main line at Eeefton : " To work " or " working" the said railway or any section thereof, or " worked," means running trains drawn by locomotive engines thereon for the carriage or conveyance for hire of passengers, animals, or goods, and generally in all respects carrying on, upon, and about the said railway the business of railway carriers in all its branches, so that the said railway shall be open for public traffic, and includes the supply and maintenance of all necessary rolling-stock and equipment for the purposes of such traffic, and the services of all requisite officers, servants, or agents that may be necessary for carrying on the traffic on the said railway, or any section thereof, as the case may be : And whenever any officer of the Queen is referred to by the title of his office, it shall be understood to refer to the person for the time being holding such office. 2. The Company shall and will with all convenient speed and within the term of five years computed from the day of , one thousand eight hundred and , or within such further time after the expiration of that period as may be allowed in that behalf

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under these presents, at its own cost and expense in ,all things, construct and completely finish the main line so as to connect Springfield, in the Provincial District of Canterbury, with Brunnerton, in the Provincial District of Westland, and thence to Eeefton, in the Provincial District of Nelson, and shall also, within two years from the said day of , one thousand eight hundred and ninety- , construct the Belgrove line. And the Company shall construct the said railway along the line shown in red upon the map marked hereunto annexed (the same, with certain amendments in the delimitation of the sections shown thereon, being similar to the map marked " Al," annexed to the original contract) or as near thereto as practicable, such railway to be constructed, and, when completed, to be maintained and worked in all respects under and subject to the terms and conditions of these presents. 3. The said railways, and all other works in connection therewith which are provided for in this contract, shall be constructed, maintained, and worked under the provisions of these presents, and shall be we'll and faithfully constructed of sound materials, and of sufficient strength and durability, having regard to the nature of such works, upon plans, both general and detail, to be from time to time approved of by the Engineer, and so that the details shall as nearly as may be conform to the approved standard drawings in use on the New Zealand Government railways, or such modifications thereof as the Engineer shall from time to time approve ; and that the specifications shall accord as nearly as may be to the standard specifications of the Government of New Zealand for the time being used in respect of railways of a similar character having single lines of permanent way, or as may be necessary for any particular work included in this contract; and such construction and maintenance shall in all things be to the reasonable satisfaction of the Engineer, it being the intent and meaning of this provision that all such plans and specifications, when approved by the Engineer, or as the same may be altered or modified subject to his approval, shall form part of this contract as effectually as if the same had respectively been attached hereto at the date of the execution hereof. Except as provided by the next succeeding clause hereof the grades on the said railways shall not be steeper than one in forty on the straight, with a sufficient flattening of curves to give equivalent haulage power, and no curve shall be of a less radius than five chains. 4. The Company shall not, without the consent of the Governor first had and obtained, deviate from the line of railway as surveyed, excepting always and it is hereby agreed that the Company may construct the Incline line shown upon the plans deposited with the New Zealand Government marked 5. All rolling-stock and plant to be from time to time used or employed upon the said railway or in connection therewith shall bo of at least equal character and strength in all respects to the rolling-stock and plant in general use upon railways constructed by the Government of New Zealand, and so as to be sufficient both in quality and quantity for effectually carrying on the traffic on the said railway as may from time to time be requisite or necessary. 6. The Company shall not at any time assign, charge, or dispose of this contract, or any benefit or advantage thereof or thereunder either at law or in equity, without the written consent of the Governor on behalf of the Queen first had and obtained; but this clause shall not be deemed to affect or interfere with or in anywise abridge the powers of borrowing of the Company, and it is further agreed that in the exercise of such powers the Company may charge all or a part or parts only of their property: Provided that the Governor may at any time appoint any person in the colony or elsewhere for the purpose of consenting to any such assignment, and no such consent shall be arbitrarily withheld either by the Governor or by any person so appointed as aforesaid. 7. Upon the construction of the said railway, and upon its being opened for traffic, the Company shall from time to time and at all times use, work, and manage the said railway to the best advantage in all respects, and shall on every week-day cause at least one train for the conveyance of passengers and goods to be dispatched each way along and upon the whole extent of the said railway: Provided that the obligation to run such daily trains shall not be compulsory if at any time any part of the said line is unsafe or dangerous to traffic, and the Company is taking all necessary steps to promptly render the same safe and fit for traffic. The provisions of this clause shall extend and apply to any section of the said railway completed and fit for traffic, save in so far as the same are modified by these presents. 8. So soon as the said railway or any section thereof is surveyed and marked out on the ground by the Company the Queen will, with all convenient speed after being requested in writing by the Company under the hand of its manager or agent for the time being so to do, and at the Company's expense, put the Company in possession of all lands then in the possession and at the disposal of the Queen for the purposes of the construction of the said railway, of the width and, extent necessary for such construction, and of any land adjacent thereto, which may be available and in such possession or at such disposal as aforesaid, which in the opinion of the Engineer may be required for side-cuttings, ballast-pits, spoil-banks, and road-approaches and road diversions, or for the protection in any way of the said railway, or for workshops, stations, or other buildings used in connection with the' said railway: Provided that nothing herein contained shall be deemed to require the Queen to cause possession of any land to be so given which is then lawfully held and used for mining purposes, or which may be subject to the terms of any special Act of the General Assembly affecting the same. 9. The Queen will, at the request of the Company, at her cost, work any portions of the main line between Springfield and the eastern end of the Incline line until the main line shall be completed, and the Belgrove line until the same shall be purchased by the Queen, as hereinafter provided respectively, or any part or parts of any of such portions which is or are completed and fit for traffic, upon the following terms, that is to say:— (a.) The Queen shall be called upon to run only such number of trains as she may consider necessary for the requirements of traffic : (b.) The Queen shall maintain the rails, sleepers, ballast, formation works and bridges:

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(c.) The Queen shall pay to the Company 40 per centum of the gross receipts derived from the working of the said portions of railway, and the remaining 60 per centum shall be retained by the Queen, and dealt with as part of the public revenues of the colony: (d.) If more rolling-stock than the Queen has at the date hereof on the Nelson Government line be requisite to work the Belgrove line, the Company shall either provide the additional rolling-stock required at its own cost, the Queen keeping the same in repair, or shall pay to the Queen the interest on the cost of providing such additional rolling stock, as may be required. 10. After the completion of so much of the main line as extends from Eeefton to Brunnerton, and thence to Jackson's, the whole or any part of the lands which the Company shall have earned or become entitled to in respect thereof, and not already selected by and granted to or otherwise vested in the Company in accordance with the provisions of the original contract shall be granted to it in accordance with the said provisions, the legal estate being antevested to the date of selection when the Company shall so require or direct, but so that each separate selection shall, unless with the consent of the Queen, be granted to the Company in one grant only ; and the whole of such lands earned by the Company, or to which it shall have become entitled, shall be granted to the Company within two years from the first day of January, one thousand eight hundred and ninety-three. 11. Save as provided by the last preceding clause, the rights of the Company to select and acquire lands shall absolutely cease and determine from the date hereof. 12. In consideration of the surrender by the Company of such rights, the Queen shall pay to the Company the sum of £850,000 sterling, by twenty equal half-yearly instalments, of £42,500 each, payable at the head office of the Company in London, free from all deductions or taxation of any sort or kind whatsoever, the first of such instalments being paid on the execution hereof. 13. If the Queen and the Company shall not, within one year after the opening of the mam line for traffic, enter into an agreement for the construction of the Buller line, the powers of the Company to construct the Buller line shall cease, and if the Queen shall hereafter construct that line the Company shall afford the Queen reasonable and proper traffic facilities in their Eeefton Station. , 14. The Queen shall give to the Company, and the Company shall give to the Queen, mutual running powers and terminal facilities over the respective lines of railway of the Queen and the Company for carrying traffic on the line of the one party through or on to the line of the other party, and in particular shall give the Company access to the ports of "Lyttelton, Nelson, and Greymouth, and to the Government termini at such ports and at Christchurch ; but neither party shall have the right to compete with the other party, by carrying on the line of the other party traffic originating and terminating on such line. The terms and conditions under which such running powers and terminal facilities shall operate shall be set out in an agreement, or, if the parties cannot agree, the form and contents of such agreement shall be determined by arbitration, and while no agreement is in existence binding the parties, then on terms to be prescribed by regulations to be made by the Governor. 15. All by-laws and regulations made for the conduct of traffic on the railway, and for the working and management thereof, shall from time to time be subject to approval by the Governor ; and, subject thereto, the maximum tolls, fares, rates, and rents to be charged by the Company for the carriage upon the said railway of passengers, produce, animals, goods, merchandise, articles, matters, and things, and for the storage of goods in any of the Company's sheds or warehouses, shall not exceed the scale set forth in the schedule hereto attached, with twenty-five per centum added thereto. . 16. The Company shall be at liberty at any time to reduce tne said tolls, tares, rates, and rents, or any of them. 17. The Company shall not be chargeable with any rates, taxes, charges, or duties other than such as may be levied" by the New Zealand Government direct; and any and all such rates, taxes, charges, and duties shall be assessed upon the income of the Company, and not upon the capital value of its railways or property. . . 18. If the Company shall not be able to construct and finish the mam line withm the period hereinbefore limited in that behalf, the Governor in Council may, by writing indorsed on these presents, if satisfied that the delay has not been caused by the wilful default or neglect of the Company, extend the said period, or the period mentioned in clause 10 hereof, for such time as he shall deem reasonable, and any such extension may be made although the period to be extended has not yet expired, or may be made after such expiration. 19. The power of purchase conferred upon the Governor by " The Eailways Construction and Land Act, 1881," and "The East and West Coast (Middle Island) and Nelson Eailway and Eailways Construction Act, 1884," may be exercised at any time after the expiration of ten years from the completion of the main line. , 20. In the event of the purchase of the main line by the Queen, or on her behalf, in accordance with the Acts relating thereto, the price to be paid for such purchase shall be the sum of two million five hundred thousand pounds sterling, payable at the Company's head office in cash or in New Zealand Government bonds bearing interest at the rate of four pounds per centum per annum, and forming a part of and subject to no other terms and conditions than the other public debt of the Colony of New Zealand. 20a. At any time after the expiration of ten years from the completion of the mam line the Queen shall, if so required by the Company, purchase the main line at the price of two million pounds sterling, payable in the manner provided in clause 20 hereof, such price to be paid within six months from the date when the Company shall give to the Queen notice in writing of their desire that she shall purchase the line.

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21. Within six months of the completion of the Belgrove line the Queen shall purchase, and the Company shall sell the same at the price of one hundred thousand pounds, paid in the manner provided by the next preceding clause. 22. The Company shall always be represented in New Zealand by a person or persons duly appointed under Part VIII. of " The Companies Act, 1882," empowered to sue and be sued on behalf of the Company in the Courts of the colony, and to execute deeds and instruments and generally to act for and on behalf of the Company within the colony ; and it shall not be competent for the Company to sue the Queen, or any person on her behalf, in any Court elsewhere than in the Courts of the colony, nor shall any arbitration proceedings be commenced, carried on, or concluded elsewhere than in the said colony. If at any time the Company shall not be so represented, it shall not, so long as not so represented, be entitled to any rights, powers, or privileges conferred by these presents, or any other contract or Act relating to the said railway, and may be compelled, on application to the Supreme Court of New Zealand, to appoint forthwith such a representative person or persons as aforesaid. But nothing herein contained shall be deemed to take away or affect any right of appeal now allowed by law. 23. The Company shall at all times keep and maintain an office at Christchurch, or in some other town in the colony. A notification of the position of such office shall, within one month after the date hereof, be given by or on behalf of the Company to the Governor; and, in case of any change in the position of such office, a like notification thereof shall forthwith be given by or on behalf of the Company to the Governor as often as any such change shall be made. Any notice required to be given to the Company under these presents may be given by delivering the same at such office as aforesaid ; and, if at any time there shall be no such office of which a notification has been given in accordance herewith, then any such notice as aforesaid may be given by delivering the same at the last known office of the Company in New Zealand, or by being affixed on the door of the booking-office of some station of the railway to be constructed under these presents: 24. It is hereby declared and agreed that, if at any time hereafter any dispute, difference, or question shall arise touching the construction, meaning, or effect of these presents, or any clause or thing herein contained, or the rights or liabilities of either of the said parties under these presents, or otherwise howsoever in relation to the premises, except as to the terms of the agreement mentioned in clause 13 hereof, then every such dispute, difference, or question shall be referred to the arbitration of two indifferent persons, one to be appointed by each party to the reference, or an umpire to be appointed by the arbitrators in writing before entering on the business of the reference; and, if either party shall refuse or neglect to appoint an arbitrator within three months after the other party shall have appointed an arbitrator, and shall have served a written notice upon the first-mentioned party requiring such party to make an appointment, then the arbitrator appointed as aforesaid shall, at the request of the party appointing him, proceed to hear and determine the matters in difference as if he were an arbitrator appointed by both parties for that purpose; and the award or determination which shall be made by the said arbitrators or arbitrator, or of such umpire if the arbitrators shall disagree, shall be final and binding upon the said parties hereto respectively, so as such arbitrators or arbitrator shall make their or his award in writing within three months after the reference to them or him, or on or before any later day to which the said arbitrators or arbitrator by any writing signed by them or him shall enlarge the time for making their or his award, and so as such umpire shall make his award or determination in writing within one month next after the original or extended time appointed for making the award of the said arbitrators shall have expired, or on or before any later day to which the umpire shall by any writing signed by him enlarge the time for making his award; and also that no action or legal proceedings shall be commenced or prosecuted by either of the said parties hereto against the other of them touching any of the said matters in difference, unless the party to be made defendant to such action or proceedings shall have refused or neglected to refer such matters to arbitration pursuant to the provisions hereinbefore contained, or unless the time limited for making such award as aforesaid shall have expired without any such award being made ; and also that all necessary witnesses on behalf of either of the parties to such reference, and all persons claiming through them respectively, shall submit to be examined by the said arbitrators, arbitrator, or umpire, upon oath or affirmation, in relation to the matters in dispute, and shall produce before the arbitrators, arbitrator, or umpire, all books, deeds, maps, papers, accounts, writings, and documents within the possession or power of the said respective parties which may be required or called for, and do all other things which during the proceedings on the said reference the said arbitrators, arbitrator, or umpire may require, and that the witnesses on the reference shall, if the arbitrators, arbitrator, or umpire shall think fit, be examined on oath or affirmation, and that the costs of the reference and award shall be in the discretion of the arbitrators, arbitrator, or umpire, who may direct to and by whom and in what manner the same or any part thereof shall be paid; and that the submission to reference and any award made in pursuance thereof may, at the instance of either of the parties to the reference, and without any notice to the other of them, be made a rule or order of the Supreme Court of New Zealand : Provided that, if by the terms of any award made under any such reference as aforesaid any money shall in any manner be payable by the Queen or the Government to the Company, no attachment, or execution or process in the nature thereof, shall be issued by or on behalf of the Company upon any rule or order of the Supreme Court as aforesaid, unless and until the Governor shall on behalf of the Queen at as early a date as practicable have taken all such steps as may be necessary to have such money specially appropriated by the General Assembly to satisfy such award, and the payment of such money shall have been refused by the General Assembly.

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25. It is also declared and agreed that these presents shall be and are intended to operate as a substitute for the original contract. 26. Wherever in these presents it is provided that any appointment, instrument, or notice, or any other act or thing, power, or authority whatsoever, may be made, executed, given, done, performed, exercised, or suffered by the Queen, or by or on behalf of the Queen, or by the Governor, then it shall be sufficient if such appointment, instrument, or notice, or other act or thing, power, or authority is made, executed, given, done, performed, exercised or suffered by the Governor on behalf of the Queen or in his own name, as the case requires, or by such person or persons as the Governor may from time to time appoint for all or any of the purposes herein mentioned; and also that when any notice or instrument may be given to or served on the Queen by or on behalf of the Company, the same may be given to or served on the Governor on behalf of the Queen, or to or on any person appointed by him to receive the same. 27. Wherever in these presents any act or thing is agreed to be done or suffered by or on behalf of the Queen, or the Minister for Public Works, which, under or by virtue of " The Government Eailways Act, 1887," is now or at any time hereafter may be directed or required to be done or suffered by the New Zealand Eailway Commissioners constituted under the said Act, then, and in any such case, the obligation to do, perform, or suffer such act or thing shall devolve upon the said Commissioners, who shall be deemed to be substituted throughout these presents for the Queen, or the Minister for Public Works, as the case may be, so far as relates to any such act or thing as aforesaid: Provided that if the hereinbefore mentioned Act shall be repealed, or the powers and duties of the said Commissioners shall in any manner be determined or be suspended, then the Queen or the Minister for Public Works, as the case may be, shall be entitled to resume the right to do, perform, or suffer any such act or thing as aforesaid, subject to any provision in that behalf made by the General Assembly; and the Queen and the Company shall in any case as lastly provided for have all such mutual rights and liabilities in respect of any act or thing as aforesaid as if the said Act had not been repealed, or the powers and duties of the said Commissioners had not been determined or suspended. In witness whereof these presents have been signed by the Governor of the Colony of New Zealand, in the name and on behalf of the Queen, with the advice and consent of the Executive Council of the said Colony, and the Seal of the Colony and the Common Seal of the Company have been respectively hereunto affixed, the day and year first before written.

SCHEDULE OE BATES. For any distance Per mile after not exceeding 10 first 10 miles, miles. Animals. s. d. s. d. Horses, one only ... ... ... ... ••• ... 10 0 0 3 Horses, each additional one belonging to same owner ... ... 7 6 0 2| Cattle, one only ... ... ... ... ... ... 7 6 0 2£ Cattle, each additional one belonging to same owner ... ... 50 02 Calves (one year old and under), one only ... ... ... 4 0 0 1-J-Calves, each additional one belonging to same owner ... ... 20 0 Of Sheep, goats, pigs, one only ... .;. ... ••■ ••■ 4 0 0 1-J Sheep, goats, pigs, each additional one belonging to same owner ... 2 0 oOf Sheep, goats, pigs, and calves, in large lots, per truck, loaded and unloaded by owner, who takes all responsibility and risk ... ... 15 0 10 Carriages, ■ &c. Carriages, two-wheeled ... ... ... ... ... 10 0 0 4 Carriages, four-wheeled ... ... ... ... ... 12 6 0 5 Drags ... ... ... ... ■■• ••• •■• 12 6 0 5 Goods and Merchandise. Per ton per mile ... ... ... ••• ••• ••• 00 07 Minimum weight 2 cwt. Minimum charge ... ... ... ■ •■• •■• 10 00 In addition to above charges, a terminal charge will be made not exceeding per ton ... ... ... ... ••• ••• 00 30 Gram. Grain of all kinds, flour, green horse-feed, per ton per mile (minimum weight 2 tens) ... ... ■•■ ••• • •• ■■■ ••• 0 3 In smaller quantities as merchandise, a terminal charge will be made not exceeding per ton ... ... • ■ • ■■ • • • • •• • 30 Mineral and Animal Manures. Per ton per mile (minimum quantity 4 tons) ... ... 0 2£ Minimum charges, coal, for 3 miles and under ... ... 16 Ditto, ditto, over 3 miles and not exceeding 15 miles 2 6 Minimum charges, other minerals (small lots in packages or bags as merchandise) ... ... ■• • • • • • • • • ■ ■ • • • 13 Every loading or unloading done by the Company, per ton ... 16

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SCHEDULE OP EATES— continued. For any distance Per mile after not exceeding 10 first 10 miles, miles. Wool. s. d. s. d. Undumped, per bale per mile (bale not to exceed 4 cwt.) ... ... ... 0 1-| Ditto, for each bale exceeding 4 cwt., extra per mile ... ... ... 0 0-J-Ditto, minimum charge per bale ... ... ... ... ... 10 Double-dumped, per bale per mile (bale not to exceed 8 cwt.) ... ... 0 2-f Ditto, for each bale exceeding 8 cwt., extra per mile ... ... ... 0 Of Ditto, minimum charge per bale... ... ... ... ... ... 16 Each loading or unloading done by the Company, per bale, undumped ... 0 4 Ditto, dumped ... ... ... ... ... ... ... 0 8 Timber. Sawn timber, per 100 ft. super., per mile ... ... ... ... ... -0 Of Ditto, minimum charge, per 100 ft. super.... ... ... ... ... 7 0 Heavy timber, per 100 ft. super., per mile ... ... ... ... 0 1 Ditto, minimum charges, per 100 ft. super. ... ... ... ... 10 Australian timber, rate and a half for each loading or unloading done by the Company, per 100 ft. super. ... ... ... ... ... 0 4 A truck load is computed at 5 tons. A fraction of a mile is counted as a mile. A truck of firewood must not exceed 3 tons. Passengers. First-class, per mile ... ... ... ... ... 0 3£ Second-class, per mile ... ... ... ... ... ... 0 2-J-First-class (minimum charge) ... ... ... ... ... ... 0 6 Sec.ond-class (minimum charge) ... ... ... ... ... ... 04 Beturn fares equal one and one-half single fares. A fraction of a mile is counted as a mile. Notice is also hereby given that a maximum rent or charge to be made for the storage of goods, produce, or merchandise, shall be as follows:— Storage. On all goods not removed within twelve working hours of their arrival, per ton per day ... ... ... ... ... ... ... 20 Demurrage. On all trucks not unloaded by the consignees within four workinghours of their arrival, per truck per day ... ... 20 0

No. 29. The Under-Secretary for Public Works to the Eailway Commissioners. Public Works Department, Wellington, 18th July, 1893. Ec Midland Bailway: Proposals for a new Contract. I have the honour, by direction of the Minister for Public Works, to inform the Commissioners that the Midland Eailway Company is making proposals to the Government for a new contract for the construction of their line, and that, inter alia, provision is made in the said proposals : —■ 1. For the extension by the company of the section of line now under construction at Belgrove, to the Motueka Valley. 2. For the purchase of the same by the Government, within six months of completion, for £100,000. 3. For the working by the Queen of any portions of the main line between Springfield and the eastern end of the Incline line until the main line shall be completed, and the Belgrove-Motueka Section until the same shall be purchased by the Queen. The Queen to maintain the rails, sleepers, ballast, formation works, and bridges, and to pay the company 40 per cent, of the gross receipts, but only to run such number of trains as she may consider necessary. Any additional rolling-stock that may be required for the working of the Belgrove-Motueka Section to be either provided by the company, or the company to pay interest on the cost of providing the same. The Minister will be much obliged if the Commissioners will kindly favour the Government as early as possible with their opinion as to the advisableness or otherwise of accepting the above proposals. H. J. H. Blow, The Eailway Commissioners, Wellington. Under-Secretary for Public Works.

No. 30. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, 17th July, 1893. I have the honour to request you to inform me what action the Government intend to take relative to the proposals submitted by my directors in their letter dated 14th April, 1893, and set out in the draft of the proposed new contract forwarded to you on my return to the colony. 3-D. 6.

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I am instructed to inform you that, while my directors are most anxious to do everything to arrive at a friendly and satisfactory settlement, they must impress upon the Government that any further delay will seriously injure the prospects of the company; and lam also instructed to cable any information or decision which you may advise me the Cabinet has arrived at. I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

No. 31. The Under Secretary for Public Works to the General Manager, Midland Eailway Company. Public Works Department, Wellington, 18th July, 1893. Sir, — Ec Midland Bailway : Proposals for a Neiu Contract. I am directed by the Minister for Public Works to acknowledge the receipt of your letter of yesterday's date on the above-mentioned subject, and, in reply, to state that the proposals of the company have been referred to the Hon. the Colonial Treasurer for advice as to their financial aspect, and to the Eailway Commissioners as to the proposal that the Government should purchase the Belgrove-Motueka Section for £100,000. I have, &c, H. J. H. Blow, E. Wilson, Esq., General Manager, Under-Secretary for Public Works, New Zealand Midland Eailway Company, Wellington Club, Wellington.

No. 32. The Secretary to the Eailway Commissioners to the Under-Secretary for Public Works. New Zealand Government Eailways, Head Office, Wellington, 26th July, 1893. Midland Baihuay : New Contract. In reply to your memorandum of 18th instant, requesting the Commissioners' opinion upon the proposals submitted by the New Zealand Midland Eailway Company for the extension and subsequent working and purchase of the Belgrove-Motueka Section, and the working of the Springfield extension, I am directed to say that, before the Commissioners can go into these matters, they will require to be furnished with plans of the lines referred to, showing alignment, &c. They would be glad to be informed if the company is under any requirement to provide rolling-stock for the Belgrove Section ; and, if so, to what extent ? The Under-Secretary for Public Works. E. G. Pilcher, Secretary.

No. 33. The Under-Secretary for Public Works to the Eailway Commissioners. Public Works Department, Wellington, 27th July, 1893. Ec Midland Bailway : Proposals for a Neiu Contract. With reference to your memorandum of yesterday's date, stating that before the Commissioners can express an opinion upon the Midland Eailway Company's proposals with regard to the extension, &c, of the Belgrove Section to Motueka, and the working of the Belgrove and Springfield Sections, they will require to be furnished with plans showing the alignment, &c, of the sections of railway referred to, I have now the honour, by direction of the Minister for Public Works, to forward to you herewith this department's original contract-plans of the Springfield Section, P.W.D. 16526, and of the Belgrove Section at present under construction, P.W.D., 16654. I am to state, however, that there are no plans in possession of the Government of the proposed extension of the Belgrove Section to the Motueka Valley, but it is understood that the line will be on a descending gradient all the way, the limit being 1 in 40, and no curves sharper than 1\ chains. As the plans forwarded herewith are the only copies we have, I must ask the Commissioners to kindly return them; but if copies of the same are desired for record purposes, they can be supplied on the return of the originals. With regard to your request to be informed whether the company is under any requirement to provide rolling-stock for the Belgrove Section, and if so, to what extent: the Commissioners would appear to have overlooked the latter portion of clause 3 of my memorandum of the 18th instant, which reads as follows: "Any additional rolling-stock that may be required for the working of the Belgrove-Motueka Section to be either provided by the company, or the company to pay interest on the cost of providing the same," and which gives the information required, I think. H. J. H. Blow, The Eailway Commissioners, Wellington. Under-Secretary for Public Works.

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No. 34. The Eailway Commissioners to the Hon. the Minister for Public Works. New Zealand Government Eailwavs, Head Office, Wellington, 28th July," 1893. Memorandum for the Hon. the Minister for Public Works. Be Midland Bailway : Proposals for a Neiu Contract. The Commissioners have the honour to report to you on the proposals contained in the UnderSecretary for Public Works' memorandum of the 18th instant, supplemented by the information contained in his further memorandum of 27th instant, with plans for reference which are returned herewith. The Commissioners suppose that the company does not propose to provide any rolling-stock for the Motueka line, although you speak of " additional" rolling-stock, and that the Government, therefore, would have to provide what is needed if it works it. Motueka Extension. The plan of the company's line from Belgrove shows a line of about 6 miles 7 chains in length, reaching to Norris's Gully, which we believe is partly constructed ; but it is not stated in your memoranda what additional length would be required to reach the Motueka Valley, although we presume this might be done in three or four miles. The data supplied, therefore, do not afford us any opportunity of expressing an opinion as to whether the cost of the proposed railway is reasonable, having regard to the works involved. As regards the traffic which may be expected, the Commissioners have had the matter inquired into locally, and learn that at the present time a total quantity of about six hundred tons of goods per annum might be expected on the line, with a possibility of such traffic doubling in a few years when railway communication is available. The passenger traffic under these circumstances must also be exceptionally light, and would not exceed a few hundred pounds per annum for many years. The country opened up by the railway is hilly, with narrow valleys in between of limited extent, and therefore gives no scope for much settlement. The Commissioners do not think, therefore, that there would be any prospect of this extension paying the expenses of working. In addition to whatever small loss in working there might be, there would be no interest obtained on whatever sum the Government might pay for the railway. There would be no difficulty in working the line at the sole risk and expense of the company and handing over the receipts. The proposal to give the company 40 per cent, of the receipts, and to bear the greater part of the expense of working, is one which the Commissioners see no sufficient reason for the Government adopting, so far as they have been informed in the correspondence. Springfield Extension. As regards the Springfield extension, which the Commissioners have been working for the Government, there has as yet been no traffic on it which will pay for a third part of the very moderate cost of running a train once a week; and, until the line is through, the company's materials, and the traffic ensuing from the construction if proceeded with, are likely to be nearly all that can be expected for some years. The proposal to give the company 40 per cent, of the receipts, and to bear the greater part of the expense of working, is one which the Commissioners see no sufficient reason for the Government adopting, so far as they have been informed in the correspondence. There would be no difficulty in working the line at the sole risk and expense of the company, and handing over the receipts. This was a system pursued by the Eailway Department in working the district railways for some years before their purchase. James McKerrow, 1 ! -o -, J. P. Maxwell, r Eai . lwa y W. M. Hannay! J Commissioners.

No. 35. The Under-Secretary for Public Works to the Hon. the Minister for Public Works. Public Works Office, Ist August, 1893. Midland Bailway : Proposals for Neiu Contract. In accordance with your instructions, I have perused the new draft contract submitted by the Midland Eailway Company, and beg to remark thereon as follows : — The new contract contains numerous deviations from the existing contract, as under :— Clause 2 : This clause provides fof an extension of time for five years from an undefined date. If the date of signing the new contract is filled in as the date from which the five years is to be computed, the extension would amount to between three and a half and four years, supposing that the new contract is signed about September or October next. This applies to the East and West line. The extension of time for the Belgrove-Motueka Section is three years less than this; but for the Motueka-Eeefton Section no time for completion is fixed at all. Clause 3 : In this clause the word " reasonable " is introduced before the words " satisfaction of the engineer" in reference to the construction and maintenance of the line being to the satisfaction of an engineer to be appointed by the. Government. Clause 9 : Entirely new provisions are introduced by this clause regarding the working of the disjointed sections of the railway until the main East and West line is completed through. The existing contract only provides for the working of the Springfield and Belgrove Sections, and the sections from Brunnerton eastwards for a distance of nine miles, and from Brunnerton to Ahaura ; and only as regards these for a period of five years from 3rd August, 1888, which period expires on Thursday next. The new draft contract provides for the working of the East and West line, from Springfield to the Bealey, until the line is completed right through, and for the Belgrove Section until the same is purchased by the Government.

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The terms for working are also distinctly more favourable to the company than in the existing contract, as the Government is now to be bound to -maintain the formation and bridge works, and to remove all large slips, which is not the case under the existing contract. Clauses 10, 11, 12, and 13: These clauses are new. They provide (clause 10) that on the completion of the line from Brunnerton to Jackson's the land to be earned by the company under the existing contract in respect thereof shall be granted to it, such grants to be made by Ist January, 1895 ; and (clause 11) for the surrender by the company of all rights to select any further land ; and (clause 12) for payment to the company, in consideration of such surrender, of the sum of £850,000 by twenty half-yearly payments of £42,500 each, the first to be paid at once; and (clause 13) for the cessation of the company's rights in the matter of the construction of the MotuekaEeefton Section, if no agreement for its construction is made within one year after the opening of the East and West line. Clause 15 : This clause materially modifies the provisions of the existing contract as regards the rates to be charged on the railway when opened for traffic. The existing contract provides that the rates shall not exceed those for the time being in operation on the Wellington-Masterton Eailway with 25 per cent, added thereto. The rates specified in the schedule attached to the new draft contract (to which 25' per cent, is also to be added) largely exceed the rates in force on the Wellington-Masterton Eailway. Moreover the general tendency of freight rates is to get less; whereas the new draft contract proposed to make the schedule, with 25 per cent, added, apply for all time. This provision is very important in the public interest, as reductions in the schedule of charges on the Wellington-Masterton line have been made already, and doubtless many others will be made in the future. Clause 17: This clause is new. It provides that the company shall not be chargeable with any rates, taxes, charges, or duties other than such as may be levied by the Government direct, and also that such rates, &c, shall be assessed upon the income of the company and not upon the capital value of its railway or property. The effect of this will be to relieve the company of all local taxation, as well as from the land-tax. Clause 20 : This clause is also new. It provides that if the main line—viz., the East and West line, and the line from Brunnerton to Eeefton, is purchased at the option of the Government, under the powers conferred by Act, that the price to be paid for the same shall be £2,500,000. The existing contract makes no special provision in the matter, merely confirming the powers of purchase given by Act, except to provide (clause 44) that interest on capital during construction, to an amount not exceeding £400,000, is to be reckoned as part of the cost of the line and paid to the company accordingly. " The Eailways Construction and Land Act, 1881," provides that, in the event of the purchase of the line by the Government, the price to be paid is to be settled by arbitration on the following Nothing to be awarded to the company in respect of lands the use of which for the railway has been granted by the Crown, or which may have been gratuitously granted to the company by private persons, but improvements on such lands shall be paid for. Also, nothing is to be paid for goodwill, but the arbitrators are to take as a basis of their valuation the cost of other similar railway works, plant, and rolling-stock at tbe time when the works forming the subject of the arbitration were constructed, and are also to allow for depreciation in the permanent-way, plant, rolling-stock, buildings, and other works of the railway, also any onerous or burdensome provisions respecting the use of the railway, or the works thereon, or any easements, rights, or privileges in connection therewith. If the line is purchased within fourteen years of the railway being opened for traffic, 5 per cent, it to be added to the price arrived at as above; and if between fourteen and twenty-one years, 10 per cent, is to be added. It is impossible to say what price the Government would have te pay for the purchase of the East and West and the Eeefton lines on this basis, but it would probably not amount to nearly as much as £2,500,000, as the following figures will show :— Government estimates of cost of East and West line, on £ £ tunnel route ... ... ... •• • 1 > 505,000 Less saving by adoption of incline (company's estimate) 470,000 Net cost 1,035,000 Government estimate of cost of Eeefton line ... ... 275,000 Total 1,310,000 Add 5 per cent., as provided by Act ... ... ■■■ 65,500 Add interest during construction ... ... ... • • • 400, 000 Gross total £1,775,500 In the above computation I have allowed the maximum amount claimable for interest during construction, as if the whole railway, including the Eeefton-Motueka Section, were made and purchased ; but if this latter section is not constructed, the amount allowed under that head should in equity be somewhat less than the whole amount claimable, if the contract is carried out in its entirety. . Clause 20a : This is likewise a new clause. It provides that the company may, at any time after the main line has been open for ten years, call upon the Government to purchase the same, but in this event the price is to be £2,000,000 only. Even this price would appear to be rather a full one, if the above estimates are reliable.

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Clause 21: Another new clause. This clause provides for the purchase by the Crown of the section of the railway from Belgrove to Motueka, within six months of its completion, for £100,000. It is open to question whether this section will cost the company £100,000; but in any case the purchase could not be other than a very unprofitable one for the colony, for there is no reasonable prospect of the line even paying working expenses. In addition to the foregoing provisions in the new draft contract, which are not to be found in the existing contract, there are sundry useful and desirable provisions in the existing contract which are not reproduced in the new draft. Clause 8 : Clause 8 of the existing contract gives the Governor power not only to call upon the company to make any additions, alterations, or repairs that the Government engineers may consider necessary to the works of the railway (as provided by section 48 of the Act of 1881), but permits him to direct the Government engineers to effect the repairs, &c, themselves, if necessary. This is omitted in the new draft. Clause 10 : The portion of this clause which provides that the company's time-tables are to be subject to the approval of the Governor, is also omitted in the new draft. Clause 21: This clause, which provides for the holder of a miner's right being entitled to construct water-races or works for mining purposes on or over or under the railway, subject to certain conditions, is also entirely omitted. Clause 41 : This clause, which empowers the Minister for Public Works to require the company to reduce its haulage rates, if any of them are considered excessive, is also omitted. Clause 43 : The portion of this clause which provides that if, under the provisions of any Act, or by virtue of the contract, the Governor shall be entitled to take possession of the railway, or any part thereof, then, in lieu of taking possession, he may, if he think fit, purchase the railway, although not completed, or the period of ten years from the date of completion may not have expired, is also omitted. Clause 47 : The last proviso to this clause is also omitted, but this is probably not material if the price to be paid for the line is definitely fixed in the contract. Most of the above alterations speak for themselves, and every one of them seems to be in favour of the company. Only one of them need call for any further remark from me, I think, and that is the provision for the purchase of the company's land-grant by the Government for £850,000, as contained in clause 12 of the new draft contract. As regards this, I would point out that the value of the land-grant that would accrue to the company on the completion of the East and West line under the existing contract is £618,000. The land is only claimable by the company, however, as sections of the line are completed, and certified by the Engineer appointed by the Governor under the contract as having been carried out in accordance with the contract, and to his satisfaction. The construction of the East and West line will occupy at least three years. I therefore assume that if the work is pushed on vigorously the six hundred and eighteen thousand pounds' worth of land might fall due to the Company somewhat as follows, say: 31st December, 1894, £200,000; 31st December, 1895, £200,000; 31st December, 1896, £218,000 : total, £618,000. Should the Governor agree to take over the land-grant from the company, and to give them cash (or debentures) in its stead, and to pay the amount by twenty half-yearly instalments, extending over ten years (the first to be paid on the signing of the new contract), as now asked by the company, the amount that would be equivalent to a payment of £618,000 on the dates shown above (taking the value of money at 4 per cent.) would be £675,000, or twenty half-yearly payments of £33,750 each, as against £850,000, or twenty half-yearly payments of £42,500 each, asked for by the company. I am indebted to Mr. Morris Fox, the Actuary of the Government Insurance Department, for the actuarial calculation giving the above results. H. J. H. Blow, The Hon. the Minister for Public Works. Under Secretary for Public Works.

No. 36. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, 15th August, 1893. I have the honour to state that, after perusal of the reports of the Eailway Commissioners, and of the Public Works Department, upon the proposals of the company, I have to submit the following modifications of the proposals with the view of endeavouring to meet the objections raised in these reports, and in the hope of inducing the Government and the House of Eepresentatives to favourably consider the offer in its new form. The clauses modified are as follows: — No. 9 : This modification does not call upon the Government to work any section of the company's railway, excepting for contractors' traffic purposes, and at the cost of the company for traffic and maintenance. No. 12 : Is inserted a provision that the annual payment for land-grant may be made by the issue of Government bonds, bearing 3-J- per cent, interest per annum. The bonds to be issued at the current market price on the day of issue. No. 20 : The bonds issued for the payment of the purchase of the railway to bear 3|- per cent. interest, instead of 4 per cent. No. 21 : The payment for the Belgrove line to be extended for a period of ten years, on the same terms as those mentioned in clause 12. The second modification of this clause, that the comp-

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any is not required to complete this section into the Motueka Valley; and it sells the work executed, up to date, at half cost—namely, £30,000. Third modification, that the company complete the line into the Motueka Valley, and that the Government work and maintain the line when completed, paying the company the net profits after deducting the cost of working. Schedule of Eates : Instead of adhering to the schedule of rates attached to the original contract, it is proposed to take the same as those in force on the Wellington-Masterton line, with 25 per cent, added thereto, and with power to charge double rates on the Incline Section, East and West Line, I have, &c, Eobert Wilson, Engineer-in-Chief and General Manager, New Zealand Midland Eailway Company (Limited). The Hon. the Premier, Wellington.

Enclosure in No. 36. Amended Draft Contract, 15th August, 1893. This Deed made the day of , one thousand eight hundred and ninety-three, between Her Majesty the Queen (who, with her heirs and successors, is and are hereinafter referred to as " the Queen "), of the one part, and "The New Zealand Midland Eailway Company (Limited), a joint-stock company carrying on business in the City of Christchurch, in New Zealand, and elsewhere, and having its head office at No. 61, Gracechurch Street, in the City of London, in England (which, with its successors and assigns, is hereinafter referred to as " the Company "), of the other part. Whereas by a deed bearing date the seventeenth day of January, one thouaand eight hundred and eighty-five, and made between the Queen, of the one part, and William Crystall, John Tucker Ford, George Hart, John Thomas Matson, Thomas Shailer W r eston, John Honeycombe Cock, Charles Yates Fell, Henry Douglas Jackson, Albert Pitt, and James Sclanders, all therein respectively described and thereinafter collectively referred to as " the contractors," of the other part, the Queen and the contractors did mutually contract and agree for the construction, maintenance, and working of a line of railway to connect the east and west coasts of the Middle Island, from Springfield, in the Provincial District of Canterbury, to Brunnerton, in the Provincial District of Westland, so as to connect at Springfield aforesaid with the New Zealand Government railway already constructed, and having its terminus there, and at or near Brunnerton with the Government railway already constructed, and connecting Brunnerton aforesaid with the Town of Greymouth ; and also a further line of railway from Brunnerton aforesaid to or near Belgrove, in the Provincial District of Nelson, so as to connect there with the New Zealand Government railway already constructed and leading thence to the City of Nelson, and connecting the same with the first before-mentioned line of railway, which two several lines of railway are thereinafter referred to as "the said railway," with all necessary buildings, railway works, and other appliances requisite for the same, and for working the said railway upon the terms and conditions and with and subject to the covenants, agreements, provisoes, or restrictions in the said deed now in recital contained : And whereas, by a deed of assignment bearing date the thirtieth day of April, one thousand eight hundred and eighty-six, and indorsed upon the hereinbefore in part recited deed of the seventeenth day of January, one thousand eight hundred and eighty-five, the contractors did thereby, with the consent of the Governor of New Zealand, testified as therein appearing, assign unto the Company all that the original contract and the full benefit and advantage to arise therefrom, upon the terms and with and subject to the covenants, provisoes, and conditions therm contained: And whereas by a deed bearing date the third day of August, one thousand eight hundred and eighty-eight, and made between the Queen of the one part, and the Company of the other part, a new contract was entered into in substitution for the recited deed of the seventeenth day of January, one thousand eight hundred and eighty-five, which said deed of the third day of August, one thousand eight hundred and eighty-eight, is hereinafter referred to as " the original contract." Now this deed witnesseth that in pursuance of the premises and in consideration of the covenants hereinafter on the part of the Queen and of the Company reespectively contained, the Queen doth hereby covenant with the Company, and the Company doth hereby covenant with the Queen in manner following, that is to say,— 1. In construing these presents, if not consistent with the context, — " Lands " mean Crown lands selected or to be selected by the Company, and granted by the Crown to it in accordance with the original contract or under these presents: " Month " means a calendar month: " Original contract " means the hereinbefore in part recited deed of the third day of August, one thousand eight hundred and eighty-eight: " The Engineer " means an engineer or engineers to be appointed from time to time by the Governor for any of the purposes of these presents : " The Governor " has the like meaning as is attached thereto by " The Interpretation Act, 1878": "The main line" means the line of railway from Springfield to Brunnerton, and from Brunnerton to Eeefton, mentioned in these presents, constructed and to be constructed, maintained, and worked in accordance therewith, with all necessary buildings, works, and appliances requisite for working the same : "The Belgrove line" means the line of railway consrructed, and being, and to be constructed, from the Government railway at or near Belgrove, in the Provincial District of Nelson, towards the Motueka Valley :

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" The Buller line" means the line of railway connecting the Belgrove line with the main line at Eeefton: "To work " or " working " the said railway or any section thereof, or " worked," means running trains drawn by locomotive engines thereon for the carriage or conveyance for hire of passengers, animals, or goods, and generally in all respects carrying on, upon, and about the said railway the business of railway carriers in all its branches, so that the said railway shall be open for public traffic, and includes the supply and maintenance of all necessary rolling-stock and equipment for the purposes of such . traffic, and the services of all requisite officers, servants, or agents that may be necessary for carrying on the traffic on the said railway, or any section thereof, as the case may be: And whenever any officer of the Queen is referred to by the title of his office, it shall be understood to refer to the person,for the time being holding such office. 2. The Company shall and will, with all convenient speed and within the term of five years, computed from the day of , one thousand eight hundred and , or within such further time after the expiration of that period as may be allowed in that behalf under these presents, at its own cost and expense in all things, construct and completely finish the main line so as to connect Springfield, in the Provincial District of Canterbury, with Brunnerton, in the Provincial District of Westland, and thence to Eeefton, in the Provincial District of Nelson, and shall also, within two years from the said day of , one thousand eight hundred and ninety- , construct the Belgrove line. And the Company shall construct the said railway along the line shown in red upon the map marked hereunto annexed (the same, with certain amendments in the delimitation of the sections shown thereon, being similar to the map marked " Al" annexed to the original contract) or as near thereto as practicable, such railway to be constructed, and, when completed, to be maintained and worked in all respects under and subject to the terms and conditions of these presents. 3. The said railways, and all other w r orks in connection therewith which are provided for in this contract,- shall be constructed, maintained, and worked under the provisions of these presents, and shall be well and faithfully constructed of sound materials, and of sufficient strength and durability, having regard to the nature of such works, upon plans, both general and detail, to be from time to time approved of by the Engineer, and so that the details shall as nearly as may be conform to the approved standard drawings in use on the New Zealand Government railways, or such modifications thereof as the Engineer shall from time to time approve; and that the specifications shall accord as nearly as may be to the standard of specifications of the Government of New Zealand for the time being used in respect of railways of a similar character having single lines of permanent-way, or as may be necessary for any particular work included in this contract; and such construction and maintenance shall in all things be to the reasonable satisfaction of the Engineer, it being the intent and meaning of this provision that all such plans and specifications, when approved by the Engineer, or as the same may be altered or modified subject to his approval, shall form part of this contract as effectually as if the same had respectively been attached hereto at the date of the execution hereof. Except as provided by the next succeeding clause hereof the grades-on the said railways shall not be steeper than one in forty on the straight, with a sufficient flattening on curves to give equivalent haulage power, and no curve shall be of a less radius than five chains. 4. The Company shall not, without the consent of the Governor first had and obtained, deviate from the line of railway as surveyed, excepting always and it is hereby agreed that the Company may construct the Incline line shown upon the plans deposited with the New Zealand Government marked 5. All rolling stock and plant to be from time to time used or employed upon the said railway or in connection therewith shall be of at least equal character and strength in all respects to the rolling-stock and plant in general use upon railways constructed by the Government of New Zealand, and so as to be sufficient both in quality and quantity for effectually carrying on the traffic on the said railway as may from time to be requisite or necessary. 6. The Company shall not any time assign, charge, or dispose of this contract, or any benefit or advantage thereof or thereunder either at law or in equity, without the written consent of the Governor on behalf of the Queen first had and obtained; but this clause shall not be deemed to affect or interfere with or in anywise abridge the powers of borrowing of the Company and it is further agreed that in the exercise of such powers the Company may charge all or a part or parts only of their property : Provided that the Governor may at any time appoint any person in the colony or elsewhere for the purpose of consenting to any such assignment, and no such consent shall be arbitrarily withheld either by the Governor or by any person so appointed as aforesaid. 7. Upon the construction of the said railway, and upon its being opened for traffic, the Company shall from time to time and at all times use, work, and manage the said railway to the best advantage in all respects, and shall on every week-day cause at least one train for the conveyance of passengers and goods to despatched each way along and upon the whole extent of the said railway : Provided that the obligation to run such daily trains shall not be compulsory if at any time any part of the said line is unsafe or dangerous to traffic, and the Company is taking all necessary steps to promptly render the same safe and fit for traffic. The provisions of this clause shall extend and apply to any section of the said railway completed and fit for traffic, save in so far as the same are modified by these presents. 8. So soon as the said railway or any section thereof is surveyed and marked out on the ground by the Company the Queen will, with all convenient speed after being requested in writing by the Company under the hand of its manager or agent for the time being so to do, and at the Company's expense, put the Company in possession of all lands then in the possession and at the

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disposal of the Queen for the purposes of the construction of the said railway of the width and extent necessary for such construction, and of any land adjacent thereto, which may be available and in such possession or at such disposal as aforesaid, which in the opinion of the Engineer may be required for side-cuttings, ballast-pits, spoil-banks, and road-approaches and road-diversions, or for the protection in any way of the said railway, or for workshops, stations, or other buildings used in connection with the said railway : Provided that nothing herein contained shall be deemed to require the Queen to cause possession of any land to be so given which is then lawfully held and used for mining purposes, or which may be subject to the terms of any special Act of the General Assembly affecting the same. 9. The Queen will, at the request of the Company, work any portions of the main line between Springfield and the eastern end of the Incline line until the main line shall be completed, for the carriage of contractors' material, &c. (a.) The Queen shall be called upon to run only such number of trains as may be considered necessary for the requirements of traffic : (&.) The Company shall maintain the rails, sleepers, ballast, formation-works, and bridges : (c.) The Queen shall pay to the Company the gross receipts derived from the working of the said portions of railway after deducting the net cost of working. 10. After the completion of so much of the main line as extends from Eeefton to Brunnerton, and thence to Jackson's, the whole or any part of the lands which the Company shall have earned or become entitled to in respect thereof, and not already selected by and granted to or otherwise vested in the Company in accordance with the provisions of the original contract shall be granted to it in accordance with the said provisions, the legal estate being antevested to the date of selection when the Company shall so require or direct, but so that each separate selection shall, unless with the consent of the Queen, be granted to the Company in one grant only ; and the whole of such lands earned by the Company, or to which it shall have become entitled, shall be granted to the Company within two years from the first day of January, one thousand eight hundred and ninety-three. 11. Save as provided by the last preceding clause, the rights of the Company to select and acquire lands shall absolutely cease and determine from the date hereof. 12. In consideration of the surrender by the Company of such rights, the Queen shall pay to the Company the sum of £850,000 sterling, or by the issue to the Company of Government bonds bearing 3-J- per cent, interest per annum. The bonds to be issued at the current market price on the day of issue, by twenty equal half-yearly instalments, of £42,500 each, payable at the head office of the Company in London, free from all deductions or taxations of any sort or kind whatsoever, the first of such instalments being paid on the execution hereof. 13. If the Queen and the Company shall not within one year after the opening of the main line for traffic, enter into an agreement for the construction of the Buller line, the powers of the Company to construct the Buller line shall cease, and if the Queen shall hereafter construct that line the Company shall afford the Queen reasonable and proper traffic facilities in their Eeefton Station. 14. The Queen shall give to the Company and the Company shall give to the Queen mutual running powers and terminal facilities over the respective lines of railway of the Queen and the Company for carrying traffic on the line of the one party through or on to the line of the other party, and in particular shall give the Company access to the ports of Lyttelton, Nelson, and Greymouth, and to the Government termini at such ports and at Christchurch; but neither party shall have the right to compete with the other party, by carrying on the line of the other party traffic originating and terminating on such line. The terms and conditions under which such running powers and terminal facilities shall operate shall be set out in an agreement, or, if the parties cannot agree, the form and contents of such agreement shall be determined by arbitration, and while no agreement is in existence binding the parties, then on terms to be prescribed by regulations to be made by the Governor. 15. All by-laws and regulations made for the conduct of traffic on the railway, and for the working and management thereof, shall from time to time be subject to approval by the Governor; and, subject thereto, the maximum tolls, fares, rates, and rents to be charged by the Company for the carriage upon the said railway of passengers, produce, animals, goods, merchandise, articles, matters, and things, and for the storage of goods in any of the Company's sheds or warehouses, shall not exceed the scale set forth in the schedule hereto attached, with twenty-five per centum added thereto. 16. The Company shall be at liberty at any time to reduce the said tolls, fares, rates, and rents, or any of them. 17. The Company shall not be chargeable with any rates, taxes, charges, or duties other than such as may be levied by the New Zealand Government direct, and any and all such rates, taxes, charges, and duties shall be assessed upon the income of the Company, and not upon the capital value of its railways or property. 18. If the Company shall not be able to construct and finish the main line within the period hereinbefore limited in that behalf, the Governor in Council may, by writing indorsed on these presents, if satisfied that the delay has not been caused by the wilful default or neglect of the Company, extend the said period, or the period mentioned in clause 10 hereof, for such time as he shall deem reasonable, and any such extension may be made although the period to be extended has not yet expired, or may be made after such expiration. 19. The power of purchase conferred upon the Governor by "The Eailways Construction and Land Act, 1881," and " The East and West Coast (Middle Island) and Nelson Eailway and Eailways Construction Act, 1884," may be exercised at any time after the expiration of ten years from the completion of the main line. 20. In the event of the purchase of the main line by the Queen, or on her behalf, in accordance with the Acts relating thereto, the price to be paid for such purchase shall be the sum of £2,500,000 sterling, payable at the Company's head office in cash, or in New Zealand Government

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bonds bearing interest at the rate of three pounds and ten shillings per centum per annum, and forming a part of and subject to no other terms and conditions than the other public debt of the Colony of New Zealand. 20a. At any time after the expiration of ten years from the completion of the main line, the Queen shall, if so required by the Company, purchase the main line at the price of £2,000,000 sterling, payable in the manner provided in clause 20 hereof, such price to be paid within six months from the date when the Company shall give to the Queen notice in writing of their desire that she shall purchase the line. 21. Within six months of the completion of the Belgrove line the Queen shall purchase, and the Company shall sell, the same at the price of £100,000, payment to extend over a period of ten years, as provided in clause 12. 21a. (Alternative clause No. 2.) The Company to sell to the Government the works already completed at half their present cost —namely, £30,000 —payment to be made as per clause 12. 21b. (Alternative clause No. 3.) The Company to complete the Belgrove Section into the Motueka Valley, and the Government to work and maintain the same, paying to the Company the net profit after deducting working-expenses. 22. The Company shall always be represented in New Zealand by a person or persons duly appointed under Part VIII. of "The Companies Act, 1882," empowered to sue and be sued on behalf of the Company in the Courts of the colony, and to execute deeds and instruments, and generally to act for and on behalf of the Company within the colony; and it shall not be competent for the Company to sue the Queen, or any person on her behalf, in any Court elsewhere than in the Courts of the colony, nor shall any arbitration proceedings be commenced, carried on, or concluded elsewhere than in the said colony. If at any time the Company shall not be so represented, it shall not, so long as not so represented, be entitled to any rights, powers, or privileges conferred by these presents, or any other contract or Act relating to the said railway, and may be compelled, on application to the Supreme Court of New Zealand, to appoint forthwith such a representative person or persons as aforesaid. But nothing herein contained shall be deemed to take away or affect any right of appeal now all-owed by law. 23. The Company shall at all times keep and maintain an office at Christchurch, or in some other town in the colony. A notification of the position of such office shall, within one month after the date hereof, be given by or on behalf of the Company to the Governor; and, in case of any change in the position of such office, a like notification thereof shall forthwith be given by or on behalf of the Company to the Governor as often as any such change shall be made. Any notice required to be given to the Company under these presents may be given by delivering the same at such office as aforesaid ; and if at any time there shall be no such office, of which a notification has been given in accordance herewith, then any such notice as aforesaid may be given by delivering the same at the last known office of the Company in New Zealand, or by being affixed on the door of the booking-office of some station of the railway to be constructed under these presents. 24. It is hereby declared and agreed that, if at any time hereafter any dispute, difference, or question shall arise touching the construction, meaning, or effect of these presents, or any clause or thing herein contained, or the rights or liabilities of either of the said parties under these presents, or otherwise howsoever in relation to the premises, except as to the terms of the agreement mentioned in clause 13 hereof, then every such dispute, difference, or question shall be referred to the arbitration of two indifferent persons, one to be appointed by each party to the reference, or an umpire to be appointed by the arbitrators in writing before entering on the business of the reference ; and, if either party shall refuse or neglect to appoint an arbitrator within three months after the other party shall have appointed an arbitrator, and shall have served a written notice upon the first-mentioned party requiring such party to make an appointment, then the arbitrator appointed as aforesaid shall, at the request of the party appointing him, proceed to hear and determine the matters in difference as if he were an arbitrator appointed by both parties for that purpose ; and the award or determination which shall be made by the said arbitrators or arbitrator, or of such umpire if the arbitrators shall disagree, shall be final and binding upon the said parties hereto respectively, so as such arbitrators or arbitrator shall make their or his award in writing within three months after the reference to them or him, or on or before any later day to which the said arbitrators or arbitrator by any writing signed by them or him shall enlarge the time for making their or his award, and so as such umpire shall make his award or determination in writing within one month next after the original or extended time appointed for making the award of the said arbitrators shall have expired, or on or before any later day to which the umpire shall by any writing signed by him enlarge the time for making his award; and also that no action or legal proceedings shall be commenced or prosecuted by either of the said parties hereto against the other of them touching any of the said matters in difference, unless the party to be made defendant to such action or proceedings shall have refused or neglected to refer such matters to arbitration pursuant to the provisions hereinbefore contained, or unless the time limited for making such award as aforesaid shall have expired without any such award being made; and also that all necessary witnesses on behalf of either of the parties to such reference, and all persons claiming through them respectively, shall submit to be examined by the said arbitrators, arbitrator, or umpire, upon oath or affirmation, in relation to the matters in dispute, and shall produce before the arbitrators, arbitrator, or umpire all books, deeds, maps, papers, accounts, writings, and documents within the possession or power of the said respective parties which may be required or called for, and do all other things which during the proceedings on the said reference the said arbitrators, arbitrator, or umpire may require, and that the witnesses on the reference shall, if the arbitrators, arbitrator, or umpire shall think fit, be examined on oath or affirmation ; and that the costs of the reference and 4—D. 6.

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award shall be in the discretion of the arbitrators, arbitrator, or umpire, who may direct to and by whom and in what manner the same or any part thereof shall be paid; and that the submission to reference and any award made in pursuance thereof may, at the instance of either of the parties to the reference, and without any notice to the other of them, be made a rule or order of the Supreme Court of New Zealand : Provided that, if by the terms of any award made under any such reference as aforesaid any money shall in any manner be payable by the Queen or the Government, to the company, no attachment, or execution or process in the nature thereof, shall be issued by or on behalf of the Company upon any rule or order of the Supreme Court as aforesaid, unless and_ until the Governor shall on behalf of the Queen at as early a date as practicable have taken all such steps as may be necessary to have such money specially appropriated by the General Assembly to satisfy such award, and the payment of such money shall have been refused by the General Assembly. 25. It is also declared and agreed that these presents shall be and are intended to operate as a substitute for the original contract. 26. Wherever in these presents it is provided that any appointment,'instrument, or notice, or any other act or thing, power, or authority whatsoever, may be made, executed, given, done, performed, exercised, or suffered by the Queen, or by or on behalf of the Queen, or by the Governor, then it shall be sufficient if such appointment, instrument, or notice, or other act or thing, power, or authority is made, executed, given, clone, performed, exercised, or suffered by the Governor on behalf of the Queen or in his own name as the case requires, or by such person or persons as the Governor may from time to time appoint for all or any of the purposes herein mentioned; and also that when any notice or instrument may bo given to or served on the Queen by or on behalf of the Company the same may be given to or served on the Governor on behalf of the Queen, or to or on any person appointed by him to receive the same. 27. Wherever in these presents any act or thing is agreed to be done or suffered by or on behalf of the Queen, or the Minister for Public Works, which, under or by virtue of " The Government Eailways Act, 1887," is now or at any time hereafter may be directed or required to be done or suffered by the New Zealand Eailway Commissioners constituted under the said Act, then,' and in any such case, the obligation to do, perform, or suffer such act or thing shall devolve upon the said Commissioners, who shall be deemed to be substituted throughout these presents for the Queen, or the Minister for Public Works, as the case may be, so far as relates to any such act or thing as aforesaid : Provided that if the hereinbefore mentioned Act shall be repealed, or the powers and duties of the said Commissioners shall in any manner be determined or be suspended, then the Queen or the Minister for Public Works, as the case may be, shall be entitled to resume the right to do, perform, or suffer any such act or thing as aforesaid, subject to any provision in that behalf made by the General Assembly; and the Queen and the Company shall in any such case as lastly provided for have all such mutual rights and liabilities in respect of any act or thing as aforesaid as if the said Act had not been repealed or the powers and duties of the said Commissioners had not been determined or suspended. In witness whereof these presents have been signed by the Governor of the Colony of New Zealand, in the name and on behalf of the Queen, with the advice and consent of the Executive Council of the said colony, and the seal of the colony and the common seal of the Company have been respectively hereunto affixed, the day and year first before written. Schedule oe Bates. To be the same as those in force on the Wellington-Masterton Eailway in August, 1893, plus 25 per cent., and the power to charge double rates on the Incline Section, East and West line. Approximate Cost of Paper.— Preparation, not given ; printing (1,400 copies), £17.

By Authority: Samuel Costall, Government Printer, Wellington.—lB93. Price 9d.~]