MIDLAND RAILWAY COMPANY. (CORRESPONDENCE RELATIVE TO THE PROPOSALS OF THE, FOR A NEW CONTRACT).

Appendix to the Journals of the House of Representatives, 1894 Session I, D-03

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1894. NEW ZEALAND.

MIDLAND RAILWAY COMPANY. (CORRESPONDENCE RELATIVE TO THE PROPOSALS OF THE, FOR A NEW CONTRACT).

Laid on the Table by the Hon. B. J. Seddon, by leave of the House.

No. 1. No. 198, 1893. Extract from the Journals of the House of Bepresentatives. Monday, the 2nd Day of October, 1893. Besolved, —That, seeing the Midland Bailway Company has signified its inability to complete the construction of the several railway-lines enumerated in its contract, and having submitted an amended contract, this House is of opinion that the proposals contained in the amended contract should not be agreed to. Further, that, with a view of enabling the company to complete the construction of the several lines between Springfield and Brunnerton, and from Belgrove to Beefton, and to enable the 5,000,000 acres of land now reserved for selection by the company to be freed and thrown open for settlement, it is expedient that the following modification of the existing contract be made : — A. That in lieu of land-grants being made to the company on account of work hereafter executed by it debentures of corresponding value to the Bl value be issued to the company, bearing interest at the rate of 3J per cent, per annum; such issue of debentures in lieu of landgrants to be conditional on the company surrendering its right to select land within the reserved area of about 5,600,000 acres, after deducting the quantity to which it is entitled and to which it may be entitled to for works done. B. That an extension of time for completion of the work be granted to the company; such extension not exceeding five years from the date of signing the new contract. C. That, if desired by the company, the debentures to which it may become entitled to from time to time be deposited with the Public Trustee, to be issued to the company in, as near as may be, twenty equal half-yearly instalments ; the interest of each debenture while in the hands of the Public Trustee to be applied as the company may direct: that these modifications shall not be considered a variation of other terms of the contract. D. That these modifications of the contract be made conditionally only on the company having first satisfied the Government that it is in a position to raise the necessary capital required to complete the several railway-works enumerated in the contract. On motion of Hon. Mr. Seddon. [A true extract —George Friend, Clerk, House of Bepresentatives.]

No. 2. The General Manager, Midland Eailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 4th October, 1893. I have the honour to enclose proposed draft contract, and shall be glad to have an early appointment with you to discuss this matter. I am, &c, Bobert Wilson, The Hon. the Premier, Wellington. Engineer-in-Chief and General Manager.

Enclosure in No. 2. 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 Honevcombe Cock, Charles I—D. 3.

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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 cloth hereby covenant with the Queen in manner following, that is to 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 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 Beefton, 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 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 Buffer line " means the line of railway connecting the Belgrove line with the main line at Beefton : " 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 Beefton, in the Provincial District of Nelson. 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.

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3. The said railways, and all other works in connection therewith which are provided fdr 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 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 a,nd 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 5 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 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 sidecuttings, 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 for the carriage of construction material any portion of the main line between Springfield and the eastern end of the incline line until the main line shall be completed. (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 company shall maintain the rails, sleepers, ballast, formation-works, and bridges : (c.) The Queen shall pay to the company the gross receipts derived from working the portion of railway, after deducting the net cost of working : (d.) The Queen shall work the Belgrove line, when open for traffic, until the completion of the Buller line, paying to the company the gross receipts derived from working such lino of railway, after deducting the net cost of working : (c.) The Queen shall, on the Belgrove line, maintain the rails, sleepers, ballast, formationworks, and bridges. 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 invested in the company, in accordance with the provisions of the original contract, shall be

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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 New Zealand Government 3-J-per-cent. debenture bonds in lieu of the present land-grant allocated to each section of line. These payments to be made at the head office of the company in London, and in sums equal to the amount of the monthly certificate of expenditure, and each payment to be made to the company within thirty days of the date of the certificate of the Engineer to the company. The bonds to be calculated at the current market price of the day of issue of each bond, and to be free from all deductions or taxation of any sort or kind whatsoever, and to form part of and subject to no other terms and conditions than the other public debt of the Colony of New Zealand. 13 If the Queen and the company shall not, within one year after the opening of the main line for traffic, enter into a contract 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 Beefton 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 run-ning-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 on 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 25 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 or any portion of the railway 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 capital cost price to .the company, in addition the Queen to pay to the company interest during construction as provided in. clause 44 of the contract of 3rd August, 1888; such price to be payable at the company's head office in cash, or in New Zealand Government bonds bearing interest at the rate of £3 10s. 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. Clause 21 of existing contract re construction of water-races to be retained. 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

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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 abitrator, 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. 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 Govern-

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merit Railways 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 of Bates. To be the schedule of rates and fares in force on the Wellington and Masterton Bailway in October, 1893, plus 25 per cent., and to include the right to charge double mileage rates over the incline section of the main line.

No. 3. The General Manager, Midland Eailway Company, to the Hon. the Bremier. Sir,— ' ' Wellington Club, Wellington, N.Z., sth October, 1893. I have just received a cablegram from my directors asking me to, if possible, agree to the terms of the proposed new contract on the basis of your amendment to the report of the Committee, to enable the company to finance immediately so as not to delay works, and I am also to return at once to London. Will you kindly have this matter settled to enable me to return to Christchurch on Saturday next. I am, &c, Eobert Wilson, The Hon. the Premier, Wellington. Engineer-in-Chief and General Manager.

No. 4. The General Manager, Midland Bailway Company, to the Hon. the Premier. Sir,— Wellington Club, Wellington, N.Z., 6th October, 1893. I have the honour to acknowledge the receipt of your letter of the sth instant, and in reply beg to state that it is necessary for me to go south on Saturday next to attend to the business of my company there. Having left with you a draft proposed contract for your perusal, I shall be glad to hear of any amendments thereto you may wish to make at your earliest convenience as I am leaving for London the end of this month. I am, &c, Eobert Wilson, The Hon. the Premier, Wellington. Engineer-in-Chief and General Manager.

No. 5. The Hon. the Minister for Public Works to the General Manager, Midland Bailway Company. Sir, — Public Works Office, Wellington, 13th December, 1893. I have the honour to acknowledge the receipt of your letter of the 6th October last, in which you refer to the draft proposed contract you lately left with me and ask for any amendments thereto which I may wish to make. In reply, I beg to point out that the resolutions adopted by the House of Bepresentatives on the 2nd October do not at present permit the Government to vary the existing contract without the authority of an Act of the General Assembly. Further legislation will be necessary to sanction the proposed modification of such contract, and the new Parliament will, as a matter of course, fix the exact terms of any such modification. The resolutions proposed by the Government, and which were adopted by the House of Bepresentatives on the 2nd October last, are accepted as the basis of the proposed modification of the contract. These resolutions, extracted from the Journals of the House, are as follows :— A. That in lieu of land-grants being made to the company on account of work hereafter executed by it debentures of corresponding value to the Bl value be issued to the company, bearing interest at the rate of 3f per cent, per annum, such issue of debentures in lieu of landgrants to be conditional on the company surrendering its right to select land within the reserved area of about 5,600,000 acres, after deducting the quantity to which it is entitled and to which it may be entitled for work clone.

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B. That an extension of time for completion of the work be granted to the company; such extension, not exceeding five years from the date of signing the new contract. C. That, if desired by the company, the debentures to which it may bacome entitled from time to time be deposited with the Public Trustee, to be issued to the company in as nearly as may be twenty equal half-yearly instalments ; the interest of such debentures while in the hands of the Public Trustee to be applied as the company may direct: that these modifications shall not be considered a variation of other terms of the contract. D. That these modifications of the contract be made conditionally only on the company having first satisfied the Government that it is in a position to raise the necessary capital required to complete the several railway-works enumerated in the contract. On the company satisfying the Government in terms of clause D above, the Government will, during the next session of the General Assembly, be prepared to submit the necessary measure sanctioning the proposed modification of the existing contract, and containing the requisite powers to carry out the same, subject, however, as stated hereafter. The Government will also propose that provision shall be made to the effect that if the whole of the works mentioned in the existing contract which at present remain to be executed are not completed by the company at the end of the proposed extension of time; or, if these works are not energetically resumed by the company within six months after the execution of the new or modified contract, and thereafter from time to time carried on at such a rate as will admit of the whole works being duly completed within five years from the date of such new or modified contract; or, if at any time the company shall, in the opinion of the Government, commit or suffer a wilful breach of the contract, there shall be power to the Government to absolutely determine such contract as regards such portions of the railway as shall not then be complete and open for traffic, as to enter upon and take possession of all the incomplete portion of the line, and may thereafter complete or abstain from completing the whole or any part of such works as maybe thought expedient. These provisions would be in addition to any of a. like character contained in any Act at present in force relating to the contract; and exercise of any such power should not be deemed to prejudice or restrict any other right or remedy arising under or secured by the contract. Further,' it will be necessary that, on the new contract being entered into, a mutual release as to non-performance or non-observance of terms of the present contract shall be given, subject, however, to the terms of the present proposals. The Government do not think an entirely new contract need be entered into, but that a modification of the present contract will meet the case. The particular terms in which it shall be expressed is a question of detail which can better be left to a future date. It must be distinctly understood that the new Parliament will be at liberty to deal with this matter, and anything herein contained is subject to ratification or alteration accordingly ; and, if Parliament does not ratify these proposals, with or without alteration, the same shall have been deemed to have been made without prejudice. I shall be glad to receive from you an assurance that these proposals are likely to be acceptable to the company. I have, &c, The General Manager, B. J. Seddon, New Zealand Midland Bailway Company. Minister for Public Works.

No. 6. Mr. H. Allan Scott to the Hon. the Minister of Labour. (Telegram.) 13th December, 1893. Can you send me as soon as possible draft of terms which Government is submitting to company. Hon. W. P. Beeves, Wellington. Scott, Christchurch.

No. 7. The Under-Secretary for Public Works to Mr. N. H. M. Dalston. (Telegram.) Wellington, 15th December, 1893. The formal letter to company on subject proposed modifications in contract has been posted to Christchurch to-day. Copy cablegram sent Mr. Wilson will be posted to you. N. Dalston, Esq., H. J. H. Blow, Midland Bailway, Christchurch. Under-Secretary for Public Works.

No. 8. The Hon. the Minister for Public Works to the Midland Eailway Company, London. (Cablegram.) Public Works Department, Wellington, 15th December, 1893. Modification existing contract on basis resolutions passed by Parliament last session approved by Cabinet, subject ratification by Parliament next session. Proviso :If work not commenced six months after date modified contract, and continued energetically so as to complete in five years, contract liable be determined. Letter posted to Christchurch. The Midland Bailway Company, London. B. J. Seddon.

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No. 9. The Under-Secretary for Public Works to Mr. H. Allan Scott. (Telegram.) Wellington, 15th December, 1893. Formal letter to company on subject proposed modifications in contract has been posted to Christchurch to-day, but copy will be sent you as requested in your telegram to Hon. Mr. Beeves. H. J. H. Blow, H. Allan Scott, Esq., Midland Eailway, Christchurch. Under-Secretary for Public Works.

No. 10. The Under-Secretary for Public Works to Mr. H. Allan Scott. Public Works Department, Wellington, 16th December, 1893. Sir, — Be Midland Bailway. Eeferring to my telegram of yesterday's date, I have now the honour, by direction of the Minister for Public Works, to forward herewith for your information a copy of the letter which has been sent to the Midland Eailway Company on the subject of the proposed modifications in the existing contract. I have, &c, H. J. H. Blow, H. Allan Scott, Esq., Christchurch. Under-Secretary for Public Works.

No. 11. The Under-Secretary for Public Works to Mr. N. H. M. Dalston. Public Works Department, Wellington, 16th December, 1893. Sir, — Ec Midland Bailway. Eeferring to my telegram of the 15th inst., I have now the honour to forward to you herewith, as requested, a copy of the cablegram sent to Mr. Wilson on the subject of the proposed modifications in the Midland Bailway contract. I have, &c, H. J. H. Blow, N. Dalston, Esq., Under-Secretary for Public Works. New Zealand Midland Bailway Company, Christchurch.

No. 12. The General Manager, Midland Eailway Company, to the Hon. the Minister for Public Works. No. 156, Worcester Street, Christchurch, New Zealand, Sir,— 18th December, 1893. I have the honour to acknowledge the receipt of your letter of the 16th instant, enclosing copy of cablegram sent to Mr. Wilson on the 15th instant, for which I am obliged. I am, &c, Norman H. M. Dalston, Per pro the General Manager. The Hon. the Minister for Public Works, Wellington.

No. 13. The Secretary, New Zealand Midland Eailway Company (London), to the Hon. the Premier, The New Zealand Midland Bailway Company (Limited), Sir, — 61 and 62, Gracechurch Street, London, E.G. 24th February, 1894. The general manager of this company has submitted to the Board your letter to him of the 13th December, 1893, which reached London by the last mail on 2nd February. I have to state that it is the desire of my directors to meet the views of the Government in every way, consistent with the possibility of raising the money for the completion of the line of railway from the east to the west coast, and to assure you that they will use every endeavour to accomplish this end. At the same time, I am instructed to point out that it is not in the power of my directors to satisfy the Government that they are, or will be, in a position to complete that portion of the line from Belgrove to Beefton which resolution "D " appears to them to include. To comply with the terms set forth in the resolution, my directors are convinced that nothing short of an absolute, guarantee of interest by the Government would suffice. My directors have thought it right to call your attention to this point at the earliest opportunity afforded to them, as they cannot help believing that the intention of the resolution is that the Government will be content with my company showing by the statement of a good financial house that they can raise the capital necessary to complete the main line from east to west.

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It is at the present time impossible for my directors to say whether any, or what, modifications may be required in the terms proposed in order to enable them to raise the capital, but so soon as these can be ascertained, my Board will at once communicate them to you, but the point above mentioned must be settled before any definite conclusion can be arrived at. In the meantime, negotiations will be carried on with the understanding that our reading of clause D will be accepted. I have, &c, The Hon the Premier, Wellington. 2Eneas B. McDonell, Secretary.

No. 14. The Secretary, New Zealand Midland Bailway Company (London), to the Hon. the Premier. The New Zealand Midland Bailway Company (Limited), Sir,— 61 and 62, Gracechurch Street, London, E.C, 24th March, 1894. I am instructed by my directors to inform you that they have, as promised, made every effort to raise the money for the completion of the east and west route of the New Zealand Midland Bailway on the terms which you have stated would be acceptable to the Government in your letter of the 13th December, 1893. They greatly regret that they have not been successful in their endeavours; but they understand that, in accordance with their instructions, Mr. Bobert Wilson has already intimated to you the doubt that existed in their minds as to the possibility of success. My directors have been very anxious to refer to some authority upon whom you would rely, and whose opinion you would trust apart from any representations that were made to you by them. They have accordingly placed themselves in communication with Messrs. Scrimgeour, the brokers to the New Zealand Government, and they understand that Messrs. Scrimgeour will hereafter communicate with you, either directly or indirectly, in order that you may understand clearly the condition of the money-market in London. - I have, &c. The Hon. the Premier, Wellington. .ZEneas B. McDonell, Secretary.

No. 15. The Hon. the Premier to the Secretary, New Zealand Midland Eailway Company (London). Wellington, New Zealand, 28th April, 1894. Sir, — Be New Zealand Midland Bailioay. I have the honour to acknowledge the receipt of your letter of 24th February last in reference to the modifications proposed in the New Zealand Midland Bailway contract, and giving the interpretation which your directors place upon the resolution of the House of Bepresentatives, marked " D," transmitted to you in my letter of 13th December last. In reply, I have to state that I am unable to concur in the company's interpretation of the resolution referred to, but must leave the same to speak for itself. I have, &c, The Secretary, New Zealand Midland Bailway Company, B. J. Seddon, Premier. 61 and 62, Gracechurch Street, London, E.C.

No. 16. The Hon. the Minister for Public Works to the Secretary, New Zealand Midland Bailway Company (Limited), London. Public Works Department, Wellington, 3rd May, 1894. Sir, — Be New Zealand Midland Bailway. I have the honour to acknowledge the receipt of your letter of 24th March last, intimating that Messrs. Scrimgeour, sharebrokers, of London, will communicate with the Government relative to the condition of the money-market in England. I have, &c, B. J. Seddon, The Secretary, New Zealand Midland Bailway Company, Minister for Public Works. 61 and 62, Gracechurch Street, London, E.C.

No. 17. The Agent-General to the Hon. the Minister for Public Works. (Cablegram.) London, 11th May, 1894. Midland Bailway Company received offer necessary money complete railway subject to following: Firstly, New Zealand Government purchase with 3J-per-cent. inscribed stock Belgrove Section, Midland Eailway Company extending to Motuska if desired; secondly, exemption from local taxation ; thirdly, railway rates to be maintained contract schedule; fourthly, £618,000 3J-per-cent. inscribed stock to be vested, trustees transferable as line constructed; offer definite, and early arrangements advisable. Bremier, Wellington.

No. 18. The Secretary, New Zealand Midland Eailway Company (Limited), London, to the Hon. the Premier, Wellington. Sir,— 61 and 62, Gracechurch Street, London, E.C., 19th May, 1894. In continuation of my letter of 24th February, 1894, I am instructed to inform you that my directors have an offer of the money necessary to complete the east and west route of the New Zealand Midland Bailway. Some modification of the proposals that have been received from you will 2-D. 3.

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be necessary, but they are not such as will interfere with your views in any material point. Mr. Wilson has full instructions from my Board, and he is now on his way to New Zealand. We have also been in communication with the Agent-General. He has informed you generally of the suggestions that have been made. It would be an advantage in this negotiation if my directors were enabled to confer with the Agent-General on points of detail, and if he received from you sufficient authority to assist them in their dealings with the financier who is prepared toadvance the requisite funds. I have, &c, .ZEneas E. McDonell, Secretary. The Hon. the Premier, Wellington, New Zealand.

No. 19. The General Manager, New Zealand Midland Bailway Company (Limited), to the Hon. the Premier. Wellington Club, Wellington, 19th June, 1894. Sir, — Midland Bailways : Proposals for a New Contract. Eeferring to our interview yesterday, I have the honour to submit, as you requested, the proposals of the company more in detail than those you received from London. The company has received an offer of the capital to finish and equip the line of railway between Patterson's Creek on the east, and Jacksons' on the west, of the main range of the South Island, and thus complete the connection between the east and west coasts. The new capital is to be £1,250,000, and is to be issued only for the specific purpose of connecting Jackson's with Patterson's Creek. It is intended that the stock of the new issue shall bear 4 per cent, interest. The following conditions are stipulated by the financiers : — (a). In exchange for the land at present locked up within the authorised area (not including lands still to be selected by the company) the company to receive New Zealand Government 3-|~ per-cent'. bonds amounting in value to £618,250, which bonds shall be placed in the hands of the Public Trustee of the colony, and will form a fund together with the annual 3|-per-cent. interest accruing thereon, out of which interest only will be paid to the holders of the new issue of capital. The Public Trustee to pay to the company in London each six months, until the fund is exhausted, a sum equal to the interest at 4 per cent, on £1,250,000, or, say, £25,000 half-yearly. All such interest payable to the company to be free from taxation. (b). Exemption of the railway from local taxation. (c). A maximum schedule of rates and fares to be agreed and attached to the new contract, which schedule may be modified from time to time with the consent of the company. (d). The construction of the Eeefton-Motueka Section of the railway to be the subject of future negotiations. (c). The Government to purchase the company's works at Belgrove at their cost price, namely, £60,000 ; or, if the Government so elect, the company are to finish the works to a point shown on the plans at the junction of Norris Gully and Motueka Valley, and when finished the Government will purchase the line at its cost price, say, £90,000. I have, &c, The New Zealand Midland Bailway Company (Limited).. Bobert Wilson, Engineer-in-Chief and General Manager. The Hon. the Premier, Wellington.

No. 20. The General Manager, Midland Bailway Company, to the Hon. the Premier, Wellington. Wellington Club, Wellington, June 25th, 1894. Sir, — Midland Bailway: Proposals for a New Contract. By last mail I received a communication from my directors to the effect that I was to inform you that time is a very important element in connection with the arrangements with the company's finances. I have, therefore, the honour to ask if you will be kind enough to let me know, approximately, when you anticipate the proposals of the company will come before the House. I have, &c, The New Zealand Midland Bailway Company (Limited). Bobert Wilson, Engineer-in-Chief and General Manager. The Hon. the Premier, Wellington.

No. 21. The Hon. the Premier, Wellington, to the Secretary, New Zealand Midland Bailway Company (Limited), London. Wellington, June 29, 1894. Sir, — Be New Zealand Midland Bailway. I have the honour to acknowledge the receipt of your letter of 19th ultimo, stating that your directors have received an offer of the amount necessary to complete the east to west coast route of the above-mentioned railway, and requesting that the Agent-General might be authorised to confer with you in dealing with the matter. In reply, I have to state that it would be inconvenient for negotiations to be carried on simultaneously in both England and New Zealand; and, as Mr. Wilson is already treating with the

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Government direct in the colony, it would not appear to be desirable to authorise the Agent-General to treat with your company in London at the same time. I have, &c, B. J. Seddon, Premier. The Secretary, New Zealand Midland Bailway Company (Limited), 61 and 62, Gracechurch Street, London, E.C.

No. 22. The Hon. the Minister for Public Works to the General Manager, Midland Bailway Company.. Public Works Office, Wellington, 18th July, 1894. Sir, — Midland Bailway : Proposals for a New Contract. Eeferring to your letter of 19th ultimo on the above-mentioned subject, in which you submitted the proposals of the company in greater detail than cabled from London, and to your further letter of 25th ultimo inquiring when the said proposals would be laid before Parliament, I have now the honour to state that the matter has been carefully considered in Cabinet, but Ministers are of opinion that the proposals, as they stand, would certainly not be accepted by Parliament. Taking the several proposals in order, I w T ould remark upon them as follows : — (a.) The suggestion that the whole of the 3-J-per-centi. bonds to be paid to the company, as a consideration for the completion of the Springfield-Brunnerton Section of the railway should be paid over to a trustee in advance, and that such bonds should bear interest from the date of the proposed new contract—when the railway might never be completed at all—seems to the Government to be unreasonable. If the company will propose that the payments be made as follows —viz.: £200,000 one year from the date of new contract, £200,000 two years from same date, and the balance, £218,250, on the completion of the through line, such a proposal would be much more likely to be accepted by Parliament. The company's proposal should also provide that, in the event of the whole of the new share capital not being paid up immediately, interest is only to be paid by the trustee on so much thereof as may from time to time be actually paid up. It also appears to Ministers that if the Government debentures are to be vested in a trustee, to be devoted to certain strictly defined uses, that the company's new share capital, when raised, should also be vested in trustees, to be appointed by the Government and the company jointly, who would see that the same is dealt with only as prescribed by the trust deed. (b.) The Government considers that it would be quite hopeless to ask Parliament to exempt the sections of the railway aleady constructed from local taxation, as to do so would be to confiscate a portion of the revenue of certain local bodies, wdrich bodies have in some cases entered into engagements in anticipation of such revenue, but if the company will frame its proposal so as to apply only to the uncompleted portions of the line, the Government will be happy to submit the same to Parliament. (c.) Before any opinion can be expressed on this proposal it is essential that the schedule of rates proposed to be adopted should be before the Government. If, however, a reasonable schedule of rates is submitted there will probably be no objection to this proposal. (d.) This proposal is very indefinite. It should be stated how long the company wishes the matter to stand over for. The Government presumes, however, that the company would submit proposals on the completion of the section of the railway between Springfield and Brunnerton. (c.) Cabinet considers that it is extremely unlikely that Parliament would entertain this proposal as it stands, but if the company will propose to complete the Belgrove Section to Motueka within three years from the date of signing the new contract, and to conduct regular traffic thereon from and after that date, and to accept 3|~per-cent. debentures in lieu of land-grant to the amount of one-half the cost of completing the line, that Parliament might possibly entertain such a. proposal. It would also be as well if the company's proposal stated that it would be understood that the existing contract between the Queen and the company would be entirely cancelled as from the date of the execution of the new one, and that such provisions of the existing contract as it is considered necessary to retain will be incorporated in the new contract; also, that the cancelling of the existing contract will extinguish all claims and demands that could have been made thereunder by either the Government or the company; also, that all the Crown land at present reserved from sale for selection by the company (except as regards the area yet to be selected in respect of the portion of the railway already constructed) will'be entirely released from such reservation, and will be available to be dealt with in any manner the Government may think fit, as from the date of the execution of the new contract ; also, that the area of land which the company is entitled to select in respect of the portions of the railway already completed will be so selected within three months from the execution of the new contract. If you can see your way to make the above suggested modifications in the proposals of the company and will make them accordingly, the same will receive the careful and early consideration of the Government. I have, &c, To the General Manager, B. J. Seddon, New Zealand Midland Bailway Company, Wellington. Minister for Public Works.

No. 23. The General Manager, Midland Bailway Company, to the Minister for Public Works. Wellington Club, Wellington, N.Z., 20th July, 1894. Sir, — Midland Bailway : Proposals for a iVew Contract. I have the honour to acknowledge the receipt of your letter of the 18th instant, containing modifications of certain proposals of the New Zealand Midland Bailway Company (Limited), submitted in my letter dated the 19th ultimo

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In reply, I beg to state it is the desire of the company to meet the views of the Government so far as it lies in its power so to do, and with this intention I have the honour to submit the following comments and counter-offers on the proposals in question : — (a.) Since my return to the colony last month I have received a cable from my directors stating that it is imperative for the whole amount of £618,250, in Government bonds, to be placed in the hands of the Public Trustee on behalf of the company, and for the specific purpose of paying interest on the new issue of capital, this being a condition imposed by the financiers. It is the intention of the Board to issue stock and call up the whole of the capital at once. It is, as you will see, impossible to take the part-payments, as suggested by the Government, but, with the view of meeting your wishes relative to interest payments on the £618,250, the company would accept the following modifications, viz. : — The sum of £618,250 to be placed (as required by the financiers in London) in the hands of the Public Trustee on the company signing the contract. Interest, at 3J per cent, per annum to be paid on £200,000 as and from that date. Interest at 3J per cent, per annum on the second £200,000 to commence one year later, and interest at per cent, per annum on the remainder—viz., £218,250 — to commence two years later than the date of signing the new contract, by which time the greater part of the new capital will be expended on the works in the colony. The Public Trustee to pay the company in London each six months, until the fund is exhausted, a sum equal to the interest at 4 per cent, per annum on £1,250,000, or, say, £25,000 half-yearly; all such interest to be free from taxation. I have to point out that this fund will practically remain in the coffers of the colony until exhausted, being held in trust by the Public Trustee. I have also the honour to draw your attention to the fact that in the prospectus for the issue of the new capital it will be stated that the money is raised for the specific purpose of completing the railway between Paterson's Creek and Jackson's, and consequently cannot be used, unless fraudulently, for any other purpose whatever ; and, as the directors are responsible for the issue of the prospectus and the expenditure of the money raised on the strength of such prospectus, I believe the standing and reputation of these gentlemen will be a sufficient security as to the proper manipulation of the' new capital, and therefore it will be unnecessary to adopt so unusual a course as to appoint a trustee for stockholders, and lam sure no Board would agree to such a proceeding. But there is no reason, I think, why your Agent-General in London should not, on behalf of the Government, be first satisfied as to the prospectus before it is issued by the company. (b). The company's lines to be constructed by the new capital to be free from all local taxation, and the company's existing lines to be brought under the new Eating Act, and not therefore taxed on improvements. (c) A maximum schedule of rates, fares, and charges to be the same as that attached to the existing contract, which may be modified from time to time with the consent of the company. Such maximum schedule will not necessarily be put in force, as, it is hardly necessary to state, the company will always have to fix its charges to suit the exigencies of traffic. (d.) The company to submit to the Government proposals to complete the Eeefton-Belgrove section after opening the line east and west for traffic. (c.) The company to complete the Belgrove Section to a point at the junction of Norris Gully and Motueka Valley within three years from the date of signing the new contract, and accept 3-|~per-cent. Government debentures, in lieu of land-grant, to the amount of one-half of the cost of completing the line. As it is not possible for the company to work so short a section, the Government to work and maintain the line, paying the company 40 per cent, of the gross receipts from that section. In the event of the Government and the company not agreeing to terms for the completion of this line to Beefton, the Government are then to purchase the Belgrove-Motueka Section from the company at 75 per cent, of its cost, or, say, £70,000; payment to be made in 3-|-per-cent. Government bonds. If the Government cannot accept this modification, the alternative is to leave the works at Belgrove in their present unfinished state, waiting the result of the negotiations for completing the Beefton-Belgrove Section when the east and west line is finished. It is understood that the existing contract between the Queen and the company will be entirely cancelled as from the date of the execution of the new one, and that such provisions of the existing contract as it is considered necessary to retain will be incorporated in the new contract; also, that the cancelling of the existing contract will extinguish all claims and demands that could have been made thereunder by either the Government or the company; also, that all the Crown land at present reserved from sale for selection by the company (except as regards the area yet to be selected in respect of the portion of the railway already constructed) will be entirely released from such reservation, and will be available to be dealt with in any manner the Government may think fit, as from the date of the execution of the new contract; also, that the area of land which the company is entitled to select in respect of the portions of the railway already completed will be so selected within six months from the execution of the new contract. On hearing from you that the above amended proposals meet with the approval of the Government, I will cable to my directors for confirmation. I have, &c, The New Zealand Midland Bailway Company (Limited). Eobert Wilson, Engineer-in-Chief and General Manager. The Hon. the Minister for Public Works, Wellington.

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