GOLDFIELDS AND MINES JOINT COMMITTEE. REPORT ON THE PETITIONS OF HERBERT ERNEST EASTON, Nos. 75 AND 231, TOGETHER WITH MINUTES OF PROCEEDINGS AND EVIDENCE.

Appendix to the Journals of the House of Representatives, 1901 Session I, I-04a

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1901. NEW ZEALAND.

GOLDFIELDS AND MINES JOINT COMMITTEE. REPORT ON THE PETITIONS OF HERBERT ERNEST EASTON, Nos. 75 AND 231, TOGETHER WITH MINUTES OF PROCEEDINGS AND EVIDENCE.

Beport brought up 30th October, 1901, and ordered to be printed.

ORDERS OP REFERENCE. Extracts from the Journals of the Legislative Council. Friday, the sth Day of July, 1901. Ordered, " That a Seleot Committee be appointed to consider all Bills and petitions that may be introduced into the Council affecting goldfields and mines, and to report generally upon the principles and provisions which any suoh Bills may contain ; with power to sit and confer with any similar Committee that may be appointed by the House of Representatives, and to make a separate report: the Committee to consiat of nine members—viz., the Hon. Mr. Barnicoat, the Hon. Mr. Bonar, the Hon. Mr. Jennings, the Hon. Mr. Kerr, the Hon. Captain Morris, the Hon. Mr. Reeves, the Hon. Mr. A. Lee Smith, the Hon. Mr. Swanson, and the mover."—(Hon. Mr. W. C. Walker, C.M.G.)

Friday, the 26th Day of July, 1901. Ordered, " That Standing Order No. 162 be suspended, and that the names of the Hon. Mr. Johnston and the Hon. Mr. Twomey be added to the Goldfields and Mines Committee."—(Hon. Mr. W. C. - Walker, C.M.G.)

I Wednesday, the 14th Day of August, 1901. Ordered, " That the petition of Herbert Ernest Easton, praying for amendment of the law relating to mining oompanies, be referred to the Goldfields and Mines Committee."—(Hon. Mr. Jenkinson.)

Friday, the 6th Day of September, 1901. Ordered, " That power be given to the Goldfields and Mines Committee of the Legislative Counoil to agree to a joint report with the Goldfields and Mines Committee of the House of Repiesentatives upon the petition of Herbert Ernest Easton."—(Hon. Mr. Reeves.)

• - Extracts from the Journals of the House of Representatives. Wednesday, the 3rd Day of July, 1901. Ordered, " That Standing Order No. 211 be suspended, and that a Goldfields and Mines Committee, consisting of seventeen members, be appointed, to whom shall be referred all matters relating to mining, and all Bills relating to mines; with power to call for persons and paners ; five to form a quorum: the Committee to consist of Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvn, Mr. W. Fraser, Mr. Gilfedder, Mr. Guinness, Mr. Herries, Mr. Lang, Mr. R. McKenzie, Mr. Miliar, Hon. Mr. Mills, Mr. Palmer, Right Hon. R. J. Seddon, Mr. E. M. Smith, and the mover."—(Hon. Mr. McGowan.)

Friday, the 6th Day of September, 1901. Ordered, " That power be given to the Goldfields and Mines Committee of this House to confer with the Goldfields and Mines Committee if the Legislative Council, and to agree to a joint report in the matter of the petition of Herbert E. Easton."—(Mr. Palmer.)

Thursday, the 12th Day of September, 1901. Ordered, " That the Goldfields and Mines Committee have leave to sit and take evidence in the matter of Easton's petition to-morrow, although the House be sitting."—(Mr. Palmer.)

EEPOET.

No. 231. Beport on the petition of Herbert B. Easton, of Dunedin. I. In this case the petitioner asks that legislation be passed in order to prevent what the petitioner alleges are acts of commercial immorality in mining companies. 11. Your Committee have very carefully inquired into the complaints made by the petitioner. The inquiry was confined to seven of the companies floated by Messrs. Cook and Gray. There was some evidence adduced to the effect that the commercial immorality alleged to have taken place in these companies was typical of what had taken place in some other companies. Although a i—l. 4a,

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great deal of evidence was given in regard to private matters between petitioner and Mr. Cook, your Committee wish as much as possible to disregard everything except the public aspect of the case. 111. The following is a summary of the charges made by petitioner:— (1.) One person or firm being (a) the promoter, (b) broker, (c) secretary, and (<_.) director, and (c) the registered offices of companies being in his or their office. (2.) Transfers being accepted and passed with moneys owing from sellers. (3.) Shares being " dummied," and commission received on them. (4.) Signatories to articles of association not being shareholders. (5.) The articles of association being so drawn as to override what may be classed as the safety clauses of the Act under which they are framed, thereby allowing a few holders of shares to obtain almost absolute control of the companies, and the articles of association being so worded as to allow unqualified shareholders to vote. (6.) Lees Ferry Company's vendors' shares being used for voting to prevent liquidation, for benefit of promoters; and that out of twelve companies, with an aggregate capital of £100,000, floated by Messrs. Cook and Gray eleven must go into liquidation but for the action taken by the holders of vendors' shares. (7.) Promoters receiving secret profits. (8.) That minute-books show that directions were given to the secretary to invoke the law against bond fide shareholders when promoters and others were owing large sums. (9.) One promoter being also a director and receiving director's fees, yet not attending meetings. (10.) The Ngahere Company's brokers taking commission on shares on which no cash has been paid. (11.) That the Ngahere Company's claim is not situated where stated in prospectus. (12.) That, on the grounds of misrepresentation, Mr. Gray, one of the promoters of the Golden Grey Company, and others, repudiated payment of calls on shares upon which the firm of Cook and Gray had received brokerage. (13.) The formation of secret rings for speculative purposes only by promoters and directors at a time when the public were being asked to subscribe money to be used for mining purposes. (14.) Shareholders voting and directors acting when their allotment money and calls were unpaid. (15.) Vendors making a profit on liquidation on shares which have cost them nothing. (16.) Improper auditing. Review op the Charges. IV. In all of these charges the onus of proof must be on the petitioner. Some have not been proved, and others are matters that should be dealt with by the law-courts, for where the law provides an ample remedy that remedy should be taken, as it is not for this Committee to take up the functions of the law-courts. Your Committee will therefore dispose of these latter charges first, namely : — (1.) " Promoters receiving secret profits" : This charge must refer to (a) salary for office and secretary, and (b) directors' fees. In regard to (a), Mr. Hoisted was simply Cook and Gray's servant, and managed the companies, and had nothing whatever to do with the flotations. Mr. Hoisted managed fourteen companies for Cook and Gray, and received on an average £75 a year each, or a total of £1,050 a year, and in the books of the companies he debited the companies with owing these amounts to Cook and Gray, and credited the companies with having paid the various payments thereon to Cook and Gray. Therefore any profits made out of this by Cook and Gray were not secret profits, but were known to the shareholders, all of whom could have known that Mr. Hoisted was only the servant. Neither were the directors' fees secret profits. Therefore this charge has not been proved at all, unless it refers to brokerage, which is dealt with hereafter. (2.) " One promoter being also a director and receiving director's fees, as per table attached, yet not attending meetings " : Mr. Cook drew director's fees, and attended in some cases only one meeting, and in others no meetings ; but if there is any wrong in this the remedy is with the shareholders, who may elect some one else. A director may do work for his company other than attending meetings, and the company should not be restricted in their choice of a director. (3.) "That the Ngahere Company's claim is not situated where stated in prospectus" : The evidence upon this charge is very much more in favour of Mr. Cook than petitioner; but even if the charge was proved, the law on the subject has been clearly laid down in the Promoters' and Directors' Liability Act, and therefore the Parliament has provided an ample remedy, which should have been taken if any wrong had been committed. (4.) " That, on the grounds of misrepresentation, Mr. Gray, one of the promoters of the Golden Grey Company, and others, repudiated payment of calls on shares upon which the firm of Cook and Gray had received brokerage " : In reference to this charge, we have the evidence of Mr. Gray, who swears that his partner, Mr. Cook, induced him to take up shares on the understanding that only the application-money would require to be paid. Mr. Gray and others were summoned by the company in the Magistrate's Court at Dunedin, and defended the actions on the above grounds. Mr. Cook, in answer to this charge in his sworn evidence, question 35, page 8, says, "The Magistrate decided there was no misrepresentation without hearing my side at all." Mr. Cook took this evidence away with him, and corrected it and returned it, yet this statement of his was not correct, for the Court held that no agreement entered into between Mr. Cook and the defendants could bind the company, and therefore the issue of this charge was not decided by the Court at all. Mr. Abbott also gave evidence on this charge, and admitted that certain of the companies were formed for speculative purposes; that Mr. Cook had induced him to take shares

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on the understanding that the application-money (Is. per share) only should be called up, and that he (Mr. Cook) would have the control of the companies, and they would not be gone on with unless the state of the share-market warranted it. The evidence of Mr. Gray and Mr. Abbott was denied by Mr. Cook, who, it appears, also by writing took over Mr. Abbott's shares, but still retained them in Mr. Abbott's name on the share register. There is also the evidence among the other documents of the company of letters written by other shareholders which corroborate the statements of Mr. Abbott and Mr. Gray, and the weight of evidence concerning this charge is against Mr. Cook; but whether or not these shareholders are to be relieved of their liability on these shares is purely a matter for the Courts to decide in proceedings between them and Mr. Cook. The part, however, of this charge which concerns your Committee is the formation of a company merely for speculative purposes on the share-market. This is against public policy, and is purely a species of gambling, and should be stopped by legislation. All parties knowingly entering into such a transaction are particeps criminis. (5.) " The formation of secret rings for speculative purposes only by promoters and directors at a time when the public were being asked to subscribe money to be used for mining purposes " : The only evidence we have of this is what is mentioned in the previous paragraph. It has not been proved that what had been done was kept secret from the other shareholders. If, however, it was kept secret, then it would be unfair to the other shareholders, who would be induced to take up shares on the representation of the names of those subscribing. Legislation is necessary to prevent the occurrence of such a case as that alleged to have taken place in this matter. (6.) " Vendors making a profit on liquidation on shares which have cost them nothing " : This has not been proved. (7.) " Shares being ' dummied,'and commission received on them": If this had been-done, then a remedy is already provided by law, and therefore the Committee have no further remarks to make. V. As to the other charges, we wish to say,— (8.) " One person or firm being (a) the promoter, (b) broker, (c) secretary, and (d) director, and (c) the registered offices of companies being in his or their offices " : It has been proved that Mr. Cook—or, rather, the firm of Cook and Gray, of which he was the managing partner in Dunedin, and had the sole control there—was the vendor to the company, also the promoter, secretary, broker, and director, and the office of the company was Cook and Gray's office. It will be necessary to briefly review these different positions held by Mr. Cook in order to ascertain if his duties in one position would conflict with those in another position. As "vendor" to the company Mr. Cook is the seller, and as " secretary " and " director " he is in a position of trust for the other shareholders to purchase from himself, so he becomes both a buyer and a seller. Again, being the "promoter" of the company, he stands in a fiduciary position to the company he promotes: he virtually creates a body to purchase from himself. The promotion gives him an unlimited power to make the company subject to such regulations as he pleases ; also for such purposes as he pleases, as well as to create it with a managing body whom he selects, and having such powers as he chooses to give them as managers. Morally, therefore, he who accepts such extensive powers should not be allowed to disregard the interests of the company. The Legislature has given these powers to a promoter, and it is necessary to pass further legislation to prevent these powers being abused. Petitioner alleges that these powers have been abused— -e.g., that as promoter Mr. Cook appointed himself broker, and as director and broker he would be both master and servant; that as director he allowed himself to charge exorbitant sums as broker; and that as secretary he, through his servant (Mr. Hoisted), actually paid himself brokerage on shares on which no money was paid at all. There is no doubt that Mr. Cook's positions of director, broker, and secretary here came into conflict. It is clear that brokerage was very high, and the shareholders, when they agreed to take up shares, did not know that so much of the money they were subscribing was going to Mr. Cook himself, and not being devoted to mining. Mr. Cook admits that in the fourteen companies inquired into he received about £1,900 in brokerage, but he says he had to pay some of this to other brokers ; but taking one only of the companies as an example, and comparing the brokerage with the amount of capital paid, the latter is quite disproportionate to the former— e.g., in the Lees Ferry Company : capital paid, £537 ; brokerage paid, £150, of which £15 2s. 6d. was ordered by the auditor to be refunded by Mr. Cook, as no money had been paid at all for the shares on which this brokerage was charged. In most of the fourteen companies inquired into the brokerage has been as disproportionate as above set out, and in some even worse. Further conflict of these positions of promoter, broker, director, &_.., is shown in reviewing charges (5), (7), and (10). (9.) " Transfers being accepted and passed with moneys owing from sellers " : This was done in some of the cases inquired into, but it is allowed by law, and is very often done by many companies ; but the law should be altered, to the effect that where any money for application, allotment, or calls is due upon shares, then the same should be noted on the transfer before it is completed. (10.) " Signatories to articles of association not being shareholders" : By the Companies Act it requires seven shareholders to form and be a company, but in many of the cases inquired into seven persons signed the memorandum of association, but some never became shareholders in the company at all, and so for a period of time the company consisted of less than seven persons; yet these who were not shareholders attended meetings, moved and seconded resolutions, and appointed Mr. Cook, Mr. Leijon, and others directors, appointed the secretary, and did other business, but it is stated in evidence that they did so on the advice of the company's solicitor. This wilful disregard of the provisions of the Companies Act is very reprehensible, and may entail loss upon shareholders, who were innocent and ignorant of these breaches. The Committee recommend that in these cases proceedings should be instituted by the Crown to test their legality.

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(11.) "The articles of association being so drawn as to override what may be classed as the safety clauses of the Act under wdiich they are framed, thereby allowing a few holders of shares to obtain almost absolute control of the companies, and the articles of association being so worded as to allow unqualified shareholders to vote " : The promoter has the creation of the company, as set out in the review of charge (1), and the interests of the shareholders should be safeguarded. In the cases inquired into many of the safety clauses for shareholders in Table A of the Act are negatived, such as their voting-power, &c. This may be quite right in regard to private companies, but in public companies, and especially in mining companies where the business on the sharemarket could not be carried on if every intending purchaser had first to search the articles of association before he purchased, the law should be amended so as not to allow these safety clauses to be negatived. (12.) " Lees Ferry Company's vendors' shares being used for voting to prevent liquidation, for benefit of promoters; and that out of twelve companies, with an aggregate capital of £100,000, floated by Messrs. Cook and Gray eleven must go into liquidation but for the action taken by the holders of vendors' shares" : The minute-book of the Lees Ferry Company shows that on the 26th March, 1901, the vendors' shares were used for voting to prevent liquidation. At this date this company should have gone into liquidation. The company was not, and had not been, carrying on the business of mining; and it was not in a financial position to do so, and the only reason for keeping the company in existence would be either for share-market purposes or for the benefit of the salaried officers. In this case the Dunedin Stock Exchange struck the company off its quotation-list. The articles of association having negatived the safety clauses in Table A, the voting-power of the smaller shareholders was reduced, and the law requires amending as set out in the review of charge (1). That there is no evidence to show that the vendors' shares were used to prevent other companies from going into liquidation. (13.) " That minute-books show that directions were given to the secretary to invoke the law against bond fide shareholders when promoters and others were owing large sums " : A large number of shareholders were sued in the Magistrate's Court at' Dunedin on the 19th April last, while Mr. and Mrs. Cook, who then owed very large sums to the companies, were not sued at all. The shareholders who were most in arrears in the companies were Mr. and Mrs. Cook, whom, Mr. Cook says, were never sued at all. The law should be more clearly defined, so as to insure that all shareholders shall be treated alike. (14.) "The Ngahere Company's brokers taking commission on shares on which no cash has been paid " : Cook and Gray were ordered to refund this money by the auditor. This is one of the cases referred to in the review of charge (1). Mr. Cook says he was absent, and he blamed his clerk (Mr. Hoisted) for this and other irregularities. He further said it was the duty of the auditor to detect the matter and order a refund to the company. Other such payments in other companies were not detected, and have not been refunded. The principle of charging improper items and the company paying them, and then these having to be refunded by order of the auditor, is not right, and when it happened once Mr. Cook and his servants should have seen that it did not happen again, otherwise it would subject them to grave suspicion. This happened more than once. Notwithstanding Mr. Cook blaming Mr. Hoisted in the matter, the minutebooks of the company show that he himself is to blame, as he as director at directors' meetings passed his brokerage account as correct and signed the same, and in some cases ordered payment; in others Vie had collected application-money on the shares sold, and he simply retained the brokerage, paying the balance over to the company. This trouble is to be attributed to Mr. Cook being promoter, broker, director, and secretary all in one. (15.) " Shareholders voting and directors acting when their calls were unpaid " : Mr. Cook elicited from Mr. Somerville that he (Mr. Somerville) had voted and also acted as director while his application-money was unpaid, and he had received director's fees, and the accounts of his firm had also been paid, while he still owed money for calls. What happened in Mr. Somerville's case happened in a much worse form in regard to Mr. Cook, which will be seen by looking at the comparative table of Mr. Cook's dealings with the seven companies whose books your Committee have, for in all of these companies he had not even paid his allotment-money till it was about nine months, on the average, overdue, and yet during this time he had acted as director, attended meetings and voted, and even passed some of his own brokerage accounts for payment, as well as his secretary's salary. He had actually passed large sums for payment to himself, and had received them while he himself was still owing to the company large sums of money. The law certainly requires amending in the direction of depriving a shareholder of the right to vote or act as director until he has paid his allotment-money. (16.) " Improper auditing " : The Committee desire to point out that in some cases brokerage was charged by Messrs. Cook and Gray on application-money when such application-money was never paid ; the matter escaped the attention of the auditors. Generally. VI. To each and all of the above charges Mr. Cook's chief answer was to point out to the Committee the very large number of contributing shares he had taken up in each of these companies for himself and Mrs. Cook. That he must have taken them up purely as a mining venture, and not for speculative purposes only, he said, was proved by the fact that he did not sell his shares, and that he stood to lose double the amount that the others did if the companies failed. This position was often during the inquiry impressed upon us by Mr. Cook, and it would have been a very strong argument indeed of Mr. Cook's bona fides if it was fully borne out, but it does not stand close criticism, for Mr. Cook has paid for his and Mrs. Cook's shares in the seven companies whose books were put in evidence the sum of £2,140, but Messrs. Cook and Gray received £1,841 13s. 9d. back from the companies, as shown by the following table: —

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V

Comparative Table.

(17.) Excepting the Eoss Day Dawn and No Town No. 2, the companies are practically in liquidation, and practically no calls will be required. (18.) Besides this, Cook and Gray had the use of moneys obtained from charges to these companies, for Mr. Cook did not always pay his application-money when due, and he did not pay his allotment-money till about nine months after it was due, and in the meantime Cook and Gray drew large fees from the companies, as follows : — Before paying allotment or calls, £ £ s. d. Mr. Cook, Boss Day Dawn, paid in 70, and Cook and Gray drew out 247 10 0 Wicklow, „ 50 „ „ 239 15 0 Lees Ferry, „ 50 „ „ 239 15 0 Ngahere, „ 50 „ „ 216 18 9 No Town No. 2, „ 50 „ „ 232 0 0 Tucker Flat, „ 65 „ „ ' 227 5 0 Golden Grey, „ 50 „ „ 220 15 0 Total „ £385 „ „ £1,623 18 9 (19.) Messrs. Cook and Gray had to pay for the services of the secretary and certain sums for other brokers, which are not included in the above table. (20.) Mr. Cook did not stand to lose much if these companies failed, but he had the chance of winning much if they were a success; and in the latter case he was by the flotations to receive fully paid-up shares worth £6,390, while he would be responsible for contributing shares worth £7,500. (21.) The Committee recommend that the law be altered on the lines above indicated, and that the law be so amended that all mining companies should be registered under the Mining Companies Acts. (22.) The question of titles having been extensively dealt with in the evidence, the Committee find that in the case of companies in which the vendors' shares have been allotted the titles are held by the company, but in the other companies the titles are held by the vendors, though the company's money has been spent on them. Bichd. H. J. Beeves, 30th October, 1901. Chairman Joint Committee.

'aid [r, :ool to iompanies. ieceivei .oo] am .ray from lompanies. Company. Date. Amount. Total. Date. Amount. Total. . Wicklow Paid Application Allotment .. 9 May, 1890 22 Feb., 1891 £ s. d. 50 0 0 50 0 0 £ a. d. By Brokerage .. Secretary's salary Director's fees 21 May, 1900 £ a. d. 139 0 0 87 10 0 £ s. d. I. Ngahere Subsequent shares 15 0 0 115 0 0 21 0 0 247 10 Q Paid Application Allotment .. 23 April, 1900 6 Mar., 1901 50 0 0 50 0 0 By Brokerage .. Secretary's salary Director's fees 24 Sept., 1900 175 0 0 87 10 0 I. Lees Ferry .. No calls made .. 100 0 0 3 18 9 266 8 9 Paid Application Allotment .. 15 June, 1900 22 Feb., 1901 50 0 0 50 0 0 By Brokerage .. Secretary's salary Director's fees 15 June, 1900 150 0 0 100 0 0 1. Tuoker Flat No calls made .. 100 0 0 21 0 0 271 0 0 Paid Application Allotment .. 19 May, 1900 About 25 Jan., 1901 65 0 0 65 0 0 By Brokerage .. Secretary's salary Director's fees 19 May, 1900 150 0 0 56 15 0 i. No Town No. 2 Subsequent calls paid 65 0 0 195 0 0 21 0 0 227 15 0 Paid Application Allotment .. 8 May, 1900 22 Feb., 1901 50 0 0 50 0 0 By Brokerage .. Secretary's salary Director's fees 8 May, 1900 185 0 0 87 10 0 >. Golden Grey Calls subsequently 500 0 0 600 0 0 7 0 0 279 10 0 Paid Application Allotment .. 21 May, 1900 25 Feb., 1901 50 0 0 50 0 0 By Brokerage .. Secretary's salary Director's fees 25 May, 1900 139 0 0 87 10 0 '. JSoss Day Dawn No calls made .. 100 0 0 21 0 0 247 10 0 Paid Application Allotment .. 27 Mar., 1900 27 Dec, 1900 50 0 0 50 0 0 By Brokerage .. Secretary's salary Director's fees 27 Mar., 1900 175 0 0 106 0 0 Some calls paid with allotment 830 0 0 930 0 0 21 0 0 302 0 0 Total .. Total .. £1,841 13 9 £2,140 0 0

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PETITION No. 75, 1901.

To the Honourable the Speaker and Members of the Legislative Council in Parliament assembled. The humble petition of Eerbebt Ernest Easton, late of Weston-super-Mare and Taunton, in the County of Somerset, now and for many years past an honorary member of the Devonshire County Club, England, at present a member of the Otago Club, and now residing in Dunedin, sheweth, — 1. Your petitioner first landed in New Zealand on 17th January, 1900. 2. Your petitioner invested a considerable sum in mining and dredging companies, and in June of last year your petitioner advised certain influential gentlemen in England and Ireland to do likewise, being of opinion the operations in connection with the dredging industry were being conducted at least on honest lines ; and that the mining and companies laws then in force gave an investor fair protection against fraud and rascality. 3. Your petitioner, on making an examination of the books of a number of companies in which he had invested and recommended to others, found gross irregularities, inasmuch as the companies were promoted, floated, managed, and directed from the office of the promoters, and that in one company a transfer of your petitioner's had been accepted and passed at a date when money was owing to the company from the seller. 4. Your petitioner found in these companies a large number of shares had been " dummied " by the promoters ; the commission on these shares, which only existed on paper, was charged and received out of the moneys obtained from the genuine shareholders. .Upon finding out this and that other grave irregularities existed, your petitioner set about trying to get these companies liquidated. Your petitioner then found that several of those who had signed the articles of association were not shareholders, and the company's solicitor had so worded the articles as to allow the unqualified and " dummy " shareholders to vote, and in the case of the Lees Ferry Gold-dredging Company (Limited) the vendors' shares were used for voting, and such was done by the vendors' employes to prevent liquidation, thereby keeping these paper companies alive for the benefit of the promoters. 5. In the case of the Lees Ferry Company your petitioner, on the 30th March last, gave his evidence before a special committee of the Dunedin Stock Exchange, deputed to investigate the irregularities complained of, as fully set out in the document accompanying this petition. Within a few days after this investigation this company, with several others floated by the same firm, were struck off from the quotation-lists of the Dunedin Stock Exchange. In the Lees Ferry Company an expert in the vendors' employ, at a heavy cost to the contributing shareholders, tested and condemned the claim as " absolutely valueless for dredging purposes." On the 26th March last a resolution to wind up was defeated, another employe of the vendor using his employer's vendors' proxies. This employe then nominated himself and got on the directorate. This company is still alive for the benefit of the promoters and some of the directors. The promoters and their employes, exclusive of other charges, received in directors' fees and office - expenses to 28th February last £207 10s. ; and further fees and office charges have or are being made and obtained from the genuine shareholders by persons who are or have been in the employ of the promoters. 6. The minute-books show entries made by the directors, empowering and directing the secretary (a nominee in the employ of the promoters) to invoke the law against the bond fide shareholders, at a time when the promoters and their nominees were owing very large sums to the companies; and that one of the promoters, who was also a director, was receiving director's fees, and not attending any of the directors' meetings. 7. Your petitioner invested money in the Ngahere Gold-dredging Company (Limited), registered Ist May, 1900. In this company the promoters and brokers obtained brokerage upon shares on which no application-money has, up to the date of the petition, been paid. This claim was tested and condemned by an expert in the promoters' employ. On the 15th April last a resolution to liquidate this company was lost, owing to the promoters' employe using the vendors' proxies and those of unqualified shareholders against the votes of the genuine shareholders. Up to the 10th instant this employe had not paid one penny into the company, and yet his employers (the brokers) had obtained commission on the shares standing in his name. Your petitioner at the date he invested his money had not seen the prospectus; he is, now advised the claim is not situated where stated in such prospectus. 8. Your petitioner has experienced great difficulty in communicating with the shareholders. The time allowed under the present laws does not permit of the shareholders receiving and returning the proxies, many of the shareholders in these companies residing in very remote districts throughout the two Islands. 9. Your petitioner found that one of the promoters in another company in which your petitioner is largely interested, on being applied to for payment of calls on contributing shares standing in his name, on which his firm has received brokerage, sent the secretary a telegram as follows: "On grounds of misrepresentation I repudiate shares allotted me." This statement he has since embodied in evidence given in the Magistrate's Court in Dunedin. At a meeting of this company held on the 23rd May last an employe of the promoters attended and threatened the shareholders that he would make the liquidation very expensive unless his employer (one of the promoters) was then and there allotted 2,000 vendors' shares. Notwithstanding this threat, your petitioner carried the resolution, only this employe of the promoters dissenting.

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10. Your petitioner finds in several dredging companies the capital is being utilised for purposes other than those for which the public subscribed it, and that no genuine attempt is being made to carry out the purport of the prospectuses. 11. While your petitioner has found the Press of the colony ready and willing to aid him in exposing the flagrant breaches of the law, and tbe unscrupulous tactics which have been resorted to by vendors and their employes, he has at the same time been unable to thoroughly set out as a warning to investors in mining stock many of the unscrupulous tactics and utterly indefensible practices of certain promoters and others whom he desired to specifically name and criticize. Your petitioner found that the. Press, while showing him every consideration, and granting him large space in the mining columns for setting forth the grievances of which he has to complain, were deterred by the drastic libel laws of the colony from publishing much that should have appeared, and if it appears to your honourable Council that what your petitioner has said on this subject is worthy of its consideration, he prays that greater freedom should be given to the public Press of the colony in the publication of facts concerning glaring evils that are heing perpetrated in connection with an industry which is of vast importance to the colony. 12. Your petitioner has, during the past six months, continually inserted charges, over your petitioner's name and address, in the public Press of the colony on the irregularities complained of, none of which have been repudiated by the parties interested, and it is the humble opinion of your petitioner the present mining and companies laws are being openly ignored, proving in some respects the law is in urgent necessity of amendments, as under the present laws the investing public have not sufficient protection against the unscrupulous. 13. Your petitioner, on the Ist instant, forwarded to your Government his suggested amendments, which he has formulated as the result of actual and costly experience, and your petitioner believes that such amendments will, if made law, go far towards effectually removing the gross and highly flagrant abuses the dredging and mining industries are now suffering under, and which, to your petitioner's knowledge, are bringing serious discredit on the commercial morality of this colony. Your petitioner humbly prays that your honourable Council will in its wisdom grant the relief desired, and, as in duty bound, will ever pray. Dated this 13th day of July, 1901. Herbeet E. Easton. [Note. —A similar Petition, No. 231, was presented to the House of Bepresentatives.]

MINUTES OF PROCEEDINGS. *

LEGISLATIVE COUNCIL. Feidat, 16th August, 1901. The Committee met at 11 a.m. Present: Hon. the Chairman, Hon. Mr. Barnicoat, Hon. Mr. Jennings, Hon. Mr. Kerr, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker, C.M.G. Order read referring to the Committee the petition of Herbert Ernest Easton. Petition read. Besolved, That the evidence given on this petition be taken on oath. Petitioner attended, was sworn, and gave evidence. Besolved, That Mr. W. B. Cook be summoned to attend the Committee in order to his being examined on this petition. Then the Committee adjourned.

Friday, 23rd August, 1901. The Committee met at 11 a.m. Present: Hon. the Chairman, Hon. Mr. Barnicoat, Hon. Mr. Jennings, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker, C.M.G. Minutes of previous meeting read and confirmed. Petition of Herbert Ernest Easton further considered. Hon. Mr. Pinkerton attended. Mr. Easton, the petitioner, and Mr. W. B. Cook attended. Petitioner gave further evidence. Certain documents relating to the Lees Ferry Dredging Company were laid before the Committee. Ordered, That copies of petitioner's evidence be supplied to the persons against whom charges have been made by the petitioner—viz., Mr. Cook, Mr. William Hoisted, and Mr. William Howes. Then the Committee adjourned.

Thursday, sth September, 1901. The Committee met at 11 a.m. Present: Hon. the Chairman, Hon. Mr. Barnicoat, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey. Minutes of previous meeting read and confirmed. Petition of Herbert Ernest Easton further considered.

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Telegram from Mr. Palmer, M.H.8., read. Mr. Palmer attended. On motion of Hon. Mr. Twomey, Besolved, That this Committee do sit with the Goldfields and Mines Committee of the House of Bepresentatives to hear further evidence on this petition. Ordered, That each member of the Committee be supplied with a copy of the evidence already given on this petition. Ordered, That Mr. C. G. V. Leijon and Mr. W. G. Somerville, of Dunedin, and also, Mr. Easton be summoned to appear before the Joint Committee on Thursday next; and that Mr. Hoisted, Mr. Howes, and Mr. Cook be informed that evidence will be given contradicting the evidence previously given by them. Then the Committee adjourned.

Thursday, 12th September, 1901. The Committee met at 10.30 a.m. Present: Hon. the Chairman, Hon. Mr. Barnicoat, Hon. Mr. Jennings, Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey. Minutes of previous meeting read and confirmed. Account for £1 lis., expenses of William Howes, passed for payment. Then the Committee adjourned to sit and confer with the Goldfields and Mines Committee of the House of Bepresentatives on the petition of Herbert Ernest Easton.

HOUSE OP KEPEESENTATIVES. Tuesday, 6th August, 1901. The Committee met at 10.15 a.m. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvin, Hon. Mr. Duncan, Mr. Gilfedder, Mr. Guinness, Hon. Mr. McGowan. On motion of Mr. Guinness, Besolved, That the reading of the minutes of last meeting be postponed until next meeting. On motion of Mr. Carncross, Ordered, That the Chairman do issue his summons to Mr. W. B. Cook, an accountant, Mandel's Empire Hotel, Wellington, to attend this Committee at its meeting on Thursday next, the Bth instant, for the purpose of giving evidence in the matter of the petition of H. E. Easton. The Committee thereupon adjourned.

Thursday, 15th August, 1901. The Committee met pursuant to notice. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvin, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Hon. Mr. Mills. The minutes of the meetings of the Ist and 6th August were read and confirmed. Mr. H. E. Easton, petitioner, attended the Committee, and, having been sworn, gave evidence. Mr. W. B. Cook attended the Committee, and, having been sworn, made a statement. On the motion of Mr. Fraser, Ordered, That the Chairman do issue his summons to the Secretaries of the No Town No. 2, the Lees Ferry, the Tucker Flat, and the Boss Day Dawn Gold-dredging Companies to attend the next meeting of this Committee and produce all books, documents, and balance-sheets of the said companies ; also to the liquidator of the Golden Grey, Wicklow, and Ngahere Companies to attend, and produce books and papers relating thereto. On the motion of Mr. Carncross, Ordered, That Mr. William Howes, accountant, of Dunedin, be summoned to attend this Committee at its next meeting to give evidence, and that the question of Mr. Cook's offer to pay this witness's expenses or otherwise be deferred. The Committee thereupon adjourned.

Thursday, 22nd August, 1901. The Committee met pursuant to notice. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Gilfedder, Mr. Guinness, Mr. Herries, Mr. B. McKenzie, Hon. Mr. McGowan, Hon. Mr. Mills, Mr. Millar. The minutes of last meeting were read and confirmed. The Chairman read a certificate from Dr. Colquhoun, stating that Mr. Sydney Thorpe Mirams was unable to attend the meeting of the Committee, as he was unable to leave Dunedin owing to illness. Thereupon the Committee agreed that the Chairman communicate with Mr. Mirams, requiring him to forward the books of the Golden Grey, the Wicklow, and the Ngahere Golddredging Companies without delay; and a telegram to that effect was at once written and despatched by the Chairman from the room. Mr. William Hoisted attended, and, having been sworn, produced the share register, prospectus, balance-sheets, and papers of the Tucker Flat Gold - dredging Company, and gave evidence. Mr. Hoisted was examined by Mr. Easton and cross-examined by Mr. Cook in reference to the conduct of the business of the Tucker Flat Company, And the witnesses having withdrawn,

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On the motion of Mr. W. Fraser, Ordered, That the Chairman be authorised to take the steps necessary to insure that all evidence relative to the matters embodied in the petition of H. E. Easton be printed. The Committee thereupon adjourned.

Saturday, 24th August, 1901. The Committee met at 10 a.m. Present : Mr. Palmer (Chairman), Mr. Bennet, Mr. Carncross, Mr. Colvin, Mr. Herries, Mr. Lang, Hon. Mr. McGowan. The minutes of last meeting were read and confirmed. The Committee proceeded with the taking of evidence in connection with the petition, dealing with matters connected with the Tucker Flat Company. The Chairman read a telegram received from Sydney Mirams, informing him that the books and papers connected with the Golden Grey, Wicklow, and Ngahere Gold-dredging Companies had been forwarded by the steamer " Te Anau " on the 22nd August. Mr. William Howes, having been sworn, was examined by Mr. Easton, and afterwards by members of the Committee and by Mr.'Cook, finally by the Chairman. The Committee proceeded with an investigation of the affairs and management of the No Town (No. 2) Gold-dredging Company. Mr. William Hoisted, on his former oath, was examined by Mr. Easton, by members of the Committee, and re-examined by Mr. Easton. The Committee then adjourned.

Monday, 26th August, 1901. •The Committee met at 10 a.m. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Herries, Mr. Lang. The minutes of last meeting were read and confirmed. The Committee proceeded with the taking of evidence relative to the matters contained in the petition. Mr. William Hoisted, on his former oath, gave further evidence as to the conduct of the business of certain gold-dredging companies, being examined by petitioner and cross-examined by the members of the Committee, Mr. Cook, and the Chairman. Mr. William Howes, on his former oath, was examined by Mr. Cook and cross-examined by Mr. Easton (the petitioner), members of the Committee, and the Chairman. And the witnesses having withdrawn, On the motion of Mr. J. Allen, Ordered, That the Chairman be directed to call the attention of the House to the publication on Friday, the 23rd August, 1901, in the Dunedin Star, of evidence given before this Committee, this Committee not yet having reported on such evidence. The Committee thereupon adjourned.

Tuesday, 27th August, 1901. The Committee met at 10 a.m. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. W. Fraser, Mr. Herries, Mr. Lang. The minutes of last meeting were read and confirmed. At half-past 10 the Committee adjourned for half an hour to attend the meeting of the House, and, having resumed, The Committee proceeded with the taking of evidence relative to the matters contained in the petition. Mr. Howes, on his former oath, was further examined by Mr. Easton, Mr. Herries, and the Chairman. The Chairman called upon Mr. Cook to make a statement in reply to the allegations which had been made; and, Mr. Cook having asked for time to examine books and papers, On the motion of Mr. W. Fraser, Besolved, That this Committee meet again on the morrow to hear the statement of Mr. Cook, and do now adjourn. The Committee adjourned accordingly.

Wednesday, 28th August, 1901. The Committee met at 10 a.m. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Guinness, Mr, Herries, Hon. Mr. Mills. The minutes of previous meeting were read and confirmed. The Committee resumed consideration of the petition. Mr. Gray was called and sworn, and gave evidence. ' Mr. Howes was recalled, and further examined by petitioner. Mr. Easton (the petitioner), on his former oath, was examined by Mr. Cook, and put in certain documents. Mr. W. B. Cook, on his former oath, gave evidence, and put in certain documents. The Committee then adjourned. Thursday, 29th August, 1901. The Committee met at 10 a.m. Present: Mr. Palmer (Chairman), Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Mr. Millar. The minutes of last meeting were read and confirmed. ii—l. 4a.

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Mr. Cook attended and made a statement. Mr. Easton attended and made a statement. Mr. Easton cross-examined Mr. Cook, Mr. Cook being on his former oath. Witness was further examined by members of the Committee. And the witnesses having withdrawn, On the motion of Mr. J. Allen, Besolved, That the witness William Howes be paid the expenses consequent on his attendance on this Committee. The Committee thereupon adjourned.

Friday, 6th September, 1901. The Committee met at 10 a.m. Present: Mr. Palmer (Chairman), Mr. Bennet, Mr. Colvin, Mr. Guinness, Mr. Herries, Hon. Mr. Mills. The minutes of last meeting were read and confirmed. On motion of Mr. Colvin, Besolved, That the House be requested to grant power to this Committee to confer with the Goldfields and Mines Committee of the Legislative Council, and agree to a joint report in the matter of the petition of Herbert E. Easton. The Committee thereupon adjourned.

JOINT COMMITTEE. Thursday, 12th September, 1901. The Committee met at 11 a.m. Present.— Council: Hon. Mr. Barnicoat, Hon. Mr. Jennings, Hon. Mr. Johnston, Hon. Captain Morris, Hon. Mr. Beeves, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey, House : Mr. J. Allen, Mr. Bennet, Mr. W. Fraser, Mr. Gilfedder, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Mr. Millar, Mr. Palmer. Mr. Herries moved, That the Hon. Mr. Beeves do take the chair as Chairman of this Joint Committee. Mr. Bennet seconded the motion, which was put by the Clerk and carried. The petitioner (Mr. Easton) and Messrs. Cook and Leijon attended. Mr. C. G. V. Leijon, having been sworn, gave evidence before the Committee, and was examined by Mr. Easton and Mr. Cook, also by members of the Committee. A letter having been read from Mr. Allan Holmes, solicitor, Dunedin, jn reference to the transfer of the claim of the Boss Day Dawn Gold-dredging Company from the vendors to the company, it was agreed that the Committee should communicate with the Mining Begistrar at Boss in the matter. A telegram to the Mining Begistrar at Boss was sent from the room by the Chairman accordingly. It was ordered, That a copy of the evidence taken by the Goldfields and Mines Committee of the House of Bepresentatives be supplied to each member of the Joint Committee when the work of printing is completed. The Committee thereupon adjourned.

Friday, 13th September, 1901. The Committee met at 11 a.m. Present. — Council: Hon. Mr, Beeves (Chairman), Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House : Mr. J. Allen, Mr. Bennet, Mr. Colvin, Hon.. Mr. Duncan, Mr. W. Fraser, Mr. Herries, Mr. B. McKenzie, Mr. Palmer. The minutes of the last meeting were read and confirmed. A letter was read from Mr. W. G. Somerville, requesting that the secretary of the Lees Ferry, Tucker Flat, and Boss Day Dawn Companies be required to forward at once all correspondence, vouchers, and requisitions in connection with these companies, the same being required for the evidence he was about to tender to the Committee. The Hon. the Chairman reported that he had communicated with the secretary of the companies in compliance with the request of Mr. Somerville. A letter from W. Howes was read, stating that he had received a notification that the evidence given by him before the Goldfields and Mines Committee of the House of Bepresentatives would be contradicted, and applying that he might be allowed to be present when such evidence was being given. It was agreed that Mr. Howes should be allowed to be present when any evidence was being given affecting him. A telegram from W. A. Brookes, Mining Begistrar, Boss, was read by the Chairman in reply to the telegram sent by the Committee at the previous meeting, whereupon it was agreed to communicate with the Warden at Hokitika asking him to explain the discrepancy in the messages which had been sent to the Committee, and a telegram was sent by the Chairmau from the room to the Warden at Hokitika accordingly. The Committee proceeded with the hearing of evidence. Messrs. Easton, Cook, Somerville, and Howes attended. Mr. W. G. Somerville, having been sworn, gave evidence, being examined by Mr. Easton. Mr. Cook cross-examined the witness. On the motion of the Hon. Captain Morris, Besolved, That this Committee do now adjourn, to meet again on Tuesday, the 17th instant, at 11 a.m The Committee adjourned accordingly.

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Tuesday, 17th September, 1901. The Committee met at 11 a.m. Present.— Council, : Hon. Mr. Beeves (Chairman), Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House: Mr. J. Allen, Mr. Carncross, Mr. Colvin, Mr. W. Fraser, Mr. Guinness, Mr. Herries. The minutes of the previous meeting were read and confirmed. A letter from Mr. W. B. Cook was read, requesting that Mr. W. Hoisted, of Dunedin, might be summoned to attend, with books and papers, in order to his examination. The Hon. the Chairman reported that he had telegraphed Mr. Hoisted to attend, as requested by Mr. Cook. A letter and telegram from Mr. W. Hoisted were read, informing that he had forwarded books and papers as required, and that he had been detained at Lyttelton through no steamer sailing from that port until the evening of the 17th instant. A letter from Mr. W. B. Cook was read, stating that he had waited in the Committee-room from 2.30 rid 5.30 p.m. on the 16th instant, in anticipation of seeing the typewritten copy of the evidence given on the 13th instant, and had been unable to obtain it. He was therefore at a disadvantage should he be called upon to proceed with his cross-examination of the witness. A letter from Mr. H. E. Easton was read, informing the clerk that the evidence sent to him on the 16th instant was not his evidence, but that of Mr. Somerville, and that he had at once forwarded it on to that witness. A letter from Mr. W. G. Somerville was read, returning the typewritten copy of his evidence only partially corrected, and declining to correct his evidence any further. The Committee agreed to consider the last three letters together. On the motion of Mr. W. Fraser, Besolved, That in future, unless otherwise ordered by the Committee, any evidence requiring to be corrected by either a questioner or a witness shall be corrected in the Committee-room in the presence of the clerk, but the questioner and the witness shall not be both present at the same time whilst the work of correction is proceeding. Mr. Somerville attended, and was informed by the Hon. the Chairman that on the rising of the Committee he would be afforded an opportunity to complete the work of correcting his evidence. Mr. Cook attended, and was informed by the Hon. the Chairman that in the course of the afternoon an opportunity would be afforded him of perusing the evidence given by the witness, Mr. Somerville. The Committee then adjourned.

Wednesday, 18th September, 1901. The Committee met at 11 a.m. Present. — Council : Hon. Mr. Beeves (Chairman), Hon. Mr. Jennings, Hon. Captain Morris, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House : Mr. J. Allen, Mr. Bennet, Mr. Colvin, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Bt. Hon. B. J. Seddon. The minutes of the last meeting were read and confirmed. A letter from Mr. W. B. Cook was read, complaining that on the previous day the clerk of the Committee had refused to allow him to take notes from the evidence of Mr. Somerville, although that witness and Mr. Easton had the evidence away and in their possession for a considerable time. Mr. J. Allen moved, That all persons interested in the inquiry be allowed to take notes of the evidence for the purpose of cross-examination, on the understanding that such notes are for their own use alone, and are not to be shown to any other person. Mr. Herries seconded the motion. And the question being put, the Committee divided, the names being taken down as follow:— Ayes, s.—Mr. J. Allen, Mr. Bennet, Mr. W. Fraser, Mr. Herries, Hon. Mr. Twomey. Noes, 6. —Mr. Colvin, Hon. Captain Morris, Mr. Palmer, Bt. Hon. B. J. Seddon, Hon. Mr. A. Lee Smith, Hon. Mr. W. C. Walker. So it passed in the negative. The Committee proceeded with the hearing of evidence. Mr, Somerville and Mr. Cook attended the Committee, Mr. Somerville, on his former oath, being cross-examined by Mr. Cook. The Committee then adjourned.

Thursday, 19th Septembee, 1901. The Committee met at 11 a.m. Present. — Council : Hon. Mr. Beeves (Chairman), Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House: Mr. J. Allen, Mr. Bennet, Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Herries, Hon. Mr. McGowan, Mr. Palmer. The minutes of previous meeting were read and confirmed. A letter was read from Mr. H.E. Easton, requesting that a Mr. Abbott be summoned to attend and furnish documents in his possession bearing upon matters involved in his petition. The Hon. the Chairman reported that he had caused Mr. Abbott to be summoned as requested. The Committee proceeded with the hearing of evidence in connection with the petition. Mr. Easton, Mr. Cook, and Mr. J. W. Abbott attended the Committee. Mr. Abbott, having been sworn, gave evidence, being examined by Mr. Easton, Mr. Cook, and members of the Committee. Mr. Somerville, on his former oath, was cross-examined by Mr. Cook. The Committee then adjourned.

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Friday, 20th September, 1901. The Committee met at 11 a.m. Present.— Council: Hon. Mr. Beeves (Chairman), Hon. Mr. Jennings, Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey. House: Mr. J. Allen, Mr. Bennet, Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Bt. Hon. B. J. Seddon. The minutes of the previous meeting were read and confirmed. The Committee agreed' that a telegram be sent to Mr. Allan Holmes submitting for answer three questions in reference to advice given by him upon the alleged right of non-share-holders to vote at meetings of companies. Mr. Somerville and Mr. Cook attended the Committee, the cross-examination of Mr. Somerville, on his former oath, being continued by Mr. Cook. On motion of the Bt. Hon. B. J. Seddon, Besolved, That a letter be written to the Clerk of the House pointing out the inconvenience occasioned by the change of clerks acting in connection with the Committee, and requesting him to arrange that in future the clerk of this Committee may be present at all meetings of the Committee, and that a copy of this resolution be forwarded to the Hon. the Speaker of the House of Bepresentatives. The Committee thereupon adjourned.

Thursday, 26th September, 1901. The Committee met pursuant to notice. Present.— Council: Hon. Mr. Beeves (Chairman), Hon. Mr. Jennings, Hon. Captain Morris, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House: Mr. J. Allen, Mr. Colvin, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer. The minutes of the previous meeting were read and confirmed, A letter dated 25th September, 1901, was received and read from the Clerk of the House of Bepresentatives in reply to a letter sent to that officer, as per resolution of this Committee, on the 20th September, 1901. " A letter dated Dunedin, 21st September, 1901, was received and read from Mr. Allan Holmes. A letter dated Wellington, 23rd September, 1901 (together with two memoranda and a telegram) received and read from Mr. W. B. Cook. The Hon. Mr. Jennings moved, That a copy of the letter received from Mr. Cook be supplied to Mr. Easton, and that he be asked to reply to the same in writing. Mr. Colvin moved, by way of amendment, That this letter be received, and not printed as evidence. And the question being put on the amendment, the Committee divided, and the names were taken down as follow :— Ayes, 7. —Mr. Colvin, Hon. Mr. McGowan, Mr. B. McKenzie, Hon. Captain Morris, Mr. Palmer, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. Noes, s.—Mr. J. Allen, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Hon. Mr. Jennings. So it was resolved in the affirmative. Amendment agreed to. Mr. A. F. Lowe (Second Clerk-Assistant) was called and asked to explain the reason for delay in printing and circulating certain evidence taken before this Committee, and, having explained Mr. Lowe withdrew. The Committee then adjourned sine die.

Friday, 18th October, 1901. The Committee met at 11 a.m. Present. — Council: Hon. Mr. Beeves (Chairman), Hon. Mr. Barnicoat, Hon. Mr. Bonar, Hon. Mr. Jennings, Hon. Mr. Lee A. Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House: Mr. J. Allen, Mr. Bennet, Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Guinness, Mr. Herries, Mr. Lang, Hon. Mr. Mills, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Bt. Hon. B. J. Seddon. The minutes of the last meeting were read and confirmed. The Hon. the Chairman laid on the table a draft report on the petition of H. E. Easton, which he submitted for the consideration of the Committee. Mr. J. Allen moved, That the drafting of a report be referred to a sub-committee, consisting of the Hon. the Chairman, Mr. Guinness, Mr. Herries, the Hon. Mr. Jennings, the Hon. Mr. A. Lee Smith, and the mover. Mr. Fraser seconded the motion. Mr. Colvin moved, as an amendment, That the draft report be taken as read, and the Committee proceed at once with its consideration clause by clause. And the question being put on the amendment, the Committee divided, the names being taken down as follow :— Ayes. 9.—Hon. Mr. Barnicoat, Mr. Colvin, Hon. Mr. Duncan, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. Noes, 1. —Mr. J. Allen, Mr. Bennet, Mr. W. Fraser. Mr. Guinness, Mr. Herries, Hon. Mr. Jennings, Hon. Mr. Mills. So it was resolved in the affirmative. Amendment agreed to. Mr. J. Allen asked the Hon. the Chairman to give his ruling upon the question whether the Committee were expected to report upon matters which occur in the evidence of any of the witnesses, notwithstanding that such matters are not embodied in the petition itself, or whether the business of the Committee is not strictly limited to the charges which the petition contains.

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The Hon. the Chairman ruled that it was open to the Committee to report upon any question or fact disclosed by the evidence. If there was any matter in the draft report unsupported by evidence or irrelevant to the petition the Committee could strike it out. The Committee thereupon proceeded with the consideration of the draft report, beginning at clause 1. Amendment proposed: That all the words after the word "asks" down to and including the word " and "be struck out. (Mr. Herries.) Amendment agreed to. Another amendment proposed : That the words " consequent upon such report " be struck out. (Mr. Herries.) Amendment agreed to. Another amendment proposed: That the words "in mining companies" be added to the clause. (Mr. Herries.) Amendment agreed to. Clause as amended agreed to. Clause 2. Amendment proposed : That all the words after the word " petitioner " down to and including the word "up" be struck out. (Mr. B. McKenzie.) Amendment agreed to. Another amendment proposed: That between the word "to" and the word "companies" the words " seven of the "be inserted. (Mr. Guinness.) Amendment agreed to. Another amendment proposed : That the words " as it was stated in evidence " be struck out, and the words "There was some evidence adduced to the effect" be inserted in lieu thereof. (Bt. Hon. B. J. Seddon). Amendment agreed to. Another amendment proposed : That between the word " in " and the word " other " the word " some "be inserted. (Mr. J. Allen.) Amendment agreed to. Another amendment proposed : That between the word " companies" and the word " although " the words "or registered in Dunedin "be inserted. (Mr. Guinness.) And the question being put, That the words proposed to be inserted be so inserted, the Committee divided, the names being taken down as follow : — Ayes, 3. —Hon. Mr. Bonar, Mr. Colvin, Mr. Guinness. Noes 11.—Mr. J. Allen, Mr. Bennet, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Herries, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Bt. Hon. B. J. Seddon, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey. So it passed in the negative. Words not inserted. Clause as amended agreed to. Clause 3. Amendment proposed : That the words " in his petition " be added to the first line. (Mr. Guinness.) And the question being put, the amendment was lost. Subclauses 1, 2, 3, and 4 agreed to. Subclause 5. Amendment proposed : That all the words after the word "so " down to and including the word " and "be struck out. (Mr. J. Allen.) And the question being put, That the words proposed to be struck out stand part of the clause, the Committee divided, the names being taken down as follow : — Ayes, 9.—Mr. Colvin, Hon. Mr. Duncan, Mr. W. Fraser, Mr. Herries, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey. Noes, 4.—Mr. J. Allen, Mr. Bennet, Hon. Mr. Bonar,.Mr. Guinness. So it was resolved in the affirmative. Words retained. Subclauses 5 and 6 agreed to. Subclause 7. Amendment proposed : That subclause 7be struck out. (Mr. Herries.) And the question being put, That subclause 7 stand part of the report, the Committee divided, the names being taken down as follow : — Ayes, 7. —Mr. Colvin, Hon. Mr. Duncan, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey. Noes, 6.—Mr. J. Allen, Mr. Bennet, Hon. Mr. Bonar, Mr. W. Fraser, Mr. Guinness, Mr. Herries. So it was resolved in the affirmative. Subclause retained. Subclauses 8 and 9 agreed to. Subclause 10. Amendment proposed: That the words " The Ngahere Company's" be struck out. (Mr. Herries.) The attention of the Hon. the Chairman being directed to the fact that there not being present five members of the Committee of the Legislative Council there was no quorum, he immediately left the Chair.

Thursday, 24th October, 1901. Present. — Council: Hon. Mr. Beeves (Chairman), Hon. Mr. Bonar, Hon. Mr. A. Lee Smith, Hon. Mr. W. C. Walker. House: Mr. J. Allen, Mr. Bennet, Mr. W. Fraser, Mr. Herries, Mr. Lang, Mr. Palmer. There being present only four members of the Goldfields and Mines Committee of the Legislative Council, a quorum was not constituted, and the meeting lapsed.

Friday, 25th October, 1901. The Committee met at 10 a.m. Present.— Council : Hon. Mr. Beeves (Chairman), Hon. Mr. Barnicoat, Hon. Mr. Bonar, Hon. Mr. Jennings, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. House : Mr. Bennet, Mr. Carncross, Mr. Colvin, Hon. Mr. Duncan, Mr. Guinness, Mr. Herries, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer. The minutes of the last meeting were read and confirmed. The Committee resumed consideration of the draft report at subclause 10, the amendment moved by Mr. Herries to strike out the words " The Ngahere Company's" being before the Chair.

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And the question being put, That the words proposed to be struck out stand part of the subclause, the Committee divided, the names being taken down as follow :— Ayes, 7. —Hon. Mr. Barnicoat, Mr. Bennet, Hon. Mr. Bonar, Hon. Mr. McGowan, Mr. B. McKenzie, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson. Noes, 4.—Mr. Guinness, Mr. Herries, Mr. Palmer, Hon. Mr. Twomey. So it was resolved in the affirmative. Words retained. Subclause 10 agreed to. Subclause 11. Amendment proposed : That the word "a" be struck out, and the words " the Ngahere Company's "be inserted in lieu thereof. (Mr. Herries.) Amendment agreed to. Subclause as amended agreed to. Subclauses 12 and 13 agreed to. Subclause 14. Amendment proposed : That between the word " their " and the word " calls " the words " allotment-money and" be inserted. (Mr. Guinness.) Amendment agreed to. Subclause as amended agreed to. Subclause 15 agreed to. Amendment proposed : That the following words be inserted, and stand as subclause 16: " Improper auditing." (Mr. Herries.) Amendment agreed to. Clause 4as amended agreed to. Clause 5. Amendment proposed : That after the word " Cook," in the second line, the words " and Gray" be inserted. (Mr. Herries.) Amendment agreed to. Clause as amended agreed to. Clause 6. Amendment proposed: That between the word " fees " and the word " yet" the words "as per table attached "be inserted. (Mr. B. McKenzie.) Amendment agreed to. Another amendment proposed: That the words " one case " be struck out, and the words " some cases " be inserted in lieu thereof. (Mr. Herrie3.) Amendment agreed to. Clause as amended agreed to. Clause 7. Amendment proposed : That the word "a" be struck out, and the words "the Ngahere Company's "be inserted in lieu thereof. (Mr. Herries.) Amendment agreed to. Mr. B. McKenzie moved, That the clauses of the draft report be first read by the clerk before being dealt with by the Committee. And the question being put, the Committee divided, the names being taken down as follow :— Ayes, 2.—Mr. Herries, Mr. B. McKenzie. Noes, 9.—Hon. Mr. Barnicoat, Mr. Bennet, Hon. Mr. Bonar, Hon. Mr. McGowan, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey, Hon. Mr. W. C. Walker. So it passed in the negative. Motion lost. Clause 8. Amendment proposed: That the last four lines of the clause beginning with the words " The part " be struck out. (Mr. Herries.) And the question being put, That the words proposed to be struck out stand part of the clause, the Committee divided, the names being taken down as follow :— Ayes, 6. —Hon. Mr. Barnicoat, Hon. Mr. McGowan, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. W. C. Walker. Noes, 4.—Mr. Bennet, Hon. Mr. Bonar, Mr. Herries, Hon. Mr. Swanson. So it was resolved in the affirmative.. Words retained. Clause agreed to. Clause 9 agreed to. Clause 10. Amendment proposed: That the words "at all" be struck out. (Mr. B. McKenzie.) Amendment agreed to. Clause as amended agreed to. Clause 11, subclauses 1 and 2, agreed to. Subclause 3. Amendment proposed : That subclause 3be transposed, to follow subclause 10. (Mr. Herries.) Amendment agreed to. Clause transposed. Subclause 4. Amendment proposed : That between the word " business " and the word " This " the following words be inserted : " but it is stated in evidence that they did so on the advice of the company's solicitor." (Mr. Herries.) And the question being put, That the words proposed to be inserted be so inserted, the Committee divided, the names being taken down as follow : — Ayes, 5. —Mr. Bennet, Hon. Mr. Bonar, Mr. Herries, Hon. Mr. McGowan, Hon. Mr. Twomey. Noes, 5. —Hon. Mr. Barnicoat, Mr. Colvin, Hon. Mr. A. Lee Smith, Mr. B. McKenzie, Mr. Palmer. And the voting being equal, the Hon. the Chairman gave his vote with the " ayes." Amendment agreed to, and words inserted. Another amendment proposed : That between the word " breaches " and the word " for " the following words be inserted : " the Committee recommend that in these cases proceeding should be instituted by the Crown." The attention of the Hon. the Chairman being directed to the fact that there not being present five members of the Goldfields and Mines Committee of the Legislative Council there was no quorum, he immediately left the chair.

Monday, 28th October, 1901. The Committee met at 11 a.m. Present.— Council: Hon. Mr. Beeves (Chairman), Hon. Mr. Barnicoat, Hon. Mr. Bonar, Hon. Mr. A. Lee Smith. Hon. Mr. Swanson, Hon. Mr. Twomey. House: Mr. J. Allen, Mr. Bennet, Mr. Carncross, Mr. Colvin, Mr. W. Fraser, Mr. Herries, Mr. B. McKenzie, Mr. Palmer. The minutes of the last meeting were read and confirmed. The Committee resumed consideration of the draft report at clause 11, subclause 4, the amendment of Mr. B. McKenzie to insert certain words being before the Chair. And the question being put, That the words proposed to be inserted be so inserted, the Committee divided, the names being taken down as follow : —

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Ayes, 6. —Hon. Mr. Barnicoat, Mr. Colvin, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey. Noes, 4.—Mr. Bennet, Hon. Mr. Bonar, Mr. W. Fraser, Mr. Herries. So it was resolved in the affirmative. Words inserted. Another amendment proposed : That all the words following the words just inserted be struck out. (Mr. Colvin.) Amendment agreed to. Subclause as amended agreed to. Subclause 5 agreed to. Subclause 6. Amendment proposed : That the following words be added : " That there is no evidence to show that the vendors' shares were used to prevent other companies from going into liquidation." (Mr. Herries.) Amendment agreed to. Subclause as amended agreed to. Subclause 7 agreed to. Subclauses. Amendment proposed: "That between the word "payment" and the word " were " the words "in other companies "be inserted. (Mr. Herries.) Amendment agreed to. Subclause as amended agreed to. Comparative table agreed to. Clause 11. Amendment proposed : That all the words after the word " required "to the end of the clause be struck out. (Mr. Palmer.) Amendment agreed to. Clause as amended agreed to. Clause 12. Amendment proposed: That the words "Besides this" be struck out. (Hon. Mr. Twomey.) And the question being put, That the words proposed to be struck out stand part of the clause, the Committee divided, the names being taken down as follow : — Ayes, 7. —Hon. Mr. Barnicoat, Mr. Bennet, Mr. Colvin, Mr. Herries, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. Swanson. Noes, s.—Mr. J. Allen, Hon. Mr. Bonar, Mr. W. Fraser, Hon. Mr. A. Lee Smith, Hon. Mr. Twomey. So it was resolved in the affirmative. Words retained. Another amendment proposed : That the word " Mr. " be struck out, and that between the word " Cook " and the word " had " the words " and Gray "be inserted. (Mr. Palmer.) Amendment agreed to. Another amendment proposed : That the word " he," at the beginning of the second line, be struck out, and the words " Mr. Cook" be inserted in lieu thereof. (Mr. Palmer.) Amendment agreed to. Another amendment proposed : That the word " he," in the third line, be struck out, and the words " Cook and Gray "be inserted in lieu thereof. (Mr. Palmer.) Amendment agreed to. Another amendment proposed : That the table be amended by the insertion of the words "Mr. Cook " before the words " Boss Day Dawn," and that the word " ditto" be inserted under the words " Mr. Cook "to the end of the column. (Mr. Palmer.) Amendment agreed to. Another amendment proposed: That between the word "and" and the word "drew" the words " Cook and Gray " be inserted, and that the word " ditto " be inserted under the words " Cook and Gray "to the end of the column. (Mr. Palmer.) Amendment agreed to. Another amendment proposed : That at the foot of the table the following words be inserted : " Messrs. Cook and Gray had to pay for the services of the secretary, and certain sums for other brokers, which are not included in the above table." (Mr. J. Allen.) Amendment agreed to. Clause as amended agreed to. Clause 13. Amendment proposed: That all the words down to and including the word " months "be struck out. (Mr. Herries.) Amendment agreed to. Another amendment proposed : That the word " therefore "be struck out. (Hon. Mr. A. Lee Smith.) Amendment agreed to. Another amendment proposed : That the clause be struck out. (Mr. Herries.) And the question being put, That clause 13 as amended stand part of the report, the Committee divided, the names being taken down as follow : — Ayes, 8. —Hon. Mr. Barnicoat, Mr. Bennet, Mr. Colvin, Mr. B. McKenzie, Mr. Palmer, Hon. Mr. A. Lee Smith, Hon. Mr. Swanson, Hon. Mr. Twomey. Noes, 3.- Mr. J. Allen, Hon. Mr. Bonar, Mr. Herries. So it was resolved in the affirmative. Clause retained, and agreed to. Clause 14. Amendment proposed : That all the words after the word " law," down to and including the word " law," in the second line, be struck out. (Mr. J. Allen.) Amendment agreed to. Clause as amended agreed to. On the motion of Mr. Herries, Besolved, That the following new clause be inserted immediately before the heading " Generally " : —" Improper auditing : The Committee desire to point out that, in some cases where brokerage was charged by Messrs. Cook and Gray on applicationmoney when such application-money was never paid, the matter escaped the attention of the auditors." On the motion of Mr. Herries, Besolved, That the following be added to the report: " The question of titles having been extensively dealt with in the evidence, the Committee find that in the case of companies in which the vendors' shares have been allotted the titles are held by the company, but in the other companies the titles are held by the vendors, though the companies' money has been spent on them." On the motion of Mr. Palmer, Besolved, That the report, evidence, and minutes of proceedings be printed, and duly reported to the General Assembly. The Hon. the Chairman having been authorised to sign the minutes of this meeting,— On the motion of Mr. Bennet, Besolved, That the thanks of the Committee be voted to the Hon. the Chairman for his conduct in the chair. The Committee then adjourned sine die.

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LEGISLATIVE COUNCIL.

Evidence was taken on petitions of Mr. Easton presented to the Legislative Council (No. 75) and the House of Representatives (No. 231). The evidence is printed as hereunder: — Legislative Council evidence (Chairman, Hon. Mr. Reeves), pp. xvi.-xxii. House of Representatives evidence (Chairman, Mr. Palmer), pp. 1-70. Joint Committee of both Houses evidence (Chairman, Hon. Mr. Reeves), pp. 71-108.

MINUTES OF EVIDENCE.

Friday, 16th August, 1901. Mr. Herbert Ernest Easton examined. (No. 1.) 1. Hon. the Chairman.] This is your petition to the Speaker and members of the Legislative Council, Mr. Easton ? —lt is. 2. And you make certain allegations in it ?—Yes. 3. Will you be kind enough to tell the Committee about this petition ?—Well, Mr. Chairman, I was not aware I was to be called before you to-day, and therefore, unfortunately, gave up my papers to the Goldfields Committee of the House; but I have sufficient material at hand, I think, to answer any questions you may put to me. 4. You say in the third paragraph in the petition here, " Your petitioner, on making an examination of the books of a number of the companies in which he had invested and recommended to others, found gross irregularities, inasmuch as the companies were promoted, floated, managed, and directed from the office of the promoters, and that in one company a transfer of your petitioner had been accepted and passed at a date when money was owing to the company from the seller." What companies have you gone into ?—The Lees Ferry, the Ngahere, the Wicklow, and Tucker Flat. 5. Where are they situated : four, upon the Grey Biver, near the Black Ball Mine, are they not? —Yes, not far from it. 6. Are you in any others ?—The Golden Grey. 7. That is also on the Grey Biver?.—Yes. 8. Any others ?—The Boss Day Dawn, and the Auckland Beach Back Lead. 9. You say in paragraph 4, " Your petitioner found in these companies a large number of shares had been ' dummied' by the promoters. The commission on many of these shares, which only existed on paper, was charged and received out of the moneys obtained from the genuine shareholders. Upon finding out this, and that other grave irregularities existed, your petitioner set about trying to get these companies liquidated. Your petitioner then found that several of those who had signed articles of association were not shareholders, and the company's solicitor had so worded the articles as to allow the unqualified and ' dummy' shareholders to vote; and in the case of the Lees Ferry Gold-dredging Company (Limited) the vendors' shares were used for voting, and such was done by the vendors' employes to prevent liquidation, thereby keeping these paper companies alive for the benefit of the promoters " : is that so ? —Yes, sir. 10. Who were the promoters ?—Messrs. Cook and Gray. 11. Well, then, I think it is only right that Mr. Cook should be present. 12. Hon. Mr. W. C. Walker.] Are all the petitioner's allegations directed against Mr. Cook ? —Yes. I think nearly all of them are in respect to companies floated by that firm. 13. Hon. the Chairman.] Well, gentlemen, I think it would be better to let Mr. Easton, who has been before the Goldfields Committee of the House, get finished with that Committee, and then we could take his evidence before this Committee. I think Mr. Cook should be present during the examination of Mr. Easton. The Committee decided to adjourn until Tuesday, the 20th August, 1901, at 10.30 a.m., in order to allow Mr. Cook to attend.

Friday, 23rd August, 1901. Mr. Herbert Ernest Easton examined. (No. 2.) 1. Hon. the Chairman.] Now, then, Mr. Easton will you be kind enough to state your case as briefly as possible with reference to the Lees Ferry Gold-dredging Company (Limited). You have already been sworn, and understand you are on your former oath? —I find that the Lees Ferry Company was registered on the 9th April, 1900. The capital is £8,000, made up as follows : Vendors' shares, which were allotted on the 17th September, 2,000, as per minute-book 1900, which shows Joseph Taylor received 520, C.T. A. Broad 120, OKay 120, John Gill 200, and W. B. Cook 1,040, making up 2,000. Those are vendors' shares. The contributing shares allotted were 5,375; unallotted contributing shares', 625. On the 9th March, 1900, as per minute-book, business transacted by people termed to be provisional directors —at their meeting there were present: Messrs. Hoisted, Thompson, and Holmes. Messrs. Davidson and Sawell were at that meeting on

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.the 19th March, 1900. Now, I would ask how it is that Messrs. Hoisted, Holmes, and Thompson (three of the gentlemen who signed the articles of association, and took up the single shares), how is it their names are not shown on the share register ? I will bring to your notice that Mr. Cook is the vendor of this claim to the company. He, I presume, purchased the claim, and then sold it to the company. 2. Whom did be purchase it from ?—Mr. Joseph Taylor. Then, I want to bring your attention to the copy of the deed of sale from Joseph Taylor to Cook. I ask whether it was based on the contracts or filed at the Begistrar's Office. If so, I would like to know on what date it was filed. I note the deed referred to in the prospectus from Mr. Taylor to Mr. Cook is dated the 23rd October, 1899. The date from Mr. Cook to the company is the 9th March, 1900. The articles of association are dated the Ist March, 1900. I would ask, why have the dates on these deeds been altered and not initialled ? I refer to the ones at the Begistrar's Office in Dunedin. Mr. Cook was the vendor, the promoter, the broker, the director, and the secretary of the company ; although Mr. Hoisted is stated to be the secretary of the company, he was in Mr. Cook's employ. I put it to you that Mr. Hoisted was merely receiving a stated salary from Messrs. Cook and. Gray, and Messrs. Cook and Gray received the fees. I find that the registered office of the company was at Mr. Cook's office. I find that on the 1,000 contributing shares held in Mr. and Mrs. Cook's name the application-money paid for such shares was in June, 1900, and the allotment in February, 1901. The company was registered on 9th April, 1900. The application of Is. per share was only paid in June, 1900, and the allotment was not paid until February, 1901. On 18th July, 1901, the share register will show you that no moneys at all have been received on 250 shares, and that allotment-money of Is. per share is still owing on 1,600 shares, and that Mr. Cook's late partner, Mr. William Gray, one of the vendors of this company, owes an allotment on 500 shares, of which he and his partner have had the brokerage. I find Mr. Cook as a director had received twenty guineas of the shareholders' money for attending one meeting only. The prospectus of this company states that this claim cannot fail to get large returns of gold, and recommends the property as a good and safe investment for capital. Now, this claim has been tested, at a large expense to the qualified contributing shareholders, by Mr. Cook's own employe, Mr. Chester, and condemned by Mr. Chester as being absolutely valueless for dredging purposes. I would like to know the position that this Mr. Chester was in in Messrs. Cook and Gray's employ. At a directors' meeting, on the 22nd March, 1901, if you will refer to the minute-book, as a director, declined to pass a transfer of 250 shares which Mr. Cook had taken over from a Mr. L. S. Benjamin. At a meeting on the 3rd May, 1901, Mr. Howes, who was an employe of Mr. Cook's, got me removed from the Board by the use of his votes and Mr. Cook's vendor proxy votes, and passed this transfer, which I had refused to put through, and put it through from Mr. Benjamin to Mr. Cook. On the 16th August, 1901, Mr. Cook's late partner, William Gray, states the secretary's fees were handed over to his firm, Messrs. Cook and Gray, as they were received and paid through them by Mr. Hoisted. He goes on to say, " Mr. Hoisted was simply a clerk in our employ," and, to prove this, Mr. Gray produces the statement showing where he received this money. Mr. Gray also states that on receiving notice to pay over Is. per share—that is, on the 500 contributing shares he took vp —he saw Mr. Cook, and told him that he (Mr. Cook) had broken faith with him. Mr. Cook then said he would take over all Mr. Gray's shares back again. Mr. Gray signed, and gave Mr. Cook a blank transfer, which Mr. Cook took away, but did not get passed. Mr. Gray states that if the shares went to a premium Mr. Cook arranged that sufficient of them were to be sold out by Mr. Cook to make the balance fully paid. Now, in support of this statement made by Mr. Gray, I will refer you to Mr. L. S. Benjamin and his transaction with Mr. Cook, and also to the evidence given in the Magistrate's Court in Dunedin by Mr. B. H. Abbott and Mr. H. C. Choyce to the same effect. When Mr. Benjamin came down to Dunedin, and found that more than Is. was going to be called up, and that the directors were not under the control of Mr. Cook, Mr. Benjamin made a demand on Mr. Cook to take over these shares from him, inasmuch as he had taken the shares on the assurance that not more than Is. should be called up, and Mr. Cook took over by bill the 250 shares from Mr. Benjamin, which I declined to pass through. The bill subsequently was not met, and with Mr. Benjamin I went and conferred (which is less than a fortnight ago) with Mr. Benjamin's solicitor here on the matter. Mr. Benjamin intimates to me that he has taken action in this matter. Now, I would ask you, after this report of Mr. Cook's nominee, Mr. Chester, condemning the claim, why does Mr. Cook allow another nominee, Mr. Howes, to use his (Mr. Cook's) proxies, and vote against the liquidation ? I bring to your notice, gentlemen, that after the investigation made in March, 1901, by the special committee appointed by the Dunedin Stock Exchange to investigate this company, this company was removed from the lists and quotations of the Dunedin Exchange ; that Mr. Cook resigned from the board on the 11th March, and I was elected by his co-directors to take his place. 3. Hon. Mr. Twomey.] The Stock Exchange Board ?—No ; the board of directors of the Lees Ferry Company. I took his place on the 11th March. Then, his employe, Mr. Hoisted, issued a notice to the first annual meeting, in which two out of the three directors were made to retire instead of one. On the 26th March, at the next meeting of shareholders, Mr. Cook's employe, Mr. Howes, nominated himself as director, and, by the use of Mr. Cook's vendors' proxy, secured a seat on the Board, removing me. Now, as to the deed by which Mr. Cook acquired this property : In March, 1900, I called at the office with my solicitor to have an inspection of the deed, which is said to be shown —if you will look at the prospectus: it states that this deed can be seen by shareholders at the registered office of the company. I went to the registered office of the company with my solicitor to inspect the deed. You will find that Mr. Cook's nominee, Mr. Hoisted, said, " Mr. Easton, 1 have not got the deed," and he gave me instructions to call at the company's solicitor's office. I went down to the company's solicitor, and he said, " I decline to produce this without a Hi——l. 4a.

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written order." I returned and got the written order for the production of this deed, and went to l the company's office again' with my own solicitor, and asked for authority to see it, and I was then told by the company's solicitor that I could not look at that deed until I chose to pay some £80—a private bill of costs which was owing to him (the solicitor) by Mr. Cook. Well, gentlemen, I was. not inclined to pay £80. I then went to the Begistrar's office to try and get a sight of this deed, but found it had never been filed. Since that I have made a written application for that deed, but the company's solicitor declined again to produce it. Then, on the 30th July, 1 made a second request, to which the company's solicitor replied by letter, declining to produce the document. Then, in June last, his late partner, Mr. William Gray, and other large shareholders gave written evidence in respect to shares in the Golden Grey Company, "that Mr. Cook assured them the liability was only Is. per share " ; Mr. Cook had said that these companies were entirely under his control, and that he had arranged with the other directors to be his nominees. Why, at the last meeting of this company it was stated that if a resolution to liquidate was carried it would prove very expensive to us, as the vendors would claim to receive a dividend from the contributing shareholders on their vendor shares. And then, finally, Mr. Howes, one nominee, voted in favour of Mr. Hoisted being appointed liquidator of the company at that meeting. 4. Hon. Mr. Swanson.] What is your object in coming here with this petition ?—My object, sir, in petitioning the Council, is that I am not speaking only on my own behalf. I have come here to-day representing some thousands of shareholders from all parts of this colony who have found out that there are irregularities going on in the management of these dredging companies, but they have not been in the position to come and inform you gentlemen what is taking place. 5. Is that not a case that can be tried and settled in the Supreme Court ? —That is for you gentlemen to say. 6. It does not affect us at all, and why should we take an interest in the Supreme Court Hon. the Chairman: It has nothing to do with the Supreme Court at all, Mr. Swanson. Witness : I put a petition before you gentlemen, and it is for you to say whether I can subtantiate the charges in that petition, or if I cannot. That is why lam giving you this evidence. 7. Hon. Mr. Swanson.] Can you get no redress from the present state of the law ?—I am asking Parliament to amend the law. Hon. Mr. Swanson: It appears to me, Mr. Chairman, here is a petition presented by Mr. Easton. It appears to me that he complains of some wrong, and I want to know if that wrong cannot be settled by the Supreme Court of the colony. Hon. the Chairman : We have nothing to do with the Supreme Court, Mr. Swanson. 8. Hon. Mr. A. L. Smith.] What is your object in coming here, Mr. Easton ?—ln support of the petition I have put in. 9. Your object is to see an amendment, I suppose, of the law, and you represent a certain number of the people who are, as you believe, in the same condition as yourself ?—That is so, sir. 10. Now, you say you have referred to a deed in connection with this company. What is the nature of that deed ? Have you ever seen it ?—I saw the deed yesterday afternoon for the first time, but whether it is the original deed, or not, I cannot say. 11. Where is that deed ? [Deed produced.] This deed purports to be an agreement between Joseph Taylor, vendor, and William Bichard Cook, with regard to the Lees Ferry Company ?— That is the one, sir, and you will see the only money paid in this claim is 10s. 12. Has this deed got a stamp on it? Hon. the Chairman: You had better ask the clerk to read that deed. The deed was then read by the clerk, and is as follows:— An agreement made the twenty-third day of October, one thousand eight hundred and ninety-nine, between Joseph Taylor (hereinafter called "the vendor") of the one part, and William Richard Cook, of Dunedin, accountant (hereinafter called " the purchaser "), of the other part, whereby it is agreed and declared as follows :— 1. In consideration of the sum of ten shillings (10s.) paid by the purchaser and his assigns till the twenty-third day of February, one thousand nine hundred, the option of purchasing mining property desoribed in the schedule hereunder written for the sum of twelve hundred pounds (£1,200). 2. The said sum of twelve hundred pounds (.81,200) shall be satisfied by the purohaser causing to be allotted and issued to the vendor, or his nominees, twelve hundred pounds (£1,200) fully paid-up shares of one pound (£1) eaoh in the capital of the company formed under suohname, and with suoh memorandum and articles of association as the purchaser may think fit; but so that suoh company be (a) incorporated as a company limited by shares under "The Companies Act, 1882"; (6) that the oapital of the said company be eight thousand pounds (£8,000) divided into eight thousand shares of one pound (£1) each; (c) that of such shares six thousand (6,000) shall be contributing shares, and two thousand (2,000) fully paid-up shares; (d) that one of the objects of the company shall be to purchase the said mining property. 3. The said twelve hundred (1,200) fully paid-up shares shall be allotted immediately after the incorporation of the company, and the company shall thereupon become entitled to possession of the said mining property, and the vendor shall assure or cause to be assured to the company the said mining property ; and the said twelve hundred (1,200) fully paid up shares shall not be issued to the purchaser or his nominees till he has complied with the provisions of this clause. 4. The vendor shall not, during the currency of this option, assign, mortgage, or part with the possession of the said mining properties, or do anything whereby he may be prevented from complying with the provisions of this agreement. 5. All rents, fees, fines, or other moneys payable in respeot of the said mining property prior to the exercise of the said option shall be paid and borne by the vendor. 6. The purchaser and his engineers, agents, and workmen shall, during the currency of the said option, have the right of entering on the said mining property and prospecting the same in such manner as may be thought proper; and the vendors shall give all reasonable facilities for such prospecting. 7. The rights and dutiea of eaoh party under this contraot shall, in case of his death, devolve in or on his executors or administrators. Schedule. Prospecting dredging area of one hundred acres, situated on the Grey River, commencing at junction of SlateyCreek with the river, and extending down-stream for eighty chains to Lees Perry, Ahaura, by a width of twelve and. a half chains. No. of certificate, 284. 28/9/99. Witness— Joseph Tatoor.

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13. Hon. Mr. Sioanson.) Have you taken the advice of any real good lawyer of what you ought to do in the matter ?—I have taken the advice of three or four lawyers. 14. Did they tell you to come here ? —They said my only redress was to get the law amended through Parliament, so as to get better protection. 15. Hon. Mr. A. L. Smith.] Do you assume that this is the deed that you have been searching for ? I notice there is no witness's name here, and that there is no stamp on it. This is the basis of the claim ? —I take it that that is the title to the claim. 16. When did you first invest in this company?—ln August, 1900. 17. When was it registered?—On the 9th April, 1900. 18. When did you have reason to believe that all was not as it should be ?—Speaking from memory, on the examination of the books in October, 1900. 19. Then you took steps to investigate the claim by asking, at the registered office of the company and the office of its solicitor, for the agreement of Mr. Cook as the original vendor, and you have never been able to obtain it ?—I have never seen it. 20. Have you seen this deed in my hand?—l saw it yesterday afternoon. 21. Who produced it? —I do not know who brought it up. I saw it in the Committee-room in the other House yesterday afternoon. 22. You say you were on the board of this company for some time?—l was. 23. For how long?— From the 11th March till the'26th March, 1901. „ 24. What was the nature of the business done while you were there?—l was endeavouring to break up the monopoly of this " ring " —to smash up the " ring." 25. On what grounds?— Because I was requested to do so by a great many of the shareholders. 26. What business was brought forward while you were there?-—I objected to passing the transfer from Mr. Cook to Mr. Benjamin. 27. And then after you left that transfer was put through ?—Yes. 28. Were there any calls owing on those shares ?—No. . ~ 29. When you were voted out, by whose voting was it done ?—I can show you that Mr. Howes voted against me and used Mr. Cook's proxies. 30. Were there any liabilities on those shares at the time?— Yes, on some of them—the Tucker Flat. 31. On whose? —The share register will show that. The names *of the people who have not paid their allotments, I gave you. On 1,600 shares, allotments have not been paid up to the 18th July of this year. 32. Were any of those shares belonging to persons who voted at the meeting when you were put out of the board?—l believe a Mr. H. A. McDonald voted, but I will not swear to that. 33. Were you present at the meeting on the 26th March ?—Yes, that was the meeting at which lost my seat. Hon. the Chairman.] The following is the minute of the meeting : — /: Minutes of annual general meeting of shareholders of the Lees Perry Gold-dredging Company (Limited), held in the registered office of the company, 17, High Street, Dunedin, March 26th, 1901:— Present personally : Somerville (chairman), A. Holmes, Easton, Howes, Davidson, Haggit, Hoisted. W. C. MacGregor was also in attendance. Proxies: William Benjamin, J. Kellow, Ballantyne, Mac Donald, Churton, Howarth, Mace, Taylor, Abbott, Mrs. Cook, W. R. Cook, and C. D. Parley. Notice of meeting was read by the secretary. Directors' report and balance-sheet: Proposed by Mr. Howes, seconded by Mr. Easton, That the report be adopted, subject to the amendment that date of Mr. Easton'3 eleotion, viz., 11th March, be inserted on the minutes, and that the balance-sheet be adopted without any amendment. Proposed by Mr. Howes, seconded by Mr. Hoisted, That Messrs. Pearce and Howes be elected directors. Prt posed by Mr. Somerville, seconded by Mr. Hoisted, That Mr. Easton be re-elected a director. On a ballot being taken, the following was the result: Mr. Howes, 3,985 ; Mr. Pearce, 3,985 ; Mr. Easton, 300 ; Mr. Somerville, 300 votes. Mr. Howes and Mr. Pearce were declared duly eleoted. Mr. Haggit and Mr. Davidson were appointed scrutineers. Resolved, That Mr. Chalmers be re-elected auditor, at a fee of five guineas per annum. W. S. Somebville, Chairman. Hon. Mr. A. L. Smith : About the confirmation of that meeting : was it confirmed at the next meeting, and who signed it? Hon. the Chairman : It is not confirmed, and has never been confirmed, according to the minute-book. 34. Hon. Mr. A. L. Smith.] Now, Mr. Easton, are there any vendors' shares issued for this claim ?—Two thousand pounds' worth of shares were allotted in the manner I have described. 35. And the deed has never been registered ? —Mr. Corliss tells me, in Dunedin, that that deed has never been filed with him. 36. Has possession been taken of the property?— Mr. Cook's employe, Mr. Chester, has been there testing it. 37. The vendors' shares have been issued and voting has taken place. Now, this agreement is valueless to the company and Mr. Cook unless it is filed. Since then the vendor, Mr. Taylor, has handed over the property : has Mr. Taylor got these vendors' shares ?—I am ignorant of it, except that Mr. Taylor has 500 shares, which were allotted to him on the 17th September. 38. In the deed it says 1,200. Are you aware that unless this is filed in the Court register, that the vendors will have to be paid in full in cash ?—I have heard so. 39. Have you searched to see how many Mr. Cook and Mr. Taylor have ?—I find Mr. Cook was allotted on the 17th September, 1900, 1,040, and Mr. Taylor 520. 40. Do you know of your own knowledge whether the property has been taken possession of, or does Mr. Taylor stand in the same position as in this deed ?—I am not in a position to say. 41. He is the secretary of this company ?—I would call Mr. Cook the secretary because he was in the receipt of the secretary's fees.

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42. Who is the secretary on the prospectus ?—Mr. William Hoisted. 43. Who is Mr. Hoisted ?—A clerk in Mr. Cook's employ. 44. Did he act as leading manager to this firm ?—No. 45. You cannot give me information as to whether this property is taken possession of, or whether it stands virtually in the position it was before the company was floated : you do not know whether the company have the right to say, " We have paid for that property by shares, and are going to take possession of it" ? —I am ignorant of that. 46. Are there any calls at the present time on those shares ? —Yes, there were allotments owing on 1,600 shares on the 18th July last. 47. On whose names ?—Mary Jarie Mill is owing an allotment on the 18th July on 125 shares. (This is an extract taken on the 18th July, 1901, of the company which was registered on the 9th April, 1900.) Mr. H. C. Choyce owes allotment on 125; Mr. B. H. Abbott owes allotment on 500; Mr. H. A. McDonald, Inveroargill, owes allotment on 100; Mr. William Gray, (Mr.. Cook's late partner) owes allotment on 500; and Mr. J. Kneebone has not paid anything on 250 shares—no application-money. 48. Has the brokerage been taken ?—On the 5,375 shares allotted the brokerage amounts to £134 7s. 6d. 49. Does any one else owe money ? —No, they are all paid up. Mr. Cook paid his applicationmoney, and Mrs. Cook's, in June, 1900, and the allotments in February, 1901. 50. Has Mr. Cook, to your knowledge, sold any of his shares in this company ? —I am not aware that he has. 51. What about the 250 shares you mention?— Those I purchased through a Mr. Choyce. 52. In the Lees Ferry Company? —Yes. 53. Who is the seller ?—Mr. Choyce. 54. And what have you to say with regard to that particular matter ? —The only thing I have to say is that I did not know that I was buying into a company formed merely for speculation, and not for mining. In August I heard, through Mr. Cook, of the Lees Ferry Company, and Mr. Cook said to me that he knew of a Mr. Choyce, of Auckland, and this Mr. Choyce would sell me the shares at par. The transfer was put through in the usual way. 55. Were any calls made? — The amount I paid for the shares was £25 25., and I have those 250 shares now. 56. Have there been any calls since then ? —No, there has been nothing doing. 57. You mention that three of the signatories of the articles of association have never taken any shares up ? —That is so. 58. Have they attended any meeting?—A Mr. Thompson told me that he was formerly in Messrs. Cook and Gray's employ. He said, that Mr. Howes came to him, and asked him to put his name down on the articles of association to form the company. This man did not want to go into mining, and Mr. Howes said, " You have no liability, and all you have to do is to put your name down." He (Thompson) also told me he had not paid one single penny, and yet his name appears on the share register. 59. Has Mr. Holmes taken a share : has he voted as a shareholder ?—I believe not. 60. What is the voting in this company ?—Everybody in the company can vote. If you hold shares under these articles of association, you can take up a whole lot of shares, not pay a farthing, and yet you can have a vote on all the shares. 61. Do you say there is power to vote without money being paid on shares? —I put that question in the presence of the company's solicitor. 62. Can you produce the articles of association of the company ? [Articles of association proIs there anything in these articles to give power to shareholders to vote, whether they have paid or not ? The articles have been altered so as to allow people to vote without having paid any money on the shares ?—Yes. 63. Can you show me any evidence of that ?—I can. Take section 44. This is how these articles of association bear on the matter: under the Mining Companies Act of 1882, Table A,. Begulation 44 of that Act states every member has one vote for every share up to ten. 64. lam talking about the voting power. Look at No. 44. There are some alterations here in Table A ?—Begulation 44 is struck out in the articles of association. 65. Give me the alteration ?—lt enables large shareholders to outvote the small holders. ~ 66. Give me the wording of it?—" Beyond ten, one for every five up to a hundred, and one for every ten over a hundred." The whole of that clause is struck out in the articles of Messrs. Cook and Gray, and that permits every one to vote. 67. What I want to get at is, you say that a person can vote at these meetings without having paid anything: which clause is that? Is there a clause to make that possible ?—Yes; Begulation 44, which has been struck out, covers that. The Act says, " Every member one vote for every share up to ten, beyond ten one for every five up to a hundred, and one for every ten over a hundred." 68. lam talking about the money paid?—l can only tell you that I put that question to the solicitor of the company, and asked him if people unqualified could vote, and he said every person on the company has one vote according to the articles of association. 69. Look at " The Companies Act, 1882 " ?—Here it is—Begulation 47 : " Unless all calls paid, no member entitled to vote." Begulation 47 of Messrs. Cook and Gray's articles : " All the words after the word ' paid ' shall be struck out." 70. Begulation 47 : " Unless all calls paid, no member shall be entitled to vote." Now, the object of that is that a person must be the holder of shares for three months under the Act before he is entitled to vote. Under these regulations (Messrs. Cook and Gray's articles) a person can hold shares and not pay anything, and yet vote on them ?—Yes; Messrs. Cook and Gray's. articles state all the words after the word " paid " shall be struck out.

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71. I want to come on to the question of proxies: what is the time in the Lees Ferry Company—how many hours before the meeting have the proxies to be in?— Twelve hours. 72. What does Table A of the Act say about that ?—Seventy-two hours. Begulation 50, Table A: "Proxies to be lodged seventy-two hours previous to the meeting." As altered by Messrs. Cook and Gray, Begulation 50, the word " twelve " shall be substituted for the words " seventy-two." 73. That is to say, a person at twelve hours' notice can leave proxies?— Exactly. 74. Now, then, about notice of calls : what is the regulation in the company with regard to notices of calls—the Act requires notices, if served by post, to be served at a time when a letter would be delivered in the ordinary course ?—Begulation 97 is struck out, and the effect in Messrs. Cook and Gray's companies' notices to shareholders is that they are deemed to be served as soon as posted. 75. What alteration has been made ?—The regulation has been struck out altogether. The shareholders are deemed to be served with the notices as soon as they are put in the post-office, according to Messrs. Cook and Gray's articles. The effect of this alteration is that these poor shareholders are deemed to have the notices as soon as the letters are put in the letter-box ; and in companies such as Messrs. Cook and Gray's the control is all under the promoters, only twelve hours enabling the secretary of Messrs. Cook and Gray- to secure sufficient proxy votes to generally defeat the contributing shareholders. In nearly all Messrs. Cook and Gray's companies the secretary was their employe. 76. Beferring back to the question of this deed : you made application at the office more than once to see it ?—Yes ; on several occasions. 77. And was Mr. Hoisted the secretary?— Yes. 78. What did he say ? —He said he had not got it. 79. And you searched hard for it ?—To the extent of paying the solicitor to go and search for me. 80. Then you went to Mr. Holmes ? —With my solicitor. 81. And he would not give you it unless that £80 was given to him?—No, not unless I paid him the £80—a private bill of costs. 82. And you had never seen this agreement or never heard anything at all about it until you saw it to-day ?—I never saw it till yesterday afternoon. I have heard a good deal about it. 83. What is your view of the present position of the company?— That it is simply being kept alive for the benefit of the directors. No contract has ever been entered into ; no plans have ever been prepared ; and there has been nothing done. 84. And how many calls have been made upon it ? —The application- and the allotment-money. 85. Do you know the present condition of the funds ?—I should say there is very little left. 86. Do you know about their finance?—A resolution has been carried to liquidate the company, but Mr. Hoisted sent out an informal notice, and we have to go through it again. 87. Are the expenses going on in the same way?— The secretary and the directors are legally entitled to their fees. 88. Hon. Mr. Jennings.] Is this merely a copy of the agreement from Mr. Taylor to Mr. Cook [agreement produced] ?—I do not know. 89. Were the directors of this board that you were on elected by the shareholders?—l presume they would be elected as provisional directors. I was not in the colony at the time. 90. How many directors were there when you were on the board?— Three. 91. How long were you on the board of directors ? —From the 11th to the 26th of March of this year. 92. What was the number of shares held by you ?—-250. 93. Do you know what the other directors held: I think you mentioned about 1,500? —Mr. Leijon held fifty, Mr. Somerville fifty, and Mr. Cook 500. 94. Were you present when the meeting was held to put the company into liquidation ?— That has obtained since I have been up here. 95. How many shareholders were there in the company altogether ?—Speaking from memory, about forty or fifty. 96. Are you speaking on behalf of the majority of these shareholders?—l may tell you that I am speaking for nearly the whole of them, because on their behalf I had a requisition legally prepared, which was sent to the shareholders in various parts of the colony and returned to me in the company's office, on the 15th July of this year. 97. When you were on the board of directors did you make any inquiries in regard to this agreement ?—I did ; I made strenuous inquiries. 98. What reason do you assign for the company going into liquidation ?—Well, it has been condemned as absolutely valueless for dredging purposes. But suppose it was a veritable Bonanza, what would you think when one of the persons who floated the concern will not pay his calls on the 500 shares he took up ? 99. The shareholders, on further consideration, found that it was a " duffer," and that it was not worth while going on with it. Are there any others that you know of iv the mining dredging ventures down South? —Oh, yes ; there have been others in other localities. 100. Is it an unusual thing for men who put money into a claim' sometimes to find out that it is not worth while pursuing it—they waste more money in doing so :is that unusual ?—I have not been out here in the colony long enough to say. 101. Hon. Mr. Twomey.] You have been asked why you went in there with a determination to liquidate : I do not quite understand your reasons ?—My reasons for liquidating were, directly I found that the claim was condemned as absolutely valueless by the employe in the very firm who floated it, I thought, myself, what is the use of this property?

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102. You found the thing valueless, and you went in with a determination of winding it up as soon as possible ?—I did. 103. Now, you have found this company floated, no calls being paid, nothing being done, and you come to the conclusion that it was never intended seriously to carry it on—it was merely a " wild cat" for speculative purposes?— You are correct. Mr. Cook's late partner tells me that the claim was never intended for mining purposes at all. 104. Hon. the Chairman.] That is mere hearsay evidence ?—-But it has been supported by the evidence given in the Courts at Dunedin —by three or four of the shareholders. Mr. Gray is not alone in that statement. 105. Hon. Mr. Twomey.] How many shares did Mr. Cook hold?— Mr. Cook held 500 contributing shares and Mrs. Cook 500. 106. That would be 2,040 shares between Mr. and Mrs. Cook, with tbe vendors' shares? — Yes. 107. Would there be any brokerage paid on the vendors' shares? —Oh, no. 108. The brokerage would be paid only on contributing shares?— Yes. 109. And. Mr. and Mrs. Cook had paid their allotment-fees? —Yes; on the dates that I named. 110. The thing was got up deliberately for speculative purposes, and not with the intention of carrying it on ?—So I am led to believe. 111. Hon. Mr. Jennings.] How much money did you put into that claim? —£25 2s. 112. Hon. the Chairman.] You said you do not understand much about floating companies: is it not always the usual thing for brokers to obtain brokerage ?—I have never heard of brokers being able to make money out of shares on which nothing has been paid.

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MINUTES OE EVIDENCE. Thursday, 15th August, 1901. Herbert Ernest Easton in attendance and examined on oath. (No. 1.) 1. The Chairman.] What is your name ? —Herbert Ernest Easton. 2. You are the petitioner ?—I am the petitioner. 3. We shall be pleased to hear what you have to say.—Mr. Chairman and gentlemen,—ln view of the grave nature of the charges I am about to-make in support of my petition, I ask permission to read my statement, in order to avoid errors and facilitate business. Before giving you my reasons for the action I have taken, I wish to explain how I come to be mixed up in what appears one of the greatest scandals in mining history of modern times. Last year I landed in New Zealand from the Old Country, commissioned by some influential and wealthy friends to look into the dredging industry, prepared to invest for them a large sum of money— not, I may tell you, for mere speculative purposes, but for investment. To satisfy myself the claims were genuine, I inspected a large number of the properties quoted on the Stock Exchange lists, and to facilitate my business dealt with a Mr. W. B. Cook, a man who I thought could be relied on, seeing that he had been engaged as a liquidator to several very large estates, and the fact of such appointment having been made by the Supreme Court of New Zealand appeared to me, though a new-comer, sufficient guarantee to warrant my having thorough confidence in him and in his advice. An incident occurred, however, which created a suspicion in my mind that all was not as it should be. I at once went from Wellington, where I was living, to Dunedin, and asked to look over the share registers, which showed a deplorable state of affairs, and I found myself face to face with what appeared to me to be serious irregularities, which tended, if unchecked, to bring ruin to a very large number of investors in this colony, and which seem to me to be in open defiance of the spirit of the laws of the country which Parliament has placed on the statute-book, this being done by clauses being altered or struck out when framing the articles of association, the effect being, lam told, to render the Act absolutely valueless as a safeguard. If this is so, it is a most serious state of affairs, and one which I fear, if action is not taken, will seriously retard investments in the colony, and ruin what should be (if carried out on honest lines in the spirit of the Companies Act of 1882) one of the most profitable and popular industries of New Zealand. The industry itself is, in my opinion, a good one. The Acts alluded to also provide safeguards for investors; but these Acts are worthless if men who trade and make a living on the credulity of the public are to be allowed to draw up contracts and articles of association in 'direct contravention of the spirit of those Acts. Happily, though to some extent implicated myself, I was in time to prevent any of my friends' money being swallowed up in the maelstrom. I then set about to try to right matters; and that my action in exposing these irregularities is meeting with approval is evident by the number of letters I have received and am receiving from all classes in all parts of the colony. But I found my task much harder than I anticipated owing to my inability to fully ventilate the subject in the Press on account of the newspaper proprietors being in fear of libel actions. Hitherto the subject does not appear to have been brought prominently under the notice of members of Parliament, and, as I did not feel inclined to submit to what I thought was a great wrong-doing, I determined alone to take action, and now come before you voicing the views of holders of thousands of shares, many of whom are struggling men and. women. Of the latter I can, if required, give you as an illustration a most sad case. I respectfully ask you to take the matter up, and afford such redress as is possible to those now suffering from the state of affairs existing. The irregularities complained of are as follows : (1.) I find in many companies, especially in those floated by Messrs. Cook and Gray, the articles of association are so drawn as to override what may be classed as the safety clauses of the Act under which they are framed, thereby allowing a few holders of shares to obtain almost absolute control of the companies. (2.) Large blocks or parcels of shares have been allotted to office clerks who are evidently unable to meet the liabilities, as they have up to the present paid next to nothing on them. In one company floated by Cook and Gray, one-seventh of the contributing capital was allotted to an office clerk in the employ of Mr. W. B. Cook, the promoter, vendor, broker, and director of the company (another clerk was secretary), and the registered office of the company alluded to was in Mr. Cook's office. And yet Mr. Cook has obtained brokerage on the said shares, taken from moneys paid in by genuine or qualified shareholders. (3.) Offices of companies are being registered in the same office as promoters, these promoters acting as promoters, vendors, and directors, and their employes as secretaries. (4.) Brokers are receiving brokerage on shares upon which no money has been paid. (5.) Share registers are in some cases improperly kept. (6.) Improper auditing. (7.) Directors have struck calls and invoked the law against defaulting shareholders at a time when they (the directors) were owing very large sums on their own shares. (8.) Misrepresentation of prospectuses; in support of which statement I would point out that Mr. Cook's late partner, William Gray, in defending an action for payment of allotment-money due on a large number of shares held by him, repudiates shares on the grounds of misrepresentation, and this in a company floated by Cook and Gray, and upon which brokerage has been received. (9.) Directors passing transfers at a time when money is owing to the company by the seller. (10.) Vendors making a profit on liquidation upon shares which have cost them nothing. (11.) Directors receiving fees whilst almost entirely neglecting the business of the companies. (12.) The formation of secret rings, for speculative purposes only, by promoters and directors at a time when the public were being asked to subscribe money to be used for mining purposes. (13.) That out of I—l. 4a,

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twelve companies, with an aggregate capital of £100,000, floated by Messrs. Cook and Gray, eleven must, in my opinion, go into liquidation. But for the action taken by the holders of vendors' shares many of these companies would have been wound-up long ago. It may interest you to know, if you are not already aware of the fact, that the total capital of the Otago and West Coast gold-dredging companies is, roughly speaking two and a half millions sterling. Gentlemen, what I have stated will give you some of my reasons for placing my petition before Parliament. During the past six months, through the kindness of many newspaper proprietors, I have published in the Press of this colony letters, all over my own name and address, calling attention to the deplorable state of affairs in connection with the management of the dredging industry, and making the charges just alluded to, none of which, I may tell you, have up to the present been repudiated. In order that the suspicion and reflection which exist at the present time on the commercial morality of the colony, to the detriment of what should be a sound and profitable industry, should be removed, I pray, on behalf of a very large number of investors who are suffering without much hope of relief unless from Parliament. I would urge you, in the interest of the mining industry, in the interest of the progress of this colony, to pass immediate legislation to prevent this blot on the commercial morality existing any longer, and also appoint a Boyal Commission to investigate the grave charges which have been made in the Press for some time past. That is my statement. 4. Can you give us any particulars about any of the companies mentioned in the petitions ?— Yes. I have prospectuses of some of them with me ; the others I can produce later on. I would like to make some remarks on these prospectuses. 5. We will be pleased to hear you now ?—I would like to refer to the No Town No. 2 Company. I find that it was floated by Messrs. Cook and Gray, that Mr. W. B. Cook acted as vendor, and as broker, the registered office of the company being at Cook and Gray's office, 17, High Street, Dunedin. The secretary of the company, Mr. W. Hoisted, was an of Mr. Cook's, and Mr. Cook was until recently a director of the company. Mr. Cook had profits as vendor, salary as secretary, commission as broker, and fees as director. The prospectus of this company contains a long report signed by Mr. J. Howard Jackson, C.E. On Mr. J. Howard Jackson's name appearing on this prospectus there was a great rush for shares, and they were quoted at several shillings premium. Mr. J. Howard Jackson never made such a report as stated on the prospectus, and gave Mr. Cook to understand that he had not done so. He has also repudiated having signed such report in the public Press of the colony. Now, directly the public read Mr. Jackson's repudiation, and knew of the deception that had been practised on them, the shares fell to a considerable discount, and have since become unsaleable. At the time when Mr. Cook and his employes were owing money on their shares—hundreds of pounds sterling—small shareholders were being sued for their arrears. 6. Can you tell us anything about the Lees Ferry Company?— The Lees Ferry Company was registered on the 9th April, 1900, under the Companies Act of 1882. The capital —£B,ooo —was made up of 2,000 vendors' shares, allotted as follows: C. T. A. Broad, 120; Mr. J. Gill, 200; Mr. O'Kaye, 120; Mr. J. Taylor, 520; Mr. W. B. Cook, 1,040. The contributing shares, allotted as per share register, were 5,375; unallotted, 625: making a total of 8,000 shares. I understand that Mr. Cook was the purchaser of this claim, and also vendor to the company. It was stated on the prospectus that there was a deed of sale from Joseph Taylor to Mr. Cook, based upon the contracts filed at the Begistrar's office. The deed of sale from Mr. Cook to the company is dated 9th March, 1900, while the articles of association are dated Ist March, 1900. The dates on these deeds have been altered, but the alterations have not been initialled. I find that some of the persons who signed those articles of association did not pay for the shares they took on signing those articles of association, nor do their names appear on the share register of the company. In connection with this company I find that the share register has been improperly kept; in some cases the addresses of shareholders have not been entered, and pencil notes have been made directing that in the case of a Mr. and Mrs. Farley all notices of calls due from them were to be sent direct to Mr. Cook. Mr. Cook was a promoter of this company, he was a broker, he was a director, his nominee (Mr. W. Hoisted) was the secretary, and the registered office of the company was in Mr. Cook's own office. The share register on the 31st July, 1901, states that no money had been paid on 250 shares, that allotment-money was owing on 1,600 shares, and that Mr. Cook's late partner, William Gray, owed allotments on £500. Now, on all these shares Mr. Cook has received per cent, brokerage out of moneys paid in by the genuine and qualified shareholders. I find also that Mr. Cook received twenty guineas for attending as director only one meeting during the first year of the company's existence. The prospectus states that this claim cannot fail to get large returns of gold, and recommends the property as a good and safe investment for capital. This claim was tested at the expense of the qualified contributing shareholders by his (Mr. Cook's) own employe, Mr. Chester, as a mining expert, and was condemned by him as absolutely valueless. After the report of Mr. Chester, Mr. Cook allowed another of his employes, Mr. Howes, on the 26th March, 1901, to use his (Mr. Cook's) proxies, and vote against the liquidation of the company. After the investigations made in March, 1901, by the special committee deputed by the Dunedin Stock Exchange, of which report you have heard, this company was immediately removed from the lists and quotations of the Exchange. Upon Mr. Cook's resignation from the board I was elected in his place on 11th March, 1901. His employe, Hoisted, then issued a notice for the first annual meeting, in which two out of the three directors were made to retire instead of one. On the 26th March, 1901, when the annual meeting came on, his other employe, Howes, nominated himself as director, and, by using his employer's (Cook's) proxies, secured the seat on the board and removed me. I went with my solicitor to inspect the deed of sale, which the prospectus stated could be inspected at the office of the interim secretary. Mr. Hoisted said it was not in the registered office of the company, and gave a written order to the

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company's solicitor to produce the document. This the solicitor declined to do unless I paid a private account of some £80 which Mr. Cook owed him, the solicitor. I made a second request by letter on the 30th July, 1901, to which the company's solicitor replied by letter declining to produce this document. I find that in June last Mr. Cook's late partner, William Gray, and other large shareholders gave evidence on oath, in defending payment in respect of shares, to the effect that Mr. Cook assured them that the liability of the shareholders in this company was only Is. per share, and that Mr. Cook had stated this and other companies were entirely under his own control—that he had arranged for the other directors to be his nominees. A Mr. B. H. Abbott stated, in sworn evidence, that Mr. Cook promised him that if a market existed for the shares he would sell sufficient of the shares that Mr. Abbott applied for to make the balance fully paid up. At the last meeting of the Golden Grey Company Mr. Cook's nominee and Howes, stated that, if a resolution to liquidate was carried, the liquidation might be very expensive to the shareholders, as his employer, Mr. Cook, might claim to receive a dividend from the contributing shareholders on his vendor's shares. That is my statement, sir, in regard to the Lees Ferry Company. 7. Mr. Allen.] Have you got the letter which the Stock Exchange sent you? —The Stock Exchange merely sent a formal letter of acknowledgment a week after they heard the evidence, and we have heard nothing from them since. 8. They took action ?—They removed the names of the companies from their list. 9. Mr. Fraser.] They sent an acknowledgment of your letter to them ? —Of our report to them. 10. Mr. Herries.] Did they appoint you to report ?—They appointed a special committee to hear our report and verbal evidence. 11. Can you give us the names of the gentlemen comprising that committee ?—I have not the names here, but I can easily get them. I will give them later. 12. Mr. Allen.] Have you Mr. Howard Jackson's letter which was published in the newspapers ?—I have not got it with me, but I can get it for you. It was published in the Otago Daily Times. 13. Mr. Fraser.] Can you give us any particulars about the Auckland Beach Back Lead Gold-dredging Company (Limited) ?—Yes. It was registered in August, 1900, the promoters being Messrs. Cook and Gray, the interim secretary Mr. W. B. Cook, vendor to the company Mr. W. B. Cook, and the capital £9,000 —2,500 fully paid-up shares to be allotted to vendor as part payment, also £500 in cash to the vendor, and the cost of flotation and registration. The prospectus" states, " Will yield excellent returns." After 2s. per share had been paid by the contributing shareholders the claim was condemned by Mr. Cook's own employe and expert (Mr. Chester) as valueless. This company was liquidated some months ago, but up to the present time no statement of accounts has been rendered. 14. The Chairman.] Did the company go into liquidation voluntarily?— Yes. 15. Now, with regard to the Tucker Flat Company, can you give us any information about that ? —Yes. The company was registered on the sth March, 1900, the capital being £7,500, made up of contributing shares £6,000, and vendors' £1,500. The prospectus states the company to be registered under the Companies Act of 1882; interim secretary, Mr. W. B. Cook ; application for shares to be made to Cook and Gray; property highly auriferous, all gold-bearing, a genuine investment; the whole of the subscribed capital, less cost of flotation and registration, to be devoted to building the dredge, and the development and working of the property; the contract for the sale to the company and the memoranda and articles of association of the company being open for inspection at the office of the interim secretary. The only contract entered into by the vendors is dated 21st September, 1899, and is made between Bichard Wylde of the one part and William Bichard Cook of the other. Mr. Cook was a director ; Mr. Cook's nominee and employe, Mr. W. Hoisted, was the secretary; the registered office of the company, Messrs. Cook and Gray's office ; the brokers, Messrs. Cook and Gray ; vendor to the company, Mr. W. B. Cook. In March, 1901, Mr. Cook resigned from the board, and I was elected to fill the vacancy. The secretary, in the directors' report, caused two directors to retire instead of one. On the 27th March last, at the annual meeting, I lost my seat, another employe and nominee of the promoter's (Mr. W. Howes) taking my place. At the present time this man is chairman of the company. At an extraordinary general meeting held shortly after the annual meeting Mr. Howes moved that the capital be increased by £5,000, but could find no one to second the motion. A requisition to liquidate, signed by a very large majority of the shareholders, was lodged at the company's office on the 15th July last. On the 10th July I purchased through a firm of brokers 100 fully paid vendors' shares of £1 each for £81 lis., paid by my cheque, for which I was promised the scrip. On the 29th August, 1900, I purchased through Mr. W. B. Cook, of a Mr. Henry C. Choyce, 200 contributing shares at par, sending £25 2s.—being the application-money at Is. per share, the allotment of Is., and trans-fer-fee 2s.—to the secretary, Mr. William. Hoisted, Mr. Cook's employe} and nominee. Now, the directors had, on the 10th August, 1900, struck a call of 2s. a share. At the time the secretary and directors accepted the transfer from Mr. Choyce to myself Mr. Choyce had not paid this call amounting to £25, and I was not made aware that it had been struck. On the 15th July, 1901, the call was still uupaid, and I refused to accept the liability. On the 9th March last the auditor to the company signed the balance-sheet for the period ended 28th February, 1901, with this call outstanding, as being correct. On the 19th December, 1900, the directors struck another call of 2s. per share. In December, 1900, finding that scrip could not be delivered for the £100 fully paid shares I had purchased in July, I caused a writ to be issued on the broker through whom I purchased, and at once recovered the £81 lis. I had paid, less £3 7s. 6d. costs. Up to the 28th February, 1901, £479 4s. 9d. of the shareholders' money has been spent, and no attempt made to either design a. dredge or build the pontoons. On the 15th July, 1901, an extract from the share

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register states £12 10s. was due on application-money, £80 on allotment-money, and £836 owing on the first and second calls. Included in these sums was £50 owing by Mr. Cook's wife, and £90 by Mr. W. B. Cook. That is on the 15th July of this year; and at this date no dredge had been ordered or contracts made. I find that the share register has been improperly kept, the shareholders' addresses not given, and pencil notes directing, in some cases, all notices of calls to be sent to Mr. Cook. I find, also, that certain shareholders have stated in sworn evidence that Mr. Cook promised that only Is. per share should be called up, and that his co-directors should be his nominees. During the time that I was a director I declined to pass a transfer of 250 shares which Mr. Cook had, by a bill, taken over from a Mr. L. S. Benjamin. On my removal from the board this transfer was put through by Mr. Howes, Mr. Cook's employe and nominee, who had got on the board, and who is now, as I have stated, chairman of the company. He passed this transfer with £25 owing from Benjamin. On the 15th July, 1901, Mr. Cook's bill to Mr. Benjamin was dishonoured. I ask, for what purpose, other than the promoter's benefit, is this company existing? 16. Do you wish to refer to any other companies ?—Yes; I might mention the Boss Day Dawn Gold-dredging Company, the circumstances in connection with which are on much the same lines. Mr. Cook was one of the vendors of the company; he and his partner acted as brokers for the company. Mr. Cook, while acting as director, received £19 13s. 9d. for attending only two of the company's board meetings—this can be verified on reference to the minute-book. I find that an entry in the minute-book on the 27th November, 1900, shows that the directors instructed Mr. William Hoisted, the secretary, to place all overdue calls in the hands of a solicitor for collection; that on the 23rd April, 1901, Mr. Cook as director owed to the company on contributing calls £540 ; that Edward Mace, a clerk in Mr. Cook's employ, owed to the company £612 ; that Mr. William Howes, another employe, owed the company £90—all in respect of calls long overdue. lam given to understand that, of the 800 paid-up shares which Mr. Cook obtained from a Mr. C. Coote, the books will show 150 of these paid-up shares have been transferred by Cook to his employe, Howes ; that at the time when very large sums were owing to the company by Mr. Cook and his employes, Mace and Howes, other smaller shareholders were being summoned, and threatened with distress-warrants.; that repeated attempts were made to pass a transfer for his employe, Mr. Howes, when the latter was owing a very large sum of money to the company ; that Mr. Cook has given others to understand that his co-directors were merely his nominees; and that Mr. Cook acted as promoter, broker, and director, and his nominee as secretary, to this company at one and the same time. 17. Am I to understand from what you say that Mr. Cook was not summoned for any of his calls in connection with that company ?—Not at that time. Mr. Cook : Nor at any time. 18. The Chairman.] And others were being summoned?— Yes ; I can produce the Magistrate's judgment on these summonses. I would like to say, with regard to the Ngahere Company, that Mr. Cook's employe' and clerk, Edward Mace, holds no less than 1,000 contributing shares, and up to the time that I left Dunedin only £50 in respect of those shares had been paid in. 19. Mr. Guinness.] What should have been paid ?—£100; and yet on the balance of those shares Messrs. Cook and Gray received 2J- per cent, brokerage from the genuine or qualified shareholders. I further charge that company with misrepresentation in the prospectus, inasmuch as the property is not in the locality stated in the prospectus—it is not in the position stated. The Ngahere prospectus states that this claim is fed from the rich gold-bearing creeks of German Gully, Callaghan's Creek, and Nelson Creek, and that the claim is at the confluence of those creeks. Now, Callaghan's Creek is a long way off that claim altogether. 20. Mr. Colvin.] Is it above or below it ?—lt is towards Beefton. In respect of the Wicklow Company, it was registered on the 3rd March, 1900, and on the 27th July of this year applicationmoney was owing on 250 shares, allotment-money on 1,250 shares, and on all these shares Cook and Gray have received 2-J- per cent, brokerage from the moneys paid in by the qualified shareholders. Mr. Cook, who was elected a director on the 9th April, 1900, received twenty guineas for attending one directors' meeting only during the year. One of the brokers and promoters (Mr. Gray), who had been allotted 500 contributing shares, refused payment of the allotment-money on the ground of misrepresentation of the very company he had floated. A late employe of the brokers and promoters had been paid £87 10s. for services as secretary. A motion for winding up this company I was successful in carrying. I may mention, gentlemen, that I joined the boards of these four companies for the express purpose of breaking up these rings of monopolists; and I had no other object, as I have stated over my name and address through the papers of the colony, than to smash the companies up and break up these rings of monopolists. 21. The Chairman.] Have you got any memoranda of association of the companies ? —Yes. 22. Have you got the memorandum of association of the Lees Ferry Company ? —I sent that to the House with other papers; but the articles of association are exactly the same in all these companies. 23. Mr. Guinness.] You stated that a number of shares in different companies are held by employes of Cook and Gray, or W. B. Cook : have you any reason to suppose that those shares are held by these employes as trustees for Cook and Gray, or W. B. Cook, or are they held in their own right ?—I have taken them as I find them shown on the share register, 24. You have no evidence to suggest that the shares are held in trust for Cook and Gray ?—■ At one of the meetings Mr. Howes insinuated that the shares were held in trust. At a meeting of the Golden Grey Company, when we were trying to liquidate it, Howes threatened to make the liquidation cost 7s. or Bs. a share unless Mr. Cook was then and. there allotted 2,000 vendors' shares. A question put to Mr. Howes was answered as follows—l am reading from the report of the meeting that appeared in the Otago Daily Times : "Mr. Howes had only fifty contributing

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shares in this company, but on being asked why he protested so strongly against liquidation, said, ' I have a very large interest in the company—larger than you think.' " 25. Is that the only statement that you can refer to that points to the fact that he was holding them in his own right ?—Yes; but that is what he stated there. 26. The Chairman.] You have stated in your petition and evidence that the articles or memoranda of association of all these companies are different from the form given in Table A of the Act?—l would like to explain, with your permission, how I find those articles—the articles of association of companies floated by Cook and Gray. I have a table here on one side of which I have placed extracts from the regulations contained in Table A of the Companies Act of 1882, and opposite are the corresponding extracts from the articles of association of the companies. Under Begulation No. 4 of Table A directors may make calls provided twenty-one days' notice is given. In Cook and Gray's regulations, Begulation No. 4is struck out. The effect is to give directors power to levy calls without notice at any time. Begulation No. 37 of Table A provides that no business can be transacted for declaring dividends unless a quorum of members be present: if ten members are present, five to form a quorum ; if exceeding ten, one more for every five additional. Begulation No. 37 in Cook and Gray's articles is struck out. The effect gives power to one or two directors to transact business in any way they choose. Begulation No. 44 of Table A provides that every member shall have one vote for every share up to ten; beyond ten, one for every five up to 100, and one for every ten over 100. Begulation No. 44 is struck out in Cook and Gray's articles, the effect being to enable large shareholders to completely outvote the small holders. Begulation No. 52 of Table Aof "The Companies Act, 1882," says that the number of directors and the names of the first directors shall be determined by subscribers to the memoranda of association. This regulation is struck out in Cook and Gray's articles, the effect being to enable promoters to fix the number of, nominate, and appoint their own directors. Begulation No. 53 provides that, until directors are appointed, subscribers to the memoranda of association shall be deemed to be directors. Cook and Gray strike this out, and the effect is that still further control is given to promoters. Begulation No. 97 says that notice, if served by post, shall be deemed to be served at the time when a letter would be delivered in the ordinary course. This is struck out by Cook and Gray, and as a result the shareholders in Cook and Gray's companies are deemed to be served as soon as the letter is posted. Begulation No. 36 lays down that all business may be transacted at ordinary meetings, with the exception of passing dividends, and considering accounts, balance-sheet, and report. In Cook and Gray's articles the words " sanctioning dividends" are omitted, the effect being, I take it, to debar shareholders from ascertaining whether the directors are paying dividends out of actual profits or out of capital. Then, with regard to Begulation No. 47, providing that unless all calls are paid a member shall not be entitled to vote, Cook and Gray strike out all the words after the word " paid." Now, the words struck out prevented a shareholder from voting unless the shares had been held for three months previous to the meeting at which shareholders proposed to vote. The effect of Cook and Gray's alteration is to allow shareholders whose application and allotment-money are unpaid to vote. 27. Mr. Allen.] If application-money is unpaid ? —ln Cook and Gray's companies. I asked the company's solicitor whether it was possible for a man to take up a parcel of ten thousand shares in one of these companies, pay not one penny-piece on them, and yet record votes on the ten thousand. The answer I received was, Yes, he could vote on his ten thousand shares. 28. How would he get on the register ?—By applying for shares. Begulation No. 50 of Table A of the Act of 1882 provides that proxies shall be lodged seventy-two hours previous to the meeting. Cook and Gray substitute " twelve " for "seventy-two," the effect being that in companies such as Cook and Gray's the control is all in the hands of the promoters. Twelve hours enables the secretary, a nominee of Cook and Gray, to secure sufficient proxy votes to generally defeat the contributing shareholders. In nearly all Cook and Gray's companies the secretary was their own employe. Begulation No. 57 deals with the disqualification of directors. It provides that if a director holds any other office or place of profit under the company he shall be disqualified for holding office as a director, and his seat shall become vacant. (See Begulation 57 of Table A, " Companies Act, 1882.") In Cook and Gray's companies' articles of association there is added at the end of this regulation the words " and no director shall vacate his office by reason of the allotment to him of paid-up shares in pursuance of the said agreements, or by direction of the vendor, nor be liable to account for the profits on such shares." Begulation No. 90 provides that to fill a casual vacancy in the offices of auditors, directors, and others an extraordinary meeting is required. In Cook and Gray's companies' articles the words " may fill the same " are substituted for all the words after the word " director." The effect of this alteration is to give to Cook and Gray the power to appoint fresh auditors or directors at any time without even consulting the shareholders. Those alterations, gentlemen, show how the regulations under Table Aof the Companies Act of 1882 have been varied in these articles of association. 29. Mr. Guinness.] All your investments were not confined to Cook and Gray's companies, were they ?—No. 30. You invested in other companies registered in Dunedin under this Act ? —I did. 31. Have you ascertained whether it is or is not the practice of promoters registering companies under that Act to make identically the same amendments that have been made in connection with the Cook and Gray companies ? —I made exhaustive inquiries into a great many other companies, and I found no companies in Dunedin in regard to which the same articles of association have been adopted as those under which Cook and Gray's companies are formed. In no company—and I have inspected, I think, over two dozen—can I find a case of a man being able to vote on large blocks of shares without paying one penny-piece into the company.

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William Bichard Cook in attendance, and examined on oath.—(No. 2.) 32. The Chairman.] Do you wish to make a statement, Mr. Cook, or ask Mr. Easton any questions ? —I would like to ask some questions later, because all this is new to me. These are grave charges, and I would like to look into them in order to see how far they are true, though I know that a very great deal of what Mr. Easton has stated is absolutely untrue. Before asking any questions I would like to look into some documents 33. Will you be able to produce any documents for us to verify the statements that have been made, or otherwise ? —I should like to get all the documentary evidence. I have not been in Dunedin for more than three weeks during the past eighteen months, and, as I say, what Mr. Easton states is new to me. His charges must be refuted or supported; and I would ask the Committee to order the production of the companies' books here, and have the evidence of the secretaries and directors. In addition to asking questions, I should like to make a short statement. 34. We shall be pleased to hear your statement now ?—Very well; but I would also like to make a statement after this if the Committee wdll give me an opportunity of examining Mr. Easton. First of all, gentlemen, I would like to say, in reference to the allotment of shares in the Cook and Gray companies, that I was never at any meeting when the shares were allotted. I think lam absolutely correct in saying that, but I might have been at one. Personally, I had nothing at all to do with the allotment of the shares. There may be an exception that Ido not remember ; but, broadly speaking, I know nothing of the allotment of the shares. When these options were given me I had many options —the Nelson Creek, the Charlton Creek, the Lawrence, the Three-mile Greenstone, and others. 35. All of these were successes. We have heard this morning that out of twelve companies floated by Cook and Gray eleven will go into liquidation ?—ln answer to that I may say that I can name five that are paying. Mr. Allan Holmes, solicitor —I believe, an honourable man—■ prepared the articles of association of the companies; I have never read them, and know nothing about them. Mr. Holmes drew up those articles of association, and they are either good or bad, according to the legal arrangements, and had nothing whatever to do with myself or Cook and Gray. Then, sir, in every one of these companies I have at least 500 contributing shares, and Mrs. Cook has also 500. I think that we have paid all the calls that have been made in connection with all of them. It is news to me to hear this morning that Mrs. Cook owes £50 on the shares in the Tucker Flat Company. If she does, it is one call of 2s. per share. Mr. Easton has told you that I owed on the 19th April £500 or £600—1 forget which—to the Boss Day Dawn Company. I was away from Dunedin for five or six months, but on the 2nd May I paid up 20s. in the pound on the Boss Day Dawn shares. I hold 900 contributing shares, for which I have paid £900. I certainly owed for some calls on the 19th April, but they were all paid on the 2nd May. With reference to the No Town No. 2. Company, and Mr. Jackson's letter in connection therewith, the prospectus will be laid before you, and will speak for itself. Mrs. Cook and myself have up till now paid £600 on contributing shares in that company. Mr. Easton is distorting the facts with regard to Mr. Jackson's report on the No Town claims. There are two miles of creek— exactly similar ground. For his report I paid Mr. Jackson twenty-five guineas in cash, and he insisted on having twenty-five fully paid-up shares, making fifty guineas for his report. To support that report or otherwise I sent Mr. John Don, paying him his fee. They both reported that the ground was apparently gold-bearing, and both reports were very favourable. Then, we had the next mile of creek —a continuation of the No Town. Cutten, the engineer, was there, and he gave a report —which is printed on the prospectus —saying that this ground was precisely the same as the claim reported on by Messrs. Jackson and Don, with this exception : that it had a little more timber. That you will see from the report on the No Town No. 2. In regard to all the other companies — Lees Ferry, Wicklow, and others—Don was sent to prospect and report, being there some five or six weeks reporting on several claims—more than half of which he condemned— the others he reported on, as the prospectus shows, in a very favourable way. On what he based that report is for him to say. At any rate, he reported; his report was printed on the prospectus without comment, and the companies were floated on his report. As I say, in every instance I have taken 500 contributing shares, and Mrs. Cook has taken 500. The shares all went up to a premium, but we never sold; I have never sold a vendor's share in either of those companies, and I stand to-day to lose more than any one connected with them. We have never made a shilling out of them, and hold the vendors' shares, many of which are not allotted, and in addition I paid large fees for reports beforehand. As to the directors being my nominees—well, that is absurd. The articles of association were signed by seven—l think the legal number is seven—contributing shareholders in Dunedin in my absence, and they nominated and elected the directors. They elected me to be a director on most of them; they knew that I was travelling and could not attend the meetings—that I should be on the West Coast—and I was asked to look after the companies' interests on the Coast. Personally, I did not know that my fees had been paid; they were paid into the office, and I think that the companies have not got my receipt for one sixpence—they took receipts from the clerks. I believe that what was done was that a certain fee was voted to the directors for their services—not a fee for each director—but the directors were voted a sum for their services to be divided as they deemed well. Out of that they voted me a certain amount, for which I have given services by inspecting matters on the Coast. With regard to Mr Gray's evidence, where he swore about misrepresentation : Mr. Gray was my partner, but we dissolved. I had to step in and insist on a dissolution, and probably Mr. Gray is feeling a little sore. I asked my solicitor to have my evidence taken at the Court, but was not called, and the Magistrate decided that there was no misrepresentation without hearing my side of the question at all. As to the statements which Mr. Easton has made in reference to the Dunedin Stock Exchange, I never heard that there was such a meeting ; whatever was done was

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a one-sided affair—we never heard about it. With reference to Mr. and Mrs. Farley's shares, and Mr. Easton's statement that pencil memos, were inserted in the register to the effect that notices of calls to them were to be sent to me, I may say that those people have had my little girl for twelve or fourteen years. Mr. Farley went to Italy, and I undertook to look after his private business while away. That is the reason why the notices were sent to me—that is to say, so that his wife should not be bothered. Then, about the Auckland Beach Back Lead Company: Mr. Easton said that this claim was condemned by my employe, Chester. This "employe" business is rather absurd. Chester was reporting for me on the Coast, and the directors of the companies engaged him—not from me at all, but because he knew his business —and he condemned this claim. In that company Mrs. Cook held 500 shares and I held 500, but we never had a vendor's share allotted to us; I was to have had some, but they were not allotted. The company went into liquidation, and no one got them. To that company I paid £50 in calls, and Mrs. Cook paid £50. I think that there were not more than 500 shares sold outside of Hokitika—the Hokitika people and Mrs. Cook and myself bought the lot, excepting the 500. What I would like, gentlemen, is to have a copy of the petition and Mr. Easton's charges, and be able to look up each thing seriatim, looking into each matter fully before replying. I think it is due to me that I should have such an opportunity, for I cannot remember all these things that happened so long ago. I may tell you, gentlemen, that what Mr. Easton says about his coming out here to look into dredging is absolutely untrue. He came out here on family affairs. I may say that he is, unfortunately, a connection of mine by marriage. He came to me and thrust himself upon me, saying that he wanted to go into the dredging industry, and asking me to advise him. This I refused to do; but after some pressure he went to the Coast, saw the claims there, and wanted me to sell him an interest in the companies—the Tucker Flat Company, and others. I declined to do so, but told him that I knew a man who was carrying more shares than he wanted, and I would try to get some from him at par. This was just.before the Grey Biver dredge commenced working. Mr. Easton said, "If I can get in, and the Grey Biver turns up trumps, the others will jump." The Grey Biver Claim did not turn up trumps as we anticipated, and Mr. Easton was left with his shares the same as other people. No money has been spent in building dredges for any of the companies, and if they are wound up we shall lose our 2s. a share, or something like that. Any misrepresentation on my part, or any malpractices in any respect whatever, I deny. There may have been mistakes made, the same as in everything else, but to all of these charges I am sure that I can give a good reply. As to my men having been employed—well, there is no harm in that ; the office was there, and the directors employed the men in my office as secretaries to the companies. The auditors were never employed in my office. It was the directors' business to look after the secretary, and see that he did his duty. The man who acted as secretary to the companies is not in my employ now, but up till now he has done his duty. The companies whose legal office is at my office, which are working, are working satisfactorily ; the shares are generally at premiums, and dividends are being paid. This is about all I can tell you at present; but if you will order the documentary evidence to be produced and call Messrs. Howes and Hoisted, and also Mr. Holmes, I think you will find that we can alter the whole aspect of these very grave charges which have been made. 36. Mr. Allen.] I did not quite understand your reference to Mr. Howard Jackson's report: will you please explain it?— There were two miles of No Town Creek; the upper mile was the claim of the first company, called the No Town Company. On this claim Mr. Jackson reported, and for which report I paid him £50 odd. Mr. Don also reported on the claim, both being favourable reports. The other mile adjoining the No Town Claim belonged to the same people, and it was to be floated. That was the No Town No. 2—the one in question. The prospectus, which will be produced, states that " It is the adjoining claim to the No Town, and on the adjoining claim Mr. Jackson and Mr. Don_report as follows," &c, the words " on the adjoining claim " being printed in large type." Then, there is the report from Mr. Cutten, the engineer, in which he states that " this claim adjoining is precisely similar ground to that reported on by Messrs. Jackson and Don." There is no misrepresentation whatever; the whole thing speaks for itself, as you gentlemen will see when the prospectus is produced. 37. With regard to what Mr. Easton has stated about people voting without having paid any application-money, can you give us any information in connection with that ?—No one has voted without paying application-money. Mr. Easton said that it was possible only—no one has ever done such a thing. It may be possible ; Ido not know; that is a matter for lawyers to say. I have not attended any of these meetings, but I feel quite sure that no one has voted without having paid the application-money. 38. Mr. Herries.] Who managed your office while you were away ? —Mr. Hoisted, the secretary to these companies. 39. Mr. Colvin.] But you are responsible for what has been done by your office ? —Quite so ; but if a misrepresentation has been made by another man I object to having it put on to me, though I am responsible for any pecuniary loss. 40. How far is the No Town No. 2 Claim from the junction of the Grey ?—lt comes down just above the railway-bridge. The two miles stretch from the railway-bridge nearly to the township. 41. Hon. Mr. Mills.] Did you not get any weekly or monthly returns from your office while you were away ? —I had letters, of course, and I would be very pleased to show you all the letters which passed between the office and myself. The fact is that we have struck a " slump," a lot of people are disappointed, and to get out of their liabilities they are making misstatements and distorting the facts. I wonder that these charges should have been brought here ;if anything was wrong, why was not an explanation asked for ? I never had anything of the kind asked of me, and, I think, never attended a meeting. 42. Mr. Herries.] You were never there?—No, I think not.

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43. Mr. Colvin.] How many companies did Cook and Gray float ? —I think, about fifteen or sixteen. 44. How many dredges were built?— Dredges were built for the Nelson Creek Claim, the Charlton Creek, Long Valley, Lawrence, and the Three-mile Greenstone—they are all working; then four more are being built for the No Town, No Town No. 2, Bose Day Dawn, and Aylmer Lead Claims. The Dobson No. 2 was an unfortunate claim, the dredge being built with a short ladder. The various companies resolved that they would not build a dredge until they saw how the Grey Biver dredge worked, thus getting the benefit of their experience. The dredge did not start working till September or October, and then Mr. Easton started his agitation, and the whole thing has been hung up since. If the companies go into liquidation, or are not successful, I stand to-day to lose double as much as any other man in the place; and, as I say, I have not dealt with any of my shares, either contributing or vendors', in the companies complained of. 45. Mr. J. Allen.] Several rather serious charges have been made in connection with brokerage : can you give us a rough explanation as to it ?—We got 2-J- per cent, brokerage on the contributing shares ; that is what everybody got, with the exception of those who got an overriding commission of \\ per cent, and 1\ per cent., which most of the brokers did in Dunedin. 46. But the charge was that brokerage was obtained on shares on which the applicationmoney was not paid ?—Then it would be the auditor's duty to see to that. If any brokerage was paid on shares that had not been paid for the auditor should have called attention to it. The only matter bearing on the point that I know of, speaking from memory, was in the case of the Ngahere Company. I got a letter from the liquidator, addressed to Cook and Gray, asking for a refund of £5, being the application-money on 100 shares not paid by a Mr. Sawell, who had nothing at all to do with Cook and Gray and Mr. Howes. 47. Brokerage was paid on those shares? —I presume it has been paid, from this letter asking for a refund. 48. Mr. Herries.] Is that the only one of the companies that have been liquidated?—No; three or four of them have been ; but that is the only intimation I have had of that nature. 49. Mr. W. Fraser.] Is any brokerage allowed on vendors' shares ?—No, only on contributing shares. 50. Mr. Colvin.] Is it usual for one person to take an option of a property, be the vendor, act as director and broker, and do everything connected with the company ? —I think it has been done very often. You see, I was the vendor ; I paid all the fees myself. If I employed a man to prospect I paid him. Cook and Gray floated these companies ; it was part of their business to do so, and was perfectly legitimate. No charge has been made about the Charlton Creek Claim, or the Three-mile Greenstone ; I took the same number of shares in them. The shareholders appointed the directors themselves, and made No. 17, High Street, Dunedin, the office of the company —that was the directors' doing. There is nothing said about the companies which have built their dredges and started working. 51. You took the option from the people on the West Coast for these claims?— Yes. 52. Then you sold to the companies ?—Yes. 53. Then you acted as broker ?—Yes. 54. And you acted as director for the companies : Is that so ?—Yes. 55. Mr. Herries.] Can you tell us of any other firm that has acted in that way ?—I think I could if I looked the matter up. Ido not not know that there is anything wrong in a firm floating a company and acting as I have. I am holding 500 contributing shares in every one of these companies that Cook and Gray floated, on which I have paid my calls, and am holding 500 through my wife. Why should I not be elected to be a director if the shareholders wished it ? I did not nominate myself. 56. Mr. Colvin.] I look on a director as a trustee. You cannot look after your own interests and those of the company and a third party's at the same time. You are buying, selling, and acting for yourself? —The transaction is completed beforehand. 57. Mr. Guinness.] What have you to say in regard to the allegation that your employes hold shares in the companies that have been mentioned ? Do those employes hold the shares on your behalf in order to influence votes in your favour, or do they hold them on their own account as a private speculation ?—As a private speculation. 58. In all cases ? —ln all cases. With regard to the money that Mr. Mace owes on shares, I may say that I did not know that Mr. Mace had the shares until some time afterwards. I found on inquiry that Mace formed a syndicate here in Wellington ; the members of the syndicate asked him to take the shares in his name, which he did ; but when this agitation came on one or two of the men dropped out. That Mace will be able to pay his calls, however, lam quite sure ;he will get assistance. The statement that any man ever held a share in trust for me is absolutely incorrect. 59. Mr. Colvin.] As you have been away, you do not know about the suing of the small shareholders ?—No, I was not there ; but, of course, the books will show that. As I have said, I have paid all my calls, unless in connection with the Tucker Flat Company and the No Town No. 2, and if my wife and myself have not paid that last call we will pay it. I did not know that it was unpaid. 60. Hon. Mr. Mills.] Were you the vendor to all the Cook and Gray companies?—l think, in every instance. 61. You sold the claims to the companies ? —Yes. 62. Did I understand that when you said you stood to lose double as much as any one else on account of the shares you had in the companies, you took into consideration the moneys you received for the sale of claims to the companies ? —I never got a shilling in that way —not at all. Where there has been cash paid it has been paid to the original owners. I never had a shilling

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from any company that I floated. Only one company has written to me and asked me if I was prepared to forego my interest as vendor; I said, " Certainly." If any of these companies went into liquidation I would not claim a penny for my interest as vendor, so as a contributor I must lose. I never had a shilling, directly or indirectly, as vendor, except in shares. 63. By whose instructions would brokerage be charged by Cook and Gray on the shares on which no money had been paid, if it has been charged ? —I do not know how that has occurred, not being there. I presume that when a company was floated my office, in rendering its statement to the company, would make its charge for brokerage on the shares that were allotted. Very often a broker would send in an application for shares without paying the application-money. If the man was a good man they would be allotted to him. What I cannot understand is how the auditor missed charging the brokerage back. 64. I wanted to know by whose authority it would be charged in the first place: would it be a clerk in your office, or the other partner, or who ?—I do not know how that could be. The secretary to the company would put in the application. Not having been there, and so much of this being news to me, until I look the matter up I cannot say. Mr. Easton : With your permission, gentlemen, I should like to entirely repudiate Mr. Cook's statement that lam either a connection or a relation of his. I landed here on the 17th January, 1900, and until the 23rd April, 1900, I had never heard of a Mr. Cook. What induced me to believe that Mr. Cook was a man to be trusted was the fact that he had been appointed by the Supreme Court as liquidator of several large estates.

Thursday, 22nd August, 1901. William Holsted in attendance, and examined on oath. (No. 3.) 1. The Chairman.] What is you name? —William Hoisted. 2. What is your occupation, Mr. Hoisted?—l am the secretary of various companies. 3. Where do you reside ? —ln Dunedin. 4. Do you know Mr. Cook ? —I do. 5. And Mr. Easton?—Yes. 6. I believe you were working in Mr. Cook's office until lately, were you not ?—I was managing for Mr. Cook, at Dunedin, up till the 13th April. 7. We will deal with the Tucker Flat Company first. I have here the share register of the company: will you please tell the Committee how many original shares Mr. Cook holds in that company?— Boo contributing shares. 8. How many vendors' shares ?—Vendors' shares were not alloted. lam not aware of the number of vendors' shares that he was to have obtained. 9. Does not the agreement give the number ?—Yes; 1,500 fully paid-up shares were apparently, according to the prospectus, to have been distributed between the vendors. 10. Mr Herries.] With reference to the contributing shares; how many were taken up?— 6,000. 11. Were they all taken up then ?—-Yes, fully subscribed. 12. The Chairman.] Will you explain why the vendors' shares were not allotted ?—That was a matter for the directors. The company's solicitor advised them not to allot the vendors' shares until certain documents had been completed. 13. According to the share register, Mr. Cook owes £65 in calls?— Yes; there have been two calls struck ; he owes one call. 14. That call was struck on the 29th January, 1901?— Yes. 15. Mrs. Cook owes £100 in calls ? —Yes, the first and second calls. 16. Has any shareholder been summoned for calls in this company? —No. 17. Mr. Easton.] Who signed the articles of association in the Tucker Flat Company, Mr. Hoisted?— William George Somerville, stationer, Dunedin ; Charles V. G. Leijon, Dunedin ; Allan Holmes, solicitor, Dunedin; J. Davidson, accountant, Dunedin ; James Gregg Sawell, Dunedin; William Hoisted, manager, Dunedin ; and Thomas Henry Thompson, accountant, Dunedin. Those are the seven names here in the articles. 18. Where are those single shares shown and the moneys accounted for ?—I do not quite understand your question. 19. I take it that each of those seven is responsible for one share ? —Yes. 20. I want to know where those single shares are shown on the register, and how the money received on them has been accounted for? — I take it that Mr. Somerville holds fifty or a hundred shares; Mr. Leijon is the same; Mr. Holmes is the holder of only one share: that is not shown on the register. 21. Why is it not shown? —I could not give an explanation of that; I presume that Mr. Holmes's is a share transferred from Mr. Cook's holding. 22. Should not the holder of each share be shown?— The total number of shares allotted is shown on the register, but whether each single share should be shown is a matter which I would not like to give an opinion upon. All the shares are included in the total number allotted to the various holders 23. How many of the seven who signed the articles of association are not shown on the register? —Three—Mr. Holmes, Mr. Thompson, and myself. 24. Then, three people who signed those articles of association, and were supposed to have taken up one share each, have never paid anything on these shares, and their names do not appear on the share register: is that so ?—I do not think you put the question quite fairly, As a matter of fact, my share was a gift from Mr. Cook, and he paid my calls. 2—l. 4A.

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25. Then, that makes an additional share ? —No; the 6,000 are accounted for. 26. Mr. Cook has transferred one share to you ?—No. 27. Then, how do you become possessed of one share if you do not pay for it ? —lt is paid for by Mr. Cook ; he gave it to me. That is the position. 28. With reference to the secretaryship of this company, have you acted as secretary to the company ?—I have, and am still the secretary. 29. Did you receive the secretarial fees ?—While I was manager for Cook and Gray I did not. I was not entitled to hold any private fees. 30. Who received the secretarial fees of the company at the time you were acting as secretary and managing for Cook and Gray ? —As manager, I paid them into the account the firm of Cook and Gray. 31. You were not actually the secretary of the company? — Undoubtedly I was, and am now. 32. But were you receiving the secretary's fees ?—Yes. My arrangement with Cook and Gray was that I received a salary, and anything outside that I handed over to Cook and Gray. 33. Then, at the time the public were allowed to know that you were the secretary of the Tucker Flat Company, I take it that you were a clerk in Cook and Gray's employ, receiving a stated salary from them, and remitting the secretary's salary to them ? —Yes. 34. Were you aware at the time you were doing that that Mr. Cook was a director of the company ?—Undoubtedly I was. 35. Then, Mr. Cook, as director, was making a profit out of the secretarial fees : is that so ?—■ I should say he was not; Cook and Gray may have been making a profit, if there were a profit made out of them, but that is very questionable. 36. What I want to get at is this: Cook and Gray were receiving the secretary's fees in the Tucker Flat Company, and not you ?—The firm had the fees, in addition to other sources of income. 37. And at that time you were quite aware that Mr. Cook was a director of the company?— Undoubtedly I was; he was elected at a meeting of shareholders. 38. I understand that the prospectus of the Tucker Flat Company states that there was a deed of sale from Wilde to Cook —that is to say, the deed by which Cook acquired the claim ; that deed is stated to be on view at your office: were you aware of that ?—Yes ;it is so stated on the prospectus. 39. Will you tell the Committee who removed that deed from your office ?—lt was not removed from the office. 40. Was it ever placed there ?—Yes, because I took it out myself. 41. Who took it away ? —I did. 42. At what date did you take it away?— When I came away on Tuesday last. 43. The Chairman.] Are we to understand that it has been in the office all the time ?—lt has. 44. Mr. Easton.] Are you aware that a written application was made to produce that deed previous to the last extraordinary meeting of the company ?—I think you are making an error there. You applied for the deed in connection with the Lee's Ferry Company then, and made a further application last Monday, through Mr. Somerville, for the Tucker Flat document. Mr. Somerville came to me, attended by his solicitor, Mr. McGregor, requesting the production of this document. The Lee's Ferry deed was in the hands of the company's solicitor when they asked for the Tucker Flat deed, and I told them then that I thought it was in the hands of the solicitor, the same as the Lee's Ferry document. It subsequently occurred to me that I had put the Tucker Flat deed away in my safe, and I immediately went and hunted it up, and not half an hour later I received Mr. Palmer's wire asking me to come here. That is why the deed was not produced when Mr. Easton sent for it. 45. Mr. J. Allen.] Did you inform Mr. McGregor?—l did not, because I had Mr. Palmer's wire to come here. 46. Mr. Easton.] Was no request made to you on the Bth August for that deed ? —Not for the Tucker Flat document, to my memory. Ido not recall the Tucker Flat deed being applied for. 47. Then, with the Chairman's permission, I will read this telegram from a late director of the Tucker Flat Company—Mr. Somerville—who wired me on Bth August as follows : " Tucker Flat meeting adjourned six weeks. Cook wanted paid-up shares allotted. Holmes advised to the contrary. Cook never presented deed of assignment"?—He could not, because, as a matter of fact, it was in the safe in my office, and Mr. Cook was not there. 48. Mr. Colvin.] Cook's office, not yours ? —lt was in Cook's office, but he was very much away. 49. Mr. Bennet.] Who was managing the office ?—I was. 50. Mr. Easton.] Then, I take it that the deed has been in the office, but up to yesterday neither the public nor the shareholders have been able to look at it?—lt has been there for any one to look at, but I deny that you ever asked for the Tucker Flat deed. .. 51. A great many applications have been made to inspect this deed, and Mr. Somerville has written me as follows : " I took the trouble to get McGregor to go round with me to Cook's office, and Hoisted assured us that he could not produce the deed of Tucker Flat. We then went round to the Stamp Office and saw Mr. Corliss, who looked up his deeds and found that the agreement for Cook and Company was filed in March, 1900, but no reference is made to the agreement from Wilde to Cook, nor is it filed with the other documents. I think this is all in connection with the Tucker Flat, except to confirm what I said in my previous wire to you, that the meeting stands adjourned for six weeks to enable the directors to make arrangements with the vendors regarding fully paid-up shares." The registered office of the company is in Cook and Gray's office ?—No ; it is at my office now.

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52. It was at Cook and Gray's office up to 13th April?— Yes. 53. You were aware that Mr. Cook was a director of the company, that Cook and Gray were the brokers, and that Mr. W. B. Cook was vendor to the company?— Yes. 54. You are aware that in March last Mr. Cook resigned from the board ?—I could not speak from memory as to the date, but the minutes will show that. 55. Can you tell us how much Mr. Cook received during the eleven months that he acted as director ?—The annual fees were sixty guineas, I think, divided as the directors thought fit. I presume, therefore, that Mr. Cook would get an equal share with the other two directors. The balance-sheet would show that. 56. Then, we will take it that Mr. Cook received twenty guineas : will you tell us how many meetings Mr. Cook attended during the eleven months? —Two, I think; either one or two, I am not sure which. 57. Then he attended one or two meetings, for which he received twenty guineas of the shareholders' money ? You are aware that on the 27th March last, at the annual meeting, I lost my seat on the board ?—Yes. 58. And you are aware that one of Mr. Cook's other employes, Mr. Howes, took my place ?— That is so. 59. Who is chairman of the company at the present time ?—Mr. Howes. 60. At an extraordinary general meeting—the first meeting after I lost my seat—Mr. Howes moved that the capital be increased by £5,000 : is that not so ? —No ; that motion was moved by Mr. Somerville. 61. Mr. Howes put the motion, then ? —Yes, as chairman he had to. The motion was one of Somerville's. 62. You are aware that on the 15th July I lodged a requisition signed by a majority of the qualified shareholders ?—No, the unqualified shareholders. 63. It was signed by a majority of the shareholders—a requisition to voluntarily wind up the oompany ? —Yes. 64. Can you produce that requisition ?—I did not bring it with me, but I admit the fact. 65. Then, can you remember that on the 10th July, 1900, I purchased through a firm of brokers 100 fully paid vendors' shares of £1 each?—l can remember a transfer coming in, but must accept your statement as to dates; 66. Not a transfer ; it was for fully paid shares ?—Yes. 67. You are aware that I subsequently issued a writ against the brokers who sold those shares, because they could not deliver ? —You say so; Ido not know it; lam speaking from hearsay. 68. Are you aware that on the 15th July I purchased of a Mr. Choyce, through Mr Cook, 250 contributing shares ? —Yes. 69. How came that transfer to get through; because at that time Choyce had not paid a call, amounting to £25, on them ?—That is so. At the time that you bought them no demand had been made on Choyce to pay the call. You bought the shares at 2s. paid up, I understand ; but the transfer will prove that. The call of 2s. was certainly struck between the time that you bought and the time that the transfer was registered, but the directors did not object to passing the transfer, because they knew you to be a reliable man and that you would be liable for the calls. 70. The first call struck was on the 10th August, and Mr. Choyce was liable for 2s. per share on every share that I bought :is that not so ?—lt all depends at what time you bought the shares. 71. I bought them on the 29th August ?—Then, your transfer was very slow in coming in. 72. On the 29th August I purchased 250 contributing shares at par, sending £25 25., being application-money of Is. per share, allotment of Is. per share, and 2s. office fees. That transfer was passed through to me with a call owing by Choyce, struck on the 10th August. How came it that the directors put that transfer through ? —They knew from the fact of your transfer that it was 2s. per share, that you were only paying 25., and that you therefore must become liable for the call. 73. I want the Committee to fully understand that the transfer was passed through the office with £25 due from the seller ?—That is so ; but the liability became yours, as you had only paid the application- and allotment-money. 74. Mr. B. McKenzie.] Do you transfer shares with calls unpaid on them?—l stated that the directors knew Mr. Easton's position, and therefore passed the transfer. 75. Mr. Easton.] I find that on the 9th March, 1901, the auditor to the company signed the balance - sheet for the period ending the 28th February, 1901, as correct : where is this £25 shown ? —The auditor did not take any objection to that. Of necessity we could not charge it to two men—-you and Choyce as well —and it was therefore rendered to you. You received a notice of the second call being struck, and that showed arrears of first call £25. 76. Ido not hold myself responsible for the first call: Choyce has to pay the £25 ? —You bought the shares at 2s. 77. There had been a call due from Choyce on the 10th August, and I did not purchase till the 29th August. —I cannot say when you purchased, but the transfer will show. 78. Mr. J. Allen.] Have you got the cancelled scrip there? —Scrip had not been issued at that date. "Two shillings paid" is marked here on the transfer —that is, application and allotment. 79. Mr. Guinness.] What is the date of that transfer? —23rd August. 80. The Chairman.] It is just an ordinary transfer ?—Yes, for 250 shares. 81. I fail to see how you could make any one who buys those shares responsible for the unpaid calls ? —Mr. Easton must have been aware, for one thing, that only 2s. had been paid, because the transfer had to come into the office to be marked. 82. Mr. Easton.] 1 was not aware on the 29th August that a call had been struck on the 10th ?—

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No; as a matter of fact we had no knowledge of your existence in the matter—the transfer was passed on the 17th September. 83. The directors were aware when they passed that transfer that there was £25 owing by Mr. Choyce ?—lt was owing by you, because you distinctly had the transfer marked " two shillings only paid." Mr. Easton :] Ido not accept any responsibility in respect to that £25; in fact, I might tell the Committee that I am advised that by taking an action in the Supreme Court I can get my name removed from the register. Mr. Choyce is liable. 84. Mr. B. McKenzie.] Is this £25 shown as paid in the balance-sheet? —No ; it is shown on the debit side of the register, amongst the outstanding calls. 85. When the balance-sheet was passed, on whom did you rely for payment ?—Mr. Easton. 86. Did he hold the shares when the balance-sheet was passed by the auditor?— Yes. 87. The Chairman.] According to this document (transfer), the consideration was £12 10s. ? —Yes. Mr. Easton : The amount I paid was £25 2s. Witness : I may add, though it has really no bearing on the question, that the transfer would certainly have been hung up if it had not been that Mr. Easton was already known to the directors as being a man of standing, and that he was not likely to repudiate liability. 88. Mr. B. McKenzie.] Should not the directors have got this call paid before the shares were transferred ?•—I think you are quite right there. 89. Mr. Easton.] Are you aware, Mr. Hoisted, that the balance-sheet shows that up to the 28th February £479 4s. 9d. of the shareholders' money had been spent?— Yes. 90. You are also aware that up to that date no dredge had been ordered ?—That is so. 91. Do you know that the share register shows that on the 15th July of this year there was £12 10s. owing as application-money on shares, £80 allotment, and £836 due on first and second calls?— Yes, I will not dispute that, because on the 28th February it is shown that there was £1,206 in arrear. 92. Included in these sums I think you will find from the share register that £50 was owing from Mrs. Cook ? —No, two calls—£loo owing. 93. And £90 from Mr. Cook ?—No, £65. 94. Are you aware that Mr. Cook's late partner—one of the firm that brought this company into existence —owed £125 on the 15th July of this year?— Yes, that is so. 95. Can you remember that during the short period I had the pleasure of being a director of this celebrated Tucker Flat Company I declined to pass a transfer of 250 shares which Mr. Cook had taken over by bill from a Mr. L. S. Benjamin ?—I can rememher your declining to pass a transfer. Mr. Easton: At the time I declined to pass the transfer there was £25 owing by Mr. Benjamin. The Chairman : According to the share register, there is £25 owing, and a pencil memo, that Mr. Cook is to pay the second call. 96. Mr. Easton.] I declined to pass the transfer, and, as I have explained, I lost my seat on the board, Mr. Cook's other nominee, Howes, taking my place, and he is now the chairman of the company. Mr. Hoisted has admitted that. Now, Mr. Hoisted, that £25 was still owing on the 15th July ?—Yes, the second call is owing by practically all the shareholders. 97. Mr. Benjamin gave me to understand that on the 15th July the bill was dishonoured. You are aware, Mr. Hoisted, that when Mr. Howes became a director the transfer from Mr. Benjamin to Mr. Cook was put through, with the £25 owing ?—Yes, that is so. 98. The Chairman.] Mr. Cook has not paid this £25 yet ?—No; that will make his liability £90—£65 and £25. 99. Mr. Easton.] That is, admitting that £25 owing by Benjamin is due from Mr. Cook ?— Yes, that is so. The £25 was debited to Mr. Cook. He took over the liability. The Chairman : The register shows that the shares were transferred with £25 owing, that £25 being charged against Mr. Cook. 100. Mr. W. Fraser.] Does that relieve Benjamin from liability ?—That is questionable. 101. This is different from the case between Easton and Choyce?—Yes. 102. In that case was Choyce relieved of liability according to the books ?—I do not think so ; it is a question of law. 103. Mr. Easton.] Are you aware that in the Tucker Flat Company there are 250 contributing shares on which up to date no application- or allotment-money has been paid?— Yes, that is so; you refer to Kneebone's shares. 104. Are you aware that on the whole of those shares Cook and Gray received 2J per cent, brokerage ? —Yes, that was included in the brokerage charges, I think. 105. So they have received brokerage on shares that exist only on paper ? —That is hardly correct; Mr. Kneebone exists, at all events. 106. The Chairman.] When you put in the account for the brokerage you had this book before you, I suppose—you could see that nothing had been paid on the shares ?—Yes. 107. Mr. Easton.] Were you sending Cook and Gray monthly or quarterly statements remitting the brokerage ?—No ; the brokerage would be paid into Cook and Gray's account. 108. You paid it into Cook and Gray's account ?—Yes. 109. Were Cook and Gray aware that they were obtaining brokerage on shares on which nothing had been paid ?—They must of necessity have been aware of it, seeing! that they were the brokers. 110. They were aware that they were making a profit out of that which cost them nothing ?— Ido not that it is fair to put it in that way. Of course, they sold the shares, and I presume the

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position would be that if at a subsequent date the directors did not recover the calls they would come on Cook and Gray for a refund of brokerage. 111. Mr. J. Allen] Has that been done?— Not in this case; but Mr. Kneebone has not repudiated his liabilty. 112. Mr. Easton.] Are you aware that certain shareholders have stated in sworn evidence that only Is per share has been called up in this (Tucker Flat) and other companies ?—1 have heard that; it is hearsay. Ido not know it for a fact. 113. The Chairman.] Before we leave that question, I would like to ask you whether the commission is earned on the shares until the money is paid on them ?—I think so. 114. You think that if you agree with a man to take shares, and he pays nothing, you have earned the commission ?—The position would be this : a broker would probably have as much trouble in selling shares to him as to the man who paid his application-money. It would be a matter for the directors when the statement was brought before them to be passed. 115. Did the directors pass the accounts for brokerage in the Tucker Flat Company ?—Yes. 116. They knew that commission was claimed on the shares on which nothing had been paid ?—Yes ; there was a statement handed in to them. 117. Mr. Colvin.] Who were the directors?— Those who passed the accounts for brokerage were Messrs. Somerville and Leijon. 118. Mr. Easton.] Was Mr. Cook a director then ?—Yes, but he was not present. 119. Mr. Guinness.] When brokers put in their statement of the shares they have sold do they not also hand in the form of application for the shares, signed by the person applying ?—Yes. 120. Mr. Kneebone did sign an application for 250 shares ? —Yes. 121. But did not pay the money? —No. 122. Mr. B. McKenzie.] In this case there was Is. per share payable on application, and Is. on allotment ?—Yes. 123. Did you pay the commission before the allotment was paid, or before the Is. application was paid ?—The statement may not have been handed in till some time after. 124. I want to know whether the directors paid the brokerage before the allotment- or applica-tion-money was paid ?—No. 125. In the case in question no money was paid on the shares ?—That is so. 126. So they must have paid the brokerage on the shares without the Is. application being paid ?—Yes. 127. Mr. Colvin.] Is. for each share applied for ought to accompany the application ?—Yes. 128. The assumption being that the broker is selling to a responsible party ? —Yes, that is so. 129. Mr. J. Allen.] Are there any other similar cases to this ?—I think not. 130. Did William Gray, who sent in an application form without the application-money, pay his application-money on the 500 shares later on? —Yes. 131. Mr. Herries.] When did he pay?—On the 19th May. 132. Mr. J. Alien.] What is the date of the application ?—lsth February ; but the company was not registered till the 9th March. 133. Is it the usual practice to receive application forms without the application-money, and pay brokerage on shares so applied for ? —lt is very often done—in Dunedin, at any rate. 134. Mr. W. Fraser.] Mr. Kneebone has not paid application-money ?—Not yet. 135. Mr. J. Allen.] Is there any power by which he can be made to pay ? —I understand there is. 136. What power? —Legal power. The signature to the application form proves the contract. 137. Mr. Cook.] The amount of commission on the sale of Kneebone's shares was £6 ss. ? —Yes. 138. And his is the only case in which the application-money has not been paid ?—Yes. 139. Is it not customary in Dunedin, to your knowledge, for many people to pay applicationand allotment-money in one sum ? —Decidedly it is. 140. Beliable men send in applications for shares, and pay application- and allotment-money in one sum ? —Yes, it is customary. 141. This application referred to came from Auckland, and the amount of the brokerage charged on the shares was £6 ss. ?—Yes. 142. We have heard a great deal about the companies being " Cook and Gray's " companies : now, who were the directors of the company under consideration—the Tucker Flat Company ?— Messrs. Somerville and Leijon and yourself. 143. I was never in attendance but once ? —That is so. 144. For which I received, or, rather, the office received, the sum of twenty guineas?— Yes. 145. Do you remember whether any arrangement was made with my co-directors that I was to give attention to outside matters on the Coast ?—Yes. 146. They knew I would not be at the meetings ?—Yes ; you drew attention to that. 147. Do you remember that while I was on the Coast I was asked to superintend and arrange for the boring in connection with this company?— Yes, I do. 148. And that I did so ?—Yes ; that is shown in the books. 149. Therefore I did not take the twenty guineas for nothing ?—Decidedly not. 150. I probably did more work and gave more time to the company's business than the other directors in their attendance at the meetings?— Yes. 151. In reference to your acting as secretary to this company, were you under the instructions of the directors ?—Undoubtedly. 152. Did you ever take instructions from Cook and Gray, directly or indirectly ?—I could not do so, because they had no power to give instructions. 153. Had Mr. Somerville, a director of this company, any connection with Cook and Gray?—■ None whatever.

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154. Has his conduct towards Cook and Gray been such as would indicate that he had any kindly feeling for them, or otherwise ? —I should say otherwise. 155. It has been mostly antagonistic ? —Yes. 156. He has been Mr. Easton's lieutenant in the whole of this agitation ?—I have been given to understand that is so. 157. Mr. Leijon : what is he ?—A man of independent means, I understand ; a former dredgeowner, very largely interested in mining in Otago. 158. Has he any connection with Cook and Gray in any way whatever ?—None whatever, to my knowledge. 159. Is he interested in any other companies that are being carried on in Cook and Gray's office ? —Yes. 160. Which ?—I think he was a director of several; he is a director of the Charlton Creek Company, at any rate. 161. You swear that you have never been influenced, directly or indirectly, by Cook and Gray in reference to your duties as secretary to this company?—l can swear to that most emphatically. 162. With reference to the position you held in Cook and Gray's Office : you were there on a yearly salary ?—That is so. 163. Your duties were to look after any business that came to the office, and the remuneration that you received went to Cook and Gray's account as a revenue of the office? —That is so. 164. You kept the banking account yourself ?—Yes. 165. And you and the accountant operated on that banking account ?- —Yes. 166. Neither myself nor Mr. Gray had anything to do with it ? —No. 167. With reference to the transfer of shares from Choyce to Easton, Easton has stated that he paid Choyce £25 for the shares : is it not a fact from this transfer [produced] that Easton bought the shares without the allotment-money being paid, the consideration being £12 10s.—the application-money was paid, and Easton paid the allotment to the office ?—Yes. 168. Easton paid the allotment-money, and not Mr. Choyce ? —Yes. 169. Mr. B. McKenzie.] What was the date of the payment of the allotment-money ? — " September 4th ;by cheque, £12 10s." That is the entry in the book. The Chairman : The payment is credited in the books to Choyce. Mr. Easton's book shows one cheque for £25 2s. 170. Mr. Cook.] Could you tell us from your letter-book whether you got a letter from Mr. Easton in reference to this? —There would probably be a letter with the cheque, but I have not brought the correspondence with me. 171. Mr. J. Allen.] Have you a receipt-book ?—Yes ; but I have not got that here. 172. Is the cash-book here?— Yes ; it shows £12 10s., received on the 4th September, credited to Choyce. 173. Mr. Cook.] The directors who attended the meeting when this transfer to Easton was made were Messrs. Leijon and Somerville ?—Yes. 174. I was not there?— No. 175. Neither Cook and Gray nor myself had anything to do with it ?—Nothing whatever. 176. What is the name of the auditor to the company ?—Mr. Chalmers. 177. Had he anything to do with Cook and Gray?— Nothing whatever; as a matter of fact he belongs to the " opposition." 178. He was elected by the shareholders at a general meeting?— Yes. 179. And never had anything to do with Cook and Gray, directly or indirectly?— No. 180. Mr. Easton has told us that he (Easton) was a director of this company : can you tell us how Mr. Easton was placed in the position of director if he did not have the shares, as he says he did not ?—He could not have been placed on the directorate unless he was a shareholder. 181. He tells us that he is not a shareholder, that he disputes the shares, and yet he acts as director to the company ?—Yes. 182. By whom was he elected a director?—He was elected a director by Messrs. Somerville and Leijon. 183. When I resigned they elected Mr. Easton in my place ? —Yes ; after you resigned. 184. At the annual meeting of shareholders Mr. Easton was nominated ? —Yes. 185. Presuming that these shares are Mr. Easton's, how much does he owe in calls ? —£2s. 186. In reference to this "option" agreement from Wild to myself, it is stated on the prospectus that the only agreement in existence was this one, which was to be seen at the office of Cook and Gray ?—Yes. 187. This was always in the office until the company was registered? —Undoubtedly. 188. And was then handed over by me to the solicitor of the company in order to prepare the agreement between the company and myself ? —That is so. 189. Mr. B. McKenzie.] Who drew up the agreement ?—Mr. Holmes. 190. Mr. J. Allen.] Who drafted the " option " agreement ? Mr. Cook.] I think it was sent to me. The general options were printed ones. 191. Mr. Cook.] This agreement was never taken out of the office by any one ?—No, decidedly not. 192. Mr. Herries.] Do you know anything about the agreement between Cook and the Tucker Flat Company? I want you to read section 5, and would ask you if that is usual?— Yes, I think so. I may mention that I know of articles of association of other companies that are the same in that respect. 193. The article is as follows : " The validity of this agreement shall not be impeached on the ground that the vendor or the promoters stand in a fiduciary relation to the company, or that the

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vendor or any of the promoters are directors of the company, or that any of the directors have accepted office at the request of the promoters; and neither the vendors nor the promoters shall, by reason of any fiduciary relation with the company, be liable to account for any profit he may make or receive by virtue or in consequence of this agreement. In witness whereof these presents have been executed by or on behalf of the parties hereto the day and year first before written." I ask the witness if that is usual ?—I think the same thing occurs in connection with at least two other companies ; but it is really a legal question, and lam speaking from memory. 194. Was this clause 5 in the agreement embodied in the articles of association?—l do not think so. 195. This clause sis contrary to Table A of the Companies Act, of 1882. The memorandum of association says : " For the purpose of commencing mining operations to enter into a contract which has been already prepared, and is expressed to be made between William Bichard Cook, of Dunedin, accountant, of the first part, and the company of the other part, for the sale to the company of the mining property therein mentioned for fifteen hundred fully-paid up shares of one pound each in the capital of the company as therein expressed"; but it does not say about the profits arising from the secretarial duties : can you explain why this was put in ? —No, I cannot. 196. The Chairman.] Was the secretary paid office-rent for the company as well as salary ? — The secretarial salary included office-rent; it included the use of office for ordinary purposes and board meetings. 197. Mr. Herries.] Did Mr. Holmes draw up this agreement as well as the memorandum of association ?—Yes. 198. Mr. Colvin.] You say you are a shareholder in the company ?—lnasmuch as I hold that one share that Mr. Cook gave me. 199. But that share was not placed on the register ?—No; it is included in Mr. Cook's holding. 200. Then, you admit that you were acting as a dummy for Mr. Cook—you were acting as Mr. Cook's clerk and as secretary to the company, and you were not on the register ?—I exercised no vote at any time. 201. I see by the balance-sheet that " preliminary expenses " amounted to £34 13s. : who got that money ?—£l lis. 6d. was paid to Mr. Sawell for printing. 202. Mr. Herries.] Is that the Mr. Sawell who applied for the shares?— Yes. Wilkin and Co. got £6 10s. for printing ; Legatt, 14s. 6d. for printing circulars, I think, and office-stamp ; the cost of registration of the company amounted to £15 ; and £10 17s. paid to Mr. Holmes for law-costs makes the total of £34 13s. 203. Mr. Colvin.] Who received the commission of £150 ? —Cook and Gray. 204. And who received the secretarial salary, £68 15s. ?--Cook and Gray, through me. 205. And rent, £9 12s. ? —That is the rent of the claim. The rent of office is included in the secretarial salary. 206. Was a separate account at the bank and a separate bank-book kept for this company? — Undoubtedly ; that was the very first thing that was done. 207. Have you got the bank-book with you?—No ; but there are separate bank-books for each company. 208. You said that you took that deed of association out of your safe when you left ?—Yes. 209. And you stated to Mr. Somerville when he called for it that you did not think you had it ?—lt was last Monday that Mr. Somerville called for it, evidently under Mr. Easton's instructions. 210. You could not give it to him ? —No, in all good faith. Mr. Somerville mentioned the Lees Ferry deed, and I said I thought the Tucker Flat document was in the hands of the solicitor with it. 211. Where was it ?—lt was in my safe. 212. Where was that ?—ln my room. 213. You have an office now separate from Cook and Gray ?—ln the same building. 214. You are carrying on by yourself, but are in the same room, and the deed was there all the time ?—Yes. 215. Is the statement that Mrs. Cook owes £100 for calls in the Tucker Flat Company correct ?—Yes. 216. And also the statement that Mr. Cook owes £90 ?—Yes—£6s and £25. 217. With reference to these calls that Mr. Easton objects to pay : if a man of straw put in a transfer —a man whom you did not know—would you pass it ? —Not if there was any liability on the shares ; but I could not transfer the shares—the directors would do that. 218. But they would not do it in such a case ? —No, decidedly not. 219. You acknowledge that it is not right to transfer shares in a company when a call has been made and not paid previous to the transfer being put in ?—I should say it is not right. 220. Mr. Millar.] Do you ever transfer shares when there is a liability on them ?—No ; but it has occurred. 221. It is a most unusual custom ? —lt is an illegal custom. 222. Mr. J. Allen : Has Mr. Wild not received his 750 paid-up shares ? —No. 223. Why ?—Because the directors have not allotted them. The directors were advised by the company's solicitor not to allot them for some time after the company started, until, at all events, they were perfectly satisfied about the title, &c.; and since that, on account of the various questions that have been raised, and the consequent trouble in the mining market, the directors have not taken steps to allot them. 224. The company has been registered ?—Yes. 225. Is it not satisfied with the title ? —Yes, I think so.

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226. Has Mr. Wild received no consideration for his title ?—As far as the company is concerned, he has received no consideration. 227. Has he signed the transfer ? —I presume so. 228. Does the company still hold the ground ?—Yes, we still pay the rent. 229. Has Mr. Wild applied to have these shares transferred to him ?—Yes, I think he has. 230. What do the minutes say about it?—l do not think there has been a demand from Wild before the directors. 231. There is an agreement that Cook cannot pay Wild until Cook gets the paid-up shares from the company ? —Yes. 232. Has Mr. Cook applied for these paid-up shares in order to pay Wild?—l do not think so. 233. Why did the solicitor advise the company not to allot these shares ?—Because if the company went into liquidation it would complicate matters if the vendors' shares were allotted. He said it would be better to make an arrangement with them, in the event of liquidation, that they should not insist on their right as vendors. 234. Mr. W. Fraser.] In order to facilitate liquidation ?—Yes. 235. Mr. J. Allen.] What would be the rights of Mr. Wild in case of liquidation ? —I understand that he could insist on the capital being called up. 236. That is the law, is it not—that the subscribers' shares can be called up ?—Yes ; it would inflict a hardship on the subscribing shareholders. 237. Have you got the minute with the solicitor's opinion ? —No. 238. Can you tell us from memory what his opinion was ?—That the vendor be written to and asked to voluntarily forego any vendor's interest—not to insist upon the shares being allotted. 239. Which vendor ?—Mr. Cook. 240. You know nothing about Mr. Wild's position ?—No. 241. Mr. B. McKenzie.] You were secretary to this company ?—-Yes, and I am still secretary. 242. Also a clerk in Cook and Gray's service?—l was at that time. 243. Were you allowed to do any work outside of Cook and Gray's office ?—No. 244. You were entirely in their service ? —Yes. 245. Was Mr. Cook a director of the company at that time ? —Yes ; he was elected a director at the start. 246. How much was paid as secretary's fees ?—£7s per annum, including office-rent. 247. Who was it paid to? —It was to Cook and Gray ; I paid it into their account. 248. So that in reality Cook was both director to the company and secretary, acting through you?— Yes, putting it in that way. 249. When Cook was superintending the boring on the West Coast what remuneration did he receive? —None except as director's fees; he received no separate remuneration. 250. Are you aware whether it is legal for directors to transfer shares until all calls on them are paid up ?—I understand that it is illegal. 251. Do you know the law on that point ? I want to know whether you know, yourself, that all calls must be paid before a transfer can be made ?—Yes ; but I will amend my statement in this way : when I say I am aware, I am not here to say that it is so. 252. You know that to be a fact ?—Yes. 253. Were you secretary to the company when the shares were transferred from Choyce to Easton ? —Yes. 254. Did you sign the transfers ?—No, I do not think so. 255. Which directors passed the transfers? —The directors present at the meeting w r ere Messrs. Leijon and Somerville. 256. You stated in reply to Mr. Cook, that it was customary in Dunedin to pay application and allotment together ?—Yes. 257. Can you cite any cases where it has been done?—lt would be rather difficult to speak of individual cases, but there have been several that I know of. 258. But have you got anything to justify you in saying that: can you give us any case in point ? —lt would be extremely difficult to name cases. 259. Do you know of any ?—I could not give you the exact names, but I know of cases; I could turn them up. 260. Outside of Cook and Gray's companies ? —That is another matter. I have myself paid application- and allotment-money together, outside of Cook and Gray's companies. 261. In what company ?—The Happy Valley Company. 262. Who were the directors of it?—l really could not tell you; but I think I paid the two together in that case. 263. At the time of the application ?—No ; the time of the allotment. 264. What I wish to get from you is, do you know of any other cases in which brokerage was paid on shares before the application-money was paid ?—You asked me to speak of a definite case, and I cannot undertake that. 265. Is it usual in Dunedin to pay brokerage on shares when there is no application-money paid ?—lt is commonly understood to be so. 266. Can you say that of your own knowledge ?—I cannot of my own knowledge speak of other places. 267. Do you know of any other case than the one referred to in which brokerage was paid without any application-money being paid ?—I understand it was the same in the Bignell's No Town Company. 268. Is that one of Cook.and Gray's companies ?—No,

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269. Do you know of your own knowledge whether that is a fact ?—I could not say of my own knowledge ; I would have to look up the books. 270. What do you think of it as a business transaction : do you think it is fair or legitimate ? —Yes, I think it is, for the reason that the directors can recover from the broker if the calls are not paid. 271. Who is responsible for this application-money ?—I presume the broker is. 272. Suppose a broker accepts men of straw, say, for £100,000, who will never pay any appli-cation-money, do you think the directors could legally pay him the brokerage when the applica-tion-money is unpaid ?—lt does not appear that it is legal on the face of it. 273. The Chairman.] You say that the salary paid to the secretary is £75 a year? —Yes. 274. Is the same amount paid by every company? —No; some pay less than others. 275. How many companies have Cook and Gray ?—There were fourteen or fifteen at one time, but there are not that number now. 276. What would be the average amount paid by each of them per year ?—I think they were paying £75 a year each, with two exceptions. I may add that £75 a year is the average secretarial salary in Dunedin, but there are several higher than that. 277. How many hands were employed in Cook and Gray's office then ?—There was myself, the accountant, the assistant accountant, the typist, and the boy—five altogether. 278. What would their wages average per year ? —The accountant's salary was £175 per annum, the typist's £85, and two juniors, say another £100. 279. What was your salary ?—£s a week. 280. That would make about £650 a year for salaries ?—Yes. 281. How much was the office-rent ?—£s2 a year. 282. Mr. Cook was the official liquidator for some companies : did you do work for him in that connection ?—We had nothing to do with that in the Dunedin office.

Saturday, 24th August, 1901. William Howes in attendance, and examined on oath. (No. 4.) 1. The Chairman.] What is your name ?—William Howes. The Chairman : We will finish with the Tucker Flat Company first, so I will ask Mr. Easton to proceed with his examination. 2. Mr. Easton.] Are you in Mr. Cook's employ?— Yes. 3. Have you been acting as manager for Cook and Gray at their Dunedin office ?—No. 4. Who was acting as manager at the Dunedin office? —Mr. Hoisted. 5. Have you any interest in vendors' shares, other than the contributing shares standing in your name, in the Tucker Flat Company ? —No. 6. At the meetings of the Tucker Flat Company, in using your votes and those of Mr. Cook, have you always been qualified to do so ?—Yes. 7. Your shares have always been fully paid up at the time you voted?— They have; I did not act as director when my shares were not paid up. 8. Have you ever endeavoured to get the vendors' shares in the Tucker Flat Company allotted? —Yes; the minute-book will prove that. 9. What was your reason for doing so? —I considered the vendors were entitled to them. The company have held this claim for a long time. It is a good claim; and I take it, the company having adopted the agreement, and held the claim as long as they have, they should allot the vendors' shares, not for the sake of the pecuniary amount they represent, but because the vendors have as much right to have a say in the fate of the company as the subscribers, under the circumstances. 10. On behalf of which vendor were you pressing for those shares to be allotted ?—Whoever was entitled to them. 11. Were you pressing on Mr. Cook's, your employer's, behalf to get those shares allotted?— Not on his behalf alone, on behalf of the vendors generally. 12. Of which he was one ?—Yes. 13. Mr. Herries.] Do you hold vendors' shares as well as contributing shares?—No; I am a subscriber and a present director of the company. 14. When you made your application for the shares did you pay up the application-money?— To the best of my belief, I paid it up at the time the application was sent in. 15. Why does the application [produced] show a blank ?—I cannot recollect the circumstances, but the register will show. 16. The application is dated February, and the money was paid on the 18th May ? —I paid the application-money on the 31st March. 17. At the same time as the allotment-money ?—No. 18. Before you paid the allotment-money ?—Yes. 19. What was the nature of your employ with Cook and Gray ?—I was Inveroargill manager for them, and was engaged in the liquidation of various companies there. When the business got dull I was removed to Dunedin ; there was a lot of work to do in the Supreme Court at Dunedin in connection with these Inveroargill companies. 20. You were not attached to the Dunedin office of Cook and Gray ?—I always drew my salary from the Inveroargill office. 21. How much did you draw as director's fees in the Tucker Flat Company? —I have drawn nothing yet. 3—l. 4a,

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22. Mr. Colvin.] Who draws it ?—While matters are in abeyance we are not drawing directors' fees at all. The general meeting can, if it chooses, vote us fees when we explain the work we are doing. 23. Mr. Herries.] But no fees have been voted since you have been director? —None paid. 24. Have secretarial fees been voted? —Certainly. 25. Who drew those fees ? —The secretary. 26. Were you aware that they were paid into Cook and Gray's account ? —They were not in my time. They were paid to Mr. Hoisted. Mr. Hoisted has purchased the Dunedin branch of Messrs. Cook and Gray's business, and the alteration has made no difference whatever in his position as secretary to the company. 27. He draws the fees now himself, and formerly he paid them into Cook and Gray's account ?—He may have done so ; I presume he did. 28. Have you got the articles of association of the company there? —Yes. 29. You are perfectly acquainted with all those articles of association —Yes. 30. Is the deed of sale from Cook to the company there ? —Yes. 31. I would call your attention to clause 5 : do you consider that is a proper clause to be embodied in any articles of association ? —lt is frequently done , it depends on the bargain made between the company and the vendor. 32. As a director, do you not think that that contradicts the clause in Table A of the Companies Act of 1882 —viz., clause 57 : " The office of director shall be vacated —If he holds any other office or place of profit under the company ; if he becomes bankrupt or insolvent; if he is concerned in or participates in the profits of any contract with the company ; if he participates in the profits of any work done for the company. But the above rules shall be subject to the following exceptions : that no director shall vacate his office by reason of his being a member of any company which has entered into contracts with or done any work for the company of which he is a director; nevertheless he shall not vote in respect of such contract or work, and, if he does so vote, his vote shall not be counted " ?—Well, companies have power to alter Table A to meet their requirements, and, as long as it is not ultra vires to the Act itself, it is generally done. Table A, as adopted here, is practically copied from the English Act, and as long as the company thinks proper to amend Table A they can do so in any respect, provided that it does not interfere with the main Act. I might say that I was not a director until within the last three or four months, and lam not responsible for the articles of association. They were drawn by Mr. Allan Holmes, of Dunedin, who I believe is thoroughly competent; and I know that the articles of association of many other companies, in addition to Cook and Gray's, have the same clause. 33. But do you not think that the two contradict each other ?—Yes ; but Mr. Cook was not a director at the time that he made this bargain with the company. He became a director by virtue of his subscribing shares, at the request of the shareholders in general meeting. 34. But he was a director at the time that he drew the office-rent? —Yes, that may be ; but there is a saving clause :—Table A, clause 57 : "But the above rules shall be subject to the following exceptions : that no director shall vacate his office by reason of his being a member of any company which has entered into contracts with or done any work for the company of which he is a director ; nevertheless he shall not vote in respect of such contract or work, and, if he does so vote, his vote shall not be counted." That exception, I consider, would cover Mr. Cook's position in the matter. 35. The Chairman.] It would cover his receiving rent ?—He had not received rent; he got paid for work done by his manager; practically that is what it comes to. , 36. Mr. Herries.] Are you still a director?— Yes. 37. What is the reason why the company has not been liquidated? —We know the claim is a good claim. It has been tested by two experts, and Mr. Leijon, who is a very successful mining man, visited the claim, and reported favourably on it. An effort is being made on the part of some shareholders to get out of their liability in regard to the claim. There is a slump on, and shareholders have got frightened, and are not particular as to what means they adopt to get out of their responsibility. 38. Is it the intention of the company to put on a dredge ?—We are now in treaty with another company, who have a dredge, and are not satisfied w T ith their claim, to amalgamate. 39. How much protection have you got ? —We have been prospecting, and I think we have now some seven or eight months before we have to commence to build the dredge. 40. What protection did you get ?—We paid the rent the other day —a year's rent —so we must have eleven months, not seven or eight months. 41. Have you got men working there now?— There are two men, I think, working on the claim, but not for the company. 42. Whom are they working for? —They are working on their own account —working for the gold they are getting. 43. Mr. Colvin.] Are you still in Mr. Cook's employ ? —Yes, on and off; I am practically on my own account. I now work for Mr. Cook casually. 44. Do you consider it right that Mr. Cook should be the vendor to the company, act as secretary, and act as director?—He never acted as secretary; Mr. Hoisted was appointed secretary. 45. But was not Mr. Cook responsible for Mr. Hoisted?— But Cook's name does not appear as secretary, and Mr. Cook was not responsible to the company for Mr. Hoisted's actions as secretary to the company. 46. That is only quibbling : is not Mr. Hoisted manager for Cook and Gray?—No, not now; he was at one time. 47. Did Cook and Gray not get the secretarial allowance—the secretarial salary? —I believe it was paid into their account.

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48. If I engaged you to do certain work, and you drew the money and paid it to me, is not that the same as if I was getting it ?—lt would be the same as far as my own affairs were concerned, but Mr. Hoisted, personally, was the secretary to the company. The change in the business has made no difference whatever to Mr. Holsted's appointment. He still acts as secretary. 49. But Cook and Gray do not receive the secretarial salary now ? —No. 50. Is not that a difference ?—Yes ; to the extent of five guineas a month, or whatever it is. 51. Mr. Cook received the brokerage on the shares sold, though he was away from the office at the time ? —Certainly. 52. He was the broker to the company ?—Yes. 53. And he was to receive 750 paid-up shares in this company ?—I do not know the number. 54. Surely, if you are a director you know who is to receive them, and what the agreement was ?—I can tell you by referring to the register. 55. You have seen the agreement?— Just now ; that is the only time I have seen it. 56. Do you consider that the way these companies have been floated is a healthy state of affairs ?—Yes. 57. Mr. Bennet.] Who reported on this claim?— Mr. William Faithful, Cutten Brothers, engineers, Mr. William Palamountain, and Mr. Charles Chesterman; those are the names on the prospectus. Since the company was floated the directors have had the claim tested at a cost of over £114, and the report was a highly favourable one. Mr. Leijon, a practical man, a successful man in mining, has visited the claim, and speaks very highly indeed of it. The directors have no reason whatever for wishing to throw up the claim on account of it being a duffer. 58. Mr. W. Fraser.] When was this company formed—at about what date ?—Some time in the early part of 1900. 59. Since then there has been over £100 spent in prospecting it ? —£ll4 4s. Id. for boring operations. 60. You said just now that you are in treaty with some other company to work it ? —-The directors have arranged for an interview with the directors of another company, who have a dredge, for the purpose of bringing about amalgamation, either by forfeiting the shares of those shareholders who will not pay up, or amalgamating. Ido not know what course the negotiations will take, but we were to have met them the day I left Dunedin to come here. 61. As chairman of directors, doubtless you know the reason that influenced the solicitor to advise that the paid-up shares should not be given to the vendors : what is that reason ?—The reason assigned was this: You will see in the plan there are two small sections of 1 acre each within the area owned by the company. They were left out in the prospectus, but the solicitor advised that it would be well, before the co-iipany took over the claim and allotted the vendors' shares, to get these 2 acres included. lam not speaking from my own personal knowledge, because 1 was not director at the time. I proposed that the vendors' shares should be allotted. I consider that an injustice is being done to Mr. Wild and other people on the Coast who are interested in the vendors' shares. 2 r;- 62. Is the property now vested in the company ?—Yes ; the company pays the rent. But titles may not all be completed. 63. It was known, when the purchase was made, that the 2 acres were not included ?—Yes. 64. But suraly the solicitor must have some other reason for advising that the vendors' shares be not allotted : that is not a reason ?—He has another reason now. In consequence of this agitation, and the larger shareholders not paying up their calls, he considers that it would be better not to alter the position of the company until such time as matters are cleared up. That is the reason he gives now; he advises us, as directors, not to take any further action until the position is cleared up. 65. Mr. Herries.] You were chairman of the company when the transfer from Benjamin to Cook was passed?— Yes. 66. Why did you agree to that transfer?— There was no reason why we should not. 67. Had Benjamin paid up all his calls ?—Cook paid them. 68. Had Benjamin paid up the calls before the transfer was passed ?—Cook paid them before the transfer was put through. 69. Did he pay them in cash?— Yes; Mr. Easton's statement in that respect was entirely misleading. The date of the transfer is the 19th February, 1901 ; that is when the transfer was made between Cook and Benjamin. It came before the directors during the period Mr. Easton was on the directorate, and they declined to pass the transfer! Benjamin wrote to me again after the annual meeting, at which Easton and his lieutenant, Somerville, were put off the board, and asked if we could not put these transfers through. On 19th March, exactly a month after Cook and Benjamin did their deal, Cook paid £80 into the company, £25 of which should have been placed to the credit of Benjamin, but it has not been. The other £55 was meant to go in payment of his arrears on his other shares. When this transfer came in to us Cook had paid £80. 70. On Benjamin's shares?—He intended to pay £25 on Benjamin's shares and £55 on his own. 71. Then, Mr. Hoisted is entirely wrong in saying that Mr. Cook still owes the £25? The Chairman asked Mr. Hoisted, " Mr. Cook has not paid this £25 yet? " and Mr. Hoisted answered, " No; that will make his liability £90 —£65 and £25 ": is Mr. Hoisted wrong in saying that?— Yes, I maintain that he is. 72. The Chairman.] Then, the share register is wrong?— The share register is correct. It shows that on 19th March of this year—between the date of the transfer and the time when it came before the board, of which I am a director—Cook paid in £80, and I know that Cook intended to pay Benjamin's calls.

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73. Mr. Herries.] Mr. Easton asked, " That is, admitting that £25 owing by Benjamin is due from Mr. Cook?" and Mr. Hoisted answered, "Yes, that is so; the £25 was debited to Mr. Cook. He took over the liability " ?—Mr. Cook paid £s0 since. 74. This is referring to the time of the transfer; he may have paid £80 on other shares ? — That is the view I take of it; besides, the Act is permissive, it is not compulsory. The directors can, if they choose, pass transfers when the calls are not paid up. 75. The Chairman.] That is your opinion?—lt is the law. The Act says "may." I would not pass a transfer unless the calls were paid. My opinion is that the £25 has been paid with other money. 76. Mr. Cook.] In reference to this agreement for sale, dated 9th March, I see that I signed it in Auckland: is it to your knowledge that this was forwarded to me for signature?— Yes; the solicitor to the company forwarded it to you. 77. Do you remember that I left Dunedin in December, 1899 ?—I cannot recollect the date. 78. And I did not return until after this company was formed? —That is so; you were not present at the time the shares were allotted or at the election of directors. 79. Is it within your knowledge that I had anything to do with the preparation of the agreement?— You had nothing at all to do with it as far as I know. It was prepared by the solicitor to the company. 80. Is it also within your knowledge that after this company was registered the shares went to a considerable premium ?—Yes ; I myself bought and sold a few shares. 81. What premium did you get for yours ? —2s. 9d. 82. They went up as high as 6s. ?—I cannot say that I recollect their going up to 6s. ; but I know there were all sorts of prices. 83. Do you remember Mr. Cutten, the engineer of the company, purchasing?— Yes ; he bought 200 shares, I think, at a premium of 4s. 6d. 84. With reference to the transfer of these shares from Mr. Benjamin, was the correspondence in reference to the completion of this transfer from me or from Mr. Benjamin ?—From Mr. Benjamin. 85. Has any letter been received by the company, to your knowledge, from me, requesting the transfer to be completed ?—No. 86. I would like to ask you some questions on Mr. Easton's evidence : Mr. Easton. says, " I find in many companies, especially in those floated by Messrs. Cook and Gray, the articles of association are so drawn up as to override what may be classed as the safety clauses of the Act under which they are framed, thereby allowing a few holders of shares to obtain almost absolute control of the companies": had Cook and Gray, or any one connected with them, anything to do with the preparation of the articles of association?— Nothing whatever; they v were prepared by the solicitor to the companies. 87. We have influenced the articles of association in no way whatever? —That is so; the directors would not stand interference by Cook and Gray. 88. Mr. Easton also says, " Large blocks or parcels of shares have been allotted to office clerks, who are evidently unable to meet the liabilities, as they have up to the present paid next to nothing on them " : is that the case in this company ?—No; it is untrue as regards this company. 89. Mr. Easton goes on to say, " Brokers are receiving brokerage on shares upon which no money has been paid." It came out in Mr. Holsted's evidence that £6 ss. brokerage had been received on shares on which no money had been paid. Mr. Hoisted Was asked whether it is customary for brokers to forward applications without the application-money, that money being paid by the applicant generally when he has received notice of allotment, and he replied, " Yes " : do you know of your own knowledge that that is so?— Yes. 90. In other companies?— Yes, companies outside of Cook and Gray's. 91. Can you give any names? —Yes, two; the Happy Valley Company and the Bignell's No Town. 92. It is the general custom?—lt is a general custom. In connection with this particular company, I can tell you of other men who did not pay anything until the allotment of their shares; they were Messrs. Davidson, Cutten, and Sawell. 93. To your knowledge, they did not pay on application, but they paid when they received notice of allotment ? —Yes, they paid afterwards. 94. Mr. Easton also says that " share registers are in some cases improperly kept" : to your knowledge, is that so in the case of the Tucker Flat Company?—l consider that when the payment was made by you £25 should have been credited to Benjamin, and the £55 to your General Share Call Account. I had personal correspondence with Benjamin about it, and knew that you had to pay. 95. Mr. Easton also says, " The directors have received fees whilst almost entirely neglecting the business of the companies." In connection with this company, is it within your knowledge that the directors desired me to give attention to matters on the Coast, knowing that I would be travelling?—lt was the understood thing when you were appointed that you would be on the Coast, and that you would be of service to the directorate, and thus obviate the necessity of appointing a director on the Coast. One of the other directors, Mr. Somerville, visited the Coast, and drew five guineas for his expenses, from four or five different companies. 96. I have not charged a penny extra ?—Not a penny-piece. 97. At the request of the other directors I arranged for the boring operations of this company? —Yes. 98. With reference to Mr. Hoisted being secretary to the company while in my employ : he was manager of the Dunedin office of Cook and Gray ?—Yes. 99. He had full charge of the office ?—Yes. 100. And it was his business to conduct that office in order to show a profit for Cook and Gray, if possible ?—Yes, if possible ; I do not know whether he did or not.

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iOl. He and the others had to give their services to all business that came to the office, and received the fees for it ?—Yes. 102. And paid them into Cook and Gray's account ?—Yes. 103. The business of Cook and Gray was a commission and agency business ?—lt was. 104. Is it to your knowledge that Mr. Hoisted had the sole charge of the bank account, and alone operated on it ? —ln conjunction with the accountant, yes. 105. Do you know whether I ever signed a cheque on behalf of Cook and Gray ?—I have never seen a cheque signed by you on behalf of Cook and Gray, either in connection with the Dunedin or the Inveroargill branch. 106. An auditor went round periodically ? —That is so. 107. He audited the books of the firm, and I never had anything to do whatever with the firm's office-work ? —Mr. Mace used to go round and audit periodically. 108. Can you tell us, from your knowledge whether I have ever influenced Hoisted as secretary to the company in any way ?—Certainly you have not. 109. He was in the employ of the directors of the company ?—Yes. 110. And did his work for the company ? —Yes. 111. And on receipt of his salary he paid it to the general account of Cook and Gray ?—Yes. 112. Mr. Easton goes on to say that among the irregularities the following exists: "The formation of secret rings for speculative purposes only by promoters and direstors at a time when the public were being asked to subscribe money to be used for mining purposes : " is that true in reference to this company ?—lt has no bearing whatever on this company. 113. Mr. Easton also says that " out of twelve companies with an aggregate capital of £100,000 floated by Messrs. Cook and Gray, eleven must, in my opinion, go into liquidation": in your opinion, should this company go into liquidation ? —ln my opinion, it should not; but it may have to, for the reason that the shareholders cannot or will not pay up their calls. 114. Who is responsible for that ?—Mr. Easton. 115. This agitation has caused shareholders to be alarmed, and try to get out of paying their calls ? —Yes ; on any pretext. 116. And to your knowledge some of thgm have not been particular about the mode they have adopted in order to get out of their liability?— They have not. 117. Without mentioning names, do you know that they have told untruths in reference to this Tucker Flat Company in order to get out of paying their calls ?—Yes ; deliberate untruths. 118. Mr. Easton also says that " but for the action taken by the holders of vendors' shares many of these companies would have been wound up long ago " : would the Tucker Flat Company have been wound up but for the action of holders of vendors' shares ?—No vendors' shares have been allotted in this company. 119. With reference to the untruths I asked about, can you give an illustration ? —Yes ; Mr. Easton has stated here, and has stated in other places, that I proposed a resolution to increase the capital of the company. Now, that is untrue in intent, and his statement is made with a view to deceive. The minute-book shows that on the 27th March, at an extraordinary meeting, Mr. Somerville moved that the capital of the company be increased by £5,000; this was seconded by Mr. S. Brent. 120. Mr. Carncross.] Was Mr. Somerville a director ? —Yes ; then chairman. 121. Mr. Herries.] Did~ you not move the resolution at the meeting held to confirm those minutes ?—That is a quibble of Mr. Easton's. 122. Mr. Easton may have referred to that?—l say that it is a quibble; the statement is made with the intention to deceive. 123. Mr. Cook.] The resolution at that meeting was moved by whom ?—Mr. Somerville. 124. And seconded by Brent ?—Yes. At the subsequent meeting held to confirm the resolution —I may say that both Somerville and Easton had been removed from the directorate in the meantime —the persons who introduced this resolution did not move it. There was a full meeting, and I waited ten minutes, and then said that, unless they moved a resolution, I would propose the resolution pro forma. I did so ; but it was not seconded, and I declared it lost. 125. The Chairman.] Does it appear in the minutes that you moved the resolution pro forma ? —It does not say pro forma in the minutes. 126. Mr. Carncross.] Was Mr. Somerville present at that meeting?— Yes. 127. But he did not move the resolution ? —No, not to confirm. 128. Mr. Cook.] There had been a change of front in the meantime? —Yes. 129. Mr. W. Eraser.] You were not the originator of the intention to increase the capital ?— No ; I did not approve of it personally, because I considered we might get a dredge without increasing the capital. 130. Mr. Cook.] The statement made here by Mr. Easton, that "at an extraordinary general meeting, held shortly after the annual meeting, Mr. Howes moved that the capital be increased by £5,000, but could find no one to second the motion," you say, is untrue in intent?— Yes; the statement is put that way with the intention of deceiving. 131. The resolution was moved at the first meeting —that would be the extraordinary general meeting —and this was the confirming meeting; it was moved and seconded as you stated ?—Yes. 132. Mr. Easton states that, with reference to his contributing shares, during the period before his transfer was in the office the directors had struck a call of 2s. a share ; that may be right or wrong. He goes on to say, " Mr. Choyce had not paid this call, amounting to £25, and I was not made aware that it had been struck. On the 9th March last the auditor to the company signed the balance-sheet for the period ended 28th February, 1901, with this call outstanding, as being correct." Now, that implies to me, as an accountant, that the auditor signed a balance-sheet which was incorrect: is there anything iv the balance-sheet that is incorrect ? —Not that lam aware of.

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133. Do you know anything of this call being outstanding ?—The auditor has included the amount in the outstanding calls, and the balance-sheet is perfectly correct. 134. Who is the auditor?— Mr. Chalmers. Mr. Easton at the annual meeting proposed the re-election of Mr. Chalmers as auditor. 135. Mr. Chalmers was the auditor, and Mr. Easton proposed his re-election for the ensuing year?— Yes ; the minute-book shows that. 136. Mr. Easton also says, " I find that the share register has been improperly kept " ; and, again, he specially states, in reference to this company, " The shareholders' addresses are not given, and pencil notes directing, in some cases, all notices of calls to be sent to Mr. Cook " : can you tell us anything about that? —I believe that is a fact. I presume there is a good reason. 137. You do not know anything personally ?—No ; but I understand that you are representing some of the shareholders. 138. Mr. Easton goes on to say, "I find also that certain shareholders have stated in sworn evidence that Mr. Cook promised that only Is. per share should be called up, and that his codirectors should be his nominees." With reference to the Is. per share being called up, do you know of your own knowledge that I ever promised any such thing to any shareholder ?—No ; you were not in Dunedin. 139. You never promised such a thing ? —No. 140. As to the co-directors being my nominees, were they my nominees in any way whatever? —No, certainly not. 141. You were in Dunedin at the time of the flotation and registration of the company?— Yes. 142. I was in Auckland ; and to your knowledge these directors were not my nominees ?—Certainly they were not; they would not accept any instructions whatever from you. 143. Mr. W. Eraser.] At the elections of directors were any vendors' shares used : did vendors' shares carry any votes with them ? —The vendors' shares are not allotted. 144. Then, for all elections of directors it was only the subscribing shares that carried votes with them ? —Yes. 145. Mr. Herries.] I see Mr. Hoisted was present at the general meeting of shareholders : did he vote ?—I could not say whether he voted or not. 146. As a general rule, who held the proxies ? —I could not say who held them. I have no doubt that I held Cook's and Mrs, Cook's for their subscribing shares. I think either Somerville or Easton held the balance. 147. You always held Mr. and Mrs. Cook's?— They did not always send them; in many cases they did not vote. 148. But you held their proxies when they did?— Yes. 149. Mr. Easton.] With regard to the shares transferred from Benjamin, you stated that I was incorrect in saying that £25 was due from Benjamin at the time I declined to pass the transfer. Now, all my attacks on this company are based on the evidence from the company's books, and I ask you, are those books right or are they wrong?— They are correct. I maintain that the £80 paid by Mr. Cook was intended to pay the £25 standing in Mr. Benjamin's name, and my co-directors took the same view when passing transfer. 150. I am not talking about £80 : I want to know whether the book shows £25 as being due from Benjamin ?—lt does. 151. Then, I am correct in my statement that the books of the company show £25 as being due from Benjamin at the time I declined to pass the transfer?— Yes ; at the time you declined. 152. The Chairman.] Does not the share register show to-day that Benjamin still owes that £25 ?—Yes. 153. It is still owing—not marked off?—lt is not marked off against Benjamin; but in my opinion that is an error in book-keeping. 154. Is the register correct or incorrect ?—I say that it is incorrect to that extent. 155. You said just now that it was correct, now you say it is incorrect ?—As regards allocation of this amount paid by Mr. Cook, yes. 156. Does the share register show that he paid that £25 ? —No ; it shows that he paid £15 and £65. 157. Were you there when Cook paid that money in ?—I was in Dunedin, and had letters from Benjamin about it; and in the course of conversation with the secretary I said that Cook must pay the £25 before the transfer was put through. 158. You knew Mr. Cook's intentions in the matter? —Yes. 159. From what did you know them?—l was receiving letters from him periodically. 160. About this matter? —This, and others. 161. Did any of these letters state that it was Mr. Cook's intention that so-much of the £80 was to go to one account and so-much to the other ?—I cannot say from memory. 162. Then, how do you know what his intentions were? —I knew that was his intention; he sent £80 intending it to cover that £25. 163. It is very hard for one man to say what another's intentions are unless he has some evidence to go on; you have sworn that you knew what Mr. Cook's intentions were?— Yes. 164. I am trying to get the data on which you base your knowledge of his intentions ?—-There has been a lot of correspondence in regard to this. 165. But you cannot tell me that Mr. Cook said this in any of that correspondence?—l cannot from memory, but I know that was the impression on my"mind, all the way through. 166. You have sworn that £25 should have gone in payment of that item?—lf I had been keeping the register I should have so placed it. 167. But you have sworn as to what Mr. Cook's intentions were ; I want to get at how you knew what they were ?—I know that for one reason Mr. Cook would never ask a transfer to be put through unless he had paid the calls owing.

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168. He would not ask for a transfer to be passed unless he had paid the calls ?—-No, I should not think so. 169. And that is your reason for knowing what his intentions were ?—That is not the only reason, because I had correspondence with him about the same thing. 170. Have you got any of the correspondence ?—I may have, but I have not looked it up specially.. 171. You cannot tell me that that correspondence said that £25 was to pay the calls owing by Benjamin?—l cannot say definitely. 172. You have already sworn to certain intentions on Mr. Cook's part, and I want to get at your reason for knowing that those were his intentions ?—I knew Mr. Cook's intentions in regard to these transactions, because Benjamin came to me and said that Cook was going to take these shares, and wanted to know when. I told him that if Cook had said that he would take the shares from him he would do so. 173. That is not answering my question; you said that Cook would not ask to have the transfer put through unless he was prepared to pay the calls owing : is it not a fact that previous to this an attempt wa3 made to put that transfer through, but that the directors refused? —Yes; there was a request to put through the transfer previous to its being passed by myself, but in the meantime that £15 and £65 had been paid. 174. Did you see the share register when that transfer was being put through ? —Yes. 175. You looked it up?— Yes. 176. As a director, did you not see from the share register that Mr. Cook's intentions had not been given effect to, and that the £25 standing in the name of Benjamin had not been marked off? —Yes, I mentioned it at the time. 177. That the share register was wrong ?—That the transfer should be made from Benjamin. 178. It is your duty as a director to see that the share register is correct ?—Yes. 179. Did you ask to have it corrected ? —I mentioned the matter. 180. Did you put anything in the minutes to show this error had taken place ?—No ; I thought the fact of our passing the transfer would be sufficient. 181. And still leaving Benjamin liable on the books for £25 ?—The transfer was made to Cook —the shares are liable. 182. Does it not show that Benjamin still owes £25 on the books if you look up his account? —It does. 183. And if the company went into liquidation would he not have to pay ? —Yes, if he was put on the list of contributors ; but I take it he would have a very good defence against being put on the list of contributors. 184. I see there is an agreement from Bichard Wild to Cook for sale of the mine ?—Yes. 185. It is not marked as registered in the Warden's office : has there ever been a registered transfer of this company from Wild to Cook ?—I could not say. 186. Has there ever been a transfer from Wild to the company ? —I could not say. 187. Then, you do not know whether this claim at the present time belongs to the company or to Wild ?—lt belongs to the company. 188. Has any title ever been granted to it ?—Those matters have all been in the hands of the company's solicitor. 189. This document does not appear to have been registered in the Warden's office, where it would have to be registered in order to pass the title from the original grantee ?—ln that case I presume that Mr. Wild, or Mr. Cook, whoever holds the documents bearing on the claim, objected to complete the transaction unless they received the vendors' shares. 190. You presume that ?—Yes 191. Is there any evidence in your books to show that ?—I cannot say. 192. You say that no one connected with Cook and Gray had anything to do with the preparation of the articles of association of the company?—l would qualify that by saying that I believe that the acting-secretary would confer with the solicitor. 193. Would not the articles of association have to be signed before there could be a company ? —Certainly. 194. Then, it must have been done, not by the company, as you said, not by the secretary, for there could be uo secretary ?—There would be an interim secretary. 195. It must have been done by some one unconnected with the company itself—by the promoters ?—The articles were signed by seven intending shareholders, who each signed for one share. 196. Who promoted these companies? —Principally Mr. Cook. 197. But you said that Mr. Cook was not there, and had nothing to do with, the preparation of articles of association ?—As a matter of fact, I chink there were only about ten lots of shares in the company sold to people in Dunedin. I sold to five friends of mine. 198. Who sold the rest to form the company ?—Mr. Cook and other brokers, I suppose. Cook did not always sell them himself ; they were sometimes sold through other brokers. 199. Had Hoisted anything to do with the flotation of the company ?—I do not think so. 200. Then, I suppose that you and Cook would be the floaters of this company ? —No, I was not a floater of the Tucker Flat Company. 200 a. Then it was Cook, was it?— Yes; I understand that he employed other brokers to sell shares. 201. You say that some people told untruths to get out of paying their calls?— Yes. 202. Did you refer to Mr. Gray ?—No ; I referred to the statement made as to my proposing a resolution to increase the capital of the company. 203. It was said in evidence, at an earlier stage of this inquiry, that Mr. Gray, Cook's

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partner, had given evidence on oath that he had been led to take up these shares under a misrepresentation ; and I did not know whether you referred to him or not ?—Mr. Gray, to my knowledge, made a defence. Ido not know whether it was in connection with this company or not, but judgment was given against him. It was held by the Stipendiary Magistrate that there had been no misrepresentation. 204. The company has held the claim for about a year?— Yes, over a year. 205. Can you show that you have done any practical work to bring in any return from that mine ?—We have been prospecting. For the greater part of the time I was only connected with the company as a shareholder. The responsibility rests with the late directors. 206. How much have you got in in calls ; and how much is there owing in unpaid calls ?—I think there are only ten or a dozen people who are qualified to vote in the company now, but the majority of them are good for their calls. 207. Do you think it is right to hold this ground and do nothing with it ?—No, I do not. 208. Mr. Herries.] With regard to the proposed amalgamation of the company with another company, to which you referred, I notice in the minute-book there is an addition to the minutes in your handwriting?— Yes ; that was inserted by me as chairman at the following meeting when we were confirming the minutes. 209. The resolution which I refer to is about a circular being sent to the shareholders with regard to the position of the company, and there is an addition to that inserted in your handwriting with regard to the amalgamation ? —As soon as I got on the directorate I moved in the direction of getting an expression of opinion from all the shareholders, irrespective of whether the calls were paid or not, in order to get at the position of the company, and to see if we could not proceed with it. Mr. Brent proposed the resolution, and Mr. Leijon seconded, " That a circular be sent to each shareholder setting out the position of the company, and asking if they are in favour of the directors delaying operations with a view that they may be able to obtain a suitable secondhand dredge within the present capital of the company, or amalgamation with another company." The words " or amalgamation with another company" were inserted on the confirmation of the minutes. 210. Was the circular ever issued ?—Yes; and replied to. 211. The Chairman.] What was the reply to that circular from the shareholders generally ? —T.iey were pretty well divided; I think the majority were in favour of persevering with the company. 212. The company has been formed for more than a year, and you have done no practical work for a return of gold outside a little prospecting ; the only evidence that you have to show that you intend to do anything is your intention to amalgamate ?—We have been in negotiation for some time past with two or three companies who have dredges, with a view to getting a suitable dredge. 213. You are going to purchase a dredge?— Yes. 214. Has the company the funds to purchase one with?—We have a few hundreds in hand at present. 215. How much will it take to purchase a proper dredge?— That depends. 216. Have you got the necessary funds ? —No ; but we have the call capital to go on. 217. If you can get the call capital in, can you do it then?— Yes. 218. But you may go for perhaps another year without doing anything?—We naturally will not go on any longer than we have a right to hold the ground for. 219. Have not the majority of the shareholders asked you to liquidate this company?—l do not think the majority of shareholders have ; there has been a requisition to liquidate . the company, but of these requisitionists there are only two who are good on the books, and who could exercise voting-power. 220. You do not know whether the company hold the claim, or whether it is still in the name of the original grantee ? —No, I cannot say from my own personal knowledge. 221. You say there may be a dispute as to the allotting of vendors' shares, and that the company may own no property at all : do you think, in view of those facts, it is advisable to keep it on ?—I presume that if the company have not got the title to the claim they have a grievance which will give them a good right against the vendors, providing the company fulfil their obligations to the vendors. 222. Mr. Herries.] With regard to the proxies used at the general meeting, were those proxies entitled to a vote —had they all paid up their calls ?—Only those who had paid up their calls were allowed to vote. 223. 27th March is the date of the extraordinary general meeting called in connection with the increase of capital ?—No proxies were used at that meeting ; there was no opposition to the proposal; it was carried by a show of hands.

William Holsted recalled, examined on former oath as to affairs in connection with the No Town No. 2 Company. (No. 5.) 224. Mr. Easton.] Who was the promoter of the No Town No. 2 Company ?—Mr. Cook, I presume ; but I could not speak from personal knowledge. 225. He brought the company into existence ?—Yes. 226. Who was the vendor to the No Town No. 2 Company ?—Mr. Cook was the vendor to the company. 227 Who were the brokers to the company?— Cook and Gray. 228. Was Mr, Cook a director of the company ?—Yes, he was.

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229. Who was the secretary to the company?—l am. 230. But who was ?—I have always been. 231. Have you always, yourself, received the secretarial fees of the No Town No. 2 Company?— While I was manager for Cook and Gray the fees were paid into their account. 232. You received a stated salary from Cook and Gray, and paid the whole of the secretarial fees from the company into the account of Cook and Gray ? —Yes. 233. You handed over the cash ? —Yes. 234. The registered office of the company was at Cook and Gray's office ?—Yes, at Cook and Gray's office. 235. Then, to your knowledge, Mr. Cook had profits as a vendor, commission as broker, fees as secretary, and fees as director, all going on at one and the same time ? —The firm of Cook and Gray had. 236. How many shares did Mr. Cook originally hold in this Company ? —5OO contributing shares. 237. How many vendors' shares did he hold?—-1,000. 238. How many of those 500 contributing shares does he hold now ?—All of them ; he has sold none. 239. Has he sold any vendors' shares ?—Yes. seventy-five. 240. Mr. Cook sold seventy-five vendors' shares : can you give the Committee the date he sold them?— The date of transfer is 19th March of this year. Mr. Cook : Before you proceed any further in that connection, Mr. Easton, I may explain that I gave the shares away, not sold them. 241. Mr. Easton.] Very well; how many contributing shares in the company does Mrs. Cook hold ?—5OO. 242. How many contributing shares does Mr. Cook's employe, Edward Mace, hold ?—1,350. 243. And what sum is owing at present from Edward Mace on those shares ? —Some £1,147. 244. Can you tell the Committee how many contributing shares Mr. Howes holds in the company ?—lOO. 245. And how much does he owe on them ?—£9o. 246. How much of the capital has been called up ? —lBs. per share. 247. Then, he has only paid application- and allotment-money ?—He has not paid that. 248. Would you tell the Committee how much Mr. Cook owes to-day on his shares ? —£lso —three calls. 249. Would you tell the Committee how much Mrs. Cook owes on her contributing shares ? —A similar amount—£lso. 250. You must be aware, then, that at a time when Cook and his employes were owing those hundreds of pounds to the company the small shareholders were being sued for their arrears? —No. All those in arrears were being sued; a number of summonses were issued up to a certain stage. 251. Was Cook summoned at any time ? —No; every one more than two calls in arrear was to be sued. 252. Was Mrs. Cook sued ?—No. 253. Was Howes ?—Yes ; and he confessed judgment. 254. Has Edward Mace been summoned ? —A writ has been issued against him. 255. Were those summonses and writs issued against Cook and his employes before these other nineteen small shareholders were summoned ? —No; at the same time ; the whole thing took place at the same time. 256. At what time were they summoned?—l think the minutes will show when the instruction was given to the solicitor. The summonses would probably be issued in the latter part of April or May. The minute-book shows that the instruction to hand the accounts to the solicitor was given on the 23rd April, but I cannot say when the summonses were issued. 257. I will hand in this letter, Mr. Chairman, from one of the shareholders in the No Town No. 2 Company. The Chairman : This letter is from Mr. Somerville to Mr. Easton. It says : " Sir, —I have to acknowledge the receipt of your letter of the 18th, and note the contents. I went to the Eesident Magistrate's office, and found that on 19th April nineteen summonses had been issued in the No Town No. 2 Company, but when I called at the office I was informed that the secretary had the books of the No Town No. 2 Company in Wellington. I have wired you to that effect, and trust that you will receive the-same in good time." Witness : I dare say that is correct. In regard to Mace, for instance, the solicitor would have to issue a writ. 258. Mr. Easton.] Is it not a fact that the share register shows that on the 30th April, 1901, there was due from Mr. and Mrs. Cook, Howes, and Mace no less a sum than £1,937 10s. to this company, and yet on the 19th April, 1901, nineteen shareholders had been summoned?—l cannot gainsay that; it is a point I could not speak about. I know instructions were issued to the solicitor, but whether he issued the summonses in one batch or not I am not in a position to say. 259. Do you admit that the books show that on the 30th April, 1901, there was £1,937 10s. owing to the company from these people?— Yes. 260. Can you tell us who received £400 in cash for the sale of this property—the balancesheet states that £400 was paid to the vendors ?—Yes ; that would be to Parfitt and this man Mullins, I think ; Mullins received £200, and I think Clement Parfitt received the other £200. 261. Do you happen to know how much in cash Mr. Cook paid for the claim?— That is a matter that is not within my knowledge. 262. How much per share has been called up to date in this company ? —lBs. 4—l. 4a,

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263. What are the total arrears owing to date ? —I have not the call-book with me ; but, speaking roughly, about £2,800, I think. 264. Has there been any mention of liquidation of the company ? —No ; no such request has been made. 265. Do you consider the financial affairs of the company are in a satisfactory or healthy condition ?—I think they are —if we can get the calls in. 266. Do you think Mace is a man likely to pay up his calls ?—He can, I think, with assistance. 267. Is he looking to Mr. Cook for any assistance ?—I cannot say. 268. Has the money that has been received on Mr. Mace's shares come from him, himself— has he always paid by cheque? —I really cannot tell you how he has paid. 269. All that he has paid has been the application-money ? —Yes. 270. Who paid that cheque in?—l cannot say from memory. 271. Have you any means of ascertaining?— Yes; there are means of ascertaining. 272. Would the bank-book show it ?—lt would not show whose cheque it was. 273. To the best of your knowledge; did Mace pay that money himself? —It is a long time ago, and he was not in Dunedin at the time the application-money was paid in to the brokers. I cannot say whose cheque it was paid by. 274. Is Mr. Mace a capitalist ?—I could not express any opinion. 275. You know nothing of his financial affairs ?—Not sufficient to give an opinion. 276. You think, then, he is good to pay up the balance ?—He might with assistance ; I do not think he can with his own means at the present time. 277. There is a writ out against him?— Yes. 278. Has he met it ?—So far he has not paid it. 279. Has execution been levied on him ? —No; his solicitors are trying to arrange matters with the directors. 280. Has judgment been obtained ? —No, I think not. 281. But judgment has been obtained against a good many of the shareholders?— They were taken to a different Court altogether. 282. Mr. Herries.] Have you got the share register there ?—Yes. 283. Were all those people who subscribed the articles shareholders ? —Yes ; all on the sharelist. 284. Have the calls been levied on every one of the shareholders?— Yes. 285. Mr. W. Fraser.] I presume these summonses and writs were taken out in consequence of certain instructions from the directors ?—Yes. 286. What were the instructions? Will you read them out?—l will: "Besolved, That all shareholders owing more than two calls be sued, and that the secretary prepare accounts and instruct the company's solicitor to sue at once for all calls due." 287. Then, by this resolution the directors determined that the names of all persons in arrears with calls should be sent to the solicitor to sue at once ? —All in arrear up to the sixth call. 288. No; the resolution says that " all shareholders whose calls are in arrears, and have been duly notified, their names be handed to the company's solicitor, with instructions to sue at once, including the sixth call "? —There were two more calls struck, then. 289. That is to say, all calls up to the sixth; and therefore any one who had paid up to the sixth was not included in this resolution? —That is so. 290. How many calls have been made ? —Eight. 291. You stated just now, in answer to Mr. Easton, that Mr. and Mrs. Cook and certain other persons owed calls upon their shares ?—Yes. 292. Do they owe anything up to the sixth call ?—Yes ; they owe the sixth call now— the sixth, seventh, and eighth call. 293. Do you consider, then, that they came under the scope of this resolution ?—Strictly speaking, I think they did; but I would like to explain. Mr. Cook had been duly notified about this, and he interviewed the directors, and they agreed not to summon under six calls, as far as I understand. He is only owing three calls, and it would mean suing him for one call in order to bring him into line with the others. 294. Where is the evidence of that?— There is none that I can see; the minute is the only evidence relating to it. 295. I want to know how it comes that after this resolution was passed by the directors certain persons are sued and others are not: is there any authority for it? There may be some private arrangement ; if so, I presume there is some record of it?—No, there is not. 296. Then, by the minutes of the company, all the parties who had not paid the sixth call ought to have been sued ?—Yes. 297. The Chairman.] The minute is dated 12th February of this year?— Yes; there is mention at a subsequent meeting on the 26th February of returned drafts. I may mention in this connection that I had notified some of the shareholders who lived at a distance that I would draw on them at a certain date, and I drew on them accordingly. 298. Mr. W. Eraser.] Can you answer this question: Has Mr. Cook on behalf of himself, or Mrs. Cook, paid the sixth call since that date ?—No ;it is still owing according to the register; but it was resolved that legal proceedings be deferred for ten days, so there was apparently considerable delay in issuing the summonses. 299. I thought perhaps you had drawn on them and the draft had not been paid ?—No. 300. Has any money been paid since the date of the minute, on account of Mr. and Mrs. Cook's liabilities?— Yes.

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301. On the 12th February at the meeting of directors when that resolution was passed Mr. and Mrs. Cook owed the sixth call ? —Yes. 302. But they have paid something since that date ? —Yes ; they have made a payment of £275. 303. Would that cover the whole of the sixth call ?—No ; it would leave them still owing the sixth, seventh, and eighth —three calls. 304. What is the amount of a call upon the number of shares they hold ?—£so each. 305. Then, the £275 would pay several calls ? —Yes ; it would cover the second, third, fourth, and fifth calls. 306. Then, at the time the resolution was passed Mr. and Mrs. Cook owed upon all the calls then made, in addition to the sixth ?—Yes. 307. And that £275 simply liquidated calls prior to the sixth ? —That is so. 308. Mr. Herries.] I see that you signed the agreement between Cook and the company for Cook ?—Yes. 309. Had you a power of attorney ?—No ; I was only the manager for him. 310. Why did you adopt a different process in connection with this company from that in connection with the Tucker Flat Company ; why did you not let Cook sign it himself ? —I really cannot tell you that, except that Cook was probably away at the time. 311. But the agreement in connection with the Tucker Flat Company was signed by Mr. Cook when he was away in Auckland ?—Yes. 312. Then, why did you not send this document to him to be signed, as well as the Tucker Flat agreement ? —I cannot say. 313. Do you consider that this agreement is worth anything, as it is signed by you when you had not a power of attorney ?—The company's solicitor would be responsible for that. 314. I see the name Harold Howes on the register ?—That is a son of Mr. Howes. 315. Does he still owe anything?— Yes ; he is one who has been sued. 316. Has he anything to do with Cook and Gray? —No; nothing whatever to do with the firm. 317. Has he been sued ?—Yes ; and confessed judgment. 318. Has he paid?— No. 319. Have any of these people who have been sued paid?— Yes ; some of them. 320. Of their own accord, or did you take steps to enforce it ? —ln some cases they paid at the very last moment before the date of hearing; and others would have paid to the solicitor after judgment being obtained. 321. Why did you enforce judgment against some and not against others?— Some of them would pay so-much on account, and ask for a withdrawal of the summons, which would be agreed to. 322. Do you think that you can get the money from William and Harold Howes ? —Yes. 323. Why have you not taken steps to get it ?—The judgment was obtained through a solicitor, and it is for him to bring the money in. 324. Were any instructions sent by the directors to discriminate between the people sued ?— None whatever. 325. Is Mr. Howes a director of this company ? —No. 326. Who were the directors ? —Mr. Wales, Dr. Martin, Mr. Martin Pearce, and Mr. Parfitt is the local director on the Coast. 327. Was Mr. Cook a director?—He was, but has not been for some time. 328. Was he one of the original directors ?—Yes ; he was elected at the first meeting. 329. The same thing applies to this company as to the Tucker Flat Company—that the office was in Cook and Gray's, you were secretary, &c. ?—Yes, the same thing applies. 330. Did Cook receive any directors' fees during the time he was a director ?—I think so ; he would receive for the period he was a director. 331. You do not know how much ?—No, I cannot say, but I think some £7 is all he got. 332. That was paid into Cook and Gray's account, I suppose?— Yes. 332 a. How much has been paid in on behalf of the secretarial fees, including rent ?—The balance-sheet will show that up to the end of the financial year the secretarial fees were £75 per annum —the same as the Tucker Flat Company—that sum including office-rent. 333. The vendors' shares were allotted in this company? —Yes. 334. When were they allotted —at the first meeting? —No; not till the 28th August, 1900. 335. Who were they allotted to ?—W. B. Cook, 1,000; Goldsworthy, 280; George Parfitt, 100; W. H. Parfitt, 100'; Clement Parfitt, 920 ; Timothy Mullins, 200 : total, 2,600. 336. Have any of those vendors' shares been sold ?—Parfitt has sold forty, and Mullins has transferred 200 to his wife. 337. How many of those shares does Mr. Cook hold now ?—- The lot. 338. What were those shares that were sold sold at ?—I cannot say; the transfer-book will show the consideration. 339. Do you not know of your own knowledge ?—No. 340. Do you think the vendors' shares are worth anything now ?—Yes; mine were contributing shares, and I sold them at a profit of 6d. each. 341. How long ago was that ? —The 22nd January or the 22nd February; lam not sure which. 342. Are the shares quoted in the market now?—l do not think they have been quoted lately. 343. They have a saleable value ?—Yes. 344. What is the position of the company ; has the dredge been ordered ?—Yes, the contract has been let. 345. When is it to be completed ? —I think the time has expired according to the original

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agreement, but an arrangement was come to with the contractor not to hurry this one up so much as the dredge for the No Town Creek Claim, which adjoins. The contract for the No Town Creek Company's dredge was let first, and should be completed first. 346. When do you expect the dredge to be working ?—Not this side of the New Year, for the contractor is considerably behind with the No Town Company's dredge. 347. Who is the contractor ?—Mr. Anderson, of Christchurch. 348. Mr. W. Fraser.] With regard to this document —I mean the agreement —I see from it there was £400 to be paid in cash, and £2,600 by the allotment, to the vendor or his nominees, of 2,600fu11y paid-up shares of £1 each, &c : was that clause given effect to?— Yes. 349. And was the cash paid ?—Yes. 350. What is the basis of the company's title to the property—this document ?—The basis of that is the agreement from Parfitt to Cook. 351. No; this is the agreement between the company and Cook?— Yes. 352. Well, is the execution of this document the only basis of the title to the property ? — There are several titles as well. 353. Yes; but would you require to have this document executed first ?—Yes. 354. But you said just now that you held no power of attorney from Cook ?—Yes. 355. And yet you signed this document?— Yes ; under solicitor's instructions. 356. The Chairman.] Mr. Cook sold and the company bought; Mr. Hoisted was Mr. Cook's agent, and was the secretary also to the company, and he is the only one who signed it—he was both the buyer and the seller ; surely there is some explanation ?—I have no recollection of it. 357. Mr. W. Fraser. ,l There must be some explanation? —Yes, which I cannot give. 358. You cannot say whether the original of this agreement is filed and registered in the Warden's Court?—l cannot say; all these documents are kept by the solicitor, and I only got them at the last moment before coming away. 359. Do you know whether this is a true copy of the agreement ?—I could not swear to that; this is indorsed as being a copy of the original agreement. 360. It is marvellous to me ; but I presume the titles to the property are held by the company? —Yes ; the solicitor has the proper titles. 361. Mr. Carncross.] Who is this Mr- Mace that owes the large sum of £1,147 ?—He was Cook and Gray's manager here in Wellington. 362. Was he a highly paid official occupying a responsible position? —I cannot say what his pay was. 363. That £1,147 represents an equal number of shares, I suppose?—lt is what he owes on the whole of his holding ; he holds more than that number of shares. 364. 1,350 shares, is it ?—Yes. 365. Were those shares applied for in one application, or did he become possessed of them by various transfers ?—I think, by one application. 366. And he has paid nothing at all?— Nothing beyond the £67 10s. application-money. 367. You say a writ has been issued against him ?—Yes. 368. But no proceedings have been taken ?—The writ has not been returned ; the solicitors are trying to make arrangements for payment. 369. How long have they been making arrangements ? —I think they asked for two months. 370. Have those two months expired ?—lf they have not expired already they are about expiring now. 371. How much has been paid into this company on behalf of Mr. and Mrs. Cook's shares?— £300 on Mr. Cook's shares, and the same on Mrs. Cook's. 372. Then, Mr. Cook's statement is correct, that he and Mrs. Cook have paid £600 on their shares in this company ?—Yes, absolutely correct. 373. Mr. Herries.] Is Mr. Easton a shareholder?— Not in this company. 374. Mr. Cook.] With reference to the calls owing by Mrs. Cook and myself; when the instructions were given to the solicitor to take proceedings against all shareholders, did you include our names with those of the other people —did you treat us all alike ? —Yes, all alike. 375. I was away from October of last year to the end of April of this year —you remember that ?—Yes, that is so. 376. I was constantly travelling the whole of that time ? —Yes. 377. You could not communicate with me very often?— No. 378. The day, or the day after, my return to Dunedin I paid £550—1 think it was—into this company ?—Yes ; I think it was on the Ist May. 379. I think it was the 13th April when I returned to Dunedin, and I paid this amount on the Ist May ; so to make up this statement of amounts owing on calls on the 30th April was apparently done to show the liabilities as they were the day before we paid?— Yes. 380. The difference was £550 ?—£2oo was paid on the Ist May, and another payment was made on the 7th May. 381. It is within your knowledge that in many of the companies I have paid some thousands of pounds in calls?— Yes. 382. And it has never been necessary to sue me or Mrs. Cook for a shilling?— That is so. 383. We have always paid up?— Yes. 384. When there has been delay it has generally been on account of our being aw r ay travelling?— Yes. 385. You had authority from me to pay calls, if the calls were wanted, from the funds of Cook and Gray ?—Yes. 386. You have paid calls while I was away travelling ?—Yes ; calls in connection with other companies.

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387. Can you tell us why pressure is not being brought to bear for the money we owe in calls to this company ?—lt is understood that the moment you return to Dunedin the whole amount will be paid?—l am given to understand that. 388. Was any arrangement made by me with the directors to hold over proceedings ?—-Yes. 389. Until the dredge of the original No Town Company is working ?—That is so. 390. The contracts are let, but it was thought wise to leave matters in abeyance on account of the No Town Company's affairs being so far behind. In consequence of that, the directors are not pressing for the funds now ?—lt has not been necessary to press for them. 391. You know I arranged that with the directors—l saw them ? —Yes ; there is no pressing need for the funds. 392. Can you tell us whether any distress-warrants were issued against any of the shareholders who are in arrears ? —None have been issued, to my knowledge. 393. To your knowledge, no distress-warrants were issued?— No. 394. In reference to Mr. Mace's arrears on calls, have you been informed of a syndicate which Mr. Mace formed?— Yes ; I have been told that he formed a syndicate here in Wellington. 395. The Chairman.] Were you informed by Mr. Mace ?—Yes ; by Mr. Mace also. 396. Mr. Cook.] With reference to the prospectus of this No Town No. 2 Company, have you got that with you? —Yes. 397. Mr. Easton says, " Mr. J. Howard Jackson never made such a report as stated on the prospectus, and gave Mr. Cook to understand that he had not done so ; he has also repudiated having signed such report, in the public Press of the colony." Now, will you please read us the second paragraph in the front of the prospectus ?—" The ground is a continuation of the No Town Creek Gold-dredging Company's claim, on which Messrs. Howard Jackson and John Don reported most favourably." 398. Now, what is there before Mr. Jackson's report —I mean at the head of the report ?— " Beports on the No Town Creek Gold-dredging Company's claim, which immediately adjoins the property of the No Town No. 2 Company." 399. That is in large type ? —Yes. 400. And shows to you that this report was not on the No Town No. 2 Company's claim, but on that of the No Town Creek Company? —I could not possibly make any mistake in that respect. 401. Then, what Mr. Easton states here regarding the reports is incorrect?—To my mind it is, decidedly, because the prospectus shows the matter clearly enough. 402. Mr. Easton.] Did you never hear that Mr. Jackson had repudiated having his name attached to that prospectus of the No Town No. 2 Company?—l have heard it. 403. Have you ever seen a letter From Mr. Jackson in the Press?—l have. 404. What did he say in that letter ?—I have the letter, and will read it—the letter appeared in the Otago Daily Times of Thursday, the 2nd May, 1901. It is as follows : — Cook and Geay's Dbed&ing Companies : No Town No. 2. Sib,— To the Editor. Under this heading a short letter appears in your issue of last Monday which suggests that in some way I was oonoerned in the flotation of the above-named company ; such suggestion is misleading. In no way and at no time was I ever concerned with that oompany. I reported on the property of the No Town Creek Dredging Company. Some time after the flotation of the No. 2 Company a prospectus of that company came into my hands accidentally, when I found that my report on another property with a somewhat similar name had been published, without my knowledge or consent, as a part of the No. 2 prospectus. What effect this report had on the flotation of No. 2 I cannot say; it had the effect of making me sufficiently angry to refer the matter to my solicitor, who, after perusing the prospectus, advised me I that had no remedy. Had I discovered sooner tbe use to which my report on another property had been applied I should probably have felt it my duty to set the facts before the public more clearly than is done in the prospectus ; but weeks before I became aware what had been done it had been announced that the shares had been over-subscribed. 1 am, &c, ■ Lawrence, 30th April, 1901. J. Howaed Jackson. I will hand this letter in, Mr. Chairman. I would also like to hand in with that a letter which I received from Mr. Jackson, in which he said that if he could have prosecuted Cook for making what he (Jackson) considered a most improper use of his report on the No Town Company's claim he would have done so. I will hand the letter containing that statement in, if the Committee desire it. 405. Mr. Howes has not paid a penny-piece into the company, Mr. Hoisted ; has brokerage been paid on his shares ? —Yes. 406. Then, you acknowledge that in this company brokerage has been paid to Cook and Gray in respect of shares on which not ODe penny-piece has been paid ?—Yes. 407. The Chairman.] How much was paid altogether as commission on the sale of the shares? —£185. 408. Mr. Herries.] Is there any other shareholder besides Mr. Howes who has not paid anything?— Yes ; his son. 409. Any one else ?—I would have to look through the register to find out that. The Chairman : Ada Hawkins has not paid anything. 410. Mr. Herries.] What is she ?—She is a typewriter and book-keeper. 411. Was she with Cook and Gray ?—Yes. 412. Did John Began pay anything ?—He has paid something, but he is one of those who are being sued. 413. There are a good many who have not paid their application-money?— Not many, I think. 414. Has Mr. Oxenham paid his application-money?— Yes. 415. Did Alexander Campbell McLeod pay his?— Yes; he owes nothing at all. 416. Did William Hoisted pay his? —Yes; I paid everything before selling my shares. 417. But in the meantime Cook and Gray have charged brokerage on shares on which the application-money has not been paid ?— Yes.

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Monday, 26th August, 1901. W. Holsted in attendance, and examined,on former oath. (No. 6.) The Chairman: I think it would be well to examine Mr. Hoisted on matters connected with any of the companies, and finish with him. Will you proceed with your examination of him, Mr. Easton ? 1. Mr. Easton.] I would like to ask, Mr. Hoisted, how many of the twelve companies which have been referred to are working ? Is the Aylmer Lead Company working ?—No. 2. The Ponsonby?—There is a question of that going into liquidation. 3. The question of liquidation of the Ponsonby Company has been raised ?—Yes ; it is to be considered on the 28th of this month. 4. Will you tell the Committee the position of the Lees Ferry Company?—A motion for liquidation has been passed, and the confirming meeting is to be held to-day. 5. It is piactically in liquidation?— All but the appointment of a liquidator. 6. What is the position of the Golden Gray Company?—l am not the secretary to that company now, and cannot say. 7. Mr. Mirams's books will show? —Yes. 8. Can you tell us the position of the Dobson No. 2 Company?—lt worked for about six months or upwards, and is now in liquidation. The results were not satisfactory. 9. How about the Crown Diamond Company ?—No steps have been taken in the direction of ordering a dredge for that company. The directors have decided to await the results obtained from the Buby Creek and Ford's Creek, I think. 10. Has any suggestion been made by any of the shareholders to liquidate the Crown Diamond Company ? —Not as far as I know, but I can only speak from memory. 11. What is the position of the Wicklow Company?—l am not now the secretary to that company either, and cannot say. 12. Mr. Mirams's books will show that? —Yes. 13. Can you tell the Committee the position of the Ngahere Company ? —That, too, has left my office ; Mr. Mirams has been appointed liquidator. 14. What is the position of the Auckland Beach Back Lead Company ?—I know nothing of that. 15. Will you tell the Committee what Mr. Cook was owing to the Aylmer Lead Company on the 15th of this month ? —-I have not got the books here, but I made a note of that before I came away. He has paid £372 10s., and owes £223 16s. 16. What was Mr. Howes owing to the company on that date ?—£37 10s. 17. Mr. Mace holds 1,000 shares ; what did he owe on the 15th ?—£49o; he has paid £240. 18. How much did Mr. Howes owe to the Crown Diamonds Company on the 19th of this month?—l have not got the books here, but I think it was about £5. 19. With regard to the Lees Ferry Company, is Mr. Allan Holmes's name shown on the share register as a holder of shares ?—No ; the position of Messrs. Holmes and Thompson and myself is the same in this company as the Tucker Flat Company —we each held one share. 20. But your names are not shown on the share register. The names of the seven who formed the foundation-stone of the Lees Ferry Company are: W. G. Somerville, C. C. V. Leijon, A. Holmes, J. Davidson, J. G. Sawell, W. Hoisted, and T. H. Thompson. Those are the seven men who signed the articles of association. Were the moneys paid by the three of you who held only one share each accounted for in the books of the company ?—-Undoubtedly; our shares are included in the others. Mr. Somerville is at the present time a holder of a number of shares, and his name appears on the register; the names of Messrs. Leijon, Sawell, and Davidson also appear on the register. The shares of Messrs. Holmes and Thompson and myself are paid for by Mr. Cook, and are included in his allotment. Our position is the same in this respect as with the Tucker Flat Company. Mr. Cook gave us each a share, and he pays the calls on them. They are included in his holding. 21. As to the deed of sale of the Lees Ferry Company, you are aware that I made repeated applications to see that deed ?—Yes, I am aware of that. 22. Was that deed sent up here from your office, or did Mr. Holmes send it up?—lt was sent to me the day before I came away, 23. Do you know that that deed has never been stamped ?—I have had nothing to do with it. 24. Have you ever seen it ?—I cannot say that I have. 25. Were you aware that there is no stamp on this deed of sale from Taylor to Cook?—I was not aware of it. 26. Were you aware that it has not been witnessed ?—I have had nothing to do with it; that did not come within my functions. 27. Do you know whose name the Lees Ferry Company's claim stands in to-day ?—I presume it belongs to the company ; but that is a question for the company's solicitor. AH the documents in connection with the transfers of the claims are at his office, except those that we have here now. 28. The Chairman] For all you know, then, the mine may still be registered in Mr. Taylor's name ?—I cannot gainsay that, as far as my own knowledge goes. 29. Mr. Easton.] You cannot throw any light on the matter?—l cannot. As far as I know, the mine belongs to the company. I may say, however, that the company had a notification from the solicitor to the effect that the titles were complete, and that we could allot the vendors' shares. 30. The vendors' shares have been allotted in this company—Lees Ferry ?—Yes. 31. Mr. W. Fraser] Did you say you had a letter to that effect from the solicitor ?—Yes ; but I have not got it here.

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32. You are certain that you have that letter ? —Yes. 33. Mr. Easton.] With regard to the Dobson No. 2 Company, can you say from memory whether Mr. Cook has ever sold any vendors' shares ?—Yes, he has sold some. 34. Has he sold any contributing shares ?—-I cannot say definitely from memory, but I think he has. 35. Has he sold any contributing shares in the Tucker Flat Company? —The register will show that. Yes, he has. 36. How many ?—250. 37. Has Mr. Cook sold any vendors' shares in the Boss Day Dawn Company?— Yes; 150 transferred to Mr. Howes. Mr. Cook: To save time, I might say that I gave those shares away—not sold them. 38. Mr. Easton.] The register shows that Mr. Cook has transferred 150 vendors' shares to Mr. Howes; will you give us the date of the transfer? —February last. 39. Has Mr. Cook dealt with any contributing shares in the Boss Day Dawn Company ?— Yes. 40. How many ? —He transferred 100 shares in June, 1900, shortly after the formation of the company, to another party. 41. Has Mr. Cook transferred any vendors' shares in the No Town No. 2 Company ? —-Yes ; seventy-five, to Mr. Howes. 42". On what date ?—The 19th March of this year. 43. Has Mr. Cook sold any contributing shares in the No Town No. 2 Company ?—No. 44. Are you aware that there is an entry in the Boss Day Dawn Company's minute-book on 27th November, 1900, directing you as secretary to invoke the law against shareholders for calls due ?—I could not speak from memory, but I have the minute-book here. 45. Will you read the entry, please?— Yes. "Overdue calls: Besolved, to instruct the secretary to place overdue calls 1, 2, and 3 in the solicitor's hands for collection." 46. Now, will you tell us what was due to the company from Mr. Cook on that date, 27th November, 1900?—£590. 47. On that date—the date of the entry in the minute-book directing you to instruct the solicitor to take steps —Mr. Cook was owing the company £590 ?—Yes. 48. Is Mrs. Cook a shareholder in this company?—No, not in the Boss Day Dawn Company. 49. What was Mr. Howes owing on the same day—27th November, 1900 ?—£6o. 50. What was Mr. Mace owing?—£3BB. 51. Are you aware that at that date Mr. Cook was a director of the company ?—Yes. 52. He was drawing fees as a director? —Yes. 53. How much did he receive in fees for the eleven months he was on the board ? —Fifteen guineas. 54. How many directors' meetings did he attend for that fifteen guineas ?—Two, according to the minute-book. 55. Have any of the shareholders in the Boss Day Dawn Company been summoned for their calls ?—Yes ; that instruction recorded in the minute-book was not carried out at that date ; the people were summoned in May, I think. 56. Was Mr. Cook summoned ?—No ; I think he had paid up then. 57. Was Mr. Howes summoned?— Yes, I think so. 58. Was Mr. Mace ?—Yes. 59. Has Mr. Howes paid ?—No. 60. Has Mr, Mace?— No. 61. What does Mr. Mace owe now?— About £600. 62. What does Mr. Howes owe to-day?—£9o. 63. Does the balance-sheet for the first year show brokerage to have been paid on those shares?— Yes; it shows commission £175 —that would be on 7,500 shares. But application- and allotment-money has been paid, so the amounts owing would not affect the brokerage. 64. Has Mr. Howes, to your knowledge, ever used Mr. Cook's proxies to prevent companies from being liquidated—say, the Lees Ferry Company ?—I think that is so, but I would not like to say without looking up; I would have to have the ballot-papers. Mr. Hotoes : Yes, I did. 65. Mr. Easton.] At a meeting of the Lees Ferry Company at which I was present, was it not intimated to the meeting that if the company liquidated it might be very expensive, on account of the vendors' shares, to the shareholders —that we might have to pay more on the shares ?—I think that is so. 66. Who did that statement come from ? —Mr. Howes, I think. 67. Do you remember, at a meeting of the Boss Day Dawn Company, my making charges in Mr. Cook's presence as to the large amounts owing by the directors, while other shareholders were being summoned? —I cannot say from memory. 68. Will you look up the minute-book—it was at a meeting held on the 7th May ; who was. present at that meeting ? —Messrs. Wales (in the chair), Cook, Goodeve, McFadyen, A. C. McGeorge, Howes, Cutten, Duncan, Davies, Burns, Easton, Somerville, Johnston. 69. Is there any entry there that I made a speech, and alluded to the heavy amounts owing by directors and their nominees, and resented that other shareholders should be summoned ?—No ; there is no such record in the minute-book. The minutes would not show anything like that. 70. Have any payments ever been made by you, as secretary to any of these companies, to Mr. Chester ?—The only payments I made to Mr. Chester were when he was employed boring for the Lees Ferry Company.

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71. Was he paid weekly wages from your office?— No. 72. He had nothing to do with your office ?—Nothing whatever. 73. Did any of the amounts paid to Mr. Don for reports go through your office ?—No. 74. You had nothing to do with that branch ? —No, 75. How often did you send Mr. Cook statements? —Only once a year—our annual balancesheet. 76. So that Mr. Cook could only know once a year of the financial state of these companies ? —That did not concern him ; it was the directors' look-out. 77. How often did you remit the secretarial fees?— They were paid into Cook and Gray's account at the bank in Dunedin. 78. Did you advise Mr. Cook of those payments—it is customary, is it not, to send an advicenote when a sum of money is paid in ?—Not at all; Mr, Cook had access to the books when he liked to look at them. 79. Ycu paid in sums to Cook and Gray's credit and did not give him notice of it; did you not intimate that you were paying in sums ?—lt was my duty to pay all moneys received. 80. And not advise Mr. Cook ?—He could see the bank-book at any time. 81. When he was away ?—When he was at Dunedin he could. 82. Mr. Cook, then, had no knowledge of the financial aspect of the office?—He had a knowledge of it. He would ask for the bank-book when he came to Dunedin. 83. But he was in Dunedin very little ? —That is so. 84. And during his absence you never advised him ?—I did not send any statements to him. 85. Can you tell us why, in connection with several of the companies, some of the shareholders' addresses are entered in the register in pencil ? —I do not remember any particular case where the address is entered in pencil. 86. How about Mr. and Mrs. Farley ?—Their address is not entered in pencil; there was a pencil note that notices of calls were to be sent to Mr. Cook. 87. Why have the addresses been inserted since ?—Because Mr. Farley has since returned to the colony. The notices were sent to Mr, Cook while he (Farley) was away. 88. How long was he away ?—I cannot say how long. 89. Is it not usual to write in a shareholder's address?— When Mr. Cook told me to send the notices of calls to him (Cook), that was sufficient for me in the way of address. I have no recollection of the entry being in pencil, but I accept Mr. Easton's statement that such was the case. 90. Have you any interest in vendors' shares ? —None whatever. I never had a vendors' share in my life. 91. Mr. W. Fraser] With regard to that agreement in connection with the Lees Ferry Company that has been referred to, you stated that the company proceeded with the allotment of the vendors' shares on the receipt of a letter from the company's solicitor stating that the titles were complete ? —Yes; the letter stated that the titles were complete, and the vendors' shares might be allotted. 92. Can you produce that letter? —No; I have it in the office in Dunedin. I can send for it. 93. Is it customary in the companies which you have been associated with for the solicitor to keep all the titles, or for you to keep them ?—ln the companies with which I have been connected the solicitor has had the titles. 94. All the companies?— Yes. 95. You have never seen them ?—Yes; I have seen the titles of the Boss Day Dawn Company, the No Town Company, and so forth, but they are in the solicitor's custody. 96. The Chairman] Has his account been paid ?—Not in full. 97. Mr. W. Fraser.] Have you seen the titles of all the companies which you have been secretary to at any time ?—Not all of them. 98. Have the directors seen them ?—That I could not say. 99. Have they been produced before the directors at their meetings?— Not to my knowledge. 100. You relied upon the statement of the solicitor that they were in order ?—That is so, with the exception of those that I have seen. 101. Mr. Herries.] When you were acting as secretary to a company, and working for Cook and Gray, did you consider that you were the servant of the company or of Cook and Gray ?—The servant of the company. 102. But, supposing that the interests of Cook and Gray had been different from the interests of the company, would you have considered that your duty was to look after Cook and Gray's interests or the company's?— The company's interests, as far as my duty related to the company. Mr. Cook was only a shareholder. 103. And if any irregularity had occurred with regard to Cook and Gray you would have felt it your duty to report it to the company ?—Yes ; to the directors. 104. Not suing Mr. Cook, or anything like that, did not come about because you were the servant of Cook and Gray ? —No. 105. You considered your first duty was to the company ? —Yes; if I were instructed to sue him I would, the same as any other shareholder. My duty lay to the company first. 106. Mr. J. Allen.] How many subscribing shares does Mr. Cook hold, in the Boss DayDawn Company? —He has only sold 100; he still holds 900 contributing shares. 107. How many vendors' shares does he hold ? —He has sold 150, and still holds 650. 108. Is this company going into liquidation now ? —No,

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109. Is the company's dredge working?— The machinery is ready to ship down to the claim. Some of it, I think, has been shipped. 110. Mr. Cook.] With reference to the Boss Day Dawn Company, will you please turn up the transfer of the 150 vendors' shares ? —Yes ; I have it. 111. Who were the shares transferred to ?—William Howes. 112. What was the consideration ?—los 113. You said that I sold 150 vendors' shares; I want to prove that I gave them away?— Yes, that is so. 114. Mr. Easton mentioned that I had owed £590 to the company, Mr. Howes £60, and Mr. Mace £388, and stated that he made charges about those amounts being due at a meeting held on the 7th May ; will you tell the Committee whether I owed anything on the 7th May?— You had paid up in full then. Mr. Easton : I did not say that. 115. Mr. Cook.] In reference to the Dobson No. 2 Company, Mr. Easton asked you whether I had sold any shares (vendors') in that company; the company was in operation for some months ? —Yes ; six months, I think. 116. How long was it after the contributing shares were called up in full, and all shares on an equality, before I sold any vendors' shares ?—A considerable number of months after; the capital was called up some time before the dredge was completed. 117. Was it twelve months?— From nine to twelve, I should say. 118. All shares were on the market then?— Undoubtedly. 119. Have you got the share register? —No, not of this company. 120. Can you tell us what Mr. Easton's holding was in the Dobson Company ?—No ; I cannot say from memory what his holding was; but he only become a shareholder very shortly before the dredge stopped working. 121. The shares in the Dobson No. 2 Company went to a considerable premium ?—Yes ; up to 14s , I think. 122. To your knowledge, I never sold a share when the dredge was working ?—As far as my memory serves me, that is so; at all events, you did not till after the contributing capital was called up. 123. To your knowledge, I never sold vendors' shares in any company until every one had paid £1 per share, and all shares were on an equality ?—That is so. 124. I never sold a vendors' share in any of these other companies ?—No, with the exception of the Boss Day Dawn Company. 125. In that case the consideration was 10s.—the shares were given away?— Yes. 126. In the Tucker Flat Company I applied for 500 shares originally ?—I think so. 127. You have said that I sold 250; but I also bought, and to-day I hold 650?— That is so. 128. Outside of Benjamin's?— Yes. 129. Apparently I did not sell in order to get out of my liabilities ?—No; after selling you bought in again. 130. The shares were at a premium ?—Yes. 131. And there were considerable operations ?—Yes. 132. In reference to the deed of option in connection with the Lees Ferry Company, was that deed in Cook and Gray's office, until the company was floated, for inspection?—lt was there for inspection till flotation. 133. And it was then handed over to the solicitor?— Yes, in order to complete the documents. 134. The proper deed of agreement between the company and myself as vendor was prepared ? —Yes. 135. And signed by the company ?—Yes. 136. The deed of option was between the owners of the claim and myself, and had nothing to do with the company afterwards? —No; it was placed in the solicitor's hands, and no inquiry was made for it till Mr. Easton asked. 137. Mr. Easton asked you whether you gave me notice of payments of secretarial fees. I want to place before the Committee the mode of conducting Cook and Gray's business in Dunedin. You prepared half-yearly balance-sheets ? —Yes. 138. The accounts were audited by an auditor?— Yes; by Cook and Gray's auditor. 139. And the balance-sheet was submitted to Mr. Gray and myself ?—Yes. 140. It was signed by the auditor and yourself ?— Yes. 141. That balance-sheet contained the gross receipts and the gross expenditure?— Yes. 142. The payments of secretarial fees were not shown as separate items?— They came under the heading of commissions. 143. In the balance-sheet an amount would be shown for " Commissions for the year," somuch ?—Yes. 144. Did you ever at any time send me any statement about particular receipts ?-—No. 145. There was no reason for doing so ?— No. 146. Mr. Easton.] I did not catch what you said as to how many shares Mr. Cook had transferred in the No Town No. 2 Company ?—He has not transferred any shares in that company. 147. You heard what Mr. Cook said about the Boss Day Dawn Company—that I charged him with owing sums of money in May ?—Yes, I heard what he said. 148. The meeting I referred to was in April—l never made charges as to Mr. Cook owing sums of money to the Boss Day Dawn Company in May ?—Yes; you referred to a meeting held in May. 149. On what date did Mr. Cook pay the sums of money which have been mentioned ?—On the 30th April and 4th May. s—l. 4a.

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150. My charge against Mr. Cook was made on the 23rd April ?—The 6th May was the date of the meeting you referred to. 151. At that meeting I referred to an entry in the minute-book on the 27th November, 1900, and called attention to sums owing on the 23rd April ?—There is no reference to that in the minutes. 152. The Chairman.] Was there a meeting of the company on the 27th November last ? — .Yes. 153. And at that time Cook owed moneys to the company ?—-Yes. Mr. Easton: What I wanted to make clear was that it was not on the 6th May that Mr. Cook owed a large amount, but the 23rd April. 154. Mr. J. Allen.] When were the summonses issued in connection with the Boss Day Dawn Company ?—Some time in May. I cannot give you the exact date. 155. Were they issued before the 6th May?— Apparently not, because the directors' meeting was held on the 9th May. The meeting held on the 6th May was an extraordinary general meeting. The summonses were issued subsequently to the 9th May. 156. Mr. Herries.] Who were the directors of the company at that time—that is to say, on the 9th May?— Messrs. Wales, Somerville, and Burns; also Mr. Bruce, who was always on the West Coast. 157. Mr. J. Allen.] Can you swear that the summonses were issued after the meeting on the 9th May?— Yes. 158. Mr. Cook] After I had paid £1 per share into the company? —Yes; you paid on the 4th May. 159. The Chairman.] You said just now, in reply to Mr. Cook, that you had seen the deed from Cook to the company (Lees Ferry Company), and after that was signed the deed from the original vendor to Cook had nothing further to do with you ?—That was practically the position as far as the option from Taylor to Cook was concerned, but it never at any time came much under my observation. It was a matter for Mr. Cook during the flotation of the company. 160. Can you say, if that deed was not stamped or registered, how the title was going to get in Mr. Cook's name to enable him to sell to the company ? What title had Mr. Cook to the claim if the first deed—Taylor to Cook—was of no use, and you had nothing further to trouble about in connection with it ? —I cannot answer that; it is a legal question. 161. Was it your duty as secretary to the company to see that it had some title to the property ?—Yes ;we instructed the solicitor to attend to that. I think there is a minute in the book to that effect. 162. Would you be surprised to learn that the Lees Ferry Company's claim still belongs to Taylor, and not to the company at all ?—I certainly would. The Chairman : I may say that a telegram has been received from the Warden on the West Coast, stating that the claim is registered in the name of Taylor. 163. Mr. Herries.] Does the company pay rent for the claim?—l do not think we are paying any rent now; but I could not say definitely without referring to the books. 164. Mr. J. Allen.] Is the company in liquidation?— Yes; a motion for liquidation has been passed, and the confirming meeting is to be held to-day. 165. Mr. Herries.] Has the company ever paid rent for the claim ?—Speaking from memory, I think not; but the books would show. I will look it up. No; no rent has been paid by the Lees Ferry Company for the claim. 166. Mr. W. Fraser.] Has rent been paid by any other of the companies?— Yes; rent has been paid by the Tucker Flat Company, the Boss Day Dawn Company, and the No Town No. 2, at all events. 167. Would not the non-payment of rent be certain evidence to you that the company did not own the title to the property ?—Not necessarily, because it might have been assumed to have been paid by the vendors up to a certain period. 168. How often is the rent paid?—ln some companies yearly, and others half-yearly. 169. How often to the Mining Begistrar?—Some companies yearly; some half-yearly. 170. How long has this company been in existence ?—Since the 9th March, 1900. 171. Over a year?— Yes. 172. And yet no rent has been paid by the company ? —No. 173. Did it never strike you that some one else was paying it for you—there must have been some explanation ?—lt occurred to me that it was quite possible that the vendor had paid it from the 9th March till some subsequent date. 174. You do not know of your own knowledge that the title to the property is still in Taylor's name ? —I do not. 175. You never heard it before?—lt is new to me entirely; the vendors' shares have been allotted in the company. 176. The Chairman.] The company's solicitor told you that the title was complete ?—Yes ; and that we might allot the vendors' shares. 177. Then, this telegram that I have read is a surprise to you?—lt is. 178. Mr. Herries.] You mentioned the names of one or two companies in connection with which you have paid rent for the claims; can you mention any for which you have never paid rent besides the Lees Ferry Company ? —As far as my recollection goes, no rent was paid by me while secretary to the Wicklow and the Golden Gray Companies, but that is speaking from memory. I could not say definitely without having access to the books. 179. Mr. J. Allen.] Are those companies in liquidation?—l understand from Mr. Easton that they are.. Mr. Easton: Yes, both of them are in liquidation.

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180. Mr. Herries.] I would like to ask you whether, in your capacity as manager for Cook and Gray, you had anything to do with floating the companies ?—No, I had nothing to do with that. Ido not think I sold any shares in the companies at any time. 181. You were not connected with the companies until you were appointed secretary?— That was the first connection I had with any of the companies—when I was appointed secretary. 182. Had you any connection with Mr. Cook, as far as he was a vendor?—No; the flotation of the companies did not come under my department at all. 183. That was all in Mr. Cook's hands?— Yes; Messrs. Cook and Howes. 184. Had Howes anything to do with the floating of the companies?— Yes. 185. Do you know why these companies were floated under the Companies Act, and not under the Mining Companies Act ?—I could not say; that is a matter for the solicitor. I think nearly all the companies are floated under the Companies Act. 186. The Chairman.] With reference to the payment of brokerage ; if the application- and allotment-moneys are paid, how much brokerage does the broker claim ?—2J per cent. 187. On the full amount of the share ?—Yes. 188. Mr. Easton.] In the matter of the Golden.Gray, Lees Ferry, Tucker Flat, and Wicklow Companies, have you any remembrance of my making a statement to you, as secretary, that a compact had been entered into by Cook that only Is. per share should be called up? —Yes; you mentioned it verbally. 189. Benjamin mentioned it to you ?—Yes. 190. You heard that Mr. Gray lodged a protest ? —Yes, I heard that. 191. Mr. Cook.] Mr. Easton has just asked you whether Benjamin stated that a compact was entered into that only Is. per share should be called up in the four companies, and whether you heard that a protest was made by Mr. Gray ?—Yes. 192. You were secretary to these companies for about twelve months?— Yes. 193. You issued notices in the usual way to Mr. Gray, or anybody else?— Yes, undoubtedly. 194. During that twelve months did you ever receive a protest in any way —in writing—from anybody, that a compact had been entered into that they should not pay any more ?—No, not in writing. 195. Did you, in reply to your notices, ever get a letter from anybody saying that a private arrangement had been made ? —No. 196. Mr. Herries.] Have you, as secretary to those companies, ever applied for protection ?— Yes, through the solicitor. 197. In connection with what companies?—ln the Tucker Flat Company we applied for an extension of time. 198. In any other company ? —Not in the Lees Ferry Company, nor, I think, in the Wicklow or Golden Gray Companies. 199. Did you in the No Town Company?— Yes; the No Town Creek Company. The dredge is nearly completed. In the No Town No. 2 Company an extension has been applied for. 200. It was part of your business to apply for the extensions?— Yes, that is so ; I did it by writing to the local director on the Coast, who would then apply at the Warden's Court there. 201. Mr. Cook.] On Saturday we could not explain the signature to the agreement in the No Town No. 2 Company; we looked it up afterwards, and will you please explain the matter to the Committee?— You will notice that the company's common seal has been attached, and in this copy the "per W. Hoisted " should have appeared under the company's seal, not after Mr. Cook's name. Mr. Cook signed the deed himself, and I signed on behalf of the company. 202. The Chairman.] In this copy, " per W. Hoisted" appears opposite Mr. Cook's name, and not opposite the seal of the company ? —Yes, that is so in the copy. 203. Are you sure your explanation is correct ? —Yes, I am sure. 204. Mr. W. Fraser.] That agreement was signed by Mr. Cook ?—Yes; there is no doubt that that is the explanation. 205. Mr. Herries.] Is it the usual thing, when you have a common seal, to sign "per W. Hoisted "?—Yes. 206. Mr. W. Fraser.] Then, this is a bad copy ?—Yes, a confusing copy. 207. Mr. Herries.] Is the No Town No. 2 Company the only one of the companies that has a common seal ?—No ; they all have. 208. You do not sign the Lees Ferry document with a common seal?—No; I do not know why that particular style of signature was used there. 209. Mr. J. Allen.] What is the position of the subscribing shareholders in these companies that are going into liquidation ?—I cannot speak about the Wicklow and the Golden Gray Companies. 210. Under the Companies Act will the subscribing shareholders have to pay up the whole of their calls, or sufficient to equalise them with the value of the vendors' shares ?—I understand that if the vendors like to take up their legal position they can insist upon that. 211. Is it not the law that the subscribing shareholders must pay up?— Yes, unless the vendors are agreeable to forego their legal rights. 212. Does that mean that every single vendor would have to sign an agreement? —Yes, I should say that would be the legal way. 213. Unless every single vendor signs an agreement to forego those rights the subscribing shareholders would have to pay up in full before the company could liquidate ?—I think so; but in these companies the only vendor that the companies recognise, except in the Lees Ferry Company, would be Mr. Cook, because he is the vendor to the companies. 214. But the vendors' shares have been allotted in some of the companies that are in liquidation?— Only in the Lees Ferry Company.

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215. In the case of the Lees Ferry Company every single vendor would have to sign an agreement foregoing his legal rights, otherwise the subscribing shareholders would have to pay up in full before the company could liquidate ? —I think that would be the position. 216. Has any objection been raised to the company liquidating ? —No, not by the vendors. 217. By any one?— No. 218. The Chairman.] Did Howes object to the Lees Ferry Company going into liquidation ?— No ; he did not vote against it. 219. But did he originally?—He drew attention to the probability of the vendors making the subscribing shareholders pay up. 220. Mr. J. Allen.] How were the vendors' shares held in the Lees Ferry Company ?—Joseph Taylor had 520, C. A. Broad 120, O'Key 120, W. B. Cook 240, John Gill 200, W. E. Cook 800. 221. Has any agreement been propagated for the vendors to sign—to give up their rights?— No; what has been done is this : Cook has been written to asking him to obtain the vendors' consent to give up their rights. 222. Why should he be written to ?—Copies of the request have also been forwarded to him to send to each of the vendors; he knew them personally, and would be the best man to get their consent. 223. Mr. Cook holds all the vendors' shares in the other companies that are in liquidation ?— Yes, as far as I know. 224. In the Tucker Flat Company ?—He is the only recognised vendor. We have not allotted vendors' shares to any of his nominees. 225. What will happen in the case of the Tucker Flat Company?—l cannot say; but Mr. Cook has been written to, asking him to agree to forego his interest. 226. Has he answered?— Not yet; the last letter has not been replied to, but he has on a former occasion indicated that he is willing to forego his interest. 227. Verbally?— Yes, providing he can get the others to fall in with his action. 228. That means to say that Wild shall forego his purchase-money?—l suppose it would mean that; but, of course, he would get the claim back again. 229. Then, it means getting the consent of Mr. Cook to forego his interest in the cases other than the Lees Ferry Company ?—Yes, excepting the Lees Ferry Company. 230. In the other cases where liquidation is going on Mr. Cook's consent is needed, otherwise the subscribing shareholders will have to pay up in full ? —I take it that will be the case. 231. Has Mr. Cook been asked for his consent in the other cases ?—I cannot speak for the Wicklow and Golden Gray Companies. W. Howes recalled, and further examined on former oath. (No. 7.) 232. Mr. Cook.] With reference to the No Town No. 2 Company, Mr. Howes, I think you had the whole of the matter of the flotation of this company in hand, and can probably give an explanation with regard to Mr. Jackson's report appearing on this prospectus ?—Yes. A short time before the claim was put on the market for flotation you were in Dunedin, and instructed me that you would be sending documents over from the Coast for me to prepare the prospectus from, and that I could take " bespeaks" for the shares. I did so. 233. Did you have any applications for shares before you issued the prospectus ?—Yes. I had on one list " bespeaks " for 8,500 shares before the prospectus was printed, and on a supplemental list about 3,500 more. 234. In reference to obtaining the report on the No Town Claim from Mr. Jackson, you arranged with him for the payment of his fees for that report ? —I did. 235. What were they?— Before you left I had the whole flotation of the No Town Creek Company —I am speaking now, of course, of No Town Creek Company. 236. You had floated the No Town Creek Company ?—Yes. 237. On that claim a report was obtained from Mr. Jackson; I arranged that he should report, and you settled with him as to payment?— You informed me before you left that you had arranged with Jackson for twenty-five guineas for his report on the No Town Creek Claim. I proceeded to take "bespeaks" before the prospectus of the No Town Creek Company was printed. Jackson came to me at Mr. Cook's office and said he heard that I was floating the No Town Creek Company, and I said that I was taking " bespeaks." He asked, " Will you not have my report?" I replied, "Yes; we will be glad to get it at the fee agreed upon." "Oh," he said, " what was that ?" I answered him that it was twenty-five guineas according to Mr. Cook, and he replied, "No ; I shall want more than that for it. I shall want fifty guineas." We talked, the matter over, but Mr. Jackson would not give way, and I wired to Mr. Cook, at Auckland I think it was, and I have his reply here. As I say, I had a long conversation with Mr. Jackson on the matter of this fee, and at last he suggested that we should either give him fifty guineas, or twentyfive guineas and fifty fully paid shares. I expressed myself as being very disappointed that we could not get his report on the terms which I understood had been agreed upon, and I should like the report, though it would make no difference to the flotation. Mr. Jackson then said, " Well, whoever else gets contributing shares, I think I should have some." I replied, "Certainly ; what is the least you could do with?" to which he answered he would like to have a hundred for himself, which he ultimatey got, and has to this day. As I said before, I wired to Mr. Cook about the fee, and this is his reply : " Consider fee excessive, can float without; but, if you deem necessary, authorise procuring report, twenty-five guineas fifty shares." I paid Mr. Jackson the twentyfive guineas from my Inveroargill bank account, and gave him a guarantee that Mr. Cook would give him the fifty shares, which was done. 238. That was in regard to the No Town Creek Company?— Yes.

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239. After the No Town Creek Company was floated the No Town No. 2 Company came on for flotation ?—lt did. 240. How did you float that company ?—I have my original " bespeaks " here. The company was to have been called, in the first place, the "No Town Extended." I understood that I was to prepare the prospectus in Dunedin, but after the lapse of a few days I got the prospectuses sent over ready printed from Mr. Cook, on the West Coast. I had previously written to Mr. Cook, and told him that I had 8,500 shares on my first list and a supplemental list of three or four thousand before I had received the prospectuses, so that Mr. Jackson's report would make no difference whatever to the flotation of the company. I was advised by Mr. Cook that he could only spare for Dunedin a thousand contributing shares in the No Town No. 2 Company, on account of the West Coast vendors having insisted upon getting the bulk of tbe contributing shares for themselves and their friends in Wellington. By their " friends" in Wellington I mean that, Mr. Parfitt being the original owner of the claim, and his son being a broker here in Welington, he probably had some friends whom he wanted to sell the shares to. 241. The Chairman.] As a matter of fact, you put Mr. Jackson's report in the No Town No. 2 prospectus without his consent ?—I did not put it in at all. 242. Well, it was done from the West Coast?— Yes. 243. Mr. Herries.] You had nothing to do with it ?—Nothing to do with the prospectus in the flotation of the company. 244. Mr. Cook] Can you tell us whether, in the flotation of companies at that time, there was a tremendous rush for dredging companies' shares?— There was. 245. In reference to other companies outside of those floated by Cook and Gray, have you ever seen any prospectus where the reports on the adjoining claim have appeared? —Yes, I have. 246. On the Maranui, or any others? —Yes, I have. 247. Where it was not possible, or not deemed advisable, to prospect the ground, the reports on the adjoining claim have appeared ?—Certainly. 248. Can you tell us whether the results of the prospecting on this company's claim by the company's engineers have borne out that the ground is of similar value to the No Town Creek Claim ? —That was Mr. Jackson's own opinion. I saw him before I got this prospectus, and he expressly asked me to reserve three or four hundred shares for him. He said that the only difference between the two claims was that there was a little more scrub on the claim of the No Town No. 2. 249. I am asking as to the result of prospecting by the company's engineers ; to your knowledge, has the result of the company's boring and prospecting shown this claim to be of similar value to the No Town Creek ?—Yes, it has. 250. Then, I presume, Mr. Jackson's objection to his report appearing on the No Town No. 2 prospectus is that he did not get another £75 ? —I would not like to say that; he is a gentleman of whom I have a great opinion, and I would not like to say that he had any unworthy motives, but I dare say he felt sore about not getting something in addition to what he received for his report on the No Town Creek Claim. 251. Mr. Easton] You spoke of some thousands of " bespeaks " : will you kindly show the Committee a list of those " bespeaks "?—Yes, certainly I will. [List produced.] 252. Whose writing is that ? —Mine. 253. I meant the actual applications ? —I had not the prospectus at that time, as I have already stated. I just took a note of the names of those desiring to take up shares. 254. Mr. J. Allen] Did Mr. Jackson take up any shares in the No Town No. 2 Company?— No, he did not. Some were bespoke for him, but not allotted, as only 1,800 eventually came to Dunedin. 255. Mr. Herries] With regard to the shares that you hold at the present time in the No Town No. 2 Company, is it a fact that nothing has been paid on them ?—Yes; judgment has been obtained against me for the amount. I have been expecting money. The Supreme Court gave judgment in Dunedin about a fortnight ago on a matter that has been hung up for a long time, and I have £2 a week extending over a considerable period due to me. A long time has been spent in getting the amount through the Court, but I shall get that amount shortly. In the meantime I have arranged with the directors, and given them security for the payment of the money. 256. Had you much experience in floating these companies ?—Yes. 257. How many were you connected with in the matter of flotation?—Aylmer Lead, the No Town Creek, the Boss Day Dawn, the No Town No. 2, the Crown Diamonds, and the Ponsonby. I had very little to do with several others of them, selling just a few shares, mostly to friends. In connection with the Ngahere Company I sold a few shares. I had a good deal to do with the Ponsonby, and also the Boss Day Dawn. The Three-mile Greenstone I had not much to do with, nor with the Tucker Flat or the Wicklow Companies. 258. Who issued the instructions to the solicitors with regard to preparing the articles of association ?—As a rule, I did. 259. Did you give him any particular instructions with regard to accepting certain portions of Table Aof the Companies Act of 1882 ?—I did not. 260. Who gave him those instructions ? —He was instructed to prepare the articles of association, including the usual clauses governing companies. 261. What companies? —Mining companies in Dunedin—the companies that were formed there; he received no particular instructions on any points as to details. 262. In the first place, those articles are the same in all these companies ?—I believe they are practically the same; each solicitor, I think, as a rule, has his own particular form. 263. But in your companies—the articles for which Mr. Holmes prepared—are they all the same ?—Practically the same.

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264. Do you think they are much the same as those of similar companies that have been floated?—l think they generally adopt Table A, which is an adaptation of the English Table A, and knock out the clauses that they do not consider suitable to mining companies. Of course, the English Table A was prepared more for industrial companies than mining companies, and they adapt Table A to the requirements of dredging companies in New Zealand. 265. Did you instruct the solicitor to draw up the articles under the Companies Act, and not under the Mining Companies Act?—lt was on his advice that we had them drawn up under the Companies Act. 266. For what reason? —The Mining Companies Act was too unwieldy, and was not at all adapted to the object we had in view. 267. In what way was it too unwieldy ?—My opinion is that neither the Joint-stock Companies Act nor the Mining Companies Act meet the case of dredging companies in New Zealand. 268. Did you approve of the articles ? —I was one of a number that did. 269. Were all the various alterations suggested?— No, Ido not think they were. The articles as drawn up were simply the solicitor's stock copy of articles, and I think he adapted them to all the companies. 270. Supposing that he had advised that Table A should be adopted in its entirety, would the companies have been floated ?—A good many of these companies were floated before the articles of association were seen—of course, the articles could be seen. 271. The directors and the promoters knew what they were?— Certainly. I should not have recommended the adoption of Table A in its entirety ; certainly not. 272. Was it part of your business to look at the companies' titles ?—No. 273. Not those of the companies of which you were a director?—l have been a director only for a very short time. These companies were going into liquidation without consulting the vendors, and I strongly objected to that course. You will find from the minute-books that iv all the companies I have had anything to do with I objected to such a course being taken. I have cautioned the shareholders that they might be placed in a position of having to pay up the full amount of the shares, but I have not threatened them. 274. But, with regard to the titles to the claims, did you consider that, as a director of a company, it was your duty to see they were in order ?—I should have done so if I had been one of the first directors. 275. As a director of a company, did you represent Cook and Gray in any way, or did you try to do your best for the company ?—I was a shareholder myself, and tried to do my best for the company in its true interests. The course I recommended the companies to take was the proper one under the circumstances. 276. When you recommended that the vendors' interests should be looked after you thought that was in the best interests of the other subscribers ?—Certainly. 277. It was in the case of the Lees Ferry Company that you considered the vendors' shares should be allotted ?—Yes ; you will find that as soon as I got on the directorate I proposed that the vendors should be written to. I recognised fully that, in consequence of the general slump and the manner in which a number of the shareholders were loaded with shares, we could not hope to bring matters to a successful issue. 278. Then, in the case of the Lees Ferry Company, you recognised that it was necessary that the company should be liquidated ?—Yes ; for financial reasons, not for the reason that was adduced —viz., that the claim had been bored, and had turned out to be a duffer. I did not think that the vendors would accept that report, which was condemnatory of the claim, as being trustworthy and reliable. 279. You considered that for financial reasons it was desirable that the company should be liquidated ?—Yes. 280. You apparently tried to protect the vendors : why did you do that?—My object was not to protect the vendors, but to protect the shareholders from the claims which the vendors would be entitled to make in law. I looked at it from this point of view : that instead of rubbing the vendors the wrong way we had better try to carry them with us. 281. Take all these companies that Mr. Cook has been the vendor to : if he chose to enforce his claims he would get a large sum of money, would he not ?—Yes; he would in one way, but he would have to pay a good part of it out again to the other vendors. 282. Mr. J. Allen] What other vendors?— Take the case of the Golden Grey Company, which is in liquidation : In that company the vendors' shares have not been allotted, but the company have adopted an agreement to allot the vendors' shares, and are liable for them to Mr. Cook ; but Mr. Cook, I understand, is liable for the bulk of those vendors' shares to gentlemen on the Coast, and to protect himself he must insist upon his own rights in the matter. That is the view I take of it. 283. The Chairman] But the Lees Ferry Company's claim is not owned by the company at all—it is owned by Taylor ? —I am quite at a loss to understand what explanation Mr. Holmes can give of that. 284. Do you not think that the directors have shown negligence in that connection ?—I have never had a very high opinion of some of the gentlemen who were directors of these four companies. 285. But lam asking about the Lees Ferry Company; do you not think they have been negligent ? —Yes, I do. 286. You are one of the directors yourself ?—I have been elected only very recently. 287. Mr. J. Allen] How many of these companies are in liquidation ?—You mean the companies in connection with which a resolution for liquidation has been passed and confirmed ? 288. Yes? —The Golden Grey and the Wicklow Companies. I do not know whether a

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resolution to liquidate has been confirmed in connection with the Ngahere Company; and with regard to the Lees Ferry Company the meeting for confirmation of the resolution is to be held to-day. 289. Is the Tucker Flat Company in liquidation?— No. 290. Has any resolution been passed with regard to liquidation ?—-Some of us are in hope of saving it by amalgamation with the Hokitika Extended Company. 291. I want to know what the position of the vendors' shares is in the Golden Grey Company ; have they been allotted ? —No. 292. Have they been allotted in the Ngahere Company ? —No. 293. In the Lees Ferry Company ?—Yes. 294. In the W icklow Company ?—No; I understand that in each case agreements were adopted to allot the shares. 295. But they have not been allotted?— No. 296. What is the position with regard to the subscribing and vendors' shares in these companies that are in liquidation?—l am of opinion, and always have been, that the loss will have to be divided between both vendors and subscribers. The subscribers will have to make up to the vendors a certain amount. 297. But in these companies where the vendors' shares have not been allotted what is the position ? —I take it the vendor has a claim against the company or the liquidator to compel allotment of the shares; he can come on the estate of the company. 298. What will happen with the vendors' shares—who will they be allotted to ?—I take it that the companies are responsible to Cook, and he to the West Coast vendors. 299. But what will become of the vendors' shares ?—When the liquidator calls for claims against the company I presume the vendors will send in their claims. At all events, they have the legal right to do so. 300. Had the companies any right to go into liquidation without allotting the vendors' shares ? —Certainly not. The Golden Grey Company went into liquidation illegally. I will read the resolution deciding to go into liquidation: "It has been proved to the satisfaction of this meeting that the company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind up the same, and accordingly the company be wound up voluntarily ; and that Sidney Thomas Mirams, of Dunedin, be and is hereby appointed liquidator for the purpose of such wind-ing-up." It was not proved that the company could not carry on. As a matter of fact, only the application- and allotment-money was called up. It is true it might have cost more for a satisfactory dredge than the capital of the company would amount to, but it is by no means certain. In fact, to my knowledge, a dredge that could work that claim could be paid for out of the capital of the company. 301. You say that the company was wound up illegally, or was proposed to be ; wherein was the illegality ?—ln the statement that the company could not, by reason of its liabilities, carry on —in the wording of the resolution. 302. That is not a question of legality, is it ? —I am so advised by a solicitor ;of course, Ido not pretend to be a lawyer myself. 303. How many of the companies are being wound up illegally, in your opinion ?—This is the only one in connection with which the resolution is put in that way. 304. Can you tell me who the vendors are—who will hold the vendors' shares?— Mr. Cook should' send in his list as to how the vendors' shares are to be allotted. I understand that with regard to the Golden Grey Company that had been done, and the vendors' documents to the company were lying at the bank in Dunedin waiting to be handed over in return for the vendors' shares which would be allotted. 305. Can you tell me, then, in these cases where the vendors' shares have not been allotted, whether the subscribing shareholders will have to pay up the whole of their calls on their shares in order to equalise them with the vendors' shares, though those vendors' shares have not been allotted ? —In my opinion, yes. 306. You say that no vendors' shares have been allotted in the Golden Grey Company ?—That is so. 307.. Then, there are no vendors to go to to ask them to agree to forego their rights, are there ?—Yes, under the agreement with the company. 308. But they have not got vendors' shares ? —The company have agreed to allot those shares. 309. That is not the point; the vendors have not got the vendors' shares ?—No. 810. And there are none on the register?— None. 311. Therefore there are no vendors on the register to go to to ask them to agree to forego their rights, and, if there are none on the register to go to, what is the position ?—Mr. Cook is the vendor to the company, and he is the person who has to write to the other vendors. 312. I want to know the legal position ?—My idea is that the liquidator, before he can liquidate, must call for claims against the company, and it is for the one vendor only that the company knows —the man who has agreed to sell the claim—to put in his claim. 313. Do you know whether it is illegal or legal to have agreed to have wound up the Golden Grey Company without allotting the vendors' shares ?—I think it is legal in that respect, but very inadvisable, because in winding up the company in that way the shareholders must know that they are responsible to the persons to whom they agreed to allot these shares. 314. Is there any agreement to allot the shares ?—I understand there is. 315. In all these companies ?—Yes. 316. Then, why have they not been allotted?—As soon as I got on the board I at once tried to rectify this false position that the companies were in, but I met with opposition, and what I

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wished has not been carried out. Why the previous directors did not allot the shares Ido not know. In my opinion, they were waiting to see the result of the development of the Grey Valley, in which tbe claims are situated, before they took steps to call up their capital. 317. What had that to do with the allotting of the vendors' shares?— Evidently they thought it had something to do with it; they thought that they could get out of their liability to the vendors. 318. Are you a director of the Tucker Flat Company?—l am chairman of the company at present. 319. Why have the vendors' shares not been allotted in that company ? —The solicitor to the company advised that in the present position of the company—certain individuals are trying to wreck it—we should not allot the vendors' shares, you will find that in the minutes. 320. Why did he advise that ?—I do not think he gave any reason. It is only recently that we have had his letter. 321. I wish we could get some satisfactory evidence as to why these vendors' shares have not been allotted ?—I am not quite satisfied in my own mind ; I think that they should have been allotted in each case, if not for pecuniary reasons, at all events for the reason that the vendors had a right to have a say in the fate of tbe company through their votes. 322. They have no votes ? —No. 323. Is not that a funny state of things ?—Yes, I quite agree with you. 324. You stated that, in regard to one of the companies, the reason it was being wound up was a financial one, not that the claim had proved to be bad by further prospecting ; is that true of the Tucker Flat Company? —That has proved to be an exceptionally good claim by all prospecting. 325. It is an exceptionally good claim ? —Yes. 326. It was sold to Cook by Wild for 750 paid-up shares?—l do not recollect what the consideration was. 327. Has Mr. Wild had those shares?—He cannot have them, because the vendors have not allotted them. 328. Then, he has sold a good claim and got nothing for it ?—That is so. 329. Will he ever get anything ? —-If I were in his place I would. 330. Whom is he going to get anything from ?—He will have to get it from Cook, and Cook from the company. 331. Mr. Herries] How much has been called up in the Tucker Flat Company?— Application, allotment, and two calls of 2s. each—6s in all. 332. Mr. J. Allen] There are no registered vendors in any of these companies?—■ There is a vendor with whom the agreement has been adopted—that is, Mr. Cook. 333. Mr. Easton] I would like to ask you a few questions with regard to the Golden Grey Company; you have said that you think the Golden Grey Company is financially strong enough to go on ?—No ; I did not state that. I say it might have been made financially strong. 334. Are you aware that Mr. Cook's partner, one of the firm that promoted and floated this Golden Grey Company, repudiated his liability on the ground of misrepresentation—that Mr. Gray was summoned in the Magistrate's Court in Dunedin for the £25 due on the 500 shares ?—I was in Court at the time, and I think the Magistrate ruled that he had no defence, 335. Against the company? —Certainly. 336. You are aware, in connection with this company, that Messrs. Choyce and B. H. Abbott raised a similar contention?— Yes. 337. And yet in the face of that you contend that the company should have gone on?—As a claim it was a good claim. The report on which the company went into liquidation—Chester's— shows it to be a good claim—good for 50 oz. a week. 338. Have you ever been on the West Coast?— No. 339. You have never been over any of these claims ?—No. 340. Mr. Herries] Have you seen the agreement between Cook and the Golden Grey Company?—l had not seen it until it was shown to me just now. 341. Can you explain why it has never been executed?—No; I think this is only an office copy of the wording of the agreement. I can understand why a transfer of the claim would not be made to the company, as I know that at one of the meeetings a letter from a solicitor was read asking for a transfer of the shares, and I know the documents were lying at the bank to be exchanged to the company in return for the vendors' shares. 342. Is that the case with every company where the vendors' shares have not been allotted ? —I believe so. 343. Is it so with the Tucker Flat Company?—l believe so; I will look at the minute-book. There is an entry here in the minutes under date 9th March, 1900 : " Besolved, that Mr. J. Davidson be authorised to sign tbe agreement referred to in the memorandum and articles of association." I understand that that has been done; a proper agreement must be in existence. 344. You were a director of the company ?—I was not a director of the Golden Grey Company. 345. You have never seen any of the documents ?—No. I might say that there was not a quorum of shareholders present either at the annual meeting or the adjourned meeting, and the old directors still remained in office. At the meeting called to consider the proposal to liquidate an objection was raised. The resolution to liquidate being put, Mr. Gascoigne, a solicitor representing Mr. Cook, objected on the grounds that the vendors' shares had not been allotted. 346. Mr. J. Allen] Was it done? —The resolution was carried, but it was carried informally. 347. Mr. Herries] Who was present at that meeting?— Messrs, Somerville, Easton, Leijon, Knight, Sewell, Davidson, T. D. Pearce, and myself.

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348. You were present yourself?— Yes. I objected to the resolution being carried, and I held proxies. 349. Whose? —They were never counted. I think I held 2,050, and I had 900 more in my pocket, which I could not use on account of not having been able to lodge them in the company's office twelve hours before hour of meeting. 350. Did you hold Mr. Cook's proxy?— Yes. 351. What did Gascoinge have to do? —He was Mr. Cook's solicitor and mine. 352. He appeared as solicitor, not as a shareholder?— That is so. Further, clause 86 of the Companies Act requires the chairman, in the case of a special resolution, to satisfy himself that three-fourths of those present in person or represented by proxy must be in favour of a resolution to carry it. That is the correct way, I hold, to pass a resolution of this sort, and. it was not done in this case. They could not possibly have had the three-fourths majority even if they had had all the other proxies that I had not got. 353. You say that you held Mr. Cook's proxy ? —Yes; he was absent a good deal. 354. I mean in all these companies ?—Not all of them; sometimes he did not send them. 355. You had not a general proxy ?—No. 356. A special proxy in each case ?—Yes ; and in his letter covering the proxy he would say, " use your own discretion." 357. Did you hold Mrs. Cook's proxy?—ln this case I did. 358. Generally ?—Yes. 359. Did you hold any other proxies?—l was explaining that there were only about ten shareholders in this company residing in Dunedin; most of them resided out of Dunedin, and many of them would send me their proxies. 360. Who used to hold Mace's proxies ? —Sometimes he would send them to me, but more often he did not. 361. When he did send proxies he would send them to you?—l do not know that he has ever sent any to any one else. He was present at some of the meetings himself. Many of the meetings he did not attend, though he might be in Dunedin at the time, and did not vote at all. 362. You held the proxies for Cook and Gray's employes?— Not as Cook and Gray's employes, only as personal friends. 363. You held the proxies for Mr. Cook, Mrs. Cook, and Mr. Mace?— Yes; but I think I am correct in saying that I held Mace's proxies on two occasions only: 364. Did any one else hold them ?—No.

Tuesday, 27th August, 1901. W. Howes recalled, and further examined on former oath. (No. 8.) The Chairman: Before we commence asking any questions I wish to state that I sent telegrams to the Wardens at Greymouth and Hokitika, asking as to whose names certain mines stand in, and received the following reply from the Warden at Greymouth: "Golden Grey, Bobert Currie; Wicklow, Henry August Wicks; Ngahere, Joseph Scott; No Town No. 2 Gold-dredging Company (Limited) Lees Ferry, Joseph Taylor." The No Town No. 2 Company's claim is the only one which has been transferred from the names of the vendors. 1. Mr. Easton] I would like to ask one or two questions in regard to the Golden Grey Company: Was the brokerage charged on the full amount of each share, or merely on the application- and allotment - money ? —When the directors accept the proposals for shares the brokerage is paid on the shares accepted. 2. But is it paid on the full amount of the shares or on the application- and allotmentmoney? —2f per cent, is paid on the full amount of the shares —that is, 6d. per share. The practice in some flotations is to pay an overriding commission of H per cent., making it equal to 3f in all. 3. Are you aware that in the Golden Grey and Lees Ferry Companies brokerage was charged on 1,075 unallotted shares ?—No ; I am not the secretary to the companies. 4. Are you aware that in the Lees Ferry, the Golden Grey, the Wicklow, and the Tucker Flat Companies brokerage has been charged on 1,000 shares on which no money at all has been paid ?—No ; I cannot say that I am aware of it. 5. Are you aware that in the Ngahere Company the books show that on the 19th March, brokerage had been taken on 400 shares on which nothing had been paid ?—No, I am not aware of it. 6. Have you ever voted or used proxies at a meeting when you were not qualified ?—I do not think so. I would not be allowed to vote or use them. 7. You have voted at meetings of the Ngahere Company ? —Yes. 8. Were you qualified to vote when you did so ?—I think so. 9. Then, I would refer you to the minute-book of the Ngahere Company, pages 22 and 24? — I admit that I voted, but I do not admit that I was not qualified to vote. 10. How many shares do you hold in the Ngahere Company?—loo, I think. 11. Have you ever paid anything on those shares?— No. 12. The Chairman] Have you paid the allotment?—l have paid nothing on them yet. 13. Neither the allotment-nor the application-money? —No. 14. Mr. Easton] The minute-book shows you voted.? —Yes. The opinion of the company's solicitor was taken as to who was entitled to vote, and he held that application- and allotmentmoney was not share calls. 6—l. 4a.

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15. The Chairman] Is it not a condition that you shall pay your application-fee before shares are allotted to you ? —No. It is better, if the money can be collected, but shares are frequently allotted on which no application-money has been paid. I am responsible for my shares in the Ngahere Company, and the money will be paid. 16. Mr. Herries] You were connected with the floating of some of these companies ?—Yes, some of them. 17. Did Mr. Cook have anything to do with the floating of the companies?— Yes. 18. Had you more to do with the floating of the companies than Mr. Cook ?—With some of them. 19. I mean the companies that were floated at your office ?—No; I did not have more to do with the floating of them than Mr. Cook. I sold the bulk of the shares in one or two of them. 20. Do you consider yourself responsible for the floating of the companies ?—I consider myself responsible for the floating of the No Town Creek Company. I sold the bulk of the shares in that company ; also the Ponsonby and Crown Diamonds. With the Boss Day Dawn and other companies I had very little to do. 21. Who is responsible for the memoranda of association of these companies ?—The solicitor to the companies. 22. Who gave him instructions, you or Cook ?—Mr. Cook being absent, he would probably ask me to see Mr. Holmes, and get him to prepare the articles of association, and they would be afterwards adopted by the companies. 23. What were your instructions to Mr. Holmes? —To prepare the usual articles of association. I did not go into details. 24. Were they sent to you for approval in any case ? —No ; they were sent to the office. 25. Were any alterations ever suggested by you?— No. 26. They were accepted as they came from the solicitor?— Yes. 27. Did you instruct him that the companies were to be floated under the Companies Act rather than the Mining Companies Act?—l did not instruct him, but I agreed with him that that should be done ; it was his suggestion. Ninety-nine out of every hundred dredging companies floated in Dunedin are floated under that Act. 28. What reason did he give for advising that the companies should be floated under the Companies Act ?—That the Mining Companies Act was not suitable for dredging companies in many respects. 29. In what way? —I think it is generally admitted that such is the case. He did not particularise. 30. You did not go into the subject yourself ?—No; I am not very conversant with the Mining Companies Act, because it is seldom used in the flotation of dredging companies, but I am pretty well conversant with the Joint-stock Companies Act. 31. Did you instruct the solicitor to draw up the articles of association under the Companies Act rather than under the Mining Companies Act?— Yes; he would take it as an instruction. Every one concerned would be of the opinion that the company should be registered under the Joint-stock Companies Act. 32. Was it under your instructions that the omissions were made from Table A of the Act ?— No. 33. Whose instructions was it under ?—As a matter of fact, Mr. Holmes used the stock form that he kept in his office. He was solicitor to other companies besides Cook and Gray's, and used the stock form. 34. Have you seen the memoranda of association of other companies ? —Yes, I have. 35. Are they similar to these ?—Some are similar, and some differ on minor points. I may say that I do not know of a single company that has adopted Table A in its entirety. 36. What is the object of leaving out certain portions ?—lf you would particularise I could probably tell you. 37. Take Begulation 47 : why are all the words after "paid" left out in the memorandum of association used in the Cook and Gray Company ? —As I stated before, Table A was framed in England more with the view of suiting industrial companies than dredging companies, and the reason why the words after " No member shall be entitled to vote at any general meeting unless all calls due from him have been paid " are left out is that the provision would be unworkable so far as a dredging company is concerned, because, were the words eliminated left in, shares would have to be held three months after the first three months of the existence of the company before he can vote. 38. Why is section 44 left out ?—The usual practice in dredging companies—and it is felt to be an equitable, proceeding—is that a man shall be entitled to one vote for every share held by him, so that not only is his personality represented, but his weight of share influence in the company. 39. But do you not think that is liable to allow two or three people to rule a company ?—I look Upon it in this way: that a joint-stock company is practically a partnership, in which whoever has the largest interest should have the largest say in the affairs of the company. 40. Mr. Carncross] Are vendors' shares included?— Yes ; if they have been allotted they all rank alike. 41. Mr. Herries] In clause 50 why are " twelve hours " substituted for " seventy-two " ?—lt is the usual thing. It is thought that seventy-two hours is too long a time to require for the notices to be in the office. 42. Do you not think it necessary to have the proxies sent in a good time previous to a meeting, so that people shall see who is holding them ?—No, Ido not. I hold that in some cases it would be inadvisable that people should know till the proxies are opened. I know that it is usual for the

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secretary to write them up, but that could be done at the meeting. In clause 57 of Table A, there is an addition to the regulation, " And that no director shall vacate his office by reason of the allotment to him of paid-up shares in pursuance of the said agreement or by the direction of the vendors, nor be liable to account for the profits of such shares." 43. What is the meaning of putting that in ?—So as to allow the holders of the vendors' shares to be elected as directors of the company and to hold their seats. 44. Do you not think that all these alterations are in favour of the vendors as against the contributing shareholders ?—No, Ido not. The contributing shareholders when they take up shares take them up on the prospectus, and they know perfectly well what they are going in for. In all these cases they take the shares up in the hope of gain. It is a business, and if they look sufficiently well after their own interests and think that the articles are drawn up on an inequitable basis, and object to them, they need not take up the shares. 45. Are these memoranda of association always to be seen at the office ? —Yes. 46. Before the shares are applied for?— Yes, a copy of the articles of association can be seen. 47. Has that always been the case?— Yes; or the articles could be always got for them. But I may say that I have never known a single case in which any one has ever asked to look at the articles before buying shares. 48. Do you know of any other firm who have been vendors, had the office-rent, and had one of their managers as secretary to the company?—l do not know of any that have drawn office-rent. 49. Or where the secretary to the company was the vendors' servant ? —I certainly was of opinion that there were a good few such cases. 50. Can you name any ?—I could not name them offhand; I have a copy of the " Investors' Guide," and by going through the directorates and the secretaries I dare say that I could point out a few. 51. You cannot name any offhand?—-No; but if you like I will go through the list during the day. 52. The Chairman] I notice that in the Ngahere Company Cook and Gray's charge for brokerage, according to the ledger, was £175? —Yes. 53. How many shares would that represent at 2-J- per cent. ? —7,000. 54. Were there 7,000 shares sold in the Ngahere Company?— Yes, I believe there were, but I am not sure. 55. Was £7,000 in cash paid up?—No; only Is. is necessary to be paid in order for the broker to claim brokerage. The usual practice is for a man who takes up shares to pay Is. into the company, and then a broker gets commission. 56. (To Mr. Hoisted) : How much was paid up, can you say, Mr. Hoisted ?—The brokerage paid was £164 odd; an amount of £10 odd was deducted from the £175. 57. Does not the balance-sheet show how much cash you actually got for the shares? —The number of contributing shares unallotted was 425. 58. I want to know the actual cash you got for the shares that were sold originally ?—£32B Bs., application-money. 59. (To Mr. Howes): And then you charged £175 commission, less a refund of £10 odd?— Yes ; the actual brokerage was £164 odd. 60. Of the £328 subscribed, £164 was charged for brokerage ? —Yes. W. Holsted further examined on former oath. (No. 9.) 81. Mr. Easton] In regard to the Golden Grey and Lees Ferry Companies, is it not a fact that brokerage was charged on 1,075 shares on which no money had been paid at all ? Take the Golden Grey Company first: was not brokerage charged on 625 shares in that company on which no money had been paid at all ?—No; the brokerage was refunded. The balance-sheet shows a refund of £11 ss. 62. In the balance-sheet it is not stated what the refund is for?— The bokerage is shown in the balance-sheet, and you can see the number of shares on which it has been charged. 63. Did Cook and Gray refund that money voluntarily ?—Certainly. 64. Was no demand made by the auditor ?—-No, not by the auditor. It was already refunded when the auditor audited the books. 65. Was no demand made by the auditor in the Golden Grey Company for a refund?—l will refer to the book. You must understand that these books have been out of my care for some time, and I would like to refresh my memory. Oh, yes ; I find that you are correct. 66. Then it was not until a demand had been made by the auditor that a refund was made to the company for brokerage on the shares that were not allotted at all ? —That is so. 67. Then we will take it tbat the same thing applies in the Lees Ferry Company on a number of shares —that the auditor made a demand there ?—Yes, that is so. 68. Now, can you tell us whether it is not a fact that in the Lees Ferry, Golden Grey, Wicklow, and Tucker Flat Companies up to the present day brokerage has been taken on 1,000 shares on which not one penny-piece has been paid? I will enumerate them separately : The Lees Ferry, 250 shares ? —Yes ; that is so. 69. The Golden Grey, 250 ?—Yes. 70. The Wicklow, 250 ?—Yes. 71. The Tucker Flat, 250 ?—Yes. 72. Making 1,000 shares on which nothing has been paid ?—Yes; but they are all held by the one shareholder. 73. Up to the present day not one penny-piece has been paid on them ? —That is so. 74. And is it not a fact that brokerage was charged on them ?—Yes. 75. Now, in regard to the Ngahere Company, you gave me your certified copy of the register

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on the 19th March, which showed to me that brokerage had been taken at per cent, on 400 shares on which not one penny-piece had been paid ?—Then, that will be correct. - 76. And that certified, copy of the register proved to me that on the same date brokerage had been taken on 2,600 shares on which only Is. per share had been paid?— That will be also quite correct; Is. would be the application-money. 77. Am I right in saying that Mr. Howes at a meeting of the Lees Ferry Company voted in favour of your being appointed the liquidator?—l believe he did; he seconded the motion, so I presume that he was in favour of it. 78. Mr. W. Fraser] To which of the companies mentioned in the telegram from the West Coast are you secretary?—l am not now secretary to the Golden Grey Company, nor to the Wicklow Company, nor to the Ngahere Company; and. yesterday I ceased to be secretary to the Lees Ferry Company—it went into liquidation yesterday. 79. You cannot state definitely, then, as to whether the vendors' shares have been allotted to the vendors in any of these companies?—No; they might have been allotted since I ceased to be secretary. 80. Who could tell us ? —Mr. Mirams, who was my successor as secretary. 81. Would the minute-book show ?—Yes. 82. There would be no vendors' shares allotted in the case of liquidation ?—That is so. 83. Mr. Herries] The vendors' shares were not allotted as far as you know, except in the Lees Ferry Company ? —Not up to the date I ceased to be secretary. 84. Mr. J. Allen] In the case of these companies where vendors' shares have not been allotted, and the title is still in the name of the original owner, and that have now gone into liquidation, have the subscribing shareholders paid up their calls upon a claim that they had not, and have not got now ?—lt would appear that they have paid application- and allotment-money on it. 85. On a property that does not belong to them ?—Yes. 86. Is that the usual thing in mining companies ? —I think the titles are never completed until some time after the shares are allotted. 87. But still they have paid their money on a property that does not belong to them ?—lt would appear so. 88. Whose fault was it that the cash was not paid to the vendors —the directors' ?—When the subscribing shareholders paid their application-money there were no directors to allot vendors' shares. 89. Directors were appointed immediately on the company being registered ?—Yes, but not at the time the application-money was paid. 90. Does the memorandum of association say that you must allot the vendors' shares?— The memorandum of association does not refer to vendors' shares. 91. The Chairman] Does it say that the company shall take over an agreement to Mr. Cook —Yes, that is so; it says, " For the purpose of commencing mining operations to enter into a contract which has been already prepared and is expressed to be made between William Bichard Cook, of Dunedin, accountant, of the one part, and the company of the other part, for the sale to the company of the mining property therein mentioned for two thousand fully paid-up shares of one pound each in the capital of the company, as therein expressed." 92. Mr. J. Allen] That contract has never been entered into?—lt has never been completed in those companies that still stand in the names of the original owners. 93. Is that the usual thing ?—Of course, I am not speaking for any other companies than those to which I have been secretary. 94. In the case of liquidation, what property have the subscribing shareholders got? —It appears to me that they have none. 95. They have been paying the subscribing shares up for nothing?—l think that is a legal question which would take a legal man to answer; I would not like to give a definite opinion on the point. 96. Mr. Cook] With reference to that question of the non-adoption of the agreement: the directors of the companies represented the subscribing shareholders, did they not ?—Yes. 97. There were no vendor shareholders, and so the whole of the companies were comprised of subscribing shareholders ?■—Yes. 98. Is it not a fact that the directors of these companies thought it wise not to proceed with the allotment of the vendors' shares, and the taking-over of the property, until the Grey Biver was proved auriferous ?—That was the reason given for non-allotment. 99. That was the reason assigned by the directors?— Yes. 100. With the view that, if the Grey Biver was not payable, they would not take over the liability of the property by handing the shares to the vendors ?—That is so. 101. So that the persons who have suffered in this respect are the vendors, and not the subscribing shareholders ?—Undoubtedly; the vendors are the people who will suffer. 102. They have got nothing?— They have nothing, but they will get their claims back after the companies have held them for some considerable time. 103. With reference to brokerage, we have heard a great deal about the thousands of shares on which brokerage has been taken, and no application-money paid, presuming it was an incorrect thing for the brokers, Messrs. Cook and Gray, to take brokerage on shares on which no applica-tion-money has been paid on all these companies that have been mentioned here—the Boss Day Dawn, Tucker Flat, Lees Ferry, No Town No. 2, Wicklow, Golden Grey, and Ngahere Companies—what is the gross amount of the brokerage that has been taken on shares on which no application-money has been paid ?—£33 15s. ; but Mr. Easton made it £5 more on the 19th March, 104. But take the amount as it stands to-day ? —£33 15s,

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105. That is the whole amount of brokerage that has been taken on shares on which no application-money has been paid in all these companies: on the shares on which the total brokerage came to £1,000 odd?—-Yes ; the total brokerage was £1,094 15s. 106. And of that £33 155., £25 was taken on shares held by one man in Auckland?— Yes, by one man alone. 107. Outside of that one man's share, the whole amount of brokerage wrongly charged was £8 15s. ?—Yes, at date. 108. You have told us before that it is customary for application- and allotment-money to be paid together ?—lt is very frequently done. 109. Do you know whether this man in Auckland, Mr. Kneebone, is good for the money that he owes ?—I understand that he is a man in a very good position—carrying on a very large business in Auckland. 110. Mr. Easton] Mr. Cook stated that the brokerage on the total shares on which no applica-tion-money had been paid amounted to only a small sum: will you tell the Committee the total amount of brokerage charged on shares in respect of which only application-money has been paid ? —The brokers invariably charged on the application-money only. 111. My contention was that a very large sum has been charged as brokerage on shares on which only application-money not allotment-money has been paid ?—Yes, that is correct; the brokerage is always charged on the application-money only. 112. Mr. Herries] How many were therein the Golden Grey Company ? — 5,000 were alloted at the first allotment, but there were some subsequent allotments ; 6,000 were allotted, less 450—that is, 5,500. 113. Those are the shares on the register?— Yes. 114. How many did Mr. Cook have ?—5OO. 115. How many did Mrs. Cook have ?—5OO. 116. How many did Howes have ? —5O. 117. Did Harold Howes have any?— No. 118. Did Mace have any ?—Yes, 100. 119. Did Gray have any ?—Yes, 500. 120. Then Cook and Gray, and their employes had 1,650 contributing shares in the company ? — Yes, that is so. 121. Then would not they have been able to carry a motion to allot the vendors' shares if they had wished to ?—They were never all present; they were scattered over the colony. 122. But, as a matter of fact, those shares all being used in the one way would carry anything ?—Yes, if the motion were put at an extraordinary meeting they would have great weight. 123. Cook and Gray and their employes had a large number of shares in most of these companies ? —Yes, a large number of the shares. 124. The Chairman] If only the application-money was paid, and commission of 2-J per cent, was claimed, the brokerage would amount to 50 per cent, of the money paid in ?—Yes, 50 per cent, of the application-money of Is. per share. 125. It would be 25 per cent, of the application- and allotment-money ? —Yes, that is so. 126. What was the total amount of the brokerage that Messrs. Cook and Gray got from these companies?—l make it £1,094 155., received from seven companies. 127. You do not know what they got from the others ?—Yes. 128. They got other brokerage besides?— Yes. 129. Mr. Cook] Do you know how much out of that Cook and Gray paid away to other brokers? —No ; but I know that they paid some away to others. 130. They did not have the whole of it ?—That is so; you had to distribute brokerage among other brokers.

Wednesday, 28th August, 1901. William Geay in attendance, and examined on oath. (No. 10.) 1. The Chairman] What is your name? —William Gray. 2. You are at present residing in Wellington ?—Yes. 3. You were a member of the firm of Cook and Gray?— That is so. 4. That partnership, I believe, has been dissolved ? —lt has. 5. Mr. Easton] Will you tell the Committee what day you dissolved your partnership with Mr. Cook ? —I think the deed was signed on the 4th or sth February; the partnership was dissolved as from the 31st January. 6. What part have you taken in the flotation of the twelve companies now under review ?— None. 7. Did you participate in the promoting profits—l mean the brokerage ?—Yes, as far as lam aware. 8. Did you apply for 2,000 shares in the Lees Ferry, Golden Grey, Wicklow, and Tucker Flat Companies ?—I applied for 500 shares in each of those four companies. 9. The Chairman] Were you in Dunedin at all during the flotation of these companies ?—No; I was neither in Dunedin nor yet on the Coast. 10. Mr. Easton] At what date did you apply for those shares?—l think it was either January or February of last year. 11. In taking up those 2,000 shares what liability were you incurring ? — So far as the liability was concerned, there was an understanding that, as the market was very depressed, the application-money only should be paid, and the companies go no further unless there was reasonable prospect of things going ahead,

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12. Then, what liability did you consider you were incurring in applying for the shares?— Simply the application-money. 13. One shilling per share ?—Yes. 14. Did you understand that Mr. Cook would be a director of all those companies ? —I did. 15. And who was to be the secretary?— Our Dunedin manager. 16. The manager of your own firm ?—Yes. 17. Can you tell the Committee the names of the parties from whom Mr. Cook purchased the claims ?—No; I have seen no documents in connection with them. 18. How much cash was paid for the properties ?—I could not tell you. 19. You did not find any of the cash? —No; we found none, as far as I know. 20. Were you acquainted with the conditions upon which the articles of association were based ? —I have never seen any articles of association. 21. Have you examined the deeds of sale?—l have not. 22. Did you understand that the deeds of sale from the owners of the claims to Cook had been filed with the Begistrar?—l supposed that Mr. Cook was doing all that was necessary. 23. Who did you understand Cook's co-directors were to be : I am speaking with reference to the four companies—that is, the Lees Ferry, Golden Grey, Wicklow, and Tucker Flat Companies ? —There were to be three directors—himself and two others whom he would see appointed, but he did not say who they would be. 24. Who was to "make the appointment of them ?—The promoters. 25. You paid the application-money on those shares, and why did you not pay the allotmentmoney on receiving notice to pay it ?—Simply because I was told by Cook that the sending of notices was merely a formal matter, and that the payment need not be made. 26. Did you ever speak to Cook with regard to the notice demanding payment ? —I did. I did not like the notices I was getting, and spoke to Cook about the matter, and he said, " If you do not like the position you can give me the transfers of the shares, and I will relieve you of them," which I did—that is, gave Cook the transfers. 27. Is it a fact that you signed and gave Cook blank transfers for the shares in those four companies? —That is so. 28. And Cook accepted them ?—I presume that he did, for I did not get them back. 29. Have those transfers been put through ?—They have not. 30. On being threatened with legal proceedings, did you send the following telegram to the secretary of the Golden Grey Company : " On ground of misrepresentation I repudiate the shares allotted me " ? —That is so ; it was done under legal advice. 31. Do you know of any other people to whom Cook said that the only liability in connection with these companies would be Is. per share ?—Several; in fact, I think pretty well all the shareholders. Messrs. Choyce and Abbott have both sworn to that fact, but Ido not know of any one else who went into the Court and gave similar testimony. 32. There was an understanding given to the shareholders that only Is. per share should be called up ? —That is so. The arrangement was that we were simply to pay the application-money, and the shares were then to be left in Cook's hands to deal with ; that, so far as any of the shareholders were concerned, they could not at any moment have dealt with them without consulting Cook, because he was supposed to be acting as broker in connection with all of them. 33. Have any of these people, to your knowledge, defended actions for payment ?—Yes ; Choyce and Abbott did. 34. It having been decided in the Magistrate's Court that you are liable to the companies, do you still contend that there has been misrepresentation ? —I do. 35. On whose part ? —Cook's part. 36. Did Cook promise to give you, or did he give you, an interest in vendors' shares ?—He did not. 37. How many vendors' shares did you understand Cook was to receive in each company?—l understood he was getting four or five hundred. 38. In each of the companies? —Yes; but I do not know whether he got them. 39. How often did you receive statements of account in connection with the companies?— The last statement of account that I had was on the 31st July of last year. 40. From whom did you receive it ?—From Mr. Cook. 41. Did you hear from Cook from time to time as to the financial aspect of these companies?-— No ; I took no part at all in connection with those companies. 42. Who was your manager at Dunedin?—Mr. Hoisted. 43. Did he transact any other business for your firm —other than the management of the companies in question?—He was our manager in Dunedin, as far as I knew, and was responsible for everything while Cook was away. 44. You were paying him for work other than that in connection with these companies ?— Certainly ; but I do not know what work there was doing. 45. Have any of these companies paid a dividend ?—I do not suppose so. 46. Have any of them got dredges working ? —No, not as far as I know. 47. What, in your opinion, are these companies being kept alive for?—l do not know; I do not know why they were formed. 48. Mr. W. Fraser] The question was asked whether any of these companies had paid dividends: would it be possible for a company to pay dividends with only Is. per share called up? —No ; considering the fact that they have never been working. 49. Mr. Herries] You speak with reference to four companies only— that is, the Tucker Flat, Lees Ferry, Wicklow, and Golden Grey ?—Yes, that is so,

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50. Mr. Carncross] You said that you did not know why these companies were formed : what do you imply by that?—l understand that, in connection with one or two of them, reports have been received lately that the ground is bad, and there is no chance of success. 51. Since the formation of the companies ?—Yes. 52. But you stated that you did not know why they were formed ?—They should not have been floated if the ground was bad ; that is what I meant. 53. Did you have reports ?—Yes. 54. Did those reports say that the ground was bad ? —The reports on which the companies were floated stated that the ground was good, but reports which have been received since have been to the opposite effect. 55. Then, you do know why the companies were floated ?—The understanding was that the flotation would not be gone on with unless the dredging market revived, and the shares could be sold at a profit. That was the understanding when the application-money was paid. 56. On that understanding you paid Is. per share?— Yes, that is so ; but the companies were gone on with when they should not have been proceeded with. 57. It seemed to me that you made a very sweeping assertion when you stated that you did not know why the companies were formed ?—That is what I meant; that is to say, that the understanding was that they would not be gone on with unless the market improved very considerably. 58. Who was this understanding with?— Mr. Cook. 59. Did you pay all your application-fees in connection with these companies ? —Yes. 60. A hundred pounds ?—Yes. 61. Mr. W. Fraser] I suppose that when you took up the shares in those four companies you hoped they would go to a premium, and probably you would be able to sell without making any further payment—that was the object you had in view in taking them up ?—That is so; that was the understanding. 62. How do you mean " the understanding " ?—The understanding with Cook that, unless the market improved and the shares were saleable, there should not be any further liability; that is what has been sworn to by Messrs. Choyce and Abbott, as well as by myself, in the Court. 63. What was the verdict of the Court?— That any arrangement with Cook did not bind the company. 64. Did you suppose, when you took those shares, that any arrangement of that kind with Cook could bind the company?— Yes; because he was one of the three directors, and therefore nothing could be done without his sanction. I supposed that the arrangement would be carried out. 65. How were the directors elected? —By the shareholders, I presume ; but I do not know how the directors of these companies were elected. 66. But there is only one way in which they can be elected—that is, by the shareholders ? —Yes. 67. Mr. Cook was not the only shareholder?— Seeing that he held these shares at his control, he had a majority to carry everything he wished. 68. Mr. Bennet] Were the directors elected by the shareholders merely as provisional directors ?—That I could not say; but I suppose there must have been a meeting of shareholders to elect them 69. Do you think that any of these companies which have been referred to would have floated if the " slump " had not come at that time ?—I believe they would. 70. It was the " slump " in the market that created the principal confusion?—-That is so. 71. Mr. Carncross] You were a partner in the firm of Cook and Gray ?—Yes. 72. And you had your share in any profits that accrued from the floating of these companies ? —Profits in connection with the brokerage, but not in promoting shares. 73. You held no vendors' shares ? —No. 74. They had nothing to do with the firm—they were entirely Cook's?—l understood at one time that the vendors' shares did belong to the firm, but I found out since that that was not so. 75. Before the dissolution of partnership ?—Yes. 76. Did you make no representation to Cook?—I did. 77. What was the result? —I was informed that I had no interest in the vendors' shares at all—that they were Cook's own private property. 78. Then, your interest has been your proportion of the profits in connection with the brokerage? —-That is so. 79. Mr. Cook] In January or February, 1900, I was in Auckland, and the contemplation of the flotation of these four companies was then under discussion ? —That is so. 80. You saw the prospectuses?— Yes. 81. And the reports ?—Yes. 82. This was not the first time that you took up mining shares ?—No. 83. By many and many times?— Well, several times, at any rate. 84. You were very much to the front in the Auckland " boom," were you not?—Of course, the Auckland companies were all no-liability companies. 85. You understood what you were doing about the mining shares ?—Yes. 86. And when you signed the application forms you knew what you were signing?— Yes, that is so. 87. I will read the application form. [Form read.] You understood that, did you not ?— Yes, I understood it. 88. As a business-man, you understand when you sign a document that you sign for the responsibility of what is contained in that document ?—Yes, that is so.

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89. You said that I informed you and others that I was to be a director of the company, and would nominate the other directors ? —Yes, that is so. 90. You swear that in the face of this prospectus, which states, " The subscribers to the memorandum of association will act as directors until the statutory meeting of shareholders, which will be called immediately after the registration of the company " : you read that ?—Yes. 91. You knew that I remained in Auckland until after the formation of these companies?— No. 92. You know that your applications were sent down to Dunedin from Auckland ? I can prove that they were sent from Auckland ?—You took them with you to Dunedin. 93. You knew that I could not possibly be the subscriber to the memorandum of association, did you not ?—No, certainly not. 94. Seven were required, and how could I be more than one?— You could be one, of course. 95. But you know that the Act provides that seven members must sign the articles of association?— Yes. 96. And you knew that I could not be seven? —Of course. 97. And you knew that no people in Auckland could be subscribers to the articles of association —they must have been Dunedin people?— Yes; but the holder of one share could sign the articles of association. 98. Was not this the fact: when these companies were formed the Grey Biver dredge was expected to work the following month ?—Yes. 99. We talked this over, and, seeing the prosperity of dredging, thought that if the Grey Biver dredge was a success we would be going in for good things ?—Yes. 100. And that on the Grey Biver giving good returns there would be a rise in the market, and that we should be able to operate on our shares at a profit ?—That is what was expected—what you told me. 101. In the event of the Grey Biver giving good returns you would have made a profit on the shares ?—That is so. 102. Was it not stated that practically the whole of the expenditure in a dredging company was in the building of a dredge ? —That is so. 103. And that if the Grey Biver dredge proved the Grey Biver to be non-auriferous it would not be advisable for us to build a dredge ?—Yes. 104. And that we should have the benefit of other people's experience before building ?—Yes; and therefore the application-money would cover all the expenses that were likely to be incurred if a dredge were not built. 105. Was any mention at all made of application-money ? Was not the understanding to this effect: that unless a dredge was built there would be no reason to make calls? —Yes; the companies would go out of existence if no dredge were built. 106. No calls had been made on the shares in the companies whose claims were on the Grey Biver ?—Not as far as I am aware. 107. You stated that you gave me transfers at my request ?—That is so. 108. Did you not send down some blank transfers with a letter asking me to take them, and if an opportunity offered to sell them, and get rid of your liability?—We had a chat about it in Wellington, and I sent them after you. 109. Why did you have to give them to me?— Because they were in my name. 110. Why did I take them ?—Because you said you could get some one to take the liability, and I gave you the transfers to enable you to do that. 111. When was that, do you say?—ln August, I think. 112. Did you not wire me saying that you and some others would not sell shares in the Tucker Flat Company under ss. premium?— Never. 113. You swear that ?—I do. 114. Did you write me in January last asking me to sell these shares —the shares in the four companies under review—and that you would take a premium of Is. ? —Probably I may have done so. I think, if I remember rightly, that I wrote you something to that effect in reply to a letter from you saying that you thought you could deal with them at Is. premium, and I said, " Very well." The shares in the Tucker Flat Company could have been sold at 4s. premium, but you declined to sell them. I have a letter from you to that effect. 115. When was that?--1 could not say what the date of the letter is; I was looking up some documents the other day and came across it. It was written shortly after the company was formed. 116. You said that the companies were not to be floated unless the shares could be sold at a profit ? —That is so; they were not to be gone on with unless the shares could be sold at a profit. 117. You said " floated " just now?—l meant that there was to be nothing further in the way of expenditure unless the dredging operations on the Grey Biver by the Grey Biver dredge proved successful. 118. You said that others had given evidence on the same lines as those on which you are now giving evidence —in regard to misrepresentation ?—That is so. 119. You mean Messrs. Choyce and Abbott ?—Yes. 120. Messrs. Choyce and Abbott are friends of yours ?—Yes, 121. You stated that you objected to pay calls when yoii were threatened with legal proceedings : did you object to the secretary before being threatened with legal proceedings ?—No. 122. Did you have any notice of allotment call from the secretary ?—I did. 123. But you never objected until you were threatened with legal proceedings ?—No; because you told me to take no notice of the notices.

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124. When was it that you were threatened with legal proceedings ?—About March or April of this year, I think. 125. You held the shares from February, 1900, to March, 1901, and made no objection to the company until you were threatened with legal proceedings in March of this year ?—That is so. 126. Now, with reference to the partnership that existed between you and me: you were my partner for about ten years and a half, were you not ?—Nine or ten years. 127. The first three years you were my partner at a salary ? —That is so. 128. And after the three years you were to participate in the profits to the extent of one-third? —That is so. 129. At the end of the fourth year had you overdrawn your account ?—Probably. 130. You know it, do you not ? —No, I do not know it. 131. You know that I have sent you some very strong letters about this overdrawing of account?— Shortly before the dissolution of partnership you did. 132. I am taking you right along from 1893 to 1900 : when I went to Auckland I found that you had overdrawn to the extent of nearly £2,000, is that not so ?—lt is not so. 133. You have stated that you signed the applications for the shares in the Tucker Flat, Wicklow, Golden Grey, and Lees Ferry Companies ?—That is so. 134. You knew what you were signing? —I did. 135. And it was an understanding when we talked over the flotation of these companies, in Auckland, that if the Grey Biver proved to be non-auriferous we should have the benefit of the Grey Biver Company's experience before building our own dredges? —Yes. 136. And if it was shown that the Grey Biver was not payable we should not build the dredges ? —That is so. 137. Mr. Easton] Was there not an arrangement as to pooling the shares in the four companies?— They were all to remain in Cook's hands for twelve months—that was the understanding. 138. He was to have the right to operate on those shares ?—Yes. 139. On the understanding that not more than Is. per share should be called up ? —That is so. Cook was to sell them on behalf of the various parties who had taken them up. 140. Have you had any communication with Benjamin in the matter?—l have not. 141. Mr. Herries] When you sent proxies did they go to Mr. Cook?—As a matter of fact, I do not know whether I ever sent any; Ido not think I ever sent any. 142. Mr. W. Fraser] You never sent any proxies ? Then, how could Cook use the shares at a meeting of directors if you did not send proxies ? —1 suppose we must have given him proxies for the first meeting. 143. But they did not hold good for every meeting ? —There would be only that one meeting of each of the four companies up to the time of the dissolution of partnership. W. Howes recalled and examined on former oath. (No. 11.) 144. Mr. Easton] Have you any interest in shares in any of the twelve companies other than those held in your own name ?—No. 145. You have no further interest than your own shares?—lf you mean interest in shares, no. 146. I ask you have you a larger interest in any of these twelve companies than the shares held in your own name, and shown on the share register ?—No. 147. At a meeting of the Golden Grey Company held in Dunedin on the 23rd May, Mr. Knight said, "Mr. Howes has only a small interest in this company" ; and your reply was, "I have a very large interest in the company—larger than you think." Is that not so ?—That is so. 148. What did that imply? —It did not imply an interest in shares. I had put in at that time, but they had not been opened or placed before the meeting, 2,050 proxies from people living at a distance who had asked me to represent them ; and I had 900 more in my pocket that I had not received in time to use at the meeting. That was the interest. 149. You did not mean a personal interest?— No. 150. You are chairman of directors in the Tucker Flat Company ?—Yes. 151. You said that no directors' fees are being paid?— Yes. 152. Have any directors' fees been paid since you have been a director ?—No ; they have been passed for payment but have not been paid. At the same meeting we passed a resolution that we would not draw them at present. 153. Then, in the event of the Tucker Flat Company being liquidated are you going to claim to be paid director's fees from the time you were appointed a director? —I do not know ;we are working very hard for the company and have been for some time, but it will probably be for the general meeting to say whether we are to be paid the fees. Heebeet E. Easton further examined on former oath. (No. 12.) 154. Mr. Cook] Where do you reside ? —I am residing now at Searl's Hotel, Wellington. 155. Where is your permanent abode?—ln England. 156. You are simply a visitor here now; you have no permanent abode in New Zealand?— No. 157. What is your occupation ?—I am out here on a matter of business. 158. What is that business ?—Business in connection with some of my friends at Home. 159. Was that your reason for coming out to New Zealand ?—I had various reasons for coming out; I had other business than to look into the dredging industry. 160. When did you land in New Zealand ?—ln January, 1900. 161. You landed at Dunedin, I believe ?—I landed at Wellington on my way down. 162. You first called on me in April, 1900 ?—I first saw you on the 23rd April, 1900. 7—l. 4a.

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163. You called at my hotel ? —I saw you in the Boyal Oak Hotel, Wellington. 164. You called on me ? —No, I did not; I met you in the hotel. 165. How did you come to speak to me if you did not know me ? —You spoke to me in the hotel —I believe it was in the smoking-room. 166. Did not you and your wife call upon Mrs. Cook and myself at the hotel, and introduce yourselves to us? —I was staying at the Boyal Oak Hotel with Mrs. Easton. 167. You say you were staying there—did you sleep there? —Not that night. 168. Did you not call upon me and my wife at the hotel and introduce yourselves to us ? —I met you there for the first time in my life. 169. You came and called on us?—l was in the hotel when you were there. 170. Your wife's brother married my wife's sister, and when you came out you called upon us at the hotel: is that not so ? —My wife and I were staying at the hotel. We had lunch there that day. 171. Will you say whether you called on us or not?—l did not call on you. 172. Did you purchase any mining shares before seeing me ?—I believe I did. 173. Do you not know ?—I can tell you by reference to my book. I first bought shares from you on the 10th July, and I believe I bought two small parcels from Mr. Stuart in Wellington, in May. 174. Did you not buy any shares in Dunedin?—Not a single share. Mr. Stuart bought shares for me through a broker in Dunedin. 175. Did you not buy several lots of shares down in Dunedin?—No. 176. Did you not buy shares in the Perseverance Company?— Yes, through Messrs. Quick and Smith. 177. Did you not buy some Junction Electric Company's shares ?—I had not bought them until I bought shares through you. 178. Did you buy any Cromwell shares ?—Yes, but not previous to my buying shares from you. 179. Did you not buy shares on the advice of a Mr. Hodgkins in Dunedin ?—Yes, I think he bought some shares for me, but I am only speaking from memory. 180. You resided in Wellington from April, when you came here, until August, and then you visited the West Coast: is that so ?—I did not reside in Wellington the whole of that time ; I was travelling about. 181. While in Wellington you bought and sold shares?— Yes, I bought and sold, I think, two parcels of shares through Mr. Stuart. 182. Did you not purchase some shares in the Wakamarina Company?— Yes. 183. Did this company go into liquidation?—lt did. 184. Did you not create considerable disturbance with the directors of that company?—l do not remember doing so. I got my money back. 185. Did you employ a solicitor to go to the meetings ?—No, I did not employ a solicitor. In connection with the Wakamarina Company I acted as my own solicitor. 186. Did you not go to a meeting and have a long argument with the Hon. Mr. Hislop about those shares ? —I mentioned the matter to Mr. Hislop, yes. 187. There were very strained relations over this matter between yourself and the directors of the company : you went to several meetings of the company ?—I think I went to two or three. 188. Have you not had many transactions, both in buying and selling, with several brokers in Wellington ?—I bought shares through Stuart and Mr. Harcourt, and by post I bought from a Mr. Bate. Ido not know of any other brokers in Wellington whom I dealt with. 189. Have you always been on good terms with them with reference to your shares ? For all I know, yes. 190. Have you not had serious disagreements with three of the leading brokers in Wellington? —Not that I know of. 191. Have you not threatened legal proceedings against Stuart ?—I served him with a writ for the Tucker Flat shares, and got my money back. 192. Did you not threaten Mr. Hume with legal proceedings ? —Yes, I did, and I got my money back from him also. Those were some shares I purchased through Hume in a claim that was proved to have been " salted." I had bought vendors' shares, but the scrip could not be delivered. Finding that I could not get the scrip, I threatened Hume with a writ and got my money back. 193. You stated in your evidence that "an incident occurred " when you were in Wellington that induced you to " go slow " ?—That was so. 194. What was that incident ? —I had a warning sent to me respecting the company I had been seen in, and advising me that I had better go to Dunedin and look into affairs. 195. Was that warning anonymous ?—No. 196. Who sent it ?—A Mrs. Walmsley ; she was living at that time at Totara Flat, Sullivan's Lead. 197. That was the person you called on in my company ?—Yes. 198. Mrs. Walmsley wrote warning you against my company ?—She spoke to me, not wrote, and advised me that I had better, in my own interests, go to Dunedin and examine some of the books of the companies in which I told her I had been purchasing shares. 199. She told you that when you were on the Coast ?—Yes. 200. The day you visited her with me ?—I believe lam right in saying she wrote, but I could not say definitely from memory. 201. When did she tell you?— Subsequently to the day we were there.

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202. You called on her afterwards, then ?—Not at that house, but I have seen her many times since. 203. Where ?—ln Dunedin. 204. But before you went to Dunedin ?—I have no recollection of seeing Mrs. Walmsley in Wellington. 205. She called on you in Wellington ?—I have seen her. 206. It was her calling upon you in Wellington that induced you to go to Dunedin ?—Other people cautioned me, but she gave me the first hint that things were not straight. 207. This was the main cause of your going to Dunedin?—No. 208. But you stated in your evidence that "an incident occurred " ?—Yes, I was warned by other people apart from her. 209. Mrs. Walmsley warned you against me or against these companies?— She advised me to look into affairs generally. 210. When did you go to Dunedin ?—ln October, 1900. 211. You went down South in October to look into these companies' affairs?— Yes. 212. And you inspected the books and became alarmed? —I was very seriously alarmed. 213. And then you set about righting matters ? —I did. 214. In October ?—Yes. 215. In what way did you proceed to right matters?—By investigating the share registers. 216. That would not right matters. After your investigation, how did you proceed to right them ?—On the 19th March I caused a letter to be published in the Otago Daily Times, warning the public of the existing state of affairs. 217. But you say that you started in October ? —I could not do much to warn the public before March, because, only being a shareholder, I was not allowed to look at the minute-books ; but when I became a director I had a right, and demanded the minute-books. On those minute-books I prepared a letter which I sent all over the colony, warning the public. 218. You did not do anything between October, when you found out those alleged irregularities, and March ?—Not in the newspapers. 219. How did you proceed before you started writing to the newspapers ? —I wrote letters to you on the matter. 220. To anybody else ?—To Mr. Benjamin and others. 221. Did you do all this in October, immediately after you found out the alleged irregularities ?—lt might have been November; I could not answer to a day or two. 222. Was it within a month after your finding out about these irregularities that you wrote the letters ? —Yes ; I think it was about Christmas-time that I wrote to you. 223. Did you find out all these things in October? —I found out what could be found from the share registers; as I say, I was not allowed to look at the minute-books until I became a director. 224. You did all that you have done in the protection of the dredging industry and in the interests of the commercial morality of the people of New Zealand?— Yes. 225. Not for your own benefit?— Naturally I wanted to help myself. 226. Was there no animus ? —Not the slightest; no personal matter at all. 227. I suppose, when you found out that these companies were in the state in which you say they were, you would not have thought of selling shares in them, would you ?—I bought them all for investment. 228. As an honourable man, when you found the irregularities existing in these companies, that you say do exist, you, of course, elected to keep your shares —you would not put them off on to some one else ? —I did not find out about these companies until March. I found out certain discrepancies from the share registers, but I have before stated I was not allowed to look at the minute-books until I became a director. 229. In October you saw the share registers only ? —Yes. 230. Did you see the minute-book at all ?—Not until the 11th March. 231. You were aware of calls not having being paid, and other irregularities, in October ?—I was aware then that there was a good deal of money owing on shares, but I had not, in October, the knowledge that I have now of those who constituted the shareholders. I had made inquiries between October and March as to the stability of the various shareholders. 232. However, you knew in October, according to your evidence, that the shareholders in these companies were holding shares on which they were not paying calls, and the finances of the companies were weak ? —Yes ; I had a general idea. I looked over the share registers in October. 233. Knowing that you would have sold the shares if you had got an offer for them? —I wrote and demanded of you to take them over again, as it was through you I purchased. 234. Do you know of any other companies outside of those under review that have gone into liquidation ?—Yes, 235. You know there is a large number, do you not ? It is public property that fifty or sixty companies in Dunedin have gone into liquidation during the past twelve months? —I do not know the number ; I am only interested in the ones that I hold shares in. 236. You know that during the last twelve months there has been a very serious " slump " in Dunedin, and very great difficulty has been experienced in getting in calls in connection with the companies outside of those floated by Cook and Gray ? —There may have been difficulty. 237. You have shares in other companies ?—ln most of the companies in which I hold shares they are all paid up. 238. But you hold some shares that are not paid up ? —I hold very few that are not paid up outside of those I hold in Cook and Gray's companies. 239. You know that summonses have been issued by other companies?- That I cannot answer to.

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240. What is the amount of cash that you have paid into the four companies which have been referred to ? —I hold 1,000 shares in those four companies, and I have paid £100 and some fees. 241. £100 is all the cash that you have paid into those four companies ? —Yes. Then, in the Ngahere Company I paid £10 on the 100 shares which you sold me. I bought shares in the Dobson No. 2, which liquidated. I think I gave £56 for them. 242. How much did you get for them ? —I made a profit on the transaction of £3 10s. 7d. 243. Then, is £110 the total amount of the money that you have paid into the companies floated by Cook and Gray? —No; I bought shares through you in the Auckland Beach Back Lead Company. On your advice I took up fifty shares in that company, and paid you £5 for them. 244. That makes £115: is that all?— No. In the Boss Day Dawn Company I bought fifty fully paid-up shares. 245. What did you pay for them?—£37 13s. 6d. 246. From whom did you buy them? —I bought them through Mr. Stuart on the 27th July, 1900, and received the scrip on the 6th October, 1900. 247. That makes £152 13s. 6d. that you paid into the companies floated by Cook and Gray? — Yes. 248. You visited the West Coast in August, 1900?— Yes. 249. Was Benjamin with you? —He was. 250. What was your object in going to the West Coast ?—To look over the claims. 251. Did you visit them?— Yes; I visited, I think, the Lees Ferry, Ngahere, Tucker Flat, and other claims. 252. Did you meet the original owners of the claims? —I do not know 7 who the original owners are. 253. Did you meet Mr. Taylor ?—Yes. 254. He was the original owner of the Lees Ferry Claim, was he not ?—lt appears so now. 255. Did you not know at the time ?—No. 256. You did not discuss the value of the Lees Ferry Claim with Taylor, as the owner ?—I never discussed the ownership of any claim on the Coast with Mr. Taylor. 257. Did you meet Mr. Wicks?— Yes. 258. Did you speak to him about the value of the Wicklow Claim ?—No. 259. You swear to that ? —Yes. 260. Did you meet Mr. Scott, the manager of the Blackball Coal Company.—Yes. 261. You dined at his house?—l lunched with him. 262. Did you discuss the value of the Ngahere Claim with him ?—I mentioned having gone over the claim. 263. You went over it from his house, did you not?—l did. , 264. You knew Mr. Scott was the owner of the Ngahere Claim, did you not? —No, not at that time. 265. Do you swear that you never discussed with Mr. Scott, as owner of that claim, the situation and value of the claim ?—I discussed the Ngahere Claim with him, but I never asked him who was the owner of it. 266. Did you not know that he was the owner of the claim when you were having the meal in his house ?—No, I had no idea. 267. Did he not send a man to show you the way to the claim?— Yes. 268. And yet you did not know that he was the owner of it ?—No. 269. Did you meet Mr. Wild ?—Yes. 270. Did you know that he was the original owner of the Tucker Flat Company's Claim ?—I did not. 271. Did he drive you out to it ?—Yes ; he drove me round the roads by the Flat. 272. And got a man to prospect with you ?—We met a man prospecting by the side of the road, but I did not know that Wild had got him to prospect. 273. Did you discuss the value of the Tucker Flat Claim with Wild ? —I asked him what he thought of it. 274. But did you not know that he was the owner of the claim ? —I have subsequently found out, because I see it stated in the prospectus, but I had not seen the prospectus at the time. 275. Did you not go to the Coast with the object of seeing these claims and discussing the values of the properties with the owners ?—No. 276. Was it not after seeing all these claims that you bought the shares?— Yes. 277. It was after you had seen all these claims that you decided to buy into them ?—I cannot say that I saw all the owners of the claims, because I did not know who they were. 278. Did you meet these gentlemen whose names I have mentioned ?—I met Messrs Wild, Taylor, and Scott. 279. And Hargreaves ?—Yes. 280. He was the owner of the Golden Grey Claim, was he not? —I never knew that; it is news to me. 281. From your general impressions you decided that you would buy into some of these claims ?—Yes. 282. You knew that Benjamin and myself were holding subscribing shares in the companies? — Yes. 283. He was with you and we discussed the matter generally?— Yes. 284. You desired to become a shareholder, and asked me to sell you some of mv shares ? —I did. '

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285. And I declined to do so ?—I did not know that you did then. 286. Then, why did you not have them ? —I did buy some of your shares. 287. I know that I sold you shares in the Ngahere Company, but I am speaking of these other companies?— You told me that you would get the shares for me. 288. You asked me to sell you some of my shares in the Lees Ferry, Golden Grey, Tucker Flat, and Wicklow Companies, and I declined to sell, but told you that I knew of some one who had shares in those companies to sell ? —Yes. 289. I wired to him and you bought the shares at par?— That was so. 290. And he drew on you through the National Bank for the money ? —Yes, I think so. 291. Did he draw on you for £50 ? What was the amount of Mr. Choyce's draft?—l think it was £50, but Ido not remember the amount; the books speak for themselves. 292. I want to know the amount you paid to Mr. Choyce for the 250 shares that you bought from him in each of those four companies ? —My ledger shows that I paid £25 2s. for each of those parcels of 250 shares. 293. You bought the shares on the 29th August; and will you swear that you paid £100 to Mr. Choyce, or that you only paid him £50 ?—I am not prepared to swear at all on that point. I can only say that I paid £100 and a few shillings for the shares and fees. 294. Mr. W. Fraser] Did you buy shares in these companies from any one other than Mr. Choyce ?—No. 295. Then you must have paid the money to Choyce ?—The books will show you what I have paid. 296. Mr. J. Allen] Did you pay anything direeft to either of the companies?— Yes, I know that I paid something to them, because I had to send a cheque for the fees. 297. But beyond the fees did you pay anything?—l paid the application-money and the allot-ment-money. 298. To whom ?■—-That I am not prepared to answer, but I could send you up letters from Dunedin to show. 299. Mr. Cook] Here is the transfer of the 250 shares in the Lees Ferry Company: what is the consideration shown on that transfer, Mr. Easton ?—£l2 10s. 300. Is that transfer correct or incorrect which shows that the consideration was £12 10s. in connection with the shares in one of the companies ? —I will not swear to that, but we will presume that I paid Choyce £50 for the shares in the four companies, and the other £50 to Cook and Gray's companies. 301. But surely you know whether you put in the transfer a true consideration or a false one ?—I am not going to swear to that without looking at the fly-leaf of my old cheque-book which I left in Dunedin ; but we will take it that I paid the money by two cheques, one to Choyce and one to your office. 302. I want to show that on the 29th August, when you bought the shares, you knew that the allotment-money was not paid on them ? —I understood on buying those shares that I had to pay 2s. on each of them. 303. I will put it in this way : that if you did pay Choyce the application-money only, and paid the allotment-money to the office, you knew on the 29th August that the allotment on those shares had not been paid by Choyce, because you paid it ? —We will take it that I paid the applica-tion-money and the allotment-money—that is, £100 on the 1,000 shares. 304. The Chairman] The point at issue is who paid the allotment-money ?—My books show that I paid 2s. a share—that will be the application-money and the allotment-money, because I have paid no calls. Though I will not swear to it, I will admit that I paid the allotment-money. 305. On the 29th August?— Yes. 306. Mr. Cook] When you were on the Coast you knew that no dredges were ordered for these companies ?—No ; I had not made an inspection of the minute-books then. 307. You knew when you paid for these shares that no dredges were ordered?—l had heard in respect to the three companies whose claims were on the Grey Biver that no dredges had been ordered, but I did not know the position with regard to the Tucker Flat Company. 308. You also knew that no calls had been made on the shares in those three companies?—■ Yes, through you. 309. You bought the shares with the application-money only paid, and you were aware that the directors of the companies had decided not to incur large expenses until it was seen whether the Grey Biver dredge worked successfully ?—I never heard anything about that. 310. When you bought the shares did you not know that the Grey Biver dredge was about to begin to work? —I believe the dredge began to work in September ; I was on it. 311. You knew when you bought the shares that the results of the Grey Biver dredge were being awaited before expenses should be incurred ?—No ; that I did not know. I had never met any of the directors except yourself. 312. You met Taylor ?—Yes ; but he was not a director. 313. You purchased these shares thinking that, when the Grey Biver dredge worked, the Grey Biver generally would " bump," and that there would be a profit on the shares, did you not? —No. 314. Then, what did you buy them for ? —To invest the £1,000 in. 315. You swear that? —Yes ; because all the shares I was buying were paid-up shares. I was likely to go Home, and I wanted to hand them over to an attorney; I was not buying contributing shares. 316. But your shares in the companies under review are all contributing shares, except those in the Boss Day Dawn Company: the shares you paid £115 on are all contributing shares ?— Certainly; but, with the exception of those, my holdings are nearly all paid-up shares.

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317. You thought of going Home? —Yes. 318. When did you decide not to go ? —I have never decided not to go Home. 319. You expected to go Home then, so you must have changed your plans since ? —I am not tied in any way, or to any one. 320. Were you thinking of going Home in October or November ?—Yes; I had letters from England that might have occasioned my presence there last January. 321. Were you thinking of going Home in November?—l do not think I was in November. 322. Did you get some serious news at the end of the year calling you back to England ? —■ Yes; I lost an uncle in England at the end of the year. 323. And you thought of going Home then ?—I am trustee for a good many ladies and gentlemen at Home, and was asked to return on other business. 324. Did you contemplate going Home in December or January ? —I have contemplated going Home in many months. 325. When you were on the Coast you met Mr. Faithful, did you not ? —I did. 326. You knew that he was a mining expert—a mining engineer ?—I should not call him an expert; I knew him as a clerk to Messrs. Cutten Brothers. 327. You knew that he was representing Cutten Brothers, and building dredges for them on the Coast?— Yes. 328. And you knew also that he reported on several claims? —No, I did not know that he reported on several. 329. Did you know that he had reported on any ?—Yes ; I was told that he had reported on the Ngahere and Auckland Beach Back Lead Companies' claims. 330. Did you talk to him about the value of either of those claims ?—Yes, I might have asked him what he thought of the claims. 331. Did you meet Mr. Don?— Yes. 332. He reported on all the other claims under review ? —He reported on some, as the prospectuses show. 333. Did you discuss with him the value of the claims ?—I asked him what he thought generally of the industry. 334. How long were you on the Coast ? —I believe I left Wellington on the Ist August and came back some time in September. 335. You were there five or six weeks ?—Yes. 336. You met Messrs. Don, Faithful, Taylor, Scott, Wick, and Hargreaves ?—Yes, and a great many other gentlemen. 337. They were the owners and the experts who reported on the claims ? —As, I said before, I never knew that they were the owners. 338. From their opinions on the West Coast generally, and your impressions of the Coast, you made up your mind then to try to obtain money from England for investment ? —Yes ; as I have said, I was commissioned before I came out to look out for investments. 339. Have you ever had any money sent out for investment ?—Yes, and I have returned it. 340. When did you get it ?—ln October, and some more in November. 341. When you bought the shares from Choyce, Mr. Benjamin and I were there : you knew then that I had floated these companies, did you not ? —Yes. 342. And that I was a director?—l heard that you were a director of some. 343. Of those four companies that have been referred to ?—Yes ; but I would not swear to it. 344. You knew that the office of the companies were at Cook and Gray's office? —Yes. 345. And that Hoisted was the secretary ?—I was under the impression that there was an independent secretary. 346. Did you write to the secretary ?—Yes, I addressed my correspondence to the secretary. 347. You did not know Mr. Hoisted then?—No ; I had never met Mr. Hoisted. 348. Had you had any correspondence with him prior to that ?—Yes. 349. What about ?—I think about the Boss Day Dawn scrip. 350. Did you write to him on other matters—asking him to advise you on mining generally ?— Yes; I asked him to give me his opinion of the Junction Electric Claim. 351. You knew there was such a man, and you had corresponded with him ?—Yes. 352. You knew he was manager of Cook and Gray's office ?—I understood that he was the secretary of these companies. 353. But you knew that he was the manager of Cook and Gray's office ?—No, certainly not. 354. Is it not a fact that you were quite satisfied with the whole of the Grey Biver ventures, these included, till about the end of October, when you found out than you were holding more shares than you could carry?— Certainly not. 355. Do you swear that at the end of October you did not find that you were holding more shares than you could carry ?—Certainly I swear that. 356. You became alarmed at the number of shares you were carrying ?—I became alarmed when I saw the state of the share registers. 357. You were not carrying more shares than you could comfortably pay for ?—I certainly swear that. 358. Nor were you doing so at any time ? —Not with regard to these companies. 359. You were never short of cash yourself?— Not as regards these companies. 360. On the 15th October you wrote to me as follows : —■ Wellington, ISth Ootober, 1900. The enclosed paragraph was in Friday's paper. In my opinion, letters should appear in the Wellington papers giving tbe results of the borings and tests on some of the oompanies we are interested in ; this might rally the public a bit, and stop the panio that seems setting in. I have received a notice to pay calls on Old Diggings ; could you use your influence with the directors to postpone ordering the dredge until the claims adjoining have ?

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When will the Dobson and Nelson Creek start ? I notice Ross Day Dawn are quoted here at 3s. discount. Is there any reason for this ? Write a line when you can, giving all the latest. Have you sold any further interest in our five claims ? and on the 21st November I received your wire from Alexandra, as follows : " Have you got the two others ? Am on tour round, returning Dunedin about Tuesday. What news from Coast "?— Yes, that is so. 361. When you were short of cash—after you wrote that letter that I have just read —did you not try to sell your shares ?—They were unsaleable. 362. Did you try to sell them?—l asked you to take them over again when I found out from the books the state of the four companies. 363. You made several subterfuges, did you not, to try to get me to take them ?—I do not remember. 364. You made threats to induce me to relieve you of them?—No; but I would not swear to that without looking at my correspondence. 365. After .you had failed to get me to take these shares off your hands you started the agitation to pull down the companies ? —My reason for asking you to buy the shares back was that you gave me to understand that the shares in all the Cook and Gray companies were held by substantial people, and on that assurance I thought I was safe in taking them. 366. What I want to know is this : After you failed to get me to take these shares from you, it was then, and not till then, that you started this agitation to try to pull down the companies?—l went on the boards of these companies for the purpose of bringing about liquidation when I discovered that one-half of the calls on the shares were not paid. 367. Was it not after you threatened me with all manner of things, and after I definitely refused to relieve you of your liability by taking the shares off your hands—was it not then, and then only, that you started this agitation against the companies ?—No, certainly not. 368. You swear that it was not till after I declined to relieve you of the shares that you started the agitation?—l did not start my public agitation until the 19th March of this year. 369. Before concluding my examination of Mr. Easton, Mr. Chairman, I will read a few letters and telegrams in reference to these shares, which I have received from, and despatched to, Mr. Easton. Letter, Easton to Cook. 21st November, 1900. I received your wire at Alexandra saying you had no further Coast news. You will have heard of the Grey River return of 39 oz. I thought this return would have hardened Dobson, but it seems the reverse, there being sellers to-day, 17s. 9d. to 18s. Not being able to sell any of my holding, and having to pay the bank 5 per cent, on the cheques I am drawing against my deposit-note, which the Sydney office holds until the 10th January next, I am writing to ask you if you oan manage to let me have a cheque for the half of the two shares you sold in our options on the Nelson Creek, together with a receipt for the balance of my interest in them. The monthly calls I am paying on Old Diggings, Buller Junctions, Perry's R.ward, &c, are making a considerable inroad on my capital, and with the exception of Charlton Creeks, all my other holdings are unsaleable. Buller Junotion transfer I paid another ss. on. Do you know how much more is due, as I have just had a demand for £3 15s. I suppose you have heard of the Thompson Bullock Creek swindle. It has come at an unfortunate time, as the Wellington people were just ready to go in for the Coast; Bishop having also reported on Kohinoors. I shall try and get out, but these shares have also dropped. I saw Cray a few days ago, and have had a long letter from Jones ; both think the Grey Company will be good to 50s. Letteb, Easton to Cook. 30th November, 1900. I hope you have had my letter of the 21st instant. I shouldEhave been glad of an answer about the Waihi Mines, so that I could advise my friends by the 'Frisco mail, leaving on tho 3rd proximo. There being no market value (even at a discount) for any of the shares you sold ma, I am endeavouring to reduce my liabilities, and with this view have written you at your office here a formal notice to withdraw any application for the shares I applied for in Ruby Creek Junction. Will you also return me the £10 I paid you on the Ist July last for 100 Ngaheres ? If you will remit me these sums, together with the half of the interests you have sold in our options, I shall be obliged, as until I cau get my money over from Sydney I am finding it difficult to meet the calls falling due on the other shares I purchased from you. Can you suggest any means by which I can get out or considerably reduoe my liabilities in connection with Tucker Flat, Lees Ferry, Wioklow, and Golden Grey? Be sure and use your influence with your other directors not to proceed with these companies until the claims have been thoroughly tested. Telegram, Easton to Cook. 4th December, 1900. English letters. Want to return. Can you place the thousand shares Choyce? Wire terms. Suppose must lose. Telegram, Cook to Easton. sth December, 1900. Wire received. Writing. Telegram, Easton to Cook. sth December, 1900. Anxious to dear. Wire best offer. Home troubles. Letter, Cook to Easton. Bth December, 1900. Am in receipt of your two letters, and also of tho formal one addressed to me in Dunedin re Ruby Creek Junction. As requested, I enclose cheque for £5, the amount paid by you, and shall be glad if you will return to me the receipt I gave you. You will remember I paid £40 for an extension of time for this property, but I send you amount without deduction. Be Ngahere : I am under the impression that I gave you a transfer of shares in return for amount paid re Upper Nelson Creek. I have only reoeived cash for one of the shares sold, but expect the other daily, and will forward amount due you then ; but what are we to do re the cost of prospecting which I have inou;red ? Are you prepared to pay your proportion, or do you desire to part with your whole interest? Be Buller Junction : I enclose 55., cost of transfer. These are 15s. shares, and, I think, paid noiv to 13s. 6d.; but I unfortunately left my book in Wellington, and cannot speak positively. Be Grand Junctions and other Auckland stocks : I would rather not advise you on these, or send the information I obtained, as it may not turn out exactly as anticipated. I will see one or two men here re the sale of your shares in Grey River olaims and Tucker Flat, but am too busy to go out till Monday or Tuesday. Should the Grey River give a good return this week there should be no difficulty in disposing of them.

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Telegram, Easton to Cook. Bth December, 1900. Must quit thousand group shares. Wire without fail your results. Telegram, Easton to Cook. 12th December, 1900. Cannot understand your silence. Please wire fully. Telegram, Cook to Easton. 12th December, 1900. Wrote Saturday. No buyer yet for shares. Telegram, Easton to Cook. 14th December, 1900. Letter received. Make offer thousand shares. Musi sell urgent. Telegram, Cook to EASTOif. 17th December, 1900. Hope to obtain definite offer Wednesday. Telegram, Easton to Cook. 24th December, 1900. Please remit moneys paid re Shellback, Ngahere, and options. Quote offer for thousand shares. Wire date money will arrive. Most urgent. Telegram, Haston to Cook. 28th December, 1900. Why no reply to prepaid wire of 24th ? Don't delay wiring me to-day. Telegram, Cook to Easton. 29th December, 1900. Wires just received. Living in bush till 7th. Will probably then make offer for your stooks, but do not understand tone of your telegram. Telegram, Cook to Easton. 7th January, 1901. Sending written offer for shares purchased from me. Letter, Cook to Easton. Auckland, 9th January, 1901. Enclosed I hand you cheque value £120, which with the £30 you received from Kee makes the amount in full that you paid me for the interest in the Upper Nelson Creek claims. On my return from the country I received your wire asking me to remit moneys paid re Shellback, Ngahere, and options. Why you should ask suoh a thing is to me incomprehensible, and savours of the boy who took the toy he had played with for months back to the shop and cried for his money ; but, as I should extremely regret that you should be inconvenienoed by anything you purchased from me, I will take back the whole of the shares you bought from me, at the price you paid for them. I must insist on having all, and also that you take the British Victory shares that you sold me. Our business transactions will then be as if they never existed, and you, I presume, be satisfied. Telegram, Easton to Cook. 10th January, 1901. No letter. Forward receipt for £150 paid you 17th September. Wire what offer for shares per Choyce. Will he repurchase ? Telegram, Easton to Cook. 15th January, 1901. Aocept offer per letter ninth, provided included thousand shares per Choyce. Reply. Telegram, Easton to Cook. 17th January, 1901. Please reply to my telegram of fifteenth. Telegram, Cook to Easton. 18th January, 1901. Not buying Choyca's shares. My offer of ninth firm till noon Saturday only. Telegram, Easton to Cook. 22nd January, 1901. Written. Can you find purchaser group shares? Pressed. Return Home. Telegram, Easton to Cook 31st January, 1901. Unless you refund one hundred pounds and relieve me of further liability in group within week from date, shall place position before Ward and Minister of Mines. Reply immediately. Letter, Cook to Easton. Wellington, 12th March, 1901. Replying to yours of the 26th ultimo and 7th instant re Ngahere shares that you purchased from me, I have no knowledge of "giving you a written undertaking io return money for share 3 on which coull not be delivered," and can find no copy in my book of any suoh uudartaking; bat, if I did so, an! you evnnot obtain the scrip for these shares, I will perform my promise. lam making application to the company for my sorip, and on receipt of their reply will communicate with you. Your ol sing remarks re our business transactions are uncalled-for. Of tthe five parcels of shares you bought from me, four are at a premium (two at a very handsome one). I offered to take the whole back at what you paid, but it appears you want to take the profits and saddle me with a prospective loss. The gross misstatements you have made, both verbally and in writing, I am sure you will regret ere long. In October you found out these alleged irregularities, and from October to the 31st January you tried to dispose of your shares, making use of subterfuges about going Home, and eventually finishing with threats that you would place the position of matters before Ward : who is that Ward you referred to ?—Sir Joseph Ward. 370. Why did you want to place the position before him ?—Because I understood at the time that he was connected with the Mines Department. 371. You did not make that threat because you knew that I had had, in my business, to report on the Ward Association? —No; I had no knowledge of that. 372. You are quite sure that you did not know that I was connected with that ?—Certainly. 373. You had not the slightest idea?—l never made it my business to investigate your business. 374. And yet you stated in your evidence-in-chief that your reason for relying on me was that you knew that I was employed as a liquidator by the Supreme Court ?—I did not know that you had any connection with Sir Joseph Ward ; I knew that you had acted as liquidator to large estates. 375. Mr. W. Fraser] With regard to the shares that you bought from Choyce, you alleged that they were transferred to you while there was a call unpaid by Choyce ?—Yes, on the shares in the Tucker Flat Company.

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376. Did you, when you bought the shares, think you were buying them with the call paid up, or were you buying them at a discount, or what ?—I was buying them at par ; but I had no knowledge on the 29th August that a call had been struck on the 10th August. 377. Then, if Choyce had paid the call on the shares you would have bought them virtually at a discount ?—I should have had to pay £25 more. 378. But you have never paid that call, have you ? —No ; my solicitor told me that Choyce was liable for it. 379. That is the question I have asked you : you said just now that you bought those shares without knowledge that there was a call outstanding?— That is so. 380. You did not think that you were buying them at a discount ?—No. 381. Since then you have discovered that a call had been made on the shares : then, why do you now repudiate your responsibility for that call ? —I consulted my solicitor in Dunedin, and he said that the call having been struck before I purchased the shares it was due from the seller. Choyce was liable for it, and I should have to repay him ; but he advised me not to pay any more calls in the Tucker Flat Company until the matter of that call had been settled, because the books of the company showed Choyce to be owing £25. 382. Then, if Choyce paid that call you would feel bound to repay the call to Choyce ? — Certainly. 383. Mr. J. Allen] Did not the books show that Choyce was owing £12 10s. allotment-money when you purchased ?—I had not seen the books then. 384. Did you not know that the allotment-money was unpaid ?—No. I understood at the time that I had to pay 2s. on each share. 385. lam talking about the allotment-money ?—No, I was not aware. I understood, in taking up the shares, that I had to pay application and allotment on them. 386. To whom?— That I cannot tell you. 387. Had Choyce paid the allotment?— From the transfers it appears that he had not. 388. Did you know whether he had or had not ? —I did not know at that time. 389. To whom did you pay the £12 10s. allotment-money?—l would not swear to that, as I have said before, but it appears that I must have paid it to the secretary to the company. 390. What is the difference between the position as regards the allotment and the first and second calls : is there any difference in the principle ?—No, not that I know of. 391. Mr. Guinness] You bought the shares from Choyce, Mr. Easton, on the assumption that application and allotment calls of 2s. had been paid ?—Yes. 392. When you were drawing up the transfer and signing it, must it not have been brought under your notice that Choyce had only paid the application-money, because' in your transfer you filled in that you paid to Choyce only £12 10s., whereas if he had paid the application- and allot-ment-moneys the transfer would have been filled in for £25 ? —lt would ; but, as I say, I knew that I had to pay the £100, and did not scrutinise the transfers as closely as I might have done. I could settle the whole point by getting my papers up from Dunedin, and sending you the whole of the correspondence and the receipts. At present lam only in a position to say here that I paid the £100 on the shares. 393. Did you see Choyce yourself ? —No. 394. Who gave you the transfers ? —I think they came from Auckland. 395. Who actually handed them to you, and asked you for the cheque ? —I believe Mr. Cook handed them to me. 396. Mr. Cook] Did they not come from the National Bank : did not Choyce draw on you through the National Bank ?—Yes; I think I did get the transfers through the bank. 397. Mr. Guinness] Why did you not accept Cook's offer made to you in January, when he offered to buy back all those interests for what you paid to him, provided you gave him back the purchase-money of any shares that he bought from you ?—My letter, which I will read, will show •that in one case I had sold some of the shares, and Cook made me that offer subject to my returning everything. I wrote him on the 21st January, 1901, as follows: — Dear Sir, — Post-office Box 490, Dunelin, 21st January, 1901. Received your letter enclosing cheque, £120, due to me as half of the money you have received from sales of purchasers of interests in our five options on Upper Nelson Creek. Mr. Brent, solicitor, having told me he had paid you £60 for the last interest, I was not aware that you had received this money, and therefore withdraw my offer contained in my last letter. Are you agreeable to allow either Mr. H. Jackson or Mr. Barney to report on their respective values ? On the other side is a statement of what I have purchased of any through you, with my remarks thereon. If you care to repurchase I shall be thankful to terminate such unprofitable business transactions. lam willing to keep Buller Junctions and Perry's Reward, and to give you credit for 50s. in British Victory. Failing to get a purchaser for the 1,000 shares in Tucker Flat, Lee's Ferry, Wicklow, and Golden Grey Companies (and it is an impossibility to do so in Dunedin), I shall have them liquidated. Had you told me how the books of the companies stood, of course, no one in their right senses would have taken the shares. Yours truly, W. R. Cook, Esq., Messrs. Cook and Gray, Auckland. Herbert E. Easton. 10th July, 1900.—100 Shellbacks, £75 :on that date (10/7/1900) of no value; at present date 2s. per share only is stated to have been paid up, but, in reality, it has not been all received, and, practically, the company only exists on paper. 100 Old Diggings, £7 10s.: sold. 100 Buller Junctions (paid to 11/3), £56 ss. : could have been bought on 10th July, 1900, on 'Change, in Dunedin, at a considerable discount; with calls, they now stand me in £71 10s. sd. 100 Ngaheres (paid to 25.), £10: of no value; and no sorip has been received, as promised, on your receipt. 100 Perry's Reward (to Is.), £5 : now paid up to £50 2s. ; were at a discount on 10th July, 1900; cheque, £153 15s. 50 Auckland Beach Black Lead, £5 ; bought per you, 4th May, 1900 ; valueless. 100 Happy Valleys, bought on 13th August, 1900, at par on this date ; were sold on 'Change at a disoount.

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398. The Chairman] Did you post that letter to Mr. Cook?— Yes. On the 10th July I paid Mr. Cook £75 for 100 Shellback Company's shares. I wrote to Mr. Cook on the 7th March, 1901, but not receiving a reply I went to a firm of lawyers and got them to serve a summons; but I withdrew the summons because the expenses w r ere getting more than the £10 was worth. 399. Mr. Guinness.] Is that the only explanation that you can give of why you did not accept Mr. Cook's offer ?—Mr. Cook made that offer conditionally that I returned everything, which I could not do, because I bad sold some of the shares. 400. The Chairman] Did you sell them at a profit ?—I made a profit of £1 12s. 4d. on the Old Diggings. 401. Mr. Carncross] With regard to this offer of Mr. Cook's to take back the shares, you say you could not do so because you had already parted with some of them : did you communicate with Cook, telling him that you had sold certain shares ? —Yes. 402. And did he repudiate his offer on the strength of that? Did you attempt to negotiate with him even though some of the shares had been sold?— Not after that, because Cook's offer held good only up to a certain time. 403. You did not think it worth while to get a renewal ?—No. 404. Did you not make an attempt to pursue negotiations?—l wrote to him. 405. What I want to know is this : Did Cook at any time refuse to take the shares back on the grounds of your having sold some of them ?—Yes ; I had to give them all back or none within a certain period of time. 406. Did you ask him to take them back again after that period of time had expired ? —No, I did not ask again. 407. Mr. Guinness] You assumed that he would refuse because you could not comply with the terms of his offer ?—Exactly so. William Bichaed Cook in attendance, and further examined on former oath. (No. 13.) Mr. Cook : I would have liked to have written out my statement and read it to you, but my time is limited, so I have got a partly written statement, and will read it as far as it goes. I may say that I have taken Mr. Easton's evidence as the basis of my statement. The first point is with reference to the articles of association. I wish to state that these were prepared by the companies' solicitor, and he alone is responsible for them. I never saw them, nor at any time made a suggestion relative to them. With reference to " shares being allotted to office clerks" : These were allotted during my absence from Dunedin by the directors of the companies, and without my knowledge ; but I am informed that Mr. Mace, who holds the bulk of them, is one of a syndicate formed in Wellington, and the members of the syndicate asked him to take the shares in his name, but when this agitation was started the others withdrew, and left Mace to carry the responsibility. He states that he will get assistance, and be able to meet his liabilities ; his holding is large, but he can and will pay. As to " offices of companies being registered in Cook and Gray's office " : This was done by the contributing shareholders, and the companies could be removed at any time if the shareholders so wished. I have never used my influence to favour this, but cannot see that there is any harm in it. I would have liked to mention some other companies in a similar position, but I am without data. " Employes acting as secretaries " : Hoisted was manager of the firm's Dunedin office, and it was part of his business to act as secretary to the companies. He had the power to refuse or undertake any business, and acted as secretary to the companies, taking his remuneration, and paying it into the account of the firm. The directors had power to remove him at any time, and he was never interfered with or influenced in any way by myself. One or two companies, I might say, that were in that office have been removed from it by the directors. " Brokers receiving brokerage on shares upon which no money has been paid " : I find that the gross amount that has been received in this way from the seven companies under review amounts to only £33 155., and the secretary states in evidence that it is customary for application- and allotment-money to be paid together after allotment, so that the error—if error it is—might easily occur. "Misrepresentation on prospectuses": Mr. Easton states that "William Gray, in defending an action for payment of allotment-money on shares held by him, repudiates shares on the grounds of misrepresentation." I have not seen Mr. Gray's defence, but if he states that I made any misrepresentations to him he states that which is untrue. I am informed that the Magistrate, without hearing my evidence, gave judgment against Mr. Gray, and stated that there had been no misrepresentation. " Directors passing transfers at a time when money is owing to the company by the seller " : Not having attended the directors' meetings I am not responsible for what was done there. " Vendors making a profit on liquidation upon shares that have cost them nothing ": This has not been done by the vendors to these companies; no one has, to my knowledge, made a shilling. The costs of reports and preliminary expenses were very considerable to me. " Directors receiving fees whilst almost entirely neglecting the business of the company " : If I did not attend the directors' meetings I gave as much time to the companies on the West Coast, and paid my own travelling-expenses. A fixed sum was voted to the directors and divided as they deemed well. The amount paid for my services was not asked for or received by me, but was paid into the firm's office, and the clerk's receipt obtained. I never handled a sixpence, nor, until my attention was called to the fact by Mr. Easton's letters, did I know that anything was paid. " The formation of secret rings for speculative purposes": I know nothing of this, and the statement has no foundation in fact. " The No Town No. 2 Company and Mr. Jackson's report" : Mr. Jackson reported on the adjoining claim, and received a fee of £75—twenty-five guineas in cash and fifty fully paid shares. His report was reprinted on the prospectus of the No Town No. 2 Company, and it was stated in large type that " the report is on the No Town Creek Gold-dredging Company's claim, which immediately adjoins the No Town No. 2 Company's claim." Mr. Easton's statement that "Mr. Jackson never made such a report " is wilfully misleading, and the statement

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that he gave me to understand that he had not done so is untrue, as I have not spoken to, nor had a communication from, Mr. Jackson since the prospectus was issued. The facts in regard to Mr. Jackson's report are as follows: In 1899 I arranged with him to report on various properties, agreeing, at his suggestion, to pay him his out-of-pocket expenses in cash, and his fee in paid-up shares on the successful flotation of the company ; where this was not done his charge was to be £5 ss. a day and out-of-pocket expenses. I produce a letter, dated 19th April, 1899, in which Mr. Jackson states, "I shall be glad to report on the other ground for you; my terms are £5 ss. per diem and out-of-pocket expenses." In July, 1899, he reported on the Nelson Creek property, for which he was paid by that company. He also reported, for me, on the Dobson No. 2 and the Three-mile Greenstone Claims, and charged me £26 ss. in each case, which I paid him in cash. In November, 1899, he wrote asking for some paid-up shares in these companies, but, as he had received his fees in cash, I did not feel inclined to pay twice, and wrote him accordingly. I produce his letter to me, dated 14th November, in which he states: — Extract prom Letter, Jackson to Cook. 14th November, 1899. It is a week now now since our last conversation, which I was sorry not to have the opportunity of renewing before I left town. I had hoped that before now you would have sent me the paid-up shares to which I believe myself entitled in Dobson No. 2 and Three-mile Greenstone. There is nothing to be gained by want of frankness in a matter of this sort, and the longer the matter is left unsettled the greater I hope will be the value of the shares, and possibly your disinclination to part with them. My understanding of the matter is that I was to have some paid-up shares in each of the ventures reported on by me successfully floated, the number being left to your sense of the fitness of things and on this understanding of our very loose agreement; I have made no charge for report or expenses where my inspection did not enable me to report favourably— e.g., Duffer Gully, Ota Creek, Bulmer's, &c.; in the other cases my charge has been at least not exorbitant. If this is not a correct view of the position, please write and tell me so, and let me know what your views are in relation to it and what you purpose doing. To that letter I replied on the 17th November : — Letter, Cook to Jackson. 17th November. I am in receipt of yours of the 14th instant re the claims on the West Coast reported on by you, and at your request will give my view on the matter. The ar.angement made with you for reporting on claims in whioh I have an interest was that you were to receive a proportion of the vendor's share obtained by me on the flotation of the companies, or when this could not be done you would charge cash fee of five guineas per day and expenses. These were your own terms, and I willingly agreed to them. When you visited the West Coast it was to report on the Nelson Creek property, for which you were to be paid in ca.h. We then arranged for you to report on other claims for me, taking payment in shares. On your return from the Coast you informed me that it would be more convenient for you to receive cash for the reports on Dobson No. 2. and the Three-mile Greenstone Claims. Though I would have much preferred to have kept to the former arragement, I assented to your request, and paid you £52 lOi.. for the reports on the two claims. The time you were occupied with these properties and the Duffer's Creek did not exceed three days, so you have received upwards of £17 per day, instead of £5 55., the prioe agreed upon. When I paid you the companies were not registered. The Three-mile was not floated for some weeks afterwards, and to insure flotation I subscribed a thousand shares. Had the flotation failedl should have received nothing, and have lost the money I paid you in addition to other costs. You charged me your largest fees, and when they were paid I presumed I was under no further obligations to you. I have given you all you have asked for, and any alterations in terms was made by you and willingly acceded to by me, but to receive cash in lieu of shares and afterwards to expect some proportion of my interest savours of " wanting the cake after eating it." The account rendered by you in connection with the Ota Creek amounted to £41 lis. 6d., which wa3 paid. You did not visit these properties. Till now you have received all you have asked for, but if you think you are entitled to more let me know what it is, and on what grounds you claim it. Your suggestion that I should be disinclined to part with shares as they increased in value is incorrect. If you are entitled to any they are yours whatever the value, but at present I cannot see why you should have them. Be Deep Stream : I have sent Mr. Simpson a copy of your remarks, and believe he is acting in the matter. Then, on the 18th December I wrote to Jackson as follows: — Letter, Cook to Jackson. 18th December. I am now in reoeipt of option over No Town property, and shall be glad if you will forward me your report on the same at your earliest convenience. Mr. Parfitt states that the owners of the freehold and leasehold areas are willing to sell their rights, but that they can be acquired under the Mining Act by the deposit of £25 for each section. The creek is proclaimed a sludge-channel, and compensation has been paid the owners. The area of claim is 63 acres, and depth 27 ft. Kindly attach price to your report, and return to me as early as possible. I regret that any misunderstanding in regard to your charge should have occurred, and shall be glad if you will state, when you furnish your report, if you prefer to take your remuneration in cash or in shares. On the 20th December Mr. Jackson wrote to me as follows :— Letter, Jackson to Cook. 20th December, 1899. I have your letter bearing date 18th December, having reference to No Town. When I last wrote to you I suggested that the matter of misunderstanding with regard to previous reports, &c, need not be again referred to between us ; that the inoident might be considered closed. I shall be glad to furnish you with the report you require. My terms are fifty guineas on receipt by you of the report, or twenty-five guineas on leceipt and fifty fully paid shares in the company to be formed so soon as they are issued. On receipt of advice from you as to which of the above methods of payment you prefer, I will get out my report without any delay and forward to you, together with tracing of claim now in my possession. Or, if you prefer it, I will send you the tracing and take no further steps in the matter of the report. I will hand those letters in, sir, with the report. Though Mr. Jackson stated to me that his cash charge would be £5 ss. a day, he charged me at about three times this rate, and in the case of the No Town report for one day's work he charged £76 ss. Under these circumstances I felt justified in printing his report without paying him another large fee, and his hostile attitude is in consequence of that. The prospectus speaks for itself, and I deny that there was any attempt at deception. In this company Mrs. Cook and myself hold 1,000 contributing shares, on which we have paid £600 in calls. In connection with the Lees Ferry Company, the statements re the share register, articles of association, &c, I know nothing about. The management of the company rested with the directors, and I was absent from Dunedin nearly the whole time the company

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was in existence. Mr. John Don reported on the claim, and the statement on the prospectus as to its value was made by him. Mr. Somerville, the chairman of directors, instructed Mr. Chester to prospect the ground, and his report was unfavourable. Don, I believe, has since written to the directors, stating that he is still of opinion that the claim is a good investment. Mr. Chester has tested some properties for me on the Coast, but he was not employed by me to bore this area. Mr. Easton states that this was tested at the expense of the qualified contributing shareholders ; as Mrs. Cook andmyself hold one-sixth of the contributing shares, we therefore have paid one-sixth of the cost. Be Mr. Howes holding proxies : Mr. Howes certainly held my proxy; but he had an entirely free hand as to how he should use it. I understand that had my proxy not been used at the meeting in connection with the Lees Eerry Company, which has been spoken of, the results would have been the same. " The solicitor declined to give up documents until I (Mr. Easton) paid a private account of Mr. Cook's." Iv reference to this, all I can say is that Mr. Holmes has never rendered me an account; I have not had a bill of costs from him. "After the investigations made in March, 1901, by the special committee deputed by the Dunedin Stock Exchange"—of whose report you have heard —"this company was immediately removed from the list and quotations of the Exchange" : I wish to state again that I know nothing of that investigation by the Dunedin Stock Exchange. lam informed that the secretary of the company was not called ; I never heard anything about the matter, and if there was an investigation the evidence of one side only was taken. Mr. Easton goes on to say, " I find in June last Mr. Cook's late partner, Mr. William Gray, and other large shareholders gave evidence on oath, in defending payment in respect of shares, to the effect that Mr. Cook assured them that the liability of the shareholders in this company was only Is. per share." Well, you have heard Mr. Gray's evidence this morning, but I can only repeat my denial that I did state any such thing. The statement that " Cook had stated that this and other companies were entirely under his control, and he had arranged for the other directors to be his nominees," is absurd, and the fact that the directors were nominated by men that I never saw in my life until the last month or so —two men who signed these articles of association—proves that they could not possibly have been my nominees. "At the last meeting of this company, Cook's nominee and employe, Howes, stated that if a resolution to liquidate was carried the liquidation might be very expensive to the shareholders." I was not at that meeting; I do not know that that was stated, and Ido not know that it was stated that " Mr. Cook might claim to receive a dividend." I have stated that in the event of liquidation of any company that I was interested in and that had not worked, I should not claim anything for vendors' interests, and I never have claimed anything. Some questions were asked me re that sub-committee of the Dunedin Stock Exchange : I know nothing of that. Mr. Howard Jackson's letter, which was published in the newspapers, I have already referred to. As to the Auckland Beach Back Lead Gold-dredging Company, I cannot say more on that than I did before, because I have not had any of the books to see. The company was floated, and the statement that Mrs. Cook and myself paid £50 each for applicationand allotment-money on 500 shares each is correct. With regard to the Tucker Flat Company, Mr. Easton's statements are generally the same as with respect to the other campanies in reference to my being a director. Of course, I admit that, rightly or wrongly, I was a director, and that the office of the company was at Cook and Gray's offices ; but I maintain that everything that was done was done "over and above board," and any suggestion that we obtained more than we were entitled to will not hold water. That the course taken was unwise from the view of recent events I must admit ; it has brought all of us into trouble ; but that anything in it was wrong I emphatically deny. If I did do wrong it must have been in one way or the other—either in taking fees and not attending the meetings, or in being a director. Well, as a director I did not do wrong, because I never was at a meeting, with the exception of one of each company, and my vote was never recorded in auy proceedings of the company. As far as the fees were concerned, I have stated that there was an arrangement that I should give my services on the Coast, outside of the board of directors. I might add, in connection with the Tucker Flat Company, that I have paid in calls into that company £145, and that Mrs. Cook has paid £50—-together £195, out of the total amount paid into the company by all shareholders of £781; thus practically a quarter of the whole amount that has been paid in has been paid by Mrs. Cook and myself. In the Boss Day Dawn Company I hold 900 contributing shares, on which I have paid £900. I held I,ooo—that was the number allotted to me —but as a Mr. Bemington could not get shares when the allotment took place I transferred 100 shares to him. As I say, on those 900 shares I have paid £900. With reference to my at one time owing large amounts in calls, I might say that I was away from Dunedin from the end of September, 1900, to the 29th April, 1901, being constantly travelling. The directors and the secretary always knew that my calls would be paid, and we had it in evidence that they were always paid before any shareholder was sued. The total amount paid into the company is £5,547, my contribution of £900 being nearly one-sixth. With regard to the Ngahere Company and the alleged misrepresentation on the prospectus as to the situation of the claim, all I can state is that Mr. Faithful, who is a man held in great respect, reported on the claim, and described the situation in his report. I think that if the Warden's grant could be obtained —I am only speaking now from memory—it would show a plan on which Faithful based his report when going over the ground. I think that the statement as to the claim not being in the situation stated is entirely wrong, but I do not know sufficient about it to speak definitely. Eeliance was placed upon Faithful, who reported on the claim, and this, I may say, is generally done. The statements made by Mr. Easton as to Mr. Gray holding 500 shares in the company are a repetition of his statements in the same connection with regard to other companies, and it would be only a waste of time replying to them separately. A question was asked by one of the members of the Committee as to employes holding shares. I can only repeat that no employe of

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mine has at any time held a share on my behalf; they have gone into the business for their own speculation ; and I may say that at the time of the companies being floated everybody was going in for shares in dredging companies—drapers' assistants, juniors in offices, &c, were holding thousands of shares. That it was wrong I have not the slightest doubt ; but that my partner or employes went in to hold shares, or to help forward the company on my behalf, is absolutely untrue.

Thursday, 29th August, 1901. William Bichard Cook further examined. (No. 14.) Mr. Cook : When we adjourned yesterday, Mr. Chairman, I had not concluded my remarks in reply to Mr. Easton's charges. In his evidence Mr. Easton states that I bought shares in the Tucker Flat Company from a Mr. Benjamin, giving him a promissory note for them, and that the promissory note was dishonoured on the 15th July. The facts in reference to those shares are as follows : I had and have implicit confidence in the value of these companies, and in February last Benjamin was anxious to sell. He had seen Mr. Easton. I did not know of this agitation—though it was started publicly in March, it had been going on privately before then—and I bought the shares on a promissory note, which was due on, I think, the 20ch June. Early in June I was in Wellington. Two of the transfers had not been completed. I saw Benjamin re this, and asked, " What about meeting that promissory note ? " He replied, "We will leave it over until we know what has been done with the shares." When I heard Mr. Easton's evidence I wrote to the National Bank at Dunedin as follows, under date 19th August : — Will jou kindly inform me per return if a promissory note made by me in favour of Louis S. Benjamin for £125, due about the 20th June last, and payable at your bank, has been presented for payment; and, if so, when, and what was the bank's reply to same? Please reply at your earliest convenience and oblige. And on the 22nd August the bank replied :—■ The bill mentioned in your memo, of tbe 19th instant, under reply, does not appear to have been presented to us for payment. Since this inquiry was commenced—and not till then—Mr. Benjamin has issued a writ for the recovery of that promissory note. I place this evidence before you in order to show the antagonism that is being displayed towards me, and to show that the statement in Mr. Easton's evidence that I dishonoured the promissory note is absolutely incorrect. With reference to the statements made by Mr. Gray yesterday, I am sorry that I have not got my private letters with me, for I would have liked to place before you some of Mr. Gray's letters. He stated that I, said that only Is. per share would be called up in the four companies that have been mentioned, unless the shares went to a premium. On leaving here yesterday I searched the "Mining Investors' Guide" which was published in January of this year, and found that shares in the Golden Grey, Lees Ferry, Wicklow, and Tucker Flat Companies were, for some months after the companies were registered, quoted at considerable premiums—generally about 100 to 150 per cent. ; so that it will be seen that Mr. Gray and others who made that statement had an opportunity of making a considerable profit on their shares by selling at that time. I also refer to the figures given in the " Mining Investors' Guide " in reference to the shares in the companies named in order to show that Mrs. Cook and myself could, had we so desired, have made substantial profits. Shares in the Boss Day Dawn and the No Town No. 2 Companies also went to a premium, so that in all those companies we could have made very handsome profits on the small amounts which were then called up; but Mrs. Cook and myself went into these companies for the purpose of investment, and our money is still in them. I have said that I have implicit confidence in those companies, and am sure that if properly designed dredges were put on profitable results would ensue. With reference to the results obtained from the Lees Ferry Claim, I may say that I saw Mr. Don, the original prospector of the claim, and he informed me that his opinion was in no way changed, and that the boring operations were conducted with a bore that had a valve of 5 in., and it was impossible to lift the gold from off the bottom. Ido not know about that, but he told me that it was impossible to test the ground with such a bore. Now, I wish to point out that the wisdom of the directors of these companies in not building dredges has been proved by the fact that the two dredges that were put upon the Grey Biver —the Dobson No. 2 and the Grey Biver Companies'—had ladders of, I think, 22 ft., or, at any rate, not more that 25 ft. in length, and since those dredges started working the river has been bored, and the depth of the wash found to be 47 ft., so that the ladders did not reach more than 20ft. of the gold-bearing wash. Now, had the directors of the three companies having claims on the Grey Biver which have been referred to done what we are told should have been done—that is say, go right on—the whole of the capital would have been called up, and the whole of the money lost. But the directors kept back ; they said they would await results; they would wait until the dredges already built had proved suitable to that district, or had proved the district; and had it not been for this agitation that has been raised by Mr. Easton and his friends simply for the purpose of escaping their liabilities, because they were carrying too many shares, as was shown by documentary evidence yesterday, proper dredges would have been put upon the Grey Biver, and to-day we should have had a dredge with a ladder 50 ft. long, proving whether we were right in going on or not. Almost without exception the shareholders in these companies are substantial men. The exceptions that have been named are, first, Mr. Mace, who informs me that he had a very powerful syndicate at his back in Wellington —I should have liked him to have been called—but that when this agitation was started they retired and left him to carry the burden himself. He is now making arrangements, and I believe has paid a considerable amount off his liabilities since this inquiry commenced ; I cannot speak positively as to that, but I understand it is so. Now, all the other exceptions are men of position, and can pay their calls ; but if there is any weak one among them he has had opportunities to unload his shares to more substantial men. I shall not detain

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you more than a few minutes, gentlemen, but I may say that, having had the opportunity on Tuesday of looking into the books for the first time, I took out a few figures. I found that from the seven companies under review—that is say, the Wicklow, Golden Grey, Ngahere, Lees Ferry, Tucker Flat, and No Town No. 2—the total brokerage received by Cook and Gray amounted to £1,094; but out of that Cook and Gray paid large sums—it is impossible to tell how much without their books—to brokers and other offices who assisted in the flotation. The total amount received by Cook and Gray for secretarial fees amounted to £525, but against that must be placed the salaries of the men employed in the office, and the rent, which were, of course, paid by Cook and Gray. The directors' fees amounted to about £130, but to be on the safe side I have put it down as £140. Those amounts added together make a total sum of £1,759 received by Cook and Gray from the companies. But against that I paid all the costs of the engineers' reports on these claims—and many other claims which were condemned in the report ; it was only those claims on which there was an undeniably good report that were put upon the market. I cannot give you the cost of these reports, because I have not got the particulars with me ; but I spent in reporting and prospecting on claims on the Grey Eiver and in its vicinity from £1,000 to £1,400 out of my own pocket. Now, the total amount paid into these seven companies in calls from all sources is £11,932, and out of that amount Mrs. Cook and myself have paid in cash £2,100, or nearly onefifth of the whole amount paid into the companies. Mrs. Cook and myself stand to-day with liabilities of £5,000 in connection with these companies, which we are prepared to pay. 1. Mr. Herries.] Is that your present liability—l did not quite catch what you said ?—Yes, in addition to the £2,100 paid in cash. Not only are we prepared to pay the amount, but we shall be very glad to pay it in order to see the companies gone on with. Now, I think these figures will show that I never went into these companies for speculative purposes. As I stated before, the shares in these companies went to a considerable premium on the small amount paid up soon after they were registered, and both Mrs. Cook and myself could not only have got rid of all liability in connection with them, but we could have made a profit of three or four times the amount we originally subscribed. We went into the companies for the purpose of investment, firmly believing in the value of the companies; and had we not believed in them the companies, as far as I am concerned, would never have been floated. And I think that our belief, not only in the value of the companies, but in the proper manner of conducting them, is shown by the large amount that we paid into them. With reference to the brokerage of 2| per cent. I have been given a number of balance-sheets, which I shall not read, but which I should like to hand in—balance-sheets of fifteen or twenty other companies—showing that it was the custom of brokers to charge an overriding commission of 1J- per cent.—-that is to say, if a broker was intrusted with the flotation of a company at 2-J- per cent, -commission and some of the shares were sold by another broker, he charged his 2J per cent, on the whole capital in addition to the 1J per cent, paid to the other broker on the shares sold by him. In the flotation of the Cook and Gray group of companies nothing of that kind has been done. I might also say that in the flotation of many companies 3f per cent, commission has been charged, and in some cases as much as 5 per cent. I will hand these balance-sheets in for the information of the Committee. I have stated, sir, that there are other companies that have had their burdens to carry. On looking up the " Mining Investors' Guide " published in January, I find that twenty-nine companies have gone into liquidation, and in addition to that number several others are likely to liquidate. Since that date —January, 1901 —many more have gone into liquidation, outside of those floated by Cook and Gray —to my knowledge, practically as many again. In conclusion, I would like to say that it is now upwards of fifteen years since 1 have been in New Zealand, and during that time I have conducted a large business—l have been intrusted with much important and confidential business throughout the colony—and up to this there has never been a suggestion made against me of any irregularities in connection with my business. I have enjoyed the confidence of the whole community ; and it is a strange thing that we should have to wait for a man to come from England —a mining speculator, the total amount of whose investment in the companies under review is £125 —to cause this strife, simply in order to get rid of his liabilities. I maintain that, had it not been for Mr. Easton's action, the shareholders would have paid up, and those who took more shares than they could carry would have had the opportunity of selling at a profit to men who could have paid, which is generally done in mining all the world over. Mr. Easton has been in constant communication with these shareholders, stirring up strife, and the statements that have been made by many of them—l say this advisedly—have been put forward by arrangement for the sole purpose of escaping liabilities. That is all I wish to say, sir. The Chairman.] You will remember, gentlemen, that I sent telegrams to the Wardens at Greymouth and Hokitika, inquiring as to whose names certain mining claims are registered in. I read out the reply received from the Warden at Greymouth on Tuesday, and I will now read the telegram received from the Warden at Hokitika in reply to mine : " Wataroa : Aylmer Lead, John Fetrie ; Tucker Flat, Eichard Wild ; Eoss Day Dawn, T. W. Bruce, F. Pedrazzi, A. Aitken, J. B. Henry, and C. Cook; Auckland Back Lead, Kelly (this lease surrendered some time ago). Could not reply sooner, being stuck by flooded rivers south of Wataroa. —D. MoFablanb, Warden." Mr. Cook : I might say, in reference to the titles to the claims, that I know nothing of them. The only man who can give the information is the solicitor to the companies ; and I think, with all due respect, that a statement of the position with regard to these matters should be obtained from him by the Committee. I think the title to the Auckland Beach Back Lead Company's claim has been surrendered on account of liquidation, but I know nothing definite on the point. 2. Mr. Easton.] Before starting to cross-examine Mr. Cook I should like to make an explanation with regard to the 1,000 shares which I purchased from Mr. Choyce —a matter about which you questioned me. I got up from Dunedin the original papers which I placed before the Dunedin Stock Exchange on the 30th March, and there the whole transaction is very clearly set out. lam very sorry to say that I have not got the block of my cheque-book, but I have wired

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for it. I will read my explanation : "On the 29th August, 1900, Mr. Cook obtained from a Mr. H. C. Choyce, of Auckland, 1,000 shares, in equal portions of 250, in each of the following companies (hereinafter referred to as the 'group'). Previous to my purchasing these shares—namely, in the Lees Ferry, Golden Grey, Wicklow, and Tucker Flat Companies—Mr. Cook had given me to understand that the shares in the above companies had been well applied for, and had been held by substantial people in Dunedin, Wellington, and Auckland. At the same time I quite admit being aware that, with the exception of the Tucker Flat Company, no actual tests of these claims had been made. In payment of these 1,000 shares I gave, on the 29th August, 1900, a cheque in favour of H. C. Choyce for £50, and another to W. Hoisted, Cook's clerk, and secretary to the four companies, for £50 9s. 3d. W. B. Cook at that date was a director of each of these companies. At the time I took over these shares Choyce was owing the allotment on the shares, and a call of 2s. on the Tucker Flat Company's shares. Notwithstanding this fact, Hoisted accepted the transfer." I will hand that statement in. Now, Mr. Cook, in reply to question No. 33 in your evidence on the 15th of this month you stated, " All this is new to me " ?—That is so. 3. Had you never seen any letters of mine in the newpapers, or had any communication from your Dunedin office?—l saw your letters in the newspapers, but they contained only general charges, of which I took no notice. 4. Did I not mention the matter to you ?—I never saw you from October last till we met here. 5. Do you know anything of the articles of association of the companies floated by Cook and Gray ?—No ; I never saw them. 6. You said you never read or knew anything about the articles of association : now, surely you do not wish us to understand that as vendor, promoter, director, broker, &c, you did not know even the nature or conditions of the articles of association ?—I do not know what you understand. What I have sworn is true—viz., that I have not seen the articles of association, and know absolutely nothing whatever about them. The solicitor prepared them, and had them; I never read or knew anything of them. 7. In reply to question No. 35 in your evidence you said, " The man who acted as secretary to the companies . . . has till now done his duty"?— Let me read what I did say. My answer to that question covers four or five sheets of typewritten paper. 8. Well, did the secretary do his duty?—As far as I know he did. My answer reads, '* It was the directors' business to look after the secretary, and see that he did his duty. The man who acted as secretary to the companies is not in my employ now, but up till now he has done his duty." I can only repeat that he always did his duty as my servant, and, I believe, as servant to others. 9. How could you possibly know that Hoisted did his duty unless you had had statements and been made thoroughly acquainted with the business ?—I can only repeat what I said before. I know he did his duty to me, and, for anything that I know, to the contrary, he did his duty to others. It is for you to prove to the contrary. 10. You stated, in your answer to question No. 35, that out of twelve companies floated by Cook and Gray five are paying : will you kindly name the five that are paying ? —Let me read what I did say : " When these options were given me I had many options—the Nelson Creek, the Charlton Creek, the Lawrence, the Three-mile Greenstone, and others. All of these were successes. We have heard this morning that out of twelve companies floated by Cook and Gray eleven will go into liquidation. In answer to that I may say that I can name five that are paying." I did not mean five out of the twelve referred to by Mr. Easton are paying. Sixteen or seventeen companies were floated by us, and out of these five are paying. 11. The Chairman] You say that the five companies that are paying are not included in the twelve referred to by Mr. Easton ?—That is so ; I meant that five of the companies floated by Cook and Gray are paying. 12. Mr. Easton] Are either of the twelve companies working ?—Which twelve do you mean ? 13. I will name them. Is the Aylmer Lead Company working ?—No ; but the dredge is in course of construction. 14. The Ponsonby ?—No. 15. Lees' Ferry ?—No. 16. Golden Grey ?—No. 17. Dobson No. 2 ?—lt was working, but has gone into liquidation. 18. Crown Diamonds ?—No. 19. Wicklow?—No. 20. No Town No. 2 ?—No ; the dredge is in course of construction. 21. Auckland Beach Back Lead ?—No. 22. Tucker Flat?— No. 23. Boss Day Dawn ? —No; the dredge is nearly completed. The companies cannot work till the dredges are built. 24. Ngahere?—No. 25. Needless to say, none of these companies have paid a dividend ?—Quite so. 26. Question No. 41, asked you by the Hon. Mr. Mills, you did not reply to ?—Mr. Mills asked, " Did you not get any weekly or monthly returns from your office while you were away? " and I answered, " I had letters, of course, and I would be very pleased to show you all the letters which passed between the office and myself." That was my reply. 27. Further on, in reply to the same question, you say that no explanation was asked of you, and you never attended a meeting ?—What I said was, " I wonder that these charges should have been brought here. If anything was wrong, why was not an explanation asked for ? I never had anything of the kind asked of me, and, I think, never attended a meeting." I added the " I think " when correcting my evidence.

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28. Did you not attend a meeting in connection with the Boss Day Dawn Company in May last ? —When I made that statement I had not got the books to refer to, and I think the Committee understood that I could not be positive of some of my statements without reference to the books. On looking up the books I find that I did attend one meeting of that company. 29. At that meeting of the Boss Day Dawn Company I alluded to the large sums of money you were owing to the company ?—I did not owe a sixpence then. 30. Do you remember my alluding to the large amount you were owing ?—You got up and charged the chairman with allowing liabilities to stand over; the chairman took exception to your charge, and stopped you talking. 81, Do you remember that I mentioned your name and that of Mr. Howes ?—You did not mention my name, because had you done so I should have got up and said that I did not owe a sixpence. We had it in evidence that my calls were paid up prior to the meeting on the 6th May. 32. In answer to question 44 you said that I started this agitation in September or October last, and the whole thing has been hung up since ? —Yes, that is so. 33. But my first letter warning the public appeared in March, 1901?— The letters that I put in yesterday showed that you started this agitation long before that. 34. You stated, in answer to question No. 35, that it was news to you to hear that Mrs. Cook owed £50 on her shares in the Tucker Flat Company ? —lt was news to me then—l was speaking from memory. I had not got the books to refer to, and could not speak definitely. On looking into the books I found that the call on the Tucker Flat shares was owing by Mrs. Cook. Ido not wish the members of the Committee to think that I purposely gave wrong evidence at that time; I was speaking from memory then, and subject to production of the books. 35. Would you have been allowed to remain owing the various companies such large sums of money had the secretary been an independent man and not a nominee of yours ?—That all depends on the secretary; I have paid more calls than anybody, and, with the exception of the Tucker Flat and the No Town No. 2 Companies, my calls have been paid in all these companies under review. In the Tucker Flat Company the money has not been expended, and in the No Town No. 2 Company the whole matter was hung up ; the directors resolved to hang up the building of the dredge until the No Town dredge was completed, and my calls have not been pressed for since. 36. Did I ever ask you to sell me an interest in the Tucker Flat and other companies?— Yes, certainly. 37. You say in your evidence that you declined to sell me any?— Yes. You stated that I declined to sell you any interest; that is why you bought the shares from Choyce. 38. Did you sell me any shares in of the companies ?—Yes ; in the Ngahere and other companies, but not in any of the four companies which have been referred to. 39. You sold me 100 shares in the Ngahere Company?— Yes. 40. You stated that you have not dealt with any of your vendors' shares in these companies ? ■ —Yes, that is absolutely correct. 41. How can you swear that when the share register of the Boss Dawn Company proves that you have done so ? —That is quibbling ; what I stated was that I had not sold any vendors' interests. 42. Have you ever sold any vendors' shares in the Dobson No. 2 Company?—l was not talking of the Dobson No. 2 Company ; we have not got the books of that company before us. 43. Have you given Mr. Howes an interest in any of your vendors' shares beyond those shown in the books ?• —No; the vendors' shares that I transferred to Howes were given to him. 44. How many vendors' shares do you hold in the Dobson No. 2 Company?— None. 45. How many did you hold originally ?—I could not say without reference to the books. 46. You had a good many ?—Yes. 47. In reply to question No. 46 you practically admit my contention as to improper auditing? —I do not know anything about the auditing. I stated in my evidence that "if any brokerage was paid on shares that had not been paid for the auditor should have called attention to it." So he should ; I cannot say more than that. 48. You referred, in your answer to question No. 35, to the action of the Dunedin Stock Exchange: were you not made aware of the fact that the Lees Ferry Company and other of your companies were removed from the lists of the Exchange?— No. 49. Did you never read the papers ?—I cannot believe all that I read in the papers. 50. Why was I asked by the solicitor to pay £80, your private bill of costs ? : —I cannot tell you why you were asked to pay it. I was not there, and do not believe your statement. I have never had an account from him.' 51. With respect to the Auckland Beach Back Lead Company, you said that neither you nor Mrs. Cook had any vendors' shares ?—That is so. 52. Was that not because this company was floated by you and condemned by your employe, and then went into liquidation, or how was it that you did not get the vendors' shares?— The company went into liquidation, and the vendors' shares were not allotted. 53. Can you tell us what has become of the £650 paid into that company by the contributing shareholders ?—-No ; I paid in £100 of that £650. 54. To whom was £500 in cash given ?—I do not think it was given ;if it was, the man who received it was the original owner of the claim. 55. Did you get any brokerage from that company ? —I think, about £50. 56. Why has no balance-sheet been issued ?--That is a matter for the liquidator; I had nothing to do with that company beyond promoting it. 57. What sum in cash did you give for the 800 vendors' shares you held in the Boss Day Dawn Company ?—I cannot tell you ; but I know that I spent a lot of money on the claim.

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58. Did you not get those 800 vendors' shares from a Mr. C. Coote ?—No ; Coote was one of the owners ; I did not get the shares from the owners at all. Tgot an option to float the company, and I had my interest the same as any one else. 59. Have you taken over from a Mr. Abbott 1,000 shares in the four companies which have been referred to — i.e., the Lees Ferry, Golden Grey, Wicklow, and Tucker Flat Companies?—l have not taken them over; I have an agreement to take them over. 60. Did you send Mr. Howes proxies from time to time ?—Yes. 61. If you were entirely ignorant of the business that was going on, why did you send proxies ? —Because I wanted some one to use the proxies who did know what was going on. I got the notices of the meetings, and sent my proxies down in the usual way. 62. So that you must have been aware of what was going on in connection with the companies ?—I knew there were meetings of the companies being held, and sent my proxies down, but what was done I cannot tell you. . 63. Have you ever claimed to have your vendors' shares in the companies allotted ?—Yes. 64. You did not send a solicitor to a meeting of the Golden Grey Company ?—Yes ; I sent a solicitor, but not to ask for the allotment of my shares. 65. Was it by your instructions that the solicitor demanded then and there to have 2,000 shares allotted to you?— No. 66. You did not instruct him to go to the meeting ? —I told him to go to the meeting to look after my interests ; those were my instructions to him. 67. Did Mr. Howes at that meeting ask on your behalf that the vendors' shares should be allotted ? —What Mr. Howes said at the meeting is, I suppose, in the minutes. He had no instructions from me. 68. Do you admit that Howes, acting on your behalf, attended a meeting of the Golden Grey Company, and said that if 2,000 vendors' shares were not allotted then and there the liquidation might cost 7s. or Bs. a share ?—I refer you to the minutes. 69. Who paid Mr. Don for his reports on the claims ? —I did. 70. Can you produce the receipts ?—Yes; but I have not got them here, 71. How much did Mr. Don charge for his report on the Lees Ferry Claim ? —I cannot tell you; but I think I paid him about £200 altogether for his reports on several claims. 72. How much in cash did you pay Mr. Taylor for the Lees Ferry Claim ?—I cannot say from memory. 73. Cannot you give us some idea?—No, not without looking up the documents. 74. Have you ever seen a paper, Mr. Cook, where it is stated that the money to be paid by you to Taylor for the Lees Ferry Claim was 10s.—I mean the option ?—Yes, that is a general thing. You will find that very often in options there is a consideration to be given. 75. The Chairman] The consideration would perhaps be 10s. and shares and money to be paid in the future ? —Yes; my position in connection with these companies was almost invariably this : The vendors had the ground pegged out, they gave me the option, and I paid for the reports and all preliminary expenses, whatever they might amount to. The cost of reporting varied from twenty-five guineas up to, I suppose, two hundred guineas. The usual arrangement was that I should take a two-fifths interest, and the vendors a three-fifths interest. I might state that that was the case in all options, and I do not think I am going too far when I say that four out of six claims that I got reported upon were condemned, so that, though I paid £50 for prospecting one claim that I did float, those that were condemned would probably bring the cost up to £200 for the one claim floated. 76. Mr. Easton] What arrangements did you make as to the deeds of sale between the owners of the claims and yourself? —The agreements are here, and speak for themselves; there were no deeds of sale between the owners and myself—they gave me options for the purchase of the claims. 77. How long has Mr. Chester been in your employ ?—He was employed by me in boring and prospecting from about June, 1899, to, I think, January of this year. 78. You stated, in reply to question No. 35, that " In every one of these companies I have at least 500 contributing shares, and Mrs. Cook has also 500 " ?—Yes, about 500 ; I think* that can be proved by the books. 79. Has Mrs. Cook any shares in the Boss Day Dawn Company ?—No; but I have 900. 80. Then, she has none in that company? —When I made that statement I was speaking generally. What we always did was to take 500 shares each in any companies we believed in. In the Boss Day Dawn Company I had 1,000 shares, because Mrs. Cook was not there to put in her application for 500 shares, otherwise we should both have had 500 shares in that company. 81. With reference to Mr. Edward Mace, do you consider it consistent that a clerk in your employ should incur such heavy liabilities as Mace incurred ?—No ; I am very sorry that he did, and if I had been there he should not have done so. You have had his explanation through me; but, as I say, if I had been there he would not have had the shares—l should have insisted on their being allotted to other members of the syndicate for whom he took the shares. 82. Did you never give your co-directors in the No Town No. 2 Company to understand that you would become liable for Mace's shares ?—No ; what I did say was. this ; When I found that Mace owed money on his shares —he had been with me for about twelve years, and I had every confidence in him as being an honourable man —I said to the directors, "I have a payment of some £3,000 or £4,000 coming to me for fees due, and I will be very pleased to take Mace's shares off his hands, but it is not convenient for me to do so now ; therefore, if it will help in any way, I will give you a three-months bill for Mace's liabilities." They went to the company's solicitor, and he said that it was impossible for the directors to take a bill m payment of calls on shares. I would have been very pleased to have taken Mace's shares over, and possibly will now, but I have not got that particular money yet. It is unfortunate that Mace allowed his name to be nominated for the liability of the syndicate. 9—l. 4a.

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83. Can you give us the name of the syndicate ?—No, I cannot. 84. In connection with the Tucker Flat Company, are you aware that I lodged a requisition at your office on the 15th July ?—-No; I only know what has been brought oat in this evidence. 85. You are not aware that that requisition was signed by Cutten, who was to be the engineer to the company? —No ; I never saw the requisition. 86. Mr. W. Fraser] In how many of these companies have the vendors' shares been allotted ?—I think, in the No Town No. 2, the Boss Day Dawn, and the Lees Ferry Companies. I might state that I have never pressed for the allotment of vendors' shares, never intending to deal with them. 87. What I wanted to ask you was this: How do you reconcile the fact of vendors' shares having been allotted to the vendors with the fact that the titles remained in the names of the vendors ?—That is what I cannot understand, and is why I wanted Mr. Holmes, the solicitor to the companies, to be called. The thing is incomprehensible to me, because Mr. Holmes is a very reliable man, and as a professional man is acknowledged to be a man of ability. How he could advise the allotment of the shares under the circumstances is incomprehensible. 88. You see the impropriety of the transaction ?—Yes; that is why I think Mr. Holmes should be called. 89. Mr. J. Allen] Mr. Fraser has asked a question that I was going to ask; but I might follow the matter a little further: who holds the title to the Boss Day Dawn Claim ? —I do not know. 90. According to the telegram received from the Warden, it is held by a Mr. Bruce, and in that company the vendors' shares have been allotted ?—Yes. 91. In the case of the Lees Ferry Company the title to the claim is in the name of Taylor, and the vendors' shares in that company have been allotted?— Yes. 92. In the case of the No Town No. 2 Company the title is in the name of the company, so that in that case it is all right ?—Yes. 93. Then, it is the transactions with regard to the titles of the other two companies—that is, the Boss Day Dawn and Lees Ferry—that you cannot understand?—l will give the Committee my views on the subject, but would prefer that they be not taken down by the shorthand-writer. [Mr. Cook then made a statement, which was not taken down by the shorthand-writer.] 94. What is the position of the vendors' shares in the case of the companies that have gone into liquidation, and in which the vendors' shares have not been allotted ? —That is what I want to know. I think the proper course is to complete the titles and allot the shares, the vendors giving an undertaking not to rank. Speaking for myself, Ido not wish to rank for one sixpence. That is the position I take up, and I think that is the way of overcoming the difficulty. More than once I have written to the companies stating that I have no desire to rank for profit in my vendors' shares. I think that the wording has been this :" In the event of liquidation my object would be to minimise the cost to the contributing shareholders, and therefore I would not rank for any vendors' interests." 95. Can you tell us the reason why, in several of these companies, the directors have not allotted the vendors' shares ?—The reason is this: I think since this agitation has been started the directors of some companies—Mr. Somerville in particular—have been very antagonistic to me, and I think they have purposely refrained from allotting me the vendors' shares out of antagonism. 96. What is your opinion as to the position of the subscribing shareholders in the companies where the vendors' shares have not been allotted ? In the event of liquidation, will the subscribing shareholders have to pay up the full amount of the shares in order to equalise their shares with those of the vendors ?—That I do not know ; that is what we are anxious to know. 97. Is the Boss Day Dawn Company in liquidation ?—No. 98. Is the Lees Ferry Company ?—Yes. 99. You hold vendors' and contributing shares in the Lees Ferry Company ? —Yes. 100. How many vendors' shares do you hold ?—I think, 1,040; and Mrs. Cook and I hold 1,250 contributing shares. 101. What position would you be in in the event of liquidation ?—I should have to pay more than I should get. I should have to pay up the full £1,250 on the contributing shares held by Mrs. Cook and myself, and then rank for the dividend. In every instance, I think, I should be a loser if the companies went into liquidation. 102. Do you mind calculating how much you would lose ?—I should have to pay, as I stated, £1,250, and I would receive back about £1,510. 103. Then, you would make a profit ?—No, because £500 or £600 of the money that has been called up has been paid away in expenses. In this company it would be just about as broad as it is long. In this company only 800 vendors' shares were allotted to me for floating the company. I purchased the others from one of the other vendors. 104. Mr. Herries] Taking all the contributing and vendors' shares that you hold in the various companies, in the event of liquidation you stand to recoup a large part of your losses ?— Yes, if I rank for a dividend on my vendors' shares. 105. A man in your position—that is, having both vendors' and contributing shares—stands, in the event of liquidation, to recoup some of his losses, if not make a profit. lam not speaking of you personally ; but I say that a vendor in your position, though losing on his contributing shares, would have that loss made up by his getting paid a dividend on his vendors' shares ?—He must lose something. I may say that what I believe would be a proper thing to embody in any Mining Act is that a vendor should not be allowed to deal with his vendors' shares until the company is working and paying dividends. If a vendor could only take paid-up shares for his property a man would derive no benefit from putting a bogus thing on the market. A vendor's share should not be of any value until the company was paying dividends.

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106. Mr. W. Fraser] That is the law now—that is provided in the Act passed last session ; but then these companies are not registered under the Mining Companies Act ?—I was not aware of that provision being included in the Act. 107. Mr. Herries] You had something to do with the floating of these companies?— Yes. 108. Why did you float them under the Companies Act and not under the Mining Companies Act ? —I was advised that the Companies Act was more easily workable. 109. Who advised that ? —Mr. Holmes certainly did; but I have been advised on all sides on that point by men who have worked under the Mining Companies Act that it is not so easily worked under as the Companies Act. Ido not mean in the way of working " points, " but I mean that under the Mining Companies Act there are notices and statements to be made up which I think are cumbersome and of no use. 110. But do you not think that the provision as to sending those notices, &c, is put in for the purpose of protecting the shareholders ?—I think, from my knowledge of companies working under the Mining Act, that the provisions in that Act are cumbersome; but Ido not know enough about the general working of them to say definitely. 111. Did you invest in the mining boom in Auckland?—No, thank goodness, except to the extend of £100. 112. Then, you are not aware that in connection with the companies floated in Auckland the Mining Companies Act is invariably used ? —Yes; and I know that the companies floated were nearly all no-liability companies, but that would not be workable in regard to dredging companies, because it would not enable them to let a contract. Practically the whole of the money of a dredging company goes, as you might say, into a machine, and an engineer has to build that; and no engineer would take a contract to build that machine unless the shareholders had a liability which could be called up to pay for it. 113. Hon. Mr. McGowan] Your statement that no contractor would take a contract from a no-liability company is incorrect, because, as a matter of fact, contractors do ?—I wish you to understand that that is only my opinion ; it suggested itself to me that that would be so. 114. Mr. Herries] It has been stated by some one that one of the reasons why some of these companies did not order dredges was because you were waiting to see the results of the working of another company's dredge ?—Yes, that is so. 115. Why would not the " no-liability " arrangement have been suitable in those cases : would it have suited those companies ?—lt would have suited up to the point when they came to ordering a dredge. 116. At that point could not the companies, if floated as no-liability companies, have been converted into liability companies ?—Yes ; but Ido not know of a dredging company that exists under the no-liability arrangement. 117. Can you give any reason why they should not be floated as no-liability companies?—■ What strikes me is that if you had to purchase anything for, say, £6,000 —the cost of a dredge— the man you purchased from would want to know whether you had got the cash to pay him with or a sufficient amount of capital to call up. If it was a no-liability company all the shareholders could repudiate liability. Ido not think the engineers would undertake to build a dredge unless, as I say, they knew the company had the cash or the uncalled liability with which to pay. 118. How many of these seven companies have ordered dredges ?—The Boss Day Dawn and the No Town No. 2 Companies. 119. Then, the no-liability arrangement would have suited all the other companies ?—Yes. 120. Do you think that if dredging companies were obliged to register under the Mining Companies Act it would do any harm to dredging ? —No; I do not think for a moment that if they were compelled to register under the Mining Companies Act it would do any harm to dredging. 121. With reference to Mr. Holmes, he was the solicitor to the various companies ? —Yes, he was the companies' solicitor. 122. Did the companies instruct him in any way to prepare these articles of association ?— I presume so. 123. But surely you, as a director, ought to know ?—I was not there, and cannot say what was done. 124. This is a copy of the agreement between yourself and the No Town No. 2 Company prepared by Mr. Holmes : did you instruct him to prepare that?— No. 125. Then, how does your name come to be here ?—When a company was floated the option that I would have would be placed in Cook and Gray's office for inspection ; the shares would be subscribed, and certain shareholders would sign the articles of association ; they would become the provisional directors of the company until the first statutory meeting provided for by the Act. At the first meeting of the directors a resolution would be passed that the agreement mentioned on the prospectus should be entered into between the company and myself as vendor; then Mr. Holmes, as the company's solicitor, would prepare the deed. 126. You mean the articles of association ?—No; the agreement between myself and the company. 127. But the deed must be executed before the company could be started?—No; the prospectus specially states that the only thing in operation before the formation of the company was the option. I think there has been a misunderstanding on that point all through. 128. This is the agreement between the No Town No. 2 Company and yourself ?—Yes; the contract for sale to the company. 129. In this instance Mr. Holmes must have prepared it beforehand ?—Yes; but in the majority of cases the option was the only document in existence before the company was formed. 130. Were you responsible for this agreement? —No.

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131. Then, was it not curious to sign a document that you were not responsible for?— One side must prepare the agreement, and if the company's solicitor prepares it that agreement should, if it favours anybody, favour the company. When the vendor consents to the company's solicitor preparing the agreement without having it perused by his own solicitor, that signifies that he does not wish to take advantage of the company in any way. ' . 132. Do you think this clause favours the company or the vendors —I refer to clause sof the memorandum of agreement in the case of the No Town No. 2 Company, which I will read : " The validity of this agreement shall not be impeached on the ground that the vendor or the promoters stand in a fiduciary relation to the company, or that the vendor or promoters are directors of the company, or that any of the directors have accepted office at the request of the promoters ; and neither the vendors nor the promoters shall, by reason of any fiduciary relation with the company, be liable to account for any profit they may make or receive by virtue and in consequence of this agreement " ?—Of course, that is apparently in favour of the vendors; but I think the reason why that was put in was that with almost every dredging company the directors are in some way or other connected as vendors—one or more directors must be. For instance, take the case of the Nelson Creek Company : Mr. O'Kane, who was the original owner of the claim, was placed on the directorate because of his knowledge of mining, and his residence being on the Coast. Since that company's dredge has been working Mr. O'Kane has inspected it week by week, and rendered invaluable aid to the company. That is one reason why a clause such as this— it is a general clause —is put into agreements : that is to say, so that a vendor, notwithstanding his fiduciary relations to the company, may act as director. That that clause was put into that agreement in order to enable me to be placed on the directorate is a statement that is incorrect. As I say, I think a clause such as this is inserted in the agreement between the vendors and the company in almost every instance. I think that, unless you are going to prevent any vendor from having anything to do with the management of a company, some similar clause will have to be kept in. If a vendor were prevented from having a say in the management of a company it would not, in my opinion, be a fair thing. Take the case of a valuable property like the Nelson Creek Company's claim, which has proved to be the best of the lot up till now. Mr. O'Kane was the original owner of the claim ; he held it for eight or ten years, knowing its value, and when it was floated he had some two thousand shares. I think that in that instance it would be an injustice to prevent that man from having anything to do with the management of the property in which he holds a 25-per-cent. interest. 133. Did the company instruct Mr. Holmes to prepare this agreement, or did the promoters? ■ —The promoters did not. 134. Some one must have instructed him ?—I think not. I will explain, for the information of the Committee, how I think the agreement came to be prepared, but I would prefer that my remarks be not reported. [Mr. Cook here made a statement, which was not taken down by the shorthand-writer.] 135. A solicitor does not prepare a deed unless some one instructs him to do so ; what I want to get at is, who instructed Mr. Holmes to prepare this deed ?—The company must have done that. What I think about it is this : You must remember that at the time the No Town No. 2 Company was registered there were four or five companies being registered every day, and solicitors had deeds drawn up beforehand, and when a meeting was called the company's solicitor would go down with the deed and have it completed. 136. Are you prepared to say that the company instructed Mr. Holmes to draw up the deed ? —I was not there, and cannot say. 137. Can you say who can tell us ? —I should think the secretary to the company could. 138. I think Mr. Hoisted said he knew nothing about the matter—it was all done by the solicitor ?—Mr. Holmes would go round and get the signatures ; then a meeting would be called, and he would be in attendance with the deed; that is what I think would be done. 139. Who would appoint Mr. Holmes as solicitor when it was stated on the prospectus that he was the company's solicitor?— The promoters would do that. 140. And at the first meeting of the company he would attend with the deed in his hand ?—Yes. 141. The company could not have instructed him to prepare the deed then ?—No, but he would be acting for the company. 142. You said he was appointed by the promoter?— Yes, that is so. 143. Then, would it not be fair to conclude that the promoter instructed him ?—I do not think so. Of course, the door would be left open for fraud if there were a dishonourable promoter and a dishonourable solicitor; but I cannot imagine any such suggestion in relation to Mr. Holmes. 144. As a general rule, the solicitor is appointed by the promoter ?—ln connection with every company the solicitor's name appears on the prospectus. 145. That means that he is appointed by the promoter ? —Yes. 146. And the promoter instructs him to prepare the deed ? —I cannot say that. I can only say that, for myself, I have never instructed a solicitor to prepare a deed for the sale of a claim to a company. 147. I want to know who instructed Mr. Holmes to prepare the deed in the case of the No Town No. 2 Company ? —I can only say that I did not; I was not in Dunedin when those meetings were held. 148. Mr. W. Fraser] You personally did not instruct him?— No. 149. Then, some one else must have done so —perhaps one of the seven provisional directors ?— Probably so ; but what I think is that no instructions were given for the preparation of the agreement, and Mr. Holmes took it as a matter of course, attended the meeting, and produced the deed. 150. Would the solicitor receive specific instructions as to each detail, or general instructions to prepare an agreement ?—He would get instructions to prepare an agreement.

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151. From whom would he get them?— From the men who signed the articles of association, I should say. That must have been so, for he did not get them from me ; and until the seven met I was the only person who could give him the instructions. 152 I suppose the solicitor was instructed by the promoter to prepare the articles of association and the deed of agreement —you would give him general instructions ?—I say that I did not instruct him. In my opinion, the position would be this: Mr. Holmes being named on the prospectus as the company's solicitor, he would naturally prepare the deeds for the company. 153. The Chairman] But some one must have intimated to Mr. Holmes that he was the company's solicitor, for the company was not in existence before the articles of association were signed? —Well, then, some one from the office would have told Mr. Holmes that the shares had been applied for. 154. Some one from your office ? —Yes. 155. Then, the instructions would come from your office?— Yes; general, not specific, instructions. 156. Mr. Herries] Would it be the same with the articles of association ?—That I could not say. Ido not know how they were signed. I can speak with regard to the Nelson Creek Company, for I happened to be there, and know all about it. The solicitor himself got the signatures to the articles of association. 157. He prepared them first?— Yes ; he got the signatures to the articles of association, and I should think that Mr. Holmes probably did the same, but I cannot say. It would be —and there is no reason why it should not be —left to him as part of his work to draw up the articles of association, get the signatures to them, and register the company on them. 158. Then, the articles of association would be prepared in the same way as the memorandum of agreement ?—-Yes. 159. You know very little about the floating of the companies ?—Very little indeed. 160. You left that to Howes —the actual details of the floating were left to Howes ?—Yes. 161. Did you ever give Howes instructions with regard to the flotation?—No; but plenty of correspondence passed between us. 162. You assume responsibility for Howes's actions?— Yes, I must. 163. He was acting on your behalf?— Undoubtedly. My objection to responsibility is in regard to any suggestion of malpractice or irregularity. I say that if such things were done the individual must be held responsible. 164. You take the responsibility for what your servants do ?—I do not take the responsibility for, say, a man getting drunk; but in a pecuniary sense lam responsible for my employes' actions. 165. You are responsible for all that was done in Cook and Gray's office as regards finance ?— Certainly. 166. What I want to get at is whether by saying you were away from Dunedin you divest yourself of responsibility. Supposing that a promoter wished to be dishonest, would he by stopping away divest himself of responsibility?—-If a man wished to be dishonest and stayed away, and got a dishonest man to act for him, that could be done. What I take the position to be in regard to these companies is this: I got an option, printed a prospectus, and floated the company on the reports of certain men to whom I paid fees for reporting. Money was subscribed, and the subscribing shareholders formed a company and elected a directorate. Whether the company put that directorate in my office or anybody else's was a matter for themselves. I, not attending the directors' meetings, must disclaim any responsibility for whatever was done at those directors' meetings. That is my contention, and I want the matter severed from Cook and Gray. I say that when a company was floated Cook and Gray's responsibility in every way ceased —the directors took it over. Some of the companies that were in Cook and Gray's office were removed to other offices. All of them could have been removed, but the shareholders in the other companies elected to keep their office at Cook and Gray's. What I say in reference to my responsibility is this : If before the date of registration of a company I put forward a false prospectus, that would be my responsibility; if people paid money to me or to my men, and that money was not paid to the company, that would be my responsibility ; but immediately the company was registered, and the shareholders formed themselves into a corporate body and took over the management of the company, my responsibility ceased, and for anything done by the directors or the secretary to the company I am not responsible. They had their own auditor, and if they liked to have the office of the company at my office it was of their own free-will. I know that the conduct of the office was unimpeachable. I am quite sure that with reference to irregularities, no one can put a finger on any irregularity as far as Cook and Gray are concerned. 167. When Mr. Hoisted was acting in the dual capacity of manager for Cook and Gray in Dunedin and secretary to the No Town No. 2 Company, did you consider him your servant or the servant of the company ?—As far as the company was concerned, the servant of the company undoubtedly. If you go to the directors they will speak in the highest terms of Hoisted. 168. What I want to get at is this: supposing your interests conflicted with those of the company ?—But they have not done so. I cannot see any harm in allowing Hoisted to be the secretary to the companies ; but, looking back on my experience, I would never allow one of my employes to be secretary to any company again, for after the personal feeling that has been shown in .this matter I feel very sore. The business of Cook and Gray in Dunedin was purely a commission business—there was no other business in the office, with the exception of a fire insurance agency. At the time of the mining boom you would have found one man secretary to twenty or twenty-five companies. Take the case of the Zealandia Syndicate: There, I think, the vendors are always the directors, and one of their nominees secretary. That is a syndicate that has floated a number of companies. 10—I 4a.

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169. With regard to Mr. Hoisted, do you think that it is a proper position to place a man in— that is to say, to be a servant of the vendor and also a servant of the company that takes over the option ?—I do not think Mr. Hoisted had anything to do in relation to that. He was the servant of the vendor, but when the company was formed the vendor ceased to exist. 170. Not at all, because he would hold vendors' shares ?—But when the company was formed he would be only a shareholder. The vendor could not interfere with the shareholders or influence them. I cannot see the impropriety of my employe acting as secretary to the companies ; the wisdom of it Ido not see. I think it was a mistake to allow any of my men to be connected with my private investments, but, as far as any impropriety is concerned, I cannot see it. In reference to mining companies, and other companies too, not only in Dunedin, but in Melbourne, you find secretaries to companies employed in the offices of the directors and vendors, over and over again. The question has only been raised because a bit of trouble in connection with mining has come along. That the proceeding was wrong in principle Ido not see, but that it was unwise Ido see. 171. Mr. Hoisted said in his evidence that he was paying the secretarial fees into Cook and Gray's account ?—That is so. 172. Did that make him the servant of the company or the servant of the firm ?—The servant of the company, undoubtedly. Cook and Gray had five offices, with a manager at each, and it was the manager's duty to give us a profit at the end of the year, by honest means. They had a free hand, and it was practically their own business, though, of course, I was responsible. Mr. Hoisted could refuse or accept any business that came along. He was paid £5 per week, and I am quite prepared to say that out of the secretarial fees which were paid into Cook and Gray's account by him I do not believe that we made a shilling. 173. The Chairman] Then, what became of the money ?—lt was spent in meeting the expenses of the office. 174. Mr. Herries] The point I wish to get at is this : Hoisted paid the secretarial fees into Cook and Gray's account ?—We had two accounts, a General Account and a Trust Account. 175. Which of the two did he pay the moneys into? —The General Account. 176. He was Cook and Gray's servant ?—Quite so. 177. And can it not therefore be argued that Cook and Gray were actually the secretaries to the companies ?—I do not think so, because the secretary to a company is a person, and his work is of a personal nature. Cook and Gray could not influence Mr. Hoisted as secretary; that was his work—his salary was paid to him as secretary. He had the management of their business, and all moneys earned by him were paid into the General Account of the firm. The cheques drawn on that account for the expenses of the firm were signed by him and countersigned by the accountant. At the end of the half-year a half-yearly statement was prepared, signed by him and countersigned by the firm's auditor, and sent to us. That is all "we had from the Dunedin office, and the same thing applies to the other four offices also. 178. Mr. Hoisted got nothing for his services as secretary personally ?—He got £5 a week from us, but he did not receive anything from the companies. 179. Cook and Gray got the secretarial fees?— Yes. 180. Did that not make them secretaries to the companies ? —I do not think so. A secretary's work is personal work—-he must do it himself. 181. You admit that it was an unwise proceeding— i.e., allowing Mr. Hoisted to be the secretary to the companies ?—Yes, I do. 182. You repudiate responsibility in connection with the companies directly they were floated ; you do not repudiate responsibility as a director, though you were not present at the meetings ?—No. As I have explained, when I was elected it was known that I would be on the Coast, and that I could give my services in that way. Had the companies been working, and had I continued my periodical visits to the Coasts, as I should have done, I have no doubt that my services to the companies would have been of great value, being able to report on what was going on, &c. As to whether there was anything wrong in taking fees as a director when I was not present at the meetings, I may say the fees were paid in lump sums. The wording of the resolution was " that the remuneration of the directors shall be sixty guineas, divided as they think well,"-so my co-directors need not have paid me a sixpence if they had desired not to. 183. If anything went wrong while you were a director you would consider yourself responsible, even though not present at the meetings ? —I know the responsibility of a director, but 1 say that if the directors at a meeting passed a resolution which was ultra vires, or anything of that kind, I should not feel that I was personally responsible, if legally so. 184. Of how many of the companies were you a director?—Of all of them, I think. 185. Do you know of how many Howes was a director ?—He was not a director at all until this agitation came on; then he went on the directorates of the Tucker Flat, Lees Ferry, and Wicklow Companies. 186. You and he were never directors at the same time ? —No. When the agitation came on the directors squabbled among themselves, and Mr. Howes was put on the directorates. Nothing has been done since he has been a director. 187. With your contributing shares and Mrs. Cook's, and those held by other shareholders who were connected with your office—if all the proxies were used, would not you have had a controlling influence over the companies ? —No. 188. Take the case of the Wicklow Company, the shares held by you and Messrs Howes, Gray, and Mace, and Miss Howes amount to 1,905 : would not those 1,905 votes have carried any resolution? — No. The only vote that I saw taken showed that 3,890 votes were cast for a resolution, and 300 against it. If you take a company with six thousand shareholders, more than two-thirds of the total number of votes would be recorded at a meeting of importance. I should say, speaking of mining companies generally, that more than two-thirds of the votes would be recorded on any matter of interest.

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GOLDFIELDS AND MINES JOINT COMMUTE.

MINUTES OF EVIDENCE.

(Chairman, Hon. B. H. J. Beeves). Thursday, 12th September, 1901. Charles Gustap Victor Leijon examined on oath. (No. 1.) 1. Hon. The Chairman] What is your name ?—Charles Gustaf Victor Leijon. 2. Mr. Easton] As a director of the Tucker Flat, Golden Grey, Wicklow, and Lees Ferry Companies, will you tell the Committee who instructed Mr. Allan Holmes to prepare the articles of association and. deeds of sale from the vendors to the companies ? —I presume the provisional directors did. 3. Were you one of the provisional directors ?—No. 4. Who instructed the solicitor to prepare the assignments or deeds of sale from the original owners of the claims ? —I do not know. 5. Somebody must have given instructions to the solicitor? —I did not do so. 6. How were the signatures to the articles of association obtained and witnessed?— Anything that I signed was signed in the office. • 7. Who witnessed your signature?—l cannot remember now. You can find out by referring to the articles. 8. Why was there no assignment or deed of sale in the case of the Lees Ferry Company?—l cannot tell you that. That is a matter for the solicitor. 9. Were you present at a meeting of shareholders in the Lees Ferry Company in March last, when I intimated that unless the company was liquidated I would bring the whole matter before Parliament?— Yes. 10. Who prevented the company from being liquidated ?—A demand was made by Mr. Cook, through his solicitor, I think, for the allotment of the promoters' shares, so that Mr. Cook would have some say in the matter before the company was liquidated. 11. I wanted to find out who prevented the Lees Ferry Company from being liquidated?— That was the only reason that I know of. The directors were willing that the company should be liquidated. 12. You, as a director, was in favour of liquidation?— Yes, certainly. 13. Has Mr. Cook ever demanded the allotment of the vendors' shares ?—Well, at that meeting, and then only as far as I know, he demanded that the vendors' shares should be allotted. I do not know that it was Cook himself, but the demand was made for the allotment of the vendors' shares. 14. Did Cook ever make a demand for the allotment of the vendors' shares in the Golden Grey Company ?—I do not know that Cook's name was mentioned. It was demanded that the shares should be allotted to the vendors. 15. Were you present at a meeting at which Mr. Howes demanded that the vendor's shares should be allotted ? —Yes; he demanded that they should be allotted to the vendors. Ido not know that Mr. Cook's name was mentioned. 16. For whom did you presume Mr. Howes was acting?— For Mr. Cook. 17. Has Mr. Cook ever sold any vendors' shares in either of the four companies which I have named?—l cannot tell you that. 18. Are you aware that William Gray, H. C. Choyce, B. H. Abbott, and other gentlemen have stated—some on oath—that Cook assured them that in these four companies—namely, the Lees Ferry, Wicklow, Golden Grey, and Tucker Flat—the only liability would be Is. per share ?—No ; I am not aware of that. 19. You did not read the evidence given in the Magistrate's Court ?—No, I did not. 20. As a director, what work did Mr. Cook do in connection with these four companies ?—He was present at one meeting of each company, I think. He might have been present at two meetings, but lam not sure of that. At any rate he was present at the first meeting. 21. Did you receive reports from Mr. Cook while he was on the Coast ? —No ; none that I know of. 22. With reference to the Tucker Flat Company, was I known to you at the time you were a director, and caused my transfer for 250 shares to be passed with £25 due on those shares by the seller? —No ; you were not known to us at that time. 23. I was not known to you ? —Only as a shareholder. 24. Had you ever met me ? —No, not at that time. 25. You knew nothing of me ?—Nothing whatever. 26. Now, would this transfer—and other transfers passed at dates when moneys were due from the sellers —have been put through, in your opinion, had there been an independent secretary ? —The standing rule is that a transfer is not put before the directors for them to pass until all calls on the shares are paid. 27. You took the secretary's word ?—Yes. 28. Who did you consider was the secretary to the Tucker Flat Company?— Mr. Hoisted. 29. Did you know that Mr. Hoisted was not receiving the secretary's fees?—No; but I have heard it since. 11—I. 4a.

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30. You thought that Hoisted was the bond fide secretary ?—I knew that he was acting as secretary the whole time. 31. Are you aware that on a very large number of shares in these four companies no moneys have been received ?—No ; I cannot say that I am aware of the position. 32. Are you aware, in connection with the articles of association of the Lees Ferry Company, that only two qualified shareholders were present when the agreement was adopted ?—I was not there and cannot say. 33. Have you ever seen the deed of the Lees Ferry Company ?—No; I have not seen any of the deeds. 34. You are not aware whether the common seal of the company has been placed on it or not ?—No. 35. Mr. Cook] You were elected a director of these four companies—namely, the Tucker Flat, Lees Ferry, Wicklow, and Golden Grey—Mr. Leijon ?■ —Yes. 36. At a general meeting, I presume ? —Yes. 37. Did I ever approach you to ask you to go on either of these directorates ? —I do not know that you did. 38. Were you my nominee ?—No. 39. Did you undertake to do what I told you, practically ?—No. 40. Then, if Mr. Easton states that you were my nominee, and under my direction as a director of these four companies, he states that which is untrue : is that so ? —That is so. 41. With reference to Mr. Hoisted : the directors employed him as the secretary to the companies, did you not ?—I really could not tell you. 42. You surely know— : you know that he was the secretary to the companies ?— Yes ; but how he was appointed I cannot remember. 43. You know that he was the servant of the companies—you had the power of dismissing the secretary if you had so desired?— There is no doubt that we could have done that. 44. Did he, to your knowledge, fulfil his duty during the time he was secretary?—We always looked upon him as a very efficient secretary. 45. He is the secretary to many companies in which you have some interest?— Yes. 46. Do you know that he was ever influenced by me in reference to his duties as secretary ?— I could not tell you that. 47. There was no reason to suspect that he was influenced by me ?—Not that I am aware of. 48. With regard to the deeds of sale: whose duty was it to see that those deeds were in order, and that the titles were transferred to the companies ? —We looked to the solicitor to see to that business. 49. Now, Mr. Leijon, you are very largely interested in dredging generally, are you not ? —Yes. 50. You have held shares in a good many companies ? —I have, unfortunately. 51. I suppose you have made money in some and lost in others ?—Yes. 52. Did you ever lose £25 in a company ?—A lot more money than that. 53. Did you ever cry about it ? —No. 54. Or rush to the public Press ? —No 55. Or assail the man who sold you the shares ? —No. 56. With reference to the preliminary expenses in connection with these four companies, were they in any way exorbitant, to your knowledge ?—No ; not exorbitant: they were less than those in connection with the bulk of the companies that were floated. 57. To the best of your belief, has everything connected with the management of these companies been above-board and clean ?—I always thought so, and understood so. I would not have gone on the boards of directors of the companies, if I had not thought they would be properly managed. As far as lam aware, they were worked honestly and in a straightforward manner. 58. I would like to ask you, as a director of other companies, whether, when the vendor to a company signs the agreement to the company, the vendor's interest then ceases: does he cease to exist as a member of that company ?—That is a question for a lawyer. I could not answer that. 59. To your knowledge, you, as a director, have not been influenced by me in any way in the management of the companies ?—Not in the slightest. 60. Mr. Guinness] You say that you have been interested in many companies which have been floated in Dunedin ? —Yes. 61. You know that under the Companies Act there are a set of regulations as to the management of a company, &c. ?—Yes. 62. But the shareholders, in the memorandum of association, can alter the rules?— Yes. 63. Do you know that alterations were made in the rules of these four companies?—l was not aware of any alterations being made. I thought they were being carried on the same as other companies. 64. What I want to get at is, whether the memoranda and articles of association of these four companies were different from those of other companies in which you were interested?—l was not aware of it, but I have since found out that they are. 65. You have found out that the rules of these four companies have been altered ?—Yes, in one respect; but I was not aware of it till lately. 66. In what respect are they different? —That vendors can vote on shares which have not been paid up, or something to that effect. 67. We have seen the articles of association of these companies, and there is nothing of that sort in them ? —lt was brought up at one of the meetings that the vendors could vote on shares which were not paid up. We took the opinion of the company's solicitor, and he said the vendors were allowed to vote. 68. You misunderstand me; you are referring to liquidation?— Yes.

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69. I referred to the rules for management of a company by the directors, &c. ?—I was not aware of anything being altered from the ordinary articles of association, as to the directors' management of the companies. 70. The solicitor who was employed to prepare the articles and memoranda of association of the four companies was Mr. Holmes ?—Yes. 71. Is he generally considered a man of standing—in a high position in his profession in Dunedin ?—I was always led to believe so. 72. Mr. W. Fraser] Your answer just now to a question asked by Mr. Guinness, that the articles of association of these four companies differed from those of other companies, in which you are interested, is incorrect, then ? You did not understand Mr. Guinness's question ?—No, perhaps not. What I meant to convey was this: I have not seen the articles of association of the companies, but we took the opinion of our solicitor, and he said that shareholders could vote at a meeting even if they had not paid their calls; and that is an unusual thing in the other companies. 73. Are you sure that is so under the articles of association of one of these four companies ?— I am not sure, but we got the solicitor's opinion on the matter when it came up. 74. Do you know at what meeting that took place, or can you mention what shareholder voted whose calls were not paid up, and in which company he held shares ?—I cannot remember now. 75. Mr. J. Allen] You were a director of the Tucker Flat, Lees Ferry, Wicklow, and Golden Grey Companies ? —Yes. 76. Do you know in how many of these companies the vendors' shares have been allotted?—. No. 77. You were a director of the four companies and do not know in how many of them the vendors' shares have been allotted?— No. 78. Do you know who holds the title to the Tucker Flat Company's claim ? —No ; but it should be in the solicitor's office. 79. Do you know whether you yourself, as the company, hold the title ?—The company should hold the title; we look to the solicitor for that. 80. Is it not the duty of the directors to see that they have the property which they are supposed to have ? —No, it is generally left to the solicitor. 81. You do not know, then, whether the Tucker Flat property belongs to the company or not? —We presumed that it belonged to the company. 82. If I told you that it does not belong to your company, but belongs to Wild, would you be in a position to deny that ?—No. 83. And that the Lees Ferry property belongs to Taylor, the Golden Grey to Curry, and the Wicklow to Wicks ? —I could not deny that. We left all those matters to the solicitor. 84. Do you not think that it was the directors' duty to see they had the property which they were supposed to have ?—We always considered that to be the duty of the solicitor, and looked to him to see that the titles were in order. The directors' duty was to look after the construction of the dredges, machinery, and so on. 85. But let me ask you this : Have you been ordering dredges for any of these claims?—We have not gone as far as that yet, but we have been prospecting. 86. Have you not ordered dredges for any of them ? —No, not yet. In the case of the Tucker Flat Company, for instance, a dredge was to have been built; I went to a consulting engineer and got an estimate, but found that the cost would be about double the amount we had in hand. 87. How long ago is it since you were supposed to have had the Tucker Flat property?— About eighteen months. 88. And you have not ordered a dredge yet?—No; because of lack of capital. We want to increase the capital. 89. Were you holding these claims for speculation, or did you intend to work them?—We intended to work them. In the case of the Tucker Flat Company, we tried to amalgamate with another company, in order to get a suitable dredge. 90. Is the Tucker Flat Company in liquidation ? —An application has been made for liquidation. 91. Is the Lees Ferry Company in liquidation? —Yes; and the Wicklow and Golden Grey Companies. We had the Lees Ferry claim prospected a second time, and found that it was not satisfactory enough to put a dredge on. One of the directors recommended that the company should go into liquidation. • 92. You stated, in answer to a question put by Mr. Easton, that the directors of the Tucker Flat Company passed a transfer of snares to him with £25 owing on them?—We were not aware that there was anything owing on them. We always took it for granted that all calls were paid on shares which were placed before the directors for transfer. 93. Did you not look up to see? —No; that was the secretary's work. 94. Whose duty did you say it was to see that the calls were paid on the shares when the transfers were made ?—lt was the secretary's duty. 95. He ought to have told you?— Yes. , 96. Did he tell you that there was £25 owing on the shares bought by Mr. Easton, when the transfer was applied for ?—Not that I can remember. 97. Did he tell you that £12 10s. was'owing on them?— No. 98. You do not know what was owing? —I do not know. 99. You passed the transfer? —We took it for granted that all the calls were paid before the transfer was placed before the directors. That is a standing rule in all the companies that lam interested in. .

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100. The directors do not take the trouble to find out whether the calls are paid or not ?.—-No, as a rule, they do not. 101. The question was asked you whether Mr. Cook did anything, while he was a director, fpr the four companies which have been referred to, and you stated that he attended one directors' meeting (of each company) ?—Yes ; but he might have done something on the West Coast. 102. That is what I. want to know: did he do anything on the West Coast?—l cannot tell you; we had not reports. 103. Hon. Mr. Jennings] You were a director of each of these four companies—namely, Golden Grey,.Wicklow, Tucker Flat, and Lees Ferry ? —Yes. 104. And do I understand that you, as one of the directors, allowed prospectuses to, go out and shareholders be obtained when you had no title to the ground ?—We had nothing to do with that. 105. You were not one of the promoters of either of these companies? —No; that was all done before I was placed on the directorates. 106. Have you been engaged in gold-mining transactions in the past?— Yes, for the last sixteen or eighteen years. 107. Would it not naturally occur to you, as a director, that you should have the title to your ground, and that you could obtain the information from the Warden's Office ?—Yes ; but we always looked to the solicitor to look after the titles. 108. Then, you put the whole responsibility of having no title on to the solicitor?— Yes. 109. Hon. Mr Lee Smith] Were you. a director of any of these companies at their first inception, or did you go on the directorates afterwards ?—I went on afterwards—elected by the shareholders. I was not a provisional director. 110. Were you a provisional director in any case ?—No. 111. Therefore you do not know whether the contracts were adopted at the first meeting of each company, which is the usual thing to do ?—No. 112. Did you ever make any inquiry about that ?—I am not aware that they were adopted. 113. Did you know at the time?—No; these matters were settled by the provisional directors. 114. Do you know whether there is anything in the minutes of the first meeting of each of the companies as to the adoption of the contracts ?—I do not know ; that can be ascertained by reference to the minute-books. 115. Take the Lees Ferry Company : when was that company brought into existence?—l do not remember the exact date. 116. Then, take the Tucker Flat Company : where are the minutes of the first meeting of the provisional directors of that company ?—I was not a provisional director. 117. Hon. the Chairman] You were not on the directorate of the Lees Ferry Company at the first ? —No; nor on the directorates of the other companies. 118. Hon. Mr. Lee Smith] Then, you did not take any steps to find out whether there had been any legal adoption of the contracts, which is the first thing to be done by a company ?—We left that to the solicitor. 119. You did not bother about it ? —No. 120. Did any one, at a meeting of any of these companies, ever vote on shares on which the calls had not been paid? —I could not give you a decided answer to the question. 121. You do not know ?—No. 122. Now, you said that Mr. Cook was at one meeting of each company ?—He was at one meeting, at any rate; I would not be sure as to whether it was the first. 123. Do you mean the first inception of the companies, or afterwards ? —After the companies were formed. 124. Where was he supposed to be ? He was a director : what was he doing ? —We were always expecting him to turn up at some time or other. He was travelling about, and was always expected at the next meeting. 125. He received fees for being a director ? —Yes, that is so. 126. Was any arrangement made by which he should go to the Coast and look after the properties ?—Not directly; he might have mentioned something to that effect, but I do not remember anything about it. ... 127. Did" you pass a resolution to exonerate him from non-attendance at the meetings on account of his visit to the Coast on behalf of any of the companies ?—No. 128. Then, according to your view, he, to use a common phrase, went " on "his own "?—Yes. 129. You did not know that he was expressly there for the purpose of looking after the interests of the companies ? —No. 130. If he said that he had arranged to go to the Coast on behalf of the companies he would be saying that which was not correct ?—I would not swear to that. 131. You know of no minute about Mr. Cook's visit to the Coast?—No ; but there might be one. 132. What information did he give you about the properties on the Coast ?—I do not think that we learnt anything more than we knew from the prospectuses in the first place. 133. Did you get any weekly or monthly reports?—No, 134. Mr. Cook did not send you any reports ?—Not one, to my knowledge. 135. And therefore, for the purposes of the companies, Cook was of no use to you, because you were absolutely in the dark as far as reports from him were concerned ?—He did not give any help. 136. He never sent you any information as to where the companies' properties were, their possibilities or probabilities, &c. ?—No; we knew nothing beyond what we could find out for ourselves.

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137. So he was receiving twenty guineas a year from each of the companies for being on the Coast without doing any apparent service in return ?—Yes, that is so. The amount voted to the directors as fees was divided between the three directors of each company. 138. Mr. Herries] The vendors' shares were not allotted in the Wicklow, Golden Grey, or Tucker Flat Companies ? —Not that I am aware of. 139. Why were they not allotted ?—We did not allot the vendors' shares till we knew that everything was in order. 140. Why were the vendors' shares allotted in the case of the Lees Ferry Company?— Because the company's solicitor advised us that everything was right. 141. Apparently, the solicitor ran the company? —The solicitor always does run the company, I think. 142. When the vendors' shares in the Lees Ferry Company were allotted, why was not the claim made over to the company ? —We naturally thought it was. 143. Did you, as a director, take steps to inquire ?—No ; as I said before, we left that to the solicitor. 144. You know nothing about it ?—No. 145. You left almost everything that a director has to do with to the solicitor ?—There are very few directors who do not leave such matters to the company's solicitor in the same way. 146. Take the Tucker Flat Company : 4s. per share has been called up?—6s., I think. 147. 4s. per share, according to the return furnished to the Government?— Then, perhaps, that is right. 148. £472 has been actually paid up ? —Yes. 149. And the amount owing on calls is £688 ?—Yes. 150. How was the £472 spent ?—ln ordinary expenses; you can see from the papers. The boring cost, I think, £113. 151. You were spending that money on ground that was not yours?—Of course, we did not know that it was not ours. We thought it was our ground. 152. You did not take any steps before spending the money on the ground to find out whether it was yours ? —No; we took it for granted that the claim belonged to us. It was for the solicitor to see that the titles were correct. 153. You think the solicitor to the company failed in his duty ? —Certainly, if the claim is not ours. 154. You paid rent for the claim ? —Yes. 155. I see the amount of £9 12s. for rent entered several times ?—Yes. 156. I do not see any amount entered here for the boring ; are you sure as to that ?—Yes. 157. I notice that the directors' fees and secretary's salary have been drawn regularly ? — Yes. 158. Apparently the bulk of what the subscribers did subscribe went as directors' fees and secretary's salary ?—Yes. 159. Were you aware that the secretary's salary was going to Cook and Gray ?—I did not know whom it went to. 160. You did not make any inquiries ?—No, not as long as he did his work properly. 161. Have you got anything to do with the Lees Ferry Company now, or is it in liquidation ? It is in liquidation. 162. Then, you have severed your connection with these four companies ? —Yes, as a director. 163. Hon. Captain Morris] With regard to the secretary laying this transfer of 250 shares before the directors when the call was unpaid, did he tell you that the call had been paid ? —I do not remember what happened at that time. He was supposed to tell us that the calls had been paid. In this case, if we had not thought that the call had been paid we would not have passed the transfer. 164. When did you find out that the call had not been paid on those shares ?—I do not know that I found it out at all. 165. The directors never knew ?—No. 166. You were quite satisfied with Mr. Hoisted as secretary ?—Yes ; he is the secretary to other companies that I am connected with, and has done his work very well. 167. It is a usual thing, when a transfer is put in, to ask whether the calls on the shares to be transferred are paid ? —The calls should be paid before the transfer is put before the directors. 168. The directors usually see that the calls have been paid—in fact, the secretary ought to bring the book and say, " The calls on these shares have been paid, and the transfer is free " ?—• Yes. 169. Your secretary did not do this in the instance which has been referred to ?—No; the chairman looked at the book and signed the transfer. He was more familiar with these matters than I —he was more of a business man—and I looked to him to see that the transfer was all right. 170. Was he in the Chair when this transfer was passed ? —Yes. 171. And did he tell you that it was all right?— Yes; or else the transfer would not have been passed. 172. Hon. Mr. Tiuomey] You were elected a director by the shareholders?—-Yes. 173. How many voted for you ?—I do not remember ; the minute-book will show. 174. Did Mr. Howes vote for you? —I could not tell you. 175. Was he present at the meeting at which you were elected ?—I do not know whether he was or not. 176. Did more than seven shareholders vote for you ?—I was elected pretty unanimously ; how many were present I could not tell you.

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177. I think you said it is eighteen months since you were elected to the directorate of one of the companies; you have been drawing directors' fees all the time?—We were prepared for the companies going into liquidation, and were prepared to forego directors' fees. 178. You say it is a standing rule that all calls should be paid before a transfer of the shares is made ?—That is so. 179. And you depended on the secretary to the company to see to that?— Yes. 180. Who was the secretary?— Mr. Hoisted. 181. Who is Mr. Hoisted ?—He is an accountant. 182. Was he carrying on business on his own account then ? —At the time referred to he was accountant to Cook and Gray. 183. Cook and Gray were the vendors ?—Yes ; at any rate, they were among the vendors. 184. You told Mr. Cook that you had lost a good deal of money in mining, but you did not cry over it. Did you ever lose money in a company which had never had a title to a claim?—No ; not that I am aware of. 185. These companies under review now have not titles to their claims ?—We are not aware of that. 186. You drew directors' fees, and did not take the trouble to find out whether the thing was good or not. Now, at the time of allotting the shares in the Lees Ferry Company, did you find that the subscribed capital was sufficient ? —At that time we did not know what sort of a claim it was. We did not know what kind of a dredge was required. It was understood that the capital might be enough, but when we looked into the matter we found that more would be wanted. 187. You have practically admitted that you have been very reckless and careless in your management as a director? —No; I do not admit that. 188. Is it not a fact that you altogether trusted in, and left everything to, Mr. Cook ?—Not at all. We have not entrusted anything to him in connection with the management of the companies. 189. At the time of allotting the shares, were they all applied for ?—He was not present. 190. At the time of allotting the shares, were all the shares applied for ?—The provisional directors did that. 191. Do you know how many of the provisional directors signed the articles of association?— There should have been seven. 192. How many of them took up shares ?—I could not tell you. 193. Hon. Mr. McGoioan] Your opinion is that it was the duty of the solicitor to the companies of which you were a director to see that the titles to the claims were correct ?—That is so. 194. You assumed that they were correct, because you left that to the solicitor ?—Yes. 195. What is your opinion of the duties of the directors of a company? —They should do the other portion of the management. 196. Will you please describe that other portion?—To see that a dredge is put on, and all that sort of thing. We always looked to the solicitor to look after the titles, or anything of that kind. 197. Putting aside the question of titles, what is your opinion of the duties of the directors? — They should look after the other part of the business. 198. What is that " other part" ? —To look after the transfer of shares, and all business that might come before the company. 199. In looking after the transfer of shares, was it a rule, in the companies of which you were a director, to see that the liabilities on shares to be transferred were paid before any transfer took place ? —Certainly. 200. Did you do that ? —We do that always. 201. Did you do it in the instance which has been referred to? —The chairman looked after it. The board of directors should do that always. 202. Did your board of directors see that all liabilities on shares to be transferred were paid? —As far as lam aware, we did. 203. Do you still say that, after the evidence which has been given with reference to transfers of shares being made on which calls were owing ? —We might not have gone into the particular case which has been mentioned. 204. Then* your statement that the directors carried out their duty in seeing that the liabilities on shares that were to be transferred were paid, is not correct ?—We might not have done our duty as well as we should have done ; we relied on the secretary to put the matter before us in the usualform —namely, that transfers should not be placed before the directors unless the calls on the shares to be transferred were paid. 205. Did you, as directors, give the secretary any instructions to that effect? —No, not that I am aware of. 206. When you made a call after the allotment, in the case of the Tucker Flat Company, what was the object in making the call?—lt was intended to get a dredge put on the claim. 207. Did you expect that a two-shilling call would enable you to put a dredge on? —We intended to increase the capital. 208. You say that you made the call in order to put a dredge on the claim ; did you expect a call of 2s. per share would enable you to put a dredge on ?—No ; we intended to make more calls. We thought that we might get a dredge cheap. 209. In the meantime was not the money that came in as the result of that 25.-per-share call distributed in payment of fees to the directors and salary to the secretary ?—Yes, and in prospecting, and so on. 210. What prospecting was done during the time that you had no dredge? —We spent a-lot of money in prospecting; I think the amount paid for prospecting the Tucker Fat property was £113, and we had prospecting done in connection with some other companies. 211. In short, the money derived from the call of 2s. per share in the Tucker Flat Company,

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which was made in order to obtain a dredge—that money was used up in the payment of directors' fees and the secretary's salary: is that so, or is it not ? If there was not money enough for that purpose beforehand some of the money derived from the call would be so spent. 212. But directors' fees and secretary's salary were made a first charge, as far as you were concerned?— Yes, naturally. 213. Have you sold any shares in either of the companies which have been mentioned?— No. 214. Did you buy your shares in them in the open market?—l took them vp —subscribed for them in the ordinary way. I applied for the shares, and paid up the application and allotment money in the usual way. 215. How long were any of these companies in existence before you were appointed a director ?—I was appointed at the first meeting of shareholders. 216. On an average, how many shares constituted the right to be a director in these companies ? —Fifty was, I think, the number. 217. And the allotment money in most cases would be Is. per share, so that for the sum of fifty shillings a director could draw as director's fees—supposing the meetings were held—his proportion of the amount voted as directors' remuneration? —About sixty guineas a year was voted for directors' fees, to be divided between the three directors of a company. 218. Mr. Herries] A transaction came up in Mr. Easton's evidence with regard to a transfer from a Mr. Benjamin to Mr. Cook of shares in the Tucker Flat Company ; the transfer was refused by one meeting of directors because a call was owing on the shares ?—Yes. 219. They refused to register the transfer ?—Yes. 220. Subsequently, at another meeting of directors—at which, according to the minute-book, you were present —the transfer was passed. Can you explain the matter? —I was present at the time. The transfer was referred to Brent, a solicitor, and he looked into the matter. I did not take an active part in it; he being a solicitor I left it to him, and he said the thing was perfectly right. Ido not know if the money has been paid. 221. We had it in Mr. Holsted's evidence that the money was still owing on the shares, and yet they were transferred with the call still owing ?—I left it to my co-directors ; I thought they knew more about it than I did. I thought the matter was safe in Brent's hands. 222. There was no doubt, according to the books and Mr. Holsted's evidence, that the shares were transferred with £25, I think it was, owing on them ? —Yes. 223. You cannot throw any light on the matter? —No. 224. With reference to boring, I see from this book—the cash-book—that £113 was paid for boring on the Tucker Flat claim : to whom was that amount paid ? —Mr. Appleton did the boring. 225. It does not appear so from the books. Was the amount not paid to Wild ?—The books will show. 226. According to this book the amount was paid to Wild. Was not Wild the vendor to the company ? —Yes, one of the vendors. 227. How is it that, according to the minutes, you received a report from Wild?—We got the report from Appleton, the man who did the boring. He was looked upon as a reliable man. 228. Does that appear in the minutes? —I could not tell you, but I may say that we have his report among the papers. 229. I find in the minutes mention of a report from Wild with regard to boring? —I saw the report from Appleton myself, so I know that we have it. 230. The only sum that I can find as having been spent on the claim is this £113 ? —More than that was spent; there was also a report from Chester on the claim. 231. Who instructed Chester to report?— The directors. 232. The amount paid for boring is shown in the books to have been paid to Wild?—He paid the money over to the man who did the work. 233. Why should the company pay Wild if they employed another man to do the work ?—He was over there as a matter of business, and we relied on him to look after the boring. 234. He was the vendor to the company ? —That is so ; but Appleton sent in an independent report on the boring, and we sent the money to Wild to pay Appleton. 235. Mr. Cook] Mr. Leijon, you were asked by Mr. Smith whether you saw into the titles at the inception of the companies. Now, the prospectus states—l am taking the Wicklow Company ■ —" This company is being formed for the purpose of acquiring and working the prospecting area No. 351, situated on the Grey Biver, about sixteen miles from Greymouth" ?—I did not look into the titles. 236. The prospecting area No. 351 was a title to that claim at the time ; you, as a mining man, would know that, would you not—that the title of a prospecting area is a title for twelve months given to a miner ?—Yes ; you can get prospecting licenses for six months or more— twelve months if work is being done prospecting. 237. Then, if you were a subscribing shareholder and had seen that on the face of the prospectus, you would have known that that was your title when you went into the company ?— Yes; there were plenty of companies floated on prospecting licenses. I took up shares in companies without a prospecting license being taken out—without any title. 238. Then the minute of the meeting of provisional directors states that the following resolution was passed : " Besolved, that Mr. Davidson be authorised to execute the agreement referred to in the memorandum and articles of association." Was that usual? —I do not know. I was not present. I should say it was not usual. 239. lam speaking of companies generally: is it usual that at the first meeting the agreement should be signed on behalf of the company by one of the directors ?—That is a legal question. I cannot answer that.

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240. But on the prospecting and flotation of a company the prospecting area was the usual thing to go upon? —It was not uncommon at that time, at any rate. 241. You stated that you never heard from me while I was on the Coast: I would like to refresh your memory on this point. In reference to the Tucker Flat Company, do you not remember my wiring over advising that the claim should be bored, and that Mr. Appleton should be employed ?—I do not remember it, but you might have done so. 242. And that a wire was sent back to me authorising me to employ him ?—I would not deny that. 243. If I produce the wire, you will admit it?— Yes ; certainly. 244. Now, I stated in my preliminary evidence—without looking up any documents—" They elected me to be a director on most of them (the companies). They knew that I was travelling, and could not attend the meetings ; that I should be on the West Coast, and I was asked to look after the companies' interests on the Coast." Is that untrue? —I really cannot remember. A matter of that sort was never brought up before the directors or shareholders; you may have said so, but we would have expected you to be present more frequently at our meetings. 245. I stated that I was asked to look after things generally on the Coast : you do not remember whether that is so or not ? —No. 246. The minutes provide that the directors' remuneration should be sixty guineas in the case of the Tucker Flat Company: " Besolved, that the directors' remuneration be sixty guineas per annum, to be divided as they consider proper " ? —Yes. 247. You considered it proper to pay one-third of that sum to me, did you not ?—Yes, we did. 248. And had the twenty guineas not been paid to me, Mr. Somerville and yourself would have had thirty guineas each ? —Yes. 249. It would have made no difference to the company? —No; we could have claimed the money and divided it between us if we had liked. 250. Hon. the Chairman] Was this money paid immediately the company was formed ?— No ;it was paid in the usual way—quarterly or half-yearly. Different companies have different rules as to that. 251. Mr. Cook] With reference to the three claims on the Grey Biver—namely, the Wicklow, Lees Ferry, and Golden Grey, I notice that at one of the meetings the question of the appointment of the engineer was held over. The minutes of a meeting of the Wicklow Company on the 9th April show the following resolution to have been carried: "Besolved, that the appointment of an engineer be held over." Now, was it not considered advisable by you and your co-director not to incur the cost of building the dredges for these companies, whose claims were on the Grey Biver, until the results obtained by two dredges that were then in course of construction were known? —Certainly; that was one of the principal reasons why we did not do anything further or make further calls. 252. Had you built at that time, you would probably have had similar dredges built to those that were being constructed?— Yes; there is no doubt that had we built then the dredges would have been similar. 253. Had you done so, those dredges would have been inefficient ?—I would not have been in favour of putting a dredge on until the river had been bored. 254. The depth of the river was greater than was anticipated, and therefore the two dredges that were put on were inadequate ?—Yes. 255. Looking back, you think it was a wise thing not to construct the dredges for the three companies mentioned, at that time ?—Yes, certainly; it would have been very foolish to have done so. 256. Then, with reference to the cost of dredges, the subscribing capital of each of these companies was £6,000; but this was proved to be insufficient. Was not that to a large extent on account of the cost of dredges going up so much ?—There is no doubt about that. Dredges were expected to be very much cheaper. 257. The prices of dredges went up some 25 or 30 per cent. ? —Yes, I belive they did. 258. There are many instances of companies, other than those floated by Cook and Gray, which have built their dredges and lost the whole of their money ?—-Yes, a good many instances. 259. You were asked by the Hon. Mr. McGowan about the two-shilling call being spent. The only call that was made on shares in any of these four companies was in the case of the Tucker Flat Company, was it not ?—That is so. 260. And that was done because you were boring —you had bored and incurred expenses ?— Yes, extra expenses. 261. Mr. Herries asked you some questions about money being paid to Wild : was it not the case that Wild acted as agent for the Tucker Flat Company on the West Coast, and paid the amount on your behalf ?—That is so. 262. He did not have the money ?—We sent it to him to pay the man who did the boring. 263. Mr. Palmer] You said just now, in reply to a question of Mr. Cook's with regard to prospecting licenses, that a number of companies were formed on prospecting licenses ?—Yes. 264. I suppose you know that the only title which a prospecting license gives you is the right to peg-off within a year a claim within a certain area? —Yes, and prospect on it. 265. It gives you the right in the meantime to prospect on the claim ?—Yes. 266. And if you do not do so the license is liable to forfeiture ? —Yes. 267. You said that you did not know anything about these companies' claims at the beginning as to their value, &c. ?—Only what I got from the prospectors' reports. 268. You trusted to the promoters ?—No; to the prospectors. 269. You went into the companies on what was stated in the prospectuses ? —Yes. 270. Were there others who, like yourself, had to trust to the prospectuses?—! suppose

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nearly everybody who took shares did. Mr. Don was a reliable man; we always trusted in his: reports. 271. Mr. Easton] I understood you to say that you had severed your connection with these four companies, as a director?— They are in liquidation. 272. Are you still a director of the Tucker Flat Company ?—Liquidation has been postponed in connection with that company for five or six weeks, in order to see if some arrangement as to amalgamation cannot be made. 273. Then, you have not severed your connection with all four companies ?—Yes, practically ; the other three are in liquidation. 274. You are still a director of the Tucker Flat Company?— Just temporarily, in order to see if anything can be done in the way of amalgamation with another company. 275. I understood you to say that the secretary to the companies had done his work well ?— We reckoned so ; in fact, you yourself gave him a testimonial to that effect. 276. Do you consider he did his work well when he advised you to pass transfers when money was owing on the shares to be transferred? —That is the only fault I can find with him. 277. Then, he did not do his work well?— Not in that case. 278. I understood you to say that money was spent in prospecting the Wicklow Company's claim ?—-The Golden Grey and Lees Ferry claims. 279. I understood you to say the Wicklow ? —Then, I made a mistake. 280. Were not some of these companies floated before the prospectuses were printed at all ?— I do not think so ; I do not think that would be very likely. 281. In the case of the Tucker Flat Company, as a director, are you not aware that I handed in a requisition to wind the company up ?—Yes, certainly ; and we called a meeting of shareholders at once. 282. That requisition was largely signed ? —Yes. 283. You know that, amongst others, it was signed by Mr. W. H. Cutten, who was to have been the engineer to the company ?—Yes, I think his name was attached to it. 284. And yet notwithstanding that the company was kept alive ?—lt was decided at the meeting of shareholders to postpone liquidation, in order to see if we could get another dredge from another company, or to amalgate with another company. 285. With regard to the four companies under review, presuming that tests had been made in each case and the ground had been proved very auriferous, do you consider that the share-lists would have been strong enough to provide dredges ? —I am afraid they were too weak. 286. How could the money have been obtained?—We did not know that to begin with—that the share-lists were not strong enough. 287. It was not a case of waiting to see whether other dredges did well or indifferently—it was simply the case that the dredges could not be ordered because the share-lists would not provide the money necessary ?—ln any case we would not have ordered the dredges without seeing what the depth of the river was, &c. 288. I understood you to say that during the time that you were a director Mr. Cook resigned from the boards of the companies ?—No, he did not resign ; we passed a resolution to appoint another man in his place. The reason why we struck him off the directorates was that he had not attended the meetings sufficiently. 289. Then, he was expelled from the boards of directors ?—You can put it in that way if you like. 290. Hon. Mr. Lee Smith] You say that we " can put it in that way " : did you understand when you removed Mr. Cook from the directorates that he was representing the companies on the West Coast, and could not be present at the meetings in Dunedin, or had you in your mind the fact that Cook was neglecting to attend in Dunedin, improperly ?—Yes, we thought so. 291. That is to say that you and the other members of the boards did not know that Cook was supposed to be attending to the business of the companies on the West Coast ?—Not so much as all that, at any rate. We thought that he should have attended the meetings better than he did. 292. And therefore you deemed it advisable to remove him from the boards ?—That is so.

Friday, 13th September, 1901. William George Somerville, examined on oath. (No. 2.) The following telegram from Mr. W. A. Brooks, Mining Begistrar at Boss, was read "Vendors to Boss Day Dawn Gold-dredging Company transfer dated 18th May last registered 14th June." 1. Hon. the Chairman] What is your name, Mr. Somerville?—William George Somerville. 2. Mr. Easton] With reference to the Lees Ferry Company, did you sign the articles of association, Mr. Somerville ? —Yes. 3. Did you act in the capacity of provisional director ?—No, except to sign the articles of association. 4. Which of the provisional directors allotted the contributing shares and authorised the completion of the agreement between Mr. Cook and the company ?—I can hardly remember, but will refer to the minute-book. They were Messrs. Davidson, Sawell, Hoisted, and Thompson. 5. How many of these gentlemen ever took up shares in the company?— The only ones whose names ever appeared on the register were Messrs. Davidson and Sawell. 6. What were the others, then ?—-They were not shareholders. 7. Do you mean to say that they were dummy shareholders?— Practically, they must have been. 12—1.-4 a.

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~...-' 8. Have you ever examined the agreement filed with the Begistrar of Joint-stock Companies at Dunedin ?—I have. .-, 9. Do you consider the agreement to be in order, as a legal document ? —No, Ido not. 10. Has the common seal of the company been affixed to the agreement, and is the agreement properly witnessed?— The common seal of the company has not been affixed to the document, and the signature has not been witnessed. 11. I understand that an alteration in the date has been made in this agreement, and has not been initialled by-cither Cook or the company : is that correct ? —That is so. 12. Did you instruct Mr. Holmes to prepare the memorandum and articles of association on the agreement, Cook to the company ?—No. 13. Who, in your opinion, gave instructions for those documents to be prepared? —Either Mr. Cook or Mr. Howes. 14. Who obtained the signatures to the articles of association ? —Mr. Howes. . 15. Who witnessed them?— Mr. Howes. 16. The provisional directors allotted the shares, I take it ?—Yes. 17. You have already stated that of those who allotted the shares the names of only two appeared on the share register of the company, and that the others were not shareholders at all ?— Their names have never appeared on the share register. 18. And, consequently, they must have been dummies? —Yes. 19. Then, in your opinion, was this Lees Ferry Company ever legally formed ?—ln my opinion the allotment of the shares was made at a meeting at which a quorum was not present. 20. Have you ever seen the assignment, or deed of sale, from Joseph Taylor to Cook ? —I had not seen it till yesterday. 21. Are you aware that I, accompanied by my solicitor (Mr. McGregor), applied for a sight of this deed, and that Mr. Allan Holmes demanded some £80, the amount of Mr. Cook's private bill of. costs, before I could see it?— Yes. 22. You are aware of that ? —Yes. 23. At what date did you become a director of this company?—l was appointed at the first meeting of shareholders—on the 9th April, 1900, I think it was. 24. Who was the secretary to the company?— Mr. Hoisted. ' 25. Did you understand Mr. Hoisted to be the bond fide secretary to the company?— Yes. 26. When did you become aware that he was not the secretary?— Some time after I acted as a director. .27. You found then that he was not the secretary?— That is so. 28. When you found that Mr. Hoisted was not the secretary to the Lees.Ferry Company, who, in your opinion was ?—Cook and Gray were the secretaries. 29. They were directors and brokers to the company?— Mr. Cook was a director. v ■■'■ SO' And he was the broker? —Yes. 31. He was also the vendor to the company? —Yes. j 32. And his firm were the secretaries?— Yes, practically. 33. Now, I understand that 2,000 fully paid-up shares were allotted to Mr. Cook and his nominees : at whose request was this done ?—At Mr. Cook's request. 34. I understand that Mr. Cook states that he resigned from the board of directors of the company : is that so?— No. Mr. Cook : I never stated that. 35. Mr. Easton] What caused Mr. Cook to retire from the board of directors?— His seat was declared vacant. 36. Why ?—Because of his non-attendance, practically. 37. Then, he was practically removed from the board ?—Yes, if you put it in that way. _' 38. Did he resign, or was he removed ? —He was removed by order of the directors. 39. For non-attendance?— Yes. z 40. Is there any record in the minute-book as to Cook's seat on the board ?—Yes. 41. Will you read it out, please?— The minute is dated the 7th February, 1901: "Besolved, That Mr. Cook's seat on the board be declared vacant, and that he be advised to that effect." 42. What services did Cook render to this company as a director ?—None. 43. Who was appointed as a director in Cook's place ?—You, yourself. 44. For what reason ? —Because you were a large shareholder, and the directors, having made up their minds to wind up the company, asked you take a seat on the board to assist in that direction. .:::. 45. I understand that the directors recommended that this Lees Ferry Company should be wound up voluntarily?—Zes. 46. What reason had the directors for doing that ?—There were three reasons: (1) The claim had been proved to the satisfaction of the directors to be valueless for dredging purposes; (2) insufficiency of capital—sufficient capital had not been provided for building a dredge ; (3) the share-list was not considered strong enough by the directors. 47. Were you present at a general meeting of shareholders held on the 26th March, 1901, when I said that if this company was kept alive for the benefit of the promoters, vendors, directors, and secretary I would place the whole position before Parliament ?—Yes. 48. Hon. the Chairman] Is there a minute to that effect in the minute-book ?—No. 49. Mr. Easton] A report of the meeting was published in the Otago Daily Times ? —Yes, it was published in the paper. 50. You signed the evidence as to the position of this Lees Ferry Company and met the subcommittee of < the Dunedin Stock Exchange?— Yes,

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51. What was the result ?—They struck this and other companies off their lists. 52. Other companies floated by Cook and Gray ?—Yes. 53. The vendors' shares were used by Howes to prevent liquidation ?—That is so ; he held the vendors' proxies. 54. While on the board of the Lees Ferry Company you declined to pass a transfer of 250 shares from Mr. L. S. Benjamin to Mr. W. B. Cook?— That is so. 55. What was your reason for doing that ?—At that time Cook was owing, to my knowledge, large sums of money to several companies, and we decided to retain Benjamin as a shareholder. 56. After Mr. Howes, by using Mr. Cook's vendors' votes, expelled you from the board of the company this transfer was passed ?—Yes; the minute-book and the transfer journal show that. 57. Mr. Howes became a director of this company ?—Yes, when I left. 58. It was while he was director that the transfer which you declined to pass was passed ? — That is so. 59. Are you aware that Mr. William Gray, Mr. H. C. Choyce, Mr. B. H. Abbott, and other gentlemen have stated—some on oath—that Cook assured them that in the Wicklow, Golden Grey, Lees Ferry, and Tucker Flat Companies the only liability they would incur would be Is. per share ? —Yes. 60. Do you happen to know of any one else to whom a similar assurance was given ?—Yes. 61. Will you tell the Committee who that gentleman is ?—A gentleman in this town volunteered the information to me that Mace, Cook's manager here, had asked him to take shares in these companies, and stated that he (my informant) would be required to pay only Is. per share. 62. Hon. the Chairman] Who was he?— Mr. Joseph Henry. 63. What is he ?—A tailor. 64. What is his address ?—Lambton Quay, Wellington. 65. Mr. J. Allen] Mr. Mace offered him the shares, not Mr. Cook ? —That is so. Hon. the Chairman ] Then, that is quite a different question. 66. Mr. Easton] What relation was Mr. Mace to Mr. Cook ? —He was Mr. Cook's manager in Wellington. 67. And he had a good deal to do with the companies ? —I cannot say that. 68. He held a large number of shares in the various companies floated by Cook and Gray ?— Yes. 69. Do you know of any shareholders whose allotment call has been paid by Mr. Cook ? —Yes. 70. Who? —Mr. and Mrs. Farley. They held about five hundred shares, I think, in each of the four companies—namely the Wicklow, Golden Grey, Lees Ferry, and Tucker Flat Companies. 71. To whom where the receipts sent for the money paid by Cook?—To Cook. 72. Not to Mr. and Mrs. Farley ?—Cook's instructions were to send the receipts to him. 73. Were not pencil entries made in the register as to the call notices?— That is so. 74. Were the Farleys' addresses always stated in the registers?— No. 75. They have only recently been put in?— Yes; they have only recently been filled in the registers. 76. Do you now consider these Farleys genuine shareholders or dummies?— Dummies, I should say. 77. Now, is there any mention in the accounts of the person or persons who gave Mr. Allan Holmes instructions generally ?—Yes. 78. Who gave him the instructions ?—I have here his account against the Wicklow Company, which is a duplicate of that against the Lees Ferry Company. It is dated the 6th April, 1900, and is as follows :— 1900. & s. d. Feb. 8. Instructions for incorporation of company and agreement for sale ; drawing agreement for sale ' „ 9. Engrossing two copies agreement for sale .. .. .. .. .. .. „ 12. Letter to Messrs. Cook and Gray, with agreement, drawing memorandum and articles .. [ia in 0 „ 13. Typewriting four copies memo, and articles „ 26. Attending Mr. Howes on his calling with contraot signed by Mr. Cook in duplicate; handing him memo, and artioles, and advising him of steps necessary to register .. .. ... Mar. 1. Attending Mr. Howes on his calling with memo, and ariioles duly executed for registration. „ 3. Attending registering memo, and articles of association. • -.= 5. Attending Mr. Howes, informing him that oompany registered. „ 7. Preparing notice of registered office ; attending filing notice of registered office. „ 9. Attending meeting of direotors, obtaining execution of contract of sale, &c.; attending to stamp agreement and duplicate ; attending to file one copy. Paid fee on incorporation .. .. .. .. .. .. .. .. 15 0-0 Paid stamp duty on agreement .. .. .. .. .. .. .. 020 Paid filing agreement .. .. .. .. .. .. .. .. 0 5 0. 25 17 0 Less oash .. .. .. .. .. .. .. .. 15 0 0 £10 17 0 This account is among the other papers in connection with the Wicklow Company, which have been placed before the Committee. 79. Mr. Herries] Whom was the account rendered to?—To the company. 80. Mr. Easton] With reference to the Golden Grey Company: the statements you- have made as to the Lees Ferry Company apply generally to the Golden Grey up to the time of the' annual meeting ?—Yes. ' ;■ . 81. I would, therefore, be only wasting time by asking them over again. Did Cook, at the annual meeting, demand the allotment of 2,000 vendors' shares? —Yes, through his solicitors. 82. Did not Howes threaten the meeting that unless these 2,000 vendors' shares were allotted then and there, the liquidation would cost 7s. or Bs. per share ?—That is so. ":-■ ' "

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83. Why did the directors of the Golden Grey Company not agree to this demand ?—Because the company's solicitor advised us not to. 84. Who was the company's solicitor? —Mr. W. C. Macgregor, of Dunedin. 85. He took the place of Mr. Allan Holmes?— Yes. 86. Why was the Golden Grey Company removed from Cook's office only a few hours before the annual meeting took place? —Because the directors considered it was in the interests of the contributing shareholders that an independent secretary and a new solicitor should be appointed. 87. Who were the directors at that time ? —You yourself, Mr. Leijon, and I. 88. Mr. Cook was a director formerly ?—Yes. 89. You remember that when I was on the board we removed the company's office and the secretary a few hours before the general meeting?— That is so. 90. And appointed a new solicitor ? —Yes, and a new secretary. 91. Mr. W. Eraser] At what date did you pass the resolution?—l think it was at the date of the annual meeting, in March of this year. 92. Mr. Easton] In this company, as in others, were not shares alloted to parties who had never applied for them ?—Yes, to people who had not signed an application for shares. 93. They were allotted to people who never put in any application for them ?—That is so. 94. How can you prove that ? —I have here the application-for-share forms ; there is a memo, here on which shares were allotted to Mr. Sawell—" Bespoke fifty in each of four companies." It is initialled " W.H.", and dated " 2/3/00." 95. Hon. the Chairman] I suppose this man promised to take the shares : is that it ?—No application was signed. 96. Mr. Easton] They were allotted to him without any application being signed?— Yes. 97 Mr. J. Allen.] Did he pay the application money on them ?—No. 98. Hon. Mr. Duncan] Was it usual to allot shares in that way ?—No; but it was done in this case. 99. Hon. the Chairman] Will you tell us who the directors were that allotted those shares ?— In the case of the Lees Ferry Company they were Messrs. Davidson, Sawell, Hoisted, and Thompson. 100. Mr. Sawell was a provisional director, but had no shares ?—He took fifty shares. 101. Mr. Easton] Some of the people who allotted those shares never held a share?— That is so ; their names never appeared on the registers. 102. So that in this case shares were allotted to a man who never put in any application, and were allotted by people who never held a share in the company—they were allotted by irresponsible parties ? —I do not not quite catch the drift of your question. This man Sawell evidently allotted himself shares without an application for them being signed, and he repudiated them afterwards. 103. Shares were allotted to Sawell by the provisional directors of the four companies— namely, Tucker Flat, Wicklow, Lees Ferry, and Golden Grey, some of whom never had any shares at all in the companies?— That is so. 104. Hon. Mr. Duncan] Did Sawell's attempt at repudiation succeed ?—He said that he never applied for the shares, and declined to pay for them ; but he afterwards admitted that, though not legally bound to pay for them, morally he was. 105. Mr. J. Allen] I asked you before whether he had paid the application money on the shares and you said No ?—He had not paid it at the time, but he has since ; that is what I meant to convey. 106. Mr. Easton] Now, with referene to the Wicklow Company, Mr. Somerville, your remarks on the Lees Ferry and Golden Grey Companies generally apply to this company ?—Yes. 107. Is it in liquidation ?—Yes. 108. And the Golden Grey and Lees Ferry Companies : are they in liquidation ?—Yes. 109. Now, as to the Ngahere Company, did not Mr. Howes prevent the liquidation of this company, and vote at a meeting when he had not paid one penny-piece into the company's office ? —That is so. 110. Do the articles of association of these Cook and Gray companies allow of people voting arid keeping companies alive when they have not paid a single penny-piece on the shares which they have applied for ?—That is so. 111. Hon. the Chairman] The articles of association are worded in that way—that a man can vote without having paid any application money ?—That is the solicitor's opinion. 112. Mr. Herries] Have you got that opinion?— The solicitor to the Ngahere Company was called to a meeting to decide the point, and he said, " Yes, you can all vote," or words to that effect. 113. Mr. Easton] How many people were present at that meeting when Mr. Allan Holmes decided that everybody could vote ?—A full quorum of shareholders. 114. The minute-book will show who were present at the meeting ?—Yes. This is the minute of the meeting, Mr. Chairman. It was held on the 18th June of this year. Hon. the Chairman : I will read the minutes of the meeting :— Minutes of Extraordinary General Meeting of the Ngahere Gold-dredging Company (Limited), held in the Registered Office of the Company, 17, High Street, Dunedin, 18th June, 1901, at 4.30. Chairman : Mr. W. G. Somerville. Personally present: Easton, Cutten, Pearce, McPadyen, Howes, Glover, Sawell, Patterson, Davidson, T. D. Pearce, H. O. Haggitt. Proxies: Howarth, McDonald, Tebbs, Webber, Cook, Stringer, Roberts, E. M. Cook, J. S. Johnston, Hallenstein, Ziele, Henderson, Tidd, Mitchell. Resolutions : Moved by Mr. Somerville, "That the company be wound up voluntarily, under the provisions of ' The Companies' Act, 1882,' and its amendments." Seconded by Mr. Cutten. Moved as an amendment by Mr. Howes, " That as a resolution to liquidate was proposed and negatived on the 15th April last, and as the direotors have made no effort to amicably arrange for the vendors' rights and interest in

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the company, whioh are provided for in the agreement with them by the company, this meeting resolves that the question of the future of the company shall be left in abeyance in the hands of the directors, at as small an expense to the shareholders as possible, for a further period of four months, and if it then appears from the result of mining operations in tbe Grey Valley generally that it is inadvisable to go on, that the directors endeavour to induce the vendors to forego their rights and interest in the company, thereby conserving the financial interests of the shareholders." Seconded by Mr. McFadyen. The Chairman put the amendment, and on a show of hands three voted for same. The Chairman put the motion, and on a show of hands six voted for the resolution. The Chairman declared tbe resolution carried. W. G. SOMBBVILI-K. 115. Mr. Herries] There is no account there of the solicitor's opinion? —No. 116. Hon. Mr. Duncan] Who was the solicitor to the company ?—Mr. Allan Holmes. 117. Mr. W. Fraser] What you stated just now is your recollection of his opinion ? —Yes. 118. Mr. Easton] I published that opinion in the Dunedin papers ?—Yes. 119. Hon. Mr. Duncan] Did you believe Mr. Holmes's statement, when the articles of association as printed stated otherwise ? —I am not a lawyer, gentlemen. 120. Mr. Easton] At the date at which Mr. Howes voted at that meeting, does not the share register of the Ngahere Company prove that he had not paid anything in to the company ? —That is so. Hon. the Chairman : According to the register he had not paid at that date. 121. Mr. Easton] Do you know of any shareholders who took up contributing shares in this company, believing that the company's claim was situated where described in the prospectus ?— Yes. 122. Who were they?— One was an employe of mine. 123. In your opinion, is the claim situated where stated in the prospectus?— No. 124. What reason have you got for saying that ?—I have examined the survey maps. 125. And what do you find ?—That the claim is not situated in the position stated in the prospectus. The prospectus is very misleading. 126. Does not the prospectus state that " This claim is situated at the confluence of the rich gold-bearing creeks known as Nelson Creek, German Gully, and Callaghan's Creek " ? —-That is so. 127. Where is Callaghan's Creek, then ?—I understand that it is several miles north of Nelson Creek. The prospectus states, " Taking in as it does the mouth of the gold-bearing streams such as German Gully, Callaghan's, and Nelson Creeks." On the map the claim is shown as being pegged-out on the stream above Nelson Creek. It is not situated at or near the confluence, or, as is stated in the prospectus, "at the confluence of the following streams." The map I refer to is one which is with the liquidator of the company. It was on yellow tracing-paper. 128. Is the Ngahere Company in liquidation ?—Yes. 129. With regard to the No Town No. 2 Company, is this company in a healthy financial position?—l understand that it is in utter chaos, financially. lam a shareholder in the company, not a director. 130. Have you ever examined the share-register of the No Town No. 2 Company ?—On several occasions. 131. Are you aware that at a time when Mr. and Mrs. Cook, and Cook's employes, Howes and Mace, were owing very large sums of money to the company, other small shareholders were being sued?— That is so. 132. Did Dr. Martin, of Dunedin, a director of the company, tell you that Cook would pay all Mace's calls on his shares in the No Town No. 2 Company ?—Yes, that is so. 133. Is it not a fact that owing to the serious financial state of this company, when Mr. Cook retired from the board of directors—or had notice to retire—Mr. Adam, of Dunedin, declined to join, and, in fact, no one in Dunedin could be found to act as a director ? —No shareholder present at the meeting would act, on account of the financial state of the company. 134. You stated that the company is in utter chaos, financially ?—That is so. 135. With reference to the Tucker Flat Company, who prospected the claim ?—lt was reported on by Chester. 136. Who was Chester?— Cook's expert. 137. The same Mr. Chester who condemned the Lees Ferry and other claims?— The same gentleman. 138. You were chairman of directors of the Tucker Flat Company at one time, were you not ? —Yes. 139. When my transfer of 250 shares from Choyce was passed, with £25 owing by Choyce, were you not aware of this ?—No. 140. Were you acquainted with me or my financial position, as stated by Mr. Hoisted?—No; I never knew you till February of this year. 141. Have you seen Mr. Holsted's evidence?— Yes; I read what was published in the Evening Star. 142. You saw that Mr. Hoisted stated that my position was known to you?— That is so. 143. Hoisted stated that which was wrong, then ?—Yes ; we were not acquainted with you at all; we did not know you. 144. When did you first know that £25 was due from Choyce on the shares ?—Not till after I left the board ; you told me. 145. Was the secretary correct in receiving this transfer and placing it before the directors, when a call was owing on the shares by Mr. Choyce ? —No. 146. Would an independent secretary have done that?—A secretary who was doing his duty would not have done it. 147. Your contention is, then, that had the Tucker Flat Company had a secretary independent of Cook and Gray these irregularities would not have taken place ?—That is so.

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148. Would you have passed the transfer from Choyce to me, with money owing on the shares, had you known me ? —No ; I would not. 149. Now, as a director, I presume that you have passed a good many transfers ?—Several thousands, I should think. 150. Have you ever known a transfer to be presented to directors for approval at a time when calls were due by the seller?— Yes. 151. How many such?— Two. 152. Whose were they ? —One was a transfer of fully paid-up shares in the Boss Day Dawn Company, on which a considerable sum of money was owing, and the other was one of Kneebone's. 153. Who was the seller, in the case of the Boss Day Dawn Company, who was trying to get the transfer passed ?—Mr. Howes. 154. How much money was owing on the shares ? —£9o was due on contributing shares ; the transfer was for twenty-five fully paid-up shares. 155. Now, then, with £90 owing, there was an attempt made to pass Howes's transfer through? —Yes. 156. And you, as a director, declined to do so ?—Certainly. 157. Is it not a fact that I cautioned you, and said that if that transfer with £90 owing was passed through by the directors, I would publish the fact all over the colony ?—That is so. 158. As a result of that, you stepped in and prevented the transfer being made ?—I do not know that you are quite right there, because I had refused before you spoke to me about it. 159. The other directors attempted to pass the transfer? —They were willing to do so. 160. Hon. the Chairman] But they did not ?—No; it was not done. 161. Mr. Easton] In the Tucker Flat Company you and 1 declined to pass a transfer from Mr. L. S. Benjamin to Mr. W. B. Cook at a time when Benjamin was owing the company £25?— That is so. 162. After we declined to pass the transfer you and I were, through Mr. Howes, expelled from the Board ?—Yes, we lost our seats. 163. And then who passed that transfer which we declined to pass ?—The present directors. 164. Hon. the Chairman] You say that you and Mr. Easton lost your seats on the Board : how did you come to lose them ?—By a vote at the general meeting. 165. Mr. Herries. I At what date was that meeting held? —Early in April, I think, speaking from memory ; probably about the 3rd of April. 166. Mr. E >ston.] Then, after we lost our seats, the very transfer, with £25 owing, that we declined to pass, was put through while Mr. Howes was a director ?—The minute-book and the transfer-journal show that. 167. Do you know the reason why Cook took over Benjamin's shares?—l cannot swear positively that I do. 168. What is your opinion ?—I suppose that Cook wished to carry out his arrangement that only so-much should be paid in calls on the shares, and they were re-transferred to him. 169. Benjamin was one of the gentlemen whom Cook gave to understand that only is. per share should be called up ?—I suppose so. 170. And finding out that that arrangement had not been carried out, he got Cook to take the shares back ? —Yes. 171. The shares were transferred to Cook with the money owing on them ?—That is so. 172. Have you signed a requisition to liquidate the Tucker Flat Company?— Yes. 173. Did the engineer to the company, Mr. Cutten, sign that requisition?— Yes; one of the firm of Cutten Brothers did. 174. For whose benefit is the company now existing?— The secretary's and the directors', at present. 175. Do you know why Howes wanted the vendors' shares in this company allotted ? —ln order to allow the vendors to vote on the requisition to wind up. 176. What was the opinion of Mr. Allan Holmes, the solicitor to the company, on the point?— That the vendors' shares should not be allotted. 177. In this and other companies, who were you led to believe had applied for shares ?—I was led to believe that the shares were being taken up by the leading men in Christchurch, Wellington, and Auckland. 178. What was the result of your investigations ? —When we pressed for the allotment money three shareholders repudiated any liability further than the Is. per share which they had understood would be the total liability. I understand that evidence to that effect has been placed before the Committee. 179. Now, you were a provisional director of the Boss Day Dawn Company ?—That is so; it is the only company of which I acted as a provisional director. 180. The only company in connection with which you were present at the allotment of shares and the % adoption of the agreement from Cook to the company ? —That is so. 181. Was the company's solicitor present ? —Yes. 182. Was it upon his advice that you completed the agreement ?—Yes. 183. With reference to the balance-sheet of the Boss Day Dawn Company, dated 31st March, 1901 —of the £3,200 of arrears on calls, was not a very large proportion owing by Messrs. Cook, Howes, and Mace ? —That is so. 184. Was a minute made in the minute-book when you declined to pass Howes's transfer, with £90 owing on the shares?— Yes. I will read the minute. It was made at a meeting held on the 31st May: " Transfers Nos. 61-68 inclusive, submitted for approval. Besolved, that secretary be instructed to register transfer when calls due by Mr. Howes are paid. Transfer No. 68 approved."

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185. Now, Messrs. Cook and Hoisted have stated that you have been my lieutenant in this agitation, and that you have been most antagonistic to Mr. Cook :is that so? — I have read the statement. When we were expelled from the boards of the Tucker Flat and Lees Ferry Companies I said that I would use my best endeavours to have these companies wound up, and I have done so. 186. In your opinion, Mr. Somerville, what would have been the result to the contributing shareholders in the several companies had I not taken the action I have taken? — I suppose the companies would have been carried on for the benefit of the secretary and the directors; but Ido not quite see what you mean. 187. Supposing that I had not come on the scene at all, and not started any agitation, what would have been the result to the contributing shareholders in these companies ?—I am a bit fogged as to what you are referring to. 188. Hon. the Chairman] What Mr. Easton means is this : supposing that he had not come on the scene and taken the steps which he has taken, in reference to the Cook and Gray companies, would the companies still be in existence ? —Steps had been taken before I met Mr. Easton to wind them up, but Mr. Easton, being a large shareholder, was placed on the boards to help us in the matter. 189. Mr. J. Allen] In which company is he a large shareholder?—He holds 250 shares in the Golden Grey, Wicklow, Tucker Flat, and Lees Ferry Companies—2so in each of them —and, I think, 100 shares in the Ngahere Company. We asked Mr. Easton to join us on the boards in order to assist in the winding-up of the companies. That was in February of this year. 190. Mr. Easton] After I was placed on the boards I did my best to get the companies liquidated on behalf of the rest of the contributing shareholders ? —That is so. 191. Can you tell me how you came to place so much confidence in Mr. Cook in connection with so many companies that have met with such a disastrous ending ? —Mr. Cook was one of the leading accountants in Dunedin, and had been appointed by the Supreme Court to liquidate and wind-up important companies, and, generally, I took his firm to be a firm on which reliance could be placed. 192. I take it that had you known the true position—that a large number of the shares were " dummied," and that there was a " dummy " secretary —jou would never have gone on the boards of directors ? —No. I have used my best endeavours to have the companies wound up. 193. Can you support, generally, the answers which you have given to my questions by documentary evidence ?—Yes ; the books of the companies, the vouchers, and the correspondence (which are not here) will substantiate my evidence. Hon. the Chairman : I may say that I wired to Dunedin last night for the vouchers and the correspondence. 194. Mr. Easton] Speaking generally, Mr. Somerville, of the twelve companies under review, with an aggregate capital of £100,000, how many, in your opinion, will escape liquidation ?—One or two. 195. All the rest, you think, will liquidate ?—The majority are in liquidation now, I think. 196. Might I ask you, in conclusion, to give me the position of the twelve companies under review—that is, as to whether they are in liquidation or not ? First, the Aylmer Lead Company : do you consider that company will escape liquidation ?—The directors are only awaiting a full meeting of the board to consider the matter of liquidation, recommended by the local director at Hokitika. 197. Second, the Ponsonby Company: is it in liquidation ?—A resolution for liquidation has been carried, and is only waiting to be confirmed. 198. Third, the Lees Ferry Company ?—ln liquidation. 199. Fourth, the Golden Grey Company? —In liquidation. 200. Fifth, the Dobson No. 2 ?—ln liquidation. 201. Sixth, the Crown Diamonds?—l understand that the directors are considering the question of liquidation. 202. Seventh, the Wicklow?—lt has liquidated. 203. Eighth, the Ngahere ?—Liquidated. 204. Ninth, the No Town No. 2 ?—I understand that it is anywhere ; it is in a very bad financial position, I understand. 205. You stated that it is in utter chaos ? —Yes. 206. Tenth, the Auckland Back Lead Company ?—That company is in liquidation. 207. Eleventh, the Tucker Flat?—A requisition in favour of liquidation has been lodged, and a meeting held, and adjourned for six weeks. 208. Twelfth, the Boss Day Dawn ? —The directors are trying to get the company out of financial straits by the issue of debentures. 209. Have all the debentures been taken up ? —No, not all taken up. 210. Is it not a fact that if that additional capital does not come in the Boss Day Dawn Company will liquidate ? —The company will have to consider getting more capital. 211. So that, generally speaking, provided the Boss Day Dawn Company does not get additional capital, the whole of these twelve companies will liquidate within eighteen months of their inception ? —Yes, that is so. Mr. Cook : Before 1 ask the witness any questions, Mr. Chairman, I would like to ask you whether I may have an opportunity later of questioning him further, because all this is new to me. I did not know till yesterday that Mr. Somerville was coming here. I will ask a few questions now, and leave myself in your hands as to whether I may ask a few more later. Hon. the Chairman : Very well. Go on. 212. Mr. Cook] Now, Mr. Somerville, you stated that you did not sign the articles of associa-

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tion, you did not know who the shareholders were, and you were not at the provisional directors' meeting of the Tucker Flat, Lees Ferry, Wicklow, and Golden Grey Companies. You were appointed a director at the provisional directors' meeting, were you not ?—I stated that I signed the articles of association. 213. You stated that you were not at the provisional directors' meeting ?—That is so ; I was not present at the allotment of shares. 214. You were not there?— No. 215. You were elected a director at the provisional directors' meeting of the four companies? —I was elected a director in April, at the first meeting of shareholders. 216. Take the first meeting of shareholders in the Golden Grey Company, on the 9th April : you were present at that meeting ?—Yes, as a shareholder. 217. You were elected a director at that meeting ?—Yes. 218. You then had before you the books of the company, with the share register, did you not? —The minute-book of the company would be there. 219. And, as a director, you had access to the share register, I presume ?—That is so. 220. You could have known all about these shareholders that you now state you understood were the leading men of Christchurch, Wellington, and Dunedin—you could have known then, could you not?—l stated that I was led to understand that the shares were taken up by the leading men of Christchurch, Wellington, and Auckland. 221. You could have seen the share register?— Yes, that is so. 222. I have just opened the share register of the Golden Grey Company, and find that there is not a shareholder in that company in Christchurch at all —not one ?—When I took shares I was led to understand as I stated. 223. Who led you to understand that?—l think it was Mr. Howes; it was either him or yourself. 224. You stated that you are aware that I owe Mr. Holmes £80 for fees : how do you know that is so, because Ido not know it ?—I got it from Mr. Easton and Mr. McGregor. I was so informed by Mr. Easton and Mr. McGregor, who called to see the deed. 225. You do not know of your own knowledge ?—I am not positive. 226. You made that statement from hearsay—from what Mr. Easton told you?— Mr. Easton and Mr. McGregor told me that they called to see the deed, and that Mr. Holmes demanded some £80, owing by you, before they could see it. lam aware that they waited on Mr. Holmes, and that that was the reply. 227. Did Mr. Holmes give any other reason for not delivering the document ?—That is a question which I cannot answer. 228. But you can answer the other question, because you had been told so?—I stated that I was aware that Mr. Easton and Mr. McGregor waited on Mr. Holmes for the document. 229. You stated that I was removed from the boards of directors of the companies for nonattendance. Take the case of the Golden Grey Company :It was resolved at a meeting on the 11th March, 1901, " That Mr. Easton be appointed as director in place of Mr. W. B. Cook, whose seat was declared vacant at the previous meeting." The previous meeting was on the 7th February, 1901, when my seat was declared vacant. You say that was for non-attendance : is it not a fact that you and Mr. Leijon removed me from the board solely to get Easton on the board ?—No. 230. You swear that ? —That is so. 231. Is it not a fact that you desired to give me what is commonly called a " dig in the ribs " because I would not give you some vendors' shares in these companies ?—Certainly not. 232. Did you ever ask me for vendors' shares ?—Yes. 233. And what did I tell you?—l got no reply. 234. You swear that your object in removing me from the board of the Golden Grey Company, and your attitude towards me since in conjunction with Mr. Easton, was not because I would not give you some vendors' shares ?—I swear that. Mr. Cook hereupon read the following letter : — Dear Mr. Cook, — Princes Street, Dunedin, 19th September, 1900. When allotting the fully-paid shares in Tucker Plat and the other three companies that Mr. Leijon and myself are your co-direotors the opinion was expressed that some consideration in the way of fully-paid shares should be made by the vendor (yourself) to Mr. Leijon and myself—.ay, fifty shares each in these companies—more especially as the whole of the work and responsibilities are left with ourselves. I trust you will be able to see your way to let us have these shares, and I trust you will consider my claim favourably, more especially as I put you into the only company I have floated, and your fully-paid would realise 15s. per share at present moment. I understand that you have been laid up with an old complaint, but trust you are now about again. Yours faitbfullv, W. G. SOMEEVILLE.

Wednesday, 18th September, 1901. William George Somerville further examined. (No. 3.) 1. Mr. Cook] You were a director of the following companies, Mr. Somerville— i.e., the Boss Day Dawn, Tucker Flat, Golden Grey, Wicklow, Lees Ferry, and Ngahere Companies, were you not ? —Yes. 2. You were elected at the first meeting of each company ?—Yes, at the first meeting of shareholders. 3. How many contributing shares did you hold in each of the companies ?—Fifty in each. 4. Were you a nominee of mine in either of the companies ?—Not at all.

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5. With the exception of one meeting in connection with each of the four companies that have been under review—that is, the Tucker Flat, Golden Grey, Wicklow, and Lees Ferry Companies— with the exception of one meeting at which I was present, Mr. Leijon and you conducted the whole of the business ?—I think that is so. 6. The minute-book shows that I was present at one meeting of each company ?—Then that is correct. 7. Mr. Leijon and you conducted the whole of the business with that exception?— From the time we were appointed. 8. Was it not the duty of Mr. Leijon and yourself, as directors, in conjunction with the solicitor, to see that the titles to the claims were completed ?—Yes. 9. Can you tell the Committee why that was not done ?—The solicitor has, on behalf of these companies, applied for special claims in the names of the original holders of the claims, as trustees for the companies. 10. The solicitor, on behalf of the companies, has applied for special claims ? —ln the names of the original holders of the claims, as trustees for the companies. 11. That has been done ?—I have seen one here, in this room, in connection with the Wicklow Company, I think. 12. Do you know whether the titles of any of the other companies of which you were a director are in the same position ?—ln the Boss Day Dawn Company's minute-book there is a minute here, dated 28th August, 1900, to the effect that a letter was read from Mr. Holmes, reporting that the vendors had executed the assignment to the company of the special claim. The fully paid-up shares were then allotted. 13. Then, am I to understand that the titles to the companies' claims, with the exception of the Boss Day Dawn Company, are held by some persons as trustees for the companies ?—The claims are held as I stated before. The special claims are held in the original owners' names for and on behalf of the companies. 14. I am asking you these questions because there has been a good deal of misapprehension on the point; we have been told that the companies held no titles to the claims ? Hon. The Chairman: I might say that I got a telegram from the Begistrar at Boss affirming the transfer and registration of the Boss Day Dawn Company's claim. Witness : As far as I remember, the wording of the title is—take the Wicklow Dredging Company—" For and on behalf of the Wicklow Dredging Company (Limited)." 15. Mr. Cook] Then the company has a title ?—That is a matter for the company's solicitor to say; I cannot say whether it has or has not. 16. The statement that none of these companies have any titles, then, is incorrect ? You say that is so ?—I should say, in reply to that, that I understand that the deed of assignment had been awaiting completion by the Wicklow Company. 17. In what way have the company got to complete the assignment ?—I have not seen the document, but I suppose it is an ordinary deed of assignment of this special claim to the company. 18. Then, why have not the company completed the assignment ?—That is a"matter for the present directors to say. 19. Why did not you complete the assignment when you were a director?—lt was never presented to us. 20. The completion of the assignment is the allotment of vendors' shares to the owners of the claim, is it not ? —That is a part —that is the consideration. 21. When the consideration is given the matter is completed, is it not?— Yes; when the fully paid-up shares are handed over and the deeds are completed. 22. Why did you not allot the vendors' shares in the four companies ?—ln the case of the Lees Ferry Company they were allotted. 23. Why did you not allot them in the other companies ?—A demand was made in the case of the Golden Grey Company by Soloman and Gascoigne, on behalf of you, to have the vendors' shares allotted. 24. When was that?— The letter was received a few minutes before the general meeting of the company called for the purpose of liquidation. 25. That was in March of this year, was it not?— About that date. 26. Then why, during the eleven months prior to that date, during which time you were chairman of directors, did you not consider the allotment of the vendors' shares, or allot them ?— We had no advice from our solicitor to do so. 27. Then, why did you write to me with reference to the allotment of these shares, stating, " When allotting the fully paid shares," if they were not allotted?—-The directors considered that, the vendors should contribute a consideration to the management of the company in paid-up shares, and I was asked, on behalf of the directors, to write to you. 28. That is not a reply to my question. Why did you write in the past tense, " When allotting the fully paid-up shares " ?—That was meant to be in the future tense. 29. In your letter to me of the 9th September you stated, " When allotting the fully paid shares in the Tucker Flat and the other three companies to Mr. Leijon and myself, your codirectors, an opinion was expressed that some consideration in the way of fully paid shares should be made by the vendor, yourself, to Mr. Leijon and myself, say fifty shares each in those companies, more especially as the whole of the work was left to ourselves." Why did you write that when those shares were not allotted ?—I was referring to the matter of the allotment of the shares in the Lees Ferry Company, and was asked to write that letter, which applied to the future. 30. It does not read to me to apply to the future, " when allotting the fully paid shares " ? — It referred to the future. 31. That is your reply ?—Yes, that is my reply. 13—I. 4a.

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32. Now, did you intend to allot the vendors' shares if I gave you the fifty shares which you asked for ?—We would have to allot them on the advice of our solicitor. 33. Was your reason for not allotting them because you did not receive the fifty shares ?—Not at all. We allotted the vendors' shares in the Lees Ferry Company as requested by the vendors. 34. Why did you not allot them in the other companies?—We had no advice from the solicitor to do so. 35. You said something to this effect: that, had you known the true position of these companies, you would not have gone on the boards of directors. Is that so ?—Yes. 36. You were chairman of directors of the companies, and who should know their true position if you did not ? —I referred to the share-list, and to the fact that a very large proportion of the shares in the companies was taken up on an understanding with you that Is. per share would be the only liability. 37. Do you know that of your own knowledge, or from hearsay?—l have seen the sworn evidence in the Court 38. Bight Hon. B. J. Seddon] No further money was to be called but the Is. per share ?— That is so. 39. Hon. the Chairman] That has been sworn to in the Court?— Yes ; I have seen the sworn evidence. 40. Mr. Cook] Is that the only knowledge that you have of the fact, that you have seen the sworn evidence in the Court ?—Yes. 41. When was that sworn evidence given?— Several months ago; I cannot remember the exact date. 42. Was it after the annual meeting of the companies?— Yes. 43. Was it after the companies went into liquidation ? —I cannot say that. 44. It was after the annual meeting of each of the companies ?—I think so. 45. Then it was over twelve months after the companies had been floated that this statement was made —that only Is. per share would be called up : is that so ? —That statement was made as far as 46. While you were chairman of directors of these companies did you receive any intimation from any shareholder that only Is. per share had to be paid ?—I do not think so. 47. Cannot you be sure of that?—l would not swear to it. 48. Application was made to tha shareholders for the call, was it not ? —Yes, the secretary was instructed to get the allotment-call in. 49. You have no knowledge of any intimation from any shareholder being made in reference to only Is. per share being required?—l have. 50. I mean prior to the annual meeting?—l would not like to swear that I had. 51. Do you not think that this statement was made for the first time by these shareholders after the annual meeting and after liquidation was decided upon ? —I cannot swear on that point. 52. 1 suppose that you had full access to the books all the time you were a director ?—Yes. 53. You alleged that the secretary and shareholders were dummies—l think that was your statement ?—No, I do not think that is correct. I was asked, in relation to the shares held by Mr. and Mrs. Farley, whether I considered them bond fide shareholders or dummies, and I replied that " I should say, dummies." 54. We will leave Mr. and Mrs. Farley for a moment. I have a memorandum here which I made when you were being examined by Mr. Easton—l may have taken it down wrongly—that you stated that the secretary and some of the shareholders were dummies : I want to know when you decided in your own mind that they were dummies ? Do you deny having made the statement that certain shareholders and the secretary were dummies ?—I certainly made the statement that I considered the Farleys dummies. 55. I am referring to other shareholders, not the Farleys : do you deny that you made that statement ?—I cannot say, without looking at my evidence, exactly what I did say. 56. Take the secretary: you knew that Mr. Hoisted was manager for Cook and Gray ?—I was aware of that. 57. You had known that for some time prior to any of these companies being floated ?—Yes, I knew it. 58. He had done business with your firm for Cook and Gray—you had had business relations with him ?—Yes. 59. You know that a secretaryship is a personal appointment ?—That is so. 60. Did you ever recognise Cook and Gray as secretaries to the companies ?—No; we looked upon Hoisted as the secretary to the companies. 61. The whole of the time you were on the boards of the four companies?— Yes. 62. During the time that you were a director, and Hoisted was the secretary, did you recognise him as the secretary to the companies, or Cook and Gray ?—We looked upon Hoisted as the secretary. 63. You stated in your evidence that you became aware that he was not the secretary, but that Cook and Gray were the secretaries ? —That is so: I stated that. 64. Then, why did you state that when you say now that you recognised Hoisted as the secretary ? —Hoisted was asked to take another office away from Cook and Gray's, and he made a statement to the effect that he could not, as he was a servant of Cook and Gray. 65. When was he asked to take another office ? —About the time of the shareholders' meeting : in March, I think it was. 66. March of this year ? —Yes. 67. Then, twelve months after the companies had been in operation, you asked Mr. Hoisted to take another office ?—Yes, that is so.

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68. Before that you were satisfied?— Yes. 69. You asked him to take another office after this agitation was started by Mr. Easton ? —As I stated in my evidence -before, the reason why the directors changed the office of the Tucker Flat and Lees Ferry Companies was that we considered it in the interests of the contributing shareholders that a fresh secretary should be appointed, and a change made in the office of the companies. 70. That was in March of this year ?—Yes. 71. It was after Mr. Easton started his agitation?— That is so; but the directors of the Lees Ferry Company had issued a circular in connection with the voluntary winding-up of the company. 72. When was that circular issued ? —I should say that it was during February. 73. You issued the circular in February ? —Before the annual meeting; I cannot swear to the month. The circular was sent out calling an extraordinary meeting to wind up the Lees Ferry Company. 74. Then, Mr. Somerville, according to the minute-book, on the 19th December, Mr. Leijon reported having visited the claim and remarked on its favourable position; and you, the chairman, announced your intention of visiting the claim at an early date, and reporting at the next meeting. Now, the next meeting was held on the 7th February, and you, the chairman, reported that you had arranged with Mr. Chester to bore and report on the claim?— That is so. 75. On the 11th March, his report on the bering of the claim, and the results, was read and received; then, after consideration, it was resolved that the company be put into voluntary liquidation, and that an extraordinary general meeting for that purpose be held immediately after the general meeting. You issued the circular before the 11th March. You say that you issued the circular in February ?—Certainly not. 76. I want to bring back to your memory that it was in March, and after the agitation had been started, that the circular was sent out?—l do not know what you mean by " the agitation." 77. I mean the letters to the public Press ? —I do not know what the date was that you refer to. 78. Beferring back to shareholders stating that they were informed that the only liability in connection with the shares in the companies would be Is. per share: have you seen the application form which was signed by the shareholders? —Yes. 79. Can you understand any one making such a statement after signing that application form ? —They have made it. 80. But, as a business man, can you understand any one making such a statement after signing the application form?—l should not do it. •81. The 11th March is the first intimation that I can find in the books of any of these companies going into liquidation, and that is the minute I have just read : is that so?— Yes. 82. Did you know Mr. Easton at that time ?—I had met Mr. Easton I think, perhaps a week before the date of that meeting. 83. That was the date when you first made his acquaintance?— That is so. 84. Then, it would be about the 4th March that you met him—the meeting was held on the 11th March ?—Yes, possibly so. 85. Did you know of Mr. Easton before that date ?—-I had seen his transfers going through the various companies. 86. The companies of which you were a director?— Yes. 87. You knew of him?—-Yes. 88. But you had not met him ?—No. 89. With reference to the three Grey Biver companies—the Lees Ferry, Wicklow, and Golden Grey Companies—did you and your fellow-director, Mr. Leijon, not agree that it would be unwise to build dredges for the Grey Biver until other dredges in the vicinity had proved the river payable ? —It was a recommendation, at the first meeting of shareholders, to the directors not to proceed with the erection of the dredges until the Grey Biver Company and the Dobson No. 2 Company had proved the Grey Biver to be payable. 90. .And you acted on that recommendation ?—Yes. 91. Looking back, do you think it was a wise thing to do ?—Yes, certainly. 92. Did not the failure of the two dredges that you have mentioned cause the " slump " in Grey Biver stocks ?—Yes ; undoubtedly that would cause it. 93. And the result of that was that you with others wished to escape liability ?—No. 94. Leaving yourself out of the question, is it not apparent that the result of the " slump " was generally to cause people to endeavour to escape liability ? —That is a matter for the individuals, not for me, to answer. 95. But is it not apparent that it should be so ? —lt is common-sense, I should say. 96. Have you ever given expression to the opinion that it was better to get out of liability, and wind the companies up ? —I do not swear that I did not, but I think that is a very trivial question to ask. 97. I want to know if you have ever given expression to the opinion that you personally thought it was better to wind the companies up and escape liability?— Possibly I said that it was better for the shareholders to wind the companies up and escape their liabilities. I may have said so in the course of conversation; but that is a very strange question to ask me. 98. And then, did you not work for that end—to liquidate these companies in order that the shareholders generally might escape liabilities ?—I think during the time I was on the boards of directors the reason for winding-up the companies was very clearly stated by the directors. 99. Was not the winding-up to the end that the shareholders might get rid of their liabilities ? —No, because, as I said before, the claims were proved to the satisfaction of the directors to be of

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no value for dredging purposes ; secondly, that sufficient capital was not provided to buildup-to-date dredges to work the Grey Biver; and, thirdly, that the directors did not consider the share-lists strong enough to go on. Those were the reasons. 100. You have stated that I did no work as director of these companies :is that so ?—I think I said that you had done practically no work. 101. I wrote it down when you said it; you said that I did no work as a director of these companies? —As far as I remember, my reply was, " No, practically none." 102. You knew that I went several times to the West Coast during the twelve months?— Yes. 103. While I was on the Coast did I not arrange for the boring of the Ngahere and Tucker Flat Companies' claims, and communicate with the directors?— You arranged for the boring of the Tucker Flat claim, but the question that was asked me was with regard to the four companies ; the Ngahere Company was not included. 104. Well, keeping to the four companies : I ask you did I not arrange, while on the Coast, for the boring of the Ngahere and Tucker Flat Companies' claims ? Perhaps you will remember that I sent a wire, or a letter, saying that I had seen Scott, the local director of the Ngahere Company, and we had arranged for the boring ? —Yes. 105. Then I did do something while I was on the Coast ?—You arranged for the boring of the Tucker Flat claim; lam quite aware of that. 106. Did I charge anything in the way of travelling-expenses, or anything of that nature, for that work ? —No ; you received nothing further than your director's fees. 107. Did I charge my director's fees?— They were voted quarterly by your fellow-directors. 108. At my request ? —The understanding was, at the first meeting of directors, that the fee should be divided equally and paid quarterly. 109. Mr. J. Allen] Was it at Mr. Cook's request that his director's fees were paid?— There was no specific request from him. 110. Mr. Cook.] Were my director's fees paid at my request ?—A director does not put m an account for his fees every quarter. 111. I am not asking about every quarter : I ask, was it at my request that a proportion of the directors' fees was paid to me in any of the companies ?—According to the Lees Ferry Company's minute-book, at a meeting held on the 9th April, 1900, at which Mr. Leijon and myself were present, it was resolved that directors' fees be paid quarterly. That resolution was confirmed at a meeting held on the 18th May, when Mr. Cook and Mr. Leijon were present, Mr. Cook being in the chair. 112. It was resolved that the directors' fees were to be paid quarterly ?—Yes. 113. To whom? —To the directors. 114. Did I ever request that you should pay me director's fees ?—You were aware of the fact that it was resolved that the directors' fees be paid quarterly. 115. Did I ever ask for payment of director's fees ?—No, but I take it that you were aware that they would be paid. 116. Did I ask for payment of the fees ?—-I do not think that any director ever did ask. 117. Mr. B. McKenzie] Was the money paid to Cook or his firm ? —The fees were passed for payment. 118. And they were accepted ?—Yes, the money was accepted. 119. Mr. Cook] Were the fees ever paid to me personally ? —That is a matter for the secretary ; I did not hand over the cheques. 120. Did you ever have a receipt from me—is there a voucher signed by me for director's fees from any of these companies ?—I cannot say. 121. Mr. J. Allen] What directors were present when the directors' fees were passed for payment ?—Mr. Leijon and myself. 122. Mr. B. McKenzie] Who gave the receipts for Mr. Cook's director's fees ?—I cannot say. 123. Hon. the Chairman] Is it usual for directors to give receipts for their fees ?—Certainly; we must have receipts to show to the auditor. Mr. Cook : I was absent practically the whole time, and the fees were not paid to me personally. 124. Hon. the Chairman] Do you admit that, Mr. Somerville ?—I did not hand the fees to Mr. Cook. It has been understood that Mr. Cook did not get the money personally. 125. Mr. Cook] Now, Mr. Somerville, when you asked me to give you fifty fully paid-up shares in each of the four companies and fifty to Mr. Leijon, you asked that, more especially as the whole of the work and responsibility were left with yourselves : is that so ?—Yes, the bulk of the work and responsibility were left with us. 126. You said that I was removed from the boards for non-attendance: is that so?— That is so. 127. That was on the 7th February in each instance ?—That is the date of the minute. 128. Why was I not removed sooner? —Because the directors expected that something connected with the claims would turn up on the West Coast, and that you would attend to it. 129. Is that the whole reason for my non-removal from the boards before February ?—As far as I know, yes. 130. On the 7th February you decided to declare my seat vacant: did you ever complain to me of non-attendance ? —No. 131. Did you not put me off the boards to make room for Mr. Easton ?—I do not think that I had met Mr. Easton at that time. 132. You stated that he was a large shareholder: when did you know that he was a large shareholder?—At the date that he purchased the shares in the companies.

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133. Then it was August of last year that you knew that he was a large shareholder? — Yes. 134. Can you tell me how much money he had paid into each of the companies ?—He held 250 shares in each of the four companies. 135. He had paid 2s. per share on 250 shares in each company ?—Yes. 136. £25 into each company ?—Yes. 137. Can you tell me how much I have paid into each company? —The share registers will show that. 138. If I read out the amounts that I have paid, will you accept that to save time ? —T know that you hold about five hundred shares in each of the four companies. 139. I have taken the amounts from the books. I have paid to the Wicklow Company £65, and Mrs. Cook has paid £50 ; to the Golden Grey Company I have paid £50, and Mrs. Cook £50 ; to the Ngahere Company, £40, and Mrs. Cook £50; to the Lees Ferry Company, £50 and £50; to the Tucker Flat Company, £145 and £50 ; and to the Boss Day Dawn Company I have paid £900, and to the No Town No. 2 Company I have paid £300, and Mrs. Cook has paid £300. You will not say that those amounts are wrong ? —I cannot contradict your statement that you have paid those amounts. I cannot deny it. 140. 'Hon. Mr. Lee Smith] You said that at a certain date Mr. Easton had paid so much money into the companies, and you now admit that Mr. Cook has paid in so much: I want to ask you whether those are comparative dates ?—That is so ; Mr. Cook's shares in the four companies have, I think, stood at the same number from the first. 141. Mr. Cook] You stated, in reply to Mr. Easton, that if he had not initiated this " foment " the companies would have been liquidated, because the directors had already made up their minds to liquidate theiL. ■is that so ?—I would like to answer that question at length. In the Lees Ferry Company the report from Mr. Chester was received some time between the dates of the meetings which have been referred to, and on the report Mr. Leijon and I had made up our minds to ask the shareholders to put the company into liquidation, for the reasons which I have stated. In regard to the Tucker Flat Company, you evidently overlook the fact that the directors were satisfied with the report made by the same person, and we asked the shareholders to give us £5,000 more, so that the directors had not made up their minds to wind up all the four companies, but had decided to get an increase of capital in the only one whose claim was reported on favourably, and carry it on, which was recommended by the company's engineers. 142. In which company had the directors already made up their minds in favour of liquidation ? —The Lees Ferry Company, because the directors had got the report on the company's claim. 143. When did they come to that conclusion ?—Upon the receipt of Chester's report. 144. That was on the 11th March ? —No, before that. That was the date of the meeting of directors. We had the report in our hands before that. 145. Mr. J. Allen] When did Chester's report come to hand?—l cannot give the date from memory. Mr. Cook : The minute made at the meeting in connection with the Lees Ferry Company on the 11th March reads as follows : " Mr. Easton was appointed a director in place of Mr. Cook, and, being in attendance, took his seat. Mr. Chester forwarded his report upon the boring of the claim and the results. Bead and received. After consideration it was resolved that the company be put into voluntary liquidation, and that an extraordinary general meeting for that purpose be held immediately after the general meeting." 146. Mr. J. Allen] At what date did you receive the report from Chester?—lt was in the office beforehand. I cannot remember the date when we received it. Hon. the Chairman: There is a minute of a meeting on the 26th March connected with this matter: " Mr. Somerville proposed and Mr. Easton seconded, that the company be wound up voluntarily under ' The Companies Act, 1882,' and its amendments." 147. Mr. J. Allen] Can you tell us the date of Mr. Chester's letter?— The Ist February. 148. What is the first sentence of the letter? —" I have made a start with boring Lees Ferry." 149. Then he had not finished boring the Lees Ferry claim on the Ist February? —The meeting was held some six weeks after that. 150. Mr. Cook] Do you not remember how long it was before the meeting on the 11th March that you received Chester's report ? —I could not say when it was received. 151. Mr. J. Allen] Had you received the report before the 7th February?—We could not possibly have received it then. 152. It was at the meeting on the 7th February that Cook's seat was declared vacant ?—Yes. 153. At that date you had not received Chester's report on the Lees Ferry claim?—l do not think so. 154. Mr. Cook] Did you and Mr. Leijon decide that the company go into liquidation before the 7th February ?—I am not prepared to state that. I cannot remember the dates. 155. You stated you had decided to place the company in liquidation before Mr. Easton was placed on the board of directors ? —Yes. 156. Now, you declared my seat vacant on the 7th February, and at the next meeting —on the 11th March—Mr. Easton was in attendance and you elected him to the board. You read the report and decided to liquidate the company. I want to know when you so decided. Did you decide upon liquidation before the 7th February ?—I have no doubt it was the result of our consideration of the report from Mr. Chester, which was received at the office before the meeting in March. 157. But you cannot tell us when it was received?-—I cannot. 158. Mr. J. Allen] It was not received before the 7th February, was it?—l do not think so.

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159. Mr. Cook] You declared my seat on the board of the company vacant, and placed Mr. Easton on the board in my place ; you received the report in the interim ?—Yes, I take it that was so ; as far as I recollect, it was the case. 160. The minute of the meeting on the 11th March states that, after consideration, it was resolved to put the company into liquidation. Can you tell us whether it was a day before that meeting, or a month before, that you decided to go into liquidation on Chester's report?— The report was considered—as reports sometimes are —unofficially by the directors. We had come to the conclusion before the meeting, as far as I recollect, that we would wind up the company on the report. 161. But you did not decide until you got the report: is that so? —That is so. 162. Whose plant was used for the boring of this claim?— The plant belonging to the Investors' Syndicate. 163. Are you a member of that syndicate?—l am. 164. And you were interested in the plant?— Yes, to a very small degree, as a member of the syndicate. 165. Mr. Leijon had seen the claim previously to this, and had reported favourably, according to the minute-book ? —Yes, superficially, I take it. 166. And you went to the Coast and engaged Chester to bore ?—Yes. 167. You referred to him as my expert ?—Yes. 168. Why did you engage him if you had any doubt about him ? Did you engage him at my request ? —No. 169. You were on the Coast and you engaged Chester : why did you engage him?— Chester had done prospecting for me and other syndicates before, and I arranged with him to do the boring. 170. Then he had been your expert as well as mine, is that so?— Yes ; he had reported for syndicates which I was connected with before. 171. Why did you make so much of his being my expert instead of yours ? Was not he to be engaged by anybody ?—Chester had been engaged on two occasions by a syndicate with which I was connected, but it was generally known that he was largely employed by you. 172. But he was other people's expert as well as mine, was he not? —Yes, possibly. 173. The statement that he was my expert is incorrect, he was anybody's expert; is that not so ?—I have only known him to do work in connection with syndicates with which you were connected. 174. You gave three reasons for liquidating the companies, among which you stated that the claims were valueless for dredging : was the Tucker Flat claim valueless for dredging?— The Lees Ferry Company was under consideration when I said that. I think the fact that as directors we recommended that the capital of the Tucker Flat Company be increased by £5,000, makes it quite clear that we did not consider the claim valueless. I never said that it was valueless. 175. You stated that one of the reasons for liquidation was that the claims were valueless : was the Tucker Flat Company's claim valueless?—l think that the company I referred to was the Lees Ferry Company. The Tucker Flat claim was reported on favourably. 176. Mr. Palmer] What is your opinion on the point ? Was the Tucker Flat claim valueless, in your opinion ? —Not according to the reports. 177. Mr. Cook] Was the Golden Grey claim valueless?—l was not a director when the reports on the Golden Grey claim came in, I think. 178. You engaged Chester to report on the Golden Grey claim; you had his report. Was the claim valueless as a dredging claim ?—I do not know. 179. Mr. Palmer] Were you ever there ?—No. 180. You never saw the claim ?—No. 181. Mr. B. McKenzie] Did your board of directors place a resolution on their minutes in favour of liquidation because the claim was reported on as not being valuable for dredging ?—I will read the minute : " Besolved, That the secretary send circulars to shareholders embodying Mr. Chester's report, and calling an extraordinary meeting of shareholders of the company on 23rd May, 1901, for the purpose of winding up the company voluntarily, to be held at registered office of the company, 3, Bond Street, Dunedin." 182. Mr. Cook] Can you say whether the claim was valueless or not as a dredging claim ? — As far as I recollect Chester's report was to the effect that the claim was valueless. 183. Did you test the Wicklow claim ?—No ; as far as I recollect the Wicklow was not tested. 184. Then, you do not know whether it was valueless or not?—l cannot say; I was not a director. 185. With reference to the Ngahere Company's claim, did Mr. Scott, the manager of the Blackball Company's mine, and the original owner of the Ngahere claim, make a report on the value of the ground ?—Yes. 186. Was his report favourable ? —As far as I recollect his report was of a favourable nature. 187. You gave us another reason for liquidation, that the share-list was not considered strong enough by the directors : is that so ? —Yes. 188. Did you decide that the share-list was not strong enough because the allotment call was not paid in some instances ? There were no calls made on shares in the three Grey Valley companies beyond the application and allotment calls ?—That is so. 189. Did you decide that the share-list was not strong enough because some allotment calls were not paid ?—I do not think the matter of the share-list was referred to in connection with the Ngahere Company. 190. I am speaking of the three Grey Biver Companies—the Wicklow, Lees Ferry, and Golden Grey Companies. Did you, as directors, decide that the share register was not strong enough because in some instances the allotment call was not paid ?—I think that the three reasons which I gave really go together.

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191. Did you yourself not decide that the share-list was not stong enough because some shareholders had not paid their allotment call ?—I cannot say that. 192. Was not the fact that the allotment call not been paid by all the shareholders your reasons for so deciding ? —lt was the opinion of the Board that the share-list was not strong enough. 193. Had you paid the allotment call on the shares you held in any of these companies ?—At what date do you mean ? 194. I will give you the date when you did pay. In the case of the Wicklow Company, it was the Ist March, 1901, when you paid your allotment?— Yes. 195. You had not paid it at 7th February?— Evidently not. 196. In the Lees Ferry, the Golden Grey, and the Ngahere Companies you had not paid your allotment calls; they were all paid on the same date. Did you act as chairman of directors for twelve months without paying your allotment calls ?—That is so; but I should like to explain that at the time I signed the applications for the shares in the Golden Grey, Tucker Flat, Wicklow, and Lees Ferry Companies I also signed applications—if I remember rightly—for shares in two other companies. At the time I gave Mr. Howes a cheque for £15. My allotment notice had evidently been laid aside when it was sent to me, but I knew that the firm of Cook and Gray had some money of mine in hand, and I thought it would probably be devoted to the purpose of paying my calls. I was not aware of the fact that my calls were unpaid until the auditor told me, and lat once gave him a cheque. 197. You gave Mr. Howes a cheque for £15 for your application-fees on the shares you held in these companies ?—That is so. 198. You had fifty shares in each of seven companies?— Yes. 199. The application-money would be £2 10s. in each case, and you gave Mr. Howes a cheque for £15 to pay your application-fees on the shares you held in these companies ?—I signed applications for shares in six companies, as I stated before. 200. Then, the application-money would be £2 10s. in each case—£ls for the six companies? —Yes. 201. Then, how did you for one moment think that the money was in hand to pay your allot-ment-fees ? —I did not know that it was in hand. I put the matter aside, and it was overlooked. 202. You were chairman of directors of each company, and you overlooked for twelve months the payment of your allotment call?— The books will show that. 203. Mr. B. McKenzie] Who were the directors of those companies before you were a director yourself—who allotted you the shares in the companies ?—I will look up the minutebooks. In one case Messrs. Holmes, Sawell, Davidson, and Hoisted were the directors who allotted the shares. I refer to the Golden Grey Company. In the Wicklow Company the directors who allotted the shares were Messrs. Davidson, Sawell, Hoisted, and Thompson. 204. Was Mr. Hoisted managing Cook and Gray's business at this time?— Yes. 205. Mr. Cook] You were chairman of directors, and you had not paid your allotment call. You drew your director's fees for twelve months, did you not ?—That is so. 206. In the case of each company you drew £21 during the twelve months : is that so ?— Yes. 207. You had paid £2 10s. into each company ? —Yes, that is so. 208. You had drawn £21 from each company in director's fees, and had not paid your allotment calls ? —That is so. 209. And you voted at the meetings of directors ?—I did.

Thursday, 19th September, 1901. John William Abbott examined on oath. (No. 4.) 1. Hon. the Chairman] What is your name, please? —John William Abbott. 2. I understand that you wish to give evidence with regard to the arrangement said to have been made by Mr. Cook, that only Is. per share should be called up in connection with the Lees Ferry, Tucker Flat, Wicklow, and Golden Grey Companies : have you any documentary evidence to produce ?—The only documentary evidence in regard to the matter that I have is a letter from Mr. Cook relating to taking over my shares. The other documents that I have are the ordinary applications from the companies for calls. 3. Have you got that documentary evidence here now ? —Yes, here is the letter. [Letter produced, and read by the clerk, as follows :—] Copy of letter, dated 20th February, 1901.— J. Abbott, Esq., Wellington.—Dear Sir,—ln consideration of your undertaking to transfer the undermentioned shares to me or my nominees, at par, at any time within six months from dat?, i undertake to pay any future calls that may be made, and to relieve you of all the shares on or before the 20th August, 1901, you to forthwith pay calls now due, and give me or my nominees proxies to act or vote at any meetings of the companies.—Faithfully yours, W. R. Cook. —Wicklow Gold-dredging Company, 250 snares; Golden Grey Gold-dredging Company, 250 ; Lees Ferry Gold-dredging Company, 250; Tucker Flat Gold-dredging Company, 250. 4. Have you got any other documentary evidence, Mr. Abbott ?—No; the only other documentary evidence, as I have mentioned, is the ordinary applications from the companies for payment of calls. 5. Mr. Palmer] How did you come to get that letter ?—I got it from Mr. Cook. 6. But why were the shares transferred to Mr. Cook ?—-He agreed to take them off my hands. 7. Can you tell us why he agreed to do so ? —I suppose Cook thought he had been instrumental in my taking them up, and so that I should not make any loss in connection with them, he agreed to take them over.

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8. Hon. the Chairman] Was it because he wanted to get your name on the share register as one of the promoters ? —No ; this took place some seven or eight months after the flotation of the companies. Mr. Cook bought the shares from me some seven or eight months after the flotation. 9. Hon. Mr. Twomey] Did you consider yourself "dummying" those shares? —Not at all. I applied for them myself, and paid the calls. 10. Mr. Easton] What is the name of the person who induced you to become a shareholder in the companies ?—Mr. Cook. 11. On what basis did Mr. Cook induce you to take the shares?—He said, practically, that a syndicate was being formed, and he enumerated certain names—himself, his partner, Mrs. Cook, my brother, and some others, who were also taking up shares, some taking a larger number than I took up—and he represented to me that the whole amount that I could lose by the transaction would be £50, the amount of the application-money. There was further conversation, and it was mentioned that no further calls would be made, or anything done in the matter, unless the state of the market warranted the companies being proceeded with; but that, in any case, I could not lose more than £50. 12. Did Mr. Cook tell you that his co-directors would be his nominees?—l do not think he put it in that way. He represented that he would be able to control the directorates. 13. He told you that he would be able to control the directorates ?—I do not know that that was the exact expression used, but he said that he would practically have control, and that no calls would be made beyond Is. per share —the application-money—if the state of the market did not warrant the companies being proceeded with. 14. Is it not a fact that the four companies were floated only for speculative purposes?— Yes, I think so. 15. These companies were publicly advertised and listed on the Exchange : to your knowledge were the outside public ever notified of the arrangement made by Mr. Cook that Is. per share should be the only liability ? —No. Cook represented that, in the case of the market being adverse, there would be Is. per share liability. 16. Is Mr. B. H. Abbott, of Auckland, your brother ?—Yes. 17. Are you acquainted with Mr. L. S. Benjamin, of Wellington ; Mr. Alexander Knight, manager for Bing, Harris, and Co., of Dunedin ; Mr. H. C. Choyce, of Auckland ; Mr. and Mrs. Milne, of Auckland ; and Mr. W. Gray, of Wellington? —Yes. 18. These people have made similar statements to yours : in your opinion are these people persons whose statements can be relied upon ?—I do not know about Mr. Gray, but the others I know personally, and I should say they would not make any misstatements. 19. Hon. the Chairman] You are a business-man, Mr. Abbott; now, if Mr. Cook or any one else came to you and represented certain things, telling you that there would be only Is. per share required to be paid, in all probability, do you mean to tell me that you would sign the application for the shares and let your name go on the share register on the mere word of any one, knowing that, legally, you were liable for the full amount of the calls ?—I did do so in this case ; but I may explain that it was understood that these companies were not to be brought out altogether ; they were to be simply formed, and remain practically dormant until the state of the market Hon. the Chairman : In point of fact, then, you are particeps criminis; if there is anything wrong about it you are as much to blame as Cook or any one else. 20. Hon. Mr. McGowan] When you took up the shares did you consider that Cook, under this undertaking, was prepared to relieve you from any loss on the shares ?—When I took up the shares there was no undertaking; the undertaking embodied in his letter dated 20th February being the first—to take them over from me. There was practically an option to take them over at any time up to the 20th August. 21. Did you consider that the guarantee to take them over was an inducement for you to hold the shares under the conditions mentioned ?—lt was some six months after the flotation of the companies that I got that letter. 22. When you received the letter did you consider it a guarantee that you should lose no more money than your application-call ?—The letter practically offered to reimburse me for the applica-tion-money as well as the allotment-money ; I was not supposed to lose anything. Whatever I had paid was to be repaid to me. 23. I want to know —put it in any way you like—if you considered this any inducement for you to take up shares in the companies ? —No, because that offer was made six months after allotment and when I had taken the shares up. I may say that at this time the allotment calls had been made, the companies were pressing for payment, and I declined to pay. I was drawn upon by the company through the bank, but I declined to honour the draft. 24. When did you ask for this guarantee, or did he propose to give it to you without being asked ? —I may say that I saw Cook when the allotment-money was being pressed for, and he said that he would see the directors down South and fix matters up. Afterwards the company drew upon me for the call, and I saw Mr. Cook again. He said it was necessary that the call should be paid, but he remarked, as near as I can recollect the words, " I do not know why I should do this for you, but as you took the shares upon my representation, I will take them over, though you must pay the allotment-money." I agreed to do this and he gave me that letter, upon receipt of which I paid the allotment-money. 25. On receipt of that letter you considered that you were not likely to lose anything—that you were practically guaranteed against loss by it ?—I considered that Cook was good for the amount I might have to pay, and I at once paid the allotment-money. 26. Do you consider you would be justified in dealing with these shares during the currency of this undertaking without consulting Cook? —No, certainly not. Cook was to take them over from me at any date after the 20th of February.

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27. You held the shares on Cook's behalf ?—Doing nothing further in the matter, and giving my proxies, as arranged, to Cook. 28. What I want to get at is, did you clearly understand that you were holding these shares on Cook's behalf?— Yes, practically so. 29. And that you would not have felt yourself justified in dealing with them ? —I considered that Cook would have had a case for damages against me if I attempted to deal with them. 30. Mr. W. Fraser] You have already said that this letter was no inducement to you to take up the shares, as you had taken them up six months before the date of the letter ? —Yes. 31. Then this letter is simply an evidence of a purchase by Cook from you of certain shares?—r Yes. 32. You are sure of that ? —Yes, certainly. 33. You made one statement just now that Cook had said that you could not lose more than Is. per share, because more would not be called up unless the state of the market warranted it. Did you mean the state of the share-market, or whether the companies intended to go on building dredges? —It was thought that dredging on the West Coast would respond to something like what had been experienced in Otago, and it was represented by Cook that he had had good men prospecting the claims, that the claims were good, and as soon as it came to mining the shares would go to a premium. As far as I knew the shares were to be all firmly held and a certain proportion sold, on which the calls would be paid; but the impression I have formed with regard, to the shares being firmly held must have been wrong, because they were immediately sold all over the place. 34. Mr. J. Allen] What induced you to take the shares in the companies ?—Mr. Cook called upon me and represented that he was forming a syndicate for the purpose of bringing out some claims; and I think I have just mentioned that he said he hoped dredging on the West Coast would improve but that, in any case, none of those taking up shares could lose more than Is. per share. I think his expression was, " You will just have to pay up £50; you may make more, but if not, that is all you can lose." 35. Did you take the shares under that impression ?—Yes; I think I was practically one of the last members who joined the syndicate, because previously he had fixed up with the Auckland members. He called upon me at my office and mentioned the names of other members of the syndicate. He stated that he, himself, had taken, I think, 500 shares in each of the companies, and his wife and his partner had also taken shares. I thought, without going closely into the matter, that I was in very good company, and that his word, that the companies would not be proceeded with if the market was unfavourable, was quite good enough to act upon. 36. Did you take the shares for speculative purposes ? —I took the shares on the distinct understanding that I risked £50 only in the event of loss. 37. Did you take the shares for speculative purposes ? —Quite so; I did. 38. Did you take them under the impression that the claims were going to be worked?—As a matter of fact, Ido not think so. It was hoped, so far as I was concerned, that the market would be favourable and we would be able to sell the shares at a premium. I had no intention whatever of putting £1,000 into the companies, which I undertook to do when I signed the applications. 39. How many shares did you take?—2so shares in each of the four companies. 40. Had you any intention of paying up the calls ?—lt was understood that the companies would not be proceeded with if the market was unfavourable—-that is to say, no calls would be made unless the shares went to a premium. 41. Did you intend to hold on to the shares if the market was favourable?—No; I would have sold out at the first opportunity on account of the allotment-money being pressed for; but I understood that all the people who had taken up shares in these companies were a syndicate, and that the shares would only be sold by some one controlling the syndicate, but I was mistaken in that. 42. Did you know when signing the application forms that you were applying for shares in incorporated companies ? —Yes. 43. Then, why did you say that the shareholders were a syndicate?— The whole thing was arranged. It was spoken of as a syndicate when I was approached by Mr. Cook, the company's form came later. 44. Between whom was it arranged?— Cook represented that the companies were being formed and would simply await events, and that no calls would be made unless the state of the market warranted. 45. That arrangement was made with Cook?— Yes. 46. In view of the letter which you got, do you think that Cook dealt fairly with you in respect to the shares ?—He must have dealt fairly at that particular time. There was no reason why he need have taken the shares from me. He said that as my position was rather different to some of the others, and that I did not understand the position, he would take over my shares, although there was no reason why he should do so. 47. Did you think that was fair on his part ? —Yes. 48. And honourable ?—Very. 49. Did you ask him to take the shares over?—l went to see him when the allotment call was being pressed for, and recalled to him that I had only intended to invest £50 in the undertaking ; that I understood no calls were to be made, and I was not prepared to pay the allotment. He said that it was necessary that the allotment should be paid, and that if I would pay it he would take over the shares. 50. Were you legally responsible for the allotment ? —Yes, certainly. The shares were in my name, without any conditions, at that time. I was liable for any calls that were made. . 51. With regard to this question about Is. only per share being paid, is there any evidence in the letter that you read that Cook made an arrangement that only Is. per share was to be called up?—No, nothing. ".'..'. - - 14—1. 4a.

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52. You say there is nothing in the letter to that effect?—lt was simply a verbal arrangement. 53. Have you any documentary evidence as to the arrangement that only Is. per share was to be called up ?—-None whatever. 54. Have you heard anybody else say that Cook made that arrangement ?—I have heard that the Auckland shareholders say that. I have heard it said; my brother advised me that such an arrangement was made in Auckland. 55. Have you heard anybody else say that there was such an arrangement ?—Mr. Benjamin, of Wellington; he is the only Wellington shareholder in the companies, as far as I recollect. 56. Have you heard any of the Auckland shareholders say that there was such an arrangement ?—Yes, my brother. 57. You have heard him say so ?—Yes. 58. Hon. Mr. Jennings] Had you indulged in mining speculation prior to this?— Only to the extent of buying shares in full; but Ido not quite understand your question. 59. Had you been prospecting in gold-mining prior to this ?—Yes ; but I have not speculated in shares ; I have held them for a considerable time. . . . . 60. Have you ever held shares under the same conditions as those under which you say you held these shares ? —Never before. 61. I take it, you were prepared to put £50 into the companies, and if they " turned-up trumps," well and good, but that you were not prepared to go any further?— That is so; it was understood that unless the market " boomed," nothing further could be done in respect to proceeding with calls. 62. Hon. Mr. Lee Smith] Who first suggested to you to buy into these companies? — Mr. Cook. 63. Under what circumstances ?—He called at my office. 64. Did you know him at that time ? —Yes ; I have known him for the last nine or ten years in Wellington. 65. How did you open the subject ?—He called in to see me ; I used to know him intimately when he was in Wellington; latterly he has been engaged more in Dunedin, and generally when he passed through Wellington he called on me on business matters. 66. What was the inducement to you to invest in these companies ? What was said to you, as near as you can remember ?—lt was part of a general conversation, during which Cook introduced the subject. 67. It was on the prospect of only losing Is. per share in the event of things not turning out well, and being in for a good thing if they did turn out well, that you took up the shares ?—That was just it; it was a gamble. 68. That letter says that you were to pay the calls and give Mr. Cook the proxies for voting purposes ?—Yes. 69. Have yon paid those calls?—l paid all the allotment-money, but no calls. No calls were male except in the case of the Tucker Flat Company, and those I have not paid. 70. Have you got a settlement for the shares—have you transferred them ?—No, I have not transferred them. 71. Then, the matters of working the claims, and the value of the claims, were never discussed ?—Cook said that he had had the claims surveyed and reported upon by the best —I believe he said the best —mining experts or authorities, and although I had no intention of paying up calls and keeping the shares, I thought the companies would turn out good things. He said they were practically all picked properties. They were supposed to have been reported upon by good men. 72. Did you ask Cook for that letter, or did he give it to you voluntarily ?—I think I explained the position to Mr. Cook that I never intended to risk more than £50 in the undertaking, and I do not think I suggested to him to take the shares over; in fact, I hardly hoped for it; I did not expect it. 73. Did you think at that time that you were in for the whole lot ?—I thought that Cook had made his arrangements so badly that in some way matters had got beyond his control, and that in some way the calls had been made, that he was not responsible to me, and that I would have to pay. 74. The arrangement was a verbal one at first ?—-Yes. 75. Then it was the state of the share-market that you relied on to sell out at a profit ?—Yes, at a profit. 76. And on the other hand, if the share-market was not good, you were to be responsible for only Is. per share? —The statement was made that all we could lose was Is. per share. 77. Hon. Mr. Twomey] Was it on the representation that you would be responsible for only Is. per share that you took up the shares ?—Yes, that that would be the only call that would be made. 78. What reason had you to think that these companies were started for speculative purposes? —None, except this, that all gold-mining companies are speculative. 79. I asked you whether you were " dummying" the shares for Cook?—No, certainly not. 80. You say that you held the shares on behalf of Cook, and that you did not feel yourself justified in selling them ?—That was six months afterwards, I took up the shares in August, 1900,* the letter is dated February last. 81. You did not give me an answer to my question ; why did you think the companies were started for speculative purposes ? Was there any agreement to that effect at the start ?—Only in a conversation. , ' ,

* See explanation later. This should have been Maroh, 1900; the allotment was in August.

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82. In that conversation you were given to understand that the companies were started merely for the purposes of speculation and gambling :is that so ?—Not at all; it was not put in that way. The claims were supposed to be good ones. The Grey Biver Company's dredge was just starting to work, and the Dobson Company's dredge was also expected to start working; it was thought that mining on the West Coast would "boom"; and Cook assured me that the claims were good ones—that they were surveyed by good mining experts. And then, of course, we would have the shares in readiness to bring out when tbe time was favourable, and they would go to a premium, 83. Mr. Palmer] Can you explain why Cook did not take the shares over at once, instead of keeping them on the register in your name ?—No, I cannot. I was quite content to hold them till he took them over. 84. Here is a letter, dated Auckland, 22nd June, 1901, from a Mr. B. H. Abbott, to the Wicklow Gold-dredging Company (Limited), Dunedin ;— " I hereby give you notice that I repudiate the allotment of 500 shares to me in the capital of the Wicklow Gold-dredging Company (Limited), and I rescind the contract to take such shares, on the grounds, inter alia, that the company's agent and representative, Mr. W. R. Cook, who also represented and acted as authorised agent for the promoters of the then proposed company —afterwards incorporated as the Wicklow Gold-dredging Company (Limited)—induced me to take up the 500 shares on the following representations : (1) That the promoters had had a report that the property acquired on behalf of the proposed company was a very valuable one, whereas such property is of little or no value; (2) that in case the shares in the proposed company were not marketable at a good premium the oompany would not be incorporated, the enterprise would be hung up and not gone on with, and that the only amount of my risk would be the application-money ; in the event of a good market and the company proceeding to incorporation, a portion of the shares would be sold at such a premium and profit as would pay the calls on the balanoe of shares held ; (3) if the shares in the proposed company or in the company, if incorporated, were not then at a substantial premium, the company if incorporated would be hung up, and no allotment of shares or oalls made, and if not incorporated would not be gone on with ; (i) that such representations have been ignored by the said company, although the said company had full knowledge of suoh representations being made to me by the said W. R. Cook." Who is that B. H. Abbott ?—That is my brother in Auckland. 85. Then, there is filed with that letter, one from Mr. William Gray, dated Wellington, 13th May, 1901, and addressed to Mr. S. T. Mirams, Bond Street, Dunedin, the liquidator of the company; it reads as follows : — Your notioe of 9th to hand re Wioklow Dredging Company. I have to state that my agreement with the company's broker (Mr. Cook) was that nothing further than the application-money would be required, and shares to be left in his hands to sell and pay allotment. I gave him transfers months ago, and also, when we dissolved, assigned them to him, so that I must, in self-defence, defend any action you may bring. I have already got a summons in the Golden Grey, whioh is in the same position. My evidence in that case is to be taken on 7th June here, so perhaps it might be well to wait result of that. This is without prejudice. . Do you know this Mr. Gray?— Yes, I know a little of him. 86. I ask this because, in reply to a question by Mr. Allen, as to whether you had heard any one say that Cook made the arrangement with then, said to have been made, you said your brother and Mr. Benjamin had so stated ? —Yes. 87. The letter which I read then was from your brother ?—I never heard of it before. 88. Do you know his signature? Is this his signature [letter produced] ?—Yes, that is his signature ; but, as I say, I never heard of the letter before. 89. Mr. Colvin.] Did you send a written reply to Mr. Cook's letter, accepting his offer?— Yes. 90. Has he paid you for the shares ?—I have paid the calls, but I have not been paid by Cook. I still hold the shares. 91. Cook has not reimbursed you for the calls you paid?—-The time has only just expired ; the offer was open till the 20th August. 92. How much have you paid into the four companies ?—£100: £50 application-money, and £50 allotment-money. 93. Mr. Cook] You have speculated largely in mining?— Not very largely, 94. Not in the Auckland District ?—Yes, I speculated in Auckland mining. 95. You are very largely interested in more than one big company? —Yes. 96. Then you know something about mining? —Yes, I do. 97. You said that I said that the whole amount you could lose in connection with the four companies would be £50 ?—Yes. 98. Was anything said about what you might gain ?—This, that if the market was favourable, of course, a profit would be made. 99. You did not go into this speculation with the anticipation of losing £50'?— Certainly not; I relied on the statements of your experts. 100. Now, you signed this form of application. [Application form produced.] This is your own application form for shares in the Lees Ferry Company. The application forms in the four companies are the same, I think. Will you please read that form ? [Form read as follows : —] Form of Application for Shares. To the interim secretary of the Lees Ferry Gold-dredging Company (Limited), (to be incorporated under " The Companies Act, 1882.") Dear Sir, — I hereby apply for shares in the above-named company, upon the terms of the said company's prospectus, and subject to the memorandum and articles of association to be hereafter prepared, and herewith forward you the sum of £ , being the deposit of Is. per share payable on application for the said shares, and I agree to pay 2s. per share on allotment, and further calls as provided by the said prospectus; and I authorise you to prooure the said oompany to be incorporated, and to transfer the said deposit and the ben?fit of this application to the said company, and to procure the said shares or any less number to be allotted to me as a member of the said oompany. Name in full: Postal Address: Occupation: Signature: Date:

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101. The date of your application is the 6th March, 1900. You stated in your evidence that you applied for the shares in August, 1900 ? —I should have said that the allotment was made in August; I recollect that the application was made a long time previously. I may say that I referred to the allotment notice, and made sure that the application was put in a month previously. 102. You made the application early in March, 1900, and my letter is dated 20th February, 1901 —eleven months afterwards. Now, when did you receive notice of allotment ? —As far as I recollect, in the following August (1900). 103. Did you write to the company and say that you were not going to pay the allotment?— No; I think I saw you when you were passing through Wellington. 104. Did you write to the company and repudiate the allotment call ?—No, I did not. 105. You said that Benjamin stated that I told him that only Is. per share was to be paid?— Yes. 106. Can you tell me whether Benjamin paid his application and allotment, and when he paid them ?—I do not know his business at all. ~ 107. You have only his statement to go upon ? —I have met him. casually. As near as I can recollect, he was rather troubled about the allotment-money ; this was eight or nine months ago. 108. When you took the shares in these companies you had the prospectuses ? —They all came round together. I had them, but, as a matter of fact, I did not read them. 109. You said that I told you that I would have control of the directorates? —Yes ; I do not know that you said that you only would have control, but that you and those with you would control the question of calls. 110. You said that I said I would have control of the directorates, and I want to point out here that at the time no such things as directors existed. The face of the prospectus says, "The subscribers to the memorandum of association will act as directors until the statutory meeting of the shareholders, which will be called immediately after the registration of the company " ?—But you must have directors before you can make calls. 111. Quite so, but can you tell us how it was possible for me to control a directorate when such a thing did not exist, and I did not know who the directors would be ? Then you stated that I told you that the claims were good ones ; on looking up the reports I find that three of the claims were reported on by Don, of whom we all thought well at the time, and do now. In his report on the Lees Ferry claim he states, " I have every confidence in recommending it as a good and safe investment for capital." He finishes his report on the Wicklow claim with these words : " With good management there is no doubt that this will be a splendid claim, a claim which I can recommend as a safe investment for capital." Do you remember those reports ?—I did not read the reports. - . 112. In his report on the Golden Grey claim he says, " I have every confidence in recommending the claim as a safe and good investment for capital." And in reporting on the Tucker Flat claim Mr. Faithful said, "I consider the property a genuine investment." Those reports were before you—you had the prospectuses ? —Yes, they came together. I signed the application forms and gave a cheque for the application-money without reading them through when they were handed to me. 113. Hon. the Chairman] You have paid 2s. per share, have you not ? —Yes. 114. Now, supposing those shares had taken a jump and been quoted at 10s. or 15s. each; what would you have done then ?—You mean prior to the time Cook made his offer ? 115. Yes; what would you have done then ?—To be honest, I think I should have tried to i sell the shares. William George Somerville further examined. (No. 5.) 116. Mr. Cook] I want to ask you a question or two in reference to the statements you made re Mr. Benjamin. You stated, as nearly as I can recollect, that I took over Mr. Benjamin's shares in order to carry out the arrangement that only Is. per share was to be paid?— Yes. 117. Did Mr. Benjamin tell you that ?—No. 118. Who did tell you?— Mr. Easton, I think. 119. Do you know when I took over the shares from Mr. Benjamin ?—The books will show that. 120. It is in the evidence that I took Benjamin's shares over in March of this year. You have stated that I .told Benjamin that only Is. per share was to be paid; now, will you please look up the share register of the Wicklow Company and tell us when Benjamin paid his call ?—-The register shows that the allotment was paid on the 11th October of last year. 121. Here is the Tucker Flat Company's register : when was the allotment call paid on the shares in that company ? —On the 2nd August, 1900. 122. When was the first call paid ? —On the same date. 123. The same thing applies with regard to the other companies: will you accept that?— The books will show when the calls were paid. 124. Benjamin paid his calls eight months prior to my taking over the shares ?—The registers show that. 125. Then your statement is incorrect, is it not, that I took over Benjamin's shares to carry out the arrangement that only Is- per share was to be paid?— That is my belief, that you took over the shares in order to carry out the arrangement. ' ■ . 126. The books show to the contrary, do they not ?—The. books show that the calls.were paid. 127. You stated, Mr, Somerville, that a Mr-Hendry .informed-you that Mr. had asked ..himrto take.shares in the, four iCOinpanie&paiMLthat only .la. per.: share. wja*s. iom& that,so 1+That is so.' '■ ■/ ■ / • »'*» ,\in«imm 128. I have been through the register of each company, and find that Mr. Hendry's name does not appear ?—I admit that; he did not take the shares. That is what I said.

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.129.. Since.you, have been in Wellington, have you not been trying to induce others to make this statement about Is. per share only being called up?—l have not. 130. You, swear that?— The information which I gave in my evidence, on the point was volunteered to me. 131. I ask you now, have you not, since your arrival in Wellington, tried to induce others to make the same statement ?—No. 132 You have not asked Mr. Ferguson to go and see people ? —No. 133. Now, with regard to the Dunedin Stock Exchange, you stated that you met the committee of the Exchange, and. that some of the companies were struck off their list ?—-That is so. 134. Was any evidence taken by that committee from me, or any opposing evidence to yours ? —I do not know. 135. You were there ? —Yes. 136. While you were there, was any evidence from me taken, or any opposing evidence to yours?— No. 137. Were the names of any companies, outside of those floated by Cook and Gray, struck off the list?— Not that I know of. 138. Was not the name of the Hartley and Biley Company struck off the list at the same time ?—I do not know. 139. You stated, Mr. Somerville, that Mr. Howes used vendors' shares in order to prevent liquidation ?—That is so. I referred to the Lees Ferry Company. 140. He prevented liquidation by using the vendors' shares: is that so?—He assisted in doing so. 141. Will you please look at the minute-book of the Lees Ferry Company, and read the minutes of the extraordinary general meeting of shareholders held on the 26th March, 1901 ?— ' Very well. Extraordinary general meeting of shareholders of the Lees Ferry Gold-dredging Company (Limited), held in the registered office of the oompany, 17 High Street, Dunedin, 26th March, 1901. Present: Messrs. Somerville (ohairman), A. Holmes, Easton, Howes, 'Davidson, Haggitt, Hoisted. Mr. W. C. Macgregor also attended. Proxies: Farley, Abbott, Mrs. Cook, W. R. Cook, Howorth, Mace, Benjamin, Kellow, Ballantyne, McDonald, Churton. The notice of meeting was read by the secretary. Mr. Somerville proposed, and Mr. Easton seconded, That the company be wound up voluntarily under " The Companies Act, 1882," and its amendments. Mr. Howes moved as an amendment, seconded by Mr. Pearce, That the directors submit Mr. Chester's report to Mr. Don, who accordingly reported on the olaim, and ask him to report to them if he has altered his opinion on the claim since making his report, and, in case he is still satisfied the claim is a good one, that they take further steps to have the claim proved. If, on the contrary, he report against the olaim, that another meeting be called for the purpose of considering the position of the claim. The amendment was put by the chairman and carried. 142. The amendment was put by the chairman, and carried by a show of hands, was it not ? —I could not tell you. Ido not remember. 143. And you were the chairman of that meeting! If I tell you that the amendment was carried on a show of hands, will you contradict me?—l do not remember whether it was or not. 144. Was a ballot taken ?—I cannot say. 145. Is there anything in the minutes about a ballot being taken ?—There is no mention here of a ballot. 146. Mr. J. Allen] Would it not be recorded in the minutes if a ballot had been demanded ? ,—I should think so. 147. Mr. Cook] Then the statement that Mr. Howes used the vendors' shares to prevent liquidation is untrue ?—lt was at a meeting held immediately before that that Mr. Howes used the vendors' shares. , , 1.48. You made that statement in order to influence this. Committee one way or the other— that Howes used the vendors' shares to prevent liquidation. Now, the vendors' shares were not used at that meeting. Why did you make that statement ? —He held the proxies. 149. Mr. J. Allen] Did Mr. Howes, or did he not, use the vendors' shares to prevent liquidation ? —The books show that he did not. I was under a misapprehension when I made the statement. 150. Hon. Mr. W. C. Walker] Did he hold the vendors' proxies ?—Yes; he held the proxies, and voted on the amendment. 151. Hon. Mr. Lee Smith] Was it declared beforehand that so many proxies were held?— Yes; he held the proxies. 152. Mr. Cook] You stated that Mr. Howes expelled you and Mr. Easton from the board by using the vendors' shares? —Yes ; he had the voting power in his own hands. 153. Had you not already balloted yourselves off the board ?—The books will show that. 154. At a directors' meeting on the 11th March, Mr. Easton was appointed a director in place of Mr. Cook (myself). Is that correct?— The books show that. 155. Is it correct ?—The books are correct. 156. Who was in the chair then ?—I was in the chair. 157. Now, at the same meeting, upon a ballot being taken, Messrs. Somerville and Easton were balloted off the board. Is that correct ?—That is so. 158,. You were, balloted off by yourselves .?—That is so. ' 159. Mr. Howes was not present ?—No. ' . .;.. 160. Thenjjie . • 161. Now, at .the election, of directors at the annual meeting,, held on the 26th March, It was * proposed'by* Mr.'Easton that you be elected a director;;; t*hj S was seconded by Ml"- Hoisted.

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Then Mr. Somerville proposed, and Mr. Hoisted seconded, that Mr. Easton be elected a director. Upon a ballot being taken the voting resulted as follows : Mr. Howes, 3,985 ; Mr Bearce, 3,985 ; Mr. Easton, 300; aud Mr Somerville, 300 : is that correct ? —Yes. - That is stated in the minutes. 162. Mr. Howes expelled you by using proxies which he held ?—-Yes. 163. How many shares did. you hold in the company ?—Fifty. 164. And Mr. Easton ?—250. 165. Together 300—all the votes which you received ?—Yes. 166. There are 2,000 vendors' shares in this company ? —Yes. 167. And the voting in favour of Messrs. Howes and Pearce was 3,985. Is that correct ?—Yes. 168. Your statement was that Howes expelled you from the board by using the vendors' votes. Now, if the vendors' votes had not been used the number of votes recorded in favour of Messrs. Pearce and Howes would have been 1,985, against 300 for Messrs. Easton and Somerville. Then, how can you say that Mr. Howes expelled you from the board by using the vendors' votes ? —He used them ; they were used. 169. Mr. Herries] You say that Mr. Hoisted seconded Mr. Easton's nomination as a director ? —The book shows that. 170. Was Mr. Hoisted a shareholder in the company? —He was not on the register. 171. Mr. Cook] You were the chairman at that meeting, Mr. Somerville ; why did you allow Mr. Hoisted to do so ?—Mr. Holmes, the company's solicitor, advised us that he could. 172. With reference to the statement that I arranged that only Is. per share should be called up, has that statement been made in regard to any companies outside the Wicklow, Lees Ferry, Tucker Flat, and Golden Grey Companies ?—No, not that I know of. 173. It applied to shares in those four companies only ? —That is so, as far as I am aware. 174. You have told us before that no complaint was made until after February of this year, regarding the payment of the allotment call; is that correct ?—I do not remember any. 175. Now, the " slump " in Otago, in reference to West Coast companies' shares, commenced with the New Year, did it not ?—I could not tell you. 176. There was no market for shares after Christmas ? —The " slump " occurred some time ago. 177. When the claims were bored, did you intend to carry on the companies ?—Yes, if the reports were good enough, and the share-lists were considered satisfactory. 178. Did you consider the share-lists before you got the expert's report ?—lt was about the same time. 179. It w T as in February when you got the report. Did you consider the matter of the sharelists before you got the report?—As far as I remember, it would be about the same time. 180. Now, the only four companies in regard to which the complaint has been made as to only Is. per share being paid, are the four companies in which Mr. Easton is interested: is that not so ? —Yes, he is interested in those four. 181. And in ? —Yes. 182. Did you sign circulars in conjunction with Mr. Easton in reference to the pulling-down of these companies ?—I do not understand what you mean. 183. Did you sign any circulars, in conjunction with Mr. Easton, addressed to the shareholders? —Yes. 184. What was the nature of those circulars ?—I do not remember now. 185. Did you sign circulars requesting proxies in order to liquidate the companies ?—I do not remember. 186. Have you got one of the circulars ?—No. 187. How many did you sign? —I remember signing one in connection with the Boss Day Dawn Company. 188. lam talking about the four companies. How many circulars did you sign ? Did you sign one in connection with each company ? —I do not rememher ; I cannot say. 189. Try to throw your memory back. These were private circulars issued to all the shareholders. Did you sign three in each company ?—Certainly not. If one circular was sent, it would be one in each company. 190. Will you swear that you did not send out three circulars ?—I cannot recollect. 191. To your knowledge, have not many letters been written to the shareholders in order to influence them in the matter of liquidating these companies?— That Ido not know. 192. These were private letters written to shareholders. Did you Write any letters to shareholders? —As far as I can remember, No. 1 have no recollection of sending any letters to shareholders. 193. With regard to the Golden Grey Company, you stated that in the interests of the contributing shareholders you (the directors) removed the office of the company from Cook and Gray's at the date of the annual meeting ?—Yes, certainly. 194. That- was twelve months after the company was formed? —Yes. 195. Why did you not do this before?—-Because at the previous two meetings we found that the proxies over which you had control had been sent to Mr. Howes, and had been used to put the directors off the boards, and we decided to change the office and the secretary. I refer to the meetings of the Tucker Flat and Lees Ferry Companies. 196. At the previous two meetings of the Tucker Flat and Lees Ferry Companies proxies had been used to put you off the board; is that so ? —Yes. 197. The Golden Grey Company had been in operation twelve months when you removed the office of the company ? —Yes. 198. The annual meeting of the Golden Grey Company was held on the 3rd April, 1901; of the Lees Ferry Company, on the 26th March; and the Tucker Flat Company on the 27th March, That is so, is it not, if according to the books? —Yes.

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199. Immediately after the meetings of the Tucker Flat and Lees Ferry Companies, you (the directors) resolved to remove the office of the Golden Grey Company for the reason stated. Now, I want to know whether you had decided to go into liquidation at that time—l mean the Golden Grey Company ?—The bcoks will show that, if there was a resolution passed. 200. Can you tell me whether you (the directors) had then decided to liquidate this Company? —I cannot say ; the records of the directors' meetings will show. 201. Did you not state, in connection with other meetings, that the minutes did not show, because you had the matter in your minds before ? Does not the same thing apply to this company ?—I cannot tell you. The minutes show the transactions of the directors. 202. With reference to the Ngahere Company, you stated that the claim is not situated as stated on the prospectus ? —That is so. 203. Do you know Mr. Faithful ?—No, I do not know him. 204. Do you know of him ?—Yes. 205. He has reported on the claims of many companies, has he not?— Yes. 206. Is he the engineer to Cutten Brothers ?—Yes. 207. Do you consider that he would make a false statement ?—I do not know the man. 208. The position of the Ngahere claim is defined by Faithful, is it not, in the report on the prospectus ? Have you seen the prospectus ?—I have seen the prospectus, but I cannot remember it exactly. 209. I will show it to you [prospectus handed to witness]. I asked you whether Faithful defined the position of the claim in his report ?—The prospectus speaks for itself. 210. Will you read the portion that I refer to, please ?—He says, " The claim is one mile in length, about 100 acres in area, and is very favourably situated, taking in as it does the mouths of gold-bearing streams, such as German Gully, Callaghans, and Nelson Creeks." 211. The point I wish to bring out, Mr. Chairman, is this: I am accused of putting a false statement on a prospectus. Now, I never saw the claim, and my object in asking Mr. Somerville to read that report is to show that the expert who visited the claim defined its position, and from that report the face of the prospectus was printed. With regard to the transfer of shares in the Tucker Flat Company, from Choyce to Easton, you allege certain irregularities ?—Yes. 212. And you stated, as nearly as I can recollect, that the irregularities would not have taken place had the secretary been independent of Cook and Gray ; is that so?— Certainly. 213. How was the secretary influenced in the matter of the transfer by Cook and Gray ? —He was under them; he was their clerk. 214. You made the statement that the irregularities would not have taken place in connection with the transfer if it had not been that the secretary was in the employ of Cook and Gray. Why did you make that statement ?—Because I considered it to be true. 215. Will you tell us how it is true ? A transfer of shares from a Mr. Choyce to a Mr. Easton was put through, and you say that it would not have been done unless the secretary had been influenced by Cook and Gray. How on earth was that possible ?—I take it that Choyce's shares were dummy shares of yours, and that the transfer was to be allowed to go through without paying the calls under an arrangement. 216. Have you any evidence as to that ?—That is my opinion.

Feiday, 20th September, 1901. William Geoege Somerville further examined. (No. 6.) 1. Mr. Cook.] With reference to the No Town No. 2 Company, you stated, Mr. Somerville, that it was in utter chaos financially ?—Yes. 2. Are you not aware that the dredge is in course of construction, and that large payments have been made on it?— Payments have been made on it, yes. 3. And that the directors have arranged to await the results of the next claim before completing : are you aware of that ? —No. 4. With regard to the financial trouble that the company is in, looking through the share register I find that you owe four calls :is that so ?—I have paid 10s. per share. 5. Do you owe four calls ?—Yes. 6. You stated that at the annual meeting of the company no shareholder present would act as director ; is that so ?—That is so. 7. According to the minutes of the meeting I find that it was moved by Mr. Somerville that Mr. Pearce and Mr. Adam be elected directors; this was not seconded. Then Mr. McFadyen moved that Mr. Parfitt and Mr. Pearce be elected directors; this was seconded by Dr. Martin and carried :is that so ?—I will take the minute-book as correct. Mr. Pearce was the retiring director. 8. Hon. the Chairman] Were Messrs. Parfitt and Pearce present at the meeting ?—Mr. Pearce was present, but he was the retiring director. Mr. Parfitt was the local director on the West Coast. He was not present. 9. Mr. Cook] What did you mean by saying that no shareholder present would act as director when the minutes show to the contrary ?—Mr. Adam declined to act as director. Mr. Pearce was the retiring director, and he was re-elected. 10. Your statement then is incorrect ?—My statement is correct, but I desire to qualify it by saying that, barring the retiring director, no shareholder present at the meeting would act as director. 11. Mr. J. Allen] Was a fresh director elected ?—Mr. Parfitt was on the West Coast. I meant that no gentleman in Dunedin other than the retiring director would act as director.

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12. Mr. Cook] I made a memo, when you were giving your evidence. You stated that no shareholder present at the meeting would act as director; I want to know why the statement was made. Are those minutes of the meeting correct ?—I have no doubt they are, but I say that no new director would take a seat on the Board. 13. Then your statement that no shareholder present would act as a director is incorrect ? — No one present at the meeting other than the retiring director would accept office. 14. With regard to the Tucker Flat Company, you stated that the company is existing for the benefit of the secretary and the directors ? —Certainly. 15. Is it not a fact that the directors have arranged to obtain a suitable dredge for this claim ? —No. 16. They are not so arranging?— Not as far as I am aware. 17. The minutes of a meeting held on the 3rd May show differently: " The question of the liquidation of the company was discussed, and the chairman and Mr. Leijon informed the meeting that there was a probability of a suitable dredge being available in the near future, and it was decided to await developments." You stated that the company was kept alive for the benefit of the secretary and the directors ?—That is so. The directors' fees and the secretary's salary are all being paid out. As far as ordering a dredge is concerned, in my opinion, in view of the state of the share register—the number of shares controlled by you—a dredge will never be put on the claim. 18. You stated that the directors' fees are being paid ?—They were roted. 19. Is it not a fact that it was specially arranged that no directors' fees should be paid in the case of the Tucker Flat Company until it was known what was to be done ?—Not that I remember. 20. We have had it in evidence that no directors' fees are to be paid ?—-Nobody outside the office is getting anything out of the company. 21. Have the directors got anything out of the company since you left the Board?—l cannot say; the fees were voted. 22. With reference to Mr. and Mrs. Farley, you state that they are dummy shareholders :do the Farleys owe any calls on their shares in the Lees Ferry, Wicklow, and Golden Grey Companies ? —I stated that, in my opinion, they are dummies. 23. How much have they paid into these companies?— The calls were paid by you. 24. Has not £200 been paid on the Farleys' shares in these companies ?—You sent your cheque for their calls. 25. Has not £200 been paid in by them, or on their behalf?— Yes, by you. 26. Were not their applications duly signed ?—The applications will show. 27. With regard to the Boss Day Dawn Company, you are a director of this company ?— I am. 28. You stated that at the time of the balance-sheet—-31st March, 1900—a large proportion of the arrears was owing by myself and Messrs. Mace and Howes : is that so ?—That is so. 29. At that date I had paid £300 into the company : is that correct, according to the books? Yes. 30. Had Mace paid £118 at that date?— Yes, £118. 31. Now, how much had you paid on the 31st March on your shares in the Boss Day Dawn Company ? You had not paid a sixpence ? —That is so; no calls had been paid by me at that date. 32. Had you paid the application-money ?—No; the books show that I had not. 33. You bad not paid the allotment either?— That is so. 34. Yet you were a director of the company ?—Yes. 35. You had been a director from the inception of the company ?—That is so. 36. You had signed the agreement with the company ? —Yes, by order of the directors.. 37. And you had not paid a sixpence into the company ?—The books show that. ' 38. You volunteered the information that I owed money to the company when I had paid £300 at that time?—l think I was answering a question then. 39. How much did you draw out of the Boss Day Dawn Company in director's fees ?—I cannot tell you; the books will show. 40. I make it £26 ss. that you had drawn as a director, and you had not paid a sixpence into the company :is that correct ?—I will look at the books. Up to'the. 31st March I had received fifteen guineas in director's fees. 41. You are a partner in the firm of Wilkie and Co. ?—I am. 42. Wilkie and Co. were supplying stationery to the various companies under review, were they not ? —I have no doubt they did supply stationery to some of the companies. 43. Can you tell us whether, in the case of the Boss Day Dawn Company, in addition to the fifteen guineas which you received as a director, £45 4s. 6d. was paid to Wilkie and Co. for stationery ?—I do not know ; the books will show. 44. You have told us that you held fifty shares in each of the seven companies under review— namely, the No Town No. 2, Boss Day Dawn, Tucker Flat, Wicklow, Lees Ferry, Golden Grey, and Ngahere Companies ?—That is so. 45. You owe four calls on your shares in the No Town No. 2 Company ?—Yes. 46. And two calls on your shares in the Tucker Flat Company ?—Yes, each call amountingto £5. 47. You have paid £5 into each of the other companies, have you not? —-That is so. 48. The whole amount that you have paid into these companies is £100, is it not?— The books will show. 49. Hon. the Chairman] Is the amount about £100 ?—I should say that is probably correct. 50. Mr. Cook] You have received £124 ss. in director's fees: is that correct ?—Your previous statement that I had drawn £26 ss. from the Boss Day Dawn Company was wrong ; the amount was fifteen guineas. I cannot say off hand whether I received that amount or not in director's fees from the several companies.

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51. Have you drawn director's fees up to date ?—I have received all that have been passed. 52. If I state that the fees payable to you that have been passed are, according to the books, £124 55., will you contradict it?— No. 53. You have received £10 from these companies for travelling-expenses, have you not?— Yes. 54. And your syndicate has received £8 for the use of its boring plant? —It is not my syndicate. 55. The books show that Wilkie and Co. have received £149 16s. lid. from the companies?— That will be correct if the books show it. 56. Then, the total amount you have received from these companies—either you yourself, or you on behalf of your firm—is £284 9s. lid. ?—I did not receive the money on behalf of the firm ; the firm itself received it. 57. The amount is £284 9s. lid., and you have paid into the companies £100 : is that so? — Yes, that is so. 58. With regard to Mr. Hendry, you swear that Hendry told you that Mace had called upon him, tried to sell him shares in the Lees Ferry, Tucker Flat, Golden Grey, and Wicklow Companies, and assured him that only Is. per share was to be paid: is that correct ?—As far as I remember, Hendry's statement was that Mace told him that he (Hendry) should pay in £50 on 1,000 shares. 59. Do you wish to qualify your statement ? What I wrote down as the answer to the question put to you is, "Mr. Hendry informed me that Mace had asked him to take shares in these companies, and only Is. per share would have to be paid " : is that correct ?—That is the gist of the conversation with Mr. Hendry. 60. I have here an affidavit from Mr. Hendry stating that he never told you anything of the kind, and that Mace never called upon him and asked him to take a share in any company. May I put that affidavit in, Mr. Chairman ? Hon. the Chairman : Yes. 61. Mr. Cook.] I will read the affidavit: — Wellington, 19th September, 1901. I, Joseph Hendry, of Lambton Quay, Wellington, tailor, hereby declare that Edward Mace, manager to tha late firm of Cook and Gray, Wellington, never at any time canvassed me for the purpose of selling shares in any gold-dredging company, nor ever represented to me that he had shares for disposal on whioh only Is. per share need be paid. I never informed Mr. Somerville, of Dunedin, or any other person that Edward Mace had so sold, or endeavoured to sell, me shares; and any statement that I did so is untrue. Joseph Hendry. Signed and sworn before me, at Wellington, this 19th day of September, 1901 —M. P. Cameron, a Justice of the Peace for the Colony of New Zealand. Is that correct or is it not ?—Mr. Hendry volunteered me the information. 62. Hon. the Chairman] You deny the affidavit that has been read? I—l1—I deny it, certainly. As I stated before, Mr. Hendry volunteered the information. Mr. Cook : I have also a letter from Mr. Mace to the same effect, which I will read :— Dear Mr. Cook, — Wellington, 19th September, 1901. Beferring to your verbal question to me as to whether I ever endeavoured to prooure applications for shares in Wellington on the understanding that Is. per share only was to be paid up, I assure you I have never done anything of the sort, and it would be absurd for me to endeavour to sell shares under such a pretext in face of the conditions printed in prospectus and application form. As far as I can remember, I have never approached Mr. Joseph Hendry for the purpose of selling him any shares whatever. —Yours, &c, Edward Mace. I will hand that declaration in, Mr Chairman. 63. Mr. W. Fraser] I happen to know that there are two brothers of the name of Hendry, and it has occurred to me that Mr. Somerville is not referring to the same one as Mr. Cook is referring to. Do you know the two Hendrys, Mr. Somerville?—l know them. 64. Then, the Joseph Hendry who signed this affidavit is the person who, you say, made the statement to you ? —I think so. 65. Mr. J. Allen] I have here the memorandum of association of the Lees Ferry Company: will you read the first clause, please?—" 1. The name of the company is the Lees Ferry Golddredging Company (Limited). 2. The objects for which the company is established are: (a) To mine for gold by dredging or otherwise, and for that purpose to acquire, by purchase, lease, or otherwise, land deemed to be auriferous, mining privileges of all kinds, dredges, and mining machinery, and plant of all kinds." 66. Did you sign the articles of association, including that one ?—Yes. 67. When signing these articles of association did you intend to work the claim ?—Yes. 68. You did not sign the articles of association for purely speculative purposes ?—No. 69. You did not intend to sell your shares in the event of their going to a premium—your object was to mine for gold?— That is so. 70. You were the chairman of directors of some of these companies, were you not ?—Yes. 71. Were you present at any meeting of any company when certain individuals were allowed to vote although they had not paid a shilling into the company?— Yes. 72. Did you ever vote on any occasion at a meeting of directors, or at a meeting of shareholders, of any of these companies without having paid a shilling into the company ?—Yes. 73. Were you advised by the solicitor to the company that you could do so?— No. 74. Then, you did it without advice ?—Yes. 75. Did you think it was right ?—I thought it to be right or I should not have done so. 76. If Mr. Hoisted voted, do you think it was right for him to do so ?—Holsted's name did not appear on any of the registers. 77. Do you think it right for Mr. Hoisted or anybody else to vote without having paid a shilling into the company ? —lf his name was on the register. 78. Was your name on the register of the company when you voted without having paid a shilling into the company ?—Yes. 15—1. 4a.

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79. How did it get there ? —The shares were allotted to me. 80. Without having paid the application-money?— Yes, that is so. 81. Who allotted you the shares?— Different gentlemen connected with different companies. 82. Is it the practice in Dunedin to allot shares without the application-money having been paid ?—I might explain that those who allot shares do not know who have paid and who have not; sometimes they do not get a statement from the broker as to who have paid for perhaps two or three months. 83. Is it the practice, then, in Dunedin to allot shares without knowing whether the applica-tion-money has been paid ?—Yes, that is so. 84. Is it a general practice ?—Yes. 85. Do you approve of it? —I can only say that it is the practice. 86. Hon. the Chairman] You actually allot shares to people and place their names on the register when they have not paid application-money : it is almost incredible ; I am astounded ?—lt is very often done, at any rate. 87. Mr. J. Allen.] Were you present at a meeting when Mr. Holmes advised that a man could vote even though he had not paid a sixpence into the company ?—Yes. 88. Hon. the Chairman.] Was that by word of mouth or in writing?— Mr. Holmes was present. 89. Mr. J. Allen] On what occasion was it?—l think, at a meeting of the Ngahere Company. 90. Will you please tell us what he did advise, clearly and succinctly?—-The articles of association were referred to him, and he said that everybody could vote. 91. Everybody?— Yes, whether they had paid any money or not. 92. Do you mean that any outsider could come in and vote?— Any person on the share register. 93. To be quite clear, I understand you to say that Mr. Holmes advised, at a meeting of the Ngahere Company, that any person whose name was on the share-list could vote although he had not paid a sixpence into the company ?—That is so. 94. Do you recollect the date when he so advised ?—I think it was at an extraordinary meeting held on the 18th June, 1901; I think that was the meeting. 95. Mr. Herries] Was Mr. Leijon a director of the company then ?—No. 96. Mr. J. Allen] Were you ever present at a meeting at which Mr. Leijon was also present when Mr. Holmes similarly advised? —I cannot recollect. 97. Did you think it right to draw director's fees from a company when you had not paid anything into that company? —They were passed at a meeting 98. I asked, did you think it right to take director's fees?— Yes, for services,rendered. 99. Who passed the directors' fees for payment ?- —The directors. 100. Who were the directors of, say, the Lees Ferry Company ?—Mr. Leijon and myself were the directors of that company, but in that case I had paid my application-money. The only company referred to in connection with which I had not paid my application-money, but drew director's fees, was the Boss Day Dawn Company. 101. Who were the directors of that company ?—Messrs. Wales, Cook, and myself. 102. Was Cook present when the directors' fees were passed?—l do not think so. 103. Then, you and Mr. Wales passed them?— Yes. 104. You have mentioned "dummies" three times, and I am not quite clear what you mean by " dummies" : were you a " dummy" shareholder if you had not paid any money into a company ?—No. 105. Then, what do you mean by a "dummy" shareholder?—A shareholder who is controlled by another person—one who is a " dummy " for another person. 106. What do you mean by " ' dummy' for another person " ?—A person who holds shares on behalf of another, or whose shares are controlled by another. 107. A person who holds shares on behalf of another?— One whose calls are paid by another. 108. Mr. W. Fraser] You mean a person who holds shares on behalf of another for voting purposes ?—Yes. 109. Mr. J. Allen] In reply to a question asked by Mr. Easton, " I take it that had you known the true position—that a large number of the shareholders were ' dummied,' and there was a 'dummy' secretary —you would not have gone on the board of directors?" you said, "No." Who, in your opinion, held " dummy " shares ?—I should say the Auckland shareholders—Messrs. Choyce, Abbott, and Milne, and Miss Milne—and Messrs. Benjamin, Gray, and Abbott, of Wellington, and Mr. and Mrs. Farley. 110. Who controlled Mr. Gray's shares?—ln my opinion, Mr. Cook did. 111. Do you know what Table A of the Companies Act is?— Yes. 112. As a director of several of these companies, were you aware of the alterations in Schedule A made in the articles of association of these companies ?—Not till recently. 113. Hon. the Chairman] Were you aware of the alterations when you were acting as a director and signed the articles of association ?—No, not when I signed the articles of association. 114. Mr. J. Allen] Then, it is only recently that you have become aware of the alterations in Table A ?—That is so. 115. Since you became aware of these alterations have you read them carefully?—l have not given particular attention to them. 116. As a director of mining companies, with the experience that you have had during the last few months, do you think these alterations advisable ?—I do not know. 117. Hon. Mr. Jennings] Have you had any transactions with mining companies prior to your association with these particular companies under review ?—Yes.

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118. Do you know of any other company in which a man held a seat on the board of directors without having paid his application-money ?—Not outside these companies. 119. And drew director's fees ?—No, not outside these companies. 120. Who was the solicitor to these companies ?—Mr. Allan Holmes was solicitor to all of them at the first; but the Golden Grey and Wicklow Companies were transferred to Mr. W. C. MacGregor. 121. Were you one of the original directors of any of the four companies that have been discussed so much lately ?—I signed the articles of association, but did not act at any of the meetings. 122. With regard to the alterations of Schedule A that have been mentioned ?—The articles of association were drawn by the solicitor. 123. At whose instigation ?—As far as I know, Mr. Howes's or Mr. Cook's, as I stated before. The vendors were responsible for the drawing-up of the articles of association. 124. Hon. Mr. Lee Smith] Were you not an original director of the Lees Ferry Company ? — Yes. I signed the articles of association; but, as I said before, I did not attend any of the meetings. 125. Mr. Cook asked you some questions as to your acting as a director when you had paid no allotment- or application-moneys : do you know whether at that time any other director of the same company had not paid application or allotment ?—I could not say from memory. 126. Do you know whether Cook owed application or allotment-money, or not ? —I could not say from memory, but could find out by referring to the books. 127. Then, will you please turn up the books of the Lees Ferry Company ?—Yes ; the shares were allotted on the 9th March, 1900, and Cook's application-money was paid on the 15th June, 1900. 128. Hon. Mr. Jennings] What was the amount of the application-money?—On 500 shares, £25. The allotment-money was paid in February, 1901. 129. Hon. Mr. Lee Smith] Had you anything to do with the Wicklow Company ?—Yes. 130. Did you pay your application-money ?—Yes; with the application. 131. Was Cook a director of that company?— Yes. 132. Do you know whether his application-money was paid ?—According to the books he paid his application-money on the 21st May of last year, and his allotment-money on the 22nd February of this year. 133. At what date was it that Mr. Holmes advised that those whose names were on the share register could vote though they had not paid any money to the company ?—I answered that before ; I think it was June of this year. 134. Was that the first intimation you had that all whose names appeared on the share register could vote, or had you any knowledge beforehand ?—That was my opinion, from the way the articles of association are drawn. One clause states that all calls—and I understand that application- and allotment-money are not calls 135. And therefore, if no calls had been made, that clause would be no bar to a man voting? —Quite so ; so long as his name appeared on the register he could vote. 136. Hon. the Chairman] With his calls overdue ?—According to the articles of association he could vote, though his application- and allotment-money were unpaid, if no calls had been made. 137. That was Mr. Holmes's advice to you ? —Yes. 138. Hon. Mr. Lee Smith] With regard to shares being controlled by a person other than the one in whose name they appear on the register —"dummies," as you called them —how do you know that they were controlled by another person ? —From sworn evidence. 139. Whose evidence ?—Evidence given in a case before the Magistrate in Auckland. 140. Who was prosecuting and who was defending in the case ?—One of the four companies which have been referred to was prosecuting, and the defendants were Mr. Abbott, Mr. Choyce, and Mr. and Miss Milne. 141. They swore that they held the shares under an arrangement with Cook ? —Yes. 142. About what time was that ? I want to get at the time when you got to know it, and how you got to know it. 143. Hon. the Chairman] I suppose, through seeing it in the public prints?—l saw Mr. Gray's evidence about March, I should say. 144. Hon. Mr. Lee Smith] Was the tenor of it the same as that which you saw in the Auckland papers ?—Yes. 145. Now, Mr. Cook has said that he never dealt with any of his vendors' or contributing shares Mr. J. Allen : I do not think he said that he had not dealt with his contributing shares. Mr. W. Fraser : I do not think he did, either. 146. Hon. Mr. Lee Smith] lam sure that he did on the first day of the proceedings. However, I will leave that point in the meantime. Do you know of any company of which you were a director, Mr. Somerville, in which the directors were taking proceedings against small shareholders while owing money themselves ?—I am not certain. 147. You do not know ? —No. 148. You do not know whether any shareholders were summoned for the calls which the directors were owing at the time of the summonses being issued?—l cannot say. 149. Hon. the Chairman] Were you a director of the Ngahere Company ?—Yes. Hon. the Chairman: According to the minute-book, at a meeting held on the 25th June the secretary reported that according to instructions the accounts of all shareholders in arrear had been handed to the company's solicitor, with instructions to take legal proceedings for recovery. 150. Hon. Mr. Lee bmith] Were you a director at that time ?—Yes.

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151. Do you know whether any directors were then owing money ?—1 could not tell you. 152. Who were the directors of the company ?—Mr. Davidson and myself. 153. Mr. Herries] Did either of you owe money ? Turn up the register, please ?—No. 154. Did Mr. Cook ?—No ;he had paid up. 155. Hon. Mr. Lee Smith] You do not know of any other company in which the shareholders were being sued when the directors were owing money ?—ln the case of the No Town No. 2 Company I think they were. 156. Were you on the board of that company ?—No. 157. Who were the directors ?—Mr. Cook was one; the others were Dr. Martin and Mr. Wales, I think. 158. According to the minute-book the following resolution was passed at a meeting held on the 19th April: " Besolved, that all shareholders owing more than two calls be sued, and that the secretary prepare accounts and instruct the company's solicitor to at once obtain all calls due." Do you know anything about that?— That is so. A considerable number of summonses were issued on the 19th April. 159. Were the directors owing money then ?—Mr. Cook had paid up to that date £100 on 500 shares—4s. a share—and there were seven calls overdue—£3so. Dr. Martin had paid up ; Mr. Wales had paid up to that call, and Mr. Pearce had paid up to the sixth call. Mr. Cook : Might I ask, Mr. Chairman, that the date be obtained on which those summonses were issued, because about the end of April I paid £200. Witness : The summonses were issued on the 19th April. According to the register Mr. Cook paid £100 on the Ist May, and another £100 on the 7th May. 160. Hon. Mr. Lee Smith] Did that money pay all calls due on Mr. Cook's shares ?—lt paid up to the fifth call. 161. What arrears were you suing for?—Up to and including the sixth call. 162. Hon. Mr. Twomey] With reference to the Lees Ferry Company, you stated that you were thrown off the directorate by proxy votes ?—That is so. 163. And then you qualified this statement when answering a subsequent question put to you by Mr. Cook, who showed that you were thrown off by a majority of votes other than proxy votes ? —Yes. 164. Here is the minute-book : will you kindly tell me how many people were present at that meeting?— Messrs. Holmes, Easton, Howes, Davidson, Haggett, Hoisted, and myself. 165. Was Mr. Holmes a shareholder in the company?— Bis name did not appear on the register. 166. He was a solicitor, was he not ? Was he at the meeting as a shareholder ?—He was there as a shareholder. 167. Who moved the motion for the election of Messrs. Howes and Pearce as directors ?—Mr. Howes moved the election of himself and Mr. Pearce, who was not present. 168. Who seconded the motion ?—lt was seconded by Mr. Hoisted. 169. Was Hoisted a shareholder ?—His name was not on the register. 170. What was he ?—He was not a shareholder. 171. Then, the facts that there was not a shareholder present to propose Mr. Howes, and that he had to perform that function for himself, and that he proposed, in conjunction with himself, an absentee, were some justification for your statement, were they not ?—Certainly. 172. Mr. Herries] I will go further with that same matter. Whom did you propose for the directorate at that meeting ?—Mr. Easton. 173. Who seconded the motion ?—Mr. Hoisted. 174. Who was the chairman of the meeting ? —I was. 175. Then, why did you allow a non-shareholder to second motions for the election of directors ?—Because the company's solicitor advised us that he was a shareholder. Mr. Holmes was present. 176. Did the solicitor advise that a person whose name was not on the share register could vote ?—That is so. He said that Mr. Hoisted was a shareholder. 177. The solicitor advised that persons whose names were not on the share register could vote?— Yes. He explained that the articles of association formed a register of their own ; that was his explanation. 178. Now, a ballot was taken ; did Mr. Hoisted vote at that ballot ?—I could not tell you. 179. Do you know if Mr. Holmes voted?— No. 180. Would you have stopped him if he had attempted to?— The voting was not by show of hands. I do not know whether they voted or not, but I suppose that a voting-paper would be given to them. 181. I would like to ask why these companies were registered under the Companies Act and not under the Mining Companies Act?— That is a matter for the promoters and vendors. 182. Do you not now think, from your knowledge, that it would have been better if the companies had been registered under the Mining Companies Act, and been " no liability " companies ? —I think I would prefer them under the " liability " arrangement. 183. Are most of the companies floated in Dunedin registered under the Companies Act ?— They are all under the Companies Act of lbB2. 184. With regard to the memorandum of association, had you anything to do with preparing the memorandum of association of any of the companies ?—No, none of these companies. 185. Did you have anything to do with the preparation of the memorandum of association of any companies outside those under review ?—Yes. 186. Is the memorandum of association of the companies floated by Cook and Gray the kind usually used by dredging companies ?—The whole of Table A is usually set out in full and printed.

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187. Without any alteration ?—There is usually an alteration to this effect: that all calls, moneys, and dues to the company must be paid before a shareholder can vote. 188. You say that the articles of association of the companies under review are, as far as your knowledge goes, different from the articles of association in general use ?—Yes. A clause is altered to provide that all moneys due, whether application or allotment-moneys, shall bear interest. 189. Taking the Cook and Gray companies' articles of association as a whole, you say that they are different from those generally used by other companies that you know of ?—That is so. 190. Did you read the articles of association when you became a director ?—I cannot say. 191. Were you aware that they were different from other companies' articles of association ? —I did not look particularly at that clause when I signed the articles. 192. Do you not think it is the business of a director to be aware of what is contained in the articles of association ?—Yes, I think so. 193. Mr. Colvin] You signed the articles of association of the Tucker Flat Company?— Yes. 194. Mr. Allan Holmes also signed them?—l think so; but I cannot remember. I think they were all the same. They were taken round together. 195. Did Mr. Hoisted sign them ? —Yes, I think so. 196. Were you aware, at the time when Mr. Holmes and Mr. Hoisted voted, that neither was on the share register of the company ?—Yes. 197. And yet they voted ? —lt was the solicitor's ruling that they could. Hon. Mr. Lee Smith: I made the statement that Mr. Cook had said that he had not dealt with either vendors' or contributing shares in these companies, and my statement was disputed. On page 8 of the printed evidence it will be seen that Mr. Cook stated, in answer to a question asked by Mr. Colvin, " If the companies go into liquidation, or are not successful, I stand to-day to lose double as much as any other man in the place ; and, as I say, I have not dealt with any of my shares, either contributing or vendors, in the companies complained of." 198. Hon. the Chairman] Will you explain that, please, Mr. Cook ? Have you corrected that evidence ?—I think I have. Ido not wish to go behind the evidence. I made that statement before I had had an opportunity of seeing the books at all, but it is practically correct to-day. I have not sold any shares. 199. Mr. J. Allen] You have not sold contributing shares in any of these companies, Mr. Cook ? —No ; only the 100 which I sold to Mr. Easton at par, at the first. 200. Mr. Easton] I would like to ask Mr. Cook whether he has sold any shares in the Tucker Flat Company ?—No. I said that Mrs. Cook and myself took 500 shares each in each company, which we now hold. In the case of the Tucker Flat Company there were 300 shares unallotted. I sold some of my shares, but I bought again, and to-day I hold 650 contributing shares in the company, and Mrs. Cook holds 500. 201. That is not an answer to my question? —I sold Tucker Flat shares at the initiation of the company; I bought and sold, as I said before. There were 300 shares unallotted, which I took, and to-day I hold 650 shares, instead of 500, in the Tucker Flat Company, and my wife holds 500. That is my answer. I bought at a premium. 202. Then, you did sell shares?— Certainly, at the start. But what I stated in the first place was this : I took 500 shares in each company, and my wife took 500; and to-day I hold 650 contributing shares in the Tucker Flat Company, and Mrs. Cook 500. When the companies were floated there was a rush for shares, and two or three people —for instance, Cutten Brothers, the engineers—did not get enough shares in the Tucker Flat Company, and asked me to sell some of mine. I did so, and bought again to cover myself. 203. Hon. Mr. McGowan.] I would like to ask Mr. Somerville a question arising out of a question put by Mr. Herries. You stated that Mr. Holmes had advised you, Mr. Somerville, that those whose names were not on the register could vote. I want to know whether Mr. Holmes advised you as a director that that was so, or whether the secretary stated that Mr. Holmes so advised ? —Mr. Holmes was present personally. 204. I would also like to ask Mr. Cook a question. You stated, Mr. Cook, that you had sold no shares in the companies under review ?-—Yes.. 205. Now you say that you did sell some shares ; one of the statements must be incorrect ?— When I stated that I had not dealt with any of my shares I had not seen the books. The statement I intended to make was that I had not sold any vendors' shares in these companies, and that I hold the same number of contributing shares that I took up in the first place. 206. lam not asking whether you hold the same number or not. You stated that you sold no shares, and now you state that you did sell shares ?—At the inception of the Tucker Flat Company I changed some shares; that is really what it amounts to. The transactions were done within the first two or three months of the company's existence. 207. Mr. Easton] I have one or two questions which I would like to ask Mr Somerville. Have you ever had any communication with Mr. Allan Holmes as to the titles to the companies' claims, Mr. Somerville? —After I left the board I did. 208. What did he tell you ? —He stated that he did not hurry about the completion of the titles, because he anticipated that most of the companies would go into liquidation. 209. Have you had any communication from one of Mr. Cook's employes, a Mr. Thompson, stating the reason why he signed the articles of association of several of the companies though he did not take up a share ? —Yes ; I sent a wire to him to this effect: — Cook says he personally took no part in flotations, but left to staff. Presume included yourself. Questions arising why you signed sevetal memoranda associations without taking a share. Serious matter. Had \ou not better explain reasons briefly in reply wire? Inquiry on again to-morrow.

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This is his reply :— Understood required number shareholders unavailable. Was asked by Howes, who was attending to registration, and who was superior to me on staff, to sign aiticles. Demurred, but was told it was mere matter of form. Pifsumed he was so advised by companies' solicitor, and therefore signed, not thinking matter of much importanoe, which section 29, Part It., of Companies Act appears to bear out. Hai my name been registered everything would have b»en formal, but my department being insurance had nothing to do with this. Assisted personally only with Long Valley and Greenstone flotations.—T. U. Thompson. [Telegrams handed in.] William Howes examined. (No. 8.) 210. Hon. the Chairman] I have here, Mr. Howes, a copy of a telegram sent by Mr. Somerville to Mr. T. H. Thompson, of Dunedin, together with Mr. Tnompson's reply. The telegrams were handed in by Mr. Somerville. Will you read them, please [documents handed to witness] ? —Yes, sir, I have read them. 211. What have you to say about the telegrams?— Mr. Thompson's statements are incorrect in one particular—where he says that I stated that signing the articles of association was a mere matter of form. 212. Is that the only statement that is incorrect?—l think that I witnessed the signatures to the documents. 213. You say that what Mr. Thompson says is correct, with the exception of his statement that you told him it was a mere matter of form?— Yes, I believe so. He was not told by me that signing the articles of association was a mere matter of form. I fully admit that the persons who sign the articles of association are the original and most certain shareholders in any company, and if those who signed the articles of association of any of the companies floated by Cook and Gray were not on the register they should have been placed there. 214. What I want to know is, do you agree with that telegram, with that exception ?—Yes. Approximate Cost of Paper.— Preparation, not given; printing 1,375) copies) .673.

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