39

I.—2b

Son. Mr. Waterhome.

702. Mr. Pearce.] Are we to understand that Messrs. Rothschild had not had possession of the - Financial Statement of 1874 at the time that they negotiated this loan ?—lt was never referred to at all until I referred to it myself. 703. Is it conceivable that they did not consider it worth while to look at the Financial Statement of the colony ? —I think you will find, as a matter of fact, that persons going into these transactions are influenced by the opinion they entertain as to the readiness w rith which they could get rid of their bonds. They go in simply with the view of realizing a profit. 704. It must have been known to dealers in New Zealand bonds that a large portion of the authorized loans had not been raised ; was it not so ? —I do not know, nor do I believe, such was the case. The extent of knowledge on these matters in England is not great. Ido not think you will find that persons in England are in the habit of reading through our Financial Statements. 705. Sir F. B. Bell] Speaking generally, would you suppose that any one, even if he had read the Financial Statement, would be influenced by that in any way compared to the way in which he would be influenced by a statement from the Colonial Treasurer himself in England ?—Undoubtedly not. do not think it is the practice of persons in England to read the Financial Statement of New 7 Zealand. 706. Hon. Major Atkinson.] Not among business men who are dealing in these matters ?—No; how utterly impossible it would be in Mr. Rothschild's case that he should read the Financial Statement. If the bonds are in fair request, and the credit of the colony is good, he will go in simply with the view of making a profit. He has a general notion of the credit and resources of the colony, and on that he acts. 707. What you mean is that if Rothschild, the contractor, is satisfied that the Government have legal authority to place bonds on the market, he does not look to the time at which they can do so?— Certainly. 708. Then does he know nothing of the power of borrowing which the colony possesses ? —Yes, undoubtedly. He will inform himself that any particular loan he is asked to negotiate is duly authorized. I cannot state as a positive fact that Mr. Rothschild, before the negotiation of the loan, was not made aware of the existence of these unexpended borrowing powers. I only infer it from what took place. 709. Supposing that Mr. Rothschild had been made acquainted of these particulars prior to this conversation that took place between him and you, through Mr. Clarke, is it conceivable that the negotiation would be prolonged ? —The whole circumstances, I think, clearly show that he had not that information. Of course I cannot say that as a positive fact. There was not the slight doubt in my mind about it. 710. The Chairman.] Were you Premier at the time when the Government initiated the negotiation for the purchase of the Port Chalmers Railway ? —Yes. 711. Are you acquainted with the character of any negotiations that might have been carried on? —I am only acquainted with the character of the negotiations carried on during the time that I was Premier. The negotiations were concluded subsequent to my leaving office, and consequently lam entirely ignorant of their nature. 712. Do you know any price that was named in connection with the negotiations up to the time that you left office ?—I will state exactly what took place. The Ministry were authorized by the Act of 1872 to purchase the Port Chalmers Railway. Directly after the conclusion of the session, negotiations were placed in the hands of the Hon. E. Richardson, who proceeded to Otago to see what could be done in the matter. Our idea at the time was that we should act liberally towards the Contractors, and should not refuse to give them a fair profit, rather than use the power which Government did possess, or if they did not possess that they should get, to construct rival works. The Hon. E. Richardson went over the works, and formed his own estimate of their value, and saw the Contractors there. The matter was very much pressed on by Mr. Macandrew, who was very anxious that the Government should obtain possession of these works on behalf of the Public Works policy. On the Hon E. Richardson coming to Wellington, the question was discussed. At the same time Mr. Murdoch came up, and had some conversation with Sir Julius Vogel upon the subject. We found that the ami unt asked for was much greater than we should be justified in paying, but at last I proposed, and the Cabinet adopted, a suggestion that we should limit our offer to whatever amount the provincial authorities were prepared to sanction. This suggestion was made by me, because at that time the provinces were responsible for the interest on the railways, and I thought we should not assume responsibility of this character, which would have the effect of entailing pecuniary responsibility upon the provinces, except with the concurrence of the provincial authorities. We telegraphed to Dunedin, and found there was a difference of opinion between Mr. Macandrew on the one side, and his Executive on the other. They telegraphed back to say that £150,000 was the highest amount that they would consent to our giving on behalf of the provinces. 713. Do you mean that a difference of opinion existed between Mr. Macandrew, the Superintendent, and his own Executive, or the Colonial Executive ? —His own Executive. Mr. Macandrew personally was desirous that we should obtain the railway at any price, while his Executive were strongly of opinion that no more than £150,000 should be given. The question came up again. Mr. Murdoch came to Wellington and resumed negotiations with Sir Julius Vogel, in the course of which it appeared that we could get the railway for £185,000, while Sir Julius Vogel arrived at the conclusion that we would succeed in getting it for £175,000; but I took a decided stand that we should not depart from the principle laid down that we would not take the railway at a higher price than the provincial authorities authorized us to give. Negotiations were, therefore, altogether suspended. A short time after I left office I heard that the Government had acquired that railway, but up to the present time I have not heard upon what terms, or whether it was with the concurrence of the provincial authorities. 714. Hon. Major Atkinson.] Do you know whether the Bank of New Zealand were negotiating to effect the sale? —Mr. Murdoch had three interviews with Sir Julius Vogel, and pressed the matter very much upon him ; and I know from other sources that the Hon. E. Richardson's great difficulty was the hardness of dealing with Mr. Murdoch. At that time I had no idea whatever that Mr. Murdoch had any

13th Oct., 1875.