I.—2b,

46

make it a condition that, if they accepted £175,000, they should get an additional sum for what had been spent beyond a particular date in completing the wharf. I had taken into consideration the completion of it, and advised Sir Julius Vogel not to submit to their demand. I found then that the matter was likely to come about, and as it was only the question of a few thousand pounds difference I drew up a series of conditions which Sir Julius Vogel submitted to Mr. Murdoch, who was in Auckland at the time. They found that they had not the requisite technical knowledge, and, at all events, it was settled that the matter should be placed in my hands for settlement. I went down to Dunedin with Mr. Murdoch, and I had a carte blanche from the Cabinet to settle it. When I got there, I found that the Company were doing all they possibly could to break off the bargain, and I knew from other sources that it was their interest to do so. I was thoroughly aware that there was a company prepared to give them very considerably more than the Government were prepared to pay for the line. The matter was concluded by me in Dunedin, and the Superintendent expressed himself very well pleased at the time with the arrangement that I made. The price finally agreed upon was £175,000 —£75,000 in cash, and the Government taking the responsibility of £100,000 worth of debentures, which had been issued in London by the Company wherewith to construct the railway. The Company had a concession of 8 per cent, on £70,000 guaranteed from the Provincial Government; but the Company elected to issue £100,000 on 5 per. cent, debentures. 838.. Sir F. B. Bell] At that time had you any information with respect to the selling price of the debentures in London ? —No. 839. You were not aware that they were being quoted at a considerable discount ? —No. 840. Hon. Major Atkinson] In your calculations, you valued them at par ? —Yes. At the time the purchase was absolutely completed, we had been informed that the Loan and Mercantile Agency Company held nearly the whole of them. 841. Sir F. B. Bell] If the debentures had been quoted at the time in London at a large discount, the effect of the arrangement would have been to place the difference between the discount and par in the pockets of the Loan and Agency Company ? —I presume it would. 842. The Chairman] If the debentures were handed over at less than par, the Company would virtually have had to receive more than £75,000 ? —I suppose they would. 843. It was understood that you were to take the debentures at par ? —Yes. 844. The value of the line, then, was £175,000 cash ?—Yes. Of course, that means valuing all the concessions as well. There were one or two extraordinary concessions granted by the Provincial Government of Otago, such as I had never heard of before being granted to any company, and it was owing to these concessions that so large a value was put upon the concern. 845. Sir. F. B. Bell] Then did it not occur to you to make it a condition that the debentures should be assigned to the Government ? —No. See Letter from Mr. E. W. Morrah in Appendix No 14.

Hon. E.

Michardson.

19th Oct., 1875,

E. W. Morrah.

19th Oct., 1875

APPENDICES-BANKING ARRANGEMENTS. APPENDIX No. 1. Produced at Meeting 24th August, 1875. 1873. New Zealand. Banking Aebangements of the Govkbnment. (Presented to both Houses of the General Assembly by Command of His Excellency.) No. 1. Memobandt/m of the Arrangements under which the Banking Business of the New Zealand Government is conducted by the Bank of New Zealand. The arrangements under which the banking business of the New Zealand Government is conducted by the Bank of New Zealand are as follow: — The Colonial Account. All moneys lodged to credit of the Public Account at the several branches of the Bank of New Zealand throughout the colony are transferred every Monday morning to the credit of the Public Account at the Wellington Branch, whence they are withdrawn for expenditure as required. Interest is credited on the average balance of the account at the rate of 4 per cent, when the balance is under £50,000, and at 3 per cent, on the daily balance when above that amount. The London Account. All moneys received in London are paid into the New Zealand Public Account at the Bank of New Zealand, whence they are withdrawn for expenditure as required. Interest is credited on the daily balances of this account at the rate of 1 per cent, below the current Bank of England rate of discount for the time being. OVEBDEAFTS. Interest is charged on debit balances at the rate of 6 per cent, when such balance is less than £50,000, and 7 per cent, when above that sum; with proviso that if the discount rate of the Bank of England shall continue for two months in excess of 6 per cent., then an increase in the above rate shall be allowed for the whole period during which such excess is maintained equal to the difference between 6 per cent, and the Bank of England rate. Remittances. All remittances on Government account between the provinces of New Zealand are made at par. All remittances between New Zealand and the Australian colonies are made by draft at fifteen days' at par. Remittances at shorter dates at one-half the current rates charged to the public.