11

D.—3

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

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

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