I.—B

10

arrangement on the part of the financiers, who say that it will simplify the operations to have the arrangement in that form. Ido not know that there would be any insurmountable difficulty in this. They might be able to arrange otherwise in London. My Board cabled me to say that it will facilitate matters very much if we can get the money placed in a lump sum in the hands of the Public Trustee. 9. I suppose you will admit that, after you raise this £618,250, you will not immediately want it; and that, therefore, it would not be a good business arrangement for the colony ?—lt might not be a good business arrangement if you had to pay interest on the money. I admit that; but the mere fact of having the bonds in the hands of the Public Trustee, and those bonds not carrying interest, will not make any difference to the colony. It is only when these bonds bear interest that the colony will be affected, as far as actual disbursements go. The payment in instalments of the £200,000, £200,000, and £218,250 would be practically the same thing as paying into trust at once the £618,250, as the bonds do not bear interest before the periods named. 10. If we issued them we should have to pay interest ? —No, I think not. I think you could get over the difficulty by arranging for a certain issue of bonds to Public Trustee, and those bonds not to bear interest for a certain stated period. The £200,000 would bear interest at once when placed in the hands of the Public Trustee ; but the next issue of £200,000 would only bear interest a year afterwards, and the balance would only bear interest two years afterwards—two years after the date of signing the contract. The bonds would be issued subject to these conditions of interest payments. The colony would not pay the interest until these respective dates. It would not cost the colony any more than the actual issue of the bonds in three sets of £200,000 each. 11. In other words, these bonds would be issued and locked up in the hands of the Public Trustee. Would it not be safer to trust the Government? —I do not raise the question myself at all. It is purely a question of the financiers stating that they would be able to go to the public with a statement that the £618,250 had been placed by the Government in the hands of the Public Trustee, and that there is, therefore, absolute security. That is the whole question at issue. 12. The Government quite recently gave its guarantee for two millions to the Bank of New Zealand, and the financiers in London were perfectly satisfied to trust the Government ?—Well, if you like to substitute for the £618,250 a 3-J-per-cent. guaranteed interest on the new capital, you .need not put the money in the hands of the Public Trustee. The credit of the colony is no doubt good. 13. It would only be a guarantee for £200,000 for one year, £200,000 the next, and the remaining £218,250 the next year?— There is a great difference between a guarantee of 3J per cent, in perpetuity and a lump sum of £618,250 to pay interest for fourteen years only; they are very different conditions. 14. "Where is the difference ? —I am not sure whether financiers would take the guarantee for fourteen years instead of a lump sum down. 15. Will you point out to the Committee the difference?—lt is a question of market conditions. I am not sure myself that the guarantee for fourteen years by the Government would not be quite as good as the deposit of the £618,250. Equal to guaranteed interest for fourteen years, I have no doubt, would be just as secure as the deposit of the money. 16. We give a guarantee of £200,000 for fourteen years, the next £200,000 for thirteen years, and the remaining £218,250 for twelve years : that is the proposal; where is the difference ?— There is a difference in this way, that you have got practically 4 per cent, interest for fourteen years. I cannot say that the financiers would accept these terms ; but practically it would be the same thing. 17. Under the land-grant arrangement you had to do the work before you got the land ?— Assuming we had the money we could do that now ; but then the British public would know that we had not got the money. We have to meet these financiers on their own terms as to how they will provide the money. That is the position we are now in. 18. What amount do you think you would be able to spend the first year ?—lt would take me three months to get the works under way. They are large works, and the contractors would have to make a careful examination of the country. I think we should be able to spend £200,000 in nine months. I expect, when all contracts are let, and the works in full swing, we shall spend over £30,000 a month. 19. Then, what objection, if any, is there to there being a limit as to expenditure, taking the minimum? —As long as you fix it at a reasonable limit I do not see any objection to the suggestion. 20. What would you say then would be a reasonable limit, the first and second years, or whatever time you fixed it ? —For protection you might fix the same as in the original contract—£lso,ooo the first twelve months. Of course, when once we get the works going we ought to spend £360,000 a year; we should have to do that to get our work done in the time. 21. Well, the second year, there being £400,000 bearing interest, you would have to spend £250,000? —We should have to spend that amount; there would be no objection to that. We shall far exceed that after our works are in full swing. The first year there would be the difficulty and delay in getting everything under way. 22. Would the contract be completed then?—l am afraid it will take us four years before we finish altogether. If we have good luck we might do it in three years and a-half. The works in some places will be very heavy. It is doubtful whether we should finish in less than four years. A great deal depends on the weather. 23. Would you spend £400,000 the next year?—We should have to spend on an average £360,000 a year. 24. For the information of the Committee, you say that, with the limit indicated, the work can be done? —I do not see any objection to it at all. The only doubtful thing is the first year, until we get all our contracts let.