T 7

8

66. And did such a provision appear in the form of debenture which was embodied in the trustdeed which was submitted to and approved by the Agent-General on behalf of the colony ? —Yes. 67. Mr. Button.] I would like to hear what you have to say about this clause in the prospectus. You pointed out specifically that "1,2,3, 4 " are part of the security. Here is the clause :— " The security for the present issue will be-— £ "1. Railway already constructed out of first issue of share-capital, including rolling-stock, surveys, &c. ... ... ... 220,000 " 2. Railway to be constructed and equipped, according to contract, out of the proceeds of this issue ... ... ... ... 545,000 "3. Land, about 300,000 acres, to be granted to the company in consideration of above expenditure, and taken at waste land value of 10s. per acre ... ... ... ... ... 150,000 " 4. Timber on only 91,000 acres in the immediate neighbourhood of the line now to be constructed, separately valued at ... 635,000 " Total value of security ... ... £1,550,000 " I want to know whether this is true; whether you are prepared to say that it is not true—namely: " The Government have subsidised the company by a free grant of 2,000,000 acres " ? Did you get that subsidy ? Was it included in the conditions ? Would you say that the view taken of the action of the Agent-General in passing this prospectus and trust deed led the debenture-holders to suppose that Government had given this free grant ?—lt is a statement; but it must be read in conjunction with the specific security mentioned in the debenture. 68. Do you rely on that statement as being misleading to the debenture-holders?— What I rely on is 69. You do not rely on that?— Not exactly on that, for that is not a statement of the specific security. 70.' I Want to know whether you rely on that ? —Not specifically on that; we rely on the statement summed up in the four items of security. 71. You say that the company was incorporated ; here we have a direct statement: it was incorporated for the construction of the railway under a contract, in accordance with Acts of the New Zealand Parliament; glowing references are made to the benefits to accrue from the railway ; but here is a direct statement; I want to know whether you rely on this direct statement ?—Not specifically on that; it does appear as a coloured statement, no doubt. The specific security is that referred to in the debenture, it is summed up as £1,550,000 ; that, no doubt, makes the company look much wealthier in itself. 72. The Chairman.] When the Agent-General did not appear among the trustees ultimately, did the directors of the company give notice to the debenture-holders who supposed he was to be a trustee that his name was omitted ?—I do not know ; I do not know whether they had given any notice that he was to be trustee ; all they knew was the fact that it was so contemplated. Sir Frederick Weld was suggested as replacing him. 73. I want to know whether there is any evidence to show that the debenture-holders then, or the debenture-holders in posse, were, or were not, led to believe that any one connected with the colony was to be trustee ? —We do not know anything of that; but we point to the fact of its being known in April that the Agent-General had officially approved of the prospectus and the trust deed.

Friday, 24th July, 1896. George B. Parker examined. 1. Witness, (in reply to Mr. Chapman) : I hold my appointment here as Receiver for the deben-ture-holders of the Midland Railway. That appointment has been recognised by the Chancery Division of the High Court of Justice in England. 2. Mr. Chapman.] And you have come out under instructions from the trustees, confirmed by a Judge of that division ?—Yes. 3. A question was raised yesterday as to the way in which the debentures were held. Do you know, generally, how and by whom they are held?—l have a list of the debenture-holders, but, of course, they do not tell the amount. But I know, from personal knowledge and information that I have received, that a large quantity of them is held by the directors of the Midland Railway and people who are connected with them. There is also a large amount that is held by people who are ordinary holders of debentures, and who have nothing to do with them. 4. Subscribed just on the market?— Yes. 5. You have been through the country and inspected the line, I understand?— Yes, I have. 6. Mr. Montgomery.] I would like to ask you what is the exact amount on which you claim that the debenture-holders have any claim against the colony ?—I take it that at this moment we are throwing ourselves on the mercy of the colony. That is the form of our petition. 7. Yes, it is true ; but you say that you reserve your legal rights. What legal rights do you suppose there are ?—1 should think that is more a question for one's lawyer than for oneself; but I am advised that we have legal rights, our money having been expended on those works for which we are supposed to hold security from the company. 8. You have legal rights against the colony ?—I do not say so, but lam advised there is a case against the colony.