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£1,100 per mile on the Beefton Section would pay 8 per cent, on the capital required for this work." The company took their figures, as regards the gross receipts of the Greymouth line for 1888, from the annual report on working railways of 1888. The quotation is correct. The GreymouthBrunner Railway did earn £3,602 per mile; but the Greymouth-Brunner Eailway is extraordinarily situated, and no other railway of the whole Government system in any way approaches it as regards earnings. The average earnings of the whole Government railways for that year were £570 per mile, as against £3,600 for this particular railway. The company say that their line is a direct extension of the Brunner line, and so it is. But, as I have already pointed out, the Government line carries the whole of the traffic from the Brunner Mines, and the company's line would not carry any of it. So that the company had nothing on their line that would lead them to suppose that their receipts would exceed the average receipts of the Government railways ; and the results have shown that they have fallen far below the average. The gross receipts per mile of the Governments railways for 1887-88 were as follows : Brunner, £3,602 ; Westport, £956 ; Wellington, £801; Napier, £674 ; Kawakawa, £627 ; Hurunui-Bluff, £585; Auckland, £456; Nelson, £397 ; Wanganui, £371; Picton, £326 ; Whangarei, £307 : the average for all sections being £570. For comparison's sake, I have also prepared a statement showing the Government receipts for 1895-96, and have added at the foot the Midland Eailway receipts. For that year the line was in our hands. As the Midland Eailway did not come into our hands until the 25th May, the accountant has given me a statement from the 27th May, 1895, to the 23rd May, 1896. Before going any further, I may say that the company was fortunate in choosing the particular year that it took, for I know of no other year, either before or since, during which the Brunner line has earned so much per mile. The receipts per mile for 1895-96 were as follows: Greymouth-Brunner, £2,865; Westport, £1,046; Wellington, £931; Napier-Taranaki, £625 ; Hurunui-Bluff, £589; Whangarei, £461; Auckland, £435 ; Nelson, £400 ; Hokitika, £356; Kaihu, £338 ; Picton, £313; Kawakawa, £311; the average being £592, and that of the Midland Eailway for as nearly as possible the same period £221, or considerably the lowest on the list. [Certified statement, Exhibit F, and tables put in ; also Eailways Statement for current year, showing all the Government railway figures.] The company not only drew attention to the fact that their line was a direct extension of the Government line, and by inference led investors to believe that something like the same rate of receipts would prevail, but went on in these words : "It is estimated that an annual gross receipt of only £1,100 per mile on the Eeefton Section would pay 8 per cent, on the capital required for this work." The receipts of the Eeefton Section have turned out to be £221 per mile. They put the clause in such words as to lead to the inference that they expected a much larger return than that, but that they wished to be very moderate in their estimate. They say it is estimated that an annual receipt of only £1,100 would produce so much. The prospectus concluded with a paragraph stating that a draft of the trust deed securing the debentures, and a copy of the contract between the Government of New Zealand on behalf of Her Majesty the Queen and the company can be seen at the offices of the company. Any prudent investor, therefore, would have gone to the office of the company to inspect the trust deed and the contract, both which documents plainly set forth that they are entered into under the provisions of the Eailways Construction and Land Act of 1881, which Act reveals the power of seizure on the part of the Governor. In both the trust deed and the contract the Eailways Construction and Land Act of 1881 is referred to as " the principal Act." As regards these misstatements in the debenture prospectus, of course no one contends that the debenture-holders are responsible for them. But neither is the colony. Mr. Chapman suggested that the Agent-General perused this prospectus and approved it. I submit that there is no evidence of anything of the kind. Mr. Chapman referred to Mr. Salt's evidence; but Mr. Salt did not profess to be at all sure of what he was talking about. Mr. Salt did not give positive evidence on the subject at all. He merely said that he " believed so," and his answer to Question 579 (Midland Eailway Arbitration Proceed-ings—D.-4, 1896, page 178), shows that his memory is not to be trusted, because he says there that the Agent-General withdrew at the instance of the Government, whereas the Agent-General's own sense of propriety dictated his withdrawal, as I will show directly. I have referred to the misleading character of this prospectus; and I may safely ask the Committee to judge whether it is at all likely that a statesman of the well-known ability and standing of Sir Francis Dillon Bell would for one moment think of putting his name to any such document, or in any way approving it. In saying this, of course I do not mean to infer that the directors did not at the time believe every word in their statement to be true. The directors themselves had next to no acquaintance with New Zealand. They were acting no doubt on information supplied to them by their servants, and they may have believed honestly that every word stated in that prospectus was true. If so, they were very badly and very improperly advised. But, in any case, the onus of making these misstatements, or in any way approving of them, does not rest on the colony. Mr. Chapman has suggested that, as I have already mentioned, the Agent-General perused this prospectus. The prospectus bore date the 12th April, 1889, and the correspondence in reference to the acceptance of the trusteeship by the Agent-General —printed in D.-2c of 1889—shows that the telegram from the Government authorising him to accept the office of trustee, only left the colony on that very day. Clearly, therefore, at the time that prospectus went to the printers, Sir Francis Dillon Bell had not agreed to act as a trustee, and hence the non-inclusion of his name. We have no occasion to search further as to the reason why the Agent-General's name is not there as a trustee. He had not received authority to act at the time that prospectus was determined upon. As a consequence, therefore, of course, no one was deceived by any reference, either official or otherwise, as to the connection of the Agent-General with the matter. Mr. Chapman further contended that it was only reasonable to suppose that the Agent-General would have perused the prospectus, because he must, of course, have noted and approved the trust deed and the draft of the debenture, inasmuch as he was to be one of the