I.—7a

II

7. The actual amount of money expended by the company on the railway, the equipment thereof, rolling-stock, and cost of administration in the colony was, in round figures, the sum of one million one hundred thousand pounds (£1,100,000). 8. The capital subscribed by the shareholders of the company amounted to the sum of two hundred and fifty thousand pounds (£250,000) ; and, in order to construct and equip the said railway, a further sum of eight hundred and fifty thousand pounds (£850,000) was raised by the issue of 5-per-cent. first-mortgage debenture stock, which are still in existence. 9. The company does not desire to repeat in detail in this petition the grievances mentioned and referred to in the petitions of the company which have from time to time been presented to your honourable House and in the course of the arbitration proceedings recently held under clause 47 of " The Midland Eailway Contract, 1888." 10. The company nevertheless asserts that, for the mutual benefit of the colony and the company, the company was induced by the Government for the time being of the colony, by representations and promises of profit and of support, to accept an assignment of the contract for the construction of the said railway. The following is a true copy of the share-capital prospectus issued by the company in the month of April, 1886 : — The New Zealand Midland Railway Company (Limited), (Incorporated under the Companies Acts, 1862 to 1882). Share Capital £500,000, of which £250,000 is now offered for Subscription, to be converted into Stock on payment of the final call. The balance of the cost of construction to be defrayed either by the issue of debentures secured upon the line constructed and upon the valuable lands which will be granted to the company by the New Zealand Government as mentioned below, or in such other manner provided for by the memorandum of association as may hereafter be deemed desirable. Directors. —Thomas Salt, Esq., Chairman (Chairman of the North Staffordshire Railway Company) ; Sir Charles Clifford (Chairman of the New Zealand Trust and Loan Company, Limited) ; H. V. Hart-Davis, Esq. (Messrs. Hoare, Wilson, and Co., London) ; C. Shirreff ; B. Hilton, Esq. (Messrs. Miles Brothers and Co., London, also Christchnrch and Timaru, New Zealand) ; E. Brodie Hoare, Esq, (Chairman of the National Bank of New Zealand, Limited, and Director of Lloyd's, Barnett's, and Bosanquet's Bank, Limited). Bankers.-- Lloyd's, Barnett's, and Bosanquet's Bank (Limited), 62, Lombard Street, B.C., and all branches; the Clydesdale Bank (Limited), St. Vincent Place, Glasgow, and brandies in Scotland ; the National Bank of New Zealand (Limited), New Zealand. Solicitors. —Messrs. Burchell and Co., 5, The Sanctuary, Westminster ; Messrs. Harper and Co., Christcburch, New Zealand ; Messrs. Pell and Atkinson, Nelson, New Zealand. Engineers. —John Carruthers, Esq. (late Resident Engineer-in-Chief to the New Zealand Government, now joint Consulting Engineer to the Colony), 7, Westminster Chambers, S.W.; Robert Wilson, Esq., 7, Westminster Chambers, S.W.; Chief Resident Engineer, 0. Napier Bell, Esq. Secretary (pro. tern.) —P. O. Stow, Esq. Lloyd's, Barnett's, and Bosanquet's Bank (Limited), are instructed to receive applications at par for 25,000 shares of £10 each, payable as follows: 10s. on application; 30s. on allotment; the balance in calls not exceeding £2 each at intervals of not less than three months. Interest at 5 per cent, per annum on the amounts paid up will be payable during the construction of the railway. Payment in full may be made upon any of the days when an instalment becomes due, and interest at that rate on the amounts paid up will accrue from the date of such payment.

Thje company has been incorporated for the purpose of constructing the above-mentioned railway under a contract, dated 17th January, 1885, which has been assigned to the company, and which was entered into by the Governor of New Zealand, under Acts of the New Zealand Parliament, intituled " The Railways Construction and Land Act, 1881," and " The East and West Coast (Middle Island) and Nelson Railway Act, 1884." This railway will form a trunk line connecting the east and west coast of the Southern Island, by the shortest and most direct route from the City of Ohristchurch, and also afford through communication between that town and the Port of Nelson, as shown by the map, and will unite agricultural and pastoral districts with others abounding in minerals and timber. It will also enable a saving of about two days to be made out of the journey between Melbourne and the central ports of New Zealand. Recognising the importance of the line to the colony, the New Zealand Government have agreed to make a free grant to the company of lands to the nominal value of £1,250,000. The directors are fully persuaded of the substantial character of this grant, as the value is to be arrived at by arbitrators to be nominated by either party, and they are only to take into consideration the estimated market value of the lands immediately prior to the making of the original contract, without reference to any prospective value that will be given to such lands by the railway. It is a matter of common knowledge that in New Zealand, as in other new countries, the making of a railway rapidly increases the value of the lands served by it. It appears, therefore, to be a moderate estimate to assume that lands which have been thus valued at, say, 10s. per acre will, on the making of the line, realise at least 20s. per acre, thus making the company's estate worth at least £2,500,0( , 0 for the purposes of realisation. The company will as soon as possible select from the Crown land lying within the large area now withdrawn from sale (the boundaries of which are shown on the map) the actual blocks which they may decide to take, the Government having aright of alternate selection, but only in the case of blocks which adjoin the line. As soon as each section (i.e., about seven miles) is completed and open for traffic, the full proportion of landgrant will be transferred to the company as their absolute freehold, including with the land all timber thereon and minerals thereunder. The Government, however, have the right, upon paying compensation, to resume the possession of lands for the purposes of gold- and silver-mining only under " The Resumption of Land for Mining Purposes Act, 1882.'' The length of line to be constructed is about 235 miles, divided for the purposes of the land-grant before referred to into thirty-five sections, and the estimated cost, with rolling-stock, does not exceed £2,755,000. As at present advised, the directors intend commencing with the line from Brunnerton to Reefton, a distance of about forty miles. The Government are desirous of assisting the company in every way, and have consented to give the most favoured running powers and facilities for interchange of traffic, so that the company will get access to the natural termini of the line over existing railways. In the country traversed by the line are large and valuable deposits of gold, coal, iron, and other minerals, with abundance of timber, and hard and soft building stone of excellent quality. Prom these sources alone a valuable traffic should come upon the railway. The export of gold from the western districts during the year 1884 (as shown in the Government returns) was of the value of £454,519, which may be taken to be about the average. The coal from its excellent bituminous properties is valuable not only for local consumption, but for export, and from this source alone considerable traffic may be expected. The demand for timber is already great, not only on the treeless plains of Canterbury, but also in most parts of New Zealand and Australia. The railways in the South Island, as shown by the official returns, earned on the average 4 per cent, per annum, during the five years ending in 1885, on the capital invested in them, by traffic alone. The Government of New Zealand have the right to purchase the railway at any time after ten years from the date of completion at cost price, in which will be included the interest on the present issue of capital. The Government of New Zealand have undertaken, through the Agent-General, to introduce an Act of Parliament relating to running-powers, regulations for the selection of land, and certain other matters that may be found desirable on behalf of the company, and may require confirmation under the law of New Zealand.