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■ —say, there was an appropriation chargeable to the Consolidated Fund: if that particular vote is not expended, any balance left unexpended goes to swell the surplus or the balance; if it was expended, then it would not ?—There may be no money there at all. A vote is authority to spend money if you have it. 89. You said the vote under that head had been exhausted? —You spend more money without the Appropriation Account showing it to be more —that is to say, if, for example, you have £500,000 of appropriation and £100,000 of credits, you have £600,000 of appropriation altogether; but the credits operate by deduction from the £600,000, and you spend the £600,000, if you get the credits, on the appropriation of £500,000. 90. At all events, the appropriation was exhausted, was it not ?—I think so. You told me so, and I believe that is the case ; and I think a reference to the Public Accounts will show that they had spent all the money they could lay hands on. 91. Had there not been an abnormal increase in the revenue from the railways and a corresponding increase of expenditure?— That may be, but that was nothing to me. 92. You audited the accounts, and I want to see if that was not so? —I should like to look at the accounts. I know there was was a large increase in revenue. 93. In regard to expenditure, had there not been a considerable increase over and above the appropriations for the railways? —The credits are appropriations, so that your appropriation is practically unlimited, except by the value of the stores. The Public Accounts are accounts merely of money, not of your other property, so if you realise part of your property it is appropriated to your expenditure. Section 41 of "The Public Revenues Act, 1891," says, " Money received from the sale of stores, or otherwise to the credit of any service, shall be carried to the credit of the vote for such service. In compiling the Estimates the Minister for each department shall cause the sums estimated to be received to the credit of each service to be abated upon the total estimated expenditure of such service for the year. All sums so credited to any vote shall be deemed to be appropriated to such service in addition to the vote for the same." It is appropriated by way of an abatement; therefore it does not appear in the Public Accounts to be an increased expenditure. 94. I have asked you are you aware of the amount that the Eailways had exceeded in expenditure—the amount of their appropriations, including the credits from sales ?—I should have to refer to the Appropriation Account. I cannot recollect the amount in excess of voted services. 95. What was the amount increased by ?—As far as I can recollect it was £27,000. 96. Were you aware that a demand had been made by the Railway Department upon " Unauthorised "to meet the increased charge owing to the abnormal traffic on the lines?—l have an impression that there was a demand made upon "Unauthorised." I recollect your saying that through some shortsightedness the railways had been embarrassed by your loss of £50,000 of the " Unauthorised expenditure " —that through a misconception of the effect of what was called a temporary transfer £50,000 had been lost. 97. The use of the money allowed by Parliament was limited owing to this transfer ? —Yes ; you had made a temporary transfer of £50,000 out of the Consolidated Fund to the Public Works Fund on the understanding that you could get the amount back when you wanted it. 98. Mr. Fisher] That was in a sense lost?—ln a sense. It had to remain in the Unauthorised Suspense Account, and therefore reduced the amount available of unauthorised expenditure by £50,000. 99. Bt. Hon. B. J. Seddon] You had an interview with me in reference to this matter ? I used every reasonable effort, did I not, to get you to remove that embargo you had put on that £50,000 ?—Yes, you did. 100. And you did not see your way clear to do so ? —I said it was illegal to do so ; and afterwards I think you sent me the advice of the Solicitor-General, in which he said I might do so, but legally I was right. 101. From a strictly legal point of view I think he supported you; but I think he at the same time said that you could have done it, and reported the matter to Parliament. And I pressed you to take that course, and you refused?— Yes, and I wrote a reply to that. The opinion of the Solicitor-General was given on the 17th March, 1898, as follows : " On considering this question, I think that on legal grounds the Audit is right in the view it has taken ; but I also think that, as the difficulty has arisen from a mistaken view of the position technically, the Audit Office might take into consideration the inconvenience which will arise to the public service from insisting on this position, and allow the matter to be disposed of as desired by the Treasury, on the understanding that the matter will be brought before Parliament, and an indemnity obtained in respect of any irregularity. —(Signed) W. 8. Reid." You sent me that, and I replied to " The Treasury" on the 19th March : " The opinion of the Solicitor-General proves the case to be one in which the Audit Office might, by an exercise of discretion, to be reported to and indemnified by Parliament, allow the claim of the Treasury. As, however, the Audit Office is without any legal authority to exercise such discretion, it must be assumed by the office that the Legislature has not contemplated any circumstances in which the authority should be anticipated. Strongly as the case may appear to call for the desired consideration, the Audit Office feels itself bound by the statute." 102. Notwithstanding the inconvenience the public service was put to, and after my seeing you personally and pointing this out to you, you still thought that as the statute did not permit you to do so, you stuck to the strict letter of the law ?—That is my last reply on the subject. 103. Are you not aware that your refusal to give the Government all the advantage of the £100,000 allowed by law caused serious public inconvenience ? —Well, the law caused public inconvenience. I understood you to tell me that the appropriations for the Railways had been insufficient, that the expenditure had been more than anticipated, and that they did not know where tq look to find the money to carry on to the 31st March without stopping payment.