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subsection (3) of section 2 the whole intention of the Legislature is made purely illusory. That subsection is as follows : "Shares given in lieu of cash in payment for any properly acquired by the company shall not be deemed to be promoters' shares within the meaning of this section." It surely is clear that the promoter has only to make his contract for cash, or, if the company see fit, the equivalent in fully paid shares taken at par in lieu thereof, to escape the provisions of the statute. If Parliament is seriously desirous to protect the contributing shareholders it will be necessary to introduce much firmer and more decisive legislation. To justify this a short survey of the whole conditions of the property dealt with and the relation of the " promoter " to the State and the company is necessary. Ido not say that at present lam in possession of data sufficient for my purpose. It is not my intention to urge crude legislation. I think it may be quite desirable for the Government to issue a Commission to, say, three persons of proved judicial qualifications to take evidence in the two chief centres of mining business—viz., Auckland and Dunedin—and to await their report. The Commission may be very inexpensive in every way, and the report of such persons as I suggest would yield a valuable basis for legislation. I have had little experience of quartz-reef mining and my remarks must be taken to be chiefly applicable to the sluicing and dredging industries though I believe that the Auckland capitalists were compelled to take an analogous course to that I recommend for statutory enactment to protect themselves ; but meantime, and guarding myself by expressly admitting the inadequacy of material, I think there are just grounds for the intervention of the Legislature. There is no question that a considerable number of claims are floated which will never pay the shareholders' interest on the capital which they have subscribed, and many more which will never repay the capital invested. In whose interest and by what means are these claims floated? I think it cannot be disputed that the persons most interested are the " promoters." It is very true that not all persons take shares in companies without making the least attempt to ascertain the value of the property, sometimes on the mere chatter of quite irresponsible touters, often on the recommendation of persons interested in floating it, and in many cases on the reports of the experts only. I refer to bond fide investors, not to persons merely buying shares with a view to a quick profit on a rise, and whom Ido not pretend to protect. It seems to me that such bond fide investors are fairly entitled to all reasonable protection by the State. Parliament has already recognised this as I have said, in the Act of 1900, but I may besides point out why I think that special controlling legislation is justifiable in ease of these mining companies. The mining privilege is the creature of the State. It is granted out of the estates of the Crown. It is the foundation of a special industry regulated by Act of Parliament. It is most injurious to the common welfare that the possession of these mining privileges should be abused ; that, instead of proving the foundation of a solid and healthy industry of sound commercial value, they should be perverted for the mere creation of paper scrip, and. the gambling of the Stock Exchange under the fever and excitement of a factitious boom which, when it collapses, involves in the disaster many varied interests and many innocent, though not the most prudent persons, and paralyses the industry itself. There are certain facts within the experience of all persons which generally govern the acquisition of claims and the floating of a company to work them ; and, subject to exceptions, I think it may be recognised as a fact that the general run of properties and formation of companies is as follows : A man pegs out, say, 100 acres as a prospecting area, at the cost now of some four wooden pegs and, say, half a day's labour. He gets one or two experts to make a few holes in and a report on the claim. If he is not in a position to float it himself he applies to some one who is— probably a broker. The prospectus is got out, provisional directors secured, brokers, solicitors, and bankers named. Up to that point the expenses incurred by the " promoter " are probably less than £30 to £40. I have before me the reports of ten companies, and I find from them that the amount of expenses paid in cash by the several companies for preliminary expenses average £269. That covers brokers' commission on flotation, cost of special-claim license, &c, apparently all cash expenses of the acquisition of the claim, and the floating of the company. If lam correct in this, then the "promoter" is recouped all his expenses, and, besides, a not inconsiderable profit in the way of commission, and he gets cash for this out of the contributing shareholders. Besides this, the " promoter " acquires from the contributing shareholders paid-up shares in the company to a large amount. What this is, is shown by an average of 102 companies in my returns A and B, where paid-up shares are 238,400, out of a share capital of £1,028,975, or rather over a fourth of the entire capital. The lowest amount I find from the returns is £600 in paid-up shares ; the highest, £6,000. That practically is the " promoter's " estimate of the value of a property which he acquired for nothing from the State, for his expenses, if I am right in my supposition, are always fixed to be paid in cash. It is not as if any great amount of exploration or skill or experience had been used. The pegging-out of these claims has, with certain exceptions, been the most careless, reckless work. It has been a race as to who could peg out ground quickest, anywhere and everywhere. My returns for last year show this, where from the 31st March, 1899, to the 31st May, 1900, there were 919 claims taken up, including 67,342 acres. It is, I think, apparent that the whole burden lies upon the contributing shareholders. They pay all the "promoter's" expenses. They pay for all the machinery of the company. They pay for all the information and surveys, the boring necessary to assure them whether the claim is profitably workable or not. While the "promoter" stands by, as is said, "on velvet," he has his property proved and worked at the cost of the contributing shareholders. The utmost, it seems to me, that can be said is that if the company are unwilling to go on with the venture the license should be handed back to the " promoter." I think that, without reservation, the " promoter's " shares should not be issued, and no " promoter " should have any vote whatever unless and until the company shall have paid two dividends. That no "promoter's "or holder of " promoter's " shares should, till the happening of that event, be a director or officer of the company. That if the company went into voluntary or com-