MANAWATU RAILWAY.

Gisborne Times, Volume XXVI, Issue 2297, 16 September 1908, Page 2

MANAWATU RAILWAY.

THE NEGOTIATIONS DESCRIBED. PREMIER ON THE PURCHASE PRICE. “A REASONABLE FIGURE.” Tho socond raiding of the Wellington .and Manawatu Railway Puicha: j Bill, in the House last woek, gave the Premier an opportunity of making an important and exhaustive statement m regard to the important transaction. The Prime Minister, in moving the second reading of tho Bill, briefly summarised tho history of the Wellington and Manawatu railway, already detailed in those columns, lie mentioned the original provision that ton years after tho completion of tho. line it could bo purchased by the State by payment of the cost of construction, plus 5 per cent. If purchased between 14 and 21. years alter completion, a 10 per cent, addition to the cost of construction was to ho made, hut no premium was to bo paid if tho line had boon running 21 years. It was opened on November 29th, 1880, therefore the period oxpired in November 1907, and on December 7th last notice was served of tho intention of the country to purchase the line. When notice was served, a letter was sent to the company, suggesting that stops should be at onco taken to arrive at a satisfactory arrangement, and that with this end in view, arbitrators should he appointed. On January 31,st tho company intimated that no doubt arrangements could be completed so that tho arbitration could proceed on tho expiry of twelvo months’ notice. WHAT COULD HAVE HAPPENED. It was plain that tho company intended waiting twelve months bofore allowing arbitration proceedings to commence, and in this it was within its rights. Doubtless reference would have had to bo. made to tho Supreme Court on law points, and eventually to the Appeal and Privy Council. It would' have been quite possible for the company to have held on to the line for eighteen months or two years after the expiry of tho notice. THE NEGOTIATIONS. The chairman of directors (Mr. ICirkcaldio) and himself met informally to discuss tho position and see if an amicable arrangement could be made, butas tho outcomo of the first deliberations, tho figures on both sides showed considerable disparity. Several further interviews followed, and it was eventually decided' that the purchase price for the railway should bo £909,000, with £IO,OOO for stores in band, and £15,000 in consideration of die Sic.to acquiring the line on December 7h, making a gross total of 1925,000. After the last interview, when they got comparatively close to a settlement, he dispatched to the chairman of directors, on August 20th, a letter detailing tho terms offered by t)ip Government, which ho read. These had been incorporated in the Bill. The Premier also read a letter in reply, indicating that the directors of the company had unanimously agreed to accept tho amended terms, and to strongly recommend .their acceptance by the company’s shareholders. PURCHASE ANALYSED. The property . was burdened with debentures to the extent of £680,000, which matured in June last, and the company proposed to pay off £IBO,OOO. However, arrangements were made to secure the redemption of tho whole amount by the State. The price paid was reasonable. Both sides would probably say this. It Vas estimated that tho line would cost £605,892 to construct, to which must be added tho valuo of equipment, which was greater per mile on the Wellington and Manawatu Company’s service than on the State railways. This was not to be wonderod at, for tho reason that on tho longer lengths the same number of engines in all probability could have carried on the business required to run the eighty-four miles owned by the company. Adding, the value of the ordinary equipment to the estimated cost, brought it to £773,893, or £126,180 less than the amount agreed upon as tho purchase price, though the estimate he had quoted was made when material was low in price. THE 1901-2 OFFER. Since the former offer of tho Government to the company, the capital value of the railway had been increased by £140,000. This was due to substantial additions to rolling stock, replacing a wooded viaduct by a steel structure, and relaying portions of the track with heavier rails. The price of tho railway in 1901-2 was £951,845, and the country would have to pay,intest on the debentures for six years, at a loss of 1 nor cent, which would have been equivalent to a further payment of £40,800, and would have brought the price up to £992,645. There was a difference in the present position, for’-,the price of 1901-2 includ-ed-all the asserts of the company. Deducting the value of the land, which was no included an the present purchase, the net price of the line, in 1901-2 was £799,518. Added to this the amount at which the equipment was valued, would bring the total up to £939,518. ESTIMATES OF THE PRICE. To purchase the line on the basis of share value would bo still more expensive to the country. Worked out in this way the cost of the railway, deducting the assets which the country was no taking over, would have amttinted to £980,707. From any aspect it was evident that the country was taking over the railway and its rolling stock upon better than was offered in 1901. It was necessarily a difficult matter to form an opinion of the price which would have been paid under tho terms of tho original Act-, but rules were laid down in that measure for the guidance of the arbitrators, and the Under-Secretary for Public Works (Mr. Blow) went into the position. Ho finally worked out the price at £900,000. Averaging tho cost per mile of all Government liiiee, it amounted to £9861, including rolling stock, while tho net cost (excluding rolling stock) was £8293. Keeping these figures before him they constituted a safe guide in so important a question. The price oil this basis would have been £830,324, but it must bo remembered that the Manawatu line contained a number of tunnels, and its rolling stock was more expensive per milo than that of tlio Government lines. FUTURE RETURNS. Tho profits of the company last year were £62,162, while the amount the Government was paying was £925,000. When the railway canio under Government control such a return could not bo expected. It was only to be expected that further train facilities would have to be given, and they could not expect to show the average the company had done. Still he was perfectly certain that there, would be a largo increase an the traffic when the line came over to the State, and they were justified in looking forward to it as being a valuable part of the Main Trunk line. CAPABLE OFFICERS. The. shareholders of the Manawatu Company were getting the money mentioned in the Bill without reduction of any sort. The whole of the negotiations had taken place between the chairman of the compaity (Mr. -Kii'keaklie) and himself. In this collection he paid a tribute to the part taken by Mr. W. N. Hammy, the general manager, who, while acting in tho kindest way possible, had done everything he could in tho interests of the shareholders. Nobody could have done it more effectively than lie. Mr. Blow, Under-Secretary for Public Works, had rendered valuable assistance. He had been familiar with the position from the start, and this knowledge and the information lie furnished had proved very valuable. MR. MASSEY APPROVES. Mr. Massey congratulated the Premier upon the near completion of the negotiations, and expressed his pleasure that the line would, in- the near future, belong to the State. However, the local bodies would lose about £SOOO a year in rates paid by the company.lt was evident that the company’s servants, from the general manager downwards, had given wholehearted service, and he hoped this would continue. The Prime Minister had been at great pains to show that money was saved by avoiding arbitration, but he (Mr. Massey) would have preferred it.

' OTHER VIEWS. Mr. Izard said tliero was uo more difficult Court to.got through than the Arbitration Court. He was glad arbitration had not been necessary. Ho asked tho Premier to see that all the company’s men were taken into tho Government sorvice at a rank equivalent to that held by thorn under the company. Sir Joseph Ward: That is provided. Mr. James Allen contended that .if the Government had purchased the line at the company’s price in 1901 they would not have had to pay any goodwill for the lino. The Premier: Wo are not paying any goodwill at all. Mr. Allen :I do not agree. (He quoted figures in support of his contention.) Tho Premier: You nro entirely wrong from boginning to end. Mr. Allen asked had tho Premier told them the goodwill? The Premier : You had better read my ‘‘Hansard” proof and speak on the third reading. Mr. Field was quite satisfied that the country had made a good bargain. He failed to understand whether the leader of the Opposition mid Mr. Allen had been objecting that the sum paid was too much or too little, lit the past they had always advocated that the company should be treated generously when tho line was acquired. Ho had it from a gentleman in a position to know that the Premier had struck a very hard bargain, but his action throughout was characterised by absolute fairness and reasonable consideration for the company. If the matter had gone to law £20,000 would not have covered the costs on either side. The increase of traffic which would result cound not he coped with on the present line. He ■ advocated a duplication of the lino from Longburn to Wellington. Mr. Herries thought the provisional agreement should have been Mid on the table of the House, so that members could have gone through it themselves. Though they were paying a high price for the line, he considered they were making an excellent bargain. Tho Premier expressed his satisfaction at the criticism of the Bill, which had, on the whole, been congratulatory. Tliero was no 'such thing as goodwill in connection with the railway, nor did the law permit any being paid.' The Government proposed to take all the men of the company—except the two superior officers—and to treat them fairly and squarely. The men’s positions would not bo prejudiced, and efforts would bo made to merge them with the other railway employees that would an no way be to their disadvantage. With regard to (the two superior officers they could onlv bring them into Government service by putting somebody out or superceding other officers. He did not tlun'k the gentlemen would tolerate being putt into the service for the sake of being put there. They could not have two general manager's. In his opinion it was the duty of the company to make proper provision for theoe two officers.

Tho second reading was agreed to.