RETURN OF THE RAILWAY. DELEGATES.

Inangahua Times, Volume X, Issue 1606, 28 September 1885, Page 2

RETURN OF THE RAILWAY. DELEGATES.

We are glad to welcome hack to Nelson Mr Fell who arrived hy the steamer from the South this morning after an abscene of a little over eight months. He was accompanied from England as far as Christchurch by Mr A D. Dobson, Mr Scott, the third delegate, having remained in London. The delegates had a most anxious time, the war scare that prevailed dnring the months of March and April militating seriously against all attempts to place the railway pcheme on the market. For a summarised account of their proceedings Mr Fell refers as to a report of an interview which the reporter of the Chrittehwrch Pnm had with Mr Dobson and which appears below. With regard to that portion of their last telegram to the Government which speaks of the line being undertaken in sections, and which was received with mneh disfavor in the colony, Mr Fell gives the following explanation. The money market was in a very sensitive condition, and certain financial catastrophes that had occurred in New Zealand had produced a feeling of doubt and uncertainty with regard to any large undertaking* of the kind in the colony, and it was generally agreed that there might be considerable difficulty experienced Id floating all at once a scheme involving the expend itnre of three millions. It was therefore considered that the better course to pursue would be to raise some snch sum as half a million and to select a poitio » of the line on which to expend that sum, and when that was in full working order to proceed with the arrangements for the complete work. Mr Fell knows nothing of the negotiations refe red to by Mr Scott in his recent telegram to the Canterbury League, and by Mr Alex* ander Sclanders to Mr James Sclanders, so that, whatever they may be, they have been entered upon since he left England on the 81st July. Of this, however, he feels pretty certain, namely, that under no circumstances is the scheme likely to be taken op except on the condition that interest at the rate of 2| per cent is guaranteed by the colony. In fact this seemed to tbe delegates to be a perfectly fair demand on the p«rt of the contractors, and when they had completed tbe arrangements with his proviso, they went home, as Mr Fell expresses it, "the happiest men in all London," for they felt that their mission had been successful, never dreaming that such unceremonious treatment as they received at the bands of tbe Parliameas was to be accorded to the proposals. The disgust of the delegates opoti learning on their arrival at Port Ohsimers that the Parliament had refused I even to consider those proposals may well be imagined. It is, we under stand, the intention of Mr Fell and Mr Dobson to present to the guarantors, in a form of a lengthy meaonui

dam, a detailed account of their proceedings, and in the meantime such general information on the subject as our readers will look for at once will be found in the following account of the interview of the reporter of the Ciiristchurch Bten with Mr Dobson : — Without losing any time after their arrival, the delegates established themselves in an office, settling in Qaeen Victoria street, Westminister. There they stayed very closely all the time the negotiations were in progress, as there was every day some one coming in about the railway. Their first care was to lay the affair before the men in London most interested in and best informed concerning New Zealand, and by them they were put in com munioation with the leading financial houses in the city. The examination of plans and estimates which followed was highly satisfactory, and these were accepted as the basis for negotiation. But the financiers would go no further for the time being. The war scare was then raging in full force, the most «xciting rumui s were daily circulated, and till there should be some prospect of a steady agreement with Russia, not a halfpenny was to be had for any peaceful undertaking like the West Coast Railway. So for two months the delegates had to await with such patience as they might master the clearing of the political horizon. That period passed, offers began to come in, and among them that of Mr J. S. Meigga. Something has been said in the colony to the discredit of that gentleman, but the delegates heard nothing of the kind in London. They had learnt that he had with his brother executed works in Chili and Peru to the value of thirty millions, both men acquiring wealth by the enterprise, bat the brother was af erwards ruined by the Peruvian war, all his money having keen invested in the securities of the two countries engaged. Mr J. S. Meiggs had invested his money in England, and now enjoyed the highest consideration in the financial world. All the English and American engineers, with the nuoierousfinanciersand contractors to whom the delegates applied for information, spoke well of him, and they found that he was even then carrying out large contracts in Costa Rica and in the Argentine Republic. It appeared he was not only a contractor, bnt a financier, having consolidated the Costa Rica public debt, and raised large loans for the Philadelphia!! Waterworks. So far as they C'.viid leavn. he was t!i n *»*>at man in Etii.'l-vu to undertake their business and wiien his proposals came to be entertained the best financial houses in the Ci:y agreed to back him up. For the rest, it may not be out of place to say that Mr Meiggs lives like a man of substantial wealth with a large honse in S°uth Keesingcon, and a big office ia Broad street, and that the delegates found him an able and courteous business man. In the course of the next few weeks the delegates learnt a great deal concerning the method adopted by the magnates of British finance in dealing with proposals to execute foreign public works. The proposer has first of all to get a contractor who will undertake to do the work for a given sum. It does not follow that the contractor is himself possessed of the whole sum required for the word. But he enjoys the confidence of leading financies, who, without examining, the merits of the proposed scheme, will on his recommendation that it is a good thing, back him up with their names and credit. The financiers are the underwriters, but the proposer, even when he has got down to their stratum, has no. yet touched the spring of the golden stream her requires. The underwriters merely engage to find capitalists, who will produce the money, ether from their own pockets or from those of their friends whom they can influence. But here, said Mr Dobson, comes in the source of one of the main charges on the whole affair, viz., the price at which the loan will be dotted, A nominal .£IOO of ths Foreign Public Works scrip in question may be worth, in the estimate of t\ww capitalists and their friend*, only £95 or £90, or perhaps leS3. H'jiice the underwriters must make a charge on th»* proposal, to cover not only their own profit, but the probable amount below par at which the loan will be floated. This charge is the " expenses of underwriting " which figured in the proposals eventually submitted by the delegates. Thus continued Mr Dobson, it will be set v th*t there are a number of heavy charges on a proposal submitted to the market as described above. The contractor will not make a move in the affair until he Uguaranted a percentage on the estimate for his trouble. When Mr Meiggs took the West Coast Rail way to his underwriters, the estimated cost, plus the ten per cent, allotted to his share "to cover contractor's risk ! and profit," ammiiiU to £3.025,000. It was then decided to rais* ha!f the money by debentures and half by the shares of a public company, whose dividends were to be paid out of proceeds of land grants. But there would be expenses in floating and administering tht- copioauy, so that the next charge, £50,000 was put down to cover tli •• n. Tlip.i came "interest dnii-ior construction," £400,000, and lastly, t,!ie item " underwriting." £885, 000. This last was about 10 per cent. on the grand total of £3,860,000. T'je underwriters had taken a line through the price paid for the Westpor* loan iv«(-;H ; -ly • raised, wliicb li.ul gone at $9. They cibnlafcod that tli? West Coast Railway serif ■ would not fetch as inuc'i, m»H some thought it, Would fetch a reaf. d-.'nl 'ess, but th< average onitii'iM wa*' t.!r>, f it vrml I -v go below j£9o, >vu\ *lm* • m-y ,ix J liJ per cent as a ?«' • <i-> i•■ t'r tin-i: charge. The delegates estiuuted that

of the £885,000, about a fourth would remain with the underwriters as profit. Such profit, if made, would be a payment not only for trouble, but for risk ; for the underwriters having guaranteed that the money should be found, would get no profit if it was issued at 90, or would even make a loss if it went below that.— Nelson Evening Mail.