D.—4a.

22

by cable, but it was impossible, of course, to give such acceptance in the absence of the specific text of the alterations. The alterations proposed reached Wellington on the 19th September. It was impossible to submit them to the Government before the elections took place, and after the elections, obviously, the Government could not deal with them," —that is so: the Government had been left in a minority at the polls—" and therefore Mr. Eichardson and myself did not submit them for consideration. The matter, therefore, must be left to our successors. In referring to it, I wish to express the opinion (and Mr. Eichardson concurs) that there should be no difficulty now in putting the last proposals of the company into a shape that will be satisfactory alike to the colony and to the company.—Julius Vogel, 7th October, 1887." The new Government came in shortly after that date, and in the ensuing session referred the subject to a Select Committee, which reported in November of that year, and attached to their report a draft new contract. An Act of Parliament followed on the 23rd December. It recites that, "Whereas a Select Committee of the House of Eepresentatives of the General Assembly of New Zealand was appointed during the present session of such Assembly, to whom was referred the proposals for amending the contract for the construction of the Midland Eailway, and which had been entered into under the provisions of ' The East and West Coast (Middle Island) and Nelson Eailway and Eailways Construction Act, 1884': And whereas such Committee has reported ' That, in the opinion of the Committee, a new contract should be prepared embodying the several provisions of the Acts of 1884 and 1886, the contract of 1885 legalised by the Act of 1886, and the further' (draft) 'contract amending the contract of 1885, and that an Act should be passed empowering the Governor to execute such new contract. Such new contract should, as far as practicable, contain provisions in the same words as are used in the said Acts and contracts, and, where any deviation is necessary in order to render the new contract consistent throughout, the alterations required should be to the same purport and effect as the draft contract hereunto annexed.'" And then follow, after some further recitals of an unimportant character, the operative parts of the Act, which provide for the substitution of a new contract. So ends 1887. The draft contract proposed by the Committee was somewhat altered by the Government, and formed the basis of further negotiations between the Agent-General and the company in London. A considerable correspondence followed, chiefly as to clause 38 which was considered most important in view of the financing of the company. It was on the 3rd August, 1888, that the contract with which we are more immediately concerned was executed, and Mr. Salt will tell the Court that the official intimation of the contract being signed— although every day was of importance then—was not communicated until the 23rd Septembersome six weeks after—and then by a private message from the Agent-General's office. Sir C. Lilley : When did he sign it on behalf of the company ? Did he sign it? Mr. Hutchison: Yes. Mr. Salt and Mr. Brodie Hoare signed it, but the date they actually appended their names on behalf of the company does not appear in their attestations. Sir C. Lilley : But the contract gives the 3rd August. Mr. Hutchison : Yes ; it was executed then, probably. Sir C. Lilley : Sir William Jervois, the Governor, puts the seal, but the date would be the 3rd August. Mr. Hzitchison : Yes. At this stage it may be as well to recall the lapse of time that had occurred since the date of the original contract. It will be observed that the same period for the construction of the railway is mentioned in the new contract as in the old—namely, ten years from the 17th January, 1885. Thus, the new contract was executed three and a half years after the original contract, and some two years and three months after the assignment of said original contract to the company. It may be asked why some modification was not made in the new contract to enlarge the time for the completion of the work ; but I will refer to that point when I come to deal with the question of time. In April, 1889, the company proceeded to raise money on debentures, which was contemplated as the course to be pursued throughout all these Acts and the contract itself. Mr. Salt will describe the nature of the difficulties the company had to encounter at. that time. I have here a copy of the debenture-capital prospectus. This prospectus was, like the prospectus of the company, submitted to the Agent-General and approved of by him. It was a term of this prospectus —a representation set out in the prospectus—that no further issue of debentures would be made until the line to Eeefton was complete and in working order. It reads : " The present issue of debentures " —which was for £745,000 —" is made —(1) to extend and equip the line to Eeefton, about forty miles; (2) to make and equip about twelve miles of line into the timber district . . .; and (3) to construct, in accordance with the contract, at Springfield (Christchurch), and Belgrove (Nelson), the extension (about six miles at each place) of Government railways now in operation at these points, in all about sixty-four miles of railway. The line to Eeefton passes through the best coal and gold districts of the colony, where during the last few years much land has been taken up for farming and mining, and the population is rapidly increasing, and the demand for land (which is under the contract withheld from, sale by the Government) is far in excess of what the company is now able to supply. There is now a substantial traffic between the important and growing townships of this district and the harbour of Greymouth, which will be largely increased by the construction of the railway. It is estimated that the existing wagon and highway traffic alone should yield about 5 per cent, upon the capital required for this section. The gross receipts of the Greymouth Government line, of which this line is a direct extension, were £3,602 per mile for the financial year ending 31st March, 1888, and when the accounts for the year ending March, 1889, are published it is believed this figure will be maintained. It is estimated that an annual gross receipt of only £1,100 per mile on the Eeefton Section would pay 8 per cent, upon the capital required for this work. No further issue of debentures will be made"—and this I consider somewhat material with reference., to this inquiry—"until the line to Eeefton is complete and in working order, or until the present issue is repaid in the terms of the trust deed." That leads me to deal with the subject-matter of the statement of particulars which have been filed,