H.—42.

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conceivable that a man might be carrying on a business and a stranger might come and say, " I can afford to pay £300 a year more to secure the premises because there is attached to them some goodwill of the business." 21. That is only as a last resort I suggest (hat to avoid injustice? I have thought a good deal about the matter, Mr. Thomas, and my opinion is expressed in the memorandum. 1 think the rent, should be reasonable—a long term of liaise, and half valuation for improvements at the end of the term. 22. Mr. Milne.] I suppose the real trouble, after ail, is that in practice you find the terms are burdensome —that is to say, the rentals are absurdly high, based on a high valuation, and added lo that there is the high rate as well, so that not only are your rates increasing but your rent is increasing?— Undoubtedly- If 1 could get for it what 1 consider the market value' I should be prepared to sell and to get a freehold, though I might have to pay much Ihe same in interest on the freehold, because I should know there would be no disturbance of business. 23. We find the Wellington rentals are fixed on something like 5 per cent, on the valuations : do you consider that reasonable or too high on the present, valuation? —1 have said the present valuations are too high, but assuming the valuations were fair and reasonable I think 5 per cent, would be a fair rate to impose. Any one who gets 5 per cent, rent is doing well, and the tenant has no cause to oomplain, but on the present valuations the lessees are paying too much. 24. The lessor is doing exceedingly well, and on the other hand the lessee has a very bad bargain, as a rule making veryr little out of the lease? —In my own case and in the case of others I know of a large amount is being written off with the object of extinguishing the capital, because towards the end of the term a man might not be in a position to do it. 25. Do you think that a tenant who expends the whole of his capital for producing capital is entitled to a higher reward than the lessee who spends nothing on capital?--! think something ought to be taken into aooount for the energy and skill which a man exerts in carrying on business, which enables him to produce—that he is entitled to a better return than the lessor. 26. It may prove that the lessor's property is appreciating in value while the buildings of the lessee are depreciating. Therefore do you not think the lessee is entitled to a better return, in reason, than the landlord? —I think that rule is generally adopted. 27. Mr. Thomas.] It seems obvious that, whatever way you approach it it, comes back to the capital value—the difficulty is to arrive at the capital value. Do you think you could get a working basis for these leases?—l do not think the basis of value is the rock on which lessee and lessor are going to split, provided the leases themselves were subject to fair and equitable conditions. The methods of assessment, to my mind, are not so important. If you provide fairvalue for improvements and a fairly long term you will find there will be no difficulty in arriving at the value of the land, for rental purposes; 1 do not think there will be any trouble about that. It is not a difficult matter for business men to determine the capital value of land at the commencement of the lease. If you have that settled then you decide between yourselves what shall be the rate of interest chargeable on the capital value—say, 5 per- cent., or' 6 per cent., or 4 per cent. —and then you fix that and incorporate in your lease reasonable conditions as to length of tenure and improvements. To-day a man of small means cannot take up a Corporation lease. It is all right for the man of wealth; a man of large means can take up a lease on arbitrary conditions, but the smaller' men are shut out altogether. 28. Mr. Milne.] Under present circumstances Corporations are forbidden to insert any provision for the payment of compensation—they have no funds out of which to pay for improvements? —That could be dealt with. 29. Mr. Thomas.] Is the small size of the Wellington allotments in many cases not answer-able for the bad results yielded to the lessee? Considering the enormous capital value that has been placed upon them can they be profitably handled? —The difficulty of Wellington has always been the limited area of land in suitable localities. There are always offers for it. 30. The Chairman.] That is the reason of the high capital value? -Yes. Where you have limited areas they have been able to get. excessively high rentals on the present method of assessment. The tenants had to take the property willy-nilly. 31. Mr. Thomas.] Would it not. improve matters if the Corporation reacquired the small blocks and reallotted them? —I do not think it would mend matters very much. 32. Mr. O'Shea.] Will not, the Wellington Investment Company lend money on leases in Wellington?—l cannot, say. .'S3. Has not the position regarding these securities arisen since the Leaseholders' Association was formed? —No, prior to that. The revaluations of 1911 brought about that decision 34. And you were much dissatisfied with yours?—l was much interested 35. And you were aggrieved? —I never let my judgment be warped by such considerations. Others came to the same decision, and the decision of the A.M.P. Society was arrived at before 1 was a member of the board. 36. Supposing you were going to give compensation for a building after a sixty-years term, would that compensation be for the actual value of the building added to the land, or the value of the bricks and mortar?—l should take it to be the actual value of the building itself, or what it would cost to put up a building of a similar character, less a fair amount for weai'-and-tear. Obsolescence ought to be considered. After the end of sixty years that would be fair wear-and-tear. I should get experts to determine what would be the value of the building at the time the improvements had to be valued. In the case of a manufacturer using sheds the buildings might be simply an encumbrance. Buildings would not be allowed to fall into disrepair if proper compensation were paid for improvements. The lessees appointed a business man as their valuer. I do not think you can compare the value given for hotel-sites with the value of land occupied by merchants' premises. I think you have to consider for what purpose a property is used at the time the valuation is made. There is no repair covenant in the Corporation leases, and, though that may show that the Corporation is satisfied with the way in