The Evening Star SATURDAY, JULY 23, 1870.

Evening Star, Volume VIII, Issue 2250, 23 July 1870, Page 2

The Evening Star SATURDAY, JULY 23, 1870.

Kow that the subject of railways ia engaging general attention, it ia of importance that every possible information should be made public calculated to guide us as to the best modes of going about constructing them. Railway construction involves more than tho engineering and mechanical arrange-

ments. The capital required is a serious consideration—not merely because of its amount, but on account of the influence which the control of it gives to those who administer it. In Great Britain railways have been made by joint stock companies, for the theory held there was that they are merely commercial speculations with which the Government ought not to interfere. Yet the Government did interfere beyond merely requiring that human life should be protected, and the consequence was immense increase in their cost. On the Continent of Europe most of the lines of railway were made by or under the control of the respective Governments, and in many points of view with greater success. In India a different system was adopted. The Government guaranteed a certain rate of interest upon capital expended, and companies were formed who made and work the lines. The difficulty Otago has experienced in getting its projected railways made, has led to the consideration of a variety of plans, each of which seemed very feasible, but not one of which has been prosecuted with success. Notwithstanding the tempting offer of 8 per cent., no company that the Government would treat with came forward to do the work. No matter why, the only chance that ever presented itsell was thrown away. The act looked at the time like Provincial suicide, but it may turn out for the best, because the delay has prevented an outlay of money that late improvements in railway construction show would have been unnecessary. The Parliamentary Papers received by the last mail from the North afford very useful information on the financial aspect of railways. Amongst them is the correspondence “ relative to the 11 proposed Nelson and Cobden Ilail- “ way,” the most valuable portion of which is a letter from Sir Charles Fox and Sons, in which the various modes of xaising capital for railway construction are considered. On account of its interest we make no apology for printing that portion of it in full which bears on the general question of railway construction. They say # Haring had extensive experience, both in Europe, America, the Cape of Good Hope, India, and Australia, of the various modes of raising capital for the construction of railways ; by grants of land ; by mileage subsidies from the Government; by the issuing of bonds and the {construction of the railway by Government; and by a direct Government or Provincial guarantee to a Company; we are, each year, more and more confirmed that the last-named mede fs in every respect the best. Ist. If grants of land only arc given, freat, and at present almost insurmountable ifficulties are thrown in the way of those endeavouring to raise the capital. The land is valued at a merely nominal rate, and high rates are charged for placing capital under what are considered risky conditions, thus swelling the first cost of the railway, and to the like extent prejudicing the interests of the country through which it runs by rendering it necessary to charge high tolls for passengers and goods in order to secure a return. The land gets into the hands of speculators, who, if the railway he opened, run up the price, and thus the country not only has a railway charging high ♦■■oils, but has parted at a ruinous sacrifice with land which yray prove of the greatest value. Under this system also tile Government can exercise but little control over either the expenditure or the quality of the works. 2ud. If mileage subsidies are given, either with or without land, the same difficulties arise to a greater or less degree, as in the case of simple land grants. 3rd. If the railways are constructed by the Government itself, as has been the case in several instances within our experience, although the capital is probably raised on rather easier terms than under any other arrangement, the Government is under great disadvantage in several respects. Political influence and political changes often most materially impede the proper carrying out of the works ; and very frequently the details, both of construction and management, instead of being decided on their merits, become party questions. It has also been found practically impossible for a Government to restrain the expenditure, or to exercise proper control, too much power beiim necessarily vested in the officers intrusted with the execution of the works, whose desire is naturally to protect themselves against any possible blame, and who aro thus apt to err on the side of costly construction. It has also been found that railways in the hands of a Government are not worked with that desire to meet public convenience which results from their being in the hands of commercial men.

4th. The system adopted in India and elsewhere is as follows, in brief : 1. The Government select the route of the railway ; the company undertake to complete and open it with all practicable speed. 2. The Government expropriate and hand over to the company the laud required for the works.

3. The company thereupon undertake to commence and complete the work ; stations and telegraph, the details of permanent way, and yther works, being first approved by the Government.

4. The Government may require the lino to be opened iu sections. B. The company pay the money raised upon their shares or bonds into the GovernTreasnry or Bank, either in England or the Colony, aa the case may be, 6. By and with the consent of Government, drafts are made on this capital for works iu progress, Ac., or other expenditure authorised.

7. Rolling stock to bo provided by company to satisfaction of Government. 8. Fares and tolls regulated by Government, and to be reduced when dividend of 10 per cent is paid on capital. 9. When lino is completed, Government give company a full title to land and lease of ninety-nine years. 10. The railway company and their officers,

servants, agents, and accounts, are under supervision and control of Government, ■with aocesi to all correspondence and minutes. 11. The Government appoint an ex-officio director, who has a veto on all proceedings oy the Board.

12. The Government sanction has to be obtained for all expenditure. I,*), The company keep a capital account, which is from time to time examined and de cked by Government. 14. The company have to keep the line and rolling-stock in good working order during ninety-nine years'. 15. The company keep a revenue account, which is audited by Government. 16. All moneys received by company are paid into Treasury, and dealt with only by order of Government.

17- The Government absolutely guarantee interest at 5 per cent, on capital expenditure, from the time of each payment into Treasury, for ninety-nine years. 18. Profits, after paying working expcnces and setting aside a reserve and amortization fund, shall be applied towards payment of interest in reduction of guarantee. 19. If profits exceed 5 per cent, in any year, one moiety of excess to go in reduction of any payments made by Government under guarantee, and the other moiety to the company'. If Government have been already repaid, or have not made any advances, then the whole surplus goes to company'. 20. Government reserve special privileges as to transport of mails and troops. 21. Railways become the property of the Government at the end of ninety-nine years. 22. Company may surrender railway to Government at any time, who shall then pay the cost thereof.

23. Government may, after twcnty-fivo years, purchase railway at mean market value of stock for three preceding years. The advantages of this system are very great. There being an absolute guarantee and no uncertainty, the capital can bo raised upon almost the same terms as npon Government bonds. There is a double responsibility : on the part of the Government to see that the works are thoroughly substantial ; on the part of the company to keep down the expenditure in the hope of a dividend above o per cent. There being two entirely distinct interests represented at the Board (that of the company by the majority of the director.?, men of commercial experience and large shareholders, and having therefore a considerable direct interest in the matter, that of the Government by an ex-officio director, not a shareholder, and therefore with no interest in the company, but with the power of veto on all proceedings) many objectionable proceedings, under other circumstances too common, are rendered impossiblo. In fact the guarantee and supervision of the Government, combined with the commercial advantages of a company and the special knowledge of practical men, enable an enterprise to be more satisfactorily and rapidly carried out than by any other mode that has been devised. We would therefore recommend that some such system should be adopted in New Zealand ; that the railways should be located with great care, using where necessary gradients of 1 in 40 and curves of 330 feet radins, and the cost reduced to a minimum, whilst the use of the best materials and workmanship should be insisted on ; that a gauge of 3 feet 6 inches, rails of 40 lbs. to the yard, and a speed of 2n miles an hour (see enclosed clauses of Regulation of Railways Act of last year, permitting the construction of light lines in Great Britain), should be agreed upon ; and that when opened, the railways should be worked in a very different way to that obtaining in older countries, so as to more thoroughly serve the district through which they pass, and to save immensely in the working staff and the expenses consequent thereon. We would further recommend that the Government should grant to a company, which we shall be happy to form for the purpose, an unconditional guarantee of such rate of interest as will ensure the stock being placed at par, under some such conditions as those of which we have already given the heads. We then believe that the amounts pai l on the guarantee will be speedily recoups! by the sale of lands and minerals, which would under this arrangement remain untouched, and that a rapid extention of railways would result.

Prom lengthened experience we are convinced that a guago of 3 feet 6 inches will be amply sufficient for any traffic which can be foreseen in New Zealand.