The Evening Star THURSDAY, FEBRUARY 6, 1873

Evening Star, Issue 3110, 6 February 1873, Page 2

The Evening Star THURSDAY, FEBRUARY 6, 1873

When the City Corporation agreed with the Directors of the Dunedin Waterworks Company for tbc purchase of their property we hoped that no further difficulties would occur to prevent the transfer. The terms were advantageous to the shareholders, and, taking all things into consideration, a fair bargain for the citizens themselves. It is seldom, indeed, in any undertaking, the profits of which depend upon regular returns, that the property advances so rapidly in value as the shares in the Dunedin Waterworks Company. Nor do wo think they would have been quoted so high, had the shareholders had to depend merely upon the probable returns on the capital invested. The fact that the people of Dunedin had at length become aware of the desirability of the water supply being under the control of the Corporation, gave to the shares a value beyond what the prospective dividends for years to come warranted. It w:as the difference between shares being in demand, and having to seek a market; and were the offer of the Corporation withdrawn at this moment, we very much doubt whether shareholders, desiring to force a sale, would be able to realise nearly so much as the price agreed upon. When it was proposed to give a bonus to the shareholders of 50 per cent, upon their paid-up capital, many persons demurred and thought the price extravagant; everyone agreed that it was liberal, and cn that point there cannot be two opinions. The value of the bargain is still further enhanced by the offer of payment in Corporation debentures hearing six per cent, interest for fifty years, a rate that according to the present appearance of the money market is far more likely to be disadvantageous than profitable to the City. It is equal to ! nine per cent, per annum on the actual capital invested, and at that rate the in payment arc very likely to command a further premium in proportion to "the demand for permanent investments consequent upon the aggregation of capital; so that those who originally invested their capital, if no hitch occurs, are very likely to have the principal increased by something like 70 or 75 per cent, in a few years, should the bargain with the Corporation be carried out. Had it been completed according to the terms agreed upoq, this would have been the enviable position of t.bp share-■ boldprs : They would have been freed from risk, ana in receipt of a certain 1 fixed income, and they w'ould have shared; in the manifest advantage of having the control of the Water Works in the handsi of the Corporation, whose bouuden duty would have been cither to have extended the supply of water, should the receipts exceed the expenses, or to have reduced j the water ratqs. In every aspect the 1 »b»rehoH«ra would hjwe been great'

gainers at both ends. We do not doubt that most persons m Dunedin are totally unconscious that the carrying out of this agreement was prevented by Legislative action. Vyc do not consider the Corporation in the slightest degree to blame in the matter, iney acted in perfect good faith, butLegis a uics do not regard bargains made, and, m consequence of the action of the Genua Assembly, the duty of which was to enable the Corporation to fulfil its agreement to the letter, instead ot being in a position to take over the waterworks, as agreed upon on the Ist January last, i was found necessary to ask the Company to extend the time for three months from the Ist January. The Directors ot the Waterworks Company have acted in a perfectly fair spirit. In reply to the application of the Corporation, they haic passed a resolution in which they say That seeing that in a great measure the rise in the marketable value of the Company s pioperty was caused by the offer of the Conation, which offer was increased afterwauls to meet the views of many shareholders, and seeing that a majority of the shareholders voting, agreed at the last general meeting to sell to the Corporation at Llo. and that the Corporation agreed to the terms stipulated without any exception ; seeing also that the default in completion of the bargain occurred through no fan t of the Corporation; and generally for other reasons, the directois recommend that the works and plant of the Company be sold to the Corporation, on the same terms as were alieady agreed to in the draft agreement. The above resolution will bo coiuiuunicated to the shaieholders, at their meeting on Friday next.

The reasons given for arriving at this resolution arc so cogent, and set out with such force, that wo fed somewhat surprised to learn that an agitation lias been set on foot to induce the shareholders to withhold their consent to it at the general meeting about to take place. We do not say that such a course is repudiation or a bargain, because, according to tiny strict letter of the agreement, the default is with the Corporation; but we do think it evinces a grasping spirit on the part of those who are endeavoring to prevent the passing of the resolution. Apart from the offer made by the Corporation, the shares would not command the price in the market that is agreed to bo given for them, and thus the action recommended by the opponents of the resolution would not only defeat its proposed purpose, but place the Dunedin Water Works Company in a position of antagonism to the interests of the City that would ultimately result in Legislative interference, as has invariably been the case at Home wherever monopolies bearing heavily upon civic interests have been allowed to grow up. The City has much to thank the shareholders in the Company for. They came forward and risked their money, if risk it can be called, when apathy and timidity were evinced by the public.. The City proposes to make them a handsome return by giving them back tbeir capital and one-half more. If the opportunity is allowed to pass, we do not think it ought to be renewed. There is a limit to the value of every good thing, and wc do not think the ratepayers would sanction the offer of a higher price, even if the Corporation were inclined to advocate it ; which, we arc well persuaded no member of the Council will ho fouud to do.