THE MIDLAND RAILWAY.

Greymouth Evening Star, Volume XXXI, 13 April 1901, Page 4

THE MIDLAND RAILWAY.

A Eeyiew of its Position.

(Wellington Post)

The rights and the wrongs of tho Midland Railway Company and its debentureholders go to make up a long story, the end of which is not yet. But another chapter is being added by tho Commission appointed by authority of the last session of Parliament, which has been diligently at work during the recess ; and something conclusive may bo expected when the Legislature is called upon to consider the report of the Commission in conjunction with whatever recommendations the Fublic Accounts Committee may have to make on the subject. In view of all this, the story of tho Midland Eailway Company and its operations in this colony is worth re-telling at the present juncture. As far back as ISBI a suggestion was made that there should be a line of railway, constructed by private enterprise, connecting the East and the West Coasts

of the Middk Island ; and in 1885 the proposal came within measurable distance, a proposed contract being submitted to Parliament and approved. In ISS7 the Midland Railway Construction Act was passed, authorising the Government to enter into a new contract, and under this Act, a formal contract was made in 1888, and the company that had been formed in England proceeded with its work, raising capital by the issue of debentures. Subsequently disputes arose between the company and the Crown, which ultimately led to the seizure of the lino by the Government in May, 1895, and finally the whole matter was submitted to arbitration. Tho main questions were—(l). Had the Crown carried out its contract? and (2). had the Crown any right to seize the railway ? The umpire (the Hon. E. Bhke, an English M.P.), gave an award in favour of the Crown on ooth points.

The company's railway having been seized, a Receiver was appointed, and subsequently certain of the debentureholders obtained an order of the Supreme Court that the Receiver was not to sell the railway without reference to the Court and notice to tho Crown. Later on an order to sell was asked for, and the Crown retaliated by applying for a variation of that order in tho direction of omitting from the power of the Receiver the railway and rolling sto6k. In December, 189 S, proceedings were commenced which practically opened up tho whole of the litigation in relation to the seizure and control of tho railway lino, and involved tho questions of whether the Crown or the debentureholders were entitled to possession, which of them had priority of right to the line, and whether the Crown wag entitled to spend money on tho railway when a Receiver had been appointed. Tho main legal point was, had the debentureholders a first charge on the railway, including rolling-stock, or was there only a second charge, tho Government having first charge. Chief Justice Prendergast and Mr Justice Edwards decided that tho security which the debenture-holders held did not in any way derogate from tho prior rights of the Crown under stature, and the general effect of the decision was that tbo Governmeut was to continue in possession of tho line, that it could continue the construction of the uncompleted portions, and that as soon as a section was finished the Commission could, as before, make demands upon tho company to be recouped for the outlay. Tho Crown also succeeded in depriving the Receiver of the Company of any power whatever to deal with tho railway, or do any thing more than deal with those assets of the company, which were not subject to Government control under the statute—in short, to limit his powers to such assets as the company might have outside the railway. An appeal to the Privy Council followed, and in February of last year judgement was given dismissing the company's appeal and upholding the seizure of the line by the Government.

This was the climax for the company, which then petitioned Parliament for relief. The petition camo in due course before the Public Accounts Committee, and a mass of evidence was taken on various aspects of the case. One point on which the Public Accounts Committee had no evidence was as to what amount of money had really been spent upon the line it was claimed by the company to have amounted to something like a quarter of a million, and what was the value of the railway to the colony as a going concern. With the object of ascertaining, mainly, these two important questions, and also obtaining reliable data before Parliament could .decide as to the equities of the Crown, tho company, and the debentureholders, a Royal Commission was set up. The Commission cannot commit the colony to anything; all it can do is to make recommendations, which may be accepted or rejected.

The Commission is asked to find out the sums actually expended by tho Midland Company in constructing the sections of railway from Stillwater to Eeefton (88 miles), Brunnerton to Jackson's (82 miles) from Belgrove to Norris's Cully (about six miles), and from Springfield to Patterson's Creek (six miles) ;v»tho sums expended for supervision and in commissions and salaries, etc —these aro to be kept apart from what has been expended on actual construction, railway material, aud labour ; and whether the sums so expended exceeded the amount which the proper economy and supervision would have been necessary for the construction and equipment of- the railway.

The reason for this is that tho Government assumes that due economy was not exercised in the construction of the line. There was some ground for that belief in the fact that there was evidence before tho Public Accounts Committee that a considerable sum Mas paid to one of the English contractors to forego a contract. The Commission is authorised to find out whether the sums spent ought to have been spent. It has also to ascertain the condition of the line as a whole when the colony took it over, and its condition when it became legaliy vested in the Government. It was taken ovsrin May, 1895 but was not legally vested until 1900. The Government was responsible during the interval, and the Commission ha 3 to ascertain what money was spent on the protection of the "lino, and what for construction purposes, and also what has been spent on the unconstrueted portions. Further, tho Commission hag generallj' to consider what the gross earnings of the several completed sections of the line were up to the time they were taken over, and how much of those gross earnings arose from the carriage of goods and passengers in connection with construction of the lines, or from portions beyond the limits of the lines; to estimate the annual cost of working and maintaining the line; to estimate tho selling value of the sections constructed at tho time the Government took them over, and in estimating the selling value, one of the factors to bo considered is based upon the net earn-ing-power capitalised. This is not to bo based alono upon the raceipts during past years, but the Commissioners can also take into consideration any increase of traffic likely to acrue within a reasonable number of years on the lines. They may not, however, take into consideration any traffic which has arisen from the continuation of tho railway by the An to the land grants which were authorised to he made to the company under its contract, tlie Commission lias to decide what was the total sum realised by the company on lands granted under the Act, the present value of the hind granted and not yet sold, and the value of Crown lands given to the company upon which the railway is built. The Commission is to say by what amount also tho sums so realised and the present value of the lands unsold exceed what is known as the Bl value of the hinds—that is, the value placed upon them in tho first instance. The company was, roughly speaking, granted land to the valve of £250,000, and it is said that it has already realised £:)00,000 in sales, and has land still remaining. The Commission is also asked to determine in what proportion the money value of the line should he apportioned among the several contributors to the cost of construction —the shareholders, the deben-ture-holders, and the Government. What the Commission has done so far has been to make a complcto tour of the lino from Belgrove to Springfield, taking evidence as it went along from engineers in the employ of the Government and from officers who were formerly in the employ of tho company, as to tho state of tho line when it was taken over by

the Government. Returns have been obtained from the books of tho company as to what moneys were spent, and other returns in relation to tho same question have yet to come in. Further, the Commission has taken evidence <of Crown Lands Commissioners in the different land districts as to tho value of the lands, and it hopes in the course of a week or so to have complete returns and to have finished the examination of witnesses. Evidence has been entirely unrestricted, both tho company and the'Crown—which have been represented at all the sittings of tie Commission by Dr Findlay and Mr. H. D. Bell respectively—having had ample opportunity for calling witnesses, and in cases where the Commi-sioners have thought the evidence called by the parties immediately concerned was not sufficient, they have called in independent witnesses.

At this conclusion of tho ovidence Mr 801 l and Dr. Findlay will put, their respective cases fully before the Commission in the form of addresses, and the Commissioners will then proceed to draw up their report for presentation to the Governor, before going before the Public Accounts Committee and Parliament. The ultimate result will he awaited with interest.