MANAWATU RAILWAY PURCHASE.

Manawatu Herald, Volume XXX, Issue 436, 15 September 1908, Page 3

MANAWATU RAILWAY PURCHASE.

Sir Joseph Ward’s exposition of the Manawatu purchase negotiations in the House on Friday night met with almost unanimous approval. Mr Massey certainly said he would have preferred arbitration, though two lawyers, Mr Izard and Mr Field, frankly told him that an Arbitration Court was a most difficult one to get out of and Mr Field added that it woud have cost more than ,£20.000 to each side. Apart from Mr Massey and Mr Allen everyone approved.

The Premier said that the Company had intended waiting the twelve mouths before allowing arbitration proceedings to commence. Doubtless reference would have had to be made to the Supreme Court on law points and eventually to the Appeal Court and Privy Council. It would have been quite possible for the company to have held on to the line for eighteen months or two years after the expiry of the notice, so the chairman of directors (Mr Kirkcaldie) and himself met informally to see if any amicable arrangement could be made. It was eventually decided that the purchase price of the railway should be ,£900,000, with ,£IO,OOO for stores in hand, and ,£15,000 in consideration of the State acquiring the line on December 7th, making a gross total of ,£925,000. The property was burdened with debentures of ,£680,000, which matured in June last, and the company proposed to pay off ,£IBO,OOO. However, arrangements were made to secure the redemption of the whole amount by the State. It was estimated that the line would cost ,£605,892 to construct, to which must be added the value of equipment. Adding the value of the ordinary equipment to the estimated cost, brought it to ,£773.893, or ,£126,180 less than the amount agreed upon as the purchase price, though the estimate he had quoted was made when material was low in price. Since the 1901-2 offer of the Government to the Company, the capital value of the railway had been increased by ,£140,000, due to substantial additions to rolling stock, replacing a wooden viaduct by a steel structure, and relaying portions with heavier rails. The price of the railway in 1901-2 was ,£951,845, and the country would have had to pay interest on the debentures lor six years, at a loss of one per cent., which would have been equivalent to a further payment of ,£40,080, and would have brought the price up to ,£992,645. Deducting the value of the land, which was not included in the present purchase, the net price of the line in 1901-2 was ,£799,518. Adding to this the amount at which the equipment was valued, would bring the total up to ,£939,518. To purchase the line on the basis of share value would be still more expensive to the country. Worked out in this way the cost ot the railway, deducting the assets which the country was nbt taking over, would have amounted to ,£980,707. From any aspect it was evident that the country was taking over the railway and its rolling stock upon better terms than it was offered in 1901. Under the terms of the original Act, the Under - Secretary for Public Works (Mr Blow) worked out the price at ,£900,000, The profits of the company last year were ,£62,162 while the amount the Government was paying was ,£925,000. When the railway came under Government control such a return could not be expected. Further train facilities would have to be given, and they could not expect to show the average the company had done. Still, he was perfectly certain that there would be a large increase in the traffic when the line came over to the State, and they were justified in looking forward to it as being a valuable part of the Main Trunk line.