PUTARURU-TAUPO RAILWAY

Putaruru Press, Volume II, Issue 32, 22 May 1924, Page 2

PUTARURU-TAUPO RAILWAY

COMPANY MAKE OFFER. TO SELL TO THE BOARD. Conference of Interested Parties. Mill Owners Guarantee £SOO for Preliminary Expenses.

A meeting .having an important bearing on the future of the Putaruru district was held at Auckland on Wednesday of last week. The negotiations between the PutaruruTaupo Railway Board and the T.T.T. Company had reached somewhat approaching a deadlock in regard to the board’s purchase of the company’s railway line. Furthermore the board was without funds, and even if an arrangement was arrived at for the purchase of the railway line the board had no money to pay for the preliminary steps. So with the twofold object of arriving at some finality regarding the purchase of the railway and to seek financial aid the board convened a conference at Auckland of the board, the T.T.T. Company, the sawmillers or timber owners in the district and representatives of the Government departments interested. The earlier stages of the meeting were marked by several clashes between the chairmen of the board and the company. The chairman of the board sought to pen Mr. Dalziell, the chairman of the company, to a precise and definite offer, which the latter would not do but gave an assurance of the willingness of the company to sell but adhered to general terms. After the luncheon adjournment the position improved and the parties came down to the discussion of business. The conclusion was that the wording of the terms of the company appeared to meet the views of the chairman of the board, and the timber interests present pledged themselves to raise £SOO for preliminary expenses. The board was represented by Messrs. H. Friedlancler (chairman), K. S. Cox, H. W. Bullock, J. Campbell, Dr. F. J. Rayner; the Taupo Totara Timber Company by Messrs. F. G. Dalziell (chairman), H. Coupe and R. S. Abraham. District timber interests were represented by Messrs. J. M. Hume, W. H. Wackrow, F. J. Carter, each owning 400 acres of bush land at Whakamaru; Mr. G. J. Goldfinch, 300 acres at Waipapa and Oruni; and Mr. R. D. Dansey, 400 acres at Maroa, Pakuri and Waipapa. The New Zealand Railway Department was represented by Mr. E. J. Guinness and the Public Works Department by Mr. F. W. Furkert and Mr. J. A. Baker. Mr. Fried!ander was chairman.

HISTORY OF BOARD. The proceedings opened by the secretary reading the following report prepared by the chairman which outlined the history of the board’s operations:— “ The Putaruru-Taupo railway district was constituted a local railway district under * The Local Railways Act, 1914,’ in pursuance of section 37 of ‘ The Finance Act, 1922.’ The enactment of the said section 37, the board were told, was the outcome of an arrangement arrived at between representatives of the settlers and timber owners in the board’s district, representatives of the various Government departments owning bush in the board’s district, and representatives of the T.T.T. Company. Under this arrangement the timber owners in the district expressed their willingness to pay Is per IQO by way of royalty on sawn timber to provide a fund to pay off the debentures to be issued to the said company if the board purchased their railway. Unfortunately the said section 37 (which was drafted by the said company’s solicitors) provided that the hoard could, with the consent of the Minister of Public Works and of the ratepayers affected, make and levy a special rate upon timber-bearing land in the board’s district as security for such debentures. “ The board assumed from the preamble to the said section 37 that the company was prepared to sell, and consequently at its first meeting, held on the 10th day of May, 1923, decided to ask the company to make a definite and concrete offer to the board, and invited the company to submit such offer at a meeting between the board and representatives of the company. This meeting was held on the 18th day of May, 1922. At this meeting the company offered to sell its whole railway line and railway plant at £167,000 (book cost) or at replacement value.

“ The board soon realised that it was impossible to negotiate further with the company until the board ascertained whether the timber owners

would agree to their timber-bearing lands being rated to provide the necessary security for any debentures issued by the board to the company in terms of the aforesaid legislation.

“It may here be mentioned that the board found that the provisions of the aforesaid section 37 with regard to rating ‘ timber - bearing lands ’ instead of ‘ sawn timber ’ constituted a very important departure from the arrangement made. “ The board then adopted the attitude that it was not in any way bound by any arrangement made, prior to the date of the 1922 legislation, and that it would carry out the Act in the best interests of the district as a whole. A meeting with the timber owners was therefore held on the 25th clay of May, 1923, but they declined to agree to being rated to provide security for such debentures in terms of the 1922 legislation, and also expressed themselves as being opposed to the board purchasing the company’s line. " The board met again on June 14, 1923, and decided to endeavour to have an independent valuation made of the line, and to continue negotiations with the company, in the hope of securing their line at what the board considered a reasonable price. Certain of the timber owners agreed to find funds to pay for such a valuation. These funds were not forthcoming, and at the next meeting of flie board, Held on August 22, 1923, various reports by Government engineers on the company’s line were submitted to the board, and it was urged by the timber owners that a further valuation in the face of such reports would be a waste of money.

“ After considering these reports and keeping in view' the object of the board, namely, to have a railway line which Government trucks would be allowed to run over, the board came to the conclusion that it would not be acting in the interests of its district if it purchased the company’s railway as a whole at the quoted price. The board decided, however, that it should endeavour to purchase at a reasonable price the company’s interest in the line from Putaruru to the 19-mile peg, and the company was asked to state definitely at what price and on what terms and subject to what conditions it would sell its interest in such section of the line.

“ At the last-mentioned meeting it was also decided to ask the Government for further pow T ers, so that in the event of the company refusing to come to terms in respect of the sale and purchase of the 19-mile section, the board would have saved time and be at liberty to build another line and extend same. Section 23 of ‘ The Appropriation Act, 1923,’ gave the board extended povoi ? sub ject to certain conditions.

“ The company for some time declined to negotiate with the board with respect to this 19-mile section, but endeavoured to get the board to attend a conference in Wellington. The company eventually stated that it would sell the 19-mile section at valuation, subject to running rights, but the board has not been able to get the company to state what running rights it desires to reserve. The company has been most anxious that the board should attend a conference in Wellington, but the board lias taken up the attitude that it is no use attending* such a conference until the board knows exactly what running rights the company requires, and has secured a valuation of the section subject to such running* rights. To meet the wishes of the company the board, however, eventually agreed to attend such a meeting, provided the travelling expenses of the board were first paid. As neither the Government, nor the company were prepared to find such expenses and as the board was and is without funds (a promise havingbeen made by the company to the settlers in the district that they would not be rated for administration expenses) the board decided to put the position before .the timber owners and obtain their view's regarding* the matters referred to in the notice of meeting.” The chairman supplemented the report by stating that the T.T.T. Co. had advanced two amounts of £IOO each. These had been exhausted and the board had now no funds.. EXCEPTION TAKEN. Mr. Dalziell, the chairman of the

T.T.T. Co., as a preliminary, took exception to some paragraphs in the report. He had no desire to refer to the past if it could be avoided, but he could not allow' the portions of the report referred to to pass without objection. The meeting was to deal with the future, and he would assure the board that his company was prepared to render all the assistance it could.

The chairman said the board had not been bound by arrangements made prior to legislation. Mr. Dalziell agreed with this. He contended that the crux of the arrangement with the Minister of Public Works was that the company should give the line and the sawmillers to pay the costs and expenses. It was not intended that the settlers should be called upon to pay. When, of course, the district had grown then it could take over the railway from the .sawmillers. This might clear up the position. A SQUARE DEAL.

THe chairman pointed out that the duty of the board was to give all parities “ a square deal.” He thought that the first question to decide was the impecunious position of the board. If the board retained the confidence of all parties concerned how w'ould means be found to enable the board to carry on? Mr. Dalziell: Do you regard the board as giving the compnay a square deal ? The chairman: It is the intention of the board to give everybody a square deal. The board was not going to be a buffer between the company and the timber owners. NINETEEN-MILE SECTION. Mr. Cox said the great trouble that had faced the sawmillers w*as the high freights. Past the 19-mile section it would be impossible to work the line with Government trucks. This lead to the suggestion to extend the line, which would provide access to two million acres of land. The opinion of sawmillers w'as sought as to whether a proposed deviation was not more in the interests of the district than the purchase of the whole line, and if so, how the funds to give effect to the wish were to be raised.

Dr. Rayner: Is the company prepared to sell the 19 miles?

Mr. Hume asked if the board could give the meeting some idea of the amount of money required. The chairman: That w'ould depend on the company. If they would make the board a concrete offer they could very soon answer the question. The board was relying on the sawmillers pledging a royalty of Is per 100 feet for the purchase of the line. He suggested that the sawmillers should say what sum they w’ould be prepared to give. Mr. Hume expressed his willingness to contribute up to a certain point, but he thought that the settlers, in whose interest it w'as, should bear their shave of the initial cost.

The chairman said that the settlers had been left out in the first ar-

rangements. Mr. Dalziell confirmed this, and said that the original agreement with the Minister was that the settlers w'ere not to be liable for the purchase money or administration costs.

Mr. Carter asked if the purport of the meeting was to raise money to enable the board to carry on, or to purchase the line.

Mr. Bullock suggested discussing the question of taking over the line and then coming back to the financial issues.

Mr. Cox thought the board’s policy w’ould be to purchase the company’s line to the 19-mile peg, and then to extend the line to permit of the use of the Government trucks. He thought that £SOO would suffice to carry cut the preliminary expenses.

The chairman asked if it was the sawmillers’ opinion that the board should purchase the company’s line as a whole, or part of it. It would be understood that all timber coming from the areas served would be liable to a royalty of Is per 100 feet.

Mr. Dalziell asked would not the timber owners’ liability be for the w'hohle of the purchase money, or capital expenditure, not for merely a section ?

Mr. Bullock: Mr. Dalziell’s remarks lead me to think that he is not now prepared to take debentures. Mr. Dalziell denied that the company had been prepared to take debentures. It was all covered in the correspondence.

The chairman said that the position was that /the company had agreed to take debentures secured by a Is royalty.

Considerable discussion took place between Mi*. Dalziell and the board about the debentures.

Mr. Dalziell denied that the company had ever detailed an offer in regard to the debentures for the 19mile section. Continuing, Mr. Dalziell said that taking a section of the line was foreign to the original agreement with the Minister. However, the company -were prepared to

meet the board. The first point o; the basis was the valuation. An argument ensued over this.

Mr. Dalziell pointed out that the board had made a new' proposal, and it could not be expected that the conditions which applied to the purchase of the whole line would apply to a purchase of part of the line. Mr. Dalziell said the company was not hawking its property. If an arrangement for the carrying of outside timber were wanted let the board and other timber-owners come forward and make a proposal. The chairman: No, we won’t.

Mr. Dalziell: Are you speaking as a timber owner or as chairman of the board ?

The chairman: I am speaking for the board, which is not prepared and is not going to be a buffer between your company and other timber-own-ers. What is your company prepared to do in regard to the 19-mile section ?

Mr. Dalziell replied that if the 19mile section were purchased by the board his company would want the same running rights as U row possessed, with a proportional increase if the output of its timber increased.

DO YOU WANT TO SELL ? The chairman: Do you want to sell or do you not want to sell ? There is no use wasting time. If you want cash, say so; if you want security, say so; but let us get to the point. Mr. Dalziell replied that the company had stated its terms in w’riting. These terms stand. I do not know how to make it plainer. Mr. Bullock:' Does the company want cash? What exactly are the financial arrangements ? Mr. DalzieU: Your board has no funds at all. It comes here and asks for expenses. You have nothing behind you. The chairman: How do you know we have nothing behind us ? Mr. Dalziell: You have told us the board has no funds. Mr. Bullock pointed out that the board had statutory right to strike a rate of Is per 100 ft on sawn timber. RUNNING RIGHTS. Mr. Dalziell pointed out the difficulties in defining running rights. If the company sold the 19-mile section they asked the same running rights as to-day relative to the output. It was unfair to say the company would *iot specify what their rights were. He had conferred with Government officials and they stated from experience it was a very difficult matter to adjust. It was a matter for experts. He thought that it. the board could finance the purchase of the 19-mile section then a mooting of experts to define running rights could be held. He reiterated that all the company sought wrs a guarantee of the samp running vig.lv s as to-day. H ? pointed oat Mi at a difficulty the company had to face was that the guarantee would be an encumbrance on the line. There was a further ques i o that the sawmilflers had -to dm.l '.he money for the purchase of the 19-mlle section, as well as for the extension of the line. The consent of the G nernmerv, had also to be obtained to the purchase of the 19-mile section. The chairman said it was the first time the company had defined its running rights. The board now knew what the company required. Is your company prepared to put that offer in writing? As far as the extension was concerned the board would extend the line to suit all the sawmillers in the district. Mr. Dalziell, at this stage, searched the correspondence and proposed to read a portion of a letter from Sir John Findlay.. The chairman: If you ai*e going to read one letter you may have to read the lot, and that will take a month. Mr. Dalziell: I simply want to refer- the chairman to the letter written by Sir John Findlay on November 15. Mr. Bullock asked if the company .wanted to have the running rights free or would they pay ? Mr. Dalziell: We would pay the same as other sawmillers, per train mile. THE MAIN ISSUE. Tht chairman: Do you want to sell or not? That is the question. Mr. Dalziell: I hoped I had made the position clear. If any member is in doubt about any point 1 will explain. The chairman: I am in doubt if the company does want to sell. Will the company sell or not, and on what conditions are what we want to know. Mr. Dalziell: I do not think l can make it any clearer that I have done that the company is prepared to sell the 19-mile section on the conditions specified in the letter from Sir John Findlay of November 14.

The chairman: Are you prepared to accept the line as security? Mr. Dalziell: If the sawmillers are prepared to give security over their timber. The chairman: How can they say this until the board can lay before them the proposals of the company ? A discussion of a contraversial na-

lure ensued between the chairman and Mr. Dalziell about the original 1 understanding prior to the legislation and other early history. Mr. Dalziell said it was now desirable that the timber owners get together and ascertained for what amount they were prepared to pledge themselves. The chairman suggested that Mr. Dalziell should put the company s offer in writing. Mr. Dalziell said it could hardly be expected that he should be asked to put in other words what Sir John Findlay and he had taken a long time to frame in letters the board had in their possession. THE TERMS. The clerk, Mr. Hewitt, said the whole point in the proposal was that the company did not state its terms whether they were to be cash or what ? Mr. Dalziell: Have the board ever asked ur what terms we would give? Mr. Hew:'it: We did; but we never have received any word whether the company wanted cash or what it wanted. Mr. Dalziell: Is it not generally taken that unless anything is said to the contrary it would be cash ? Mr. Bullock: Do you insist on cash ? i Mr. Dalziell: No. * At this stage the board adjourned, the company representatives during the interval to prepare a definite offer. COMPANY’S OFFER. On resuming the chairman asked: Have you reduced your offer to writing, or if you have not I’ll take it verbally ? Mr. Dalziell: I have not; but I have been fortunate enough to find some one who can reduce the definition of “ running rights ” to two words. Mr. Dalziell: You want to know what terms the company are prepared to take. Briefly we are willing to sell the 19-mile section at a valuation subject to our having reasonable running facilities equivalent to what we have now, of course, covering any additional output we may require. We pay for those running facilities at schedule rates equivalent to those the other timber users are paying. We are unable to specify just now what the running rights are to be; that being a matter for experts. We shall be running our own rolling stock (others may be doing the same) over the 19-mile section. The chairman: Would that not be a disadvantage to your company ? \ ou would be using your engines and paying the same rate as sawmillers who had no plant. Mr. Dalziell: No; that is not so. If we use our own engines we should not expect to pay the same as other timber owners who have not their stock. The chairman: But would such an arrangement work satisfactorily. Mr, Furkett explain oil that it would run on mileage rate. The company would pay a train mileage rate and the other persons would pay running charges which the company would not be liable for. The chairman: Is it a practicable proposition ? Mr. Furkett: Yes. The Public Works Department have an arrangement of this nature with the Railway Department. Mr. Furkett: ou would then have a mortgage over the line. Mr. Dalziell: Yes. Continuing he said there was a further question of purchase money. You ask if we will take a charge of Is per 100 feet royalty. Mr. Dalziell, continuing, said the running rights were to be guaranteed by the board. Mr. Furkett: What form of guarantee ? Mr. Dalziell: That is a matter for arrangement. We would expect that the security would be a charge on the line, but we would take any reasonable- guarantee. The chairman: The company would come in ? Mr. Dalziell: Not so, sir. We could not very well be expected to sell the 19-mile section and have to pay the purchase money. The chairman: Ultimately you will have to come in for the district outside the 19 mile peg. Mr. Dalziell: I don’t see how that would work out.- The board has burst up the old arrangement, and now proposes something different. Our offer implies that you are going to pay cash. Our offer is on a cash basis. If you pay us there is no further trouble, but the company is willing to consider any other proposal the board likes to make that will give us reasonable security. Will the board suggest its security? The chairman replied that under the 1922 legislation it was agreed that the company would sell its line, as a whole or in part, at the option of the Railway Board, the timberowners to pay a royalty of Is per 100 ft as security. It was estimated that there were 800,000,000 cubic feet of timber which on the royalty rate mentioned would represent £400,000. In addition, of course, the company would hold as security tHe line itself. The security of the line, therefore,

was supported by a revenue of £400,000. Mr. Dalziell: The position is very different, if you took the whoie line as originally suggested, you would have been in !uc position to pledge your entire royalty. You are now dealing with only a small section of the line. The chairman: Will you be satisfied with th.j royalty? Mr. Dalziell: If you give us the line and the rate it would be quite sufficient. But your difficulty will be meeting the capital for the extension. The chairman: I have no authority for saying it, but supposing the board could arrange with the Government to guarantee the debentures would that suit you? Mr. Dalziell: Quite. The chairman: To put it shortly, Cash or guaranteed debentures? Mr. Dalziell: Yes. Mr. Hume: Will you take the Government guarantee for the running rights ? Mr. Dalziell: Yes: Mr. Hume pointed out in reply to some comments on his suggestion that if such a course could be arranged it would leave the line clear. The chairman: If the board extends the line they will have to find security for its costs. The chairman: Would you be prepared to take part of the debentures which might be issued for the construction of the extension and the purchase of the 19-mile section. Mr. Dalziell: No. We must have the first charge over the line. If you are going to make a new line, at a cost of £250,000, with the consent of the Government, the company were quite prepared to take the security over that. A member: We have no doubt of that. BOARD’S EXPENSES. Mr. Cox said in his opinion the board should buy the 19-mile section at arbitration value. Then the board would put in a line to the other timber area. The board had to raise one sum to pay for the two schemes. As the board had departed from the original agreement they would have to find the cash and the security. They now came to the point of raising £SOO for paying- preliminary expenses. He took it the amount would be regarded as an advance to the board. For the order-in-council would they have to have a survey ? Mr. Furkett said sucTT was necesMr. Carter proposed that th- timber owners find £SOO for the board to continue its work, the manner in which it would be raised to be determined by the mill-owners. Mr. Cox seconded the motion. He thought if the loan were carried the £SOO would be a charge against it. In speaking on the scheme he pointed out that the Government rolling slock could not be carried past the 19-mile peg, Mr. Hume: I take it all the timber millers will come in. Dr. Raynor asked the opinion of the Government representatives on the question of paying their share. Mr. Furkett: I don’t know; but I have no authority to pledge the Government. Mr. Carter: The only way we can get forward is for those who can pay to get together and make their arrangements. The position of the Government contributing to the preliminary expenses was discussed, it being pointed out that the carrying through of the scheme would very materially improve the Government’s holdings, and therefore the Government should contribute. Row to get the Government to look at the question in the same light proved a knotty problem which the meeting did not solve. Mr. Bullock said the company agreed to pay the preliminary expenses. Mr. Dalziell denied this, contending* that there was an Understanding that the company should do so, but no agreement had ever been definitely signed. It had been agreed that Mssrs. Bullock and Cox were to be paid their expenses when the debentures were signed. This would be done. Mr. Carter: We do not understand very much about this, and it would not interest us' if we did. The point is that the board has no money. We have to settle that and past grievances will not help us. Mr. Hume pointed out that £SOO could be handled, but if it was £2OOO it was a “ big thing to swallow,” especially if the Government and the T.T.T. Co. were out. £SOO GUARANTEED. Offers were made from sawmillers present and eventually the chairman said that the £SOO suggested liad been guaranteed. Mr. Goldfinch did not like the way matters were going. Government and native bush should be made to contribute equally with the private individual. He strongly advocated paying pro rata, and was quite prepar o:l to do so. Mr. Furkett suggested that the board should prepare an assessment of what the properties should contri-

bute, without going to 'ie expense of preparing a roll. The chairman: You have the onance to get the mon.y back. lVlr. Carter: If the timber owners do not exiubit a sport ng spirit the matier will fail. Other timber ov nevs m the past had spent their money in promoting the scheme. TIMBER TRAMWAYS. Mr. Dalziell pointed out that the T.I.T. Co. was only one of many companies with tramway lines. These were a big question. At present the Sawmiiiers’ Association had a dispute with the Government, alleging that the Government were striving to make the companies carry their timber at a lower rate than was regarded as fair. With the other timber owners the company was prepared to obtain a definite decision as to what was a fair rate. He believed that the freight being asked by his company was not an unfair one, and he wanted to assure the timber owners that any price which was fixed, by the Government as a fair one would meet with the approval of his company. The meeting then- terminated, and the offer of the T.T.T. Co. will be considered by the board.