SOUTHLAND'S DIFFICULTIES.

Southland Times, Volume III, Issue 267, 25 May 1866, Page 2

SOUTHLAND'S DIFFICULTIES.

We have to acknowledge the receipt of a pamphlet, entitled, " A Review of the Position of Southland," by an " Old Colonist." It contains much matter of • importance, and we extract the following instructive letters which we believe have not previously been published :— The causes of the financial embarrassments of the Province of Southland are so clearly detailed in the following debate, that little notice is necessary in an. introduction ; I will therefore confine myself to calling attention to one of the letters published in the appendix to this pamphlet, which, though not referred to in the debate, has sufficient bearing on the subject to warrant its introduction. I refer fb the letter from the railway ~ contractor, Mr J. R. Davies, to the late Superintendent (Dr Mcnzies), of the 6th May, 1864. n this, Mr Davies offers to mortgage his plant and lien over the railways, as collateral security to assist the Grovernment in negotiating the railway loan for £40,000, so as to enable him to com* plete both his railway contracts. This clearly refutes the statement of 1)r Menzies in the debate that he as Superintendent, was forced t6 negotiate the loan, at a disadvantage, with the Bank of New South" Wales, lecause Mr Davies was clamorous for money. Had Dr Merizies enter* tamed the favorable proposition of <Mr Davies he would have precluded the possibility of any compensation being demanded by the contractor owing to the Government failing to meet its engagement with him y and thus the province would have been saved thousands of pounds ; the long delay in the completion of the , railways conse quent on the stoppage of *the workß, ami the lurther £25,000 required for the completion of only one of the railways, via., the, Bluff Harbor and Invercargill? . I may be allowed also to express the hope that the ventilation of the subject of Southland'a misfortunes may act as a beacon to other communities in New Zealand, warning them, to weigh well the arguments adduced, and test the truth of statements made, before they follow thg ignit fatum of Separation, and seek to fly "the iUa they bear to others that they know not of." " Prior to the' separation of Southland from Qtego, Dp Umzm published a letter & th*

< Lyttelton Times," in which it is stated that the entire cost of Government would not exceed twelve hundred a-year. What are the facts? j The departmental expenditure of the province, not including the land and survey departments, •was as follows : — For the nine months, ended 31st , December, 1861 ... »• £1668 18 10 J For the nine months ended 30th September, ISG2 ... ... 5167 7 6 For the year ended 30th September,lß63 ... ••• 17,184 11 4 For the quarter ended 31st Dec, 1863 ... .- — 6 > 609 15 3 For the month ended 3lst Jan., 1864 .. — 2 > 867 10 6 For the eight months ended 30th September, 1864 ... 11,689 6 5 The debt at the present moment is nearly halfa -miUion. No public work is completed, no roads made, and the sole excuse offered for the increditable mismanagement which has brought the affairs of a province, more than ordinarily favored by nature and circum stances, to such an issue, is that the General Government has not assisted the province is sanctioning further loans so that the evils under which we labor might not have been perpetuated.

The following correspondence was read by Mr Pearson during the debate :— AGREEMENT WITH BANK OF OTAGO anaiORAJvDUMOF Agbeement between the Provincial Government of Southland, JSew Zealand, on the one part, and the Bank of Otaa-o (limited) of London and New Zealand on the other part ; dated this eighth day of January, One Thousand Eight Hundred and Sixty -four. . It is agreed upon by the said parties as fols 1~ The said bank shall be the bankers of the Provincial Government, and shall transact all fheir monetary business in Southland and London, excepting always the negotiation of, and payment of interest, upon the last loan, which has already been entrusted to the JBauk of New South Wales. 2 It shall undertake the disposal of the present authorised loan of £110,000, in security of which, land is to be set aside and reserved by the G-ovemment, and until the said loan is disposed of, shall make any advances required at the rate of' seven pounds sterling per cent, iaterest j as the loan is negotiated the proceeds shall be returned by the bank in extinction pro tanio of their advances, interest, and commission. 3. The commission to be allowed to the said bank for negotiating the said loan, shall be, including brokerage and all charges, one and a quarter (25) per cent. The selling price of the debentures shall be fixed by the- agent of the Government in London so long as the debentures are unsold, they shall be held by the bank in security of their "advances at par. In the event of their not being sold within twelve months from being placed in the market, they shall be again exposed at a reduced price to be fixed by the agent of the Government and the Directors o the bank in London, so as to ensure a sale. 4. The exchange charged in London or Invercar<nll to be the current rates of the day. i. The coupons or interest warrants shall be issued, payable at the bank, in London or Invercargili, and the bank shall be allowed a commission on the amount of interest paid by them at the rate oi three-fourths per cent. The Provincial Government shall impress into the hands of the bank, hali-yearly, the amount of interest due. 6. In the ordinary account current between the Government and the bank, the Government shall be allowed to overdraw their account, the proceeds to be applied to the public service on>,-_ to the extent of one-half year's revenue, on which overdraft seven per cent, interest shall be charged. If the overdraft should remain a year uncovered, a loan ordinance shall be passed to discharge the debt ly debentures, to be held in security for a time, to allow the Government to redeem the same by the proceeds of land sales ; but in the event of a sale of the debentures being advisable, they snail be issued in the usual manner and on the like conditions as the negotiation of the present loan is to be conducted. 7. The entire revenue of the Government .from, whatsoever source, shall from time to time be paid into the credit of the Government account current. (Signed) Jas. R. Menzies, Superintendent, Southland. (Signed) John Bathgate, Colonial Manager and Attorney for the Bank of Otago (Limited).

The Bank of Otago (limited). Dunedin, sth April, 1864. To his Honor the Superintendent of Southland. Sic, — I regret to inform you that the deben tures of the New Zealand Provinces, recently brought out, have proved unsaleable in London. I relied on a ready market for them in authorising advances on your loan, but as there will be difficulty in their sale, in present circumstances, it is necessary to limit the advances upon them to the sum cf fifty thousand pounds. The state of the ordinary account has also been productive of serious inconvenience to the Bank, o\iiaz to the limit of overdraft being more rapidly approached than was anticipated. As the unsaieableness of the debentures deprives the "bank of cover in London, it will be impossible to permit at present the assigned limit to be ex ceeded. The anxiety of the bank to accommodate the Government of Southland liberally has been practically proved, but you will be satisfied that, ■with a due regard to the other obligations cf the bank, further advances beyond what I have mentioned, cannot be granted. It will be desirable that the Government lose no time in making their estimated ordinary -revenue available, to keep within limits the demands made. lam in hopes that this timely notice will prevent the Government from being subjected to any inconvenience. I have, &c, John Bathgate, Colonial Manager.

The Bank of Otago (Limited). Dunedin, 18th April, 1864. To his Honor the Superintendent of Southland, InvercargilL Sib, — I trust that after the pointed instructions I have sent previously, that no further advances on the Government account could be allowed beyond the assigned limit, in all, £120,000 ; that the safety of this bank will not be imperilled by further demands being made upon it by the Government. No further cheques can be honored, and ought not to be presented. I have written this in consequences of hearing from Mr Jamieson of the demands already made. I have, &c, Joss Bathgate, Colonial Manager.

20th February, 1864. The Colonial Secretary to the Superintendent, Southland. Sib, — I have to acknowledge the receipt of your Honor's two letters, dated respectively the 4th instant, the one requesting the authorisation of a further Loan of £40,000 on account of the Bluff and Invercargill Railway and the other to a similar effect to the extent' of £120,000 on account of the lines, of communication with the Whakatipu country. In both cases the Provincial Government of Southland, when transmitting any Bill for raising Loans for these purposes which may be sanctioned by the Provincial -Council, wiJl also describe an area of agricultural J.and to be set apart as security for these Loans. In reply, I have to inform your Honor that itlie General Government do not, at.present, without further information and consideration, feel justified in acceding to your requests, As the Hon. Mr GiUieß,.tbe Postmastw-Ghsne* ralwill have been in Southland since your Honor's letters vers written, and as be is ex. pected here immediately, tho Government will defer their final reply tiUtfeey k«e jk&&6B GJ?j?ei>

In the meantime, it would be advisable that your Honor should not incur any liabilities in the expectation of the General Government assenting to the proposed Loan Bills. I have, &c, William Fox. His Honor the Superintendent, Dr. Menzies, Southland.

Colonial Secretary's Office, Auckland, Bth March, 1861. The Colonial Secretary, to the Superintendent, Southland. Sib, — Eeferring to my letter, No. 40, of the 20th ultimo, on the subject of further loans proposed to be raised by the Province of Southland, for Railway purposes, I have tc inform your Honor that the General Government, after a careful consideration of the matter, are of opinion that the utmost extent to which they can reasonably be expected to sanction a further loan would be to authorise a sum sufficient to pay all the cost of completing the railways in Southland sanctioned by the Legislature so far as that cost has been incurred or contracted for. It appears to the General Government that it would be a wholly unjustifiable proceeding to incur debt for current expenditure and to pay off such debt by loan. The General Government, except in the greatest emergency, could not sanction such a course. It must also be understood that a sufficient quantity of Crown Land if set apart in the Province of Southland as a security, to cover the whole of the liabilities incurred in the way of loan. I have, &c, William Fox. His Honor the Superintendent, Dr. Menzies, Southland.

Superintendent's Office, Southland, 16tli Maxell, 1564. The Superintendent, Southland, to the Colonial Secretary. Str, — I have the honor to enclose herewith authenticated copies of two bills, in duplicate, entituled respectively the "Debentures Ordinance, Ho. 1, 1864," and the " Appropriation Ordinance, No. 1, 1864." The one is abill to raise a loan of £40,000, to complete the Bluff and Invercargili Railway, the other to appropriate the sum for that purpose. As I have mentioned, in another communication sent by this mail, this sum will complete the railway, and leave some little margin. The contracts have all been taken with the exception of some minor ones for stations, and are in progress, so that the liabilities may be considered to exist. The Provincial Government has transmitted a plan of a tract of land, nearly all of which is arable and of good quality, which it proposes to set apart in security for the repayment of this loan. I trust that you will have no hesitation in recommending those Bills for the assent of his Excellency the Governor. I have, &c.j J. A. R. Menzies, Superintendent. The Hon. the Colonial Secretary, Auckland.

Great Northern Kailway, "" Contractor's Office, Invercargill, 6th May, 1864. I To his Honor the Superintendent of Southland. Sib, — Referring to our conversation of yesterday j and tite pecuniary position of the Government, with reference to the suspension of the railway worts, I beg to draw your attention to the fact, that any actual suspension must necessarily entail heavy losses on me, and increase by a very large percentage the ultimate cost of the railways to the Government. In order to avoid this, and in reference to an intimation from your Honor, leading to the conclusion that such a proposal might bo acceptable, I beg to suggest that the Government shall immediately empower some gentleman appointed by it, in conjunction with some gentleman appointed by me or perhaps better still, some gentleman in whom the Government and myself have confidence, to treat for an advance of a sufficient amount to open in a preliminary manner the Oreti railway, and to proceed as far as may be necessary with the works of the Bluff Harbor and Invercargill railway on the following securities : — The £40,000 worth of debentures under the extension Loan Bill, with any collater.il security of land, as transferred to the General Governin security, and my lien on the railways until the mutual completion of my contracts with the Government, also mj plant used in the construction of the railways. If your Honor approves of the suggestion, It shall be prepared give a power of attorney to some gentleman similarly empowered by the Government, or some gentleman who shall be mutually appointed and similarly empowered. I have, &c. (Signed) J. E. Davtes. Provincial Treasury, Southland, 7th July, 186 i. SiEj — I am led to understand that the railway worts under contract by Mr J. It. Davies have been stopped by the issue of some documents from you to Mr Davies on this matter. I re- ! spectfuliy beg to repudiate all participation in, or knowledge of, any such transaction. 1 have never been consulted by you either on the subject of such notice, or on the notices themselves. I will not recognise or acknowledge any obligation winch they may imply f and as I will not bear any part in such responsibility, neither can I condone such an act by my continuance in office. I therefore respectfully tender to you my resignation as a member of the Executive Council, and of the office of Provincial Treasurer. The duties of the latter office I will discharge until the appointment of my successor. j I am, &c, (Signed) "W. ¥. Taeltok, Provincial Treasurer. I His Honor the Superintendent, Dr Menzies.

Southland 18th May, 1864. Memobastduh of Agreement between the Provincial Government of Southland and the Bank of New South Wales, relative to the negotiation of certain bonds. On behalf of the Provincial Government the Superintendent hereby agrees that as soon as they . can be prepared he will deliver to the Manager of that bank here, certain debentures representing a sum of forty thousand pounds, bearing interest at six per cent. These debentures are to be transmitted to London, to the managing director there, who shall, in conjunction with the Provincial agent (John Morrison, Esq.,) place the same for public tender, as they may best determine. The transmission of these bonds to be at the risk of the Provincial Government, and the mimimum selling price shall not be below par, unless on the written authority of the Provincial agent, who shall be present at the opening of the tenders. In the event of the realization of all or any ot these bonds, the bank shall, on receipt of the intelligence thereof, allow interest thereon at the rate of five per cent, per annum, but charging for this advance at the rate of seven per cent, per aEnum. The whole advance not to exceed ninety i per cent, upon the amount of the bonds in which is to be included all liabilities at present outstandi ing in London credits, or otherwise to the extent of twenty-six thousand pounds, particulars of which shall be hereafter furnished. Should the said bonds be not disposed of within twelve months after their arrival in London the Provincial Government hereby undertakes to rqfnnd this advance with all interest and charges incurred by the bank within six months after receiving notice thereof. The bank to pay all jn terse, on these bonds, as du.e upon being placed in funds by tie Government, charging foalf per f ■ - . ' ■■

half per cent, for commission and brokerage, with " total amount of bonds negotiated, rates of exchange to be current rates. (Signed) J. A. E. Menzies, Superintendent, Southland. T. W. GBEEIf, Inspector.

Superintendent^ Office, Southland, 7th July, 1864. Sib, — I have to inform you that the Provincial Government of Southland agrees to the following conditions as a preliminary to the resumption of works on the Bluff. Harbor and Invercargill and Oreti railways within Mr Davies' contracts, which have been temporarily suspended. 1. That Mr Davies will be relieved from liability to meet the promissary note for ■ ten thousand pounds (£10,000), issued to him by the Provincial Government. 2. That the whole work executed up to this time on the above lines of railway shall be measured up, and any balance due thereon shall, after being certified, be paid for in the usual manner. 3. That of the retention money now held by itit will pay over to Mr Davies the balance exceeding the sum of (5000) five thousand pounds — of which sum it will pay to Mr Davies onehalf when the railways are open for traffic, and the other half six months after ; or if the lines of railways are open for traffic at different dates, a proportion of such retention monej r , rateably, according to the sum of the contracts on the different lines, will be returned as above agreed. 4. That the amount of compensation due to Mr Davies, under particulars stated in his letter of this date, Consequent on the temporary suspension of the works, shall be reforred to arbiters in the usual manner, and that the same arbiters shall also nt the same time decide on the extent of deductions to be made on account of tlie use of materials, not sanctioned in the construction of he line, in place of materials specified. 5. That the Government will make tito. monthly sayments hi the usual manner ; or if it should aye reason to believe that it cannot at the end of ny particular month, that it will intimate the ame to Mr Davies at the beginning of such month. Will you b" good enough to communicate this information tv Mr Davies. Yours, &c, (Signed) J. A. E. Menzies, Superintendent. E. M. Marchaut, Esq., liaihvay Engineer, Southland.

JIEMOBANDUM BY ME PEAESON. 1. That the Executive is to be responsible to the Provincial Council for the actions of the Government on every point within the limits of provincial lagislation. 2. That they must have the entire control in all matters -which are purely Provincial ; such having no reference to power delegated to the Superintendent by the Governor ; and on which, while the gentlemen willing to act as an Executive Council are of opinion that it is desirable that they shoidd be consulted, they leave it optional with the Superintendent. 3. That in all such purely Provincial matters, as explained in clause 2, the Superintendent should consult his Executive, and act strictly in accordance with the opinion of the majority. 22nd Jidy, 1864. The Superintendent, Southland, to the Colonial Secretary. Superintendent's Office. Soutliland, l*fc August, 1864. Sib, — I hnro the honor to enclose p "nrrified copy of Resolutions passed by the Provincial Council of Southland, on the 27 th instant, which have been forwarded to me for transmission to Ms Excellency the Governor. As they consist of *. series of sweeping assertions, unsupported by any detail of facts or train of reasoning, I iliall make no direct comment on them ; but if hi 3 Excellency will read the papers and reports enclosed herewith he can form an estimate of the value of the reasons which may have induced the Council to express its unmeasured reprobation of the management of the Provincial ailairs, and its intense alarm at the antagonism maintained by the Superintendent. I have, <tc, Jas. A. Menzies, Superintendent.

Kcsolved, — | 1. That in the oi>inion of this House tb; interests of the whole Colony are, to a consid* able extent, bound up with, and may be seriou.compromised by, the continuance of the prese. financial condition of this Province. ' 2. That the management of the financial aff-" of this province is of so disastrous a chare that an immediate change of adniinistratio absolutely required. 3. That through such management the 8 ol this Province have become ssriously invo, and, therefore, this House views with the ut akrrn the position of antagonism to the vie*;, the Provincial Council still maintained I, Honor the Superintendent. \ . 4. That, seeing the Superintendent it' act in accordance with the wishes or adv; Provincial Council, this House respec{ earnestly calls upon His Excellency vernor to dissolve the Council forth take such steps as he shall think r prevent ihts further ruin of the in* 1 Province, as well as for the protection of the Colony. ;' 5/ That the hon. the Speaker beforward a copy of the above res Excellency the Governor.

The hon. MrWhitaker to the Southland. . Colonial SecretAuckland; Sib, — In reference to the o personal communications tha' between your Honor .and th ment, I have now the honor ments by which it is propose; vince of Southland from > . > embarrassment. £ — 1. In order to prevent art' with the Contractors, the - will provide such sums as _ carrying on Kailway and <• - months, not exceeding £11 ' JS'o other works than Kaily less done in iulfilment of ' . sisting Contract. ' 2. To provide for the > . vances thus to be made, , *und is to be applied exA ' . necessary to pay the c< . Waste Land Offices, tbA ' . to be reduced to the full N efficiency, to the satisfar, ■ . . ■ ; 3. It is alsa distinctl the expenditure of thi'* for other purposes thar way and other works, , satisfaction of tho Gen' be within the Revenue thantheLand. : 4. The balance due applicable to railways, the General Governm 1 account in the Colon; . it to be applied to anj tbe completion of the, Upon your siguify; • . termß the necessary it ' the Coloniu) Sub-Trea them out, ! h ■ His Honor tho Sup L Houthlßjt • i ■ " ■■ ■■■■' " : ■'

The Superintendent, Southland, to the Coloni; Secretary. ' Auckland, Bth June, 1864 Sib, — I have to acknowledge the receipt of you letter of the 7th instant, stating the terms upr which the General Government ia willing to assthe Provincial Government of Southland in " present financial embarrassment, namely, that t General Government will provide such sums may be required for carrying on railway i other works, under valid and existing contra 1 for three months, such sum not to ex ; £15,000 in any one month ; the Land Eev , of the Province to be paid to the Geneara vernment until such advances are repaid General Government will pay the Lan Survey departments, which are to be r^ to the lowest degree compatible with c/ the expenditure of the Provincial Gover, purposes other than railways and ot contracted for to be reduced to the' i of the General Government ; and th by the Bank of Otago on railway be applied only to railway purposes now to intimate the acceptance o - by the Provincial Government. I have, &c, J. A. E. MSuperintendent

Superintende . ' Southland, 22n0 Sib, — I have the honor to v. ._ Provincial Government appro to carry out the arrangement^ „ patent for a Wooden iiailv recommended by the Conn f and assented to by you ; it . your assent in writing a that you will forward the " conditions lie for referene; I have also to request specification and estim? required at your earlier I \vJ. E. DAAaES, Esq, ¥ -