CONSTRUCTION OF A RAILWAY BETWEEN NELSON AND THE WEST COAST, (CORRESPONDENCE RELATING TO).

Appendix to the Journals of the House of Representatives, 1875 Session I, E-04a

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1875. NEW ZEALAND.

CONSTRUCTION OF A RAILWAY BETWEEN NELSON AND THE WEST COAST, (CORRESPONDENCE RELATING TO).

Presented to both Houses of the General Assembly by Command of Hi* Excellency.

No. 1. The Hon. the Peemiee to the Hon. the Colonial Seceetaey. 7, Westminster Chambers, Victoria Street, Westminster, S.W., Sie,— 28th April, 1875. I have the honor to inform you that Mr. Henry Handyside, of Nelson, called on me some weeks since with the view of submitting proposals for the construction of a railway between Nelson and the West Coast. I told him that I had no authority to negotiate in the matter, nor any power or inclination to bind the Government in any respect as to it; but that I had no objection to express my opinion upon his proposals, provided he clearly understood that that opinion would not in any sense bind myself or my colleagues. Mr. Handyside's proposals were, in effect, that a land grant and a guarantee should be given. He said that the guarantee he named would never have to be paid, and that, in fact, the amount of the liability of the colony would only be one-third of the nominal guarantee. I replied that if the guarantee were actually fixed at one-third of the sum he named, it might possibly lead to an arrangement, but that I would not express a positive opinion to that effect. Sometime afterwards Mr. Handyside wrote to me that the proposals he had submitted could not be carried out, but that he wished me to see his friends Mr. Berry, formerly a resident in Nelson, and Mr. James, of the firm of Messrs. James and Edwards, Accountants, Tokenhouse Yard. I consented, and those gentlemen laid before me a proposal in writing, which I append. We had a conversation upon this proposal. You will observe that in the document there are blanks left for amounts, but I ascertained that what was meant was that the works should be constructed at a reasonable rate under the direction of the Government, and that the Government should take a perpetual lease with the power of purchase at any time, and that interest on the cost of the works during construction should be capitalized. I asked upon what basis of interest the rent was to be fixed, and I was told 6 per cent. I replied that, in my opinion, neither the Government nor the Parliament would consent to any such a rate; that the whole thing resolved into—l. Could the contemplated contractors construct the works as cheaply as they could be constructed if tenders were called for ? 2. What rate of interest the colony would consent to pay on the money expended? Subsequently Mr. James again called upon me, and informed me that the proposed contractors were Messrs. Clark, Punchard, and Co.; that they had a representative in Tasmania; that they would be content with 5^ per cent, on the expenditure; and that they would construct the railway as cheaply as it could be constructed if tenders were obtained from local contractors. He asked me if I would see Messrs. Clark and Punchard, and I met them next day. Those gentlemen asked me a few questions, and then said they would consider the matter, and would possibly ask for another interview. You will understand that I have not in any respect committed the Government, and that I intend not to do so. The Government will be as unfettered in negotiations with Mr. Eeeves (Messrs. Clark and Punchard's partner), and their representative in Tasmania, as though no word had passed with me on the subject. I do not know whether the Government will think it expedient to pay, or whether Parliament would approve of paying, 5^ per cent, interest. Admitting that it might be convenient to us not to have to borrow for this railway, and that interest on the cost of the works during construction were to be capitalized, still it would be a question whether it would be worth while paying per cent, more than we look upon as our normal rate of borrowing. This question the Government will have to consider, as well as the amount upon which they would be willing to pay

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interest, that is to say, whether Messrs. Clark and Punchard would agree to keep the cost of the works as low as it would be kept if the Government undertook the matter and called for tenders. We are certainly bound to the Nelson people to give them railway communication through to the West Coast, but I think the works should be proceeded with very slowly, for it must be borne in mind that the less new works we enter upon at present, with the contingency of requiring to borrow largely at an early date, the better it will be. In fact, we ought to keep out of the money market as long as we can; not but that I think that whenever we require a loan the money will be obtainable if the negotiations are properly managed. I have, &c, The Hon. Dr. Pollen, Colonial Secretary. Julius Vogel. P.S.—Since the above was written, Mr. Berry has signified to me that Messrs. Clark, Punchard, and Co. have withdrawn from the proposed arrangement.—J. Vogel, May 3rd.

Enclosure in No. 1. Nelson and Cobden Eailway.—Peoposal by Company. The Company will, within six years of the date hereof, make, construct, and open for traffic, for the carriage of passengers and goods, a line of railway adapted for the use of locomotive engines, with all the necessary appurtenances, from Nelson to Cobden, that is to say, the Company agree to continue the line now under construction from Nelson to Fox Hill, to Cobden, on the West Coast, the termini and direction of such railway to be more fully described in a plan to be deposited in the office of the Minister for Public Works, in Wellington, prior to the time of making such agreement; such plan to be approved of by the Governor, and referred to in the said agreement. 2. All waste lands of the Crown required for the purposes of the said railway, including what is required for stations, warehouses, sidings, &c, &c, shall be demised by the Governor to the said Company for a term of 99 years, at a rent of 20s. per annum, with a right of renewal for a futher period of 99 years at a like rental ; and the said line of railway and all works connected therewith shall be free and exempt from all rates, taxes, and charges whatever. 3. The gauge of the said railway shall be 3 feet 6 inches, and the rails to be used in the construction thereof shall be of iron, and of the weight of not less than 50 lbs. to the yard. 4. Plans and specifications of all works connected with the construction of the said railway shall be approved of by the Governor before such works shall be carried out; and the Governor shall have the power to appoint an officer to inspect the said works in the course of construction. 5. Should the Company, on the completion of the said railway, work the line, they will provide and work one through passenger train per day each way (at least) from one end to the other, and at the rate of not less than 15 miles per hour for the whole distance including stoppages, and there shall be at least three weekly trains each way for goods through the whole distance. 6. The said Company shall, in the event of war or civil commotion, on the requisition of the Governor, place the whole of the resources of the railway at his disposal, at the charges actually incurred. 7. The scale of tolls to be received by the said Company for the carriage of passengers and goods shall be fixed by the Governor, with the advice of his Executive Council, on the 2nd day of January in each year. 8. The Governor, or such person as shall be duly authorized for that purpose, shall have power at all reasonable times to enter into and upon the said railway, and establish and lay down a line of electric telegraph for Her Majesty's service, and to use the same without charge : Provided that the work to be done in laying down such line shall be done in such a manner as not to obstruct the working of the said railway. 9. The Company also agree to construct the line from the terminus of the Nelson and Fox Hill Bailway at Fox Hill to the Port of Cobden within the time named herein, and to lease the said line to the General Government of New Zealand, in perpetuity, for the annual payment of £ , on condition that the said Government undertake and agree to work the said line, and to keep the same in thorough working order and repair, and pay all costs and charges attendant thereon. 10. On the 31st December and on the 30th June following the completion of the said railway to the satisfaction of the officer to be appointed as before provided, the Treasurer of New Zealand shall pay to the said Company the sum of £ 11. Such payment of interest shall continue to be made on the 31st day of December and the 30th day of June in every year. 12. The Governor may, at any time within fifteen years after the completion of the said railway, upon giving to the said Company twelve months' notice in writing of such being his desire, purchase the said line of railway and works, paying for the same such a sum as may be determined by the valuation of two indifferent persons—one to be chosen by the Governor and one by the Company—with power to such valuators to appoint an umpire in case of disagreement, but so that such valuators shall not in any case award a less sum than £ per mile, including all sidings, rolling-stock, plant, stations, &c, &c.; and the said agreement shall also contain all such provisions and stipulations in relation to the matters aforesaid, and any of them

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in relation to the said railways, and the eventual or contingent transfer of the same, or any part thereof, to the Government, as the aforesaid Governor, with the advice aforesaid, and the Company shall respectively think fit and agree upon. 13. The Company shall have the power to alter, divert, raise, or lower any public road or way for the purpose of crossing the railway, provided that no gradient in any road so altered shall be more than one foot in twenty-five, and that the railway may cross any road upon the level. 14. All private lands required for the purposes of the railway shall be purchased by and at the cost and charges of the Province of Nelson, and be conveyed free of cost and charges to the said Company. 15. All plant, material, and machinery required for use in the construction of the said railway shall be admitted in the Province of Nelson free of all Customs duties or charges. 16. The Company shall furnish the Governor and the Superintendent of the province with the name and quality of some person resident in the province, upon whom all notices and documents may be served in behalf of the Company. Explanations given to me The promoters look to making 6 per cent on their outlay; the interest during construction to be capitalized. 3rd May, 1875. Julius Vogel.

No. 2. The Hon. the Peemiee to the Hon. The Colonial Seceetaey. 7, Westminster Chambers, Victoria Street, Westminster, S.W., Sie,— 12th May, 1875. To my letter of April 28th, respecting negotiations for the construction of the proposed Nelson and West Coast Railway, I added a postscript on May 3rd, to the effect that Messrs. Clark, Punchard, and Co., had declined to proceed with the matter. After the despatch of that letter, I received from Mr. James the document which I have now the honor to enclose. I have, &c, The Hon. Dr. Pollen, Colonial Secretary. Julius Vogel.

Enclosure in No. 2. Mr. A. A. James to the Hon. the Peemiee. Sie,— 1, Tokenhouse Yard, London, E.C., 6th May, 1875. I regret to say I have received a letter from Messrs. Clark, Punchard, and Co., intimating their indisposition to go further into the negotiations with reference to the New Zealand railway. To convey to you exactly their reasons, as they expressed them to me, I annex an extract from their letter. I would have communicated this earlier to you, but I have been for several days in the North of England, whence I returned only this morning. I am, &c, Julius Vogel Esq., A. A. James. 87, Gloucester Place, Portman Square, W. Sub-Enclosure to Enclosure in No. 2. Since we had the pleasure of meeting you and Mr. Vogel, we have carefully considered the observations which fell from him, and the inducements held out to us for building the proposed railway, and it appears that they are so slight as compared with the heavy lock-up of capital that would be necessary, that we do not think it would answer our purpose to further entertain the matter.

No. 3. The Hon. the Peemiee to the Hon. the Colonial Seceetaey. 7, Westminster Chambers, Victoria Street, Westminster, S.W., Sie,— 28th May, 1875. Eeferring to my former letters respecting negotiations for the construction of the Nelson and West Coast Bailway, I have now the honor to forward for the information of the Government a letter from Mr. Eobert Walker, and copy of my reply thereto. I have, &c, The Hon. Dr. Pollen, Colonial Secretary. Julius Vogel.

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Enclosure 1 in No. 3. Mr. R. Walker to the Hon. the Premier. Nelson and the West Coast Railway. Westminster Chambers, Victoria Street, S.W., London, Sir,— llth May, 1875. A fortnight ago Mr. Maxwell Berry introduced the question of the construction of this line to me, and, after due consideration of the proposals entertained in the " conditions and stipulations " (which I am given to understand Mr. Berry left with you) for the formation of a company in London, having for its objects the building of the said line, I beg to say that I am prepared to enter into a contract, and form a company for the construction of the line on the following terms: — 1. My engineer to agree on the spot with the New Zealand Government engineers the prices to be allowed for the various descriptions of work. 2. That an additional sum, equal to 10 per cent, on the gross amount of such works, should be allowed for expenses in the formation of the said company, and for the costs incurred in providing the funds for constructing the line. 3. That the whole sum thus raised by the company shall be paid over to the New Zealand Government (less 10 per cent, allowed for costs), who shall hold the same as trustees for the shareholders. 4. That the New Zealand Government shall pay the contractor as the works proceed, on the certificate of the engineer to be appointed by the New Zealand Government, as provided for in section 4 of stipulations, &c. 5. That the New Zealand Government shall pay interest on the money subscribed for building the said line of railway at the rate of 5 per cent.; this payment to continue during the construction of the said line. 6. That on the completion of the said railway the New Zealand Government shall take a lease of the same, paying a rental equal to 5_ per cent, on the gross amount of the contract, plus 10 per cent, allowed, as per clause 2. 7. That the New Zealand Government shall pay all costs and charges attending the working of the line. 8. The company agree to complete the line within seven years from the date of commencing the works under the contract. 9. The New Zealand Government shall have the option of opening and working (under arrangement to be more fully set forth in an agreement to be made between the proposed company and the New Zealand Government) each section of the line as the same is completed. Mr. Berry has given me to understand that your mission to England does not authorize your concluding a contract with any one for the construction of the proposed railway, and that any offer made is dependent, in the first place, upon the sanction of the New Zealand Government and Parliament j and in the second place, as to the prices to be allowed for the works, allowing, sufficient inducement to the contractors to goto New Zealand for work. As there is is an uncertainty as to the first condition, I do not think it prudent to go out to New Zealand at present and test the specifications. As to the second condition, Mr. M. Berry informs me that he is on the point of leaving for New Zealand, with the primary object of working with those interested in the construction of this much-needed line. On satisfactory arrangements for the payment of expenses being concluded, I shall be prepared to go to New Zealand with my engineer, and conclude a contract with the Government. Should you desire to have any personal explanation from me on any point, I shall be happy to keep any appointment you make for me. I have, &c, The Hon. Julius Vogel, C.M.G., Robert Walker. 87, Gloucester Place, Portman Square.

Enclosure 3 in No. 3. The Hon. the Peemiee to Mr. R. Walkee. 7, Westminster Chambers, Victoria Street, Westminster, S.W., Sir,— 17th May, 1875. I have the honor to acknowledge the receipt of your letter of llth May, respecting the formation of a company to construct a railway from Nelson to the West Coast. In reply, I have to state that I am not in a position to make any arrangement on the subject. The whole question must be referred to the New Zealand Government, and I will forward your letter to the colony by the next mail via San Francisco. I have, kc, Robert Walker, Esq. Julius Vogel. • By Authority : Geoege DIDSBUEy, Government Printer, Wellington.—lB7s. Price 3d.]