A.—No. 2

4

FURTHER PAPEES RELATIVE TO THE

the Treasurer has to point out that, in the present case, the Colonial Secretary is mistaken in supposing that the amended Ordinance authorizes an increased liability. By either the original or the amended Ordinance, the Superintendent is authorized to make the Province liable for a guarantee of eight per cent, interest on £400,000 for fifteen years. The difference between the two consists only in tho manner in which the guarantee is to operate, and especially how it is to commence. It is clear therefore that there is no legal impediment in the way of assent being extended to the Ordinance. But there arises out of this objection, and especially out of the remarks made by the Colonial Secretary, the question of public policy. It is not to be denied that on grounds of public policy the Government have the right to object to an Ordinance, but in this case it is respectfully submitted that reasons of public policy do not warrant the Ordinance being disallowed. It may be taken for granted, since the first Ordinance was assented to, that it is not considered opposed to public policy that a railway should bo procured by the inducement of a guarantee. The amended Ordinance then has the following advantages over the original Ordinance : — Ist. It prolongs the time. The period of eighteen months from April, 1866, provided by the first Ordinance, is too short to admit of tho necessary negotiations. 2nd. The guarantee provided by tho amended Ordinance would be more acceptable to investors, and therefore, more likely to secure the construction of a railway. By the first Ordinance the guarantee was to be extended only to tho capita! employed in making each ten miles of railway after the same was completed.. Although investors would still be entitled to a fifteen years' guarantee by this plan, they would not enjoy it at a time when they would most desire it, namely, whilst the works were in process of construction. The ten miles provision would undoubtedly tend to disturb the speedy and even progress of the works. Instead of the works being pushed on over the whole line, the Company would have a strong temptation to concentrate their capital, as it was from time to time paid up, upon separate portions of ten miles each ; and the difficult portions of the line, which should Be first commenced, would probably be the last. By the amended Ordinance, not only would it be for the interest of the Company to push on the works over the whole line, but the Superintendent could and would make a stipulation to that effect under the powers conferred by the following words in clause two : —" Provided always that such railway works shall be carried on subject to such conditions provisions and agreements as the Superintendent with the advice and consent of the said Executive Council shall think fit to impose." These words must be regarded as conferring a larger power than the third section of tho original Ordinance, and in any case they are an answer to the Chief Secretary's remark, " No adequate security for the protection of public interest is provided." In respect to the Chief Secretary's second reason against the Ordinance, the Treasurer thinks, on reconsideration, he will withdraw it. It is irreconcilable with his first objection, since, if the liability be considered in the light of a loan, the repayment could not be considered to be made for a private purpose. Again, the objection applies equally to the original Ordinance not disallowed as to the amended one. Again, there is custom to appeal to. In this and other Colonies and countries, guarantees have not been considered to bo " agreements to pay money to a purely private purjiose." They are looked upon as money inducements to companies to undertake works of a public nature. The Colonial Secretary might, with as much reason say that the Assembly, in the Nelson Railway Bill, authorized the alienation of a large tract of land for " a purely private purpose," as that the guaranteed inducement offered by the Otago Ordinance is amenable to a similar reproach. The Treasurer recommends that tho Superintendent should transmit this Memorandum to the Colonial Secretary, and that he should ask the General Government to re-consider their decision, so far as to assent to a similar Ordinance, if again passed by the Provincial Council. The Colonial Secretary might be invited to suggest any amendments not interfering with the spirit of the Ordinance, but which he conceived would afford a better assurance against a possible invasion of public interests. Jrairs Vogel, 4th April, 1567. Provincial Treasurer.

No. 5. The Hon. E. "W. Stafford to His Honor James Macandbew. (No. 193.) Colonial Secretary's Office, BiE,— Wellington, 16th April, 1887. I have to acknowledge the receipt of your Honor's letter No. 6786, of the 4th instant, in which you refer to the assent of the Governor being withheld from " The Dunedin Reserves Management Ordinance, 1866." I cannot concur in the entire accuracy of the description given in that letter of the course taken with respect to the Princes Street Reserve at Dunedin, which was included among other reserves referred to in this Bill. Tour Honor states that the ownership of that reserve has been declared by a distinct Resolution of the House of Representatives in the session of 1865, and that it was subsequently confirmed by an Act which passed the Lower House in 1866, and all but carried in the Legislative Council. On this point I would observe that no Resolution of the Legislature, much less of one branch only, could settle the ownership of land; nor does the Resolution in question profess to do so, —it merely states the opinion of the House in whom the land "should be vested." A Select Committee of the House had previously recommended that the land be granted to the Municipality of Dunedin. A Crown Grant of this land was granted on 11th January, 1866, to the Superintendent of Otago, under the Public Reserves Act but a Bill, not purporting to confirm or validate the grant, but to appropriate to the Superintendent of Otago certain rents on account of the land, although passed in the House of Representatives, was rejected in the Legislative Council in 1866. Thus, although a Resolution recommending that the lands should be vested in the Superintendent of Otago was passed in the House of Representatives in a former Parliament, the present Parliament has refused to pass an Act appropriating the rents in accordance therewith. Under all these circumstances, and taking into consideration that a claim to this land has been