B.—No. 2.

expenditure of about £100,000 per annum for four years. But if the Colony finds the money for these works, it is fair that it should contribute an equal amount to analogous works in the Middle Island. We propose that it should be so —that an equal amount should be placed to the credit of the Middle Island, to be spent on railways, each Province to be entitled to share, upon the basis of its receipts from the Consolidated Revenue. Such a sum will not, of course, be sufficient for the construction of railways, but it will be a valuable contribution towards their cost, and, as between the two Islands, the arrangement will be absolutely fair. The opening of a road through the North Island will promote its real, and probably rapid settlement; and this brings us to the consideration of whether, in common prudence, we should not, when we improve the value of the North Island estate, endeavour to procure a portion of that estate to share in the profit of that improvement. Whilst we do not seek to disable private purchasers, we do seek, in the interest of both races, that the Government shall not be precluded from acquiring land. We propose that land for a public estate shall be purchased from time to time at its fair value; that such estate shall be subject to the land laws in force in the Province or Provinces within which it is situated ; that the cost shall be a charge against the Provinces respectively, to be recouped in such manner as shall be agreed upon with the Provincial Government when the land is handed over; and that the land itself, or its proceeds, shall be exclusively devoted to immigration and railway purposes. We propose that, for the purchase of these lands, £200,000 shall be available. I may add that the Government intend to ask for power, under similar conditions for recouping the outstanding liability for Treasury Bills on their account, to hand over to the Provinces from time to time such portions of the confiscated lands as may be relinquished without fear of evil results following. The condition of such relinquishment would be, that the proceeds in excess of the repayments of liabilities should be set aside for railway and immigration purposes. We are now to suppose the two Islands with a landed estate, and therefore possessed of some means for promoting settlement, with the inducement to encourage settlement which the consequent improvement in the value of the estate will afford. The position of the Islands is the position of the Provinces they comprise. We are to suppose that within those Provinces there will exist such a desire for public works in the shape of railways, and for immigration, as will be suitable to their several conditions. We propose that the Government shall be armed with power to conclude arrangements for the construction of certain railways within the different Provinces, as desired by their respective Governments. By " certain railways," I mean that the Legislature should indicate the direction of the railways for which it is proposed to allow the General Government to contract; and I think that, speaking generally, railways should, in each Island, be designed and constructed as parts of a trunk line. According to the nature of present traffic should be the immediate character of the respective railways. I hope the Provinces will recollect that the Colonial rate of interest on money is large, and that it is extravagant to lock up more capital than is necessary. In America, I am told, there are what are called "revenue railways," that is to say, railways constructed in the manner precisely sxiited to the traffic, and out of the traffic returns those railways are, from time to time, improved, in accordance with the traffic demands. The constructors are satisfied with a moderate speed, and, as an example of the system, they are satisfied to do without expensive stations —indeed, without what we should call stations. Here and there, perhaps, a shed is erected for watering the engines; but for the rest, flags put out on the line of route indicate that the use of the railway is required for passengers or goods. Interesting statements have lately been published concerning a Welsh railway, constructed partly out of revenue, and which is said to be very successful. Now, as to the mode of paying for these railways. It is essential, in order that we shall not proceed too fast and undertake more than our means will justify, that we should fix a very effectual limit to the liabilities to be incurred. Speaking broadly, I contend that during the next ten years the Colony will run no risk, if it commit 4

Road in the North. Island; and like sum for Railways in Middle Island.

£200,000 to create a Landed Estate for North Island;

to be Provineially charged ;

and proceeds of sale applied to Immigration and Railways.

Railways—General Grorernment to contract, at instance of Provinces.

£10,000,000 for all purposes, during ten years.

13

FINANCIAL STATEMENT.