MR. VOGEL'S MISSION TO ENGLAND.

7

A.—No. 6.

Mr. John Morrison, authorizing him to inform Messrs. Brogden that, although I was not able to saythat the decision would bo delayed, I felt sure that'the desire of the Government would be to show to the Contractors every consideration consistent with the interests of the Colony. In order that the Government might not be prejudiced if they delayed their decision, I asked Mr. Morrison to consult Mr. Mackrell, and to get him to procure from Messrs. Brogden such an undertaking as would, in the event of the Government consenting to await Mr. A. Brogden's arrival, secure that the rights of the Government under the agreements should not be in any way prejudiced or jeopardized. On reaching San Francisco, I received from Mr. Mackrell a telegram stating that Messrs. Brogden had given such an undertaking as left the Government free to decide at once between the agreements, or to delay the decision. I may observe that, compared with the terms offered for the large number of colonial and foreign railway enterprises that are being floated in the London market, the agreements made with Messrs. Brogden are very favourable to the Colony; and I feel sure that, with proper precautions, they will lead to the construction of railways upon advantageous terms. It may be found desirable to make some alterations in the agreements; but I must repeat my conviction, that any wish in that direction on the part of the Government will be readily responded to by Messrs. Brogden, who to the last expressed themselves strongly as to the terms being rather harsh towards them, and as to their hope that the agreements would be so worked out as to put them in as favourable a position as possible for giving effect to their various provisions. I have received from the Bank of New Zealand an acknowledgment of the deposit by Messrs. Brogden and Sons of securities to the value of £25,000, for the due performance of the agreements. Under the terms of the agreements, Mr. John Henderson, C.E., Messrs. Brogden's representative or agent, has accompanied me to the Colony; and with him are Mr. C. N. Bell, C.E., and Mr. J. G. Dees, surveyor. I have the honor to state that throughout the progress of the negotiations with Messrs. Brogden, Mr. John Morrison, Agent in London for the Government, rendered me most cordial and zealous assistance, and that I have written to him thanking him for the same. Anticipations last Session, and the Terms of the Contract. No doubt, very much interest will be manifested in comparing the arrangement now entered into with Messrs. Brogden, with the anticipations expressed last Session as to the nature of the terms on which it would be possible to secure the construction of railways in New Zealand. It will be remembered that those anticipations were largely based upon somewhat unreliable evidence —such, for example, as newspaper reports, and brief sketches of the nature of certain arrangements proposed by other Colonies. lam convinced, by inquiries which I instituted in London, that we formed a somewhat too favourable estimate of the terms upon which we might secure the introduction of a large amount of capital for constructing railways, under either a system of guarantees or of land subsidies. We were under the impression, for instance, that a railway was to be constructed in Tasmania upon a bare guarantee of 5 per cent. Although, on the surface, this will appear to be the fact, lam led to believe that there are in the agreement collateral provisions which materially alter its nature. Thus, as I am told, something like £25,000 for preliminary expenses and what is sometimes called " promotion money," is to be put down to cost of construction. Further, I am informed that the gentlemen who are entering into the arrangement at home, have sent out to the Colony insisting on a provision to the effect that the amount of discount at which they may find it necessary to dispose of shares or other securities, shall be considered as a portion of the construction money. Ido not mention these things with any view of reflecting upon the agreement made by Tasmania : I merely desire thatrNew Zealand should understand that the assertions so freely inade that the construction of railways could easily be secured upon a 5 or a o\ per cent, guarantee, may be very much affected by other provisions contained in an agreement, the basis of which appears to be simply such a guarantee. Many foreign and colonial railway enterprises are being brought out in the London market, upon terms which wholly put in the shade so low a rate of guarantee as that just stated. After I left England, I received from Mr. John Morrison, copy of a prospectus of the Wellington, Grey, and Bruce Railway Company, of Canada, announcing the intended issue of £71,000 7 per cent, first mortgage bonds, in which it is stated: — " Taking into account the dates of the payment of the instalments, and the fact that the full halfyear's interest will be allowed on Ist January, 1872, the price of issue is in effect reduced to 88J. At this price the bonds yield 8 per cent, to the investor, in addition to the advantage arising from the redemption fund provided under the agreements with the Great Western Railway Company, by the application of which the whole of the bonds will probably be paid off at par within fourteen years." Land Grants in Payment. In respect to the construction of railways for land grants, I have to observe that I am very doubtful whether we are likely to be able to arrange for the construction of any railway for such grants only, upon any approach to terms that would be deemed admissible. One of the alternative agreements with Messrs. Brogden does, as the Government will observe, provide for an arrangement based on land grants, coupled with a guarantee ; only one-fifth of the land to be granted being such as would be classed as " good " land, the rest being such as it may suit the convenience of the Colony to part with ; and there being a clear understanding that the two million acres which it was proposed to give for the Nelson Railway might bo included in the amount. Should it not be desirable to part with the Nelson land, and with other land of the same character, I do not doubt but that Messrs. Brogden would consent to receive a very much smaller quantity of good land. The land-grant element in this arrangement is no doubt of very much importance, inasmuch as it represents the profit which Messrs. Brogden hope to make, the cost of the railway being otherwise minimized as much as possible. Had I proposed that railways should be constructed wholly for land grants, I should have had to give, in some form, a guarantee as to the value of the land to be parted with. You arc aware that last year Messrs. Brogden negotiated for the construction of a railway in Nelson Province, which was to be paid for wholly in land. That land was exclusively of a mineral character, and the arrangement into