A.—No. 6,

PAPERS RELATING TO

46

Appendix E.

Railways.

per cent, that they are to be applied in repaying the Government the sums paid by it under the guarantee of interest, yet, when this occurs, the whole amount by which the profits exceed 8 per cent, is to be so applied, and when the Government has been repaid, the amount of such excess is to be equally divided between the Government and the Contractors, instead of belonging entirely to the latter, as under the Indian Contract and under Contract No. 2 ; when the profits exceed 5^ per cent, the whole of the excess is in like manner to be applied in repaying the Government any sums paid by it under the guarantee of interest exceeding 5^ per cent., and when these sums have been repaid, one-fourth of the excess is to belong to the Government until all its advances under the guarantee have been repaid with interest. As regards the terms of purchase, it is to be observed that, under the Indian Contract, the purchase money is to be " the full amount of the value of all the shares or capital stock calculated according to the mean market value in London of such shares or stock during the period immediately preceding the expiration of the period of twenty-five years or fifty years," at which alone the East India Company had the right to purchase. The shares may have risen considerably above par, and it is quite possible that the belief of an intention on the part of the Government to purchase, may of itself raise the value of shares above what it otherwise would be, and so increase the amount of the purchase money. Under both the New Zealand Contracts the purchase money is to be merely the amount of the capital expended by the Contractors in making the railways and providing the plant, with a profit of 5 per cent, added, after making a deduction for the deterioration in value of the lines and plant, through wear and tear and want of repair. It would, however, be improper to omit reference to the fact that, under Contract No. 1, the remuneration of the Contractors does not consist solely in money payments, as they are to receive a grant of three-quarters of an acre of land for every pound expended by them in making the railways and providing plant. As to this, it may be pointed out that if the opening up of railway communication shall render the grant of land valuable to the Contractors, it must, of course, have a like effect upon the greatly larger extent of land retained by the Government, so that if, on the one hand, the Contractors receive an advantage which they do not enjoy under the Indian Contract, on the other hand the Government of New Zealand will derive, from the enhancement in the value of its waste lands, an advantage which the Indian Government will not derive, or at all events not nearly to the same extent. It is to be further remarked that for the remuneration given to the Contractors under Contract No. 1, consisting as it does partly in money payments and partly in grants of land, they bind themselves not merely to make the railways and supply the plant, but also to introduce 10,000 immigrants on terms which appear to be very advantageous to the Government, as, instead of paying a lump sum on the arrival of each immigrant, it is required only to make ten annual payments of £1 each, and these payments are to cease if the immigrant dies or ceases to reside in the Colony. As I have already incidentally mentioned, under the Indian Contract the Government can purchase only at the expiration of twenty-five or fifty years from the Ist of May in the year in which the contract was made, whereas the Government of New Zealand may purchase, under Contract No. 1, r.t any time within forty years from the commencement of the making of a railway, or, under Contract No. 2, at any time within twenty years from the completion of a railway. The comparison, between the New Zealand Contracts and the Indian Contracts, as regards the terms of the purchase, would be imperfect if I were to omit to point out that under the latter the Government becomes the owner of the railway without purchase at the end of ninety-nine years, supposing that it has not purchased at the expiration of the twenty-five or fifty years, whereas it is only under Contract No. 2 that a like privilege has been accorded to the Government of New Zealand; the Government, under Contract No. 1, being bound to purchase at the expiration of forty years, if it has not sooner done so. It is, however, unlikely—having regard to the policy of the Australian Colonies, in which the Government is almost universally the owner of the railways —that the Government of New Zealand would not acquire the railways at as early a period as possible, so that a provision as to a reversionary interest at the end of ninety-nine years would be practically of little value. There are other advantages which the New Zealand Contracts appear to possess over the Indian Contract. Under it the Company may at any time, after a portion of the railway has been in work for three months, call on the Government to accept a surrender of the undertaking and pay the whole of the capital then expended by the Company ; under the New Zealand Contracts the Contractors have no such rights. Under the New Zealand Contracts the cost of making each section is to be determined between the Contractors and the Government before the former enter upon it; and this cost they cannot exceed, unless the Government should order alterations or deviations, and in that case the cost of them is fixed by a schedule of prices previously agreed upon. Under the Indian Contract the Government seeks to limit the expenditure by the somewhat complicated arrangement that the Company is to make no contract and enter upon no undertaking not previously sanctioned by the East India Company. This almost amounts to the Government becoming a railway contractor. The Indian Contract fixes the termini of the railway (although there is a power to limit or extend the route), and under the New Zealand Contracts the Government has the absolute right of determining the lines of railway. June 29, 1871. J. Dennistoun Wood.

Notice as to the Securities Deposited. To the Directors and Managers or the Bank of New Zealand, — I hereby, on behalf of Sir George Ferguson Bowen, G.C.M.G., the Governor, and of the Honorable Julius Vogel, the Colonial Treasurer of Her Majesty's Colony of New Zealand, give you notice that the securities which were deposited with you by Alexander Brogden, Esquire, M.P., Henry Brogden, and James Brogden, all of No. 4, Queen's Square, in the City of Westminster, railway contractors, on