3

D.—sa.

were unsaleable ; and, pending remedial legislation, the company were forced to obtain advances under a personal guarantee, and to submit to exorbitant charges for the accommodation, in addition to which the directors were forced to make calls upon the shareholders far in excess of the sum expected to be called up at the time they subscribed for shares. The provisions of the statute relating to guaranteed interest were also found to be practically inoperative; and, although the railway had been continually open for traffic since the Ist August, 1880, the company found itself powerless to enforce payment of the guaranteed interest until the enactment of " The District Eailways Acts Amendment Act, 1883," and then only for the period commencing the Ist April, 1882. Thus the company was deprived of its right to nearly two years' interest on the certified cost (£108,713) of the railway and its equipment. After serious loss and inconvenience, extending over several years, in consequence of defective legislation, the company is at last in a position to enforce payment of the guaranteed interest, which will for the future admit of the payment of a steady dividend at the rate of 8J per cent, per annum, thus— £ s. d. Amount of guaranteed interest, 7 per cent, on £108,713 ... 7,609 18 2 Deduct interest on loans— £40,000 at 6 per cent. ... ... ... £2,400 £35,000 at 6J per cent. ... ... ... 2,175 — 4,575 0 0

£3,034 18 2 Dividend on £35,610 (paid-up capital), 8| per cent. ... ... 3,026 17 0 The traffic on the line is steadily increasing, and there is a reasonable prospect of the company's net profits in the course of a few years being considerably in excess of the amount guaranteed. In view of the foregoing facts and the company's prospects, my directors think you will see that the shareholders will be disinclined to part with their property except at a price that will, at any rate, yield them a fair and reasonable return for their outlay. Eecognizing the fact that the rating powers possessed by the company is a matter seriously affecting the settlers within the railway district, and that the line should form part of the Government system, my directors will be prepared to recommend the shareholders to enter into an agreement for the sale of the railway upon equitable terms and conditions. With reference to the conditions proposed by the Government I am directed to reply as follows:— 1, The board is willing to enter into an agreement which shall be subject to the ratification of Parliament. 2, 3, and 4. As the company's obligations will absorb the amount of the overdue rates and the guaranteed interest for the year ending 31st March next, my directors do not see their way to postpone proceedings for recovery of rates unless the Government will agree to pay the amount as contemplated by the Bill which passed the House of Eepresentatives last session, and take what course it may think proper regarding the collection of the rates. 5. The company has not materially altered its time-table since the line was opened, and continues to meet the up and down express trains between Dunedin and Invercargill. Until some definite arrangement is made with the Government re leasing and purchasing the railway my directors will deem it their duty to regulate the traffic in the interests of the shareholders and to suit the convenience of the ratepayers. With reference to the " Memorandum of Information required," I am directed to inform you that most of it has already been supplied to the Government, and to state that as regards further details, the preparation of which will involve some trouble and expense, they can be furnished if required should the Government and the company agree as to terms and conditions of sale. Should you be of opinion that the terms and conditions can be more advantageously discussed at a personal interview than by correspondence, my direotors will be glad to appoint one or more of their number to meet the Government with a view to an equitable agreement being arrived at. I have, &c, E. H. Least, The Hon. the Minister for Public Works, Wellington. Secretary.

4.—Telegram from the Under-Secretary, Pitblic Works Department, to the Secretary, Waimea Plains Eailway Company, Dunedin. Wellington, 6th December, 1884. In reference to your letter acknowledging receipt of Government's proposals relative to purchasing your railway, the Minister is anxious to get the information asked for, and would be glad if it could be sent at once if possible. In the meantime he also wishes to know at once whether the company will alter their time-table so as to suit Government trains, as required in letter. C. Y. O'Connor, Under-Secretary for Public Works.

5. —Telegram from the Secretary, Wairnea Plains Eailway Company, to the UndebSecretaky, Public Works Department. Dunedin, Bth December, 1884. Eeplying to your telegram 6th, as pointed out in my letter 4th instant, the information asked will entail delay and expense ; and, whilst the company is willing to supply it, my board think it will involve useless trouble and expense unless understanding arrived at as to lines upon which agreement is to be made. While railway under control of company as at present, directors feel bound to