I.—llb

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There is also another point that it may be worth the while of the Government to consider, and that is, as to how best to relieve the stress of traffic on the main south trunk line of railway as the Otago Central Eailway gets opened up and the rich country behind that line sends traffic into Dunedin. By continuing the Fernhill Branch-line of railway through the hills and connecting on to the Otago Central line a loop or second line would be formed from Abbotsford Station to some point on the Otago Central line, on tho Taieri Plains ; and by a short connection the line could be made to join on to the Outram Branch. This I have approximately sketched on the key map, and coloured brown. This would relieve the Chain Hills portion of the main south line of much traffic, and enable more trains to be run from Dunedin to Mosgiel, &c, without spending money on doubling the main line ; and, at the same time, a very valuable section of the Green Island coalfield would be opened up. By opening up a line of railway through Fernhill to the Otago Central and Outram Branch Eailways, on the Taieri Plain, a very good extra traffic would spring up in coal from the Green Island District. As an instance of what I mean, there is the goldfield of Hindon, practically at a standstill for want of cheap motive-power to crush the quartz ; and I am informed by miners who have been at work on the Hindon field that, if the Green Island coal could be landed there cheaply, there would be one or two crushing batteries started immediately, with several more soon following on. There is, seemingly, plenty of water for battery purposes, but not sufficient for motive-power. What they want is good cheap coal, and it seems as though the Eailway Department will have to take it from the Green Island District if gold-mining must be revived at Hindon and its surrounding district. lam told that this goldfield of Hindon would support some hundreds of gold-miners if good and cheap fuel were available for motive-power. There is also the question of brick-making, which some day will be a very considerable industry at Fernhill. The clays are highly suited to all kinds of brick-making, and I fully anticipate seeing large works at Fernhill before many years have passed by. The fire-clays are exceptionally good. As proving this I have selected, and quote below, a testimonial from Messrs. Palmer, Booth, and Co. (formerly Messrs. Davidson and Conyers), late of the Otago Foundry, Cumberland Street, Dunedin, as it may be interesting to some who read this report to know what highly refractory clays we have in our very midst, when, at the same time, we are importing Stourbridge, Garnkirk, and other English made fire-bricks —sending the money for the same out of the colony, when it might all be kept here and circulated about with great advantage to all concerned. The testimonial is as follows: " Otago Foundry, Dunedin, 30th October, 1884.—We hereby certify that we havo used the Fernhill fire-clay for about six years, and can confidently recommend it for all kinds of foundry purposes. It is superior to any imported clay. After being heated and cooled several times, there is no sign of any crack, and it lasts much longer than any other we have used. We find, in practise, it is better to mix it with half sand (sharp). We made a brick of pure clay, and tested it in the brass furnace with some Stourbridge bricks. Tho Home-made bricks were entirely destroyed by the hoat, while the Fernhill brick came out quite as sharp at all the edges after being exposed in the furnace for sixteen hours.—Palmeb, Booth, and Co." There have been several proposals made to establish brickworks at Fernhill, but, owing to one reason or another, they all fell through. In one instance which came under my own knowledge the man who offered to take the matter up stipulated that no freight should be charged on the Fernhill Branch-line, as it belonged to the company. Now, as Government charge all freights as from the mine (although the railway does not belong to them, and is not in any way maintained by them), the company could not agree to the demand, as it would have meantja concession of something like Is. 3d. to Is. 6d. per thousand bricks. I am convinced that had the jline been a Government line at the time the question of freight would never have been raised, and there would now be a large and prosperous brick - and tile-works there, employing a number of hands directly, and requiring a considerable amount of fuel daily, thus giving indirect employment to a few others in the coal-mining trade. In making up this report I have endeavoured to look at the matter as much from what I suppose might be the Government standpoint as from that of the Fernhill Company, and I feel sure that, by judicious management and reasonable encouragement, the line can be made a very valuable feeder and relief to our railways. I have, &c., Charles Foed, The Fernhill Eailway and Coal Company, Dunedin. Mining Engineer and Surveyor.

Mr. H. Logan to the Chairman, Public Accounts Committee. Sic,— Dunedin, 16th July, 1886. We beg to acknowledge receipt of your telegram in reference to the Fernhill Eailway. In reply to your request to send last balance-sheet and list of shareholders we have to state that the Fernhill Eailway and Coal Company has ceased to be a. public company for some considerable time. The business was purchased by private parties in the beginning of 1885, and has been carried on since that time under the old name, the only alteration being that the word " Limited" was left out. Although the company only paid the Government the sum of £6,162 odd, this does not represent tho total cost of the line, as the company had to expend over £2,000 more in widening cuttings and taking away slips before it was in a proper condition. There has been no slip on the line now for a long time, and we look on any danger from this cause as past. The heavy rains this winter made no difference to the banks, although they were all cracked and dry owing to the long-continued drought. We may state that the Fernhill Coal-mine was not, in our opinion, worked properly by the former owners, or by this time the revenue to the Eailway Department would have been about three times as much as at present. Our reason for saying this is that, until, the end of February last, when we purchased the property from the then proprietor, the coal had only been worked in what has been a slip from the main body of coal, and, consequently, was very much deteriorated in quality by this disturbance, becoming broken up and mixed with stone, sand, &c. Wo at once started to drive through this faulty coal, and are now within a chain or two of a large bed of as good coal as there is in the Green Island District. We have not tried in any way to increase our trade, as we preferred waiting until we got on to the good coal, yet we have increased our returns to the Eailway Department. We can put our coal into the trucks for 2s. per ton at least cheaper than any other mine in the district, owing to the way in which our works are situated. We do not require any shaft or engine to work our mine. You will therefore see that we can easily treble our output the minute we get on to the proper coal, which we know, beyond question, exists under the part of our property towards which we are now working. We may mention that Mr. Freeman, whose ground our line runs through, would have been using our line ere this were it not that he would require to pay us 6d. per ton for every ton going over it. If the line was Government property Mr. Freeman would use it at once, as his mine is becoming very expensive to work from his present siding owing to the heavy haulage he has ; but if he sunk a shaft beside our line he would then work his mine to the rise instead of to the dip as at present. The line costs us only about £2 15s. to £3 per week to maintain, so that with even our present output the Eailway Department would derive a net revenue of £1,000 per annum from it at least. We are having a report prepared by Mr. Ford, mining engineer, which we will forward to you. We have also requested Mr. Henry Howarth, of Wellington, who was formerly a director in the company, to give evidence before you. If there are any other particulars you may require, kindly let us know, and we will furnish them without delay. We are, &c, The Feenhill Eailway and Coal Company (H. T. Logan). The Chairman, Public Accounts Committee, Parliament Buildings, Wellington.

The Seceetaey, Whangarei Coal-mining Company, to the Chaieman, Public Accounts Committee. Deae Sic, — The Whangarei Coal-mining Company (Limited), Auckland, 12th July, 1886. We have to acknowledge your telegram of the Bth instant re- Whauwhau Branch-line, with thanks. Enclosed please find balance-sheet for year ending the 31st July, 1885 ; also list of shareholders, both of which are certified as correct. During this twelve months the mine was Closed whilst the line of railway was being constructed, and when the balance-sheet was made out it was still under construction, as the railway is only put down at £4,115.