67

8.—12.

class of projects with which the country will next year probably be flooded should the Standing Order be repealed. One of these Bills has already been withdrawn, a second has failed to pass Committee, and in the case of a third the deposit was not found. It will probably be found that in the case of most of these projects the deposit has been borrowed. I venture, however, respectfully to suggest that, if facilities are thus to be granted for the promotion of speculative railway enterprises, it is more than ever necessary that steps should be taken to prevent the present abuse of the Standing Order which regulates the parliamentary deposit. One of the chief objects of such deposit is to afford Parliament some guarantee that the promoters are persons of sufficient financial means to exercise the powers which Parliament may grant. In a well-known case in which Parliament granted powers a few years ago to a company with a capital of several millions sterling, and in which the fact of the parliamentary deposit having been made was urged to the Committee as a proof of the financial means of the company, it was subsequently found, when the project proved abortive, that the deposit had been borrowed, that even the commission upon such deposit had also been borrowed, that there were no shareholders in the company, and no capital, and that the professional men engaged had signed undertakings not to hold the promoters responsible for any of their charges, but to look to the capital for their remuneration if it could be raised. The custom now in the case of speculative railway companies is either for a contractor to advance the amount of the deposit upon an arrangement being made with him that if the scheme is authorized by Parliament he shall have the contract, or the deposit is borrowed from a bank or financial house. In each case it is customary for the promoters to enter into an agreement with the persons who lend the deposit not to take the Eoyal assent to their Bill, should it pass Committee, without the consent of the lenders. In this way one of the chief objects of the Standing Order is constantly defeated. This evil might, I would submit, be at once obviated— (a) by a requirement that persons promoting a railway company should be required to show that they are responsible for and are personally providing the parliamentary deposit, and are shareholders in the proposed undertaking to at least that extent; and (b) by providing that the deposit shall become impounded at an earlier stage of the parliamentary proceedings—say, when the Bill is approved by Committee of both Houses. There is one other point to which I would call the attention of your department. The present Government has recently affirmed the principle, which has frequently been upheld by former Governments, not to grant State aid by public taxation to railways and other public works, but to leave such undertakings to private enterprise. In the year 1880, the Hull, Barnsley, &c. Bailway obtained power from the Corporation of Hull to invest £100,000 in their railway, and to raise the money by local taxation. The £100,000 in question was subscribed. The loss sustained on this transaction is shown by the fact that £100 of Hull and Barnsley share capital will now realize about £33. The same company is applying for power in its Bill of this session to authorize the Corporations of Halifax and Huddersfield to subscribe to their proposed extensions. The fact of the Corporation of Hull having subscribed to the Hull and Barnsley Eailway and appointed two directors on the Board was made a prominent feature in the prospectus of the company; and that fact, together with the promised payment of 5 per cent, during construction, and 8J per cent, afterwards, doubtless induced many of the shareholders to subscribe to that undertaking. The promoters of the Eegent's Canal, City, and Docks Eailway propose to authorize the parish vestries, local boards, as well as other public authorities, to raise money and invest it in their undertaking; so that it would appear that the railway companies with whom the Eegent's Canal scheme directly competes, and who are large ratepayers, are positively to be taxed in order to provide capital for their competitors. The promoters of this scheme also propose to empower the Metropolitan Board of Works to construct and manage portions of the railway. I must apologize for thus trespassing upon your time. The interests I represent are very large. The danger to which they are exposed is very great. I would briefly submit that the payment of interest out of capital is opposed to all principles of sound finance, is at variance with the whole course of railway legislation, is distinctly prohibited by joint-stock legislation and judicial decisions, is not demanded by the public, and cannot fail again to produce the financial disorder and reckless speculation which the adoption of the present Standing Order was intended to and did prevent. I have, &c, Eobert William Peeks. H. G. Calcraft, Esq.; Assistant Secretary, Board of Trade.

No. 4. The Colonial Teeasueer to the Agent-Genebal. Agent-General, London. Waiwera, 21st January, 1886. Your letter twentieth November received. Hope you will refer copy my letter September twentysixth to Gladstone, Iddesleigh; they will reply readily. Debates re companies not quite applicable, principle somewhat different.

No. 5. The Agent Geneeal to the Colonial Tkeasuker. Treasurer, New Zealand. (Eeceived, 23rd January.) Yours to-day. Shall address Gladstone, Iddesleigh immediately. Sent you fuller letter December thirty. London, 22nd.