No. 32.
Mr. Somes to Lord John Russell.

My Lord,—

I have now the honor to transmit, for your Lordship's approval, the draft of a charter incorporating the New Zealand Company.

Two points remain to he determined, which were left in blank in the draft of arrangement accompanying Mr. Vernon Smith's letter to me of the 18th November last; viz., the amount of the Company's capital, and the rate of discount to be allowed the Company on its future purchases.

The Directors propose that the subscribed capital should be fixed at £500,000, with power to increase it to £1,000,000. Of the £500,000 the sum of £100,000 has been already paid up, and the Company will be prepared to pay up £100,000 more within twelve months; of which last-mentioned sum £50,000 will be paid within six months, and the remaining £50,000 within the twelvemonth; The payment to be proved to the satisfaction of the accountant to be appointed by your Lordship; and if the conditions of payment be not complied with, the charter to be absolutely null and void.

With respect to the rate of discount to be allowed on all future purchases of not less than 50,000 acres of land at one time from the Government, the Directors beg to suggest 25 per cent, as a reasonable scale of remuneration to the Company.

In transmitting the draft of the charter, I am further to observe, that the arrangement between your Lordship and the Company contains a stipulation that the charter shall endure for the term of forty years, and that it shall be lawful for Her Majesty's Government, at any time within that period, to annul the charter and dissolve the Company, and take possession of its property on granting it fuil compensation for the same. We have not been able to find any precedent to this effect in previous charters, and no provision for it has been made in the draft now submitted. I am desired to take this opportunity of stating to your Lordship that we entertain strong objections to the proposed resumption, inasmuch as it would present a serious difficulty in the way of raising the large additional capital which I have named; since all the arrangements of the Company; must in that case be made with reference to the termination of its existence in forty years, and public confidence in the permanent stability of our operations would thereby; be materially diminished. I have therefore to prefer to your Lordship, most respectfully, bur earnest request that your Lordship will not insist upon a proviso which we fear may operate very injuriously to our ultimate success.