2. Government Guarantee.

That the contention that Government should guarantee a loan for railway purposes is strictly in accordance with New Zealand statute law appears from section eighty eight of "The Railways Construction and Land Act, 1881," which is as follows:—

"(3.) Special Rate.—88. Every company entitled to adopt the provisions of this Fart of this Act shall be guaranteed the whole or, (as the ease may require), any deficiency of interest on the cost of the railway, at a rate not exceeding five per centum per annum, and such interest shall be raised by means of a rate in manner hereafter provided Such guaranteed interest shall be payable as follows—(1) On the whole cost of the railway from the date on which the whole line shall be open for traffic (2) On the cost of any complete part or section of a railway from the date on which such part or section is opened for traffic, but in the proportion which the cost of such complete part or section bears to the cost of the whole railway (3) No guarantee shall exceed the interest on any expenditure on construction exceeding five thousand pounds a mile (4) Such guarantee shall only attach when and so long as the railway is open for traffic (5) The guarantee created by this Act shall only subsist for a period of fifteen years from the date when the same first becomes payable".