Re proposed purchase of Waimea Plains District railway by the Government.

Sir,—I have the honour to acknowledge the receipt of your letter of the 4th inst., and also your telegram of the 8th, in reference to the proposals of the Government regarding the purchase of your railway by the Colony, and very much regret to have to state in reply that the attitude assumed by the directors of your Company seems to the Government to do away with any chance of successfully negotiating for the purchase of the lines on the basis of my letter to the chairman of the Company of the 11th ult., or indeed upon any basis that Parliament would be likely to approve of.

Under these circumstances I feel compelled—and I arrive at this conclusion most reluctantly—to regard your letter now under reply as a rejection of the proposals of the Government by your directors.

With reference to the statement contained in your letter as to the loss sustained by your Company owing to the provisions of the District Railways Act not being found to answer all the anticipations which the promoters of the Company had formed concerning them, I can only state that the Government is unable to perceive that you have any just and reasonable grounds of complaint in this respect. On the contrary, indeed, if any just ground of complaint is open to anyone at all with respect to these and other matters relating to your railway, the Government is clearly of opinion that it is the Colony at large and the ratepayers of your railway district that are the aggrieved parties.

With reference to your statement that "the Company has not materially altered its time-table since the line was opened," I feel bound to point out that what you say is not at all in accordance with what the Government understand to be the true position of affairs. I am advised that you have altered the times of the running of your trains in such a manner that the line has ceased to be of use as a through lino over which passengers can travel from Dunedin to Kingston and vice versa without delay and loss of time, and that the Company, by cancelling the previously-existing agreement in December 1883, and by refusing to guarantee any permanence in their time-table, has precluded the Government from making any arrangement for through trains from Dunedin to Kingston, or for the through booking of passengers and goods between those places, and has thus, in the opinion of the Government, tended to curtail the revenue, not alone of the Waimea Plains railway, but also of the Government railways.

The loss and inconvenience to the Government, to the Waimea Plains railway revenue, and to the travelling public which has resulted from your action in this matter does not seem to meet with any consideration at the hands of your directors, probably on account of the power which the Company possesses, under the provisions of the District Railways Acts, of levying on the ratepayers and on the Government for any deficiency which may arise.

Your directors do not appear to consider that in return for the guarantee of interest thus given, and with the view of reducing the payments under it to the smallest possible sum, they are equitably and honourably bound to work the line to the greatest possible advantage of the guarantors. Such, however, is the opinion of the Government and had not the amount of the guaranteed interest up to the 31st of March last been paid, its payment would now be resisted, on the ground that the line has not been worked to the best advantage.

Under all the circumstances of the case I deem it my duty to intimate to you that the Government will apply to Parliament during its next session for relief in this matter, either in the form of investing a large measure of control of these distric railways, or of such of them as have not been purchased by the Government, in the hands of the guarantors, or else by providing that the Government may take them over and entirely work them, in any case where it is adjudged, say, by a Royal Commission of inquiry, that they are clearly not being worked to the best advantage for the various interests concerned.