The New Zealand Railways Magazine, Volume 4, Issue 3 (July 1, 1929)
“The Manawatu” — A Story of Pioneer Railway Enterprise — Part III
A Story of Pioneer Railway Enterprise
Extracts from a Thesis written by Mr. G. A. Mill, B.A., for the Degree of Master of Arts in History.
It was not only Europeans who demonstrated generosity and patriotism in connection with the building of the Manawatu railway. Mr. J. E. Nathan in his speech at the opening of the line commented on the fact that running rights had been granted by Maoris over 31 ½ miles of railway, while Europeans had given similar rights over three miles. Some considered the Company “fair game,” and one who claimed £4,700 as compensation was awarded £300 by the Court in full satisfaction. Major Kemp, a celebrated chieftain of that day, gave freely the right-of-way for nine miles. He said: “I am filled with delight about the proposed railway, and if I were a rich man I would construct this part myself, and hand it over after the manner of a chief.” Other natives with similar land to dispose of received shares at the rate of £10 worth per acre.
During the following year, ending February 29th., 1884, contracts were let for a further 51 miles of formation, the price being £232,281. Money was urgently needed, or would be in a very short time. To secure funds it was decided to go on the London market, and to this end Sir Julius Vogel was appointed agent to the Company, with very happy results. It was proposed to sell £400,000 worth of debentures, each worth £100 and bearing interest at 5 per cent. per annum. But before this was done the directors considered it necessary to have sufficient capital subscribed for the loan to be covered by the uncalled liability on such capital. The subscribed capital was only £300,000 called up, £1 per share, leaving the uncalled liability at £4 per share, or £240,000 of the £300,000. This issue of shares was subscribed entirely in London, but the expenses, then considered moderate in such circumstances equalled 15 per cent. of the possible cash value of the Company. The task of floating the debenture issue was left to Mr. Julius Vogel and he decided to sell at 95. Again the issue was a success, and the expenses, excepting the loss of £20,000 by selling below par only amounted to £10,463. The Board considered this very satisfactory.
During the next year, however, the Company entered troubled waters. There were contracts to the value of over £200,000 that being finished required the completion of payments, while expenditure on land absorbed nearly £10,000. Land sales had been a failure. This seriously disturbed all financial arrangements. Contracts for 48 miles were well under way, while only 20 miles of easy construction needed to be contracted for. It was also seen that to sell the land to the best advantage the Company would have to wait until the line was completed, for only then could prospective buyers inspect it.
So great was the financial crisis at this time that the directors, with some of their friends, had to become personally liable for £61,000 with the brokers of the Company. Wages and salaries page 30 were often overdue, but because of the loyalty of the staff no disaffection ensued; some of the engineers, so it is said, were asked to accept shares as part of their salaries so that debenture stock complementary to the shares could be sold. In their distress the directors could see only two ways of escape—either of selling to the Government or by raising more capital on the best terms possible in such circumstances. One proposal was that each of the twelve sections as completed should be sold to the Government, thus realising sufficient money to complete the remainder of the line.
Negotiations were in progress when the annual meeting of 1885 was held. There the chairman gave little information, but asked for full confidence, and the approval of a plan whereby in the event of the Government's refusing to purchase, the company could attempt to carry on. The only way in which money could be raised was by an increase in the subscribed capital. The plan was to increase the capital by the placing of 40,000 shares and selling £166,000 worth of debentures. The subscribed capital would then amount to £700,000 and debentures would total £560,000.
The plan was agreed to, but all depended on the London shareholders as to whether it should be proceeded with. These met and recommended that the railway be not sold on the terms offered. To aid the directors they proposed that if 15,000 shares could be placed in the Dominion they would place the remaining 25,000 shares and the debentures in England. To this the Wellington Board readily assented, and discontinued negotiations with the Government.
Heartened by the sincere co-operation with the London shareholders, all again set to work to place shares. The issue both in London and New Zealand was quite successful. The debentures, however, were not nearly so, only £110,000 worth out of £160,000 being sold at 98.
The directors tried, but without success, to make suitable arrangements with their brokers, the Bank of Australasia. Happily for the Company and the district the Colonial Bank of New Zealand was willing to oblige, and became the bankers of the Company.
One would have thought that the ardour of the pioneers would have been damped by the general situation, but not so. Throughout the annual meeting there existed the old hearty optimistic spirit. From enquiries received a large traffic was expected when the line opened, and all were happy and hopeful. It was also predicted that the entire line would be open for traffic some months early. And so it happened. On December 1st., 1886, the line was declared open for traffic—ten months within the stipulated period. The official opening took place on November 3rd., by which time the Company was again deeply in debt. At the end of the financial year, i.e., in March, 1887, sundry creditors totalled £111,097, and interest on this sum page 31 accounted for another large amount. One hopeful item showed that the £50,000 worth of debentures which had not been sold the previous year were now disposed of.
The official opening of the railway took place on November 3rd., when there was performed at Otaihanga the historic ceremony of the driving of the last spike at the spot where Northern and Southern sections connected. Over this finishing point a triumphal arch built of native palms and fern fronds was stretched, underneath which a train from Wellington, bearing some 700 excursionists, steamed past as a sister train from Palmerston came in sight with 300 passengers.
The day was beautifully fine, and scarcely could a more picturesque spot have been chosen, or one in which the richness of the associations so completely marked the parting of the old order from the new. Here in a cutting assembled the official party, consisting of the Governor and his entourage, the Premier and the Native Minister, with the Minister for Public Works and for Justice, the chairman and directors of the Company, with the general manager and the chief engineer and numerous ladies. Around the official party the excursionists arranged the themselves, many using the banks of the cuttings as suitable vantage grounds from which to view the proceedings.
After the chairman (Mr. J. E. Nathan) had delivered an appropriate speech Sir William Jervois, the governor, drove the last spike, after several attempts in which the spike was sadly battered. When he had concluded his address, in which he stressed the importance of the line to Wellington and the Colony in no uncertain terms, Mr. Nathan presented him with a gold spike in a handsome case inlaid with New Zealand woods. A champagne lunch, free to all, concluded the ceremony.
(To be continued in our next.)page break