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Vail having been appointed in my stead as Agent of the Provincial Governmenc and Province of Nova Scotia in London, for the ])urpose of empowering him to complete, as such Agent, the provisi^ ns of the Act of the Legislature of Nova Scotia, passed at its last session, entitled ; " An Act for the consolidation of the Nova Scotia Railways," I have the honor to report, for the information of his Honor the Lieutenant-Governor, the progress which had been made in promot- ing the purpose of the said Act when my agency in connection with it terminated. In the performance of this duty I herewith submit a copy of the Keport, which, in compliance with your request, under date of the 13th ult., I handed the Honorable Mr. V"ail immediately after hLs arrival in London, which, 1 trust, will afford the information required in as satis- factory a shape as any other that I could adopt. (COPY.) Portland Hotel, Great Portland Street, London, 26th Sentember, 1882. Hex. W. B. Vail, Sm: In compliance with the request of the Honorable Charles E. Church, Provincial Secretary of the Province of No>ra Scotia, contained in his communication of the 13th inst., handed me by you this morning, I submit for your information the following as a report of my actions as Agent of the Government of Nova Scotia in connection with the Act entitled " An Act for' the consolidation of the Nova Scotia Railways." I may in the fiist place state that upon my arrival hero on the 7th of June last, and upon my first interview with Mr. Plunkett, the repre- sentative of the Provisional Company, I was led to fear that it would require a considerable length of time to complete the business neces- iM)>- // i • •r-"*— — -— \ 2 sary to be done before the assignmont provided by the Act to bo made by the Provisional Company could bo exeoiitt'd. As this part of the business was not completed until the 21st day oi" July, ray fears in this respect were fully realized. During this time I was in constant communication with Mr. Plunkett, and found it necessary to have frequent correspondence with the Government by Cable ; but as this correspondence is in possession ot the Government, and woidd be of no service to you here, I presume that I need not give a detailed account ot it. The present position of matters in connection with the Syndicate will be understood by attention to the following correspondence. On the .31st day of July last I received a letter from the Solicitors of Baring Brothers & Co., of which the following is a copy : Markby, Stewart & Co., 57 Coleman St., London, E. C, 31st July, 1882. The Honorajjle S. Creelman, &c., &c. " Novd Scotia Railway Company." Sir: We have been giving constant attention to tliis matter, but there have been a good many details to be observed which have occasioned some delay. We are now, however, engaged in preparing the form of Bond or Stock Certificate to be issued by the Company, and we shall be obliged by your letting us know whether you wish to see tho draft before it is finally settled. Messrs. Baring Brothers & Co. have suggested that, with a view to satisfying the requirements of investors, the securities should be issued either in Bonds payable to bearei or in Stock Certificates inscribed with the name of the holder, and registered in the Company's books, and we shall be obliged by your letting us know whether you sec any objection to this course. We are, &c., (Sgd.) MARKBY, STEWART & CO. To which I replied as follows : Portland Hotel, Grt. Portland St. London, 1st August, 1882. Messrs. Maricby, Stewart & Co. Sirs: Yours of the .Slst ult. is duly received, in reply to which I have to state that I am quite willing that the " Nova Scotia Railway Com- pany " should chose the mannner in which it should issue its securities, and I do not iee any objection to either of the courses proposed, but I consider it (juite necessary that T should see the draft before it is finally settled. I am, &c., (Sgd.) SAML. CREELMAN. A- / On the first ol' August I recoiveJ IVoui Messrs. Baring Brothers & Co., of which the following is a oopy : 8 BisHOPGATE St. Within, London, 31st July, 1.S82. The Hon. S. Cueki.man, Care Markby, Stewart & Co., 57 Coleman St. Sir: We think it well to call your attention to the fact that it is, in our opinion, essential, before the Nova Scotia Railway loan is oft'ered for public subscription, that the terms of jjurchase of all existing lines should be fiually arranged as soon as tiie money uiarket is in a favor- able condition — which may possibly be in October — and pi'ovidcd all the necessary arrangements are then satisfactorily completed, we shall be prepared to offer the gaara'hteed Bonds for subscription, and wo will, if it is so desired by the Provincial Government, and the " Nova Scotia Railway Company," assent thereto, hold the money for account of the Government. Sir We remain, fee., (Sgd.) BARING BROTHERS & CO. To this I made the following reply : Portland HoTEii, Great Portland Street, London, August 2nd, 1882. Messrs. Baring Brothers & Co., Sirs : I am in receipt of yours of the 3l8t ult., and have noted its contents particularly the closing sentence, in which you state " we will, if it is desired by the Provincial Government, and the Nova Scotia Railway Company assent thereto, hold the money received for account of the Government." I may state the Nova Scotia Government fully expected and under- stood the equivalent of one million and seventy-eight thousand pounds sterling in Bonds, Debentures or Stocks, of any one or more of the Governments of Great Britain, France, the United States, or the Dominion of Canada, would be deposited with you before the guarantee should be executed by me and delivered to you in accordance with my instructions under Minute of Council approved by the Lieut.- Govemor, I do not, therefore, apprehend that there will bo any objections to the securities being held by you for the purpose intended. I am, &;c., &c., (Sgd.) SAML. CREELMAN. 4.>?i2»S I ■f mmme» iii.Wi'Nijii <■» _J Being informed by Mr. Phmkott that Baring Brothers & Co. wished to have the Bendy endorsed, but held by me, so as to have them ready for delivery immediately after the securities were deposited Avith thein, and that my letter seemed to indicate that I would not sign the guar- antee until after the deposit of securities which would cause some unnecessary delay, upon the request of Mr. Plunkett, I addressed a Dote to Messrs. Baring Brothers & Co., of which the following is a copy : Portland Hotel, Great Portland Street. Loudon, 'J8th August. 1882. Messrs. Barino Brotiierh & Co., SiBS: Having understood that my letter of the 2ud inst., .seemed to indicate something different from the terms of my instructions contained in the minute of the Governor in Council of Nova Scotia, dated the ISth day of May, 1882, T now request the withdrawal of the same. I am, kc, 'Sgd.) SAML. CREELMAN. On the 12th September, I received from Messrs. Markby, Stewart & Co. a note, of which the following is a copy : 57 COLEMAX St., London, E. C, 12th Sept., 1882. The HoNOfiADLE S. Creelman : '' Nfjva Scotia Railway Company." Dear Sir : We now send you, herewith, the draft form of certificate and coupon of the perpetual guaranteed stock and interest. We also send you the draft, First Mortgate Deed in favor of tlic Government. This draft, as you are aware, was prepared by the Gov- ernment, but wo have added a clause No. 2-i, which it is proper should be submitted for approval. We shall be obliged by your rfitnming the drafts a.? approved on behalf of the Government, at your early convenience. Wo remain, &c., (Sgd.) iMAKKJ^Y. STEWART & CO. As you were appointed to tako my place about this time, nothing since has been done either by the Company or myself in regard to the Syndicate business. I now hand over to you a copy of the assignment which was execu- ted in triple, the draft form of certificate and coupon of the perpetual guaranteed Stock and interest and the Draft form of Mortgage Deed in favor of the Government, with the hope that you will have the plea- sure of completing the business to the satisfaction of all parties interested in the schcmo. I feave, «i:c., &c., (Sgd.) SAML. CREELMAIf. ■'^J■'■, :- • - on 1 may add that., upon the receipt o( your cablojjraiu of Hio 7th day of September, I addressed a letter to Mr. Smithers, of which the follow- ing is a copy : PoiiTLAND Hotel, Great Portland Street, London, IJth September. SlR: The. Honm-ablo I'rovincial Rccrotary ol Nova Scotia has informed me that the Government of Nova Scotia has decided to grant tho Charter to tho "Nova Scotia Railway Company," and publication of the same will bo made in tho ne> t " Gaiiotte,' which will probably be on Wednesday next, as that is ihe regular day of its issue. And ho also instructs mo not to do anything in reference to tho guarantee of Bonds until the Company depouts one million dollars as sinking fund, besides five and a half millions in conformity with the provisions of the Companj^'s Charter. I am, &c., Sy'dnky J. Smithicrs, Esq., (Sgcl-) SAID.. CREELMAN. I informed Mr. Vail of this correspondence and in the several inter- views which I had with him f gave him all the information in reference to the Syndicate that was in my pov/er to communicate, and I informed Messrs. Mark by, SteM;art & Qo. that the Honorable \V. B. Vail had been appointed as Agent of the Government in my stead, and that I had handed him tho documentn which 1 held in connection with the Syndicate. I have the honor to be, &e., &c., (Sgd.) SAML. CREELMAN. to pu- Jial lin la- ?d rJL. J I HON. W. B. VAILS REPORT. Halifax, Jamiarj- 5th, 1883. Sir: I have the honor to submit, for the information of His Honor the Lieutenant-Governor and Council, the following Report of the result of my recent trip to England, under the authority of the Order in Council of the 13th September last. I am, Your obdt. servt., (Sgd.) W. B. VAIL. Hon. Chas. E. Church, Provincial Secretary, Ac, «kc. In compliance with instructions received from the Government, I left Halifax on the 15th of September, and arrived ia London on the 2Gth, at 6 P. M. On the following morning I called on Mr. Creelman, at his hotel, and handed him the letter from the Provincial Secretary, informing him of my appointment as Agent of the Government. Mr. Creelman expressed himself as rather glad to be relieved of the duties ; and stated that notwithstanding he had been in London over three and a half months, owing to the result of the Nova Scotia Elections, and the delay conse- quent on the change of Government, he had not been able to make much progress with the business. He would, however, comply with the request of the Government, and furnish me with a written report of his work as soon as possible, together with all papers bearing on the subject. I called again on the following morning (Wednesday), when I met Mr. Plunkett, who assured me that he would be prepared to proceed with the business in a few days, and he had no doubt that in a short time it could all be satisfactorily arranged, but he was anxious to talk the matter over with me as soon as possible, before the Com- pany took it in hand, and I accordingly agreed to call at his lodgings in the evening of that day, when we had a full two hours' discussion of the Syndicate Contract ; and, notwithstanding Mr. Plunkett seemed very anxious to satisfy me that the payment of the sinking fund capital would be a good operation for the Company, inasmuch as they would receive five per cent, for their money, which was more than any other investment would yield at the present time, I left him m w Jkm . <«MM»tui|UiM(Mliffii i fully couvinccd that no avmugcment whatever hail boen made to provide either sinking fund capital, or any slfccr funds for tho undertaking ; and that a considerable time must ekps* before they would be in a position to claim tlio Government guarantee. I then an'anged to meet him at the office of Messrs. Markby and Stewart, the Solicitors of the Company, the following morning ; but having subsc(iuently been informed tfhat Sir. Stewart was not in the city, we decided to call on Mr. Sntitfecr.s, the Secretary, when I informed him that T had a copy of the "Gazette," with the proclamation, granting a Charter to the "Nova Scotia Railway Company," and I should, as soon as I received the papers from Mr. Creelman, communicate with him officially, and bo prepared to proceed with the work which devol- ved on me as the agent of the Go-ornment. Mr. Smithers immedia tely referred to the difficulty of having more than two Directors in Nova Scotia, and stated that in his opinion the Company would not proceed with the business imtil a change could be effected ; in fact the necessarj'^ capital could not be raised till the number was reduced be- low that named in the Act of lasoiporation as a quorum for the trans- action of business ; and ho was (]uite sure the London Directors would decline to meet till that question was satisfactorily settled. I stated that I did not know how the Government would view this, but I would submit any proposal they had to make when it was placed in my hands, and get a reply as soon as possible. I called agam on Mr. Creclraan in the evening, and received his re- port, which I think it better to give in full, that the Government may understand exactly where Mr. Cveelman's duties ended and mine began. Portland Hotel, Grt. Portland Street, London, 26th September, 1882. Hex. W. B. Vail, Sir: In compliance with the request of tho Honorable Charles E. Church, Provincial Secretary of tho Proviniie of Nova Scotia, contained in his communication of the llUh inst, handed me by you this morning, I submit for your information the following as a report of my actions as Agent of the Government of Nova fScotia, in connection with the Act entitled "An Act for the Consolidation ef the Railways of Nova Scotia." I may state in the first place that upon my arrival here on the 7th day of June last, and upon my first interview with Mr. Plunkett, the representative of the Provisional Company, I \sms led to fear that|it would require a considerable Icngtl; of time to complete the business necessary to be done before the assignment provided by the Act to be made by the Provisional Company could be executed. As this part of the business was not completed until the 21st day of July, my fears in this respect were fully realized. During the time I was in constant communication with Mr. Plunkett, and found it nece.ssary to have frequent correspondence with the Gov- ernment by cable, but as this correspondence is in possession of the Government, and would be of no service to you here, I presume that I need net trouble vou with a detailed aceount of it. ■* J,. ^^..jam The pi'csent position of the matter in connection with tlie Syndicate will bo understood by attention to the following correspondence.. On the JUst day of July last I received a letter from the Solicitors of Messrs. Baring Brother.'^ it Co., of which the following is a copy : Markby, Stewaut & Co., 57 Coleman St., London, E. C, :Ust July, 1882. ThK Hi )NOR.'\.IiLK S. CrEELMAN, ic, &c. " JVoi'a Scotia Railauv Company." Sir: We have been giving constant attention to this matter, but there have been a good many details to be observed which have occasioned some delay. We are now, however, engaged in preparing the form of bond or stock ceiiificate to be issued by the Company, and we shall be obliged by your letting us know whether you wish to see the draft before it is finally settled. Messrs. Baring Brother.s & Co. have sug- gested that with a view to satisfying the requirements of investors the securitiea should be issued cither in Bonds payable to bearer, or in stock certificates, inscribed with the name of the holder, and registered in the Company's books, and we shall bo obliged by your letting us know whethr?r you see any objection to this course. We are. &c., (Sgd.) MARKBY, STEWART & CO. To which J replied os follows : Portland Hotel, Grt. Portland St., London, 1st August, 1882. Messrs. Markby, Stewart &: Co. Sirs : Yours of the 31st ult. is duly received, in repl}' to which I have to state that 1 am (juite willing that the Nova Scotia Railway Company should choose the manner in which it should issue its securities., and J do not see any objection to either of the courses y)roposed ; but I con- sider it quite necessary that I should .see the draft before it is finally settled. I am, &ic., kc, (Sgd.) SAML. CREELMAN. On the lii'st day of August I received a communication from Mossr.s, Baring Brothers & Co., of which tho following is a co})y : 10 8 -tBisnopGATE St. Withiv, LoudoDi Slst August, 1882. The Hokobablb S. Creelman, Caic of Markbj', Stewart & Co., 57 Coleman St., E. C. Sir: Wo think It well to call yoxir attention to tlio fact that it is in our opinion essential before (he Nova Scotia Railway Loan is offered for public subscription, that the terms of purchase of all exiKting lines should bo tinally arransfed. As soon as the Tnoncy market is in a favorable condition — which may po.ssibly bo in Oclob'?r — and provided all the necessary arrangements are tlica .satisl'actoiily completed, wo shall be pre])ared to offer the guaranteed Bonds for subscription, and we will, if it is so desired by the Provincial Government, and the " Nova Scotia Ixailway Company" assent tlicrcto. hold the money for account of the Goverument. Sir, wo remain, &c , (Sgd.) BARING BROTHERS & CO. To this I mado the folIo^ving reply : PoiiTLAND Hotel, Gt. Portland St., Loudon, Aug. 2nd, 1882. Messrs, Baring Brotuers & Co. Sirs : I am in receipt of yours of the .'Jlst ult., and have noted itg contents, particularly the closing sentence, in which you state, " We will, if it is BO desired by the Provincial Government, and the ' Nova Scotia Rail- way Company' assent thereto, hold the money received for account of the Government." I may state that the Nova Scotia Government fully expected and understood that the equivalent of one million and 8eventy-eight thou- sand pound.s sterling in Bonds, Debentures or Stocks oi' any one or moro of the Governments of Great Britain, France, the United States or the Dominion of Canada, would bo deposited with ;yoH before the guarantee should bo executed by nm and delivered to j^ou, in accordance with my inBtructions under Minute of Council ai)provcd by the Lieut.-Governor. I do not, ^ercfore, a[)prehend that there will be any objections to these securities being held by yo\i for the purposes intended. I am, &c., (Sgd.) SAML. CREELMAN, Being informed by Mr. Plunkett that Messr!?. Baring Brothers & Co. wished to havo the Bonds endorsed, but held by me, so as to have them ready for delivery immediately after the securities wore de- poaited with them, and that my letter seemed to indicate that I would not fiign the guaitmtee until after the deposit of tha securitiea was ^pM SUM in— fiiMirwirr-"-'-" urn, list, 1882. it is in our ofFerc'd for iKting linos :ofc i.i in a iJ provided ijtlL'ted, we 'iption, and t, and the money for > & CO. d, 1882. J contents, ill, if it is otia Eail- iccouut of !cted and ^d)t thou- e or nioro es or the uarantec with my fovernor, ctions to iMAN, rs & Co. to have vorc do- I would ies waa 11 made, which would cajsc somo unnecessary delay, upon the requost of Mr. Plunkett, I addressed a noto to Messrs. Baring Brothers & Co., of which the following is a copy : Portland Hotel, Grt. Portland St, London, 2Sth August, 1882. Messrs. Baring Brothers & Co. Sirs: Having understood that my letter of the 2nd inst., addressed to you, seemed to indicate something different from the terms of my in- structions, contained in the iMinute of th^ Governor in Council of Nova Scotia, dated 18th May, 1882, I now request the withdrawal of tho same. I am, &c., &c., (Sgd.) SAML. CREELMAN. On the 12th inst., Messrs. Markby, Stewart & Co. wrote me as follows ; Market, Stewart & Co.. 57 Coleman St., London, E. C, 12th September, 1882. The Honorable S. Creelman, " Nova iScotia jRailivay Comj^iany" r>EAR Sir: We now send you herewith tho draft form of certificate and coupon of the perpetual guaranteed stock and interest. We also send yo;i the tlrai't first mortgaiife deed in favor of Govern- ment. This draft, as yoM ato aware, was prepared by the Govcrraent, but we have added to it a clause-^No. 24 — which it is proper should be submitted for aj^pioval. We shall be obliged by your returning the drafts as approved on behalf of the Government at your early convenience. Wo remain, &c,, kc, (Sgd.) MARKBY, STEWART & CO. As 5'ou were appointed about this timo to take my place, and I was instructed to do nothing until your arrival here, all business in con- nection with the Syudieatc has bern suspended. I now hand over to j'ou a copy of the assignment, wliioh was executed in triple, the draf- form of i;crtiiicato atid coupon of tlic perpetual guarantee stock and in- terest, and the draft form of juortga^'c Deed in favor of tho Government, with the Ijopo that you will have the pleasure of completing the busi- ness to the satisfaction cf all parties interested in the schcmo. I have, &c., &c., (Sgd.) SAML. CREELMAN. I On Friday, tlio •Jfitli Sept.. I went, by lecjuest <»i' Mr. Pluiikott, with Jiim and Mr. Stewart, of the law firm of Messi's. M'arkby and Stewait, Solicitors of the Company, to Messrs. Barings' office whore wo had a full discussion of the requirements of the Order in Council ; and I very soon discovered that the Messrs. Barings did not expect t > fintl any funds, and were not disposed to assist the Company in procr.iing the Bonds which the Order in Council re(iuired to be dejjositcd before the guarantee of the Government could be given ; and in fact tlie senior of the firm present stated that he did not see how the Bonds Avere to be obtained, unless some person outside ot tlieir tirm was pre- pared to furnish th(^ funds necessary to purchase them. I pointed out to him that that was matter between them and the " Nova Scotia Railway Company," and, while I was most anxious to proceed with the business and carry it out in accordance Avith the terms of the Statute, and would be ready at any time tf» discuss the points of difference as they were reached, I was disposed to think the Govern- ment would reiiuire a depositof some kind of interest-bearing securities instead of monc}'. I could, hoAvcver, assure all parties concerned tliat the Government having decided to carr}' out the legislation in good faith, they were reaily to assist tte Company as far as possible, while keeping within the meaning of the Statute ; and I would be disposed to consider anj' proposition either the Mc^ssrs. Barings or the Company' had to make, having in view the substitution of some other interest- bearing deposit for the Bonds named in the Order in Council : and, if the Company desire it, I would forward any proposal they had to make to the Government, and await their instructions. This seemed to be satisfactory, and tlie conference closed on the understanding that the matter would be considered by the Company, and a decision reached at an early day. On Saturday, the 30th of September, 1 wrote the Secretary of the Company the following letter : London", l!> Sackvillk Street, Sept. :iOth, 1882. Sir: Having been appointed by Onler in Council, dated 13th September, 1882, Agent of the Government and Province of Nova Scotia, in the place and stead of the Hon. Samuel Creelman, and invested Avith all the requisite powers and authorities to carry out the necessary details of Chap. 20 of the Statutes of Nova Scotia, 1882, including the guarantee of interest on the securities of the '■ No\'a Scotia Railway Company " as provided by the said Act : I deem it my duty to inform you, that so soon as the " Nova Scotia Railway Con'pany " shall have deposited Avith Messrs. Bai'ing Brothers & Co. the equivalent of one million and scA-enty-eight thousand pounds sterling in Bonds, Deben- tures, or Stocks of any one, or more, of the Governments of Great Britain, France, the United Saces, or the Dominion of Canada ; together with the capitalized amount of the sinking fund imj'ment provided 'and arranged to I)e made under the notice ; and upon the terms of clause 25 of said agreement ; and also furnished such other sufhcient security as provided in clause l^ of said agreement, I shall be prepared to proceed with the Avork in accor«lancc Avith the rerjuiremcnts i .-w... .■,_«.>.>: ■i.r ft rttt" h: riunkott, Markby and ce whoro wi; uiincil ; and xi)oct t-> find in procuring :)sit('d before in fact the V the Bonds I'm was pre- eni and Urn t anxious to itli the terms the points of the Govern- ng securities iicerned th.at ,ion in good ssible, while be disposed 111' Company her interest- incil : and, if they had to rhis seemed tanding that 1 a decision itary of the K Street, 188± September, otia. in the ed with all ;sary details eluding the tia Railway ty to inform shall have ilent of one ids, Deben- ts of Great >f Canada ; d jmyment >n the terms er sufficient 1 shall be ?i|uiremont8 13 of the Statute, and guarantee on behalf of the Province and Govern- ment of Nova Scotia ; the interest on the securities of the " Nova Scotia Bailway Company " which is awthorized, and provided to be given by the said Act. I beg to forward you herewith a certified copy of the "Royal Gazette Extraordinary," issued on the 11th of Septembei, Incorporating the '' Nova Scotia Railway Company.' 1 am, (Sec, (Sgd.) W. B. VAIL. Mooiu;atk Stiieet (Jilvmhers, London, 2nd Oct., 1882. The Ho>-. W. B. V.ui., li) Sackville St., W. " Nova Scotia Raihvay Company." Sir: r beg to acknowledge receipt this day of your letter of the oCth xilt, with certified foiw of " Royal Gazette Extraordinary," issued ou the nth September, incorporating this Company, and I will submit the same ty the Board of Directors at the first opportunity. I am, Sir, &c., (Sgd.) SYDNEY J. SMITHERS. On Monday I called again on Mr. Smithers and was informed that Sir Henry Tyler was in Switzerland, and that nothing could be done till he re^urned, which would bo about the 8th inst. On Thursday, the /ith October, after I had closed iny letters to the Government, Mr, Plunkett called and informed me that the London Directors would not meet for the transaction of business till the number of Directors in Nova Scotia had been reduced to t\To, which I communicated to the Govern- ment on the same day with a re(|uest that they would consider the subject and forward me their decision as early as possible. I also received a draft copy of a letter from Mr. Plunkett which he stated would be satisfactory to the Barings if T would agree to it ; but as no provision was made in the letter for securing the Province against loss of interest, I could not approve of it. As you will doubtless remember, 1 forwarded a c.>]>y of this iMcr for the consideration of the Govern- ment. On Saturday, the 7th, J. was informed that Sir Henry Tyler had returned to the City and I decided to call on him, which I did, at 12 o'clock the same day, when he assured me tliat ho was anxious to further the business in any way lie could, but ho knew nothing what- ever about the financial arrangements, that he had accepted the position on the understamling that Mr. Plunkett would find all the funds necessary for the undertaking ; he might, however, tell me that it was (|uite impossible to make nny progress until the (government consented to a reduction of the Diroctois in Nova Scotia. On Monday, the 9th, I received a letter from Messrs. Baring Bros. & Co. of which the following is a copy, demanding repayment of the I wmmmmmtM f '■ , ff , £52,000 advanced by them in November last, which I acknowledged and forwarded to you by the first mail after receiving it : London. 0th Oct., 1882. The Hon. W. B. Vail, 19 Sackville St.. W. Sir: The delay >vhicii has occurred ia delivering to us the guarantee of the Government of Nova Scotia of £40,200 per annum being, as it appears to us, unreiisonablo, and much exceeding; what we were led to expect when the sura of £ >2,0()0 was deposited b^'us with the Govern- ment in November last, and as it ap[>ear.s moreover that the Government now require-i a further payment by way of deposit beyond what was originally stipulated for as a condition of the delivery of the guarantee, we have now to demand repayment of the amount deposited by us with interest at the rate of 5 per cent. You will remember that by the terras of the original receipt and of the Act of Legislature, the deposit was repayable, if the Act ■>va3 not passed, by the 1st February in the present year, and the Act not having been passed by that date, we consented to postjjone our rights to immediate repayment on the con- dition that the guarantCvi should either be delivered to us by the 1st May or the deposit be then repaid to us. That date has now long elapsed and (in view of the new attitude assumed by the Government) we have come to the conclusion, in pursuance of our letter of the 3l3t July, addressed to the Provincial Secretary, that we must now demand repayment of our deposit a.; agreed. We remain, &a, &c., (Sgd.) BARING BROTHERS & CO, The following is a copy of the reply sent to the above ; 19 Sackville Street, October lOth, 1882. GENTLE3IEN : I beg to acknowledge the receipt of your letter of the 9th inst., de- manding repajanent of the £52,000 deposited v^ith the Government of Nova Scotia, in November last, as the security mentioned in the agree- ment of the Gtli September, 1881. I shall forward your lettor to the Provincial Secretary, by the Mail which leaves here on Thursday next, and I think I can assure you that the subject referred to will be forthwitl) considered by the Government, and a reply sent at an early day. In the meantime, as you have referred to the new attitude, which, you say, has been assumed by the Government, as one of the reasons for demanding repayment of the sum on deposit, you will, perhaps, in order that there may be no misunder- standing, in regard to the jtosition of the Government, pardon me if I take advantage of thia opportunity te assure you that they are not dis- posed to make any unreasonable demands of the Company, or throw any obstacles in the way oi an early completion of the terms of thd agreement; on the contmry, the Government are most anxious to assist 1 Mail u that iment, have )y tho esum nder' leifl >t dia- hrovr f thi assist IB the Company where they can do so, while keeping \vithin the lines of the Statute ; which, of course., they feel l>ouni'J to do. And I may further remark thnt in view of the notice i^iven by the Government to tie Company, and acknowledged liy them on the 27th of November last, the latter will hardly be justi lied in objecting to tho deposit of the biuking fund capital. I remain, kc, &:c., (Sgd.) W. B. VAIL, Agent uf the Govt, of N. S. Messrs. Baring Bros, k Co, On Wednesday, the llth, I called on ATr. Stewart, who was tho Solicitor of the Barings,' as well as o!' tho Company, and explained to him that, inasmuch aa the £52,()()() advanced by the Messrs. Baring Bros., & Co. had been transferred to, and ra.ide available to the pur- poses of the " Nova Scotia Railway Company," I did not see, even if the Government felt disposed to return the money, how they could do so without the consent of the Chartered Company, in which view he concurred. On the 14th I wrote the Secretary the following letter '. 19 Sackville Street, I'ith Oct, 1882. Sir: I beg to enclose, herewith, for the information of the '• Nova Scotia Railway Co.," a copy of a letter rLO,(:ived from Messrs. Baring Bros. & Co., on the 10th inst. You will ob serve that Messrs Earing Bros, k Co,, for the reasons therein stated, demand ) epayraent of the £52,000 deposited with the Government of Kova Scotia in November last. I was under the imp^'ession that tho ii52,0U0 had, by the assignment of the Provisional Company, been made available to the " Nova Scotia Railway Company i bat it would appear from the letter of the Messrs. Barings, they take a different view of it. I am, &c., &e., (Sdg.) W. B. VAIL. S. J. Smithers, Esq., Sec'y. of N. S. Uy. Co., On tho 18th, I received the following acknowledgement from the Secretary : MOOUOATE STUKET CHAMBERS, 18th Oct., 1882. "Ifova Scdtia Eailuuy Companv-" Srft: I beg to acknowledge receipt of your letter of the 14th Octoberj with enclosure, and will bring the same before the Directors in due course. I am, Ac, &c., (Sgd.) SYDNEY J. SatlTHERS. Hon. W. B. Vail. 19 Sackvillo Street. 16 Notwithstanding I had placed i» the hands of thw Stoieta'y the Proclamation grantin", a Charter to the " Nova Scotia Railway Coia- pany," as Mr. Plunkett appeared tf» be looked to, as working in the interesta of the Company, I called on him on Tuesday, the 17th Oct., and strongly urged immediate action, when he assured me the financial arrangements were progressing favorably, and that by the first of the following week he hoped to bo in a position to claim the guarantee. Not hearing from the Secretary of the Company in reply to my letter of the 30th Sept., beyond an acknowledgement of the receipt thereof, I called on the 20tli of October, at the office, to ask when I might expect the Company would be ready to proceed with the business, and was informed that the Directors would do nothing till the question of the Nova Scotia Directors was settled. As I had not heard from the Gov- ernment in reference to this matter, I decided to ask Mr. Plunkett to write me fully on the subject, giving the reasons why the Compjmy desired the change, &c., &c., and I accordingly wrote him the following letter : 19 Saokville Strbet, October 23rd, 1882. Dear Mb. Plunkett: It is my intention to write to the Government again this week in reference to the request of the " Nova Scotia Railway Coupany " to be allowed to drop two of the Nova Scotia Directors; but before doing so I think it better, in order that the Government may fully understand why the Company object to the present number, that you, or the Secretary, should write me on the subject, giving the reasons why the Company desire the change, and stating that they decline to organize (if such is the fact) or proceed with the business, till the num- ber of the Nova Scotia Directors is reduced from four to two. If you will be good enough to send me this letter to-night, or early to-mor- row, I will forward it by the Mail which leaves here on Thursday next. In Uic meantime, I remain, &c., &c. (Sgd.) W. B. VAIL. E. W. Plunkett, Esq., Queen Ann's Mansions, Westminster. .;:*. The following is Mr. Plunkett's reply : London, 24th Oct., 1882. Dear Sir: In reply to your request of yesterday I now haVe to say that the Directors of the " Nova Scotia Railway Company " here have stipulated from the first that it was absolutely essential, as the Company's capital will all, or nearly all, be obtained in London, that the control and management of the capital and of the Company's general policy should be vested in the London Directors. The only way that could be effected practically under existing legislation is by having a quorum (3) of the Board in London, and less than a quorum in J^or& Scotia or elsewhere. To this stipulation of the London Directors I was obliged to consent :w.- ..' jfe*. . ' »;**>;> ^, ■M «■ ivetary the Iway Coia- ing in the 17th Oct., le financial irst of the guarantee. ) my letter . thereof, I ight expect 3, and was lion of the a the Gov- lunkett to I Company B following BET, rd, 1882. ia week in npany" to but before may fully •, that you, he reaaons decline to [1 the num- 0. If you ly to-mor- raday next. 1. VAIL. t., 1882. Y that the stipulated ly's capital iontrol and licy should be effected (3) of the elsewhere, to consent r^^ 17 because I could not help myself, and also because it was in my opinion fair and reasonable that tho [)ersons finding the capital should exercise control. The London Directors have decided to take this stand and I hope therefore the Government will concur, as I can get nothing concluded absolutely by the Company, as a Company, until the number of Novn, Scotia Directors is reduced to two. I am advised that Mr. Luvitt and Mr. Duffua have intimated their willingness to resign, and therefore the difficulty may be considered practically ended as far as the Directors themselves are concerned ; but of course there is further the consent of the Government to the reduction which no doubt the Company desire to have. We are now waiting to receive the Government's approval of the form of 4 per cent, guaranteed Debenture Stock sc lit you some time ago, and also to know if you are authorized to write Messrs. Baring the letter, a draft of which I handed you some time ago. I would add the sinking fund amount will be duly paid by the Company in accordance with the Act, and that tho demand made on Messrs. Baring for that amount seems beyond the terms of the Act, and tiiereforc inadvisable to pres,s upon thenj. I remain, (fee, &c., (Sgd.) E. W. PLUNKETT. The Hon. W. B. Vail, 19 Sackville Street. Piccadilly. To this letter of Mr. Plunkett I replied as follows : Dear Mr. Plunkett: 19 Sackville St., 25th Oct., 1882. I am in receipt of yours of the 24th mst., and shall forward a copy of it to the Government by the Mail which leaves here to-morrow. Referring to the subject of the closing paragraph of your letter, I am at a loss to understand why Messrs. Baring Bros. & Co. should object to that part of the Order in Council which requires the sinking fund capital placed in their hands before the Provincial Guarantee is given ; but if they are obdurate on that point, it seems to me the objection may easily be removed, provided the Company are prepared to do their part. As I understand the instructions, the material thing is to have the money placed in some reliable Bank, subject to the order of the Provincial Government; and if the "Nova Scotia Railway Company" think proper to remove the grievance complained of, they can do so by placing the capital ef the sinking fund in the Bank of England or some other safe Banking institution here, at the credit of the Nova Scotia Government ; instead of with Messrs. Baring Bros. & Co. If the Com- pany think proper to take this course, I think I am safe in saying the Government will consider the terms of the Order in Council in that particular, as having been complied with. I am, &c., &c. (Sgd.) W. B.VAIL. E. W. Plunkett, Esq. rmm 1« On the 24th I wrote ari^aiu to the Secretary, as follows I!) vSlCKVIlXK Stukkt. Oct. 24th. 1H82. Sir: Referring to my letter of the .'lOtli ultimo, acknowledged by you on the 2nd inst., I beg to say that I aui exceedingly anxious to proceed with the work which devolves on me as the agent of the Government of Nova Scotia ; and 1 shall be glad to be informed at your earliest convenience when the Company will be prepared to comply wiJii the terms of my letter, as it is very important that I should bo able to re- turn to Halifax by the steamer of the 2nd or [)tli proximo at the latest. 1 am, &c., Jcc, (Sgd.) W. B. VAIL. Sydney J, Smithers, Esq., Sec'y. of N. S. Ry. Co,, 30 Moorgate Street. On the 26th I received the following reply : Moorgate Chambers, London, E.C., 25th Oct, 1882. " Nova Scotia Rallvay Company." Sir; I beg to acknowledge receipt of your letter of the 24th inst., en- quiring when the (Jompany will be prepared to comply with the terms of your letter of the 30th ultimo. Before I call a meeting of the Directors to consider your letter, I shall be obliged if you will advise whether, on behalf of your Govern- ment, you agree to the permanent withdrawal of two of the Nova Scotia Directors, and approve of the form of Debenture, Stock Certifi- cate and Mortgage sent to the Government some weeks since; and whether you are also prepared to give the guarantee on the terms of the Act. 1 am, &c., &c., (Sgd.) SYDNEY J. S^MITHERS. The Hon. W. B. Vail, 19 Sackviile St., W. To the above I seat the following reply : Suffolk House, Pall Mall, Oct. 26, 1882. Sir: I am in receipt of your letter of the 25th inst., and regret that I am not, at the present time, in a position to give you the decision of the Government in reference to the reduction of the number of Nova Scotia Directors. I wrote the Government on the 5th inst. on the I '8 rilKKT. t. 24tli, 1S82. Iged by you on 0118 to proceed le Government ,t your earliest DDiply with the 1 bo able to rc- 110 at the latest. ^V. B. VAIL. th Oct, 1882. 24th inst., en- (irith the terms your letter, I your Govern- of the Nova Stock Certifi- es since; and 1 the terms of WITHERS. ct. 26, 1882. ret that I am lecision of the iber of Nova inst. on the ID subject, and am daily — I may say hourly — expecting an answer from them, which I shall transmit to you immodiatoly on receipt, for the in- formation of the Company. In the meantime I have been hoping that the London Directors would meet and authorize you to inform me that the Company would bo prepared to comply with the terms of my letter of the 30th ultimo within a limited time ; or, am I to understand, as your letter would seem to indicate, that the Comnany positively de- cline to organize, or meet at all for business, till tnis question of the Directors is agreed to ? If so, I think you should write me im- mediately to that effect, in order that I may impress upon the Govern- ment more strongly, if possible, than I have already done, the necessity of an early answer. I also hope to have a reply from the Government in a few days, in reference to the Debenture, Stock Certificate and Mortgage ; but, as these are more questions of detail, it would seem, they arc not at the present moment so important as the question of the proposed reduction of the Nova Scotia Directors. In regard to the closing paragraph of your letter, in which you ask whether I am " pre- pared to givo the guarantee on the terms of the Act ? " I beg to refer you to my letter of the 30th ultimo, in which I stated that on the ful- filment of the conditions therein specified, I shall bo prepared to guar- antee, on behalf of the Province and Government of Nova Scotia, the interest on the securities of the N. S. Ry. Co., which is authorized by the said Act. 1 am, &c., Sic, (Sdg.) W. B. VAIL. S. J. Smithers, Esq., Sec'y. of N. S. Ry. Co., Moorgate St. Chambers, London, E. C. On the 28th Mr. Smithers replied as follows : Moorgate Street Chamberm, London, E, C, 28th Oct., 1882. " 27ova Scotia Railway Company." Sir: I am in receipt of your letter of the 26th inst. Without consulting the Directors, I am able to state that they make it a sine qua non that there shall only be two Nova Scotia Directors of the Company, I am, Sir, &c., (Sgd.) SYDNEY J. SMITHERS. The Hon. W. B. Vajl, Suffolk House, Pall Mall, W. On the 29th of October Mr, Plunkett called at my quarters, and in- formed me that the money required for the undertaking was all ar- ranged for ; that the whole capital of $10,000,000 would be subscribed immediately, aad in a day or two wo should bQ »ble to proceed with 20 the business and bring it to a close. I then referred to the sinking fund capital, and asked why ho was so careful in writing to state that the sinking fund would be paid in accordance with the Act ; while, in speaking of it, he never failed to assure me there would be no dis- agreement in respect to that part of the business, as the Company were quite willing to pay it. I then said : Am I to understand that tlio sinking fund capital will be paid out of this money you say you have arranged for, and before the guarantee is demanded ? He replied : " Most certainly, as it is a good investment, and will give the Company five per cent, for their money, which is, -wathout douut, a good thing." On the 3rd of November I received a cable message from you, in- structing me to ask the Company to state briefly the points in which they claim G«vernment demands exceed contract, and, on the same day, 3rd Nov., I wrote Mr. Smithers, as follows : Sir: London, Nov. 3rd, 1882. I wrote the Nova Scotia Government, some time ago, that I was led to believe the " Nova Scotia Railway Company" would ask a modifica- tion of the requirements of the Order in Council of the 13th September, and with a view no doubt of facilitating the business, they yesterday sent mo a cable message to ask the Company to state in writing, briefly, the points which they claim Government demands exceed con- tract, and I shall be very much obliged if the Company will furnish this information as early as possible, in order that I may cable it to the Government. I am, &c., &c., (Sgd.) W. B. VAIL. Sydney J. Smithers, Esq., Sec'y. of N. S. Ry. Co. Almost immediately after I had mailed the above letter, I received a cable message from the Government in reference to the reduction of the N. S. Directors, and I wrote the Secretary again on the 3rd Nov. : Sir: London, Nov. 3rd, 1882. I am instructed by the Government of Nova Scotia to inform the " Nova Scotia Railway Company " that the Government will assent to the request of the Company to be allowed to reduce the number of Directors in Nova Scotia from four to two, provided the Company will agree in writing that the Act of Incorporation, and all other Acts in connection with it, shall be so amended at the next sitting of the Nova Scotia Legislature, as to give the Government of the Province, for all time to come, the appointment of the two Directors for Nova Scotia. I am, &c., &c., (Sgd.) W. B. VAIL. Sydney J. Smithers, Esq., Sec'yofN. S. Ry. Co. Moorgate Chambers, K C, I L _ _L_ 21 On tho 4th Nov. I rocoivcd an acknowlctlgcment oh follows : MoonoATE Strket Chamhers, London. E. C, 4th Nov., 1882. SlB: Nova Seotiti, Ra'dwai/ Company." I beg to acknowledge receipt of your two letters of tho 3rd inst., which I will lay before tho Directors as soon as possible ; meanwhile will you kindly furnish mo with a copy of tho Order in Council of tlio 13th Sept. which I do not appear to have received, and also with the draft ot tho letter which Messrs. Barings re(iuired, and which draft was handed you by Mr, Plunkett. I am, &c., (Sgd.) SYDNEY J. SMITHERS. Hon. W. B. Vail. On the 7tli November I again wrote the Secretary: London, Nov, 7th, 1882. Sir: 1 beg to acknowledge receipt of your letter ot the 4th inst., and in compliance with your request, I now enclose herewith a copy of the Order in Council of the 13th September, together with a copy of the proposed letter to Messrs. Baring Bros. & Co. which was handed me by Mr. Plunkett. I shall be glad to receive the information promised in your letter of • the 4th inst. as early a-* possible, and I shall also be glad to be informed if the Company are satisfied with the terms pn which the Government ccnsented to a reduction of the number of the Nova Scotia Directors. I am, &;c., &;c., (Sgd.) W. B. VAIL. Sydney J. Smithers, Esq., Sec'y. of N. S. Ry. Co., 30 Moorgate Street. On the 9th the Secretary replied as follows : MOOROATE StREKT CHAMBERS, 0th Nov., 1882. " Nova Scotia RaiUvay Company." Hon. W. B. Vail, Sir: I have to acknowledge the receipt of your letter of the 3rd inst., in- forming me that the Government of Nova Scotia will assent to the request of the Company to be allowed to reduce the number of Directors in Nova Scotia from four to two, provided the Company will agree in writing that the Act of Incorporation, and all other Acts in connection Kkt^^e^^^^y^ 22 with it, shall bo so amended at the uext sittinge of the Nova Scotia Legislature as to give the Government of the Province for all time to come the appointment of the two Directors fop Nova Scotia. I will submit this letter to the Board at their next meeting; but in the meantime I may say, after consulting with the chairman, that I have no doubt the arrangement proposed will be considered satisfactory, and that the Company will give the written undertaking required. I am, &c., &c., SYDNEY J. SMITHERS. On the same day I received the following letter in reply to mine of the ird of November : MooKGATE Street Chambers, London, E. C, 9th Nov., 1882. - "Nova Scotia Railway ComjMny." The Hon. W. B. Vail. Sib: In reply to your letter of the 3rd instant requesting this Company to state in writing, briefly, the points which they claim Qovemment s demands exceed contract. I beg to inform you that the Company object to the terms of the Order in Council of the 13th September, 1882, on the ground that it is clearly in excess of the Agreement of the 6th September, 1881, and the Act ratifying same. The Company maintains: 1st. That the Order exceeds the said Agi'eement and Act in requiring the pa3anent of about six and one-half millions of dollars, be- fore the delivery of the guarantee, instead of five and one-half millions as stipulated in the receipt, and : 2nd. That the Order also exceeds the said Agreement and Act in requiring " further security " beyond the five and one-half millions of dollars referred tQ in the receipt fox'raing part of the Act, and the first Mortgage of the Railways. In respect to the first point it is evident that the receipt expressly modifies and defines the Agreement, and thiit the only reading of which the Act is capable absolutely establishes the view that on the payment or application of a sum of at least five and one-half millions of doUufi the Province formally undertook to deliver its guarantee. With regard to the 2nd point the Company alleges and can shnw that the Government did agree after considerable discussion, and before the payment of £52,000 on account was made and the receipt signed, that five and one-half millions of dollars cash payment by the Company (inclusive of the capitalized sinking fund) together with a first mortgage of the Railways would be considered by the Government sufficient security for the performance of the entire agreement. The Company also allies that subsequently the Legislature not only formally in general terms ratified the Acts of the Government in this matter, but that it furthermore shewed its complete approval and understanding of the arrangement made by ratifying the terms of the recript which pro- I Ign Nova Scotia or all time to ia. 3ting; but in rman, that I i satisfactory, required. tflTHERS. )ly to mine of ERS, Nov., 1882. • Lhis Companv Qovemment s jihe Company h September, Agreement of 'he Company and Act in of dollars, be- and one-half t and Act in If millions of and the first Bipt expressly iing of which the payment If millions of irantee. can sh«w that ,nd bei'ore the >t signed, that the Company first mortgage lent sufficient rhe Company y formally in lis matter, but lerstanding of pt which pro- 2S vided for the delivery ot the guarantee when a sum of at Iea.st irvc and one-half millions had been paid or applied. From the above you will observe that strictly speaking the Company claims that under a formal contract witli the Province, the payment or application of a sum of at least five and one-half millions of dollars to the purposes of the Agreement absolutely entitles the Company to the delivery of the guamntee ; and further that when the Company gives the first mortgage of its Railways to further secure the Government, then full security for the entire jierformance of the Compan3''& Agreement will have been given. Such is the strict construction of the Legislation, and the action of the Government must determine whether the Company will be obliged to insist upon its strict rights. In conclusion I would point out that the five and one-half millions cash, and a first mortgage on the property, must certainly be considered fair and ample security, as sufficient cash would be provided thereby to acquire the existing lines, and to pay the Government bonus, as weH as to deposit as caution money at least 20 per cent, of the entire eost v. the repairs and new works which the Company has agreed to carry out. I am, tfcc., SYDNEY J, SMITHERS, Secretary. On the 16th of Nov. the Secretary again wrote, as follows : MooROATE St. Chambers, 10th Nov., 1882. "Nova Scotia Bailtuay Company." Sir: Referring to my letter to you of the 9th inst,, I beg now to send you herewith copy of a letter received from Mr. Flunkett, and of the cor- respondence enclosed by him. I think his correspondence clearly bears out the Company's argument that they are entitled to the delivery of the Provincial Guarantee as soon as five and one-half millions of dollars are provided by them for the purposes of the agreement. I am, &c., SYDNEY J. SMITHERS.. (copy.) London, 10th Nor., 1882. Sydney J. Smithbrs, Esq., Secretary of the Nova Scotia Railway Co., London. Sir: Referring to the question of security for the agreement of 6th Sept., 1881, with the Government of Nova Scotia, which, as you advised me, is now under discussion between you and the Honorable W. B. Vail, I i^f ■^' u beg to send you herewith copies of the cable correspondence which took place between the Government and myself, last year, on that matter. From that correspondence you will see that the question of se- curity was fully discussed and mutually aa;reed upon before any pay- ment of money under the agreement was made. There can be no doubt, from the cable correspondence, that the Government agreed and determined that cash payments to the extent of five and one-half mil- lions of dollars, and a first mortgage in favor of the Government, would be accepted as " auficient security " for the fulfilment of the agreement of the 6th Sept., 1881. On the faith of the understanding arrived at in the cable correspondence, the sum of fifty-two thousand pounds being the first payment provided for in the agreement, was paid by the Provisional Company, and a receipt for the same was given by the Government, which practically embodied the understanding respecting security and other matters covered by the cable correspondence. This receipt, besides being an ordinary document acknowledging the receipt of money, is also, as expressly stated therein, a definition, modification and extension of the agreement of 6th September, 1881, for a considera- tion. It is, therefore, in effect, a supplementary agreement. By reference to it you will observe that the previous arrangements made with the Government by cable (whereby five and one-half millions of dollars was agreed and settled and determined upon as sufiicient se- curity for the agreement of Cth September), were in the receipt provided to be carried out in the most practical and effective manner possible, By the stipulation whereby the Province bound itself absolutely that the guarantee " shall be deliverable " when at least five and one- half millions of dollars was paid or applied, &e. The receipt, which thus practically carried out the arrangements previously made with the Government, was subsequently approved and ratified by legislation, and is now the law of the Province. In conclusion, I submit there can be no dispute or question. That payment of five and one-half millions of dollars cash and a mortgage was agreed upon — before any money was paid — by the Government as " sufficient security." That the Government, acting for the Pi'ovince, gave a receipt for money paid embodying practically the above arrangement and agree- ment, and the Legislation has formally ratified the same. That if thd Legislature intended the guarantee should not be de- liverable until more than five and one-half millions was provided, it would not have ratified the receipt. That the Government have no option but to deliver the guarantee when the five and one-half millions is provided. That security or payments in excess of the five and one-half millions and the mortgage must be, if required, a matter of mutual agreement between the Company and the Government. I remain, (fee, (Sdg.) E. W. PLUNKETT. 1 25 5ondonco which year, on that 3 question of se- before any pay- lere can be no Dent agreed and id one-half mil- ernment, would f the agreement iing arrived at ousand pounds was paid by the ks given by the ding respecting )ondence. This ^ing the receipt •n, modification for a considera- gx-eement. By igements made lalf millions of ,s sufficient se- •eceipt provided lanner possible, tself absolutely ) five and one- receipt, which T made with the by legislation, [uestion. That ind a mortgage Government as 'e a receipt for snt and agree- lid not be de- 'as provided, it the guarantee le-half millions ual agreement LUNKETT. •' Smwi, Scofic Railway Company." Copt of Cable Coreespondence between Mr. Pi.tTNKETT and Mr, Holmes, Provincial Secretary, Nova Scotia. Plunkdt to Holmes. 11th October, 1881. Cable what amount of security Government require under clause thirteen. Make amount moderate as possible. Business doing well. Holmes to Plunkett. 15th October, 1S81. Soffieient to prodnce in cash the cost of acquiring road and Govern- ment bonus ; also, reasonable security further completion contract. "What kind do they offer ? Plunkett to Jlohnts. 15th October, 1881. Am directed to ask Government to cable specific amount they re- quire deposited under thirteenth clause, naming separately amount cash for acquisition, and amount reasonable security further completion contract, rrogress good. Syndicate can'c yet make offer security. Want your requirements. Waiting answer. Holmes to Plunkett. 16th October, 1881. Governiuent require, under clause thirteen, four and a half mil- lions dollars for acquisition, and i,bree millions for completion— in all, seven and half million cash, or equivalent. Plunkett to Holmes. 16th October, 1881. As security \inder clause thirteen. Syndicate propose to deposit whatever amount may be necessary to fully indemnify Government against all liability for acquisition. As .security for completion. Syndicate think payment large sums for acquisition and bonus ample and reasonable. Want j'our cable to above effect Look oat for inflaenee to attt. Western Railway out. Cable pi Holmes to Plunkett, 20th October, 1881. J secure Eastern Railway, leaving -dS. •^ ■MH Plunkett to Holmtf. 24th October, 1881. Cable "twentieth received. Am ignorant what influence you mean. Business here being rapidly concluded. Only difficulty is your require- ments cabled sixteenth, which arc considered extravagant and unneces- sarily onerons. Will cable views later. Plunkett to Holnuo. 27th October, 1881. Company want lines Nictaux, Dartmouth, Pictou, left optional with it. Syndicate assert payments clause twelve and twenty-five mort- gage clause fifteen cash deposit three million for acquisition plus ten per cent, cost completion in all five and a half million cash is fair sufficient liecurity. Hope you can cable above effect irbmVdiftlely. Holmes to Plunkett. 30th October, 1S81. . Nictfi#x may be optional, not others; Pictou probably short line, seven miles. Will consider five and a half million cash payment sufficient securit}'. Receipts Intercolonial past three months fifty-nine thousand ov^r same period last year. « Plunkett to Holmes. Slst October, 1881. Your cable thirteenth satisfactory. Agreement now executed. Pay- ment to be made within fortnight. Cable extension time for one month. On the 11th November I wrote the Secretary acknowledging receipt of his letter with enclosures, as follows : London, 11th Nov., 1882. Sir: I beg to acknowledge the receipt of your letter of the 10th inst., en- closing a copy of a letter from Mr. Plimkett, together with copies of cable correspoiKlence which passed between Mr. Holmes and Mr. Plunkett in October, 1881, on the subject of the securities for the agreeipent of the 6th September, 1881, which I shall forward for the consideration of the Government by the Mail of Thursday next. I shall also, notwithstanding I cabled the substance of your letter of the 9th ii.st. on the same day it was received, also transmit a copy of that letter to the Government by this week's mail ; and I hope to be in a position in a few days to give you their reply. In the meantime I may say in regard to Mr, Plunkett's letter, I entirely dissent from liis view, that the Keceipt marks a new departure, and is " in effect a supple- mentary agreement," except on certain distinctly named points; in fact, the receipt expressly states that the agreement is "extended, modified and defined " as specified ; and without prejudice to any of its other provisions. I Jctober, 1881. ;nce you mean, is your require- nt and unneces- )ctober, 1881. t optional with enty-five mort- sition plus ten on cash is fair amVdialely.. )ctober, 1881. ibly short line, I cajsh paj'ment onths fifty-nine )ctober, 1881. executed. Pay- c for one month. pledging receipt h Nov., 1882. e 10th inst, on- with copies of slmes and Mr. curities for the brward for the irsday next. I )ur letter of the a copy of that lope to be in a ueantimo I may i from his view, effect a supple- points ; in fact) jnded, modified ny of its other 27 Mr. Plunkett has omitted one very important cable messago sent by Mr. Holmes, and acknowledged by Mr. Plunkett. The message referred to bears about even dat^ with the Receipt, and I think clearly proves the Government did not intend that the payment of five and a half millions and the mortgage should bo accepted aa sufficient security for the performance of the contract. I am, &c.t (Sgd.) W. B. VAIL, On the 17th of November I wrote again requesting an answer to my letters of the 30th of September and 24th October : Sir; London, November 17, 1882. Referring to my letters of the 30th September and 24th ultimo, I beg to say that it is now over seven weeks since I arrived in London, prepared at a moment's notice to endorse the Bonds of the " Nova Scotia Railway Company," and with every desire to give the Company ample time to perfect their arrangement ; I have waited patiently till the present time, hoping from day to day to be informed that they had succeeded in raising the requisite Capital to enable the Company to comply with the terms of the Agreement, but, so far as I am aware, the business in that particular is no farther advanced now than it was the day I arrived in London ; and I shall be extremely obliged if you will kindly infoim me, as early as possible, if any satisfactory progress has been made, and, if so, when the Company will be in a position to claim the guarantee of the Provincial Government for the mterest on the securities of the " Nova Scotia Railway Company " as provided in the Statute. Hoping for an early reply, I am. Your Obed't. Servt., (Sgd.) W. B. VAIL. The Secretary acknowledged receipt on the same day j MooBaATE Streett Cbambers, 17th Nov., 1882. 'Nova Scotia Railway Co." Dear Sir: I have to acknowledge the receipt of your letter of this date, which T will take the earliest opportunity of submitting to my Directors. I have received from Mr. Plunkett a letter in reference to the points raised by the Government, copy of which I enclose for your information. I am. Sir, Your Obdt. Servt., (Sgd^ SYD2SIEY J. SMXTHERS. The Hon. W. B. Vail, ' ^ ■MB 28 London, l»th November, 1882. Stdihet J. Smithers, Esq., Secretary, the Nova Scotia Railway Co., London. Deab Sib : I am in receipt of your letter of the 13th inst, enclosing copy of the Hon. Mr. Tail's letter to you of the 11th inst. T now beg to remark in respect to Mr. Vail's letter : That whether the Receipt is described as a "new dejMirture" or ' in effect a supplementary agreement " is not material, that its meaning and effect are really the important points ; that its meaning and effect being stated in express words cannot be disputed ; that the three words " extended," " modified," and " defined," in the Receipt clearly and distinctly apply to the three respective clauses following, numbered " first," " second," " third ;" this is evident from not only the plain meaning of the document itself, but from its grammatical construction. The word " defined," therefore, refers to all clauses of the Agreement bearing upon payments to be made previous to the delivery of the guarantee, in fact the Receipt defines absolutely all clauses of the Agreement respecting payments before delivery of the guarantee, and this definition not only authorizes the delivery of the guarantee when five and one-half million of dollars shall have been paid or applied, but it says it shall be deliverable. If, therefore, aa seems plain, the Legislature ratified an agreement providing that certain things " shall be " done when a fixed minimum sum shall be paid or applied, the refusal of the Executive to carry out that stipulation must have a most injurious effect on Provincial credit as well as that of the Company. Mr. Vail calls your attention to certain cables, copies of which I omitted by mistake to send you with the others, I now enclose them hcrev;ith. These cables when read together with the previous ones and the Receipt (as they ought to be) do not bear out the view expressed by Mr. Vail in the last paragraph of his letter namely " that they clearly prove that the Government did not intend the payment of five and one-half millions and the '* mortgage should be accepted as sufficient security for the performance of the Contract." I submit that the cables now enclosed read with the others as a whole and the Receipt do dis- tinctly prove the contrary of Mr. Vail's view above ; for what are the facts as clearly shown in the cables ? They are : That the Government was asked what security it i^equired, and it stated seven and one-half millions, &c. That seven and one-half millions was represented by the Company as extravagant, unnecessary and onerous, and the Government then desired to know what the Company offered. That thereupon the Company offered five and one half millions cash payments (incliL»ive of the Sinking Fund payment) and the mortgage, and requested the Government to cable concurrence to that effect, &c. That the Government answered in general terms they would con- sider cask payment of Jive and one hoUfmUlions 8uffi,cient security. That the Company replied saying that the five and one-half millions cash payments would b« satisjQetctor^. 1 mber, 1882. ig copy of the f to remark in leparture" or ettitsmeauing ing and effect le three words clearly and Qg, numbered nly the plain construction, le Agreement livery of the lauses of the larantee, and larantee when >r applied, but tns plain, the things " shall : applied, the it have a most i Company. s of which I enclose them ious ones and Lew expressed y '• that they kyment of five »d as sufficient hat the cables zceipt do dis- what are the [uired, and it e Company as irnment then millions cash the mortgage, at effect, &c. y would con- it eecuritv. -half miJiion» 29 That the Government next cabled the notice required by the agree- ment for payment of Sinking Fund amount as sucli notice was neces- sary under agreement That then the receipt providing for the delivery of the guarantd*? (when five and one-half millions was provided) was signed by the Government. I submit, in conclusion, that the notice to pay the Sinking Fund was given before, or concurrently with the execution of the receipt. and that as that notice did not explicitly say that the Sinking Fund was to be in addition to the five and one half millions " cash payments previously agreed upon and settled as sufficient security," that ii is very evident that the Government intended and agreed that five and one-half millions ca^h payments and the mortgage would be sufficient security for the contract ; for if they intended otherwise it would have been so stated in the notice or receipt. But the Government and Province have practically agreed to five and one-half millions (and the mortgage as sufficient security in the nio8t effective manner possible, viz.: by sitjning and ratifying the receipt, which, beyond all doubt, provides that the guarantee shall be deliverable when at least five and one half millions are paid. I submit, also, it is plain the Government only required five and one- half millions "cash payments as sufficient security," for these are their own words. Yours, truly, (Sgd.) Copt of Cable. Holmes to Plunkett. E. W. PLUNKETT. Halifax, 25th Nov., 1881. You are hereby notified that Government will require deposit in cash the sum equivalent to Sinking Fund payment according to clause 25 of Contract. Plunkett to Holmes. London, 37th Nov., 1881. Notice under clause 25 received. In order to satisfy the Company that the present Government were fuUpr justified in requiring the Sinking Fund Capital paid up before giving the guarantee I wrote the following nyoinder to Mr. Plunkett's letter : "^^m^ 1 t 30 .' .;, London, > ; . > ... November l8tb, 1882. Sir . I l)eg lo acknowledge tho receipt of yours of the 17th inst., enclosing a letter from Mr. Plunkett in respect to tho justice of the claim made by the present Government of Nova Scotia, for payment of tho capital of the Sinking Fund in addition to tho live and a half millions of dollars mentioned in tho receipt given to Messrs. Baring Brothers & Company, on the 2Gth November, 1881. T fully agree with Mr. Plunkett " that tho meaning and etloct of the receipt aro really tho important points," and, in my opinion, the only points it is necessary to consider at the present time; and with a view of convincing the "Nova Scotia Railway Company " that tho late Government, and Mr. Plunkett as well, long after the Receipt was given, and when tho Bill for tho consolidation of the Nova Scotia Railway Company was belore the Legislature held views adverse to those expressed by Mr. Plunkett in his letter of the 15th instant, as to the '• meaning and effect " of the receipt, I shall quote from the speeches of Mr. Holmes and Mr, Thompson, both lawyers, the former Premier of Nova Scotia, and the latter Attorney General ; and also give an extract from a letter written by Mr. Plunkett, and published in a Halifax newspaper on the first February, 1882. Mr. Holmes, on the 25th January, 1882, two months after the date of the receipt referred to, when moving tho second reading of the Rail- way Bill, in explanation of the delay which had occurred, made tho following remarks, as will bo seen by reference to pages 22 and 28 of the Debates and Proceedings of the House of Asseraoly of Nova Scotia : I'AGK 22. Therefore tho sixth of October instead of the sixth of September was the time when the contract actually took effect. Still it was thought that there would be ample time to enable the House to be called to- gether in the month of December, or, at all events, not later than tho first of January ; but in a transaction involving ten millions of dollars it is not to be wondered at that the labor necessary to perfect the organization of the matter in London should take longer than was anticipated, and the fact was it did take longer, and we never felt that w© were on safe ground until we found that we had £52,000 sterling in our hands. Then wo felt that we might say we had a contract. Still the parties in London required time to organize their company and make the arrangements necessary for providing $6,500,000 and also $5,000w000 to complete their capital, and therefore the earliest possible date at which we could call the House together was the 19th of January. PAGE 28. Now, let me call attention to the provisions for the completion and continuous workings of these railways. I will turn to section 13 of tho contract. I will not read the whole section, because it is in your hands, and you can see the parts to which I direct your attention. It is pro- vided in this section that whenever this contract is ratified by tho Legislature (I have already explained that the time limit to thu first L ■■■haliv I8tb, 188S. oat., onclosiog e claim mado ut* the capital tif millions of g Brothers <& reo with Mr. iro really the is necessary tu ng the " Nova Mr. Plunkett 3 Bill for the as before the ?lunkett in his of the receipt, lompson, both tter Attorney Mr. Plunkett, bruary, 1882. the date of of the Rail- ed, made the 22 and 28 of Nova Scotia : Bptember was was thought bo called to- iter than the ms of dollars to perfect the ;er than was ever felt that !,000 sterling d a contract. Leir company ,500.000 and » the earliest vas the 19th lupletion and ion 13 of the 1 your hands, n. It is pro- tified by the t to thu Brat SI of February has been extesd(»d by the Company), and all the Ifigi&la- tton necessary to carry out the contract is passed, " then the Company shall immediately furnish such other sufHcIont security as tho (iovt'rnor in Council may require, for tin; duo and proper porfornianc" by the Company of its obligations, as 8])iiciHed in clausos 1, 2, ii, 4 and 7" — that IS, the whole undertaking of the any shall also cause to be paid, provided or applied, such further amounts of its capital as may be required to provide the sinking fund referred to, as well as any other provisions of said agreement. Now, you will observe liy the terms of tli.> contract that until se- curity satisfactoiy to the (iovenimeut is deposited with the Qovem- m6nt, no single step is to be taken to render the Province liable for a dollar, or for any of the obligations which it assumes in the contract. Until that money ($5,500,000) anrl such other security as may be re- quired, is deposited, we are not to assume any responsibility, whatever. Now, that is a very important matter, and is overlooked by those who criticise this measure. They shut their eyes to what is good, and con- tinually harp upon the imaginary grievances that do not exist. I have been amused at. tho criticisms which this measure has met, knowing that the Qovernraent have taken such care that there is not a single objection raised by those critics that haa not been foreseen and guarded against by the Government ; and I think we have a right to congratulate ourselves that we have so successfully closed every avenue that they cannot find one single argument against it. It is impossible, as I have said, that any liability can be incurred by the Province until this security is in the possession of the Province. Now, how has that been carried out so far ? Let me for a short time direct your attention to the receipt which is annexed to and forms a part of this Act. When you look at that receipt you will acknowledge that it is not very often that such a receipt has been signed on behalf of the Province of No?a Scotia ; in fact, it has never been done before ; and I don't know whether it will be ever done again. I will read tho receipt, because it is important that it should be read. It is as follows : Received the 26th day of November in the year of our Lord 1881, from Messrs. Baring Brothers and Co., the sum of fifty-two thousand pounds, sterling, being the payment referred to in the Agreement dated the sixth of September, 1881, between the Government of Nova Scotia and Edmund Walter Plunkett. This payment is made in consideration of said Agreement being extended, modified and defined, bj' mutual consent ^nd without prejudice to any of its other provisions), as fol- lows : First, The time for making this payment is extended to this date. Second, The construction of the new line A, specified in said Agreement, shall be optional with the " Nova Scotia Railway Com- pany." Third, The Provincial guarantee, referred to in said Agree- ment, shall be deliverabl* to Messrs. Baring Brothers and Co., or order, 32 any timo after the Lcgi«Iataro of Nova Scotia nhall have ratified naii Agreement; butxMt until the Qovemmonl of Nova Scotia nhall bt^ satiafiod that the sum of of least jive and onc-ltalf millionn of doUarn cash, Canada currency, or the equivalent thoreof in Oovorament or other bonds or debentures, approved by naid Government, Hhall have been provided for the purposes of said Ajjreomont, and deposited or otherwise secured or applied to the .satisfaction of said Government. In cose of the non-ratilication of the above-mentioned Agreement of 6th September, 1881, by the Lej^-isiaturc, the said sum of £.^2,000 will forthwith be repaid to Messrs. Baring }3rutherH aud Co., with interest, ac the rate of five per cent, per annum, an stiptilatod in the said Agree- ment, or Messrs. Baring Brothers and Co. will bo released from their undertakings, to hold tne same on behalf of the Government. S. H. HOLMES, Provincial Secretary. Now, in connection with this I wish also to draw yonr attention to the 26th clause of the agreement, which, if anything -wera wanting to make this matter doubly secure, supplies that want. I will read the section; which is as follows : 20. The security provided in clauses IH to be given by the Company to the Government snail bo from timo to time reduced and retarned to the Company, or its assigns, as and in proportion to the completion of the Company's undertakings under this agreement (sut£cient seclirity Ijeing reserved for the final completion of such undertakings). Now, what can be clearer than that ? Is it possible that cay sane man, after reading that clause, can, for a moment, contend that we have not the most ample security — security such as was never dreamt i of before in contracts between the Province of Nova Scotia and the railway contractors — such as no person possessing the least common ijcnse in the world could for a moment doubt to be ample for evenr purpose — for the carrying out ot the purpose in all its detu.as ? It says that the money depo.sitcd in the hands of the Government as se- curity shall bo withdrawn only as the various railways constructed and to be constructed are completed, and, to finally crown the whole matter, the Government has the power to reserve sufficient security, not only for the acquiring of the old lines, but the building the new onea^ and also for ensuring their w.)rking forever. On the 31st of January, the Attorney General, who was consfdered one of the ablest lawyers in the Province, and who has since been appointed a Judge of the Supreme Court of Nova Scotia, spoke as fol- lows (see page 61 of the Debates and Proceedings of the House of Assembly of Nova Scotia) : Having thus referred to that branch of the subject, I desire to address myself to an objection which has been urgently discussed within the last two oi* three days — as regards the bona fides of the company pro- posing to undertake this gteat work. I admit that this is a most important matter for the consideration of the house. I admit, that if the bona fides of this company cannot bo established, and of the Government which this house will entrust with the execution of this contract — the house will be unwise to place in the bands of the 88 Oovevnmont tho means of doaling s.) largely with tbatCo npany as the bill pur[)08«H. Lot mn aHk then, what giiarautoe of g jod faith thiH Company purpo.so to give to tho Province of Nova Scotia ( Wo wore asked the other day for a list of the shareholderB of the Company. It WOH a novel rc([uest to ask, before the Incorporation of tho Company, who the HhareholderH were to be, but tho Hon. Member for Hants aaked US who they were to be, and how much capital they expected to pay uj). I propose to answer both (^uestionH. In the first place whoever the shareholders may be, and in th« second place, whatever amount of capital they may pay up, before tha Government of Nova Scotia -ihall pledge the credit of the Province to the extent of a dollar they are to pay into the treasury $r),500,()()() Canadian currency. (Applause). When they have done so wo will be in a position to answer who the shareholders of this Company are and wo will be in a position to tell him how much of their capital is paid up. Until they have done so tho (lovernment of Nova Scotia propose to have no transactions with them. Let me call the attention of the House to the fact that this is expressly provided in the receipt which has been laid on the table of this house and which is made by the very terms of this Act, a part of the statue itself and a pari of tho law of the land. This deposit is to be made either in cash, or in its eciuivalent to the satisfaction of the Government, before the guarantee of the Government is given at all. It was stated to tho Hoiise the other day by the Hon. Member for Hants, doubtless under a mere misapprehension of the terms of tho contract, that wo were to give the Company our guarantee, and that they were to liave a chance of acquiring the railroads and selling their bonds before this deposit should be made. It is to be somewhat regretted that the facts contained in that receipt were not more generally known for it is ex- pressly provided in that receipt that the deposit of the money is to precede the incurring of any kind of liability on the part of this Province to this Company or to anybody else. But, further, in addition to the five and a half millions of money as has already been stated, over and over again, one of the first duties of this Company is to place in the hands of the Government a million dollars to form a sinking fund — so that whoever these gentlemen may be — whether they shall belong to that class for which the Hon. Member for Hants has such a democratic dis- like, and whom he styles " the lords and dukes," or whether they are to be common people like ourselves — the fact that we shall liave 80,500,000 of their money in the treasury, is I think, as substantial a guarantee as to who they are and what they are, and how much capital they are to pay up as this house has ever asked of any Company desiring to deal with the Government. (Cheers.) Now it was said that the public must be on their guard with respect to this sinking fund and with regard to all that has been said in defence of the Government in relation to it because the sinking fund payment is only to be secured by mortgage, and we were only to be paid that amount in cash provided that before a certain day, now past, notice was given by the Government that the cash payment instead of tho mortgage security would be called for. The Hon. Prov. Secretary has laid on the table of the House the correspondence which shows that before that day had passed the Government of Nova Scotia did call for tho payment of the sinking fund in cash, and received a frank and can- i-'f :i k^ H- (I I f''< 3* did aeknowlvdgemd&t of the lenrice of tlutt noiico In return, lliercfore, (bo obligations of the contract in relation to that Binking fund am so far complied with that we aro to-day in the position tliat nhould this bill pass both Houses, and receive the onaent of His Honor, before that Company shall receive the charter which wo arc now pawsinK, (because it is not to become law until it is proclaimed in the " Royal (Jazette," wo can and will demand that whoever these gentlemen might be, lord, duke or commoner — and whatever amount of their capital may be paid up, their solid money shall be in the treasury of Nova Scotia t(» the extent of six and a half millions. (Cheers.) 1 think the above ought to be sufficient to satisfy the Company that the present Government of Nova fc' otia have good grounds for requiring the capital of the sinking fund paid up before the guarantiee is given; but for the purpose of removing any doubt wliich may still exist m the minds of the Chartered C>ompany as to Mr. Plunkett's own view of the "meaning and effect" of the receipt at the time the Bill was before the Legislature, I shall (^uote from a letter signed E. W. Plunkett, and published in the Halifax " Morning Clironicle " of February lat, 1882, in which ho states " as to their being not a dollar at bottom, I can positively aaaert and prove, and any intelligent person etua satisfy him- .self by reference to the Agreement and Act now before the House, that the Company must, imder penalty of forfeitute of the (juarter million of dollars now in the Provmcial Treasury, pay within a short time about G5 per cent, of its entire capital into the hands of the Oovern- tnent, or six and a half millions of dollars." In regard to that jmragraph of Mr. Plunkett' letter, in which he States " that it is very evident the Government intended and recjuired that five and one-half millions cash payments and the mortgage would be sufficent security for the Contract," I beg to refer the Company to the closing part of the extract from the Attorney General's speech, in which he positively states " that six and a half millions of dollars can and will be demanded by the Government before the Charter is granted." I thing this ought tj be conclusive on that point. I have the honor to be, Your obdt. servt. (Sgd.) W. B. VAIL, On the Slat I received the following letter from the Secretary : Sni: MooRQATE Street, Chambers, 21st Nov., 1882. "Nova Scotia Railway Company." I duly received yesterday your letter of the 18th instant. Since I l»st wrote you I have been favored by Mr. Plunkett with a copy of an Order in Council under date the 18th May. 1882, of which the following is an extract : 1 ■X v.:-T' urn. lliorcfore, Qg fund arc so lat Hhould this nor, before that ■VNsInL', fbocauao Koyal (laaette." might bo, lord, :/al may >»e paid ' Sootia to the Company that da for requiring mtco ia given ; till exist m the ivn view of the was before the Plunkott, and uary lat, 1882, bottom, I can ua satiafy him- he Honae, that luarter million a short time the Oovern- , in which he and required ortgage would e Company to lis Bpeech, in ons of dollars the Charier ia . B. VAIL, cretary : MBEBS, Nov., 1882. mt. Since I ith a copy of of which the 85 " That the said Hamuol Croclman uhallnot deliver the said Frovinoial Guarantee in either of the forma above mentioned, or any form what* over, until the equivalent of one millipn and soventy-plcht thousand Baunda sterling cash shall have been deposited with Mosara. Baring rothers and Company for the purpoaea oi and subject to thia order in "Honda, Debonturoa or Stocks of one or more of the Oovernmenta of Great Britain, France, the United States, or the Dominion of Canada, auch equivalent to bo ascertained by calculating said aecorities at the current market rate of the day of clenoait." " That ui)on the deposit mentionea in last olauae being made tho said S. Croelman shall deliver to Measra. Baring Brothers & Company tho said guarantee In any one of tho two forms hereinbefore mentioned, and Messrs. Baring Brothers & Company ahall then be at liberty to issue the securities bearing auch guarantee or otherwise deal with tho same as may be agreed between them and the Nova Scotia Railway Company." As I am about to call a mooting of my Directors I shall be obliged, if you will let me know, for their information, whether you are pre- pared to give the guarantee of your Government upon tho terms or tb« order as quoted above. I am, &c., Ac. (Sgd.) SYDNEY J. SMITHER& To tho above I immediately sent tho following reply: , .. London, Nov. "' c, 1882, I have to acknowledge the I'ocoipt of your letter of to-day, in which is embodied a copy of an Order in Council, under date of the 18th May, 1882, which has been placed in your hands by Mr. Plunkett, and ask- ing whether I am prepared to give the guarantee of the Government on the terms quoted. In reply, I beg to say the only Order in Council I recognize or acknowledge in any way is the Order of the 13th of September last, a copy of which has been in your hands for a considerable time. By reference to my letter of the 30th of September, you will observe I have clearly set forth the terms on which I am authorized to give the guarantee of the Government ; and I respectfully submit, without acknowledging that the requirements of the Order in any way exceed the agreement, you can hardly expect the Government to state how far they arc willing to modify the Order referred to, until the Com- pany have positively declined to pay up the capital of the sinking fund, and provide the security mentioned in clause 13 of the agree- ment, before the guarantee is given. If you will kindly give me the decision of the Company on the above points, and state precisely what they are prepared to do, and when they will do it, I shall immediately communicate it 'in th^ Government, and give their reply. I a,m, Sir. «tc.» (Sgd.) W. B. VAIL. »-.■ 86 On the 27th of November I reeeived the following letter from the Company, whicli I considered a full' acknowledgement that they were unable to carry out the conditions of the agreement, and I wired the Government the substance of it : MooRGATE Street Chambers, London, E. C, 27th Nov., 1882. The Hon. W. B. Vail. " Ifova Scotia Raihmy Company." \ .' Sir: I have laid before the Board of Directors the correspondence which has passed between us, and especially your letter of the l7th inst, in which you ask to be informed if any satisfactory progress has been made in raising the requisite capital to enable the Company to comply with the terms of the agreement with the Provincial Government, and, if so, when the Company will be in a position to claim the guarantee of the Provincial Government for the interest on the securities of the " Nova Scotia Railway Company" as provided by the Statute. I am instructed to inform you, in reply, that when the assignment of the agreement was made by the Provisional Company to this Coiu- Eany, the Directors were informed that all the necessary capital could e provided on the basis of the agreement. Much time, however, has beeij lost ; first, in consequence of the delay in delivering the Govern- ment guarantee, which, under the terms of the agreement and receipt as extended by Messrs. Baring, should have been delivered to them by the 1st of May last ; and, secondly, by reason of the interval, which elapsed between the execution of the assignment on the 20th of July, and the date when notification was received of the incorporation of the Coiqpany, on the 2nd of October. The Government have also placed further difticulty, as referred to in my previous letters, in the way of dealing with the securities of the Company, by demanding, as a condition prior to giving their guarantee, the deposit, on account of the sinking fund, of an additional amount beyond that originally contemplated. For these delays the Company has not Ijcen responsible ; but partly in consequence thereof the expectations of raising the necessary capital has not, so far, been realized ; and, although the portion of the capital guaranteed by the Government could easily be raised, the Directors do not see how, in the existing state of the money market, it would now be practicable to obtain, on such terms as they would consider reason- able, subscriptions to cover the balance of funds necessary for the purposes of the undertaking; and thoy consider that it would be more advantageous for the Government, as well as the Company, if the guarantee were extended. If .juck extended guarantee weie given, the requisite capital would be raised on more favorable terms, and the total amount would be reduced. At the same time the Government might, in such case, reserve an interest in the ultimate profits of the undertaking — say half of the surplus profits after payment of the in- terest on the capital guaranteed. J am, Sir, &c., (Sgd.) SYDNEY J. SMITHERS. Secretary. tier from tlie hat they were I wired the RS, Nov., 1882. adence which 1 7th inst., in ess has been ny to comply Drnment, and, /he guarantee lurities of the itute. e assignment to this Con- capital could however, has ; the Govern- t and receipt d to them by terval, which 50th of July, )ration of the 'cferrcd to in irities of the sir guarantee, 3nal amount ; but partly ssary capital f the capital Directors do would now ider reason- lary for the uld be more )any, if the were given, ms, and the government •ofita of the t of the in- HERS. Jecrotary. ■■;■,,, ^^ 37 The foregoing letter from the Secretaiy of the Company is dated Nov. 27th ; but the substance of it was communicated to me on the 24th and transmitted to the Government by cablo. On the 27th I wrote the Secretary again : 19 Sackville Street, :•', K -r Piccadilly, Nov. 27th, 1882. Sir: Referring to my letter of the SOtli Sept., and other letters of subse- quent dates, on the same subject, I beg now to inform you that, with a view of removing all possible objection the " Nova Scotia Railway Company " can have to the requirements of the Order in Council of the 13th of September last, and without admitting the demands of the Government as stated in said Order in any manner exceed the contract, and also without prejudice to the legal rights of the Government, in the event of this overture not being accepted by the Company, I am instructed to offer the guarantee of the Government on the following conditions : lit. That the Company shall agree to pay up the capital of the sinking fund in two months from this date, or before the first day of February, 1883. 2nd. That the Company shall agree to furnishjthe other sufiicient security, to the satisfaction of the Governor and Council, mentioned in clause 13 of the agreement, before the issue of theJProclamation trans- ferring the several lines of Railway to the Company. 3rd. That the Company shall, within ten days from the present date, or before the seventh day of December next, deposit with Messrs. Baring Brothers and Company, for the purposes mentioned in said agreement and Act, the equivalent of one million and seventy-eight thousand pounds sterling, in Bonds, Debentures or Stocks of one or more of the Governments of Great Britain, France, the United States, or the Dominion of Canada ; such equivalent to be ascertained by cal- culating the said securities at the current market rate of the day of the deposit, the said deposit to be held by Messrs. Baring Brothers and Company, and applied as follows : 1st. An amount of the Bonds, Debentures or Stocks forming said fund, sufficient to realize the sum of two hundred and twenty-five thousand pounds, sterling, cash, shall be disposed of to th". best adv i- tagc by Messrs. Baring Brothers and Company; and said sum of £225,000 shall be paid by them to the Government of Nova Scotia, under the terms of the said recited Act, in Montreal, Canada, or London, England, at the option of the said Government, and as it may request. 2nd. The balance, after payment of the above X22.5,000, shall be held by Messrs. Baring Brothers and Company, and returned to the " Nova Scotia Railway Company," e*- its assigns, on the order of the Government of Nova Scotia, as and in pro))ortion to the completion of Company's undertakings, as provided in section 26 of the agreement ; sufficient security being reserver^ for the final completion of the under- takings. -! 38 If you will be good enough to iufoiin me immediately, or before 12 o'clock on Wednesday, the 29th inst., that the Co. accept the terms offered in this letter, I shall remain in London, and carry out the work which devolves on me as the Agent of the Government, and give the guarantee referred toj otherwise I shall leave for Halifax on the steamor of the 80th inst. J am, &c., CSgd.) W. B.VAIL. The following letter Avas received in reply : MooKGATE Street Chambers, London, E. C, 29th Nov., 1882. . Tub Hon. W. B. Vail. Sir: " N^ova Scotia Raihray Company." J have to acknowledge the receipt of your letter of the 27th instant and regret that it is not possible to give you a reply thereto, as request* ed, by 12 o'clock, noon, to-day, as there are several parties to be consulted upon the subject ; but you may rely upon their being no avoidable delay in answering your communication. I am, &c., ■;•;'■:''>•-: (Sgd.) SYDNEY J. SMITHERS. -^ ■V. ■!-!.". ;"'■"',' ' Secretary. The Secretary wrote again on the Ist December: ; ;- , MooiiGATE Street Chambers, London, E. C, 1st Dec, 1882. The Hon. W. R Vail, Sir: . ^ " N'ova Scotia Railway Company." I have not yet been able to answer your letter of the 27th instant ; but I have this morning received a letter from Mr. Plunkett, of which I enclose you a copy ; and by direction of Sir Henry Tyler, I am calling a meeting of the Board for Monday next, immediately after which meeting an answer to your letter shall be sent to you. I am, &c., &c., (Sgd.) SYDNEY J. SMITHERS. Secretary. Copt Letter fro.m Mr. Plunkett, I'M) Wood Street, 1st December, 1882. Dear Sir : I beg to annex copy ot letter received from a financial house who have undertaken to syndicate the Nova Scotia Company's entire capital. The linu in question is known to Mr. Stewart, and it is, I am or before 12 pt the terms )ut the work n,nd give the ifax on the B. VAIL BERS, Tov., 1882. informed, considered to bo experience*! and capauje in that sort of business. In view of these and other important negotiations now pend- ing, and the long delay 1 hare had to submit to on acconnt of Govern- ment action and inaction, I beg noWj respectfully, to ask the Company to represent the matter to Mr. Vail, and request him to postpone his departure until at least the ir)th December, to give time for the nego- tiations to be concluded, one way or another. I remain, (fee, (Sgd.) S. J. Smithers, Esq., &LC.. &c. fKSgd,) E. W. PLUNK ETT. i7th instant >, as request- arties to be iir being no 'HERS. Secretary. BERS, )ec., 1882. th instant ; it, of which [ am calling ifter which , . , Copy Lkttkr a.snexei> to tuk abovk. LON'TON, L'Sth Nov. 1883. E. W. Plunkett, Esq., &c., kc. lie " Nova Scotia Eniiivay Comyany." Dear Sir : The matter you have kindly submitted to us has had not only our caj'eful consideration but also that of a powerfid financial group in Paris, with whom Ave are associated. Our dual opinion is strongly in favor of being able to form the needed Syndicate ; the final decision, in our opinion, rests only on the arrange- ment of financial terms and price ; by that wo mean the nece.s.sary margin for the Syndicate. We have a telegram this morning from Paris that a special delegate is to arrive to-morrow on behalf of the French people. The business having advanced to this point it is imperative that you kindly write to us, placing the matter in our hands for negotiation for one month from present date. You may rest assured we shall lose no time in bringing it to an earlier issue of possible. Yours, &Cm &c.. HERS. Secretary. EET, er, 1882. house who i;^'s entire it is, I am Mr. Plun'kett's Note upon the Above. one month' was refused, and (Sgd.) K. W. P. Note. — The time required above, i. «', two weeks given instead. After receipt of the Secretary's letter, dated the 1st instant, in*' rm- ing me that Mi'. Plunkett was urging the Company to a.sk for further delay I wrote the following letter : 40 19 Sackville Street, Piccadilly, Dec. 2nd, 1882. Sir : I hare to acknowledge tlie receipt of yours of the 1st instant, enclosing a copy of a letter from Mr. Plunkett, together with an unsigned communication from some financial houso in London, who, Mr. Plunkett states, has undertaken to syndicate the Nova Scotia Kail way Company's Capital. It is to be regretted that Mr. Plunkett did not sec his way clear to give the name of the firm he is negotiating with, as it would doubtless have placed Sir Henry Tyler and the Company in a better position to judge of how far they can rely on Mr. Plunkett's expectations being realized ; that, however, is a matter between the Company and Mr. Plunkett, who, since the assignment of the Agreement and Contract to the chartered Company on the 20th of July last, has ceased to hold any position in connection with the enterprize which can be recognized by me. And the Goverment must consequently hold the chartered Company responsible for carrying out the (Jontract. Referring to that paragraph of your letter of the 27th ult., in which you say " the Goremment have placed further difficulties (as referred to in my previous letters) in the way of dealing with the seciu-ities of the Company, by demanding as a condition, prior to giving the guarantee, the deposit, on account of the sinking fund, of an additional amount beyond that originally contemplated," I beg to remind the Company, that notwithstanding I wrote you on the .SOth of September, and st. led explicitly che terms on which 1 was authorized to give the guarantee, which letter you acknowledged the receipt of on the 2nd of October, it was not until the 9th of November (the only letter you referred to the sinking fund in), and after I had particularly asked by request of the Government for information on this point, that you even hinted the Company objected to the terms of the Order in Council, and I think it is now too late for the Con^any to put that forward as one of the reasons .vhy they are not in a position to com})ly with the re(iuirements of the contract. Since the receipt of your letter of yesterday, I have carefully examined all the letters received from you since the Charter was granted to the " Nova Scotia Railway Company," and was somewhat astonished to find that the Directors have never yet intimated they had made the slightest progress, or in fact were prepared to do anything : and I really think, I maybe pardoned for saying, if they have come to the conclusion, as I infer from your letter of the 27th ult, they have, that the money cannot be raised, except at too great a .sacrifice, they ought to state more frankly and positively than they have yet done, that they decline to UTulertake to raise the Ca^rital required witliouf a further guarantee of the Government. As I stated in a former letter, I am exceedingly desirous that the Company should have every reasonable, and I may add, possible opiwrtunity to fulfil their part of the Contract ; and as a further proof of this I now beg to say, if the Directoi-s, at tlie meeting on Monday next, will authorize you t write me, that the Company will be prepared to to make the tleposit in accordanco with the terms of my letter of the 27th ult., with Messrs. Baring Brothers &; Company, by Tuesday, 12th, or by twelve o'clock on Wednesday, the 13th of the present month, I shall vait till that date; but I cannot agree to extend the time on uncertainties, and expectations, which experience has taught me, are not likely to be realized. I shall bo much obliged if you will submit this letter to theJBoard of Directors at the meeting on Monday next, and hoping for an early reply, I remain, &c., (Sgd.) W. B. VATL. Sydney J. Smtthers, BSsq,, Sec'y. of N. S. Ry. Co., .- 30 Moorgate Street, E. C. ./':■ ■• ■','" ,■,,., On the 5th of December I received the following letter, giving the decision of tlie Directors at the meeting on the 4th instant : MuoRfJATE Street Chambers, 30 JMoorgate Street, London, E. C„ 4th Dec, 1882. The Hon. W. B. Vail, 19SackvilleSt.,W. Sir: In reply to your further letter of the 2nd inst,, and which I have laid before a meeting of the Board this morning 1 am instructed to say that the. Board cannot admit the expre.ssions contained in the second and third pages of the letter as accurately representing the circumstances of the case. You refer to the previous correspondence, and you mention that it was not until the 9th November that the Board ever hinted that the Directors objected to the terms of the Order in Council. They were, however, aware that this question formed the subject of negotiations between Messrs. Baring, Mr. Plunkett and yourself, and they did not think it necessary to place anything in writing in regard to that matter at that time. In regard to your further statement, that since the receipt of isy letter ot the 1st inst., you have carefully examined all the letters re- ceived from me since the charter was granted to the " Nova Scotia Railway Company," and that yo« are somewhat astonished to find that the Directors have never yet intimated they had made the slight- est progress, or, in fact, were prepared to do anything, 1 may observe that the negotiations between Mr. Plunkett and Messrs. Baring and Brothers have been continually proceeding; that Mr. Plunkett has, from time to time — as you are perfectly well aware — reported to the Board that he would be able to raise the money required, and it was not for the Board to place difficulties in his way, so long as there appeared to be any probability of hia carrying the business through on the terms of the original proposal. 42 You have since made a furUici- proposal, and the Company are still in the same position. Mr, PUinkett informed the Board, throujjjh Mr. Stewart, this morning, that he had great hopes of l>eing able to cany out the arrangements. While, therefore, the Board are sorry for putting you personally to any inconvenience by prolonging your stay here, in consequence of the delays in th<; negotiationw, they think they cannot now do otherwise than inform you that they have given Mr. Plunkett until Monday next, to bring before them a scheme, such as they may be able to ap prove, in a complete form ; and that, if he is unable to satisfy them by next Monday, they will then be prepared to inform you of the re- sult, one way or the other, of such propositions as ho may make to them. I am, &c., (Sgd.) SYDNEY J. SMITHERS, Secretary. London, Dec. 5th, 1882. Sir: I have to acknowledge the receipt of your letter of yesterday, which, I .regret to say, is disappointing, and very unsatisfactory, as I had great hopes that the Directors at the meeting on Monday would re- solve tojgive me a decided answer whether they would be prepared by Monday or Tuesday of n-oxt week to make the deposit in accordance with^the terms of ray letter of the 27th ultimo, or not. You take exception, on behalf of the Company, to certain expressions in my letter of the 2nd itst., as not being entirely accurate. In reply, I think I need do no more than point to your letter of yesterday as fully admitting all my assertions. You will doubtless remember that I have, from the first, distinctlj'' stated that, as Mr. Plunkett is not one of the Directors of the " Nova Scotia Railway Comjiany," as now in- corporated, T could not, in any way, officiall}'^ recognize him ; but that 1 must deal directly with Sir Henry Tyler, as President, through you, as Secretary, of the chartered Company. Of course, as Mr. Plunkett, who represented the Provisional Co. be- fore the transfer, Avas responsible for the management of the business up to the time the charter was gi-anted to the " Nova Scotia Railway Company," and was admittedly working to ensure the success of the undertaking, I could not, and did not, refuse to hear, from time to time, what he chose to tell me ; but you must bear in mind that the Gov- ernment I represent have no interest, or concern, in the details of the financial arrangements which the " Nova Scotia Railway Company " may find it advisable to make. The results alone concerned me, and, for official information, I have all along looked not to Mr. Plunkett, but to the Company. I must, therefore, repeat that, up to the 9th of Nov., I had no intimation from the Company that they objected to the payment of the sinking fund capital ; and I have further to n&y in reply to your letter, that, so far from my having learned from Mr. Plunkett that that objection was taken as a bar to progress, T was more than once informed by him that the payment of the capital of the sink- sHMiMa ing fund was not au obstacle to tho agreement lieing carried out. Tho only objection Mr. Plunkctt over made to that part of the Order in Council which referred to tho sinking fund, was that tho Government made a demand (ais he put it) on MesBrs. Baring Bros, for that amount, in addition to the tive and a half millions. I etcplained to him by letter that the Government made no such demand on tho Messrs. Barings ; that the demand was made upon the Company, to place it in the hands of the Barings ; but if the Company objected to that, and would prefer to place the money in any other reliable Bank hero, I shoidd consider the terms of the Order iri Council, in that particular, as having been complied with, and an I heard nothing more from Mr. Plukett, and nothing, whatever, from the Company on tho subject till the 0th Nov., I assumed, as I think I had a right to, that this proposal was satisfactory. You take exeption, also, to my saying that " the Directors never yet had intimated they had made the slightest progress." As a justification of my remark I may again cjuote from your letter of yesterday, in which you say " that Mr. Plunkett had from time to time reported to the Board that he would be able to raise the money required, and it was not for the Board to place difficulties in his way, fee," and then you state "you have since made a further proposal," and the Company ar« still in the same position, which I can only interpret to mean still wait- ing for Mr. Plunkett. It comes, therefore, to this : In September, 1881, Mr. Plunkett entered into an agi-eement with the Government of N. S. to organize a company with a capital of 810,000,000 and to under- take certain works, within a specified time. In November, 1881, a certain amount of money was lodged with the Government, as security for the fulfilment of the obligations entered into. In February, 1882, an Act 'of the Legislature was passed, ratifying and legalizing the a Church Road, ■' ■ Upper Nwwood. • . . .. Sir: " Nova iScotia Railway Company." • ? ; - Your letter of the 5th instant, as amended, and received this morn- ing, has been laid before the Directors of this Company, at their meeting to-daj', and they have desired me to point out to you that it is of a somewhat arbitrary character, and they hardly consider that nine weeks is a very long period in which to carry out tmnsactions of this nature, when very much longer periods have been taken the other side of the Atlantic in carrying out previous transactions in the same business. At the same time that they received your letter of the 5th instant, referred to, they also received a letter, of which copy is enclosed, from Mr. Plunkett. They quite agree with Mr. Plunkett, that it would be impossible at the present moment to issue to the public here, on any terms which they could consider reasonable, the unguaranteed capital placed at their disposal ; and they can only, under these circumstances, leave you to deal with the subject as you may think proper in the interests of your QovernmeBt. I am, Ac, &c., (Sgd.) SYDNEY J. SMITHERS. Secretary. Mr. Pluxkett's Letter. London, 11th Dec, 1882. S. J. Smit]iers, Esq., , tfcc, Ac. Dear Sjr: I beg, respectfully, to siibrnit for the consideration of the Directors a statement and proposal respectiur,' the agreement with the Government of Nova Scotia. The Stafenitnt is an follows: That there is no provision, stipulation or ctmdition in the agreement which requires or obliges the Company to find immediately more than £l,078,()0§ ; that is the amount rcc^uircd for the acquisition of the existing lines, and the payment to Government of its £277,400 ; the balance being an amount left on deposit as security for the completion of the agreement. That said last named XI, 078,000 can now be arranged for to the satisfaction of the Government and on the terms of the agreement, when the Government does its part. That to carry out completely the whole agreement, according to the estimate of the Company's Engineer, there will be recjuired ultimately in all the sum of £1,900,000 cash, of which about £971,000 will be wanted to acquire the existing lines, &c. , but the remaining £929,000 cannot be wanted (nor any part of it) until the existing lines are ac- quired and ^delivered, nor until the Nova Scotia Winter season has passed, and the works of repair and contruction can be undertaken. That the ac(]uisition and delivery of the existing lines has, under the agreement, to be performed and com])letcd by the Government, and may be difficult, tedious and uncertain, in view of which it is now neither necessary for practical purposes, nor essential, under the terms of the agreement, that the Company should go beyond its contract in an unfavorable condition of the money market for the purpose of ob- taining subscriptions to its ca[)ital that are not required for an indefinite time. Moreover, it is a question whether it would bo proper for the Company to solicit and accept subscriptions to its unguaranteed capi- tal until the Government had taken the necessary steps — as it is bound to do under the agreement — to set at rest all disputes and questions as to the rights and claims of the existing companies. The proposal I have to submit to the Directors is that they should state to the Agent of the Nova Scotia Government as follows : That the agreement only obliges the Company to provide at the jiresent time, and for some time to come, the sum of £1,078,000 in ad- dition to the £52,000 already paid. That the Company will, immediately the Government Agent delivers the guarantee, arrange for that sum as provided in the receipt. That, in view of the uncertainty as to the time when any further amount of the Company's capital will be rec^uired under the agreement, and the admitted sufficiency of £1,078,000 for some time to come for all possible purposes, and considering the present unfavorable state of the lioney market, the Company do not feel that they should, or oan V*'! 46 be, properly callctl upon to do rutrc tlian what i.s practically esHontial at tne present time: that is to aiTango for tin- £1,07S,(M)0. That, with respect to the subject of sinking fund and further eo- cuiity, which have been so often discussed between the Government Agent and the Company, the Directors fimily maintain that lx)th these points were clearly and fully disposed of and settled by cable corres?' pondence with the Government before the payment of the £52,000, and that they cannot now be fairly opened up again. Nevertheless, the Directors are anxions to consider and concur in the views of the Government in every way they properly and fairly can on these, as well as all other points of the agreement ; and when the proper time comes for the settlement of these matters, they will be prepared to come to an amicable understanding with the Government respecting them. I now desire to point out to the Directors that there are several ways the ungiiaranteed capital may be employed and realized if it cannot bo sold to the public between now and the time it is wanted. It may be partly used in acquiring the existing companies, or in the purchase of i'240,000 worth ot rails and iron work. It may be made valuable by obtaining the guarantee of some lai-ge Railway Company in the man- ner now commonly adopted in exahange for traffic arrangements. It may also be made marketable by offering it for subscription at a very low price in conjunction with the guaranteed capital, or it may have some of the guarantee applied to it instead of all to one stock. Which- ever of these plans is best aad most feasible can only be determine^ by inquiry and examination, Avhich requires yet .some time. I would also respectfully represent to the Directors that some such communication as I propo.se being sent to Mr. Vail is absolutely essen- tial, not only in the interests of the Company itself, but also in those of Messra. Barings and the Government. It is necessary on behalf ©f tJie Company, in order to preserve it from default, and on behalf of the Messrs. Barings to save their deposit ; and the Government, to enable it to \)&y about £20U,000 liability it has incurred for the acquisition of one of the existing lines, and which amount it has no means of providing other than from the Company. Ib conclusion, permit me to call the Directors' attention to the fact that, if after using every effort to obtain the capital required for the repairs and new lines (for that is all now wanted), the Company failed, such failure would be less damaging then than it would be now at the very commencement ; and the only result would be the post- ponement, Uiitil more favorable times, of those works, or another arrangement with the Government for an additional guarantee. Yourp, &c., (Sgd.) E. W. PLUNKETT. 47 MooiuiAii; Street Chamuehs, UQ Moor^ate Street, London, E. C, 13th Dec, 1882. The Hon. W. B. Vail. "Nova Scotia Itailvaij Co." Sir: I am instructed by the; Board of thi.s Conjpany to hand you, here- kvith, copy of letter which Mes.sr8. Baring Brothers k Co. have to-day addres.scd to Mr. Phmkctt, stating the arrangement which they are now prepared to make with refer(5nco t(j the guaranteed capital of the Com- pany, and having regard to my formwr corsespondence with yoii, T am now instructed to say that tlie Company are, witli the approval of the (iovemment, prepared to issue the guaranteed Capital, and to place it in Messrs. Barings hamds for salt* on the terms stated by tliem. If the Government should approve of the course thus proposed by Messrs. Barings, the arrangement should be concluded at once as liessrs. Barings proposal cannot, of course, remain open for an indefinite period. I am, &LC., (Sgd.) SYDNEY J. SMITHERS, ,/ Secretary. London, 12th December, 1882. E. W. Plunkett, Esg., I'M) W(jod Street, E. C. SiE: We beg to acknowledge receipt of your letter of the 11th inst., in which yoii ask us to carry out the financial arrangements connected with the issue of the guaranteed Debenture Stock of the "Nova Scotia Railway Company " which we contemplated last year when we made the advance of £52,()0(). We beg to point out to you that in conscfiuence of the long delay which has occurred in carrying out the necessary formaltics luany favorable opportunities, for carrying out the arrangements have been lost, and in the changed circumstances which now exist some modification of details is reciuisite. We are prepared to issue the Guaramteed Bonds of the " Nova Scotia Railway Company " at a price to be mutually agreed upon, as soon as the money market is faA'orabla for the issue, and if so desired we will hold the proceeds to the joint order of the Government and the Company. We are prepared t» advance, and add to the pit)ceeds of the issue, a sum sufficient to make with (jhem a total amount of £1,078,000, which with the jt52,00() already paid will make up the five and a half milllion of dollars referied to in the receipt dated 27th November last. This jE 1,078,000 we will hold to the joint order of the Govern- ment and the Company. , As security for our advances we are prepared to accept a sufficient amount of the stock of the Western Counties Railway Companj-, pro- ^p videil that you, ami the (lovornini'nt, and tlio roinpany shall previously aj{ree that iiot less thati £27\liM). lu'in;,' tlio amount (istiuiatcil l)y the Company's Chief Enj,'iiu'er as payable for the Western Counties Railway, shall be paid therofol- out of the Haid sum of Jtl,07H,000. Should it be necessary Itefore the issue of the securities that payments ior any of the existing Railways bo made, wo shall be propare ments of the Order in Council in any manner exceeded the Agreement, and I did not feel at liberty to accept their view, I should be prepared to submit the points of difference to the Qovemment and await their instructions. As I before stated, I arrived in England on the 26Ui of September, quite ready, at a moment's notice, to proceed with the bunness and endorse the bonds. I waited from week to week, and latterly from day to day, hoping the Company wo\ild be in a position to claim the guar- antee of the Government I was satisfied that up to the time I left London (Dec. 20), they had not succeeded in raising a dollar of the re- quired capital, and, as will b« seen by the correspondence, they acknowledged their inability to fulfil the requirements of the Act and Agreement by asking the Government either to extend the guarantee or endorse the Company's bonds for the five and a half millions before a , deposit of any kind was made as security for the performance of the contract. I am, your obedient fiervani,