The Sun.
London, England, 1858-07-12 00:00:00

AUSTRALIA.

By the arrival of the European we (Time) have
received our private correspondence acid Iles of
papers from Melbourne to the 15th of Ma,„
The following is the letter of our Melbourne cor-
respofident

" MELBOURNE, MAT 15.
" The Australasian, with the March mai, came
to anchor in Hobson's Bay on the morling of
Thursday the 13th inst., her arrival at the Heads
having been telegraphed on the previous evening.
Among the passengers is Mr.. Childers, wh) was a
member of Mr. Haines's Administration. When
that Ministry was succeeded by Mr. O'Shinassy's
Cabinet in March, 1857, Mr. Childers vent to
England as emigration agent, but the policy of suc-
ceeding M.uistries having changed, Mr. Childers
found himself without functions, and it is sow un-
derstood—and II believe not without foundation—
that be is clothed with powers from Barings house
to negotiate with this Government for our railway
debentures.

'The Government has accepted only ona of the
several tenders—namely, that of 'Messrs. Cornish
and Bruce, from Melbourne to Sandhurst (Bendigo)
108 miles, for 3,356,937/. The contractors, who
have executed several important works satisfac-
torily in the colony, have been able to fulfil
all the guarantees and conditions required, of them,
and have satisfied the Government of their ability
to carry on the works to completion. On-the Ist
of June the first sod will be turned by the Gover-
nor, and the works are to be completed at the end
of 1861.

" The lowest tender for the line from Geelong to
Ballarat would have been taken, but the contae-
tors did not make those assurances and were not
disposed to agree to those conditions required in
the case of the other contractors. As none of the
other tenders were satisfactory to the Government
the line has been readvertised. The line from
Sandhurst to the Murray river will not be under-
taken at present. The country is level, all the
lands are vested in the Crown, and it is thought
it may be contracted fur on very easy terms here.
after.

" In round numbers the Government will re-
quire to raise 1,500,0001. by the sale of debentures
annually for four years. The ultimate market will
be London, and it is desirable that they should be
supplied to that market through a single channel.
There are eight banks here, and it is pretty well
understood that four or five of those banks are pre-
pared to supply the funds as required, upon the
draughts of the Government upon the London.
house which may undertake the agency at home.
The annual interest which the colony will be re-
quired to provide will be as follows :-1858,
45,0901. ; 1859, 135,000/. ; 1860, 225,0001. ; 1861,
315,0001. In 1862 the interest on 6,000,0001. will
be 360,0001., but by that time the railways will be
productive, and. I have no doubt will pay expenses
and interest ; but if not we have a revenue in round
numbers of 3,000,0001., with a Government expen-
diture of not much more than half that amount, so
that we have only to suspend vane of the public
works and improvements to enable us to pay the
interest even in the most d sa,ttotui tunes. That
the rndu trunk lines—and no others are cintem-
plated at present—will pay I think cannot be
doubted. We have no competing canals here. All

the goods to the interior and the aool and gold in
return will be conveyed by train. The passenger
traffic will be great, as we are as travelling a race
as the Anglo-Americans. The Hobson's Bay Rail-
way, though it cost a mint of money (labour at the

time it was constructed being 1/. a-day), pays 14 per
cent. ; the St. Kilda Railway rather more. The
Geelong, under every disadvantage, pays its expen-
ses, though the line is only partially opened, and from
want of meansit is managed after a starveling sort of
fashion. If, however, contrary toiny expectation, the
new trunk lines should onlypay their current expen-
ses, the country can well pay the interest, and the
national gain will be the difference between the pre-
sent enormous cost of transport (101. to 181. per
ton) and a rate of much less than half to be charged
by the railway. There will also be a national saving
of half the expense of travelling.
" Permit me now to say a few words about the
controversy which has taken place in the London
papers respecting the Geelong and Melbourne Rail-
way Company and their shares and debentures. I
observe that this Government has been even accused
of ' repudiation,' because there is a dispute between
the shareholders of the company and the debenture
creditors as to priority of claim upon the guarantee
of this Government. It so happens that I have
carefully kept all statutes, reports, accounts, &c.,
relative to our railways, and from recent inquiries
I believe I am in a condition to furnish a more
accurate statement than you and your readers are
likely to get elsewhere.
" The Geelong and Melbourne Railway Com-
pany obtained a private act of the old Council
on the Bth of February, 1853. By this act
they were empowered to raise a capital of
350,0001., in 17,500 shares of 201. The com-
pany was authorised to raise a further sum of
500,0001. by the issue of new shares. They were
also empowered to borrow on mortgage to the
extent of one-third of the paid up capital.
The interest on the money so borrowed was
to be paid ' in preference to interest or dividends
due or payable by virtue of this act to the said
shareholders or any of them.' Then followed a
provision which the company now 'finds very incon-
venient. By sec. 72 of the Act it is provided that
if the Government shall at any time guarantee in-
terest, 'it shall be lawful for the said company (if
her Majesty's Government shall require the same)
to assign
or mortgage the property of the said com-
-1 pany, and the rates arising or to arise by virtue of
this Act or any part thereof, as a security for any
such sum or sums of money ss shall be so guaran-
teed, to be paid by the said Government to the
shareholders of the said company in pursuance of
such guarantee.'
g‘ By an Act passed June 12, 1855, to amend the
above Act, power was given to borrow to the ex-
tent of three-fourths of the paid-up capital instead
of one-third thereof. It was also enacted, that if
the Governor should guarantee 5 per cent, interest
on the paid-up capital for 21 years, it should be
lawful for the directors for the time being to take
and accept such guarautee, without the consent of
the shareholders, with this proviso—
cc ' That any assignment or mortgage of the pro-
perty of the said company, made in pursuance of
the 721 section of the sled recited Act, to secure
repayment of any sum of money paid under any
guarantee given or
to be given by her Majesty's
Government, shall have
priority over all other
charges and incumbrances affecting the property of
the said company.'
cc Before the passing of the last-named Act the
Government had guaranteed 5 per cent, interest,
c,
first on 200,0001. of the capital (16th of Februar
1853), and subsequently on the remainder of the
paid up capital (10th of October, 1854). This in•
terest on the whole capital, 350,000/, amounting to
17,500/. per annum, has been faithfully paid, and
so far is the Government from being open to the
charge of repudiation, filet it has never even re-
quired the fulfilment of the condition that the
company should assign its property to the Govern-
ment as a security for the guaranteed payment of
interest. The company has borrowed 262,0001., at
7 per cent interest, with the exception of one s I all
sum at 8 per cent., and this interest, calculating it
only at 7 per cent., amounts to 1,275/. per annum
more than it receives under the Government gua-
rantee. Now, you observe that with the respec-
tive rights of the bondholders or mortgagees and
the shareholders this Government has really no
concern, except that it has hitheato generously left
the settlement of those rights unfettered, by ab-
staining from enforcing that priority of mortgage