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PUBLIC RECORD OFFICE

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Reference :--

C.O. 882

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4PUBLIC RECORD OFFICE, LONDON

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But supposing that money were available at the present time for carrying on a large public work, it appears to me that other works require at least as much consideration, even from a financial point of view, as the proposed railway extension. The irrigation works promise a steady increase of revenue and diminution of expenditure in relief of The defence of Colombo has, in the light of recent events, been poverty and sickness. recognised as required to give due security to the trade of the island. The completion of the barbour at Colombo is another public work to which the community appear to attach great importance.

These subjects, equally with the railway, should engage the attention of the Legislative Council.

14. In dealing with this question of railway extension, I have not forgotten that it is one which a considerable section of the Ceylon public regards with great interest, and which has been pressed on my predecessors on several occasions of late years. It would therefore be a source of much gratification to me if I can feel myself justified in sanctioning an undertaking which has been long and keenly desired; but before doing 80, it is only my duty to satisfy myself, and to afford the Legislative Council an opportunity of doing the same, on these two important points, viz., Is this work one which should undoubtedly take precedence of other works such as those I have above mentioned? And if this be so, are the financial prospects of the line such as to secure the Colonial revenue against a heavy liability?

15. It will be very satisfactory if you are able to furnish me with a conclusive answer to these questions; but you will, of course, bear in mind that I do not contemplate that the few public works which have been sanctioned on the ground of their urgent necessity, and, least of all, those undertaken to meet the requirements of the native population, should be abandoned in order to provide from public revenue for the charges on the Haputalé Extension.

16. If, however, it should eventually appear that the Government of Ceylon cannot with ordinary prudence commit itself to this railway extension, I would, in my strong desire to interpose no obstacle to the wishes of its advocates, reconsider the decision already given by my predecessors as regards the construction of this line by a company.

It would, however, have to be executed without any Government assistance, and, so far as may be possible, the Colonial Government would have to be protected against the obvious inconveniences to be apprehended from the extension of a Government Eystem of railway by such means.

I have, &c.

Sir A. H. Gordon,

No. 3.

(Signed)

FRED. STANLEY.

GOVERNOR THE HON. SIR A. H. GORDON, G.C.M.G., to the RIGHT HON. THE EARL GRANVILLE, K.G. (Received July 26, 1886.)

(No. 257.)

MY LORD,

The Pavilion, Kandy,

June 23, 1886.

I HAD the honour duly to receive Secretary Sir F. Stanley's Despatch, No. 153, of the 28th October last, on the subject of the proposed extension of the main line of the Ceylon Railway from Nanu-oya to Haputalé.

2. In that despatch Sir F. Stanley expresses a strong desire to interpose no obstacle to the attainment of the wishes of those who advocated such an extension, and declares that it would afford him much gratification if he could feel justified in sanctioning an undertaking which has been long and keenly desired by a considerable section of the Ceylon public. At the same time, he remarks,--and, as it appears to me, with perfect justice, that before doing this it is only his duty to satisfy himself whether the work is one which should certainly take precedence of others, and whether the financial prospects of the line are such as to secure the Colonial revenue against a heavy fiability.

3. On both these points Sir F. Stanley entertained doubts; but it is to those connected with the remunerative nature of the undertaking that his despatch in question is almost wholly devoted. He expresses an opinion that the language of Lord Kimberley in 1882, when he refused to sanction a similar request, on the ground that the depression in the Colony, and the great diminution of the Colonial revenue, which had been continuʊus for no less than five years, rendered it “impossible, consistently with ordinary financial

• No. 2.

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prudence, to embark in so heavy an outlay," possesses even greater force at the present time than when written, and that there is no evidence that this depression is passing away. Nor was Sir F. Stanley of opinion that the ultimate success of the line can be regarded as beyond all doubt. "Its success," he writes, "mainly depends upon agriculturai produce, the future of which is necessarily most uncertain; and if the returns now collected promise well, it must be borne in mind that the estimates framed for the Nanu- oya section, which promised a fair return on the outlay, have proved to be altogether misleading."

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He complains that the confidential nature of the estate returns furnished to him has prevented their proper examination or analysis; but, assuming their correctness, he is unable to satisfy himself that the railroad will satisfactorily compete with cart traffic, and considers that the experience of the existing line does not support the conclusion that the completed line will secure the whole of the up and down traffic. He also objects that no allowance has been made for possible further deterioration in the yield of coffee. He considers the estimate of working expenses to be too small, and the period of three years too short a one on which to base averages, while, as the line "runs through an uninhabited country," no material passenger traffic on it can, in his opinion, be anticipated.

4. To many of the objections thus urged, an answer, satisfactorily disposing of the doubts expressed, might have been given at any date since the receipt of Sir F. Stanley's Despatch. But I felt that so long as the main central doubt, whether the construction of the work might not involve the Colonial revenue in liabilities which it was unequal to bear, remained unsolved, it was useless, and a mere waste of time, to attempt to smoothe away obstacles of a less grave character.

5. I have therefore abstained from any discussion of the various points touched on by Sir F. Stanley as rendering the success of the undertaking questionable, until I should have received the report of the Commission appointed by me to inquire into the financial prospects of a railway from Nánu-oya to Haputalé. That report I have now the honour to enclose, and if your Lordship shares the sentiments expressed by Sir F. Stanley, (as I trust I may assume to be the case,)-it will be with satisfaction that your Lordship will perceive that, in the judgment of this Commission, the extension of the railway to Haputalé would impose upon the Colony no permanent additional burden, or any liability, even of a temporary nature, that it cannot meet without inconvenience.

6. The members of the Commission are unanimous in their opinion that the remunera- tive nature of the enterprise is beyond question; and they are all men whose opinion on such a subject is entitled to most respectful consideration. Of the official members I need say nothing: their names and qualifications are well known to your Lordship You are also, I believe, acquainted with the character and ability of Mr. Downall, M.L.C. Of the other members, Mr. North Christie is Chairman of the Planters' Association; be has no direct interest in Uva, his estates being situated in the Maskeliya District. Mr. Bowden-Smith was formerly a menber of the Legislative Council, and is now in business in Colombo. He is a man of sagacity and judgment, is universally respected, and his opinion carries weight in the Colony.

7. The Commissioners report that the resident engineer has given them reasons for believing that the cost of constructing and opening the contemplated line, if depart- mentally inade, will not exceed Rs. 5,640,000; and they point out that more than a quarter of this sum will be available from the balance of Rs. 1,453,473 remaining unexpended of the loan already raised for railway purposes. Waiving, however, this consideration, and assuming that the whole sum of Rs. 5,640,000 will have to be raised, and that a sum of Rs. 282,000 will be annually required for the payment of interest and as contribution towards the sinking fund, they proceed to explain that, on the most moderate estimates, making no allowance whatever for any expansion of cultivation, and striking off one-third of the up-traffic, which experience shows may confidently be anticipated if the down traffic be only equal to the amount of produce now actually exported from Uva, a profit over the cost of staff, maintenance, and working, &c., is shown of 8 per cent. per annum, while there would still remain, after payment of interest and contribution to sinking fund, a net annual surplus balance of Rs. 217,183.

8. But I am willing to be even more moderate in my anticipations than the Commis- sioners, and to assume that the estimates prepared last year cannot be further reduced and that not Rs. 282,000, but Rs. 299,380, will be annually required to meet the cost of sinking fund and interest. Even then, if the other calculations of the Commissioners be correct, and I see no reason to question them.-there will remain a net surplus of, in round numbers, Rs. 200,000, (or more exactly Rs. 199,620),–

),—not a very large sum F 4.