CO129-389 - Governor Sir Lugard Acting Governor Claud Severn - 1912 [3-4] — Page 318

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Assuming that revenue and expenditure on

other accounts balance in each year the present balance of assets will by the end of the year 1912 when the Refuge is due for con- -pletion have been reduced to a sum of $1,000,000 in round figures and it would be obviously unwise to mortgage it to any further extent. In this connection I would refer to peragraph 4 of your Despatch No. 384 of 30th. December, 1911.

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9.

Apart however from these considerations, I am

of opinion that the proposed expenditure set out under three heads in paragraph 2 is such as could legitimately be met from funds provided by loan. The expenditure under Head (i) has already been sanctioned and need not be discussed further. Head (iii), the site for the station, is an essential part of the Government's enterprise and the expenditure thereon will yield a no less real, if invisible, profit; for the success of the Section will turn to no small extent on the suitability of the terminal arrangements. The same remarks apply in the case of the Station and Station Yard (Head ii).

The provision for locomotives included under

the same Head (ii) is no more than is necessary to place the engine power both as regards the Main and Branch Lines on a sound working basis. I may add that, although a sum of 845,000 is in- -cluded for one of these engines in the estimates for this year, it is unlikely that the amount will become available owing to an anticipated reduction in traffic receipts consequent upon the

Revolution and the unsettled state of South China.

The proposed expenditure on the Manager's house is admittedly chargeable to Railway Capital Account but it is unlikely that even the $20,000 included in the current Estimates will become available owing to the anticipated reduction in the traffic receipts referred to in the preceding paragraph. The life of the house which it is proposed to purchase may be taken on a low estimate at 50 years. The expenditure on the house would yield a return of 4 per centum or in other words interest

at 3 per centum and sinking fund at 1 per centum thereon. Finally