The directors* were satisfied, however, that the Government's decision would be based on a consideration of what wan fair and reasonably. The second rccommend ntion was—That the accounts of the re ceipts and expenditure of the Company shall be audited, the auditor to 1m ap pointed by the Government, and to have power to disallow any items, whether for the expenses of maintenance of worlds, ov otherwise, charged in .Midi accounts. The directors ;\t once conceded that it was reasonable there Bb.ouM.be an audit ; but they demurred to the large powers which it waa proposed to give to the auditor. To give such powers to an irresponsible officer, seemed to be good neither for the Government nor the Company, although it was right that the auditor should state *ny objections he felt to particular items. What "the directors suggested was that certain principles should be laid down in the agreement, and should bo strictly ad hered* to. The directors could not con ceive how any objection could be taken to any fair expenditure for the main tenance of the works, or for proper man agement. .If the diroct-ors took, or pro posed to take, revenue for purposes which nhonld be charged against capital, that might ri'.'htly be objected to. The Si'iT.iuNTBNhKST : Practically, such a condition as this second one would 1)0 giving power to the Government. I do not 'mippoKe it wan meant that the auditor should have an absolute power of •disallowance. Mr IiATiicATK : The recommendation was explicitly so worded. The third re commendation was--That no amount shall be payable to the Company, under the guarantee, unless, out of their own funds, the Company are able to pay a dividend of at least one-half per cent. The directors could not conceive the pos sibility of their not being able to pay ■such a dividend ; and why there should bo a proposal for a specific agreement on the matter, they could not at all under stand. There" niiuht V>e a reason for it, which the director."* failed to see; but, if so, it would be better tv state it in the principles to be laid down for regulat ing the audit. Circumstances might occur, under which the Government might refuse to continue to fay the guarantee. 