QUEENSTOWN, FRIDAY, MARCH 19, 1886.

Lake Wakatip Mail, Issue 1523, 19 March 1886, Page 2

QUEENSTOWN, FRIDAY, MARCH 19, 1886.

One important element in New Zealand finance, and one frequently referred to by the Treasurer, Major Atkinson and other members of the House, who have an authoritative knowledge of the subject, is the consolidation of stock. What this means is, however, by no means generally understood, and there is the further complication in that, as the loans are converted into consolidated stock, the sinking fund in each case is set free—an equivalent amount of stock being created. This was the great a>u/> of the financial policy of ISM, which the Treasurer made so much of. The effect, undoubtedly, is to relieve the revenue proportionately to the amount of sinking fund, which ceases to be required to be provided for, but a corresponding addition is practically made to what we may term the funded debt of the colony, upon the aggregate of which interest has to be paid. Our present purpose, however, is not to discuss the policy but rather to explain the process, so far as this admits of being done intelligibly.

"The New Zealand Consolidated Stock Act, 1877," authorised the Governor-in-Council to, from time to time, declare all or any of the New Zealand loans to be convertible into stock of such denominations, with such conditions and with su<-h div idends, as he may determine. The Governor-in-Council is further empowered to enter into agreement with the Uank of England for inscribing such stock in the books of the Bank, and for managing the creation, inscription and issue thereof. In 1884 the present Colonial Treasurer considered it desirable to extend the operation of this measure, and accordingly submitted a Bill, which duly passed into law. " The Consolidated Stock Act, 18*4," is entitled "an Act for the conversion of certain loans into consolidated stock, and setting free the sinking funds accrued in respect thereof." The preamble further explains the purport of the measure, setting forth that certain loans of the Government of New Zealand have been converted into stock, and that it is expedient to declare that the loans for which the colony was liable on the 31st March last "shall be further convertible," and that the accrued sinking funds " upon such of the said loans as may be converted into stock shall be set free." It is in the first place declared that the Act shall be incorporated with the New Zealand Consolidated Stock Act, 1877. The loans set forth in the schedule are then declared to be convertible into stock; but the provisions of the tifth section of the said Act are declared not to apply to the loans or parts of loans guaranteed by the Imperial Government; but in the case of the conversion of the whole or a part of such loans, a reasonable addition to the capital or annual charge may be made, commensurate to the importance which the agents consider to be attachable to the said conversion. In respect of loans having sinking funds, the Colonial Treasurer is, within each financial year, to compute the amount which from all sources, whether from contributions to the sinking fund or from the produce of accrued investments of the same, including the interest on drawn bonds, will accrue, to increase the sinking fund of each loan within each year, and on such computation being approved by the Controller and Auditor-General, such amount shall be held to be the amount of increase for the year in respect of each loan for the purpose of the Act. The Colonial Treasurer is empowered to authorise the creation of stock to the amount of the annual increases of the sinking fund, and may dispose of the same in manner defined, or otherwise, as the Colonial Treasurer directs, and the proceeds of any such exchange or sale are to be paid into the public account, and

shall form part of the consolidated fund. When any loan is completely converted or paid off, the sinking fund accruing on that loan is to be held to be set free, and is to be employed and appropriated as follows: First, a sufficient amount is to be applied to extinguish such an amount of the stock or the debentures, to be presently mentioned, as have been created on account of increases of sinking fund, in respect of the loan to which the sinking fund set free belongs. The balance is to be paid into the public account, and form part of the public works fund. Pending the operations for converting loans, and creating the stock authorised to be created, the Colonial Treasurer may create debentures to an amount not exceeding, in the whole, the amount of such stock, and may borrow and raise moneys, from time to time, by the sale, hypothecation or mortgage of such debentures, or may exchange the same for securities convertible under this Act, as the Colonial Treasurer thinks fit. The amount of stock created and of debentures outstanding is not at any time together to exceed the total amount of stock which may be created.