THE FOUR-MILLION LOAN.

New Zealand Herald, Volume XII, Issue 4400, 20 December 1875, Page 3

THE FOUR-MILLION LOAN.

The following important despatches in reference to the £4,000,000 loan have been placed at our disposal:— Sir J. "Vogel to the hon. D. Pollen. ! Westminster Chambers, Victoria-st., . ' Westminster, S.W., October 21, 1875. Sir, —I have the honor to forward to yon copy of correspondence -with Mr. Mackrell, solicitor, and Sir P. G. Julyan, Mv. Peatherston, and Mr. Sargeant. 2. You "will gather from these documents that the letter No. 10, dated London, 13th May, 1875 (B —No. 5) in the printed paper, " Correspondence relative to the Negotiation of the Four-million Loan," and headed " The Loan Agents to the Hon. the Colonial Secretary, "ihad not been seen by meuntil I saw itin that paper; and that I had also not previously seen the enclosed case for counsel and counsel's opinion. You will further observe that I impugn the correctness of paragraph 6 of that letter. 3. I feel certain you would not have published the letter and the enclosures named, without first giving me an opportunity to remark upon them, had you not supposed they had previously been submitted to me. 4. I am of opinion that the conduct of the three agents, and especially of Mr. Featherston, the Agent-General, iu sending to the Government such a letter and enclosures, without allowing me to see them, is most unbecoming, and detrimental to the interests of the public service; and I have the honor formally to make complaint on the subject. 5. Information I have rrceived from the colony leads me to suppose that, owing to the letter in question, and particularly its sixth paragraph, a wide-spread misunderstanding exists as to my action in London. That information causes me to conclude that the impression prevails in New Zealand that it was my personal action that led to the proceeds of the four million loan being deposited with the Bank of New Zealand, and that the arrangement with the bank for increasing the rate of interest determined the deposit of the money with the bank. 6. I believe that sufficient importance has not been given to paragraph 2 of my letter to you, dated 4th May, as follows : —"I may observe that it was not until I had informed the Agent-General of the terms 1 had made with the bank, that any intimation was given to me of its being deemed desirable to remove part of the account." 7. The determination to deposit the money with the Bank of New Zealand was arrived at by the agents at the time of the negotiation with Messrs. Rothschild and Sons. Sir. P. G. Julyan was absent; but the other three agents agreed upen the point. There was some discussion between us as to whether or not, the money should be first paid into the Loudon Westmaster Bank, and afterwards be transferred to the Bank of New Zealaed, as had been done on previous occasions. I objected to this course, because it would involve loss of interest between the dates of receiving and paying over the money, and that no possible object could be gained by first paying the money into one Dank arc! then handing it over to another. It was then determined that if the Bank of New Zealaud were willing to sign for the deposits and to hand over the scrip, the payments should be made to that bank. Of course, without the consent of the bank to perform the duties mentioned, its name could not be inserted in the contract as that of the bank to receive payments ; and I was risked to merely see Mr. Ruseeß and obtain the consent of the bank. 8. No intimation of a desire to change the account lnw i; 3 been made to me, and the money having been, by agreement, deposited with tl e Bsnk of New Zealand, I felt it to be my duty to obta ; a the largest iuteresi possible for the balances. You will have observed that the opinion of counscl obtained by the other agents fully bears out my action. I am not at a' 1 now dealing with the question what course I might have adopted if, at the time of the negotiation of the Joan, the other agents had objected to payment into the Bank of New Zealand. There cannot, X think, be any doubt that the bank is, by our agreement (which cannot be broken without six months' notice), the bank of the Government. At the same time the management has always shewn readiness to consider modifications of the agreement rendered necessary by peculiar circumstances ; aud, had it been desired by the other agents to limit the amount to be deposited with the bank, I feel sure there would not have been the slightest difficulty in arranging it, so far as the bank was concerned. I considered at the time-—and I cannot now see any reason for coming to another conclusion-—that the idea of interfering with the account only occurred to the other agents after I had arranged with the bank for a better rate of interest, and had informed the Agent-General of the fact. 9. I am opinion that should it be desired in future to limit the amount deposited with the Goverrment (j.'ui!:, it would be advisable the balance should be invested in Consols, which are always saleable, aud the fluctuations in the price of which are not large, and would, except, very rarely, be covered by accretions of interest. In the absence of disturbing causes, Consols could be sold at the price at which they had been purchased, and there would be the interest that had accrued between purchase and sale. 10. As so much publicity has been given to previous correspondence on this subject, I have the honor to suggest that this letter and the enclosure should also bo published. —I have, &c., Julius Vogkl. Hon. D. Pollen, Wellington. Sir Julius Vogel to the Loan Agents. 7, Westminster Chambers, Victoria-st., Westminster, S.W., Oct., 15, 1875. Gentlemen, —I observe in the " Correspondence relative to the negotiation of £4,000,000 loan," published in New Zealand, a letter of yours, dated 13th May, addressed to the Hon. Colonial Secretary. 2. Until the printed paper reached me, I had not seen a copy of that letter, nor of the enclosed case for counsel, and counsel's opinion. 3. I now write in order that you may make any explanation you think proper, for I am unable to disguise my opinion that it was an unjustifiable proeeedingtosend totheGovernment such a letter and enclosures without supplying me with a copy. It is true that I had previously written to the Colonial Secretary, enclosing copy of correspondence with you, without shewing you my covering letter; but there is a wide difference between my sending my colleagues a letter, which they might have decided to treat ?s confidential, and your sending such a letter without shewing it to me —the member of the Government to whom belonged the charge of matters to which your letters specially referred. Your withholding from me the important legal opinion you had obtained relative to the Bank of New Zealand, seems to me entirely without justification. 4. I take the opportunity of adding, that paragraph 6 of your letter is incorrect. The arrangement with the bank as to increasing the rate of interest waa not contemplated at the time of the arrangement with Messrs. Rothschild and Sons. It wasan entirely distinct matter, and was proposed some time subsequently. The agents for the negotiation of the loan were parties to the deposit of the money with the bank. It was- at the wish of the other agents (yourselves, with the exception of Sir P. G. Julyan, who was absent) that I asked Mr. Russell whether he would consent to the bank's name being inserted in the contract with Messrs. Rothschild and Sons, the consent of the bank being necessary before it could be stated that it would perform the dutiem of. signing for the deposits and handing over the scrip. . 5. When Mr. Featherston and Mr; Sargeaunt discussed with me the question relative to the Bank of New Zealand, there was not, so far as I am aware, any donbt as to tha propriety of the deposits being left with that bank. There was a question whether payments should first be made to the London and Westminster Bank, and the money afterwards be handed 1 over to tho BankofjNew Zealand ; but, as I- pointed out, that would have Involved loss of interest during the intervals between payment and transfer; and it was then agreed that all moneys should be paid to the Bank of New Zealand, if that

bank was willing to received the deposits and sign and deliver the scrip. — 6. 1 was not aware that Baron Rothschild drew your attention to " the serious responsibility that leaving such a large sum with ana bank would necessarily entail." ' . ; 7- I will only add that I am strongly of opinion that my colleagues supposed you had supplied me "with a copy of'your letter of the 13fchMay, and of the enclosures to which I have referred, or that they would not have printed the letter and presented it to the Assembly, without first giving me an opportunity of commenting upon it. I enclose you a copy of Correspondence with Mr. Mackrell. 9. As I am leaving England so shortly, I shall feei indebted to you for as early a reply to this letter as you can conveniently make. —I am, &C., Julius Vogel. Sir P. G. Julyan, K.O.M.G. [. E. Featherston, Esq. W. C. Sargeaunt, Esq., G.M.G-. [Copy letter Sir Julius Vogel to Mr. Mackrell, 11th October, and of Mr. Mackrell's reply, enclosed.] The Loan Agent to Sir J. Vogel. London, 16th October, 1875. Sir, —We have the honour to acknowledge the receipt of your letter of the 15th insta.nt respecting a communication addressed to the Government of New Zealand, in May last, by the agents for managing the public account of the colony in this country. As one of those agents (Mr. Sergeaunt), who took an active part in the matters referred to i 3 out of town, and is not expected to return for some days, we regret that it wiH not be in our power to comply with your request for an early answer, but should you have taken your departure before we are enabled to confer with our colleague, a reply shall be addressed to you by the first following mail.—We have, &c., I. E. Featiierston. P. G. Julyan. Sir Julius Vogel, K.C.M.G, 7, Westminster Chamber".