THE INSCRIPTION OF STOCK.

Otago Daily Times, Issue 6473, 10 November 1882, Page 3

THE INSCRIPTION OF STOCK.

The following letter from Sir Julius Vogel appears* in the Melbourne Argus :— Sir,—Your leading article this_ morning about the loan conversion and inscribed stock suggests to me that you may like to inform your readers of the process under which inscription can be carried out, and of what has been done in this direction hitherto. I can, I think, give you this information, as I was for three years concerned in procuring the passage of the Imperial Act under which inscription can be carried out. Its history is as follows :— In 1875 I made an arrangement with the Bank of England to inscribe New Zealand stocks. I stipulated for the provision to which, you refnr, which is part of the plan of consols and of the Metropolitan Board of Works stocks— viz., the power to exchange and re-exchange inscribed stock for bonds to bearer as often as desired. The inclusion of this bond to bearer's option required special legislation— hence all the difficulty. On another point— the commutation of stamp duty by one payment—legislation was required, but a precedent existed for it with regard to the Colonies in. an Act which had been passed to enable Canada to arrange for inscribing stock in Great Britain. It is necessary to add that the power to vary from inscription to bonds formed no part of the Canadian plan, and the Canadian inscribed stock in London is no proof of the effects of the system in which inscription is tempered with the option to exchange to bearer-bonds. „ I will not dwell upon the difficulties of procuring the passage of the Act. They were at length overcome, and the Colonial Stocks Act is open to the use of every Colony which, by legislation, adopts its provisions.^ I may add also that further Imperial legislation is not necessary to enable the inscription to be performed by other institutions than the Bank of England. You raise the question, and will be glad to learn that other banks can perform the operation with the enjoyment of equal legislative protection. As to the Agent-general inscribing, there is not, I believe, any legislative impediment in the way of his doing so, but I fancy it. would be found highly nexpedient. Apart from the clerical machinery which would have to be provided, and with which banks are furnished, there would be a difficulty in the way of giviug to the Agentgeneral an unlimited power to issue debentures for the Colony. In the case of a bank the Colony's liability would be limited to such bank's proper exercise of its functions, and people would accept a bank's responsibility. But in the case of an individual the liability would devolve wholly on the Government, and would amount to giving to one person the power to pledge the Colony to an unlimited extent. A» regards the use made of the Colonial Stocks Act, at presjent it has only, as far as I am aware, been ueed on two occasions. Three years ago the New Zealand Government made the first use of it. They required to negotiate a loan of £5,000,000. Such an amount could not, I believe, have been raised but that an option was given to the subscribers to the debentures to convert into inscribed stock within 12 months, at a price equal to about par, for 5 per cent. The loan was applied for many times over ; the option was exercised to nearly tho. whole extent. The price has since risen nearly 20 per cent., and the 4 per cent, inscribed stock stands at about par in the London market. The second occasion of use was by the New South Wales Government, a few months since. They indicated that subscribers would be able to convert debentures into inscribed stock, and their 4 per cent, lean was floated at about par, free of jouitmnee. A bill is now passing through the Legislature of New South Wales to give effect to the option, and to provide for further conversion. In the ease of Now South Wales it is intended, I believe that the inscription shall be performed by the Bank of New South Wales. There in nothing to prevent the Government of Victoria instructing the negotiators of the four million loan to give the assurance that application will be made to tho Victorian Parliament for the necessary power to enable the debentures to bu converted into inscribed stock. An assurance in fact, resembling more or less the assurance given in tho casa of iSew Zealand and New South Wales would suffice _ It is most desirable that the several Colonies should take advantage of the Colonial Stocks \ct for a reason which I may illustrate without violating any confidence. Colonial

loans would be of considerably higher value if they were availabe for investment by trustees without special direction or authority. When I saw Sir Stafford Northcote, the then Chancellor of the Exchequer, on the subject of passing the required bill, 1 urged tho insertion of a clause to enable trustees to invest ia the iuscribed stocks. Sir Stafford, in reply, advised me not to press for the clause, which would involva_ a great deal of opposition. You will, he said m effect, gain the same end without present legislation. AVhenever the Lord Chancellor marks these stocks for Court of Chancery funds investment, trustees without risk may follow. The Court of Chancery investment will bo their justification. The Colonies will doubtless be able to show the Lord Chancellor that these loans are suitable to be marked. This in substance is what Sir Stafford said, and I am convinced that when New Zealand, New South Wales, and Victoria unite in making representations on tho subject, they will carry the point, and materially add to the market value of their loans.

Let me conclude with an amusing anecdote, which will show how Irish difficulties may affect the Colonies. # It was late in the session before all the points concerning the Colonial Stocks Bills were settled between the Treasury and the Bank of England. The fate of the bill then, and perhaps for ever, depended on its being unopposed. You may fancy my dismay when Mr Biggar or Mr Parneil—l forget which —marked the bill as "opposed," in pursuance of a policy to block all Government measures. Bills marked thus cannot be called on after a certain hour of the ovening. Tho fate of the measure depended on the Irish patriot consenting to relent. He yielded on representations being made to him. The obnoxious mark was withdrawn, the bill passed, and Ireland consented to the Colonies being allowed to borrow on terms as favourable as the Metropolitan Board.—l am, &c, Julius Vogkl. Menzios' Hotel, October 24th.