PAPERS RELATIVE TO THE CONSOLIDATION OF THE LOANS OF NEW ZEALAND.

Appendix to the Journals of the House of Representatives, 1868 Session I, B-03

B.—No. 8.

PAPERS RELATIVE TO THE CONSOLIDATION OF THE LOANS OF NEW ZEALAND.

PRESENTED TO BOTH HOUSES OP THE GENERAL ASSEMBLY, BY COMMAND OP HIS EXCELLENCY.

WELLINGTON.

1868.

B.—No. 3,

PAPERS RELATIVE TO THE CONSOLIDATION OF THE LOANS * OF NEW ZEALAND.

No. 1. Messrs. JtriXAN and Saegeatjkt to tlie Hon. E. W. Staffoed. Offices of the Crown Agents for the Colonies, Sin, — Spring Gardens, London, S/W"., Ist June, 1868. Referring to your letter of the 17th October last, informing the Crown Agents for the Colonies that Mr. Eit/.herbcrt, the Colonial Treasurer, had been requested by the Government of New Zealand to proceed to England witli full powers to negotiate for the consolidation of the Loans of the Colony, and requesting the Crown Agents to consider themselves in direct communication with that gentleman, and take instructions from him with Agard to such loans, I have now the honor to state, for the information of your Government, that the following steps have been taken in the matter since Mr. Eitzherbert's arrival. In the first place, in order to pay off one sum of £300,000 and two other sums of £50,000 each, clue by the Government to the Bank of New Zealand, and bearing a comparatively high rate of interest, the Crown Agents borrowed £100,000 for three months, and £350,000 for four months, upon the security of £500,000, short-dated Debentures (created under the authority of " The Public Debts Act, 1567,") at the rate of 4 per cent, per annum. After discharging the debt of £400,000 already referred to, the balance was appropriated towards a further payment to the same Bank of £61,760, as directed in your letter of the 13th December last. The consolidation of the Public Loans of the Colony under " The Consolidated Loan Act, 1867," was then brought under consideration, and after the most patient and careful enquiry on the part of Mr. Eitzherbert, that gentleman came to the conclusion that the interests of New Zealand would be best served by placing the whole matter in the hands of the Crown Agents for the Colonies. A draft of a scheme —copy of which is enclosed—was then prepared and submitted to Mr. Eitzherbert, and with the modifications noted thereon, was finally adopted and placed before the public in the form contained in the enclosed printed copy of advertisement. The operation now before the public is confined to the 5 and G per cents of the old issues, and if the whole of them be converted, the debt will be extinguished in about thirty-six years by the payment of £293,708 instead of £330,800 per annum, being a reduction of £37,092 in the annual charge. The enclosed statement will show in what manner these conclusions are arrived at. The 7, 8, and 10 per cents omitted from that statement, and amounting to about half a million, will be dealt with separately. The various printed papers enclosed will explain more fully in what manner the consolidation is being carried out. Large holders will naturally refrain from coming in until the last moment, in order to be free to avail themselves of whatever may possibly turn up in their favor during the interval, and we shall not therefore bo able to form any very decided opinion as to the general acceptance or otherwise of the scheme until after the 15th instant ; still present indications arc sufficiently favorable to lead to the belief that the conversion will be finally successful. Up to the present moment the applications received are as follows : — £. s. d. Eive Per Cents. General Government ... ... ... 92,900 0 0 Six Per Cents. General Government ... ... ... 297,200 0 0 Six Per Cents. Provincial Government ... ... ... 521,150 0 0 £911,250 0 0 After the 15th instant, we shall probably suspend operations for a short time, in order to give time for the market to work off the new stock which will then have been issued, amounting to upwards of £2,000,000, and to allow prices to rally somewhat before commencing operations again. It now only remains for me to add the particulars of the sale of 5 per cent. Debentures representing £1,114,000, for the purposes set forth in Schedule B of "The Public Debts Act, 1867." The advertisement enclosed, taken in conjunction with the conditions of conversion which precede it, fully explains the nature of the negotiation; and the Schedule herewith forwarded gives the names of the subscribers, the extent of their several applications, and the proportion allotted to each. Among the allotments will be found one of £34,500 to Mr. EitzGcrald, your Comptroller, and this was subsequently increased by purchase in the market —at the then current rate of 98—to £82,500, the bonds for which will be placed at the disposal of Mr. Eitzhcrbert, at whose request the original tender was made. Mr. EitzGerald will therefore be debited altogether, including brokerage, with £50,035 10s., which, sum it is presumed you will require him to pay into the Colonial Treasury at Wellington to the credit of the Crown Agents' account with your Government.

B.—No. 3

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PAPERS RELATIVE TO

After much consideration on his part, Mr. Mtzherbert decided that it would be proper and desirable to place before the public of this country the whole of your intended financial operations at once, and as the rates of conversion for the old securities were based on the then comparatively high rates of the 5 per cents., issued under "The Loan Act of 1863," it became necessary to invite subscriptions at a fixed price, instead of calling for tenders upon a concealed minimum, otherwise our calculation with regard to conversion might have been all upset, to the very serious detriment of the more extended operation. The retail price of the old 5 per cents, was at that moment unprccedontly high, namely, 99, or deducting three months accrued interest, the net retail price was 97:}, and although the effect of throwing a further large amount suddenly on the market, usually produces a depression of some two or three per cent.; still, considering that this now stock possessed soino peculiarly advantageous features as compared with the old, it was determined to offer it at a rate only f per cent, below the retail price, namely, 97, at which rate the gross sum realized on the £1,114,000 was £1,080,580, making the rate of interest which the Government will have to pay for the money £5 3s. Id. per cent, per annum. Such favourable terms as these have not been obtained in. this market by any Colonial Government for many years, and although the Crown Agents are of opinion that a still higher rate might have, been obtained if the sale of the new stock could have been safely delayed until the conversion of the old had been completed, yet they are bound to admit that such delay could not have been incurred without serious risk, arising out of possible political convulsions, and they feel strongly convinced that the Government of New Zealand has good reason to congratulate itself both as to the highly favourable terms on which this new loan has been effected, and on the favourable prospects which present themselves with regard to the conversion and consolidation of old ones. I have, &c, The Hon. the Colonial Secretary, New Zealand. P. G. Jultan".

Enclosure 1 in No. 1. New Zealand Goyebumeitt Debt. Suggestions by the Crown Agents for the Colonies for the conversion of the various securities now in circulation into one common stock, which may hereafter be added to or reduced without multiplying or altering the denominations. 1. The various unguaranteed debentures of the General and Provincial Governments to be consolidated, or exchanged for securities bearing interest at one uniform rate of 5 per cent, per annum. 2. All future loans to bo contracted on securities of similar character. 3. The new 5 per cents., or consolidated securities, to be issued either in the form of registered stock or debentures, at the option of the exchanger or buyer, as the case may be. 4. The stock certificates to bo accompanied by coupons payable to holder in the same manner as debenture coupons. 5. The registered stock and debentures to be at all times exchangeable, the one for the other, on payment of a small transfer fee and stamp duty, on the debentures created in lieu of stock. (). The registered stock to be transferable from hand to hand by an ordinary deed of transfer. 7. The interest to be made payable quarterly, instead of half-yearly, as on the present securities. 8. The principal to be paid off by means of a cumulative sinking fund, into which shall bo paid quarterly a sum equal to five shillings per cent, on the total of the consolidated debt. i). This fund to be applied to periodical drawings (lottery) in the usual way. The bonds or stock certificates so drawn to be paid oft' at par. 10. The total debt will thus be paid off' in about thirty-seven years. 11. It would appear advisable that the whole of the 5 and 0 per cents, (together amounting to £4,510,000) now in circulation, should be dealt with in one operation. It is presumed that nearly all the former would be exchanged without hesitation, as the holders would, without having their interest diminished, thus participate in the contingent advantage of an early drawing at par. 12. It is roughly estimated that the results of the conversion of the whole of the 5 and 0 per cents., on terms based on the present market prices of each, would be —Ist, the increase of the nominal debt by about 7:} per cent ; 2nd, a decrease in the annual charge of about 12 per cent., or nearly £40,000 per annum, and finally the rendering available for general purposes of about £158,000 novr accumulated in the sinking funds of the various General and Provincial loans. 13. The remaining 7, 8, and 10 per cents, of the Provincial Governments, amounting in theaggregate to £499,000, might be afterwards dealt with on similar principles, and probably with greater relative advantages. 14. The consolidation ought if possible to bo far advanced, if not entirely completed, before any fresh issue of securities takes place, as any such issue must tend to lower the price of the present 5 per cents., and proportionately to deprive the Government of the advantage to be derived from the relatively high price of the jives as compared with the sixes which now exists. 15. It will also be advantageous to convert the old securities, as far as possible, into new. before the 5 per cents, are again quoted ex-dividend, as they will then have the appearance of having fallen about 2i per cent, in price. 16. If the various existing loans could all be made to disappear from the official lists and one uniform stock be substituted, it is more than probable that the sum still to bo raised under " The Public Debts Act 1867," would not cost the Government more than 5 per cent. 17. The market is now favourable for the operation, though not so much so as it was a month or six weeks ago, and it should be borne in mind that any political disquietude, or the revival of public confidence and trade, which political quiet would not fail soon to produce, must prove prejudicial. In fact, any change whatever must be a change for the worse, unless it bo possible to conceive that money will still become more abundant and cheaper than it is at present. London. 25th March, 1868. P. G. Julyan.

CONSOLIDATION OE LOANS.

B.—No. 3

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Enclosure 2 in No. 1. Memobaxtjuh. 1. The proposal to create registered stock was subsequently abandoned in consequence of doubts having been raised by counsel as to whether clause three of " The Consolidated Loan Act" would justify the creation of such stock, and although considerable advantage with regard to price might have been derived therefrom, it was thought better not to run the risk of having the authority for the issue called in question by persons who might, to serve their own interests, do much to create doubts in the public mind calculated to produce a prejudicial effect in the negotiation of the new loan. 2. Article 14 was not acted upon because Mr. Pitzherbert, after duly weighing the probable advantages and disadvantages attending the proposition, came to the conclusion that it was due to the lenders to place openly before them in a complete form the whole of the operations contemplated under " The Consolidated Loan Act, 1867." It was moreover considered that in the event of delaying for any considerable period the issue of the new securities, political complications might arise in Europe, calculated most seriously, to depreciate the value of such securities, if not to render them entirely unsaleable. P. Or. JvJLTAX. London, Ist June, 1868.

B.— No. 3.

Enclosure 3 in No. 1. SCHEME for the conversion of the DEBENTURE DEBT of NEW ZEALAND into a consolidated five per cent. Stock with a one per cent. cumulative Sinking Fund to be applied to annual drawings, by which the Debt will be extinguished in about thirty-six years, the Sinking Fund payments being remitted Quarterly in advance.

6

PAPERS RELATIVE TO

When falling due. Eate of Sinking Fund. Present net Market Price. Present Annual Charge. Proposed rate of Conversion. Proposed Annual Charge. Decrease in Annual Charge. Total Decrease Description of Debenture. ~ Amount to be Converted. Total Amount Total Increase in Nominal Capital. Annual -n . Xo. of Date- Years. Interest. Sinking Fund. Charge. Converted. Interest. Sinking Fund. Charge. Interest. Sinking Fund. Annual Charge. I £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ General Government, 5 per cent. 1,914 47 47 1 1,000,000 I 97 50,000 10,000 60,000 99} ■ 995,000 49,750 9,950 59,700 Decrease 5,000 250 50 300 Ditto 6 „ 1,891 21 21. 2 1,650,000 106 99,000 33,000 132,000 113i ;1,872, 750 93,637 18,727 112,364 222,750 5,363 14,273 j 19,636 Auckland 6 ,, 1,899 32 32 2 500,000 104* 30,000 10,000 40,000 109 545,000 27,250 5,450 32,700 45,000 2,750 4,550 | 7,300 1,879 12 12 2 not known m 3,270 651. 330 546 876 Hawke's Bay 6 „ 60,000 3,600 1,200 4,800 65,400' 3,924 5,400 Canterbury 6 ,, 1,894 27 27 2 300,000 101 18,000 6,000 24,000 327,000 16,350 3,270 19,620 27,000 1,650 2,730 ! 4,380 Ditto 6 „ 1,911 47 47 1 500,000 101 30,000 5,000 35,000 545,000 I 27,250 5,450 32,700 45,000 2,750 Increase 450 • 2,750 Otago 6 „ 1,898 31 31 1 500,000 101 30,000 5,000 35,000 545,000 27,250 5,450 32,700 45,000 2,750 Increase 450 2,750 Total 4,510,000 j [4,895,150 244,757 48,951 293,708 390,150 15,843 : ; 22,149 37,992 1260,600 70,200 330,800 Deduct Decrease 5,000 Deduct Increase 900 Total Increase in Nominal Capital I ! 385,150 Total Decrease in Annual Change 37,092 # The greater portion of these Bonds are held by one Bank who have managed, since the passing of " The Public Debts Act, 1867," to get them quoted on the Stock Exchange, and to run up the nominal price in anticipation of the conversion; but, in reality, the Auckland debentures are not worth more in the market (if so much) than those of the other Provinces. K\B. —The seven eight and ten per cents., amounting to about half a million, and not included above, will be dealt with separately hereafter. Offices of the Crown Agents for the Colonies, P. G-. .TrtYAX, London, loth April, 1868. Crown Agent.

CONSOLIDATION OE LOANS.

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B.—Mo. 3,

Enclosure 4 in jS to. 1. Memorandum on the proposed Conversion and Consolidation of the various General and Provincial Government Loans of New Zealand. Offices of the Crown Agents for the Colonies, Spring Gardens, London, Ist May, 1868. The effect of the proposed conversion, so far as the holder of the old debentures is concerned, will be as follows :— The holder of the old 5 per cents, of the General Government will, by the addition of 10s. in money to a £100 bond, receive a new 5 per cent, debenture for £100. For this one payment of 10s. the holder will have the advantage of receiving his interest quarterly instead of half-yearly, will participate in the benefit attending annual drawings at par, and, even if among the last drawn, will be paid the principal in full at the end of about thirty-six instead of fortysix years. The holder of 6 per cents, of the General Government will, at a cost of 6s. 6d. per cent, on the annual interest, add 131 per cent, to his capital, instead of eventually losing the premium at which the old bonds now stand, receive his interest quarterly instead of half-yearly, and reap the advantages attending yearly drawings at par. The holder of Provincial 6 per cents, will, at a cost of 11s. per cent, on the annual interest, add in like manner 9 per cent, to his capital, participate fully in the advantages attending quarterly payments and annual drawings, and be the possessor of a much more marketable, and therefore more valuable, security than that which he now holds. Further advantages will also attend the conversion of the old bonds, owing to the higher prices the new 5 per cents, must, from their nature, command in the market, as compared to any and all of the New Zealand debentures now in existence. To those who want to sell their old debentures, especially the 6 per cents., there will, according to the present market price, be a decided and immediate pecuniary advantage in first converting them, and then selling the new consolidated 5 per cents. The period for conversion is limited to the 15th June next. No debenture bond will bo issued for less than £100. Excluding fractions of £100, scrip certificates bearing interest at the rate of 5 per cent, per annum, from 15th April last, will at once be issued in exchange for the old bonds, but the interest accrued on such bonds prior to the 15th April, will be adjusted on delivery of the new bonds, which will not be later than the 30th Juno next. To those who may desire it, a certificate of indebtedness, not bearing interest, will bo issued for such fractional part of a bond as may be unavoidable in the exchange. Those who prefer to pay or receive the difference between such fractional part, and a whole bond, according as such difference may be above or below £50, must do so on delivery of the old bonds, and their scrip certificates will be drawn for corresponding amounts. The proposed conversion is entirely optional with the holders. The rights secured to them by the Acts under which the money was originally borrowed will be maintained intact; and with regard to the Provincial debentures, whensoever the Governor of New Zealand shall, in accordance with the provisions of " The Public Debts Act, 1867," see fit to issue a proclamation to that effect, interest and sinking fund payments will be made out of the consolidated revenue of New Zealand.

Enclosure 5 in No. 1. New Zealand. Consolidation of the Debenture Debt of the General and Provincial Governments. To the Crown Agents for the Colonies, Gentlemen, — Spring Gardens, London, S.W. have to acquaint you that hold Sew Zealand Debentures, of the respective denominations indicated below, representing the sum of £ sterling, which desire to exchange for New Zealand Government 5 per Cent. Consolidated Debentures, on the conditions specified in your advertisement dated the Ist May, 1868. Name in full Address Date

A. —The applicant to insert in this column the nominal value of debentures surrendered to be exchanged. B. —The applicant to insert in this column the amount of 5 per Cent Consolidated Debentures to be issued in exchange for those surrendered at the rates above stated. 2

Old Debentui •es to be exchanged. New ] to bo issui Debentures ed in exchange. Acts and Ordinances under which Authorized. Amount when Conyerted. B. Bate of Interest. Nominal value of Debentures. A. Rate of Conversion. 1 1S "") ( 15th July, 1914 ... 1 I 1l8 C Bonds ) 15th March ' 1891 1 1 \ * 12 \ Expiring. 1 15th June, 1891 ... I I I* J (,15th Dec, 1891 ... * l^New Zealand Loan Act, 1860 _ js Railway Loan Act, 18G0 •g g j Canterbury Loan Ordinance, 1SG2 ... ■||-i Otago Loan Ordinance, 1862 S '9. I Auckland Loan Act, 1863 * S L-Hawke's Bay Loan Act, 1863-4 5 per Cent. 6 „ 6 „ 6 „ 6 „ 6 „ 6 „ 6 „ 6 „ 6 „ £ £ £ £ £ £ £ £ £ £ £ j £99 10s. £113 10s. £109 £ £ £ £ £ £ £ £ £ £ £ £ Totals £

B.—No. 3

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PAPERS RELATIVE TO

No. 2. The Hon. E. W. Stafford to Messrs. Jultais" and Saegeaiint. Colonial Secretary's Office, Gentlemen,— Wellington, 27th July, 1868. I have the honor to acknowledge the receipt of your letter No. 48-743, of the Ist ultimo, detailing the steps which you had taken under the direction of the Honorable Mr. Fitzhorbert, with reference to the consolidation of the New Zealand Loans, and in carrying into effect the intention of the New Zealand Legislature in relation thereto. The Government fully recognise the prudence and ability with which, you have conducted this business, and they observe with pleasure, the success which had up to the date of your letter resulted from your efforts to bring a financial operation of so delicate and difficult a character to a satisfactory issue, the complete attainment of which is of great importance to the interests of this Colony. I have, Ac, Messrs. Julyan and Sargeaunt, Crown Agents for the Colonies, E. W. Staffoed. Spring Gardens, London.

No. 3. The Hon. W. Fitzhebbebt to the Hon. E. W. Staffoed. 21, Cockspur Street, Trafalgar Square, London, Sir,— Ist June, 1868. As the agent authorized to borrow, on behalf of the Colony of New Zealand, seven millions sterling, under "The Consolidated Loan Act 1867," by bonds, debentures, or otherwise, I have desired, so far as practicable, to guard the exercise of this large power of creation and issue of bonds. I proposed at first to constitute a board of gentlemen whom I should invite to countersign the bonds ; after consultation, however, with experienced persons, I was induced to abandon this intention, and the following considerations appeared to me to be conclusive, viz. : — 1. The actual labour involved in signing the large number of bonds which must be created in order to constitute an issue representing several millions of pounds sterling. 2. The unusual character which would be imparted to the bonds by the large number of signatures impressed on their face. With regard to the latter point I find that, so sensitive is the market, that great deference has to be paid to " use and custom." The method to which I now propose to resort is, to request certain gentlemen to give their attendance from time to time at the office of the Crown Agents for the purpose of checking the bonds created by me, as agent for the loan, and attesting the due delivery of such bonds to the Crown Agents for issue. The enclosed draft of form of attestation will more precisely explain the purport and effect of this step. I have to report that the gentlemen named in the margin have consented to act as a board for this purpose, and it will be a satisfaction to me to be informed that the selection I have made meets the approval of the Government. I may state that none of the bonds have yet been received from the printers. After giving my imprimatur to the form of bond, delay has arisen owing to the difficulty arising about paper, in consequence of the number of coupons to be printed, which is unusually large, owing to the interest being jiayablo quartcrhr instead of half-yearly. A first delivery however by the printer, is promised on the4th instant. I have, &c, The Hon. the Colonial Secretary, Wilimam Fitziieebeet. Wellington, New Zealand.

V. A. Weld, Esq., W.S.Graham,Esq H. Se—ell, Esq.

Enclosure in No. 3. To BE IN QtOTTTOLICATE. One copy to bo retained by the attesting parties. Two to be transmitted to the Colonial Treasurer, New Zealand. One to bo delivered to the Crown Agents, One to be retained by Mr. Fitzherbert. Memoeanditm. On the day of 186S, at the office of the Crown Agents for the Colonies in London, the undersigned at the request of the Hon. William Fitzherbort, the agent appointed under " The New Zealand Consolidated Loan Act 1867," were present and did examine and witness the delivery by the said "William Fitzherbert, to the said Crown Agents, of the undermentioned debentures, created under the authority of the said Act, and signed by the said William Fitzherbert, viz. : — Debentures for £ each, numbered to inclusive, in all debentures for the amount in the aggregate of > £ ) the form of which debentures is annexed to this Memorandum, and we do hereby attest such delivery accordingly. Signed by us the day and year above-mentioned.

CONSOLIDATION OE LOANS.

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B—No. 3.

Received from the Hon. William Fitzherbert, the agent appointed under " The Now Zealand Consolidated Loan Act 1867," the debentures above specified, to be held subject to the disposal of the said William Fitzherbert as such agent. Dated the 186 S. Crown Agents. •

No. 4. The Hon. E. W. Stafford to the Hon. W. Fitziierbert, (No. 90.) Colonial Secretary's Office, SlE,— Wellington, 27th July, 1868. I have the honor to acknowledge the receipt of your letter of the Ist ultimo, stating the precautions which you had taken with respect to the creation and issue of the bonds under " The Consolidated Loan Act, 1867," and to express the approval of the Government of the selection of the gentlemen named by you for the purpose of checking such bonds and attesting their due delivery to the Crown Agents for issue. I have, &c, The Hon. W. Fitzherbert, . E. W. Stafford. 21, Cockspur Street, Trafalgar Square, London.

No. 5. The Hon. W. Fitzuerbeet to the Hon. E. W. Stafford. Cockspur Street, London, SlE,— Ist June, 1868. I have the honor to enclose for your information copy of a letter from the Crown Agents, dated 24th April, which I ought to have transmitted to you by the last mail. It was only on that day, however, that I obtained the services of a secretary, and the rooms which I had engaged for offices were not properly furnished till some days afterwards, and so the omission occurred. I made enquiries respecting the charges for the conversion of the Canada Loan (eleven millions), which is the only transaction corresponding in character and magnitude with the present one, and the result of my inquiries was, that the charge made on that operation was two and a half per cent., and having reason to believe, from other independent sources of information, that the terms proposed in the letter of the Crown Agents were unusually moderate, I had no hesitation in closing with their proposals. I take this opportunity of bringing under the notice of the Government of New Zealand the very laborious and anxious character of the services rendered by the Crown Agents in the conduct of this large and difficult transaction. They are not services of the mere routine and departmental character incidental to putting ordinary loans in the market, but they are services of a high class and special character; and I am bound to impress on the Government my opinion that Messrs. Julyan and Sargeaunt are entitled to receive from the Colony a recognition of such services and a personal remuneration for them. I have, &c, The Hon. the Colonial Secretary, William Fitzherisekt. Wellington, New Zealand.

Enclosure in No. 5. Messrs. Julyan and Sargeaunt to the Hon. W. Fitzheebelt, Offices of the Crown Agents for the Colonies, Sir,— Spring Gardens, London, S.W., 24th April, 1868. I have to acknowledge the receipt of your letter of the 20th instant, which only reached this office yesterday, informing the Crown Agents for the Colonies of the decision at which you had arrived respecting the consolidation and conversion of the New Zealand Loans, and the further issue of debentures authorized to defray certain charges specified in the schedule annexed to " The Public Debts Act 1867," and expressing a desire, before proceeding further, to come to a clear understanding with the Crown Agents respecting the charges which they propose to make for conducting these important operations. In reply, I have to inform you that the Crown Agents do not propose to make any charge in respect to the issue of the new stock in. exchange for the debentures of the General and Provincial Governments, and the services specified in Schedule B of "The Public Debts Act," exclusive of the portion which may bo regarded as a new loan, beyond a half of one per cent, to pay brokers' commissions, it being understood that this charge is exclusive of printing, advertising, &c. I may observe that it is owing to the constitution of this Department, which requires nothing beyond the payment of its expenses, that the Crown Agents are in a position to propose this low rate of ten shillings per cent, for the important services rendered, and to be rendered, by the Crown Agents and the experienced persons who have been employed by them at intervals during the last year, in preparing a scheme by which it is believed the intention of the New Zealand Legislature will finally be brought to a satisfactory conclusion. The favourable character of these terms will be obvious when it is remembered that the issue of new stock in exchange for debentures of a great variety of denominations involves great care and responsibility in the verification.

B.—No. 8

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PAPERS RELATIVE TO CONSOLIDATION OE LOANS.

At the same time, I think it most probable that it will be found necessary to advise you to incur some charges for special agencies, in order to assist in bringing the difficult operation of exchange of debentures to a successful issue. The Crown Agents, however, will not incur any such charges without your special sanction. 1 With regard to the issue of debentures for £331,000 —which, in fact, constitutes a new loan —the charges will be the same as those authorized by Her Majesty's Government to be made to all Colonies for whom the Crown Agents perform similar services, the particulars of which were conveyed to the New Zealand Government in a Circular Despatch of the Duke of Buckingham and Chandos, dated 3rd January last, copy of which is enclosed. That Despatch limits the charge for the negotiation of new loans, including brokerage, to the half of one per cent. I may add that, from the best information that can be obtained, the cost of consolidating the Canada Loans in 1860 —which is the only analagous case on record —was more than four times as much as the New Zealand Government will thus be called upon to pay, while for the issue of the new loans the minimum charge made by financial agencies in London is just one hundred per cent, more than the foregoing. For instance, the Bank of New Zealand have been paid one per cent, by your Government for the mere sale of debentures created by the Crown Agents, and for which the bank incurred no responsibility whatever. The Bank of New South Wales and the Consolidated Bank also charge one per cent, for placing loans on the market, of which I have given you documentary evidence; and, in short, the charges made for such services generally, by banks and private agencies, range from one to two per cent., according to the nature of the loan and the standing of the company or firm employed. The reduced cost of placing loans on the market through this Department is, however, of small consideration to your Government as compared with other advantages, which are peculiar in financial undertakings of this kind, to an accredited agency of the Imperial Government, as pointed out to you by the Crown Agents in their Memorandum of the 2nd ultimo. I have, &c, The Hon. W. Fitzherbert, P G Jultan. Ac, &c.

Sub-Enclosure to Enclosure in No. 5. His Grace the Duke of Buckingham to the Officee Apmik'istbeih'Q the Government of New Zealand. (Circular.) Sib, — Downing Street, 3rd January, 1868. The Circular Despatch from this Department, of the 31st December, 18G3, authorized the Crown Agents for the Colonies to make a charge of one-half per cent, on interest paid by them on Colonial Government Loans. From that time to the present this charge has been regularly made on all such payments, but I am informed that the sums now periodically received on this account have increased to an extent disproportionate to the increased labour involved in making the payments, and beyond what is required for the Agents' Establishments. 1 have therefore authorized the Crown Agents, on and after Ist January, 1868, to reduce the charge for the payment of interest on loans from ten shillings to five shillings per £100 paid. The charges on Colonial Government Loans therefore will be — Ist. For negotiating new loans, i per cent, commission and -].per cent, brokerage. 2nd. For payment of interest, i per cent. 3rd. For paying off the principal at maturity, } per cent. No charge will bo made by the Crown Agents for services rendered as trustees of sinking funds! for the redemption of loans. I have, &c, Buckingham and Chandos. The Officer Administering the Government of New Zealand.

No. 6. The Hon. E. W. Stafford to the Hon. W. Fitzheebert. (No. 92.) Colonial Secretary's OiEce, SlE,— Wellington, 27th July, 1868. I have the honor to acknowledge the receipt of your letter of the first June, in which you state that,from independent sources of information,you have reason to believe that the terms proposed by the Crown Agents for their services in negotiating the New Zealand Loans were unusually moderate, and express your opinion that the Crown Agents were entitled to receive from the Colony a recognition, of such services and a personal remuneration for them. The Government has every reason to believe that you have justly estimated the character of the services in question, and that they will be duly recognized by the Colony. I have, &c, The Hon. W. Fitzherbert, E. W. Siaffoed. 21, Cockspur Street, Trafalgar Square, London.

PAPERS RELATIVE TO CONSOLIDATION OE LOANS.

B.—No. 3.

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No. 7. Tho Hon. W. Fitzherbert to the Hon. E. W. Stafford. 21, Cockspur Street, S.W., Sir,— London, 31st July, 1868. I transmit for your information and for record a memorandum of attestation of examination and delivery of the first series of new 5 per cent. Bonds of the Colony of New Zealand, which I have created as Agent under "The Consolidated Loan Act, 1807," and delivered over to the Crown Agents for issue. This has been signed in quadruplicate, and another will be foz'warded to the Hon. tho Colonial Treasurer by the next mail. This first series consists of 10,000 debentures, for the amount in tho aggregate of £3,780,000. In a transaction of this magnitude I was desirous that the act of delivery of the bonds for issue should not consist of a mere handing them over by me to the Crown Agents across an office table, but that it should be attended by the most independent kind of examination and the most formal attestation which I could devise. Each bond was examined by one of the gentlemen signing the memorandum ; and when they had been so checked and found correct, they were delivered by me to the Crown Agents, and their receipt taken, as appears at the foot of the memorandum. As no other bonds of the first series, except those specified in the schedule embodied in the memorandum, have been signed by me, the Colony will at all times possess, in the accompanying memorandum, a detailed voucher of the extent of their obligations in this behalf. The names of the gentlemen who performed this task constitute a guarantee which the Colony will appreciate ; but I cannot omit the opportunity of expressing my personal obligation to them for having consented to undertake the service ; for whilst I have all along perceived that it was not practicable for me to share the responsibility of controlling and directing the entire operations under the Seven-Million Loan Act, and have not therefore sought to divest myself of any portion of it, yet, considering the very large powers with which the Colony had invested me, I have not failed to recognize the importance of surrounding the creation and issue of the bonds with the safeguard of an independent check. 1 have, &c, The Hon. the Colonial Secretary, Wellington, N.Z. William Fitzherbert.

Enclosure in No. 7. Memorandum. On the 7th day of July, 1808, at the Office of the Crown Agents for the Colonies in London, the undersigned F. A. Weld, Esquire, of Kotherwas Park, Hereford; W. S. G-rahame, Esquire, of Auckland Lodge, Richmond, Surrey; and Henry Sewell, Esquire, of 11 Gordon Street, Gordon Square, London; at the request of the Hon. William Fitzherbert, the Agent appointed under "The New Zealand Consolidp.ted Loan Act, 1867," were present, and did examine and witness the delivery by the said William Fitzhcrbert to the said Crown Agents of the under-mentioned Debentures, created under the authority of the said Act, and signed by the said William Fitzherbert, viz.: —■ (First Series.) £ Debentures numbered Ito 800 inclusive, for £1,000 each ... 800.000 Ditto 1 to 2,500 do. £500 each ... 1,250,000 Ditto 1 to 4,000 do. £200 each ... 800,000 Ditto 1 to 9,300 do. £100 each ... 930,000 In all, 10,000 Debentures for the amoiint in the aggregate of ... ... £3,780,000 with 144 Coupons attached to each Debenture, a form of which is annexed to this Memorandum. And we do hereby attest such delivery accordingly. Signed by us, in quadruplicate, the day and year above mentioned. Fred. A. Weld, Wm. S. Grahahe, Henry Sewell. Received from the Hon. William Fitzherbert, the Agent appointed under "The New Zealand Consolidated Loan Act, 1807," the Debentures above specified, to be delivered by us to the Public according to the published conditions. Signed, in quadruplicate, this 7th day of July, 1808. P. G. Jtjlxan, 7 Crown Agents for W. C. Sargeaunt, j the Colonies.

No. 8. The Hon. W. Fitziierbert to the Hon. B. W. Stafford. 21 Cockspur Street, 8.W., SiE,— London, 31st July, 18G8. I have the honor to enclose copy of a Report, with enclosures, sent in to me by the Crown Agents, showing the progress made since the date of my last advices. I recommend the statement showing the calculation of rates of exchange for the 7, 8, and 10 per cent. Provincial Bonds to your attention and consideration. Some consider the rates as fixed too high ; others, that they are too low. I believe, however, that the rates have been adjusted with as much nicety as could be well attained, having regard to a successful issue. It will be seen that, according 3

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PAPERS RELATIVE TO

to the calculation of the Crown Agents, the conversion of the Provincial Bonds of these denominations will, if complete, effect an annual saving to the Colony of £12,597. It has been at any rate the subject of much thought and careful calculations, and although I have at times chafed at the delay, yet it has, under the circumstances, been unavoidable; and indeed lam particularly indebted to Mr. Julyan, who persisted in remaining in London until the terms were finally settled, although he was ordered by his medical adviser to proceed to Germany without delay. But experience teaches me that a business of this kind cannot be hurriedly done. I have, &c, The Hon. the Colonial Secretary, Wellington. William Fitzherbert.

Enclosure in No. 8. Mr. Saboeaunt to the Hon. W. Fitzhebbekt. Offices of the Crown Agents for the Colonies, Sib, — Spring Gardens, London, S.W., 31st July, 1868. Referring to my letter of the 30th ultimo, I have now to report for your information, and through you for that of the Government of New Zealand, the progress made by the Crown Agents and the steps taken in regard to the conversion of the old debentures issued on behalf of that Colony into new 5 per cent. Consolidated Debentures. The bonds of the value of nearly £3,000,000 delivered, for conversion and otherwise, have been carefully arranged and cancelled, and new bonds, inclusive of the £1,114,000 sold on the 4th May last, and those created to replace the old bonds, amounting together to £3,780,000, have been duly signed, registered, and for the most part handed over to the persons entitled to them. The arrangements made at this Department for the exchange of the old bonds for new have given very general satisfaction. I informed you in my letter to which I have already referred, that the Crown Agents had at that date taken into consideration the subject of the conversion of the 7, 8, and 10 per cents. Provincial Debentures. You are aware that the discussion respecting the rates which it would be advisable to offer was much retarded by the difficulty we experienced in obtaining copies of the Ordinances under which those Loans had been contracted. This obstacle was surmounted by borrowing from the holders, which the Crown Agents were enabled to do through the courtesy of the Bank of New Zealand, the Union Bank of Australia and others, a bond of each of the Provincial Loans enumerated in Schedule A. of "The Public Debts Act, 1867." Having ascertained the date when the various 7, 8, and 10 per cents. Provincial Debentures would be repayable, calculations were made to arrive at the capitalized value of the difference between the rate of interest holders would be invited to surrender and the rate it was in contemplation to give them in lieu ; and the amount thus arrived at having been reduced in consideration of the superiority of the new Debentures, the result will be seen by a reference to the enclosed Statement, under the column headed " Rate of Conversion." I transmit for your information copy of the advertisement which the Crown Agents published upon being informed that you approved of the proposed rates; the result will be the subject of my report to you next month. I have, <&c, The Hon. W. Fitzherbert. W. C. Sargeaunt.

Sub-Enclosure 1 to Enclosure in No. 8. CoNTEKSiojsr of the Public Debts of New Zealand under the authority of " The Consolidated Loan Act," No. 90 of 1867. In furtherance of the objects contemplated in the above Act, the Crown Agents for the Colonies, acting on behalf of the Government of New Zealand, are prepared to receive applications from the holders of the various Debentures hereinafter enumerated on the following terms; — For every £100 Otago Ten per Cent., issued under "Loan Ordinance, 1856," and payable on the 31st December, 1868, holders may receive £101 New Five per Cents., together with the difference of interest in advance. For every £100 Otago Eight per Cent., issued under " Loan Ordinance, 1861-2," and payable in 1873, holders may receive £112 New Five per Cents. For every £100 Otago Eight per Cent., issued under " Loan Ordinance, 1861-2," and payable in June, 1874, holders may receive £113 New Five per Cents. For every £100 Otago Eight per Cent., issued under " Loan Ordinance, 1862," and payable in November, 1874, holders may receive £113 10s. New Five per Cents. For every £100 Otago Eight per Cent., issued under " Loan Ordinance, 1862," and payable in 1875, holders may receive £115 New Five per Cents. For every £100 Canterbury Eight per Cent., issued under " Loan Ordinance, 1856," and payable in 1872, holders may receive £109 10s. New Five per Cents. For every £100 Wellington Eight per Cent., issued under " Loan Ordinance, 1854-5," and payable about the 15th March next, by notice published in New Zealand, holders may receive £101 New Five per Cents., and the difference of interest in advance. For every £100 "Wellington Eight per Cent., issued under " Loan Ordinance, 1862," and payable in 1877, holders may receive £118 New Five per Cents. For every £100 Wellington Eight per Cent., issued under " Loan Ordinance, 1866," payable in 1886, holders may receive £128 10s. New Five per Cents. For every £100 Nelson Eight per Cent., issued under " Loan Ordinance, 1858," and payable in 1868-9, holders may receive £101 New Five per Cents., with the difference of interest in advance.

CONSOLIDATION OE LOANS.

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For every £100 Nelson Ten per Cent., issued under " Loan Ordinance, 1858," and payable in. 1870, holders may receive £100 New Five per Cents., with the difference of interest in advance. For every £100 Nelson Eight per Cent., issued under " Loan Ordinance, 1864," and payable in 1876, holders may receive £.116 10s. New Five per Cents. For every £100 Nelson Eight per Cent., issued under " Loan Ordinance, 1864," and payable in 1881, holders may receive £124 New Five per Cents. For every £100 Taranaki Seven per Cent., issued under " Loan Ordinance, 1863," and payable in 1873, holders may receive £106 10s. New Five per Cents. The New Five per Cents will be issued in Bonds of £1,000, £500, £200, and £100 respectively, interest payable quarterly, and the principal will be repaid at par by a one per cent, cumulative sinking fund, applied by annual drawings to the extinction of the debt, by which process the whole amount will be repaid in about thirty-six years. Interest on the New Five per Cents, will commence on the 15th July instant, and the accrued interest to that date on such of the old debentures as may be converted will be paid to the respective holders in addition to the foregoing rates of exchange. Fractions of £100 which may be unavoidable in the conversion will be adjusted by the issue of one bond more or less, and by the receipt or payment of the difference in money. The annual drawings will take place in the mouth of March, commencing in 1869, and will be conducted in the presence of the Crown Agents for the Colonies, of any Debenture-holders who may be pleased to attend, and of a Notary Public. The debentures drawn will be paid off at par on the 15th April following, together with the interest due thereon. The days on which such drawings will take place, and the numbers and values of the debentures drawn, will be notified by advertisement in the London Gazette and The Times. Applications for conversion on the foregoing terms will be received by the Crown Agents at any time not later than Thursday the 27th August proximo. Scrip certificates will at first be issued, in exchange for the bonds withdrawn, pending the issue of the new debentures. Forms of application, and further particulars with regard to the public debt and resources of the Colony, prepared by the Honourable William Fitzherbert, a Member of Her Majesty's Executive Council of New Zealand, may be had on application to the Crown Agents ; or to the brokers, Messrs. Mullens, Marshall, Daniell & Co., 3, Lombard Street, and Messrs. J. and A. Scrimgeour, 18, Old Broad Street, London, where copies of the Acts authorizing the conversion and consolidation of the New Zealand Loans may also be seen. Penkose Gr. Julyan, 7 Crown Agents for W. C. Sargeatott. j the Colonies. Offices of the Crown Agents for the Colonies, Spring Gardens, London, 23rd July, 1868.

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Sub-Enclosure 2 to Enclosure in No. 8. NEW ZEALAND. CONVERSION of 7, 8, and 10 per Cent. Provincial Debentures into General Government Consolidated 5 per Cents.

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PAPEES RELATIVE TO CONSOLIDATION OE LOANS.

Peesent Authobized Debt. Peoposed Consolidated Debt. ArTHOETTT. Anntfax Chaege. Ahhttai Ciiahge. Total Amount to be converted. ■sl Total A mount when converted. Eate of Interest. Interest payable. Sinking Fund. Principal payable. o Sinking Fund 1 per cent. Total Annual Charge. Interest. Sinking Fund. Total. Interest j 5 per cent.! I. £ 10 per cent. £ £ £ £ £ £ £ "Otago Loan Ordinance, 1856" 10,300 31st March ; 30th Sept, " 31st December, 1868 1,030 1,030 101 10,403 520 104 624. "Otago Loan Ordinance, 18G1-2" 50,000 8 „ 1st January; 1st July '{ £43,000 June 30, 1874 ... £7,000 December, ] 873 ... 3,440 560 1,290 210 4,730 770 113 112 48,590 7,840 2,429 392 485 78 2,914 450 " Otago Harbour Loan Ordinance, 1862" 50,000 8 „ 1st May ; 1st November 3 let November, 1874 4,000 1,500 5,500 1.13456,750 2,837 567 3,401 " Otago Public Building Loan Ordinance, 1802" 50,000 8 „ 1st April; 1st October 3 1st October, 1875 4,000 1,500 5,500 115 57,500 2,875 575 3,450 "Canterbury Loan Ordinance, 1856" ... 30,000 8 „ 30th June; 31st Dec. 4 28th September, 1872 ... On twelve months' notice, given about the middle of March last ... 1st July, 1877 2,400 1,200 3,600 109532,850 1,642 328 1,970 "Wellington Loan Ordinance, 1854.5" 49,900 8 „ 1st January; 1st July . [ 3,992 3,992 101 j 50,399 2,519 503 3,022 "Wellington Loan Ordinance, 18G2" ... 25,000 8 „ 4 2,000 1,000 3,000 118 29,500 1,475 295 1,770 "Wellington Loan Ordinance, 186G" ... 50,000 8 „ >» }! 1st July, 1886 4,000 4,000 128| 64,250 3,212 642 3,854 " Kelson Loan Ordinance, 1858 " 28.300 700 8 „ 10 „ >> J» 2 2 1st July, 1868-9 1st July, 1870 2,264 70 566 14 2.830 84 101 100 28,583 700 1,429 35 285 7 1,714 42 " " "Nel?on Waterworks Loan Ordinance, 1864" ] 20,000 8 „ „ 2fi £10,000 1st January, 1876 £10,000 1st January, 1881 800 800 , 200 200 1,000 1,000 1161 124 11,050 12,400 582 620 11.6 124 698 744 " Taranaki Loan Ordinance, 18G3 " 3S,750 7 „ 1st April; 1st October 1st April, 1873 2,712 2,712 106| 41,268 2,063 412 2,475 I I I i 402,950 32,068 7,680 39,748 452,683 22,630 4,521 27,151 The total increase in nominal capital is £49,733, whilst the annual charge is £12,597 less than the present charge. "W. 0. Sakqeauxt, Crown A| ;ent.