FURTHER PAPERS RELATIVE TO THE CONSOLIDATION OF THE LOANS OF NEW ZEALAND. (In continuation of Papers presented 14th October, 1868.)

Appendix to the Journals of the House of Representatives, 1869 Session I, B-03

B.—No. 3.

FURTHER PAPERS RELATIVE TO THE CONSOLIDATION OF THE LOANS OF NEW ZEALAND. (In continuation of Papers presented 14th October, 1868.)

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

WELLINGTON. 1869.

B.—No. 3

No. 1. The Hon. W. Fitzheebeet to the Hon. E. W. Staeeohd. Sib, — 21, Cockspur Street, London, S.W., Ist September, 1868. I do myself the honor to transmit for your information two reports furnished by the Crown Agents, on the 28th and 30th ultimo respectively, showing the progress of my operations during the past month. Although the success has not been so marked as I had hoped, yet the results, so far as they extend, may be regarded as satisfactory. I refrain from offering any special remarks on these results, because the accompanying statement speaks for itself, and conveys the necessary information more concisely than any explanations of mine could do. The Crown Agents have referred to the inconvenience which was experienced, and to the mistakes which arose, in consequence of our being unable to ascertain precisely the due dates of all the Provincial debentures. Whilst, however, I regret those mistakes, I cannot blame myself for their occurrence, as the information within my reach was defective. Ido however take blame to myself for another probable cause of the limited amount of which the second series will consist. I may explain that in limiting the invitation to Provincial bondholders to the 27th ultimo, I was influenced by a desire to arrange so that I might be able to close up everything, and leave England by the mail of tho 2nd November. Had I named a later date, it would have been impracticable to get the bonds printed, signed and registered, the old debentures verified and cancelled, and the new and old bonds checked by the Board, and my delivery of the former to the Crown Agents officially attested, in time for me to leave by the mail of the 2nd of November. "Whilst, however. I regret that I did not some time ago recognize the impractibility of my being able to leave at the date mentioned, and, by giving a longer notice, avoid the mistake (and I admit that it is a great one) of hurrying operations of the character of those with which I am intrusted; yet I would not have it supposed that I am of opinion that either the shortness of the notice or the occurrence of the mistakes in the advertised prices were the sole or chief causes in operation. For I think that the explanation of the Crown Agents may to a great extent prove correct, viz.,—" That the 7, 8 and 10 per cents, are generally held in the Colony." But, in whatever way these conjectures may turn out, it is my wish to profit by the experience conveyed by this check to my operations, and I have accordingly reconsidered very carefully my position. Two courses appear to be open —viz., 1. To return by the mail of the 2nd November ; 2. To remain in England till my mission is completed. In the first event, the work might remain suspended for a time; or I might appoint an agent to carry it on to completion; or I might create a certain estimated amount of bonds, and leave them with the Crown Agents for issue from time to time as required. My reasons for not adopting either of these alternatives may be briefly stated thus: lam unwilling as a rule to leave work unfinished, and I am particularly so in this case, where the work is of importance, and I have conducted it with success nearly to completion. Both the latter alternatives have been recommended to me for adoption ; but, in addition to the objection of having the signature of a different name as Agent attached to the remainder of the issues, I may plainly say that I am not prepared to adopt either of them, because I could not divest myself of responsibility, and therefore could not part with the power of control whilst the actual responsibility attached to myself. I have therefore, with considerable reluctance, arrived at the decision to remain in England till my work is completed, unless previously recalled. And I propose, so soon as Mr. Julyan shall return from the Continent, to re-open the invitation to bondholders of all denominations of bonds, both General and Brovincial. I have already indicated two dates at which I hoped to have left England, viz., by the mail of July and November respectively, and have in both instances been disappointed in my calculations. It would not, therefore, be expected that I should again attempt to fix the date of my return. It is with extreme reluctance, on personal grounds, that I have decided not to leave by the mail of the 2nd November, and I have urgent private reasons for desiring to return to the Colony so soon as I can after the 2nd November ; and I may further observe that the decision to remain here till my work is completed has also forced upon me, much against my inclination, the alternative of resigning the office which. I hold of Commissioner of Crown Lands, respecting which I propose to address you in a separate despatch. I feel, however, that I need scarcely have alluded to reasons of such a character, for I am confident that the Government will believe that I shall not prolong my stay beyond what 1 deem necessary for the efficient accomplishment of the objects of my mission, and will recognize that I have acted (under difficult circumstances) solely with a view to what I believe to be for the interests of a mission of the highest responsibility, probably, which has yet been intrusted to any Agent by the Grovernment of New Zealand. I have, Ac, The Hon. the Colonial Secretary, 'Wellington, N.Z. William Fitzheebeet.

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

B.—No. 3

4

FURTHER PAPERS RELATIVE TO THE

Enclosure 1 in No. 1. Messrs. Jtjlyan and Saegeatjnt to the Hon. W. Fitzheebeet. Offices of the Crown Agents for the Colonies, Sic,- — Spring Gardens, London, S.W., 28th August, 1868. In accordance with the promise made in the concluding paragraph of my letter of the 31st ultimo, I have now to report to you the result of the invitation made to the holders of the 7, 8 and 10 per cent. Provincial Government debentures, as well as other operations of the current month, for the consolidation of the various public debts of New Zealand. The absence of complete information respecting the due dates of the various Provincial debentures, as I have already informed you, retarded a decision respecting the price it would be fair and reasonable to offer in exchange for them ; it has also been the cause of three trifling mistakes respecting the due dates, rendering necessary some small alterations in the advertised prices. The first has reference to the £7000 Otago 8 per cents., due 31st December, 1875. The rate of conversion of these debentures had been fixed at £112 new 5 per cents, because the date of maturity was supposed to be 1873 ; this was increased to £115, the amount offered to the holders of other Otago 8 per cents, due Ist October, 1875. The second relates to the £30,000 Canterbury 8 per cents., due 3rd March, 1873. The rate of conversion had been fixed at £109 10s., on the supposition that they matured on the 28th September, 1872 ; the difference of date being fully equal to 1 per cent., necessitated an increase to £110 10s. The third has reference to the £49,900 Wellington 8 per cents., and I enclose for your information copy of the correspondence which has passed on the subject between the Crown Agents and Mr. Purdy, the Manager of the Bank of South Australia. I will forward to you in time for the mail of next Tuesday, a statement showing the bonds left at this office for conversion during the present month, amounting to about £145,000 of the Provincial 7, 8 and 10 per cents., and £45,000 of the 5 and 6 per cents, of the General and Provincial Governments. The latter were held by persons who happened to be abroad, in one case at sea on a voyage from New Zealand to England, whilst the operation was open; and as they could not have made application within the time fixed, they have been allowed to exchange. The second issue of new 5 per cents, will consequently amount nearly to £200,000, and the Crown Agents will be able after the Ist of next month to give directions for the preparation of debentures. I enclose copy of a letter from Mr. Alexander Morrison which confirms an opinion I had formed, that the holders in this country of the 7, 8, and 10 per cents. Provincial debentures looked upon the terms offered them as being fair. Those who consider that an increase of capital is no set-off for a decrease of income, could not be expected to accept the terms offered; such a view of the proposed exchange has doubtless been adopted by some, but not to an extent sufficient to account for the £350,000 not converted. To explain the conversion of so small an amount, £145,000 out of about £500,000, I am led to the conclusion that the 7, 8 and 10 per cents, are generally held in the Colony. I shall have to bring before you in a separate letter, an inquiry recently made by Messrs. H. and J. Hart, the holders of £15,000 8 per cent, debentures of the General Government, maturing in December next; those gentlemen appear willing to take new 5 per cents, in payment of the amount due in December, but have not stated the terms they would accept. On the 17th inst. the Crown Agents, under arrangements made by you, paid the Bank of New South Wales £234,997 10s. lid., receiving a certificate of indebtedness, for £202,967 13s. 9d., which had been issued in lieu of £180,000 Southland debentures now in the custody of this department. The interest on the amount of the certificate at 6 per cent, per annum from January, 1866, to the 17th August instant, amounted to £32,029 17s. 2d.; compound interest on the same would have been £34,165 2s. 3d., a difference of £2,135 3s. 9d. I have, &o, The Hon. W. Fitzherbert. W. C. Saegeatjnt.

Sub-Enclosures. Mr. Bubdy to the Crown Agents for the Colonies. Bank of South Australia, 54, Old Broad Street, Gentlemen, — London, 18th August, 1868. I wrote on the 10th instant to Mr. Fitzherbert, as per copy enclosed, on the subject of the 8 per cent. Wellington bonds, which he proposes to consolidate in the 5 per cent. New Zealand Loan. Not having received a reply, and time being now important, I should be glad to know that you can furnish the desired information, and to receive the same from you accordingly. I have, &c, Messrs. F. G. Julyan and W. C. Sargeaunt. W. Puedt.

Copy of Mr. Puedy's Letter to the Hon. W. Fitzheebeet. Bank of South Australia, 54, Old Broad Street, Dear. Sic, London, 10th August, 1868. You will remember perhaps the introduction to you with which I was favoured through Mr. A. Morrison. It is this circumstance which induces me to refer to you personally as to the advertisement recently issued for converting the 8 per cent. Wellington bonds. It is there mentioned that the said bonds are due "about 15th March, 1869," but I would observe that the only notice_ I have been able to find is that in the New Zealand Gazette, dated Wellington, 6th June, 1868 ; and in accordance with that notice the bonds would not be due till Ist July, 1869. As I am anxious to get at the correct details of the case, I would also advert to a speech of His Honor the Superintendent, delivered in Wellington on 19th May, where it is stated the said bonds would be exchanged by you for bonds at 6 per cent, per annum of an equivalent value.

CONSOLIDATION OF THE LOANS OF NEW ZEALAND.

5

B.—No. 3

Being largely interested for self and others in the £50,000 issued, it is important these discrepancies should be explained by some one like yourself, able to give correct and official details. And I should be further obliged if you would do me the favour to state if I am correct in supposing that your offer is £101 in bonds now only worth £98, which would, in fact, entail upon the holder a loss of £1, should they accept the offer instead of waiting for the expiration of the official notice. I have, &c, To the Hon. W. Fitzherbert. W. Pubdt.

The Ceown Agents for the Colonies to Mr. W. Puedt. Sic,— 12, Spring Gardens, 20th August, 1868. I have to acknowledge the receipt of your letter of the 18th instant (received this morning), and have to state that immediately the New Zealand Gazette of the 6th June last reached this office, an alteration in respect to the 8 per cent. Wellington bonds, to which you refer, was made in the advertisement, stating the terms on which the Crown Agents were prepared to exchange the 5 per cents, of the General Government for the 7, 8 and 10 per cents. Provincial debentures. For the Wellington 8 per cent, debentures of £100 due on the Ist July next, you will find, on reference to the advertisement in its present form, that the Crown Agents are prepared to give £101 new 5 per cents., with the difference of interest in advance, i.e., half month's interest at 8 per cent., and Hi months' at 3 per cent, in cash; the new 5 per cents, carrying interest from the 15th ultimo, payable by quarterly coupon. I have to add, that the Crown Agents have not seen the speech of the Superintendent of the Province of Wellington, delivered on the 19th May last, but they are convinced that the General Government of New Zealand will not be prepared to give what is worth £109 to £112 in the London market to liquidate a debt of £100. I have, &c, W. Purdy, Esq., Manager, Bank of South Australia. W. C. Sargeaunt.

Mr. Purdy to Mr. Sargeaunt. Bank of South Australia, 54, Old Broad Street, Sir,— London, 24th August, 1868. I beg to acknowledge your letter of 20th instant, and to thank you for informing me of the alteration in the advertisement respecting the 8 per cent. Wellington bonds, which, on behalf of the New Zealand General Government, you propose to include in the 5 per cent. Consolidated Bonds. That every sense, meets the objection as to date to which I have adverted; and it is satisfactory to find that, so far as the question of interest is concerned, the terms offered by you are, in every sense, fair and equitable. As you have not seen the speech of the Superintendent of the Province of Wellington to which I have drawn your attention, I now beg to enclose an authorized copy of the same from the Government Gazette of 28th May last, which after perusal please return me. Tou will there find that the intention was to exchange the 8 per cent, bonds for " Colonial 6 per cents.," and that intention, I beg to submit, should have been in some sense observed, either in fact or in equivalent values. I agree with you that holders could scarcely expect to receive " what is worth £109 to £112 " for a debt of £100; but there will be relatively as much injustice to pay the same debt in what is only worth £97 15s.—and this is the fact, if your present offer is not in some way or other modified or improved My object is to draw your especial attention to these points, and in illustration I also enclose— 1. An exact state of the holders' position upon your present terms, and what that position would be if the £100 bond were discharged according to its exact and par value. 2. A certificate from the stockbrokers to this Bank in support of the exact value of the 5 per cent, bonds, a value more likely to fall than rise. I feel sure these facts will have your consideration, and while thanking you for leaving my decision to be given not later than Ist September, I send this letter by hand in order that you may know that I am in London for one day only (Tuesday), and should be happy to wait upon you with other bondholders, if any further information is necessary for your guidance. I am> &c ., W. C. Sargeaunt, Esq., "yy Btjrdy. Agent-General for Crown Colonies.

Copy of the Statement and Certificate referred to in Mr. Purdy's letter 24th August, 1868. True position as to 8 per cent, bonds. £ s. d. Wellington bond, due Ist July, 1869 ... ... ... ... 100 0 0 Interest for 12 months from July, 1868, to Ist July, 1869, at 8 per cent. 8 0 0 £108 0 0 Offer of Consolidated 5 per Cent. Bonds, and present position of the Agent's offer. General Government 5 per cent, bond of £100, worth ... £97 15 0 Premium in cash or bonds of ... ... ... 100 Interest for months at 5 per cent, as per bond £4 15 0 Interest for 11£ months at 3 per cent, as per bond 2 17 6 Interest for |- month at 8 per cent, as per bond 0 6 8 8 0 0 £106 15 0 Loss if offer be accepted ... ... ... ... 15 0 108 0 0 2

B.— Xo. 3

6

FURTHER PAPERS RELATIVE TO THE

Certificate. We hereby certify that we can sell £10,000 New Zealand 5 per cent, bonds this day at £97 155., and as the said bonds carry 12s. 6d. accrued interest, the net price would therefore be £97 2s. 6d. Linton & Clarke, 2 Boyal Exchange Buildings. 24th August, 1868.

The Crown Agents for the Colonies to Mr. Buedy. See, — 12, Spring Gardens, 25th August, 1868. With reference to your letter of yesterday's date, I have to thank you for sending to me a copy of the speech of the Superintendent of Wellington, published in the New Zealand Government Gazette of the 28th May last. Mr. Featherston appears to have stated that he proposed requesting His Excellency's Ministers (in other words, the local Government of New Zealand) to offer the holders of the loan for £50,000, known as Gladstone's Loan, to exchange Provincial 8 per cent, bonds for Colonial 6 per cents., thereby effecting an annual saving in interest of £1000; failing this acceptance, he expressed his determination to give notice that the loan will be redeemed at the expiration of twelve months from the date of such notice. As the alternative course referred to by the Superintendent has been adopted, and twelve months' notice has been given to the holders of the 8 per cents, in question, it is fair to presume that the request was made, but was not agreed to by the General Government. Whether this conjecture is correct or not, it appears to the Crown Agents that an expressed intention on the part of the Superintendent of the Province to request the Colonial Ministry to adopt a certain measure cannot be held in any way to bind the General Government. I regret that I cannot agree with you, that the intention was to exchange 8 per cent, bonds for Colonial 6 per cents.; on the contrary, even the expressed intention of requesting the Government to do so has been abandoned, and the alternative course of giving twelve months' notice has been followed. As regards the amount offered, I have only to remark, that you appear to the Crown Agents to have failed to take into consideration the difference between what is equivalent to £99 or £99 ss. in cash, with a slight additional advantage in respect to the payment of a portion of interest in advance, as compared with a bill for £100 payable eleven months hence. I return the New Zealand Government Gazette, of 28th May last. As you are in town, I should be glad if you would decide whether you convert or not within the advertised time on or before 1 o'clock on the 27th instant. I shall be happy to see you if you wish it. I have, &c., W. Purdy, Esq., Manager, Bank of South Australia. W. C. Sargeaunt.

Mr. A. Morrison to the Crown Agents for the Colonies. Dear Sir, — 21, Vanbrugh Park, Blackheath, 14th August, 1868. In reply to your letter of yesterday, I will carefully follow your instructions. I regret that there should be any difference between you and the Wellington bondholders, and more especially so as all other parties whom I have met, who held other Brovincial bonds, express themselves satisfied with the fair terms offered. The holders of the 8 per cent. Wellington bonds think they are not offered by the Crown Agents an equivalent in money for each £100 Wellington debenture, and if the transaction was reduced to money by sale of the fives, it undoubtedly would fall short of it. I will only add that the difference is so small between you that I have no doubt the matter will •easily be arranged. I have, &c, W. C. Sargeaunt, Esq. Alexander Morrison.

Enclosure 2 in No. 1. Messrs. Julyan and Sargeaunt to the Hon. W. Fitzherbert. Offices of the Crown Agents for the Colonies, Sir, — Spring Gardens, London, S.W., 31st August, 1868. In continuation of my letter of the 28th instant, I have now the honor to transmit herewith .a statement of the bonds (General and Provincial), which have been deposited for conversion since the 23rd ultimo, and which may be denominated the " second series." The nominal value of the old bonds deposited is £175,850, in exchange for which new debentures will have to be issued representing the sum of £197,600. In the case of the former, the annual charge in respect of interest and sinking fund was £16,177; whereas in the case of the latter the annual charge will be £11,756, or a saving of £4,421 a year. I annex a statement of the result of the conversions of both series, from which it will be seen that the operation of these conversions has increased the nominal debt £241,650, whilst the annual liabilities •of the Colony have been reduced by £26,880. I have, &c, The Hon. W. Fitzherbert. W. C. Sargeaunt.

B.—No. 3.

Sub-Enclosure 1 to Enclosure 2 in No. 1. STATEMENT showing the Amount of New Zealand Government Debentures (General and Provincial) Converted into New Consolidated 5 per Cents., under "The Consolidated Loan Act, 1867," between the 11th June and 27th August, 1868. (Second Series.)

7

CONSOLIDATION OP THE LOANS OF NEW ZEALAND.

Old Bonds received for Conversion. New Bonds issued to Converters in Exchange. ORDINANCES. Eate per Cent. Annual Charges. Bate per Cent. for Conversion. Received Amount when Converted. Date of Expiry. Conversion. Sinking Fund. Interest. Interest. Sinking Eund. Totals. £ £ £ s. d. £ s. d. £ s. d. New Zealand Loan Act ... 1863 < Taeanaki 1863 r1854-5 Wellington... ... < 1862 (. 1866 at S 1858 Nelson { 1864 n f 1856 Canteebuey ... ... j -I s( > 9 f 1856 I 1861 r, J 1861 0lA0 ° 1 1862 I 1862 L 1862 July 15, 1914 March 15, 1891 June 15, 1891 December 15, 1891 April 1,1873 July 1, 1869 July 1,1877 July 1, 1886 July 1,1869 July 1, 1876 March 3, 1873 July 2, 1916 ... ... December 31, 1868 July 1, 1874 December 31, 1875 November 1, 1874 October 1, 1875 July 1, 1898 2,100 9,800 4,100 2,000 2,900 32,350 15,400 36,500 12,300 2.600 19,100 8,000 7,100 7,000 1,000 1,550 6,850 5,200 5 6 6 6 7 8 8 8 8 8 8 6 10 8 8 8 8 6 1 2 2 2 "4 2 2 4 1 105 588 246 120 203 2,588 1.232 2,920 986 208 1,528 480 710 560 80 124 548 312 21 0 0 196 0 0 82 0 0 40 0 0 616 0 0 246 0 0 52 0 0 764 0 0 80 0 0 126 0 0 784 0 0 328 0 0 160 0 0 203 0 0 2,588 0 0 1,848 0 0 2,920 0 0 1,230 0 0 260 0 0 2,292 0 0 560 0 0 710 0 0 770 0 0 110 0 0 170 10 0 753 10 0 364 0 0 99| im 113* 113* 106i 101 118 12 Si 101 124 1101 109 110 113 115 113i 115 109 2,089 10 11,123 0 4,653 10 2,270 0 3,088 10 32,673 10 18,172 0 46,902 10 12,423 0 3,224 0 21,105 10 8,720 0 7,171 0 7,910 0 1,150 0 1,759 5 7,877 10 5,668 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 3 3 3 1 210 0 0 30 0 0 46 10 0 205 10 0 52 0 0 Fractions Deduct Fi af £100 under £50 paid to Cot actions of £100 above £50 reo 175,850 13,536 2,641 0 0 16,177 0 0 197,980 15 0 .vertors in jived from !ash in Cash :903 15 523 0 0 0 380 15 0 lonvertors Total amount of New D< sbentures 197,600 0 0

B.—No. 3

8

EURTHER PAPERS RELATIVE TO THE

Sub-Enclosure 2 to Enclosure 2 in No. 1. £ £ New Debentures issued, first series ... ... ... 2,665,100 „ „ second series ... ... ... 197,600 2,862,700 Old Debentures converted, first series ... ... ... 2,445,200 „ ~ second series ... ... ... 175,850 2,621,050 Nominal increase of Capital ... ... ... £241,650 Interest and Sinking Fund on Old Debentures, first series ... 182,353 „ „ „ second series 16,177 198,530 Interest and Sinking Fund on New Debentures, first series ... 159,894 „ ~ „ second series 11,756 ■ 171,650 Decrease of Annual Charge ... ... ... £26,880

No. 2. Messrs. Julyan and Saegeaunt to the Hon. E. W. Staeeoed. Offices of the Crown Agents for the Colonies, Sic, — Spring Gardens, London, S.W., Ist December, 1868. I have the honor to report for the information of your Government, that the Crown Agents for the Colonies have at the request of Mr. Fitzherbert, reopened the scheme for converting the old securities of New Zealand into new 5 per cent, consols. Six copies of the advertisement setting forth the conditions upon which the exchange of the one for the other may be effected, are herewith enclosed, together with copies of two letters which have passed between the Crown Agents and Mr. Fitzherbert on the subject. The outstanding bonds of the old issues of the General Government are, it is believed, chiefly held as investments by comparatively poor persons, who cannot be induced to relinquish any part of their present annual income in consideration of prospective advantages which they may not live to realize, and the Crown Agents do not expect that any considerable portion of these bonds will be again drawn in by any one operation. They can only be withdrawn gradually, as was the case with the Canada Consolidation. By leaving it continually open to holders to convert, the old bonds will, whenever thrown on the market, be exchanged for new ones, in preference to being sold, provided there be the slightest advantage in making such a change; and as soon as the excess in supply now on the market shall have been worked oif, the new fives will doubtless command relatively higher prices than the old debentures bearing higher rates of interest. If this be so, and the power to exchange be left open, the latter will be gradually displaced by the former. The remainder of the Provincial bonds bearing interest at 7, 8 and 10 per cent, are in all probability chiefly held in the Colonies, and I would suggest that they might be accepted in New Zealand in exchange for an order on the Crown Agents for an amount of new 5 per cent, consols, corresponding with the advertised terms of conversion. Such an arrangement would, by relieving the holders from the risk attending the transmission of the bonds themselves to London, afford some additional inducement to them to convert, whilst their doing so would be no less advantageous to the Colony than if the old bonds were delivered up here. I have, &c, The Hon. E. W. Stafford, Wellington, P. G. Julyan.

No. 3. The Hon. E. W. Staeeoed to Messrs. Julyan and Saegeaunt. Gentlemen, — Treasury, Wellington, 9th February, 1869. I have the honor to acknowledge your letter of Ist December, reporting that you had reopened the scheme for converting the old securities of New Zealand into 5 per cent, consols, and covering six copies of the advertisement setting forth the terms upon which the exchange would be effected. The Government had anticipated your suggestion for the receipt of debentures in the Colony, by appointing persons to receive them in each principal town in which any were likely to be held, empowering such persons to give receipts that should save the senders from risk in transmission. This was done on the 17th of November, and, in consequence of such notice, a small parcel of debentures was sent you by the last mail, and another small parcel is being sent by this mail. To give still further facilities for exchanges, I have issued the notice which will be found in the Gazette enclosed, in which it is intimated that persons who have no agent in the United Kingdom might avail themselves of the services of Mr. Morrison, so as to obtain payment of the interest, and also of the bonds when they shall come up for payment in the annual drawings.

CONSOLIDATION OE THE LOANS OE NEW ZEALAND.

B.—No. 3,

9

Tou will also observe that I have not limited the time in which debentures may be offered for exchange, so as to admit of their being sent in from time to time, until the whole or some large proportion shall have been converted. It will, however, after some time be necessary to modify the rates of exchange now offered, as these rates would be too favourable to holders of the present bonds as the time approaches in which the currency of the old bonds expires. For the same reason, no notice has been issued with respect to the bonds of Otago which matured on the 31st of December last, or the 8 and 10 per cent, bonds of Nelson which mature on the Ist of July in this year. I have, &c, E. W. Staeeoed. Messrs Julyan and Sargeaunt, Crown Agents for the Colonies, London.

Enclosure in No. 3. Continued Conversion of the Old Debentures of the General and Provincial Governments of New Zealand into new 5 per cent. Consols under the Loan Act of 1867. The Crown Agent for the Colonies, acting on behalf of the Government of New Zealand, will be prepared to exchange new 5 per cents., created under authority of the Act above referred to, for debentures bearing various rates of interest, which have from time to time been issued under the following Acts and Ordinances. The interest on the new securities will be paid quarterly, and the principal will be paid at par by a 1 per cent, cumulative sinking fund, applied by annual drawings to the extinction of the debt. By this process the whole amount will be paid off in about thirty-six years. The terms on which the old debentures may be exchanged for new are as follows, viz. : — For every 100 General Government old 5 per cents, payable in 1914, holders may receive 99J new 5 per cent, consols. For every 100 General Government 6 per cents, payable in 1891, holders may receive new 5 per cents. For every 100 6 per cents, of the Provincial Governments of Auckland, Canterbury, and Otago, holders may receive 109 new 5 per cents. For every 100 Otago 8 per cents., issued under Loan Ordinance, 1861-2, and payable in December, 1875, holders may receive 115 new 5 per cents. For every 100 Otago 8 per cents., issued under Loan Ordinance, 1861-2, and payable in July, 1874, holders may receive 113 new 5 per cents. For every 100 Otago 8 per cents., issued under Loan Ordinance, 1862, and payable in November, 1874, holders may receive 113J new 5 per cents. For every 100 Otago 8 per cents., issued under Loan Ordinance, 1862, and payable in October, 1875, holders may receive 115 new 5 per cents. For every 100 Canterbury 8 per cents., issued under Loan Ordinance, 1856, and payable in 1873, holders may receive HOJ new 5 per cents. For every 100 Wellington 8 per cents., issued under Loan Ordinance, 1862, and payable in 1877, holders may receive 118 new 5 per cents. For every £100 Wellington 8 per cents., issued under Loan Ordinance, 1866, and payable in 1886, holders may receive £128 10s. new 5 per cents. For every 100 Nelson 8 per cents., issued under Loan Ordinance, 1864, and payable in 1876, holders may receive new 5 per cents. For every 100 Nelson 8 per cents., issued under Loan Ordinance, 1864, and payable in 1881, holders may receive 124 new 5 per cents. The bonds will be made to represent sums of £1,000, £500, £200, and £100 respectively, and fractions of the latter amount, which may be unavoidable in the conversion, will be adjusted either by the issue of one bond, more or less, and by the payment of the difference in money, at the time of conversion. The annual drawings will take place in the month 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 are to take place, and the numbers and values of the debentures drawn, will be duly notified by advertisement in the London Gazette and the Times. The New Zealand Government will receive bonds for exchange, and will give an order on the Crown Agents for an amount of new 5 per cent, consols corresponding with the advertised terms of conversion. The Government will be responsible for the transmission of the old bonds to England. As payment of interest on new bonds has to be made in London, and the annual drawings will also be made there, those bonds will have to be deposited in the hands of some person resident in the United Kingdom. For the convenience of persons who have not agents there, Mr. Morrison, the New Zealand Agent in London, will, on application, act as agent for such persons in respect of those bonds. E. W. Staeeoed. The Treasury, Wellington, New Zealand, 6th February, 1869.

No. 4. Messrs. Julyan and Saegeaunt to the Hon. E. W. Staeeoed. Offices of the Crown Agents for the Colonies, g IE Spring Gardens, London, S.W., 29th January, 1869. I have the honor to enclose for your information copy of a report, and its enclosures, made by 3

Jan. 16,1869. Vide B. No. 4, pp. 11-29.

B.—No. 3,

the Crown Agents for the Colonies to the Hon. W. Fitzherbert, on finally closing the conversion and other operations which have been carried out by this department under his instructions. That the consolidation of the General and Provincial loans of the Colony has been a very substantial success, is now placed beyond doubt. The extent of that success and of the various measures adopted to attain it are fully described in the enclosed papers, and it only remains for the Crown Agents to offer their congratulations to your Government in having to so great an extent accomplished the important ends they had in view in passing "The Consolidated Loan Act, 1867." The discrimination shown in selecting an agent to carry out the intentions of the Legislature is also a matter upon which their congratulations are no less due ; and the Crown Agents cannot dismiss the subject without bearing testimony to the valuable services rendered to the Colony in this country by Mr. Fitzherbert, who by great tact and discretion has managed to conciliate all parties, without ever losing sight of the interests involved in his important mission. It was much to the surprise of those acquainted with official matters here, that on his first arrival he managed to effect the settlement of old accounts with the Home Government on the favourable terms he did ; and the fortunate results attending the consolidation of your public debts have been little less surprising to the financial part of the community. I enclose an account, cut from one of the daily papers, of a public banquet and testimonial which have just been given to Mr. Fitzherbert, and which I have no doubt will be little less gratifying to the Colonists generally than to Mr. Fitzherbert himself. I have, &<:., The Hon. E. W. Stafford, Wellington. P. G. Jultan.

10

CONSOLIDATION OE THE LOANS OE NEW ZEALAND.