INSCRIPTION OF STOCK BY THE BANK OF ENGLAND (PAPERS RELATING TO THE PROPOSED).

Appendix to the Journals of the House of Representatives, 1876 Session I, B-06

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1876. NEW ZEALAND.

INSCRIPTION OF STOCK BY THE BANK OF ENGLAND (PAPERS RELATING TO THE PROPOSED).

Presented to both House7oJih7~Qeneral Assembly by command of Hi* Excellency. No. 1. The Hon. Sir J. VoaEL to the Hon. Dr. Pollen. General Government Offices, Wellington, Sin,— 31st March, 1876. I have the honor to forward to you a number of documents connected with the negotiations I ventured, on behalf of the Government, to undertake in London, for the purpose of enabling New Zealand securities to be inscribed by the Bank of England. 2. For a long period, Mr. Westgarth has endeavoured to persuade the Colonial Governments to adopt a plan by which, from time to time, colonial debentures could be registered, and made not transferable to bearer. I believe the Governments of all the Australasian Colonies have had Mr. Westgarth's plan under consideration; but, although there can be no doubt as to its being desirable to arrange that such securities shall or shall not be passable to bearer, at the pleasure of the holder, the plan did not find favour with any of the Governments. This Government declined to adopt it, on the ground (as I believe) that it would devolve too great a power upon whoever was selected to make the registration, and would subject the Colony to too great a risk. 3. Nevertheless, the result desired by Mr. "Westgarth, of making securities either passable or not passable to bearer, has everything to recommend it. While I was in England, it was brought to my notice that a very large sum would have been invested in New Zealand securities, if trustees had been able to divest themselves of the personal responsibility of holding the debentures. After carefully considering the matter, I became convinced that the only safe way of attaining the result desired was to arrange with the Bank of England to perform for the colony duties similar to those performed by the Bank for the Imperial Government and for the Metropolitan Board of Works. Holders of Consols or Board of Works stock can, at any time, have the inscription cancelled, and bonds to bearer issued in lieu thereof, whilst the same bonds can be re-inscribed on application to the Bank. I felt, therefore, that I should be consulting the interests of the colony by endeavouring to effect such an arrangement on behalf of New Zealand. The Dominion of Canada has an inscribed stock, the inscription being effected through private bankers; but there are no arrangements for the issue of bonds to bearer. No doubt the Canadian Government have had the matter under consideration, and have found it impossible to give, under a system of private inscription, the option of obtaining bonds to bearer. 4 After very considerable difficulties, I was enabled to conclude the arrangement set forth in Nos. 3 and 4; of the letters which I append, I have to I.—B. 6.

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acknowledge my obligations to the Colonial Office, and to Messrs. N. M. Rothschild and Sons, for the assistance rendered to me during the negotiations. 5. The agreement, it will be seen, provides for the Bank converting any of the outstanding debentures into inscribed stock, and for the issue of new loans. With respect to the latter, the Bank will receive scrip deposits. I attach copy of a prospectus of the Metropolitan Board of Works, in order to show the course that might be adopted in calling for tenders for any new loan. As to converting outstanding debentures, the Bank would (if authorized by the Assembly) inscribe stock brought to it for the purpose, and would cancel the old debentures after inscription. Subsequent to inscription, the owners could, at their pleasure, obtain fresh debentures in the shape of bonds to bearer. 6. The duties which the Bank agrees to undertake with respect to New Zealand loans include—Effecting conversion, or issuing scrip and receiving deposits, as the case may be; payment of interest; inscription of stock and the issue of bonds to bearer—at a charge per annum of £600 per £1,000,000 up to £10,000,000, and thereafter at a. charge of £550 per £1,000,000. I think that those terms are very reasonable. I will, before I conclude, compare them with those under the plans at present adopted. 7. Transfers of inscribed stock are, by law, subject to a stamp duty of 10s. per cent. But in the case of the stock of the Metropolitan Board of Works, as well as in that of the Canadian stock, such a payment was regarded as of a prohibitory nature ; and, therefore, an Imperial Act was passed, reducing the payment to 2s. 6d. per cent., and further providing that the Board or the Canadian Government might, by a composition payment of 7s. 6d. per cent., commute all stamp duties, so that transfers of either class of stock would thenceforth be made duty-free. I considered it desirable to apply to the Imperial Government for similar legislation in favour of New Zealand. I propose that, as regards converted bonds, the payment shall be made by those who procure the conversion; whilst upon new debentures it would be better the Government should pay the 7s. 6d. composition as they now pay the 2s. 6d. duty, taking the payment into consideration, of course, in fixing the sale price. 7. Although I acted for New Zealand only, the Bank of England seemed to consider that the arrangement would be one that other colonies would gladly enter into; and, in coming to an agreement as to the charges to be made, lam of opinion that that contingency was taken into account. 8. After making the arrangement with the Bank, I desired to avoid legal difficulties. I therefore obtained the consent of the Bank that their solicitors should indicate what legislation they considered necessary; and I had a draft Bill prepared, which (subject to any alterations thought here to be desirable) might be submitted to the Assembly. In the course of the negotiations, it became apparent that, in the interest of the Bank, and, indeed, of all concerned, it was most desirable there should be Imperial legislation, with the view of making applicable to the operations of the Bank certain clauses of the National Debt Act. I placed myself in communication with the Imperial Treasury on the subject, and my representations received most courteous consideration. Although it had not, before I left England, been agreed that the Bill should embody the suggested clauses of the National Debt Act, the Treasury agreed at once to introduce a Bill empowering a composition or commutation of the stamp duties; and I have every reason to believe that the other proposal has been favourably considered. The embodiment of the suggested clauses would be as much in the interests of the Bank as in those of the colony. 9. When I reached Australia, I found that several pf the Governments were anxious to effect a similar arrangement with the Bank; and telegrams were sent to their respective Agents-General, to strongly urge the Imperial Government to make the legislation apply to all the colonies. The answers received have been to the effect that the Bill would be made general; and I have no doubt it will contain all the provisions necessary for carrying out the arrangement with safety to the Home authorities and the Bank, and with great advantage to the colonies. 10. Regarding the matter as one affecting all the colonies, I did not hesitate to supply information to the Australian Governments; for I believe that the larger

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the amount (within reasonable limits) of the stock managed by the Bank of England, the greater will be the attention directed to the securities as offering means of advantageous investment, and that New Zealand will therefore gain, rather than lose, by other colonies adopting the course which I have enabled this colony to adopt. 11. It may be useful to compare the proposed charges of the Bank with present rates. The Government now give, as a consideration for paying interest, one-quarter per cent, on the amount of interest paid. As the proposed charges by the Bank of England are based on the capital, it will be necessary, in order to arrive at a comparison, to reduce to a similar denomination the present payments. Supposing our loans to bear 4<j per cent, interest, one-quarter per cent, on £45,000, the interest on £1,000,000, would be equal to £112 10s. per £1,000,000. The Bank is not to charge for receiving scrip deposits; and tenders for loans may thus be called for, if the deposits are made payable at the Bank, in a manner similar to that adopted by the Metropolitan Board of Works, of one of the loans of which body I enclose a prospectus, as I have already mentioned. The arrangement with the Bank to receive scrip deposits will render unnecessary the payment of one-quarter per cent, the Government have hitherto made for negotiating new loans. Although the Bank in this matter does not propose to do more than has been done by the London and Westminster Bank, or (in the case of the last loan) by the Bank of New Zealand, yet the fact of the Bank of England doing this work will, I'think, render wholly unnecessary the payment of the commission of one-quarter per cent. It is to be borne in mind, that the Crown Agents have of late years acted in a double capacity. They have, in association with the Agent-General, acted as agents for our loans, and for so doing have received a small separate payment to which I am not now referring. They have also—except in the case of the £4,000,000 Loan, negotiated through Messrs. Rothschild and Sons— received a payment of one-quarter per cent, as Crown Agents. For the latter payment, they have really done no more than afford facilities for the creation of debentures, for which their large offices and numerous staff give them special capabilities. But, under the proposed system, there will be no creation of debentures until after inscription, and then, if debentures are required, they will have to be made by the Bank of England. I cannot conceive, then, any object which the Crown Agents could, under such an arrangement, subserve. Such advantage as their judgment might be held to confer was obtained from them in their capacity of Loan Agents, for which they received a separate payment. I know it has been urged that the Crown Agents, when acting with regard to a loan, give to it a quasi Imperial character. If this were the fact, we ought to be reluctant to take advantage of the impression, inasmuch as our ordinary loans have no right to such a character. But the allegation is true to a very limited extent only. Possibly a few small investors may believe that a loan issued by^the Crown Agents has, in some way, the concurrence of the Imperial Government; but assuredly the bulk of the applications, which come through moneyed houses or brokers, are not made under any such impression. The payment of a quarter per cent, which has hitherto been made, has, then, to my mind, been rendered unnecessary by the arrangements with the Bank of England. I am drawing a distinction between the payment of onequarter per cent, for negotiation, and the small payments made to the Loan Agents. There are two ways in which the Government may conduct their future loan operations; but, whichever may be adopted, I do not think the onequarter per cent, hitherto paid will be necessary. In either case, Loan Agents will have to be appointed, and the payment made to such Agents may have to be continued. If the amount of a required loan is not large, and it does not follow soon after a previous issue, there should be no difficulty in the Loan Agents calling for tenders themselves, and requiring the deposits to be paid into the Bank of England —following, in short, the system adopted by the Board of Works, or following that which has uniformly been pursued by South Australia, under which its Agent-General has called for tenders. If this plan were adopted, the Loan Agents would be able to secure the assistance of

Appendix,

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brokers, just as well as such assistance has hitherto been secured. If, however, the loan were of very large amount, or if it followed quickly after another loan, it would be expedient for the agents to obtain the aid of a powerful financial house, as was lately done. Such a house, having numerous connections, can very largely influence sales, and so make successful a loan which might otherwise not go off well. In either case, the payment of one-quarter per cent, would be saved; and, therefore, in instituting a comparison between the past system and that which is proposed, I may regard that amount as a saving. One-quarter per cent, on £1.000,000 is equal to a single payment of £2,500, which, for the purpose of comparison, may be taken as equal to £125 a year. Thus, we may consider that the Bank of England offer to do for £600 per year, per £1,000,000 up to £10,000,000, and of £550 per £1,000,000 thereafter, that for which £112 10s. and £125 have been paid nnder present arrangements, and which amounts may be saved ; but, in addition, the Bank will perform all the work connected with inscription, the issue of bonds to bearer, and, when necessary, re-inscription. It might, no doubt, be possible to arrange that the Bank should collect a fee for such transfers and inscription; but I am of opinion it would add much to the popularity of the stock, and would cause very large amounts to be inscribed and transferred, if no fee were charged. I think, therefore, it would be well worth while for the Government to pay the comparatively small amount thus required, for the sake of putting our loans into a position such as that I have described. I believe that £600 per year, per £1,000,000, considering all that the Bank propose to do for it, is a most reasonable charge. A very great saving will be effected in connection with the paying off of loans. For that operation, the present payment is one-half per cent., equal to £5,000 per £1,000,000, whereas the Bank agree to undertake the operation for £1,000 per £1,000,000. Thus upon all outstanding stock converted, the saving would be £4,000 per £1,000,000 in one payment, or equal to an annual saving of £200 per £1,000,000. Most of the other colonies act through their London bankers ; and of those bankers it may be said—as has been said of powerful financial houses—that they not only act as agents, but induce purchasers. South Australia has, as I have stated, been an exception to this plan. So far as New Zealand is concerned, I think that the system in future should be to call for tenders through Loan Agents, if the amount of a loan be small, and the circumstances generally of a not unusual character, whilst in other cases it would be better to allow the agents to negotiate through an influential financial house. 12. There cannot be a doubt that the convenience to holders of being able to have their securities inscribed, or at their pleasure made bonds to bearer, will very much improve the character of the loans, and it is scarcely necessary to add that the fact of the Bank of England managing the loans will enhance the estimation in which they are held. Eor the purpose of speculation (that is, of sale and re-sale), bonds to bearer are most convenient; whilst, for permanent investment, the power of inscription must be greatly advantageous to those who desire to divest themselves of the trouble and the risks of loss incidental to holding a number of paper documents. It would be difficult to overrate the collateral advantages arising from the employment of such an institution as the Bank of England. Indeed, I have been assured, by persons competent to give an authoritative opinion, that colonial securities managed by the Bank of England, as proposed, would become most popular with investors; that their value would be increased; and that there would be much less difficulty than hitherto in obtaining their approval by the Lord Chancellor as securities in which trust funds might be invested. The latter advantage is one which, it will be remembered, A Tarious Colonial Governments have for years been anxious to obtain. It was, indeed, suggested by Counsel that the Bill to be submitted to the Imperial Parliament should contain a clause enabling trust funds to be so invested; but I arranged that this should only be done if it would not involve risk of the passage of the measure, as I recognized that it was a question quite distinct from the others with which the Bill was to deal. I venture, however, to express a strong opinion that the giving of authority to invest trust funds in

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colonial loans managed by the Bank of England is only a question of time, and of a not very long time. 13. I think it exceedingly desirable we should provide for the conversion of all existing New Zealand loans into inscribed stock at the pleasure of the holders. The cost of conversion should be borne by the holders; and power should be given to agents to fix, from time to time, the rates of conversion, taking care, of course, that those rates leave a profit to the colony. Not only would there be a profit on account of the charges which those converting stock would be willing to pay; but, in the case of the Consolidated Loan, there would be a great saving, through avoiding the present cost of the annual drawings. I am aware that the drawings would have to be continued as long as there are any debentures of that loan outstanding ; but inasmuch as the amount converted would be held by the Government, it would not be necessary to pay interest upon such amount whilst so held, or commission upon any part of it that might from time to time be drawn for payment and cancellation. 14. In conclusion, I may express the hope that the negotiations will result in very large benefit to the colony. I have, &c, Julius Vogel. The Hon. Dr. Pollen, &c, &c.

Enclosure 1. Sir J. Vogel to Mr. E. G. "W. Heebeet. 7, "Westminster Chambers, Victoria Street, "Westminster, S."W., Sib,— 15th November, 1875. As you are aware, I am engaged in arranging with the Bank of England to inscribe New Zealand stocks. 2. It is important that the New Zealand Legislature, before authorizing such inscription, should know what the stamp charges will be. The stamp duty payable by the Metropolitan Board of "Works, on its inscribed stock, and the transfer thereof, has, by Act of Parliament, been remitted on payment of a composition of 7s. 6d. per £100. 3. I have the honor to ask you to place me in a position to arrange with the Treasury what the composition shall be in the case of the stamp duties on New Zealand inscribed stock. I think that in regard to any debentures converted into inscribed stock, credit should be given for the payment of 2s. 6d. per cent, already made. 4. You will confer a favour on me by enabling me to arrange this matter as soon as possible, as I leave England early next week. It is desirable that the terms of the Bill to authorize the composition, which it would be necessary to introduce, should be settled. I have, &c, E. G. W. Herbert, Esq., Colonial Office. Julius Vogel.

Enclosure 2.* Mr. W. E. Malcolm to Sir J. Vogel. Sib, — Downing Street, 17th November, 1875. I am directed by the Earl of Carnarvon to acknowledge the receipt of your letter of the IStli instant on the subject of the composition which would be required in lieu of stamp duty on inscribed New Zealand stock. I am desired to state that this matter is receiving Lord Carnarvon's best attention, and that his Lordship will cause a reply to be sent to you as soon as he shall have ascertained the views of the Lords Commissioners of the Treasury on the subject. I have, &c, Sir Julius Vogel, K.C.M.G. "W. E. Malcolm.

Enclosure 3. Sir J. Vogel to the Goveenob, Bank of England. 7, "Westminster Chambers, Victoria Street, "Westminster, S."W., Sib,— 16th November, 1875. I have the honor to state in writing the agreement which, as I understand it, has been arrived at between us, during our numerous interviews, respecting the inscription by the Bank of England of the New Zealand loans. 2. The New Zealand Government are to introduce a Bill to the New Zealand Legislature, enabling the Government to enter into an arrangement with the Bank of England to inscribe New Zealand stocks. 3. Provided such Bill passes, the Bank agrees to convert outstanding debentures, duly presented for the purpose, into inscribed stock, and, if the Government decide to charge a fee for such conver-

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sion, to receive the same on behalf of the Government; to inscribe New Zealand loans, and to receive instalments and issue scrip for the same; to issue certificates to bearer of inscribed stock, and to re-inscribe as is done with Consols ; to make transfers of inscribed stock; to pay interest on loans inscribed quarterly or half-yearly, as may be determined; and, when necessary, to act as agents for paying off the principal sums of the stock. 4. The Government of New Zealand to pay to the Bank of England the money required for dividends on the stock, at least one month before such dividends are due. 5. The Bank of England to perform the duties stated above, including the conversion of outstanding debentures into stock, the inscription of stock, the issue of certificates to bearer and re-inscription of stock, the management and transfer thereof, the receipt of moneys on account of new loans, and payment of interest, and to defray all incidental expenses and charges, except the cost (if any) of stamps and of advertising, for a consideration of £600 per annum for every million pounds of stock up to ten millions, and thereafter of £550 per million pounds: such payments to be made to the Bank half-yearly or quarterly at the time when the payment of the dividends is made. 6. The Government of New Zealand to guarantee to the Bank of England that the payments indicated above shall not amount to less than £2,500 per annum for a not less term than ten years. 7. The remuneration to the Bank for paying off the principal sum of any inscribed loan, or exchanging any inscribed stock for a new loan, to be at the rate of £1,000 for every million pounds paid off. I have, &c, The Governor, Bank of England. Julius Vogel.

Enclosure 4. Mr. H. Cinjßß to Sir J. Vogel. Sic,— Bank of England, E.C., 17th November, 1875. I am directed by the Governor of the Bank of England to acknowledge the receipt of your letter of the 16th instant, in which, with reference to the proposed inscription and management by the Bank of England of New Zealand loans, you state the nature of the arrangement which has been suggested, as follows : — (1.) The New Zealand Government are to introduce a Bill to the New Zealand Legislature enabling the Government to enter into an arrangement with the Bank of England to inscribe New Zealand stocks. (2.) Provided such Bill passes, the Bank agrees to convert outstanding debentures, duly presented for the purpose, into inscribed stock, and, if the Government decide to charge a fee for such conversion, to receive the same on behalf of the Government; to inscribe new loans, and to receive instalments and issue scrip for the same ; to issue certificates to bearer of inscribed stock, and to re-inscribe as is done with Consols ; to make transfers of inscribed stock ; to pay interest on loans inscribed, quarterly or half-yearly, as may be determined; and when necessary to act as agents for paying off the principal sums of the stock. (3 ) The Government of New Zealand to pay to the Bank of England the money required for dividends on the stock, at least one month before such dividends are due. (4.) The Bank of England to perform the duties stated above, including the conversion of outstanding debentures into stock, the inscription of stock, the issue of certificates to bearer and re-inscription of stock, the management and transfer thereof, the receipt of moneys on account of new loans, and payment of interest, and to defray all incidental expenses and charges, except the cost (if any) of stamps and of advertising, for a consideration of £600 per annum for every million pounds of stock up to the amount of ten millions, and thereafter of £550 per million pounds : such payments to be made to the Bank half-yearly or quarterly, at the time when the payment of the dividend is made. (5.) The Government of New Zealand to guarantee to the Bank of England that the payments indicated above shall not amount to less than £2,500 per annum for a not less term than ten years. (6.) The remuneration to the Bank for paying off the principal sum of any inscribed loan, or exchanging any inscribed stock for a new loan, to be at the rate of £1,000 for every million pounds paid off. In reply, I am directed to state that the Bank of England is prepared to accede to the foregoing proposal: understanding by clause 5 that the Government of New Zealand would not enter into any arrangement which would in any way shorten the period —namely, ten years —during which a minimum payment of £2,500 a year is to be made to the Bank. I have, &c, Hammoio) Chubb, Secretary,

Enclosure 5. Sir J. Vogel to Mr. R. G. W. Heebebt. 7, Westminster Chambers, Victoria Street, "Westminster, S.W., Sic, — 18th November, 1875. I have the honor to state that counsel has advised that in the Bill to authorize a composition, of the stamp duties on New Zealand inscribed stock it would be desirable to introduce certain provi-

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sions contained in " The National Debt Act, 1870," with the view of properly enabling the Bank of England to carry out the duties it is proposed the Bank should perform. 2. As in the case of Canada no objection was made to a composition of the stamp duties, I apprehend that New Zealand may look for a like arrangement—namely, ss. per cent, upon loans on which stamp duty of 2s. 6d. has already been paid, and 7s. 6d. upon new loans. 3. The Bill of which I have the honor to enclose a copy provides for such a composition of the stamp duty, and it incorporates portions of the National Debt Act of 1870. Mr. Eeilly, by whom the Bill was prepared, has, in a memorandum of which I have the honor to enclose a copy, shortly summarized the nature of the clauses of the National Debt Act which are incorporated in the Bill, and he states, —" lam of opinion that the insertion of clauses of this character in an Imperial Bill would not devolve any liability on the Imperial Treasury." I hope, therefore, it will not be deemed unreasonable to ask that these clauses should be added. 4. The enclosed copy of the Bill contains a clause enabling trustees to invest in New Zealand Consolidated Stock. As I feel that this is introducing a new subject, I have put a pen through the clause, and do not now propose that it shall stand as part of the Bill. Of course, if the Secretary of State for Ihe Colonies sees his way to the introduction of such a clause, it will confer a great boon; but, as I recognize that it involves a separate question, I do not desire to mix it up with the present application. 5. I am leaving England in three or four days, and I venture to express the hope that before I leave you will be able to give me an assurance that the measure required will be submitted to Parliament. It may be that the Colonial Office will desire to make the Bill applicable to all the colonies, and therefore to vary its terms; but, without determining the precise plan of the Bill, I shall esteem it a great favour if you are able to inform mo that during the next session of Parliament a measure will be introduced for the purpose of carrying out the objects proposed in the Bill enclosed. I have, &c, E. G. "W. Herbert, Esq., Colonial Office. Julius Vogel.

Sub-Enclosure to Enclosure 5. Part 3 regulates— S. 17.—Eeceipt of dividends by executors. S. 18. —Evidence which may be required before payment of dividend. S. 19. —Payment of dividend in case of infancy. And SS. 20 and 21. —The forwarding dividends warrants by post. Part i regulates— S. 22.—The mode of transfer. S. 23. —Transfers by executors, &c. S. 24. —Evidence which may be required before transfer. S. 25.—The closing of transfer books for dividend. Part 5 regulates— S. 26. —The issue of stock certificates. S. 28.—The limit of amount. S. 29.—Restrains trustees taking certificates. S. 30. —Believes the Bank from notice of a trust. S. 31.—Eestrains transfer of stock while certificate outstanding. S. 32.—Distinction between a stock certificate to bearer and nominal certificate. S. 33. —Eestrains nominee in nominal certificate from having it renewed as nominal. S. 34. —The payment of dividends on certificates by way of coupons. S. 35. —Giving three days for examining coupons before payment. S. 36. —Deduction of income tax. S. 38.—The issue of new certificates in case of loss. S. 39.—The issue of forms and the making regulations with respect to stock certificates and coupons. B. 41.—And the incidents of a stock certificate. I am of opinion that the insertion of clauses of this character in an Imperial Bill would not devolve any liability on the Imperial Treasury. Westminster, 17th November, 1875. Tean. S. Eeillt.

Enclosure 6. Mr. E. G. W. Hebbebt to Sir J. Vogel. Sib, — Downing Street, 22nd November, 1875. I am directed by the Earl of Carnarvon to acknowledge the receipt of your letter of the 18th instant, submitting a draft Bill containing clauses which you are advised that it would be desirable to introduce into the Bill which will be required for the purpose of defining the stamp duty payable on transfers of New Zealand Consolidated Stock, and the rates at which such duty may be compounded. Lord Carnarvon has been in communication with the Lords Commissioners of the Treasury on this subject, and I am to acquaint you that their Lordships consent to adopt, in the case of the New Zealand inscribed stocks, arrangements similar to those sanctioned last year in the case of Canada by the Act 37 and 38 Viet. c. 26, ami will cause the necessary Bill to be introduced early next session. Their Lordships will, however, take further time to consider what should be the precise form of

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this Bill, and Lord Carnarvon is not at present in a position to acquaint you whether your suggestion as to the incorporation in it of certain clauses taken from " The National Debt Act, 1870," can b entertained. i I have, &c, Sir Julius Vogel, K.C.M.G. Eobeet G. W. Heebeet.

Enclosure 7. Sir J. Vogel to the Agent-Geneeal. 7, Westminster Chambers, Victoria Street, Westminster, S.W., Sib ,— 22nd November, 1875. I have the honor to inform you that I have been for some time engaged in very difficult negotiations with the Bank of England, with the object of arranging for that institution to inscribe New Zealand stocks ; giving, also, the advantages to stockholders of being able to obtain at pleasure certificates to bearer, and to re-inscribe. 2. I need not point out to you how substantial will be the benefits thus secured to those who, holding New Zealand securities, may have the option of converting them into inscribed stock. 3. It is very desirable, if not necessary, that an Imperial Act should be passed, by which not only would the Bank be duly protected, but would be able to ofler facilities to the holders of inscribed stock which could not be given under the authority of a Colonial Act standing alone. 4. I have communicated with the Colonial Office, with the view of moving the Treasury to submit to Parliament, next session, a Bill applying certain provisions of " The National Debt Act, 1870," to any arrangement entered into with New Zealand by the Bank of England, and authorizing a composition on account of stamp duties similar to that which has been authorized with respect to stock of the Metropolitan Board of Works. It has been intimated to me that the composition will be granted. The adoption of the clauses of the National Debt Act is still under consideration. Possibly it may be deemed better that the measure should be made applicable to the colonies generally, for there is reason to suppose that some, at least, of the other colonies would be glad to make, with the Bank of England, terms similar to those I have made on behalf of New Zealand. 5. Mr. Mackrell, the Solicitor here to the Government, is familiar with all the circumstances connected with my negotiations, and he has copies of the papers. I have told him to apply to you in the event of any difficulty arising; and I have, on behalf of the Government, to express the hope that you will use every exertion to aid Mr. Mackrell in procuring the passage of an Imperial Act. I have, &c, The Agent-General for New Zealand. . Julius Vogel.

APPENDIX. Meteopolitan Consolidated Stock. Issue op £2,600,000 at £94 10s. pee cent. Under "The Metropolitan Board of Works (Loans) Act, 1869," and the Acts extending or amending the same.

Application for £ of the stock.

To the Meteopolitan Boaed of Woeks. Having paid into the Bank of England, to the credit of the Board, the sum of £ , I hereby apply for pounds of the above-mentioned stock, and I hereby engage to pay the several instalments on any allotment that may be made to me, as they respectively become due, in conformity with, and subject to, the terms specified in the advertisement dated the 12th February, 1874. Name in full. Address. Date. Applications are receivable at the Chief Cashier's Office, Banh of England, only, and no tender will be received after one o'clock^ on Saturday, the 21st February, 1874.

Meteopolitan Consolidated Stock. Interest at £3 10s. pee cent, pee annum. Further Issue of £2,000,000 Stock. (Authorized by Her Majesty's Treasury under Act 32 aud 33 Vie. cap. 102, and the Acts extending or amending the same.) Price of Issue, £94 10s. per cent.; First Dividend payable on 6th July, 1874. The Metropolitan Board of Works give notice that they are prepared to receive subscriptions, at the Bank of England, for £2,600,000 of Metropolitan Consolidated Stock, required for new works, for conversion of existing debt, and for loans to such other Metropolitan bodies as are empowered, by statute, to borrow from the Metropolitan Board. I This stock will be consolidated with that now outstanding, which amounts to £5,411,011 14s. 6d., and bears interest at the rate of £3 10s. per cent, per annum, payable quarterly at the Bank of

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England (dividend warrants being transmitted by post, if desired) in January, April, July, and October, on the same days on which the Government dividends are payable; and it will be redeemed at par on the Oth October, 1929, should the same not have been previously cancelled by purchase in the open market under the operation of the Redemption Fund constituted by the principal Act. The books of Metropolitan Consolidated Stock are kept at the Bank of England, where all assignments aud transfers are made, and holders of the stock are able to take out stock certificates, transferable to bearer, with coupons attached, if they so desire. All transfers and stock certificates are free of stamp duty. The primary security for this stock is the power of the Board to rate the whole rateable property within the Metropolitan area, as denned by the Metropolis Local Management Act of 1855. The annual rateable value of this area now amounts to £20,5-1-9,011, and a rate of one penny in the pound produces upwards of £85,000. Under the above statutes a special fund has been constituted for paying the dividends on and redeeming the principal of this stock ; and the Lords Commissioners of Her Majesty's Treasury control the sum to be raised annually by the consolidated rate to meet the charges on this fund. Special attention is invited to the following clause of the Metropolitan Board of Works Loans Act of 1871: — "A trustee, executor, or other person empowered to invest money in public stocks or funds or other Government securities may, unless forbidden by the will or other instrument under which he acts, whether prior in date to this Act or not, invest the same in consolidated stock." The price of the stock now to be issued will be ninety-four pounds ten shillings sterling for each hundred pounds of stock. The subscription list will be opened at the Chief Cashier's Office, in the Bank of England, on Wednesday, the 18th instant, and closed on or before Saturday, the 21st instant, at 1 o'clock p.m. The allotments will be made ]jro rata. A deposit of 5 per cent, on the amount of stock subscribed for must be paid at the same office at the time of subscription. In case of partial allotment, the balance of the deposit will be applied towards the first instalment. The dates at which the further payments will be required are as follow: — On Thursday, the sth of March, 1874, £9 10s. per cent.; On Thursday, the 9th of April, 1874, £20 per cent.; On Thursday, the 9th of July, 1874, £20 per cent.; On Thursday, the Bth of October, 1874, £20 per cent.; On Thursday, the 7th of January, 1875, £20 per cent.; but parties who desire it may, on or after the sth of March, 1874, pay up in full, and a discount at the rate of 2 per cent, per annum will be allowed. In case of default in the payment of any instalment at its proper date, the deposits and instalments previously paid will be liable to forfeiture. Interest on the total amount of the stock (calculated from the Oth of April, 1874) will be payable on the 6th of July following. Scrip certificates, to bearer, with coupons attached, for the dividends payable on the 6th of July and the Oth of October, 1874, and the Oth of January, 1875, will be issued in exchange for the provisional receipts. The stock will be inscribed in the Bank books on or after the 7th of January, 1875 ; but any scrip paid up in full, on or after the sth of March, 1874, may be inscribed as stock, with the dividend current, as on the other Metropolitan Consolidated Stock then existing. Copies of this notice and forms of application can be obtained at the Accountant's Department in this office, and at the Chief Cashier's Office, Bank of England. By order. Metropolitan Board of Works, J. E. Wakefiem>, Spring Gardens, 12th February, 1874. Clerk of the Board.

By Authority : Geouge Didsbubt, G-overnnieut Printer, Wellington.—lB76. Price 9d.]