PUBLIC DEBTS SINKING FUNDS.

B.—No. 1L:

It further becomes the duty of the Commissioners to obtain possession of all debentures, mortgage deeds, vouchers, or other securities relating to investments made on behalf of the sinking funds within the power of the Commissioners. They will therefore be glad if you will act as their Agents for the custody, not only of those securities which are at present in your possession, but also of those which may be placed in your hands by the trustees of other sinking funds, by the direction of the Commissioners. The Commissioners will from time to time direct you in what manner they desire these securities to be dealt with. As you will perceive by the Act referred to, that all future payments of these sinking funds are required to be made to the Commissioners, I am at the same time to point out, that it would be desirable that you should decline to receive any further funds on that account. I have, <fee, James Edwaed FitzGebald, Messrs. Julyan and Sargeaunt, Chairman of the Commissioners of the Public Spring Gardens, London. Debts Sinking Funds.

A similar circular, dated Bth December, 1868, was transmitted to Mr. H. Selfe Selfe, one of the Trustees for the Sinking Funds of the Canterbury Loans, in which the Trustees were directed to hand over to the Crown Agents for the Colonies all the securities in their possession relating to the above sinking funds, and to transmit to the account of the Commissioners, at Wellington, the balance in their hands uninvested.

Enclosure 2 in No. 1. Copy of a Letter from Messrs. Julyan and Sabqeaunt to Mr. J. E. PitzGeeald. Offices of the Crown Agents for the Colonies, Ste, Spring Gardens, London, S.W., 19th February, 1869. We have the honor to acknowledge the receipt of your letter of the Bth December last, on the subject of the sinking funds for the loan raised by the Government of New Zealand under " The New Zealand Loan Act, 1863," for which we are the Trustees, and enclosing, for our information and guidance, a copy of " The Public Debts Sinking Funds Act, 1868." 2. You also request us to furnish you with an account showing what moneys we have received in respect of such sinking fund, and in what manner the same has been disposed of. • 3. You further inform us that it becomes the duty of the Commissioners to obtain possession of all debentures and other securities held by the old trustees, and you request us to act as the Agents of the Commissioners for the custody of the securities now in our possession, and also such as may be placed in our hands by trustees of other sinking funds ; and, finally, you express the desire of the Commissioners that we should decline, for the future, to receive any further funds on account of such sinking funds. 4. In reply, we beg to state, for the information of the Commissioners, as follows : — (1.) Beturns showing the state of the various sinking fund accounts up to the close of 1868 have already been forwarded to the Colony in the letters noted in the margin, and herewith you will receive further returns embracing all transactions which have taken place place between the Ist January, 1869, and the present date. (2.) With regard to handing over to the Commissioners all securities (excepting those belonging to the Guaranteed Loan) now held by us as trustees under " The Loan Act, 1863," we shall have great pleasure in complying with your request if, after taking counsel's opinion thereon, we find that we can do so without rendering ourselves liable to the debenture holders still interested in the fund. On this point we hope to be able to write more fully by next month's mail. 5. In the meantime we would impress upon you the serious consequences which may follow any attempt on the part of your Government to remove the control of the funds—formed for the liquidation of debts incurred in this country—to the Colony. Our views on this subject were fully set forth in a letter addressed to Mr. Stafford on the 26th of January, 1867, of which a copy is annexed. 6. Under any circumstances, we shall cheerfully act as the Agents of the Commissioners in taking charge of all securities belonging to the sinking funds which they may direct to be delivered to us for safe custody. 7. Inspecting the proposition that we should decline in future to receive any further funds on these accounts, we may observe that the only source from which we have ever derived money on sinking fund accounts is from the Government of New Zealand itself; and if it be determined to cease remitting to the trustees in respect of the sinking funds of the unguaranteed loans contracted under " The Loan Act, 1863," the Colonial Treasurer should request the Crown Agents to discontinue the periodical payments on those accounts to the trustees. In order however, as far as possible, to meet your wishes in the matter, we will take care not to make any further investments of such moneys until we hear from the Colonial authorities on the subject. 8. We also enclose, for the information of the Commissioners, an account showing what sums have been paid to the sinking fund formed under " The Consolidated Loan Act, 1867," up to the present date. 9. In the absence of instructions from the Colony, we have, with Mr. Fitzherbert's concurrence, placed the several amounts so received on deposit, at interest, with some of the leading Joint Stock Banks, believing this course preferable to investing the money in stocks or securities of any kind, which are subject to fluctuations in price, and which might result in a reduction of the principal when--2

18 Jan., 1867.--18 Jan., 1868. 29 Jan., 1869.

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