B.—No. 13

8

RETURN SHOWING BANKING BUSINESS TEEMS BETWEEN

Under the circumstances referred to' by you, the Government is prepared to accept the terms proposed in the fifth paragraph of your letter, with this modification, that the premium on remittances shall be \ instead of f per cent., as you have suggested. The proposal to purchase Treasury Bills at par, with interest at the rate of 4d. per diem instead of _$d at which the last were taken, is a fair one, and one that will receive favourable consideration ; but the Government does not consider that the jirice at which Treasury Bills may be sold at the Bank as having any necessary relation to the question brought under notice in my letter of the sth instant, but as a separate transaction, to be arranged for from time to time as Treasury Bills may require to be issued. I have, Ac, T. M. Stewart, Esq., E. W. Stafford. Manager, Bank of New Zealand, Wellington.

J. Mr. T. M. Stewart to the Hon. the Colonial Treasurer. Sib, — Bank of New Zealand, AVellington, 22nd December, 1868. I have the honor to acknowledge the receipt of your letter of 19th inst., in which you accept the terms proposed by the Bank for the transmission of interest and sinking fund to London, provided J- per cent, is substituted for £- per cent, premium as our charge. To this modification I am willing, on behalf of the Bank, to give my assent. 2. The first payment, therefore, to be made under this arrangement is due in London on 15th April (as I learn from your letter of sth instant), and must be advised by the mail leaving Wellington on Bth January, on which date I shall be glad to receive from you the usual authority for the transfer of the amount. Should any interruption take place in the Panama mail service, it will be necessary to take advantage of the most favourable opportunity of communicating via Suez, so as to secure the timely arrival of instructions to meet the payments at maturity. 3. With regard to the latter part of your letter, referring to Treasury Bills, while I freely admit that the price at which they may be sold has no necessary relation to tho question more especially under notice, yet it must be evident that the issue of such documents, as well as the Government remittances to London, has a very important bearing upon the Public Account, and that, while the Bank frequently makes concessions to the Government which could not be made to the public, we are only enabled to do so by taking into consideration the general advantages to be gained by transacting the Government business in its different branches. I have, Ac, The Hon. the Colonial Treasurer, T. M. Stewaet, Wellington. Manager.

K. Mb. T. M. Stewaet to the Hon. the Colonial Teeasueeb. Sir, — Bank of New Zealand, AVellington, 6th January, 1869. Eefernng to the correspondence which has recently passed between the Government and the Bank, regarding the transmission of interest and sinking fund to London, I beg to state that the cessation of tho Panama mail service has so materially altered tho conditions under which the Bank undertook to make these remittances, that, in order to carry out the spirit of the agreement on an equitable basis, some modification of the terms has become necessary. Tho experience of the past two years has clearly shown that communication between AVellington and London via Panama could be relied on within fifty days. Under the most favourable circumstances, we cannot expect to communicate by the Suez route in les3 than sixty days; and for the present, while there is no regularly subsidized steamer to Australia, we cannot have intercourse with London under sixty-five days. I need not point out to you that the time during which shipments of gold are in transitu between the two points is an important element in determining the cost of exchange, and tells materially against the Suez route when large remittances have to be made. Another item of consequence is the ditference of freight in the transmission of bullion, amounting to i per cent, more via Melbourne and Suez than via Panama. The payments to be made by tho Government in London mature on the Ist and 15th of the month, and your proposal is that the money should be paid in AVellington three months prior to the due date. The alteration which I would respectfully suggest is, that the whole amount for each month be paid here on the Ist. This would give an advantage to the Bank of fourteen days on each payment due on 15th, while those payable on Ist would be transmitted on your own terms. It will be evident that this change in the terms is by no means proportionate to the unfavourable character of the conditions under which the Bank has now to conduct the Government exchange operations with London ; and, taking all the circumstances of the case into consideration, I trust you will perceive that the modification I propose is not unreasonable. One recommendation, not to be overlooked, is, that it would greatly simplify tho settling of the payments, and dispenses with any reference to the particular day on which the English mail may close in Wellington. I have, Ac, T. M. Stewart, Acting Manager. The Hon. the Colonial Treasurer, Wellington.