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by the Bank, and also taking into consideration the altered and improved position in which the Government Account will shortly be placed by the sale of the Treasury bills for £150,000, I have now the honor to submit the following terms for your approval as the terms upon which the Bank of New Zealand proposes to manage the banking business of the Government: — 1. That the charge to be made by the Bank for interest on any debit balance of the Government not exceeding £50,000 pounds shall be at the rate of £6 per centum per annum. 2. That, in the event of such debit balance exceeding £50,000, the rate of interest shall be £7 per centum per annum on the whole amount while such excess exists. 3. That, in the event of the Bank of England discount rate continuing for two months in excess of 6 per cent., an increase of the rates provided by clauses 1 and 2 shall be allowed the Bank for the whole period such increase has been maintained, equal to the difference between 6 per cent, and the Bank of England rate. 4. That interest shall be credited to the Government upon the average balance of the Government Account kept at Wellington, known as " The Public Account," at the rate of £4 per centum per annum so long as that average shall be under £50,000, and when above that amount the interest shall be credited upon the whole amount at the rate of £3 per centum per annum. 5. That all remittances between the provinces of New Zealand on Government account be made at par. 6. That all remittances between New Zealand and the adjoining colonies be made by fifteen days' sight drafts at par; by drafts at shorter currency, at one-half the ordinary drawing rate charged to the public. 7. That all remittances to London be made by sixty days' sight bills at par ; by drafts at shorter currency, at one-half per cent, below the current rate, but never below par. 8. That the Bank of New Zealand shall continue bankers for the General Government until tho present proposed arrangement be determined by six months' previous notice. 9. That all past arrangements shall be considered rescinded from the date of the acceptance of this proposal, except for such transactions under existing agreements as have not matured at such date. In proposing the foregoing terms, the Directors have made their proposals upon such a scale as to leave to the Bank only a very moderate margin of profit; and the Directors of the Bank refer with confidence to the past dealings of the Bank with the Government as a guarantee that at all times the requirements of the Government will be met with the utmost liberality that prudent management on the part of the Bank will allow. I have, &c, Thomas' Russell, For the Directors of the Bank of New Zealand. The Hon. the Colonial Treasurer, Wellington. The Hon. W. Fitzheebebt to Mr. Thomas Russell. Sib,— Treasury, Wellington, Ist May, 1867. In reply to your letter of 29th March last, submitting certain terms for my approval as the terms upon which the Bank of New Zealand proposes to manage the banking business of the Government, 1 have the honor to state, for the information of the Directors of the Bank of New Zealand, that I have submitted these proposals to my colleagues in Cabinet, and that I am authorized to inform you that the terms as jiroposed are regarded by the Government as just and liberal; and that I accordingly, on the part of the Government, accept them without any modification as from this date. I have, &c, Thomas Russell, Esq., Bank of New Zealand, Auckland. W. Fitzheebebt. Mr. Thomas Russell to the Hon. the Colonial Teeasueee. Sib, — Christchurch, sth August, 1867. Referring to the arrangement existing between this Bank and the Government of New Zealand for the conduct of the banking business of the Government, I have the honor to direct your attention to the fact that, from papers recently printed, it appears that balances of funds remaining in the hands of the Crown Agents belonging to the Government of this colony have been kept by the Crown Agents in other banks in London, and have not been deposited with the Bank of New Zealand there. I refer, by way of example, to an item remitted for investment on account of sinking fund, which, it appears, remained in the hands of the London Joint Stock Bank. Looking to the spirit of the agreement existing between the Government and this Bank, and seeing that it is a part of the business of the Bank of New Zealand to keep current and deposit accounts for its customers in London, I am sure you will agree with me that this Bank should have the benefit of the deposit of all balances of the New Zealand Government funds, not only in New Zealand but in London. I, therefore, respectfully submit for your consideration my request that the Crown Agents may be instructed to keep all balances under their control belonging to the Government of New Zealand with the Bank of New Zealand in London. I have, &c, Thomas Russell, For the Directors of the Bank of New Zealand. The Hon. tho Colonial Treasurer, Wellington. The Hon. the Colonial Teeasueee to Thomas Russell, Esq., Wellington. Sib, — Treasury, Wellington, 16th September, 1567. I have the honor to acknowledge the receipt of your letter of sth ultimo, in. which, for the