8.—17.

2

The amount of these bonds outstanding is £40,075, and the sinking funds accrued to date amount to £15,629 3s. 3d., invested as follows :— £ a. d. In Defence Loan Bonds ... ... ... ... ... 9,610 0 0 „ Canterbury Kivers Bonds ... ... ... ... 3.900 0 0 „ Otago Public Buildings Loan Bonds ... ... ... 1,525 0 0 „ General Purposes Loan Bonds ... ... ... ... 300 0 0 £15,335 0 0 Cash in hand ... ... ... ... ... ... 294 3 3 £15,629 3 3

The amount of this sinking fund will be augmented by accretions of interest between this date and the Ist October to, say, £17,250. By section 2 of " The Public Debts Act, 1867," it is provided that the interest and sinking fund of all loans specified in Schedule A to that Act shall be paid out of the Consolidated Fund ; and it further enacts that, from and after a date to be fixed by Proclamation, in respect of the debentures of any province, the Colonial Treasurer shall pay all interest and sinking fund falling due on such loans. The Otago Public Buildings Loan is one of the loans specified in the Schedule; but no Proclamation in respect of these loans of the Province of Otago has been issued, and the interest and sinking fund falling due thereon has up to this date been, and will no doubt continue to be, paid by the province. On the approaching maturity of the bonds of the Otago Loan of 1861-62, and the Otago Harbour Loan of 1862, the Superintendent of that province requested (papers attached) that those loans falling due in July and November, 1874, should be taken up by an issue of bonds under " The Consolidated Loan Act, 1867," and that the sinking funds accrued in respect of them should be released and paid over to the province. The request of the Superintendent of the province was complied with. The bonds as they came due were paid off, and the relative sinking funds released, except as respects a parcel of £6,000 bonds not due till the 31st December next. No similar request has (as yet) been made by the Provincial Government in respect of the bonds of the Public Buildings Loan falling due on the Ist October next. It is, however, observed that an item of £24,000 —for "Sinking Funds to be released "—appears in the estimated revenue of the Province of Otago for the current year, and it may be anticipated that such a request may yet be preferred. As, however, only three months have now to elapse before the bonds become payable, it is necessary, if any steps are to be taken by the Colonial Government, that immediate consideration be given to the matter, as the major part of the bonds (£24,250) are payable in London, and instructions in respect of them should be sent Home by the mail leaving on the 6th instant. I have, &c, C. T. Batkin, The Hon. the Colonial Treasurer. Secretary to the Treasury.

Enclosure 2 in No. 1.

The Hon. the Colonial Secbetaht to His Honor the Superintendent, Otago. Sib, — Colonial Secretary's Office, sth July, 1875. Beferring to the debentures of the Otago Public Buildings Loan of 1862,1 have the honor to remind your Honor that these bonds, aggregating £40,075, will mature on the Ist October next, and that, as regards the redemption of that portion of the issue on which interest has been paid in London, and which will probably be presented for payment there, it will be necessary to make arrangements by the San Prancisco Mail leaving here on the 6th instant. By "The Public Debts Act, 1867," section 2, the redemption of these bonds is made, in the first instance, a colonial obligation; and it is accordingly proposed, by the outgoing mail, to instruct the Crown Agents to notify by advertisement that they are prepared to pay ofi" these bonds on presentation, and to pay them of£ accordingly. The only sum at present available for the redemption of the bonds is the sinking fund in the hands of the Commissioners of the Public Debts Sinking Pund, amounting at this date to £15,629 3s. 3d. This amount will be augmented by accretions between this date and the Ist October to, 5ay,£17,250, leaving a sum of £22,805 to be provided out of the revenue of the colony. 'Perceiving that a sum of £24,000 is set down in the estimated revenue of the province for the present year as probably receivable on account of sinking funds to be released, it is presumed to be the intention of your Honor's Government to propose that the bonds of the Otago Public Buildings Loan shall be converted into New Zealand Stock by exchanging them for Consolidated Loan Bonds, and that the sinking fund accrued in respect of them shall thereupon be released to the province. The Government proposes to communicate immediately with the Hon. Sir J. Vogel, with a view to ascertain the probability of his being able to dispose of a sufficient amount of Consolidated Loan Bonds to take up these debentures. Looking, however, to the large amount of New Zealand Debentures which have recently been placed upon the London market, it may be found inexpedient to negotiate a further issue of New Zealand Stock.

The accrued sinking funds, supplemented by an advance from the Consolidated Pund, will in the meantime be applied to the redemption of the bonds.