8.—6

2

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

See Appendix.