9

8.—4.

Whenever it is determined to make the operation, it ought to be announced suddenly, and finished quickly. We think two months quite enough to give the bondholder to come in and exchange his bond for si i zk, and if circumstances were favourable at the moment we should not give him more than one. In all probability it would be necessary at some time or other to form a syndicate for obtaining bo much money as is required for the operation ; but we should be unwilling to attempt its formation before knowing what sum of money we should really want, and this would depend entirely on the prospects apparent at the particular time of the extent to which holders would prefer exchanging to being paid off. We do not recommend any power to the Agents to delegate their functions to others. I assume it to be your intention, from your telegram of the 3rd instant, to ask Parliament to let the Agent-General (for the time being) and Sir Penrose Julyan be the persons to carry out the Stock Act. Now, the Public Eevenues Act insures that there shall always be an Agent-General, and, in case of the death or incapacity of Sir Penrose, the Agent-General would know in a few hours by telegram who had been chosen to succeed him. In conclusion, I have only to repeat what has been so often urged before, that the first condition of success is secrecy. Nothing would bo easier than for capitalists to combine for the purpose of enforcing better terms to the bondholders by "bearing" the inscribed stock. A very few of them would suffice to do it, and that they would do it if they got an inkling of the operation to be effected there is no sort of doubt. If a fall in inscribed stock happened from the natural movement of the market only there would be no harm in it, because all our other securities would most likely participate more or less in it; but a fall caused by a combination to "bear" inscribed stock would paralyse us and make any operation whatever impossible for some time. I assume that it is unnecessary for me to urge that this despatch should be kept entirely secret, and not be published in any form whatever, until the terms of the conversion had been announced. But, if you should be unable to got the assent of Parliament without the publication of some part of it, at least lot the figures not be disclosed. To disclose them would be immediately fatal to any chance of success. A cipher code is appended, which I hope will effect the object you desire and enable you to telegraph any decision you may come to. I regret that this letter should have reached such a length, but I felt bound to leave out nothing that seemed likely to help you in the examination of our proposals. I have submitted the letter to Sir Penrose Julyan, and you will please to understand that it expresses our united advice upon the subject. I have, &c, The Hon. the Premier, Wellington. F. D. Bell.

No. 6. Mr. Sargeaunt to the Hon. the Premier. Sib,— Downing Street, London, 31st August, 1881. I have the honour to inform you that your letter of the 18th of June last, addressed to Sir Penrose Julyan, Sir Julius Vogel, and myself, stating that the Government of New Zealand had deemed it desirable to revoke the appointment of those gentlemen and myself as Agents under the Consolidated Stock Act, and enclosing copies of the orders giving effect to such decision, has been received, and opened at the Crown Agents' office. I placed your letter in-the hand of Sir Penrose Julyan for his perusal, and I have sent a copy of it to Sir Julius Vogel. I beg that you will convey to the Government of New Zealand my personal acknowledgments of the marked manner in which they have been good enough to express their thanks for the services which I have, in conjunction with the other Agents, rendered in connection with the financial operations of the colony; and that you will assure them that it has always given me, from time to time, during a period now of about twenty years, very great pleasure to render to the colony my best services. I have, &c, The Hon. the Premier, New Zealand. W. C. Sargeaunt.

No. 7. The Hon. the Premier to the Agent-General. Sib, — Government Offices, Wellington, sth November, 1881. I have the honour to acknowledge the receipt of your letter of the 25th August respecting operations under "The New Zealand Consolidated Stock Act, 1877," together with a duplicate thereof; and, on behalf of the Government, I beg to thank you for the great care and attention you have given to the subject. 2. It was not found necessary to submit to Parliament any portion of the previous letter, in which you sketched proposals as to inscription; and you may depend upon the letter now under reply being kept secret, as requested by you. The enclosed extract from Hansard will show you what passed in Parliament upon the question. 3. The important proposals'now made by you, with the elaborate calculations in explanation of them and of their probable working, are being considered by the Government; and I will, as soon as possible, by the aid of the telegraph code appended to your letter, inform you what decisions have been arrived at. 2—B. 4.