A.—3.

Enclosure No. 1. Messrs. Mackeell, Maton, and Godlee to the Agent-Geneeal for New Zealand. New Zealand Investments. Deae Sie Feancis, — 21, Cannon Street, London, E.C, 11th March, 1885. We now send you a revised print of the Bill for authorizing the investment of trust funds in New Zealand securities. It may facilitate the consideration of this draft Bill if we explain shortly the objects to be attained, and the mode of carrying out the proposed scheme. It seems more convenient to refer firstly to the last section of the Bill. In the last session of Parliament an Act was passed sanctioning the investment of Scotch trust funds in such of the inscribed stocks of the Colonial Governments as the Courts in Scotland should approve. It is proposed now that Parliament shall itself declare that any of the trust funds held in the United Kingdom may be invested in New Zealand Inscribed Stocks. If this be assented to there should be no question raised to the other portions of the Bill which sanctions the investment of trust funds in lands in the colony under a guarantee by the New Zealand Government, both as regards the capital and of 4 per cent, interest thereon. In this respect, however, the Bill will not be operative until the Legislature of New Zealand shall pass an Act making the Act binding on the Government of the colony, and otherwise as mentioned in section 4, which includes the providing the necessary funds to meet the Government guarantee. Should the Government adopt the Bill, trustees will then be duly authorized, either with or without the sanction of the Chancery Division of the High Court of Justice, to invest trust funds in the purchase of lands in New Zealand, whether such trust funds shall have arisen from the sale of settled estates or shall be held under any trust for an infant, immediate or future, subject to the consent of those of full age entitled beneficially to any intermediate interest. The machinery proposed for the purpose of the Bill is as follows: — The Government are to appoint an Investment Agent in London, who is to be empowered to enter into arrangements and engagements on behalf of the Government with trustees. When an arrangement has been come to, the trust moneys are to be deposited with the Investment Agent in London, to be transmitted to " the Public Trustee," who is constituted the Agent in the colony for the purposes of the Act. Upon the money being so deposited the Government are to become liable for interest thereon at the rate of 4 per cent, per annum until the money be invested, and thenceforth to make up a yearly return of not less than 4 per cent, per annum until the expiration of three* years from the date when a person becomes of full age and entitled in possession to dispose absolutely for his own use of the land purchased, unless, in the meantime, the purchase-money shall have been paid off. Upon receipt of the money the Investment Agent in London is to give to the trustees a debenture with warrants for payment of interest, in a form to be prescribed. The Public Trustee, on receipt of the moneys from the Investment Agent in London, is to invest the same in the purchase of the land which may have been previously selected, or otherwise at his discretion, and the same is to be vested in the trustees for whom the investment shall be made, who are to hold the same on the same trusts as if the land had been situated in England, but it may be arranged for the land being vested in some person in the colony for the purpose of facilitating the management of the same. Upon the completion of the purchase, and the delivery to the trustees of a proper certificate to that effect, the debenture issued by the Investment Agent in London, with all warrants for interest not accrued due, is to be delivered up. In case the whole of the moneys deposited shall not have been invested, a new debenture is to be issued for the balance. The expenses attending the investment are to be borne by the Government, they being entitled to deduct a commission. The land purchased is not to be subject in the colony to succession duty, legacy duty, probate duty, or other imposition in respect of devolution by death or otherwise. The management of the property purchased is to be either by the trustees or by the Public Trustee, as may be arranged; but, if the Government are called upon to make good any deficiency of income to make up 4 per cent., the Public Trustee may obtain the appointment of a receiver or manager. The necessary powers are conferred upon trustees to appoint agents in the colony for management of the property purchased. In case any person beneficially entitled in possession to the income of the trust funds should desire to have the trust funds returned to England, the Government are to be bound to repay the same, but not after the time when their guarantee of income ceases; and, if the land purchased shall be insufficient to yield an income of 4 per cent, for three consecutive years, the Government are to be at liberty to repay the trustees the purchase-money, with interest. On repayment of the trust funds the lands are to become the absolute property of the Government. The Bill will thus afford to parties interested in trust funds in the United Kingdom the opportunity of investing the same in lands in New Zealand, with a guarantee of the New Zealand Government of an income of not less than 4 per cent, per annum until three years after the time when the parties interested in the funds shall become absolutely entitled, and a right to repayment of the amount of the trust funds themselves, should the parties so desire at any time, whilst the guarantee of income is current. The Government will have the advantage of the investment of the trust funds in lands in the colony, which no doubt will induce a large number of settlers, at the risk of a guarantee which they can practically render perfectly safe, as the guarantee will only be in respect of investments made through their own officer, who can of course take care that the land shall yield the guaranteed

* This may be varied, if desired,—M., M., and G.

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