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No. 10. The Colonial Teeasueer to the Loan Agents. Gentlemen, — Wellington, 13th September, 1884. I have the honour to inform you, of that which you will already probably have learned by cable, that I have assumed the office of Colonial Treasurer. Permit me to express the hope that the relations between us will be of a cordial nature. I recognize how much I shall be indebted to your good offices and assistance. I have not time now to write to you at any length; and indeed the Financial Statement, which will be the basis of our financial policy, will not be delivered for two or three days after the mail leaves. I may, however, inform you that the funds at the disposal of the Public Works were exhausted, and that in order to meet liabilities accruing until the last million loan could be negotiated very considerable aid would be required. I have, in consequence, arranged with the bank for an advance from time to time of half a million of money, to be secured by bills drawn upon the Loan Agents, not to mature in less than six months. I have also agreed to give, as collateral security, short-dated debentures in anticipation of the third million loan, such debentures not to be hypothecated or used until after the Ist January proximo. I shall write to you more fully on this subject again. It is not determined what amount it will be necessary to borrow for the wants of the coming year. Looking at the liabilities current, and the large amount which has been diverted from the purposes for which the loan was authorized, and also taking into regard the importance of not discontinuing the works, I am afraid that it will be necessary to authorize an additional million or million and a half; but, in that case, we should not propose to negotiate the million put apart for the North Island Trunk Bailway for some months after the other loans. Possibly, therefore, I may have to ask you early in the year to negotiate from two to two and a half millions; but please to consider this quite confidential at present, as nothing is finally determined. I shall also write to you at an early opportunity with regard to the progress of the conversion. I am anxious, before the annual drawing in March next for the New Zealand Consolidated Debenture Loan, that an opportunity should be afforded to the bondholders to exchange their debentures for inscribed stock. As to the terms of the exchange, you will be a better judge of what is necessary than I can be. It appears to me, however, seeing the onerous nature of the increasing sinking fund and the high rate of interest on the loan, that it will pay us to give in inscribed stock more than sufficient to cover the market value of the converted bonds. The operation to us would be very important, whilst to the bondholders it will be a release from the gambling liability under which they labour of their bonds being paid off at par, although they command a premium in the market. I am of opinion that a very brief period should be given to exchange, as I think in operations of this kind the shorter the time the more likely they are to be effective. Notice might be given some weeks in advance, but the period during which the exchange should be allowed might be made very short. In these matters the instructions I may give to you will be subject to your using your discretion, as I recognize that you must be better able to judge of details than I am. On the other hand I should like you to receive my instructions with the desire to follow them literally, unless you see good reason to depart from them. I shall be glad if you will say if you think this is a satisfactory footing on which to put instructions, because I am desirous not to allow any feature of this most important subject to assume an aspect which will be distasteful to you. The difficulty with regard to the consolidated debentures, as to the technical liability of having to continue to pay interest and to draw bonds, is one which is more seeming than real. We shall, of course, whilst any bonds remain outstanding, continue literally to fulfil our obligations, but the theory of averages will operate so that we shall derive a corresponding advantage from whatever proportion of bonds we may convert. Concerning the 1856 loan, about which we have exchanged telegrams, I will write you on a future occasion. You will excuse me not writing to you more fully this mail. I have, &c, Julius Vogel.

No. 11. The Colonial Treasurer to the Manager, Bank of New Zealand, Wellington. Sib,— Wellington, 13th September, 1884. Beferring to our conversation respecting an advance of £500,000 applied for to your bank by the Government, the following are the terms on which it is understood the bank is prepared to lend the money :—■ 1. The amount is to be advanced by instalments; say, £150,000 in the current month, and £350,000 in October, November, and December next; the whole to be repaid in London at any time the Government is prepared to make the repayment, not exceeding six months hence. 2. Interest on the sums so advanced is to be at the rate of 5 per cent, per annum from the date of each advance to the date of its repayment. 3. The security to be drafts of the Colonial Treasurer on the Loan Agents, at such a currency from the date of the respective advances as will cover their repayment within the limit of six months mentioned in paragraph No. 1, with collateral security, in the form of debentures to be issued by the Agents for raising the third instalment of the loan of three millions, of an amount corresponding with each sum advanced,