29

B.—ll

No. 68. The Colonial Teeasueee to the Loan Agents. Gentlemen, — The Treasury, New Zealand, Wellington, 6th January, 1885. I have the honour to inform you that copies of the telegrams which have passed between us in relation to the loan negotiations will be sent to you under separate cover. I will now refer to those up to the date of your announcing the advertised issue of the loan. I have to thank you for the promptitude with which you furnished me the necessary information. I was relying, when I received your first telegram, upon the negotiation of the two and a half millions early in January, as previously recommended by you and agreed to by me, and I thought that the negotiation would take place after your receipt of the authorities relating to the Million-and-a-Half Loan, which would reach you about this date; I was therefore much surprised, as doubtless you were, to find that the Bank of England held that there was any guarantee of a nature to interfere with the double issue. lam still unable to find on what the bank relies for its objection to the issue of the second loan until after the 31st March. I take it you were quite unaware of any such objection or you would have advised me of it, and the Treasury officers were equally unaware of it. It seemed to me, after receiving the objection, that the danger of these implied guarantees was such that it would be well in the present case to have everything very clearly stated; therefore it was that I continued to dwell upon the different points, so that there should be no doubt upon the matter before agreeing to the guarantee. For example, after you told me that there would be no objection to our guaranteeing the Harbour debentures, I thought that it would be well to have it also clearly understood that they could be sold in England. Similarly in regard to the questions of borrowing in anticipation of the North Island Trunk Bailway Loan, I thought it desirable there should be no doubt in the matter. I did not expect any larger assurance respecting such borrowings from you than you have been able to give me, as I was aware that it would be impossible for you to promise a financial operation, independent of the chances of war and of the state of the money market. But I thought it well that I should place distinctly before you the contingency of our having to ask you to raise money in anticipation of the negotiation of these loans, so that it could not be possibly said afterwards that there was any bar to such operations implied in the guarantee which I was asked to give. Unless affairs in England take a very unfavourable turn it seems to me we shall be able to negotiate the Million-and-a-Half Loan sometime during the year, and meanwhile, if necessary, will be able to obtain advances in anticipation of the same. We should have no difficulty also later on, if necessary, in borrowing in anticipation of the North Island Trunk Bailway Loan. In the meantime we shall be able to find funds for the prosecution of this railway, to which the Government attach the greatest importance, out of the other loans. I have also to explain to you that a cablegram explanatory of the latest financial position of the colony was to have been sent to you at the end of the first week in January, which was the date at which the authorities sent Home for the Million-and-a-Half Loan were due in London. Your cablegram announcing your wish to bring out the loan on Saturday, the 3rd January, only reached me on Friday, the 2nd. I had to reply to it immediately, and with so short an interval to arrange it, it seemed to me useless to cable you any information, the more especially as there was no information of importance to cable. I will not trouble you with further remarks upon the subject up to the date of the loan being advertised beyond again expressing to you my acknowledgements for your services. I have, &c, The Agents for New Zealand Loans, London. Julius Vogel.

Copies of Telegrams referred to in No. 68. The Loan Agents to the Colonial Teeasueee. Treasurer, New Zealand. (Beceived 26th December, 1884.) New loan. Bank of England having required full explanation respecting your financial proposals, prolonged conference took place to-day, when Governors gave their decision. Firstly, Bank of England feel they are in honour bound not to bring out more than remaining million of three millions in January, and therefore decline being parties to larger issue now ; secondly, provided guarantee be given that no more than million and a half new loan be borrowed within your next financial year, Bank of England would undertake to bring out that amount later in eighty-five ; thirdly, such guarantee would not prevent bond fide conversion, but would prevent any creation for appropriating sinking funds ; fourthly, necessary therefore instruct whether shall give guarantee required. Our opinion is, inevitable. See our telegram September thirty. Our own opinion therein given remains unaltered, that it would have been better raise whole two millions and a half now; but Bank of England will not yield, therefore no alternative. Loan Agents, London, 24.

The Colonial Teeasureb to the Agent-Geneeal. Agent-General, London. Wellington, 27th December, 1884. Loan Agents. Bank of England's dictation novel, amazing. Fancy they desire protect advance paying off five-per-cent. five-thirties; if so, can you arrange indemnify them ? Unaware pledge concerning issue January. If existent, can we bring out two and a half millions February ?