A.—4.

Loan Account. No loan-money was raised during the year. Statutory payment to sinking fund of £4,037 15s. 6d. was brought to charge against the Administration in June, 1935, but no amount was utilized for redemption of debt. The balance of sinking fund at 31st March, 1936 was £4,037 17s. Id. Permanent Charges. With reference to M. Rappard's inquiry, on page 158 of the minutes of the Twenty-eighth Session of the Commission, as to the reason for the increase in the permanent charges, the following explanation is supplied : — The original authority for making loans to the Samoan Administration by the New Zealand Government provided for the establishment of a sinking fund designed to liquidate the loans within thirty years. At that time it was considered probable that interest on investments would not fall below an average of 4£ per cent., the rate on which the life of the loan was based. As a result of the severe fall in the rate of interest obtainable on investments, however, it was found that the sinking fund contributions orginally provided for would not liquidate the loans in the required time. Consequently, in 1932 the New Zealand Government by legislation altered the basis of the contributions to sinking fund. Under this new legislation it is provided that, so long as any portion of the debt remains unpaid, the following annual contributions will be paid to sinking fund (1) An amount equal to IJ§ per centum on £165,200—that is, the sum outstanding at the date of the amending legislation. (2) An amount equal to 4f per centum, on such portions of sinking fund utilized for debt redemption. The first item remains constant throughout the period of the loan, but the second depends upon repayments of principal. The New Zealand Government have reduced interest payable on loans to the Samoan Administration to 4J per centum, and it will be apparent that on each repayment of principal the Administration save interest at the rate of 4J per centum but have to pay an additional sinkingfund contribution under (2) above at 4-J- per centum, and it is this | per centum that accounts for the slight increase in the permanent charges. As will be seen from the table on"page 8 the public debt of the Territory has been reduced by £33,490 since the year 1932, but under the scheme of liquidation outlined above the annual permanent charges remain substantially the same until the loan is completely repaid. The method adopted is that now used for redemption of the public debt of New Zealand. It will be apparent that, while this method entails with each repayment of principal a small increase in the annual contribution to sinking fund, the life of the loan will be materially shortened, and there will ultimately be a considerable saving on the part of the Administration. Customs Revenue. The total amount collected on account of duties and taxation during the financial year ended 31st. March, 1936, was £98,254, as compared with £76,076 for the financial year 1934-35, an increase of £22,178. Following are the receipts under the principal headings :—

2—A. 4.

9

1934-35. 1935-36. Increase. Decrease. £ £ £ £ £ Import duties (including port and service 26,652 .. 33,777 7,125 tax) Export duties — £ Copra .. • ■ •• 14,284 21,632 7,348 .. Cocoa 2,042 1,835 .. 207 Rubber .. . . ■ • 67 353 286 Bananas .. .. •• 12,697 13,454 29,090 37,274 757 Shipping fees .. .. .. • • 2,863 .. 3,809 946 Wharfage dues and royalties .. .. 1,903 .. 2,567 664 Taxes .. . ■ •■ •• 9 >509 .. 8,986 .. 523 Miscellaneous, including medicinal liquor .. 6,059 .. 11,841 5,782 76,076 98,254 22,908 730 730 — £22,178 Net increase. Less refunds (see below) .. .. 19,653 .. 12,873 56,423 85,381 ■ Net increase after making refunds of export duty .. £28,958