D.—No. 5.

No. 31. Sir, — Downing Street, 21th June, 1864. In my Despatch, No. 65, of the 26th ultimo, I forwarded you a copy of the letter addressed by my desire to Mr. Header Wood, setting forth the conditions upon which I am prepared to recommend that a loan of £1,000,000 for the Government of New Zealand should be guaranteed by Parliament. I now transmit to you for your information a copy of a Parliamentary Paper, in which you will find a copy of the letter addressed by my desire to the Lords Commissioners of the Treasury on the subject, as well as of their Lordship's answer, in which they signify their assent to the proposal for guaranteeing such a loan to the extent of £1,000.000. I also send for your information a copy of the Bill introduced into the House of Commons for this purpose. I have, &c, Governor Sir George Grey, X.C.8., &c, &c, &c. Edward Cabdwell. Enclosure to No. 31. A Bill to guarantee the Liquidation of a Loan for the Service of the Colony of New Zealand. Whereas by an Act of the General Assembly of New Zealand passed in the twenty-seventh year of Her Majesty, intituled " An Act for raising a Loan of Three Million Pounds Sterling for the Public Service of the Colony of New Zealand," it was enacted, that it should be lawful for the Governor of New Zealand to appoint the Agent or Agents therein mentioned, with authority to borrow and raise on behalf of the said Colony such sum or sums of money not exceeding in all three million pounds sterling, as the said Governor might direct i And whereas it is expedient that the Commissioners of Her Majesty's Treasury should be authorised to guarantee the payment of Interest and repayment of the Principal of part of the sum so to be borrowed, not exceeding the amount of One million pounds sterling, upon the conditions hereinafter mentioned: Be it therefore enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows ; — It The liquidation of all such sums, not exceeding in the whole the sum of One million pounds, as shall be borrowed and raised in Great Britain, with the approbation of the Commissioners of Her Majesty's Treasury, under the said first-recited Act of the General Assembly of New Zealand, or of any Act passed in amendment of the same, together with the interest thereon not exceeding the yearly rate of four pounds for one hundred pounds, shall be guaranteed under this Act; and for giving effect to such guarantee, it shall bo lawful for the Commissioners of Her Majesty's Treasury to direct and cause to bo issued and paid out of the growing produce of the Consolidated Fund of the United Kingdom of Great Britain and Ireland such sums as shall be required to make good any deficiency which shall happen in the regular payment, on the part of New Zealand, of the interest accruing due upon such sums as shall be borrowed as aforesaid, or in the liquidation of the principal sums when the same shall become payable. 2. Provided, nevertheless, that it shall not be lawful for the Commissioners of Her Majesty's Treasury to approve the borrowing and raising of the hereinbefore mentioned principal sum of One million pounds, or any part thereof, until provision shall have been made by the General Assembly of New Zealand to the following effect, that is to say: (1.) That every part of the said principal sum shall be repayable and repaid at the expiration of thirty years at the furthest from the day on which such part shall have been borrowed and raised : (2.) That for the purpose of providing a Sinking Fund for the liquidation of the said principal sums, a sum equal at the least to two per cent, per annum on the total of such principal sums shall be paid yearly, and invested and increased by way of accumulation in the manner directed by the said first-recited Act in respect of the Sinking Fund therein provided for : (3.) That the said principal sums and all interest thereon shall be a charge on the general revenue of New Zealand, having priority over all other charges upon the said revenue, except charges created in virtue of an Act passed by the said General Assembly, intituled " The New Zealand Loan Act, 1856," and of an Act of Parliament passed in the twenty-first year of Her Majesty, intituled "An Act to guarantee a Loan for the Service of New Zealand," or either of them, and that the said general revenue shall for the purposes of this Act be deemed to include all the revenue which shall arise from duties of import and export, from Post Office receipts, and Supreme Court fees, from the disposal of Waste Lands of the Crown, and from all taxes, duties, rates, and imposts levied or to be levied by virtue of any Act of the General Assembly of New Zealand. 3. All the sums which shall be so issued and paid out of the said Consolidated Fund in respect of the interest of the sums borrowed as aforesaid, or the liquidation of the principal sums, with interest upon the sums so issued after the yearly rate of five pounds for one hundred pounds, to be computed from the several times of issuing the same, shall be charged upon the general revenue of the Colony of New Zealand as hereinbefore defined. 4. No Act passed by the Legislature of New Zealand in anywise discharging or varying the security to be given in accordance with this Act, upon the revenue arising from the duties of import and export, and from the disposal of Waste Lands of the Crown, for the repayment of the sums of money borrowed as aforesaid, and the interest thereon, shall be valid, unless such Act contain a clause suspending the operation of the same until Her Majesty's pleasure shall have been taken thereon, and the same shall have been confirmed by Her Majesty, with the advice of Her Privy Council, and a Proclamation of such confirmation having been given shall have been made by the Governor or person administering the Government of the said Colony. 5. The Commissioners of Her Majesty's Treasury shall from time to time certify to one of Her Majesty's Principal Secretaries of State the amount so paid from time to time on account of the interest or principal of the sums borrowed as aforesaid; and such certificate shall be communicated to the Governor or person administering the Government of New Zealand, and shall be by him communi-

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TO HIS EXCELLENCY SIR GEORGE GREY, K.C.B.