8.—17

48

1. Consols. We trust that you will not have been disappointed at the amount of consol debentures sent in, for the remarks in our letters of 26th January and 20th February (Nos. 95 and 220) must have prepared you against expecting anything like a repetition of last year's success. There will always be a residuum of holders who refuse to convert, either because they do not like taking trouble, or because they prefer keeping their investment in securities that pass to bearer. We advertised widely, to make sure that the offer should reach as many holders as possible; and, as the terms were certainly deemed sufficiently favourable by the market itself, we think you may be confident that the operation has succeeded as well as there was any probability of its doing. Indeed, when you look at the results as a whole, there is reason to be very well satisfied. When we first opened the consols to conversion, there were bonds outstanding to the amount of £5,772,500. By the conversions of last year and this, and the operation of the sinking fund, the total amount outstanding has now been reduced to only £1,309,400. We are, in fact, approaching that natural extinction of the sinking fundj to which we have ourselves attached so much importance. In the meanwhile, however, we see nothing to prevent your allowing consols-holders to continue coming in if they will. We should not recommend their having any option to exchange into new 5-per-cent. bonds, but those who like to convert direct into inscribed stock might well be permitted to do so. We accordingly telegraphed to you to that effect, and were glad to get your reply yesterday, approving what we proposed. As soon as the option expired, the consols came back the 2 per cent, which they had gone up while the offer lasted. 2. Five-thirties. In the case of the 4J-per-cent. five-thirties the bonds have come in fairly well, but holders have been influenced adversely by statements respecting the indebtedness of the colony which lately appeared in the city article of the Times. However, nearly two-thirds of the five-thirties have been sent in. The amount left outstanding at the close of the operation of September, 1883, was £2,946,100; and as £1,876,800 have come in now, there only remains a balance of £1,069,300 to be paid off, which is a manageable sum, so that no difficulty is probable in providing for it. In our letter of the 19th February last (No. 219) we said that we should probably advise the formation of a syndicate to take up the outstanding bonds, rather than raise money to pay them off ourselves. We telegraphed to you on the 3rd instant, confirming that advice, and were glad to get your answer yesterday approving that course. Having regard to the new loan to be brought out in the early autumn, we think it important to avoid offering by public notice the stock which it may be necessary to sell for paying off the residue of the 5-30s. We have no doubt of being able to dispose of the same favourably through a syndicate, and we have a precedent for avoiding publication in what we did in the arragement we made with the Bank of England for paying off the 5-per-cent. 5-30s in 1884. But, after careful consideration, we have come to the conclusion that it will be best to take no step whatever until we know the results of the remaining conversions on the 30th April, at which time interest on the new stock will begin to accrue. In the meanwhile, however, we recommend, as in the case of the consols, that any holders of 5-30s who wish to come in now should be allowed to convert direct into stock, notwithstanding the expiry of the time fixed ; because it is well to avoid disturbing investment as far as possible; and it is especially desirable, in the case of a loan which is about to be paid off, to keep every holder we can in New Zealand securities. 3. General. There are several points brought out by the conversion which invite comment, but we think it will be better to pospone what we have to say until the whole operation is completed at the 30th April, when we propose taking a general retrospect of what has been done since we began in 1883, and offering such advice as may be suitable for future action. We have, &c, P. G. JULTAN, F. D. Bell, The Hon. the Colonial Treasurer, Wellington. Loan and Stock Agents.

Copies of Telegrams referred to in No. 79. The Agent-Gbneeal to the Colonial Teeasueeb. Treasurer, New Zealand. London, 31st March. Conversion : Following totals converted : " Consolidated Loan, 1867," £589,600 ; 4J-per-cent. five-thirties £1,876,800. Agents for inscribed stock will consult you presently pursuant their telegram 2nd February. . . The Loan Agents to the Colonial Treasures. Treasurer, New Zealand. London, 3rd April. Conversion : Adhere to our proposal telegram February second. Loan Agents recommend that they be authorized to, firstly, arrange so as to provide paying residue four-and-a-half-per-cent. five-thirties ; secondly, continue converting Consolidated Loan, 18C7, and four-and-a-half-per-cent. five-thirties direct into inscribed stock without five-per-cent. bonds. Loan Agents. The Colonial Treasurer to the Loan Agents. Loan Agents, London. (Received 6th April.) Conversion : Consolidated Loan, 1867, four-and-a-half-per-cent. five-thirties, your proposals approved. Suggest consider if desirable announce before other options declared 30th April, but let me know immediately if you have arranged paying four-and-a-half-per-cent. five-thirties by syndicate without loan. Wellington, 6th. The Loan and Stock Agents to the Colonial Treasueer. Treasurer, New Zealand. London, 6th April. Conversion :Do not think this would bo advisable fresh announcement. Have decided wait expiry options before settling about syndicate for four-and-a-half-per-cent. five-thirties. Loan Agents.