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I transmit herewith copy of memoranda between myself and Sir Penrose G. Julyan giving particulars of a proposal to issue a fresh invitation to holders of the 1863 (December) bonds, and to those of the provincial bonds, to bring in their bonds for conversion. I also enclose copy of letter to the Bank of England transmitting copy of an advertisement, which accordingly appeared on the 26th instant. It will be seen by this correspondence that the Stock Agents have offered £110 3-|-per-cent. stock (ex dividend) for every £100 of the December bonds (ex coupon), and that, as regards the provincial loans, the holders can ascertain the terms of conversion by applying to the Bank of England. I also enclose copy of a letter which I addressed on the 21st instant to the Trustees of the Sinking Fund of the loan of 1863, making proposals for a further release of a portion of the fund. These proposals having been concurred in by the Trustees, the amount to be released, amounting to about £18,000, will in due course be paid into the Public Account. This £18,000 will be made up—first, by the proceeds of the sale in the open market of £10,000 4-per-cent. stock ; second, by cash transferred from other sinking funds for equivalent amount in value of 4-per-eent. stock; and third, by cash in hand. lam unable to send the actual figures by this mail as I have not received them from the Crown Agents. In case a further sale of 4-per-cent. stock is effected I shall take the opportunity of proposing a further release. The markets for sale of stock have kept extremely dull, and it was not until the 16th instant that Messrs. Scrimgeour were able to submit to me an offer to purchase £20,000 3-J-per-cent. stock at 92-J. I accordingly asked for your instructions in respect thereto by cablegram, and, having received your reply, I accepted the offer in question, the price being at market rate. The net amount (£18,449 Bs.) has been this day paid into the Public Account at the Bank of New Zealand. Copies of contract note, and of Messrs. Scrimgeour's accompanying note, are annexed. In advising you by cablegram of this sale, I took occasion to ask whether the sale of this stock should be continued provided market price could be obtained, and I desire to thank you for your reply in the affirmative. It is at present so difficult to sell that, as advised by the brokers, it is very desirable that any offer should be dealt with as promptly as possible. I have accordingly instructed Messrs. Scrimgeour to sell 3J-per-cent. stock at market rate, taking care not to unduly depress the market, and to continue to do so up to £50,000; and, if they have offers for anything over that amount, to refer to me for further instructions. I may add that on my consulting Sir P. G. Julyan he expressed his full concurrence in the view that our brokers shall continue to sell this stock at market rates. I have instructed Messrs. Scrimgeour to take any opportunity they may have of purchasing 6-per-cent. bonds of the December series of the 1863 loan, giving par for them ex coupon. Any bonds thus purchased I shall send in to the Bank of England for conversion into stock to be inscribed in the names of the Agent-General and Audit Officer, under the terms specified in the prospectus just issued. . I have, &c, The Hon. the Premier, Wellington. Waltee Kennaway. Enclosure 1 in No. 36. Memorandum to Sir Penbose Julyan. There is now £59,900 outstanding of the 6-per-cent. (1863) debentures, redeemable on the 15th December next. It is not likely that any of these will be converted under the conditions of prospectus issued on the 13th February last. It is therefore a matter for consideration whether the holders of these debentures shall be invited to bring in their debentures on fresh terms, it being borne in mind that the New Zealand 3J-per-eent. stock will be after the Ist December inscribed ex the dividend payable on the Ist January next. Taking the present market price of the 3J-per-cent. stock at 92-93, and deducting the dividend (£1 155.), the stock will probably be quoted ex dividend at from 90J to 91J ; and, as the 6-per-cent. bonds are redeemable in cash on the 15th December, it would seem that it will be necessary to offer at least £110 of 3J-per-cent. stock for every £100 debenture. It is therefore desirable to consider whether to offer fresh terms, and, if that is decided on, what those terms shall be, and then in what manner the offer shall be made known. My opinion is that it will be desirable to offer fresh terms, and that those terms should be, say, £110 3J-per-cent. stock (exdiv.) for every £100 debenture (ex coupon). As to the manner in which the offer shall be made, I would propose to issue an advertisement giving notice that the debentures can be converted into 3J-per-cent. stock on terms to be .ascertained at the Bank of England. I should also take the opportunity of advertising that the outstanding debentures of the provincial loans can also be converted on terms to be ascertained] at the Bank of England, these terms having been already fixed (see attached letter of the 14th September to the Bank of England). I attach a copy of the prospectus issued on the 13th February, 1891. 21st November, 1891. Walteb Kennaway. Enclosure 2 in No. 36. I concub in the expediency of trying to induce holders of the 6-per-cent. due on the 15th December next to take, in exchange for their bonds, 3 J-per-cent. stock, at the rate of £110 of stock for £100 bond. This would be equivalent to selling the stock at 90J, as we should have to pay brokerage if driven to sell. I do not, however, think the attempt would be to any appreciable extent successful unless the terms were distinctly advertised. The outstanding 6-per-cent. bonds are doubtless in the hands of private investors, who would not themselves go to the Bank to inquire the terms of exchange, nor would they employ others to do so for them ; but if the advertisement told them plainly that they could get 110 for 100 without any contingent expense they would be much more likely to accept the proposal. Brokers and bankers would obviously prefer the other course, but it appears to me that the balance of advantages to the Government will be to advertise the price. For provincial loans maturing at later dates, there is less need for bringing them in at present, and it is therefore not so material to publish the rate of exchange. 23rd November, 1891. P. G. Julyan. *