8.—21

4

As to the terms of the offer, much would of course depend upon the market prices of securities at the time ; but, assuming that consol debentures were quoted at 104, and the 3J-per-cent. stock at 96, the equivalent would be about 109 stock for each £100 debenture, and to this about 1| per cent, would have to be added to cover expenses, which would bring up the amount of stock to 110£ for each £100 debenture. The result in that case, assuming that all the debentures came in, would be a nominal increase of debt by about £116,000, but a reduction in the amount of interest of about £12,500. As, however, I have pointed out, there would be m addition to a reduction in the amount of interest, collateral advantages in connection with the sinking fund. The only other part of the public debt domiciled here, and which would be open for conversion without the public issue of stock, are the 5-per-cent. debentures of the loan of 1863, which mature in 1914, and, in respect to these, the opportunity might be taken to make an offer of conversion to the holders. The outstanding debentures of this loan amount to £378,800, and the accrued sinking fund amounts to about £110,000. The debentures are, I believe, for the most part firmly held, and it would require, comparatively speaking, a very favourable offer to be made to bring them in, in any considerable number, for conversion, and it is a question for the determination of the Government whether it would be desirable to place them in a similar position to that of the provincial loans, so that an offer may be made from time to time to the holders whenever the market or other circumstances make such a course desirable. I have, &c, The Hon. the Premier, Wellington. W. B. Perceval.

Enclosure in No. 4. Statement showing the Peesent Position op the 5-pee-Cent. Consol Debentdbes. £ Total debentures issued .. .. .. .. . ■ •. • • • • 7,283,100 Less debentures drawn .. .. .. .. .. • • • • • • 2,939,800 4,343,300 Less debentures converted into 4-per-cent. Stock (1886) .. .. .. .. 38,200 4,305,100 Less debentures converted into six and seven years' bonds .. .. £4,214,100 „ drawn 1,016,500 3,197,600 Outstanding, 1892 .. .. .. .. .. • • £1,107,500 20th May, 1892. ___^^___^__^^—

No. 5. (No. 33.) The Premier to the Agent-General. Sic, Premier's Office, Wellington, Bth August, 1892. I have the honour to acknowledge the receipt of your letter of the 30th May last (No. 769), in which you suggest a plan for the conversion of the 5-per-cent. Consol debentures of 1867 (annual drawing) still outstanding, and amounting to £1,107,500, and the 1863-1914 5 per cents, amounting to £378,800. I have read your proposals with much interest, and I thank you for them. It appears to me that the scheme is practicable, and would result in a saving of interest to the colony , and I therefore authorise you to take the requisite steps to carry out the operation. As to the terms to be offered, you will, of course, consult with the Stock Agents, and the Government will be guided by your own and their advice in the matter. I do not quite understand your allusion to a further advantage to be derived from encashing within the year the debentures issued for the sinking funds, for it appears to me that if your proposals are given effect to there will not be any opportunity to create sinking-fund debentures in respect of this loan, there being no accretions of sinking-fund under these proposals which could be drawn against. The remittance of the £72,831 per annum for sinking fund would be discontinued, and only interest at 5 per cent, on the amount of bonds held by the public would require to be provided each year. Beferring to your statement attached to your letter, should not the debentures converted into six and seven years' bonds bo set down at £4,214,300, allowing for £200 converted under the Lost Debentures Act ? This would reduce the outstanding balance to £1,107,300. With regard to the outstanding debentures of the 1863 loan, I gather from your remarks that there is not much likelihood of the holders converting them unless the terms offered are comparatively high; still, as there is a possibility of the debentures being brought in, I think it desirable to make an offer, which I accordingly authorise you to do, on terms to be settled between yourself and the Stock Agents, and to keep the offer open, as in the case of the provincial loans. I have, &c, The Agent-General for New Zealand, London. J. Ballance.

No 6. The Agent-General to the Premier. (No 773 ) Westminster Chambers, 13, Victoria Street, London, S.W., Sic,— 9th June, 1892. Beferring to my letter, No. 250, of the 20th February last,* I beg to state that there are now on outstanding bonds of the 1860 loan, while of the 1863 loan only £200 of the December

* Vide 8.-14 A, 1892, No. 53.