THE LOAN CORRESPONDENCE.

Evening Star, Issue 3874, 24 July 1875, Page 2

THE LOAN CORRESPONDENCE.

The following ir a further extract from the above correspondence, as published iu this morning’s ‘ Times ’:—

Sir J. Vogel wrote to the loan agent on the 29th April, saying that the warrant and letter accompanying it were meant to give them power to remove the Government funds depo itcd with the Bank of New Zealand in case they were of opinion that the Bank was getting into difficulties, and that the documents were not intended to he otherwise acted upon. So little had he 'contemplated the necessity of moving balances or any portion of them from the Bank of New Zealand, that as (-olonial Treasurer he had lately nerotiated with the Bank for increasing the rate of interest, and it was only after having informed the Agent-General of the result of those negotiations, viz,, a concession of | per cent., that he was informed they proposed to disturb the balances. He was quite unaware of any good reason for withdraw ing part of the account, as proposed by them, lie did not think that, upon the whole, the responsibilities of the Bank of New Zealanltotho Government were in excess of the general responsibilities of the Bank of New South Wales to the Government of New South Wales ; and unless they had weighty reasons for doing so, he could net conceive a course more prejudicial to the interests of the Colony than that of throwing discredit upon the principal local Bank. With a view to this question being well considered by the Government, he was willing to take upon himself the responsibility of instructing them not to act as they had proposed, except upon further instructions from the Colony. The loan agents wrote to the Colonial Secretary, oa the 13th Slay, that the total amount paid into the Bank of New Zealand on this account, up to the day previous, inclusive, was J. 3,157,314 17s 10d, and the balance standing to the credit of the public account with that bank was then L 2,486,788 18s 6d. On the 19th April, 1872, when writing to them on the disposal of the proceeds of a loan of one million, they had expressed themselves as follows:—“ Although we shall, of course, in compliance with your instructions, pdace the whole of this on deposit with the same bank, we feel we should be assuming a very grave responsibility if we failed to draw the attention of the Government to the magnitude of the sum thus to fee dealt with, and, without for a moment calling in question the solvency and honor of the Bank of New Zealand, we think we may fairly question the expediency of venturing so large a turn in this or any other bank similarly constituted, whose whole capital, supposing it to bo intact, is, we believe, hut L 600,000 sterling.—ln reply, the Colonial Treasurer, on the Stir June following, wrote to the Agent-General that, in view i.f the large sums that would have been received for the secoudinstalmeut of the New Zealand loan, he would, if he thought it desirable, invest a portion—say about one-half the amount—in exchequer bills. With the recollection of these circumstances (continued the loan agents) before them, and bearing in mind that the magnitude of the amount now to be disposed of would render the precautions they then advanced trebly necessary, they came to the conclusion that it would be their duty to distribute the risk, dividing the public balance into at least three equal parts, of which one should be left with the Bank of New Zealand, and the others be placed with two of the leading Joint Stock Banks of London. Before removing any part of it, however, they thought it right to ascertain the Treasurer’s views on the subject, and a letter was addressed to Sir J. Vogel. Upon receiving such a strong expression of the Treasurer’s opinions in reply, and with an earnest desire to respect the agreement to which he informed them the Government was committed for at least six mouths to come, they thought it best to seek counsel’s opinion in order to ascertain what legal responsibilities they would incur if they allowed the balance all to remain at one bank. The fact that the interests of the bank were so intimately bound up with the interests of the Colony,_appeared to them to render reasonable precautions no less called for. Nu country is exempt from periods of commeiord distic.s which toll more or less severely upon banks, and it would only aggravate the distress of the community if, upon any such crisis overtaking New Zealand, any large portion of the public balances was sacrificed’ With reference to the document signed by the Messrs Julyan, Sergeant, and Feather-ton, they wrote to Sir J. Vogel on May 12 that they were happy to be able to assure him that neither political nor commercial morality was outraged on the occasim, but that the document in question was the deliberate and joint production of all three who chose to signify that fact to him by having their names written at the foot of the letter they proposed to send, subject to such modifications as his suggestions might possibly have led them to adopt. It was scarcely necessary to explain that under such circumstances Dr Featherston had no offence against his public position to overlook, nor any wounded feelings to assuage ; but they might add that in all matters connected with the four million loan, as in others which had preceded it, they have never failed to consult together with an earnest desire to do that which they believed best calculated to promote the interests of the Colony. Whatever difference of opinion might have existed between them they had never failed to reconcile them on a reasonable basis ; each one had taken his full and independent _ share in discussion and responsibility; and in no one instance had the*Q been a lack of cordial unanimity in many important discussions which they had jointly had to arrive at.

BJr J. Vogel wrote to Dr Pollen on June 1, saying he had thought it advisable to ask Mr Bussell and the managing. director of the Bank of New Zealand to put into writing the information they gave him whilst the four million loan was being negotiated. In the correspondence which had passed between the other agents and himself they alleged that be was willing to accept 88 Dr Pollen would have observed that he totally domed that allegation, and stated that he was aware that he could have got 90 for a part of the loan. When he stated that the brokers who would have been employed by the Crown agents to get up a syndicate would have applied to the Bank of New Zealand to help them to r riange, he would see that the information contained in the letter enclosed bore out his assertion as to what could have been done without the assistance of Rothschild and Suns. Messrs Bussell and Larkworthy wrote to Sir J. Vogel, in answer to his letter asking them to put into writing tho advice they verbally gave him when called upon to do so at the time ho was engaged in negotiation tor the t! Jo of the four million loan. He would reiixomb' r the question put tv as as to the amount ot the loan ho could probably succeed iu sell in' • through the Crown Agents, ami the price he

could realise for same, in the event of a failure to make terms with Rothschilds. The conclusion they arrived at, and of which they advised “ lm » w «is ‘hat he could not sell more through the Crown Agents than L 2,000,000 of 44 per cent, bonds, and that for this amount he could have got 90, but no more.