THE FOUR MILLION LOAN.

Globe, Volume IV, Issue 473, 21 December 1875, Page 2

THE FOUR MILLION LOAN.

{New Zealand, Times.') Sir J. Vogel to the Hon D. Pollen. Westminster Chambers, Victoria street, Westminster, S.W., Oct. 21st, 1875.

Sir, —I have the honor to forward to you copy of correspondence with Mr Mackrell, solicitor, and with Sir P. G. Julyan, Mr Featheraton, and Mr Sargent. 2 You will gather from these documents that the letter No 10, dated London, 13th May, 1875 (B.— No 5). in the printed paper, Correspondence relative to the Negotiation of the Four Million Loan,” and headed “ The Loan Agents to the Hoa the Colonial Secretary,” had not been seen by me until I saw it in that paper ; and that I had also not previously seen the enclosed case for counsel and counsel’s opinion. You will further observe that I impugn the correctness of paragraph 6 of that letter, 3. I feel certain you would not have published the letter, and the enclosures named, without first giving me an opportunity to remark upon them, bad you not supposed they had previously been submitted to me. 4. I am of opinion that the conduct of the three agents, and especially of Mr Featherston, the Agent-General, in seeding to the Government such a letter and enclosures, without allowing me to see them, is most unbecoming and detrimental to the interests of the public service ; and I have the honor formally to make complaint upon the subject. 5. Information I have received from the colony leads me to suppose that, owing to the letter in question, and particularly its sixth paragraph, a wide-spread misunderstanding exists as to my action in London. That information causes me to conclude that the impression prevails in New Zealand that it was my personal action that led to the proceeds of the four million loan being deposited with the Bank of New Zealand, and that the arrangement with the bank for increasing the rate of interest determined the deposit of the money with the bank. 6. I believe that sufficient importance has not been given to paragraph 2 of my letter to you, dated 4th May, as follows “ I may observe that it was not until I had informed the Agent-General of the terms I had made with the bank, that any intimation was given to me of its being deemed desirable to remove part of the account.” 7. The determination to deposit the money with the Bank of New Zealand was arrived at by the agents at the time of the negotiation with Messrs Bothschild and Sons; Sir P. G. Julyan was absent ; but the other three agents agreed upon the point. There was some discussion between us as to whether or not the money should be first paid into the London and Westminster Bank, and afterwards be transferred to the Bank of New Zealand, as had been done on previous occasions. 1 objected to this course, because it would involve’loss of interest between the dates of receiving and paying over the money, and that no possible object could be gained by first paying the money into one bank and then handing it over to another. It was then determined that if the Bank of New Zealand were willing to sign for the deposits and to hand over the scrip, the payments should be made to that bank. Of course, without the consent of the bank to perform the duties mentioned, its name could not be inserted in the contract as that of the bank to receive payments ; and I was asked to merely see Mr Russell and obtain the consent of the bank.

8. No intimation of a desire to change the account having been made to me, and the money having been, by agreement, deposited

with the Bank of New Zealand, I feltjit to be mj duty to obtain the largest interest possible for the balances. You will have observed that the opinion of counsel obtained by the other agents fully bears out my action. I am not at all now dealingwith the question what course I might have adopted if, at the time of the negotiation of the loan, the other agents had objected to payment into the Bank of New Zealand. There cannot, I think, be any doubt that that bank is, by our agreement (which cannot be broken without six months’ notice), the bank of the Government. At the same time, the management has always shown readiness to consider modifications of the agreement rendered necessary by peculiar circumstances ; and, had it been desired by the other agents to limit the amount to be deposited with the Bank, I feel sure there would not have been the slightest difficulty in arranging it, so far as the Bank was concerned. I considered at the time—and I cannot now Bee any reason for coming to another conclusion—that the idea of interfering with the account only occurred to the other agents after I had arranged with the Bank for a better rate of interest, and had informed the AgentGeneral of the fact.

9. I am of opinion that, should it be desired, in future, to limit the amount deposited with the Government Bank, it would be advisable the balance should be invested in Consols, which are always saleable, and the fluctuations in the price of which are not large, and would, except very rarely, be covered by accretions of interest. In the absence of disturbing causes, Consols could be sold at the price at which they had been purchased, and there would be the interest that had accrued between purchase and sale. 10. As so much publicity has been given to previous correspondence on this subject, I have the honor to suggest that this letter and the enclosures should also be published.—l have, &c, Julius Vogel. Hon D, Pollen, Wellington, The Hon Sir J. Vogel to Mr J. Mackrell. 7, Westminster Chambers, Victoria street, Westminster, S.W., Oct. 11, 1875. Dear Sir—ln a letter written by Sir P. O. Julyan, Dr Featherston, and Mr Sargeaunt to the Colonial Secretary of New Zealand, and dated 13th May, 1876, the following passage occurs ; “ We should here explain that, in order to carry out an arrangement which, as we have since been informed by the solicitor employed on the occasion, Mr Vogel had entered into with Mr Russell, provision has been made in the contract with Messrs Rothschild that the money should all be paid into the Bank of New Zealand.” I should be glad to be informed if this passage correctly states that you gave such information. Imay add that if you did so, such informasion was not correct. At the request of my co-agents, I asked Mr Russell if the bank would consent 4 to receive and sign for the deposits. The consent was necessary before it could be stated in the contract with Messrs Rothschild and Sons that the bank would perform those duties. The arrangement about increasing the rate of interest was quite distinct, and was not even mooted until some time subsequently. I have, &c, Julius Vogel. John Mackrell, Esq, &c, &c. Mr J. Mackrell to the Hon Sir J. Vogel, 21, Cannon street, London, 8.C., 13th October, 1875. Dear Sir Julius, —I have the honor to acknowledge your letter under date of the 11th instant, inquiring if the following statement, contained in a letter written by Sir P. G. Julyan, Dr Featherstone, and Mr Sargeaunt, to the Colonial Secretary of New Zealand, dated 13th May, 1875, is correct : “We should here explain that, in order to carry out an arrangement which, as we have since been informed by the solicitor employed on the occasion, Mr Vogel had entered into with Mr Russell, provision bad been made in the contract with Messrs Rothschild that the money should be| all paid into the Bank of New Zealand.”

In reply, I beg to state that I am at a loss to understand how the information I gave Sir P. G. Julyau (who was not a party to the contract with Messrs Rothschild) repeating the terms thereof could have been so misunderstood, as I was not aware of any arrangement having been entered into between you and Mr Bussell except simply that the New Zealand Bank should undertake the receipt of the various instalments and sign the scrip certificates, When the contract was being prepared, 1 explained to you, Dr Featheraton, and Mr Sargeaunt, that it was necessary to stipulate therein to whom the money should be paid; and it was arranged between you that you should see Mr Russell and ascertain whether the New Zealand Bank would receive it, and undertake the trouble of signing the scrip certificates on payment of the various instalments. This you did, and the name of the bank was inserted in the blank which had been left in draft contract for the purpose, and the contract was then .submitted by Dr Featherston and Mr Sargeaunt to Messrs Rothschild for approval. I have, kc, John Mackrell. The Hon Sir J. Yog 0 !, K.C.M.G. Sir Julius Vogel to ,he Loan Agents. 7, Westminster Chambers, Victoria at, Westminster, S.W., Oct, 15th, 1875. Gentlemen, —I observe in the “ Correspondence relative to the negotiation of £4,000,000 loan,” published in New Zealand, a letter of yours, dated 13th May, addressed to the Hon the Colonial Secretary. 2. Until the printed paper reached me, I had not seen a copy of that letter, nor of the enclosed case for counsel, and counsel’s opinion. 3. 1 now write in order that you may make any explanation you think proper, for I am unable to disguise my opinion that it was an unjustifiable proceeding to send to the Government such a letter and enclosures without supplying me with a copy. It is true that I had previously written to the Colonial Secretary, enclosing copy of correspondence with you, without showing you my covering letter ; but there is a wide difference between my sending my colleagues a letter which they might have decided to treat as confidential, and your sending such a letter without showing it to me—the member of the Government to whom belonged the charge of matters to which your let ter specially referred. Your withholding from me the important legal opinion you had obtained relative to the Bank of New Zealand seems to me entirely without justification. 4. I take the opportunity of adding that paragraph 6 of your letter is incorrect, The

arrangement with the Bank as to increasing the rate of interest was not contemplated at the time of the arrangement with Messrs Rothschild and Sons. It was an entirely distinct matter, and was proposed some time subsequently. The agents for the negociation of the loan were parties to the deposit o the money with the Bank, It was at the wish of the other agents (yourselves, ;with the exception of Sir P, G. Julyan, who was absent) that I asked Mr Russell whether he would consent to the Bank’s name being inserted in the contract with Messrs Rothschild and Sons, the consent of the Bank being necessary before it could be stated that it would perform the duties of signing for the deposits and handing over the scrip. 5. When Mr B'eatherston and Mr Sargeaunt discussed with me the question relative to the Bank of New Zealand, there was not, so far as I am aware, any doubt as to the propriety of the deposits being left with that bank. There was a question whether payments should first be made to the London and Westminster Bank, and the money afterwards be handed over to the Bank of New Zealand ; but, as I pointed out, that would have involved loss of interest during the intervals between payment and transfer ; and it was then agreed that all moneys should be paid to the Bank of New Zealand, if that bank was willing to receive the deposits, and to sign and deliver the scrip. 6. I was not aware that Baron Rothschild drew your attention to “ the serious responsibility that leaving such a large sura with one bank would necessarily entail.” 7. I will only add that I am strongly of opinion that my colleagues supposed you had supplied me with a copy of your letter of the IBth May, and of the enclosures to which I have referred, or that they would not have printed the letter and presented it to the Assembly, without first giving me an opportunity of commenting upon it. 8. I enclose you a copy of correspondence with Mr Mackrell.

9. As I am leaving England so shortly, I shall feel indebted to you for as early a reply to this letter as you can conveniently make, —I have, &c, Julius Vogel. Sir P. G. Julyan, K.C.M.G. I, E. Featherston, Esq.

W. C. Sargeaunt, Esq, C.M.Q. [Copy letter Sir Julius Vogel to Mr Mackrell, 11th October, and of Mr Mackrell’s reply, enclosed.] The Loan Agents to Sir J, Vogel, London, 16th October, 1875.

Sir,—We have the honor to acknowledge the receipt of your letter of the 15th instant respecting a communication addressed to the Government of New Zealand, in May last, by the agents for managing the public account of the colony in this country. As one of those agents (Mr Sargeaunt), who took an active part in the matters referred to, is out of town, and is not expected to r return for some days, we regret that it will not be in our power to comply with your request for an early answer, but should you have taken your departure before we are enabled to confer with our colleague, a reply shall be addressed to you by the first following mail.—We have, &c, I. E. Featherston. P. G. Julyan. Sir Julius Vogel, K.C.M.G , 7, Westminster Chambers.