The Sinking Fund.

Manawatu Standard, Volume VIII, Issue 131, 13 November 1884, Page 2

The Sinking Fund.

The Post, m answer' ,tp a~corresponident, thus solves certain fioanoial ptizzl^si ;'"Oo,k co-respondent's first quesr tion is, Wliat is inscription 'f To this we reply that inscription means , that! the "n'tftii^ of the persoa to whom thh. Government owes the 'money is inscribed m the books of . the office inscribing (the Bank of England m the caso of New ' ZeaFand loans), and the latter is not burdened with the custody of dentures payable to bearer, which he might ipos-i ) sibly lose. He' can, hbwever, atiany time take' debentures , from the bank if he requires them, and can re-inscribe when he gives them. . We, .have never heardthat the mere process of inscribing raised the market value of our 4 per' . cents from 8Q to 103. , The next question is— -How is the further ipscription oiE stock going to save the colony £300^, 000 per annum ? To this we reply that, . taking the debr of the colony as equal to about £30,000,000, bearing an aver- , age interest of 5 per cent, it is proposed 'to 'convert' it into inscribed stock: at 4 per oent ; the saving of 1 per cent of m- 1 tercet per annum represents the amount named by our' correspondent. The .third question is as to hqw £254,000 is; to be saved by abolishing the Siuking Fund, the annual payment to which.ig isonly £119,152. Tho Sinking Fund increases yearly — partly by the direct, payment named, partly by the accumulation of interest op accrued Sinking Fund, arid partly by thar amount of in* tereßt paid each year on bonds drawn and paid off j but on which by the terms, of the loan the interest has still to be paid for the benefit, of increased drawings annually.' The r Sinking Fund will i equal this year £214,000, and each year the amount necessarily becomes larger, Finally our correspondent Wants to know what are 5*30 and lO'iO debentures. Th6se figures are constantly cropping up ip commercial quotations, yet we believe' ' Vety feWpebpie really know their meaning, explanation •is simple ; the 530 are loans contracted on the agrees ment that they are payable m 30 ye,ftrs, but the^Qdvernmerit call them m, ,for paym«nt at any time af ver the expir tation of 5 years. This 10-40 similarly have a, currency of 40 years, but may be called m for payment at any time after 10. years.