ALLOCATION OF PUBLIC DEBT. (TREASURY MEMORANDUM THEREON.)

Appendix to the Journals of the House of Representatives, 1926 Session I, B-02

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1926. NEW ZEALAND.

ALLOCATION OF PUBLIC DEBT. (TREASURY MEMORANDUM THEREON.)

Laid on the Table of the House of Representatives by Leave.

The debt table published m 8.-l [Part lII] shows the major portion of the public debt under the headings of the accounts or purposes for which the loans were originally raised. An amount of about £56,000,000 in the form of New Zealand consolidated stock, however, has up till now been shown under the heading " Miscellaneous." This consolidated stock was issued under the authority of an Act passed in 1877 for the most part in conversion of other loans previously raised for various purposes. In those times, however, the debt records were not kept in the present form, and the identity of the original loans was lost through the conversion operations. The original authorizing Acts defined the purposes for which the loans were raised, and the task of ascertaining for what purposes the loan capital now represented by this £56,000,000 of consolidated stock was raised resolved itself into a question of tracing back the conversion operations ; and in this connection the difficulties were greatly accentuated by the fact that some of the earliest loans have been converted and consolidated three times. The published accounts of the early years of the financial history of the country are very meagre and disconnected, and the investigation involved considerable research, which was not completed until the debt operations had been traced back to 1856 —practically the start of the financial history of the Dominion. The first Parliament of New Zealand was opened at Auckland in 1854, at which time the New Zealand Company still held a lien on the lands of the colony. To redeem this lien and to provide the capita] for the purchase of Native land, &c„ the first New Zealand loan of £500,000, guaranteed by the British Government, was authorized in 1856, and subsequently floated on the London market. It was at 4 per cent, issued at par, and the proceeds were applied as follows : £200,000 in discharge of the New Zealand Company's debt, £180,000 for purchase of Native lands in the North Island, and £120,000 in payment of sundry liabilities incurred prior to the Ist January, 1858, mostly for. the purchase of land. A 2-per-cent. sinking fund was provided for the repayment of the loan. Approximately two thirds of the charges on the loan were allocated among the provinces, in consideration of which the receipts from the sale of land were made provincial revenue. The Maori War started in 1860, and in 1861 £150,000 was raised at 6 per cent., through the Union Bank of Austra-lia, for war purposes, part of it being absorbed in payment of compensation to settlers in Taranaki. A further loan of £500,000 was authorized in 1862, but was later incorporated in a loan of £3,000,000 authorized in 1863. The first issue of £1,000,000 at 5 per cent, was offered on the London market at a time of financial stringency, and proved a failure. The bonds were eventually disposed of, but discount and charges amounted to £196,343. A further £500,000 with an Imperial guarantee was issued at 4 per cent, at par, and the proceeds went to the Imperial Government in payment for the services of troops sent to New Zealand. To save forcing the balance of the loan on the London market, authority was obtained in 1864 to issue £1,000,000 of short-dated debentures in Australia at 8 per cent., these to be redeemed out of the permanent loan when raised. The balance of the £3,000,000 loan was eventually issued in instalments at 6 per cent., mostly at an issue price of about 92. The original idea behind the loan was to drive back the Maoris, put immigrants on the lands, undertake the necessary public works, and arm the whole colony. Charges and expenses absorbed £275,000, and, including £150,000 for the reinstatement of Taranaki, about three-fourths of the remainder was expended on the war, and the balance on public works. This immigration and public-works scheme was a new departure, in that previously the provinces had been responsible for these. Practically the whole revenue of the colony at this time was derived from Customs and sales of land. The land revenue and part of the Customs receipts went to the provinces, who were expected to provide for public works out of such revenues. By 1866 the Govern-

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ment was in financial difficulties, and two loans raised by the Taranaki Province, totalling £70,750, were diverted and taken over by the General Government. A further source of revenue, stamp duties, was also instituted at this time, while the colonizing and public-works scheme of 1863 was definitely wound up. All told, the Maori War appears to have cost the country about £2,750,000, and in nine years ending in 1867 the permanent charges had risen from £20,265 to £305,365. Apart from the relatively heavy borrowing by the General Government, a total of about £2,000,000 had by this time been borrowed by the provinces, and the placing of so many small loans for different terms and bearing different rates of interest (up to as high as 10 per cent, per annum) on the London market had a disastrous effect on the credit of the colony, and gave rise to serious loss and embarrassment. To meet these difficulties the Consolidated Loan Act was passed in 1867, under which it was proposed to convert the whole debt of the colony, both colonial and provincial, into 5-per-cent. stock. Power was taken to extend the borrowing authority under the Act by taking over provincial loans authorized but not issued, and provincial issues were to cease. Redemption of the consolidated loan was to be provided for out of a 1-per-cent. sinking fund, applied through annual drawings of bonds for cancellation. Interest and sinking fund on the provincial loans converted were to be recouped from the provinces affected. The major portion of the conversions was effected in 1867 to 1869, but operations were carried on up to 1877, after which all conversions were effected under the New Zealand Consolidated Stock Act passed in that year. Conversions of 6-per-cent. loans were made for the most part at prices ranging from 109 to 113 J. This increased the capital debt, but had the effect of reducing the annual charges. Consolidated stock to the value of £1,114,000 was issued at 97 per cent, under the Public Debts Act, 1867, some £260,000 being allocated to telegraph extension and other public works, and the balance applied to taking up provincial loans authorized but notissued. Interest and sinking fund on the several provincial loans were to be recouped out of the land revenues of the provinces concerned. To sum up, the final position in regard to 1867 consolidated stock was found to be as follows : — Consolidated Loan, 1867. £ £ Total issued .. .. .. 7,360,100 Redeemed .. .. .. 1.974,558 Converted into inscribed stock under the 1877 Act . . . . 5,372,542* Renewed and still outstanding (1926) 13,000 £7,360,100 £7,360,100 The redemptions under the annual drawings in no way affected the amount of the annual charges, and up to 1887 had not even been deducted from the amount shown as outstanding in the published debt table. This last seems rather curious, but was apparently due to the fact that the annual charges were based on the total issues. For the same reason, too, there was no occasion to allocate the redemptions, and this does not appear to have been done. As it is desirable that provincial liabilities should be eliminated from the debt as far as possible, all redemptions have been allocated to this heading. The resultant allocation of this portion of the 1877 inscribed stock is as follows : — n ■ . , , , Amount Inscribed Stock Original Act. . , , e converted. issued. £ £ New Zealand Loan, 1860 .. .. .. .. .. 56,900 60,849 New Zealand Loan, 1863 .. .. .. .. .. 1,480,600 1,583,356 Immigration and Public Works, 1870 .. .. .. .. 2,100,000 2,245,744 Defence and Other Purposes, 1870 . . * .. . . . . 600,000 641,641 Provincial liabilities .. .. .. .. .. .. 1,135,042 1,213,816 £5,372,542 £5,745,406 On the 30th April, 1870, the total debt of the colony amounted to £7,556,216, of which £4,347,866 was colonial and £3,208,350 provincial. The ultimate redemption of the whole of this debt was provided for by sinking funds, some on a 2-per-cent. and the remainder on a 1-per-cent. basis. In 1870 the public-works policy and an era of extended borrowing was inaugurated. On the plea that the interest on the war loans was a heavy burden on the country, it was decided to charge defence expenditure against loan-moneys, and the Defence and other Purposes Loan Act, 1870, authorized the raising of £1,000,000 to be spent partly on defence spread over a number of years, and the balance to be applied in settlement of certain provincial debts to the General Government. When the public-works policy was initiated an expenditure of some £10,000,000 was anticipated to be spread over about ten years ; but no sooner was the scheme fairly started than pressure, which apparently it was impossible to resist, was brought to bear on the Government from all sides to hurry on the works. Including £600,000 of the Defence and other Purposes Loan, a total of £8,700,000 of loan capital was borrowed on the London market between April, 187.1, and March, 1875, at an annual

* A total of £4,214,100 of this amount was first converted into short-dated debentures under the Consolidated Stock Act of 1884, and then into inscribed stock under the 1877 Act.

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average cost, including redemption of discount, of £5 Os. 7d. No sinking fund was provided for loans authorized after 1870, and interest on public works during construction was for a time paid out of the Public Works Fund, but half the stamp revenue was paid into this fund as a credit-in-aid. Some doubt arose as to whether interest and grants to Road Boards could legally be paid out of the £4,000,000 raised under the Public Works Loan Act, 1870, so the General Purposes Loan Act, 1873, authorized the raising of £750,000 to be allocated— £300,000 for interest, £250,000 for grants to Road Boards, and the balance for sundry public works. In 1867 the provincial borrowing had been stopped, except in special approved cases, but it was not long before the need for local works rendered it difficult to maintain this restriction. The abolition of the provinces was largely due to conflict in matters of finance. Their fate was settled when it became obvious that they had to look to the General Government to supply deficiencies, and that they could not borrow without the colony becoming liable. Up to 1876 the various sections of the railways on completion became provincial charges, but it was found that this system gave rise to great financial difficulties. The system was accordingly abandoned in 1876, when the Provincial Governments were abolished. At this time the Government also decided to take over at valuation the trunk lines built by the 2)rovinces of Canterbury and Otago, paying for the same by also taking over an equivalent amount of provincial debt. Legislation to this effect was included in the Financial Arrangements Act, 1876. In this last connection it may be added that for a year or two after the abolition of the Provincial Governments the land compact of 1856 was adhered to and the land revenues allocated to the. provinces. In the 1876 Budget the Colonial Treasurer stated that there was no disguising the fact that the colony's credit had suffered " from the fact of the colony having borrowed very largely." It was thought that the credit of the country would be assisted by converting all the debt held in London into stock to be inscribed and managed by the Bank of England. To quote the Budget of 1878, "It appeared to the Government that not only was it expedient to give the loans of the colony the character of uniformity, but that it would be also desirable to release the accrued sinking fund. This fund has lost its value in the eyes of the capitalist as an instrument of security, and might be most usefully employed in the advancement of our public works." In accordance with this decision the Consolidated Stock Act, 1877, was passed. The total funded debt of the colony on the 30th June, 1877, amounted to £20,618,111. The Budget of 1877 stated that this debt might be allocated as follows : Railways, £8,300,000 ; immigration, £3,500,000 ; other public works, £4,400,000 ; purchase of Native land, including payment of debt to the New Zealand Company, £1,300,000 ; Maori War, £2,000,000 ; miscellaneous, £500,000. From this it would appear that provincial loans had been almost wholly expended on public works. On the abolition of the provinces the provincial liabilities were taken over by the General Government. As some of the provinces were in great financial straits, these liabilities were considerable. An amount of £250,000 out of the New Zealand loan of 1876, and £300,000 out of the 1877 loan, were allocated to provincial liabilities. In 1878 the £1,000,000 under the Loan Act of 1876, and £2,500,000 out of £4,000,000 authorized by the Loan Act of 1877, were issued at 5 per cent, at par. It is interesting to note that this was apparently the first loan issued by the Bank of England for the colony, previous issues having been arranged by the Crown Agents. Up to the 30th June, 1878, a total of £13,700,000 had been borrowed for immigration and public works. In 1879 and in the few years following the colony was in financial difficulties owing to the heavy falling-off in the land revenue. Land-tax was introduced and other taxes increased in 1879, at which time, apart from £600,000 deficiency bills previously issued, the Government of the day was faced with a deficit of £900,000. This deficiency was met by the issue of Treasury bills. In 1882 revenue bills to the amount of £1,832,000 were exchanged for debentures with a three-years currency, which were afterwards converted into consolidated stock, and thus added to the permanent debt of the colony. Some attempt was made to slow down the rate of borrowing for public works, but extensive commitments rendered this difficult, and a £5,000,000 loan, was authorized in 1879. It was a 5-per-cent. loan, and under the terms of issue netted about 95| as a debenture issue, and only 79 T \ when the option of conversion into 4-per-cent. inscribed stock was exercised. By March, 1881, £4,476,000 of the loan had been converted into £5,371,200 of consolidated stock. The fact that the trunk railway-lines were still incomplete rendered it necessary that the public works should be pushed on, and a further loan of £3,000,000 was authorized in 1882. In 1882 and 1883 the Budget was balanced, and this loan, which was issued in annual instalments of £1,000,000 in the form of 4-per-cent. inscribed stock, proved much more satisfactory, the first instalment being placed at an average price of £98 12s. 5d., the second at £100 6s. 6d., and the third at £99 10s. Id. Apart from the £5,000,000 of 1879, which was practically a new issue in the form of stock, little had been done up to 1883 to carry out the original intention of 1877 Consolidated Stock Act and convert old loans into stock and release the sinking funds. In September, 1883, however, an offer, open till the next November, was made to convert the following into consolidated stock : £6,000,000 4|-per-cent. five-thirty debentures at £103, £1,250,000 5-per-cent. five-thirty debentures at £103 10s., and £1,832,000 5-per-cent. debentures at par. The latter item represented the deficiency bills mentioned above. A total of £5,388,700 was converted, resulting in a saving of £28,800 per annum in interest. The practice of instituting a sinking fund in connection with each loan issued was abandoned in 1870, and no provision was made for the ultimate redemption of the loans floated after that year The Budget of 1884 contains an extensive review of the position of the sinking funds belonging to the

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loans issued prior to 1870. Therein sinking funds are described as " exploded fallacies," and the Colonial Treasurer stated, inter alia, that " there is no reason whatever why the colonists who are exerting themselves to lay broad and deep the foundations of great public works, which will be a splendid and magnificent heritage to those who come after them, should attempt to pay off piecemeal portions of the public debt whilst they are borrowing more. Twenty-five years hence, compared with the value of these works, the public debt will be a bagatelle. I propose we should not be idiotic enough to tax the people to pay off a little fragment of our debt; no other colony does it." It was recognized, however, that the obligations under the existing sinking funds must be met. To relieve the taxpayers of the annual charge for sinking fund, the provisions of the New Zealand Consolidated Stock Act, 1877, were extended by the New Zealand Consolidated Stock Act, 1884. This latter Act provided for conversion into 5-per-cent. short-dated debentures as an intermediate step to conversion into inscribed stock. In this way the permanent release of the sinking fund was hastened. Immediate relief to the taxpayer was obtained by taking power to issue each year short-dated debentures to the amount of the annual increase in the sinking funds and crediting the proceeds from the sale of such debentures to the Consolidated Fund. That is to say, the Consolidated Fund received as revenue a sum equal to the amount paid out for sinking fund plus the interest earned by the accumulated sinking funds, while the debentures issued for this purpose were to be redeemed out of the corresponding additions to the sinking funds as and when the same were released through conversions of old loans into inscribed stock. Conversions into short-dated debentures under the 1884 Act were made at par. The major portions of the conversions were effected between 1885 and J 890, but issues for increases in sinking fund were made annually up till 1906. Altogether debentures to a total of £3,612,484 were issued for the latter purpose, of which £2,136,820 was redeemed, leaving £1,475,664 to be added to the permanent debt of the country. On the conversion of the loans concerned, the sinking fund accumulated prior to 1884 was credited to the Public Works Fund, a net total of £506,820 being received by that fund from released sinking fund. The system of purchase and cancellation through the annual drawing sinking fund of the 1867 consolidation loan was effective so long as it was allowed to operate, but the accumulated sinking fund of other loans was diverted as indicated above, and the provision for the ultimate redemption of the old loans entirely nullified. The operations under the Consolidated Stock Act, 1884, may be summarized as follows : — Consolidated Stock Act, 1884. £ £ Issued for conversions .. .. 6,390,500 Converted into inscribed stock .. 7,121,464 For increases in sinking fund .. 3,612,484 Redeemed .. .. .. 2,136,820 Still outstanding (1926) .. .. 744,700 £10,002,984 £10,002,984 The amount outstanding represents conversions of Government loans to local bodies, £509,500 ; aid to public works and land settlement loans, 1896-99, £165,000 ; and issue for increases in sinking fund, £70,200. Conversions of short-dated debentures into consolidated stock represent the following original loans : —

Consolidated Stock issued. . , T Amount Original Loans. converted. ™ ~T" 1 per-Cent., 1929. 3-per-Cent., 1945. 3|-per-Cent., 1940. £ | £ £ £ New Zealand Loan, 1863 .. .. 43,600 47,960 Consolidated Loan, 1867 .. .. 4,214,100 4,509,087 Nelson Loan Act, 1874 .. .. 18,000 .. 18,000 Defence and other Purposes, 1870 . . 50,000 . . 50,000 Wellington Loan Act, 1866 .. 13,500 .. 13,500 General Purposes Loan, 1873 .. 164.500 .. 164,500 Colonial Inscribed Stock, 1882 .. 250,000 . . 250,000 Government Loans to Local Bodies, 912,300 .. 912,300 1886 Public Revenues Act, 1886 .. 50,000 .. 50,000 For increases in sinking fund .. 1,405,464 .. 964,340 441,908 7,121,464 4,557,047 2,422,640 441,908

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The 1884 Consolidated Stock Act fairly well achieved its object, for by 1908 there remained but £212,602 of the old sinking funds accumulated prior to 1884. In 1906 it was recognized that the arguments on which the abandonment of sinking funds was based did not apply to dead-weight, debt incurred for Maori War and defence purposes, so a special sinking fund for the repayment of old war and defence loans was instituted. This was followed in 1910 by the Public Debt Extinction Act, which made provision for the ultimate redemption of the whole public debt, and marked the complete reversal of the policy which had been followed since 1870. In regard to direct conversion of original loans into consolidated stock under the 1877 Act, the operations up till 1911 were found summarized in a parliamentary paper published annually from about 1890 up till that year (see 8.-18, 1911). Additional information was also obtained from certain tables prepared by the then Assistant Controller and Auditor-General, and published at the end of the Budget tables in 1894. It was found that, in so far as they went, these tables confirmed the parliamentary return referred to above. From 1911 onward the annual published accounts are fairly complete, and with trifling exceptions little difficulty was experienced in tracing the conversion operations up till 31st March, 1926. Conversions into inscribed stock were mostly above par, and resulted in a nominal increase in the debt, though it was estimated at the time that when completed the operations would result in a saving in debt charges. New issues, issues in redemption and for expenses, were picked up from various sources, mostly by investigating the accounts of the different years, and eventually the four different classes of stock issued were reconciled with the debt outstanding as at 31st March, 1926. Including the issue of £429,250 to cover the expenses of conversions, a total of £50.052,445 of stock was issued for the conversion of loans totalling £47,460,381, thus resulting in a nominal increase in the debt of £2,592,064. In addition, new issues of inscribed stock, including issues for expenses, amounted to £18,161,497, making up a grand total of stock issued of £68,213,942. This sum has been allocated (see Schedule A attached) in accordance with the purposes for which the different original loans were raised. The value of the railways taken over from the Provincial Governments of Canterbury and Otago was assessed by a special Commission at £1,104,281 (see parliamentary paper E.-3 of 1877). Under the Financial Arrangements Act, 1876, the General Government was to take over an equivalent amount of provincial debt. Accordingly, stock issued in conversion of old provincial debts to the amount of the valuation has been allocated to public works. Redemptions of " miscellaneous " consolidated stock totalled £859,739, and this sum has been allocated to the redemption of stock issued for revenue deficiencies. The expenses of conversions have been allocated proportionately in accordance with the amounts of the original loans. The expenses of direct issues had already been allocated in the accounts of different years. Part of the stock is already allocated in the debt table for 1926, but as this part could not be separated in the accounts this partial allocation was ignored and the total issues allocated. As a result, however, the present allocation of £11,640,209 of stock is confirmed, except that there is a small increase of £279 in the expenses allocated to State Advances (Settlers Branch). In most of these accounts the only addition represents a proportion of the conversion expenses which apparently had not been previously allocated. A complete allocation of the consolidated stock hitherto classed as " miscellaneous " is attached (see Schedule B). It will be noted that the greater part of it represents issues for public-works purposes. There are no accounts for several of the items in the allocation, and these will have to remain grouped under the heading of " Miscellaneous," though henceforth it will be known what classes of loan expenditure this heading represents. Finally, a classification of the whole public debt outstanding on the 31st March, 1926, under the headings of services for which it was raised, will be found in Schedule C attached. R. E. Hayes, Secretary to the Treasury. The Treasury, Wellington, sth August, 1926.

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SCHEDULE A. NEW ZEALAND CONSOLIDATED STOCK. Showing Original Loans and Apportionment of Stock.

("C" denotes conversion; "N" new issue. The former includes issues in redemption.) Consolidated Stock. Original Act. — Amounts. - ; ; 4-per-C'ent., 1929. 4-per-Cent., 1943-63. 34-per-Cent., 1940. 3-per-Cent., 1945. £ £ s. d. £ s. d. £ s. d. £ s. d. New Zealand Loan, 1856 .. C 50,000 .. .. 50,000 0 0 Conversion expenses .. .... .. .. . . 476 8 3 Totals .. .. C 50,000 .. .. 50,476 8-3 Defence and Maori War— New Zealand Loan, 1860 .. .. C 150,000 81,559 0 0 .. 77,064 0 0 New Zealand Loan, 1863 (part) .. C 2,140,739 1,177,492 0 0 .. 1,168,614 0 0 8,936 0 <1 Defence and other Purposes, 1870 .. C 900,000 900,391 0 0 .. .. 50,000 0 0 Naval and Military Settlers Volunteer C 27,226 .. .. .. 28,000 0 0 Land, 1892 Conversion expenses .. .... .. .. .. 30,661 10 0 Totals .. .. C 3,217,965 2,159,442 0 0 .. 1,276,339 10 0 86,936 0 0 Public Works— New Zealand Loan, 1863 (part) .. C 605,411 664,770 0 0 Immigration and Public W oiks, 1870 C 3,172,100 2,760,744 0 0 363,000 0 0 204,956 0 0 9,828 0 0 Immigration and Public Works, 1873 C 2,000,000 2,028,772 0 0 General Purposes Loan, 1873 .. C 677,900 513,772 0 0 11,016 0 0 .. 167,308 0 0 Immigration and Public Works, 1874 C 4,000,000 4,085,629 0 0 5 per cent. 10/40 Loan, 1876 .. C 750,000 .. .. 800,062 0 0 5 per cent. 10/40 Loan, 1877 .. C 2.200,000 1,318,554 0 0 .. 975,083 0 0 New Zealand Loan, 1879 .. .. C 5,000,000 5,511,280 0 0 .. 413,899 0 0 North Island Main Trunk, 1882 .. N 1,000,000 1,000,000 0 0 New Zealand Loan, 1882 .. N 3,000,000 3,000,000 0 0 New Zealand Loan, 1884 .. N 1,500,000 1,500,000 0 0 New Zealand Loan, 1886 .. N 1,325,000 1,325,000 0 0 Colonial Inscribed Stock Act, 1882 .. C 250,000 .. .. .. 250,000 0 0 District Railway Purchasing, 1885-86 C 439,400 242,800 0 0 .. 111,320 0 0 87,729 0 0 New Zealand Loan, 1888 .. N 1,000,000 1,000,000 0 0 Native Land Purchase, 1892 .. C 24,700 .. .. .. 26,400 0 0 Aid to Public Works and Land Settle- C 300,000") „„„ „ „ „ „ ment, 1896 N 500,000/ " " 300 ' 00 ° 0 0 300 '°°° 0 0 Aid to Public Works and Land Settle- C 965,000 .. .. 823,520 0 0 174,000 0 0 ment, 1899 Lands Improvement and Native Lands C 100,000 .. .. .. 100,000 0 0 Acquisition, 1894 Aid to Public Works and Land Settle- C 585,000 .. .. .. 585,000 0 0 ment 1896 Amendment, 1897 Aid to Public Works and Land Settle- C 860,000 .. 202,000 0 0 635,120 0 0 36,050 0 0 ment, 1900 Aid to Public Works and Land Settle- N 35,000 .. .. .. 35,000 0 0 ment, 1896-01 A ™nt P ?901 and Settl6 ' C ''S5} 119 - 877 0 0 25 > 5W > 0 0 1-000,000 0 0 Ai Lmt' J 1902 W ° rkS a " d Land Sett ' e " C 1 '282[200/ • 203,100 0 0 79,100 0 0 1,000,000 0 0 Midland Railway Petition, 1902 .. C 150,000 .. .. 155,260 0 0 Aid to Public Works and Land Settle- C 212,500 .. 55,800 0 0 162,225 0 0 ment, 1903 Aid to Public Works and Land Settle- C 184,500 .. .. 189,487 0 0 ment, 1904 Aid to Public Works and Land Settle- C 290,000 .. .. 298,700 0 0 ment, 1905 Aid to Public Works and Land Settle- C 40,000 .. 40,000 0 0 ment, 1906 Wellington—Manawatu Purchase, 1908 C 500,000 .. .. 512,300 0 0 Aid to Public Works and Land Settle- C 1,200,000 100,000 0 0 101,000 0 0 1,025,200 0 0 ment, 1908 Aid to Public Works and Land Settle- C 600,000\ , nlo ,, „ ment, 1909 N 400,000/ " " 1,012 ,UUu U U „ .. Finance Act, 1909 .. .. C 1,203,099 190,499 0 0 .. 1,032,852 0 0 Aid to Public Works and Land Settle- C 1,560,900 .. .. 1,592,118 0 0 ment, 1910 Aid to Public Works and Land Settle- N 100,000 \ , „„„ „ . ment, 1911 C 1,226,000/ " 1,338,260 0 0 Aid to Public Works and Land Settle- N 1,542,900 100,000 0 0 1,442,900 0 0 ment, 1912 — — Carried forward i2'40''doo} 25,341,820 0 0 3,876,953 0 0 j 10,348,702 0 0 [3,971,315 0 0

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SCHEDULE A —continued. NEW ZEALAND CONSOLIDATED STOCK —continued. Showing Original Loans and Apportionment of Stock —continued.

.Consolidated Stock. Original Act. — Amounts. — 4-per-Cent., 1929. 4-per-Cent., 1943-63. 3£-per-Cent. 1940. 3-per-Cent., 1945. Public Works—continued. £ £ s. d. £ s. d. £ s. d. £ s. d. Brought forward 12'402*900} 25 > 341 > 820 0 0 3,876,953 0 0 10,348,702 0 0 3,971,315 0 0 Aid to Public Works and Land Settle- C l' 750;000 .. 1,785,000 0 0 ment, 1913 Aid to Public Works and Land Settle- C 250,000 .. 262,500 0 0 ment, 1914 Canterbury and Otago Railways (pro- C 1,104,281 17,989 0 0 .. 788,993 0 0 374,392 0 0 vincial liabilities taken over) Conversion expenses .. .... .. 243,222 13 7 .. 58,956 7 8 Other expenses .. .. .... .. 209,255 13 6 61,666 13 4 183,590 0 9 Totals .. 12'402'900} 25 ' 812 ' 287 7 1 5 > 986 > 119 13 4 11,380,241 8 5 4,345,707 0 0 Land for Settlements — Land for Settlements, 1894 .. C 64,700 .. .. .. 68,31700 Land for Settlement Consolidation, C 799,600 .. .. 812,172 0 0 848 0 0 1900 New Zealand State-guaranteed Ad- N 450,000 .. 450,000 0 0 vances, 1909—10 (Land for Settlements) Land for Settlements, 1908.. .. C 556,200 .. 373,116 0 0 190,400 0 0 Land Laws Amendment, 1913 .. C 23,400 .. 23,868 0 0 Conversion expenses .. .... .. .. .. 11,943 12 7 Other expenses .. .. .... .. 23,764 16 7 11,666 13 4 2,916 13 4 Totals .. £ 1 'ito'ooo} 23 > 764 16 7 858,650 13 4 1,017,432 5 11 69,165 0 0 Government Loans to Local Bodies— Government Loans to Local Bodies, C 912,300 .. .. .. 912,300 0 0 1886 Conversion expenses .. .... .. .. .. 8,692 12 0 Totals .. .. C 912,300 .. .. 8,692 12 0 912,300 0 0 Cheviot Estate— Cheviot Estate Payments, 1893 .. C 250,000 .. .. 250,000 0 0 Conversion expenses .. .... .. .. .. 3,318 0 0 Totals .. .. C 250,000 .. .. 253,318 0 0 Wellington-Hutt Railway and Road Improvement — Hutt Railway and Road Improvement, C 25,000 .. .. 25,750 0 0 1903-5 Conversion expenses .. .... .. .. .. 238 4 1 Totals .. .. C 25,000 .. .. 25,988 4 1 Railways Improvement Account— Railways Improvement Authorization, C 92,500 .. .. 95,275 0 0 1904 Government Railways, 1908 .. C 75,000 .. 76,500 0 0 Conversion expenses .. .... .. .. .. 1,595 19 7 Totals .. .. C 167,500 .. 76,500 0 0 96,870 19 7 Railways Improvement Authorization, 1914— Expenses .. .. .... .. .. .. 2,327 0 0 Bank of New Zealand Shares — Bank of New Zealand and Banking, C 500,000 .. .. 500,000 0 0 1895 Bank of New Zealand, 1913, sec. 6 .. N 375,000 .. 375,000 0 0 Totals .. | ° 375'000} •' 375,000 0 0 500,000 0 0 Naval Defence — Naval Defence, 1909 .. .. C 730,0001 2 ;loo 0 0 442,170 0 0 317,430 0 0 Conversion expenses .. .. .. .. 2,167 16 0 .. .. 4,787 16 1 Other expenses .. .. .... .. 20,345 13 6 .. 47,821 13 11 Totals .. | 24,613 9 6 442,170 0 0 365,251 13 11 4,787 16 1

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SCHEDULE A—continued. NEW ZEALAND CONSOLIDATED STOCK—continued. Showing Original Loans and Apportionment of Stock —continued.

Consolidated Stock. Original Act. — Amounts. — 4-per-Cent., 1929. 4-per-Cent., 1943-63. 3£-per-Cent., 1940. 3-per-Cent., 1945. Native Land Settlement— £ £ s. d. £ s. d. £ s. d. £ s. d. Native Land Amendment, 1913 .. C 250,000 .. 255,000 0 0 Other expenses .. .. .... .. 3,730 12 3 Conversion expenses .. .... .. .. ., .. 2,382 1 1 Totals .. .. C 250,000 3,730 12 3 255,000 0 0 .. 2,382 1 1 State Goal-mines— Coal-mines, 1908 (Appropriation, 1912) N 50,000 .. 50,000 0 0 Expenses .. .. .... .. 517 13 11 1,666 13 4 416 13 4 Totals .. N 50,000 517 13 11 51,666 13 4 416 13 4 State Advances (Settlers) — Government Advances to Settlers, N 2,990,000"! .. . , ,,,,,, „ 1394 c ■' " 140,000 0 0 2,990,000 0 0 New Zealand State-guaranteed Ad- N 443,000 \ 11B „ . A ..„ „ „ vances, 1909-10 C 1,401,700/ 118 ' 000 0 0 i' 063 ' 52 ! 0 0 0 0 State Advances, 1913 .. C 250,000 .. 255,000 0 0 Government Advances to Settlers, 1908 0 100,000 .. 101,000 0 0 Conversion expenses .. .... .. .. ., .. 11,582 102 Other expenses .. .. .... .. 52,919 15 0 6,666 13 4 65,747 7 6 Totals .. 3' 433' 000 l70 > 919 15 0 1.426,187 13 4 881,847 7 6 3,001,582 10 2 State Advances ( Workers) — State-guaranteed Advances, 1909-10 N 150,000 .. 150,000 0 0 State Advances, 1913 .. .. C 383,500 .. 255,000 0 0 133,500 0 0 Conversion expenses .. .... .. .. .. .. 2,382 1 2 Other expenses .. .. .... .. 56,473 9 7 5,000 0 0 13,684 0 0 Totals .. 150'000} 56 ' 473 9 7 410,000 0 0 147,184 0 0 2,382 1 2 State Advances (Local Authorities) — State-guaranteed Advances, 1909-10 N 475,000 .. 475,000 0 0 State Advances, 1913 .. C 500,000 .. 510,000 0 0 Conversion expenses .. .... .. .. .. .. 4,764 2 3 Other expenses .. .. .... .. 11,602 16 1 13,333 6 8 3,333 6 8 Totals .. 475 000} U.602 16 1 998,333 6 8 3,333 6 8 4,764 2 3 Loans redemption expenses .. .... .. 5,050 0 0 5,000 0 0 Revenue Deficiences — Public Revenues, 1886 .. C 50,000 .. .. .. 50,000 0 0 Treasury Bills, 1879-80 .. .. C 1,832,000 1,832,000 0 0 Public Revenues, 1887 (No. 3) .. C 400,000 .. .. 420,000 0 0 Sinking Fund Debentures (issued to C 1,405,464 .. .. 441,908 0 0 964,340 0 0 Ordinary Revenue Account) Conversion expenses .. .... .. .. .. 30,396 10 4 3,802 10 7 Totals .. .. C 3,687,464 1,832,000 0 0 .. 892,304 10 4 1,018,142 10 7 Provincial Liabilities — Wellington Loan, 1866 .. C 13,500 .. .. .. 13,500 0 0 Auckland Loan, 1863 .. C 31,600 .. .. 33,702 0 0 Westland Loan, 1873 .. C 50,000 .. .. 53,750 0 0 Nelson Loan. 1874 .. .. C 18,000 .. .. .. 18,000 0 0 5 per cent. 10/40, 1876 (Financial C 250,000 .. .. 266,687 0 0 Arrangements) 5 per cent. 10/40, 1877 .. .. C 300,000 .. .. 312,769 0 0 Sundry others through previous con- C 161,261 .. .. .. 172,452 0 0 version under 1867 Act (cannot be identified) Conversion expenses .. .... .. .. .. .. 7,878 18 8 Totals .. .. C 824,361 .. .. 666,908 0 0 211,830 18 8 Totals— New^ 10 " " " N 17'353'000/ 29 ' 471 ' 351 0 0 10 > 779 ' 628 0 0 I 7 ,102,816 0 0 9,622,400 0 0 Conversion expenses .. .... .. 245,390 9 7 .. 146,279 4 6 37,580 0 0 Other expenses .. .. .... .. 383,660 10 5 105,000 0 0 319,836 15 6 Grand totals .. .. .. 64,813,381 30,100,402 0 0 10,884,628 0 0 17,568,932 0 0 9,659,98 0 0 0 Redemptions of stock to 31st March, 1926 .. .. 509,338 15 11 .. 392,400 0 0 29,591,063 4 1 10,884,628 0 0 17,176,532 0 0 9,659,980 0 0 Less already allocated .. .. .. .. 491,343 12 8 4,442,008 6 8 3,647,691 14 9 3,059,165 0 0 Miscellaneous outstanding, 31st March, 1926 .. .. 29,099,719 11 5 6,442,619 13 4 13,528,840 5 3 6,600,815 0 0

8.—2

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SCHEDULE B. NEW ZEALAND CONSOLIDATED STOCK. Allocation of Stock classed as "Miscellaneous."

2—B. 2.

Consolidated Stock. Purpose. —— ———j 4-per-Cent., 1929. 4-per-Cent., 1943-63. 3J-per-0ent., 1940. 3-per-Cent., 1945. £ s. d. £ s. d. £ s. d. £ s. d. Public works .. .. .. 25,612,287 7 1 5,986,119 13 4 10,347,389 8 5 4,345,707 0 0 Land for settlements .. .. .. .. 11,943 12 7 Loans to local bodies .. .. .. .. 8,692 12 0 912,300 0 0 Wellington-Hutt Railway and Road .. .. 25,988 4 1 Improvement Railways improvement .. .. .. 76,500 0 0 96,870 19 7 Railways Improvement Authorization .. ■ .. 2,327 0 0 Act, 1914 Bank of New Zealand shares .. .. 375,000 0 0 500,000 0 0 Naval defence .. .. .. .. .. .. 4,787 16 1 Native land settlement .. .. .. .. .. 2,382 1 1 State Advances (Settlers) .. .. 279 0 3 .. .. 11,582 10 2 State Advances (Workers) .. .. .. .. 2,382 1 2 State Advances (local authorities) .. .. .. .. 4,764 2 3 New Zealand Loan of 1856 .. .. .. 50,476 8 3 Defence and Maori Wars .. .. 2,159,442 0 0 .. 1,276,339 10 0 86,936 0 0 Revenue deficiencies .. .. 1,322,661 4 1 .. 541,904 10 4 1,018,142 10 7 Old provincial liabilities .. .. .. .. 666,908 0 0 211,830 18 8 Loan redemption expenses .. 5,050 0 0 5,000 0 0 Totals, miscellaneous outstanding, 29,099,719 11 5 6,442,619 13 4 13,528,840 5 3 6,600,815 0 0 31st March, 1926

8.—2,

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SCHEDULE C. PUBLIC DEBT. Allocation according to the Services for which Capital originally raised. Productive Works — £ £ Railways .. .. .. .. .. .. .. 47,867,634 Telegraphs and Telephones .. .. .. .. .. 7,282,810 Hydro-electric power .. .. .. .. .. .. 4,809,248 Lighthouses and harbour-works .. .. .. .. .. 1,083,832 Westport Harbour .. .. .. .. .. .. 700,100 State Coal-mines .. .. .. .. .. .. 227,601 Tourist resorts.. .. .. .. .. .. .. 365,765 Swamp drainage .. . . .. . . . . .. 456,000 Rangitaiki land drainage .. .. .. .. .. 510,000 — 63,302,990 Land Settlement and Forests —• Cheviot Estate .. .. .. .. .. .. 211,318 Land for settlements .. .. .. .. .. .. 8,745,085 Discharged soldiers settlement .. .. .. .. .. 9,757,936 Hauraki Plains settlement .. .. .. .. .. 700,000 Purchase of Native lands .. . . . . . . . . 1,902,297 Native-land settlement .. .. .. .. .. .. 3,896,782 State forests .. .. .. .. . . .. .. 601,172 25,814,590 Investments —■ Advances to settlers .. .. .. .. .. .. 18,021,786 Advances to workers .. .. .. .. .. .. 6,978,082 Advances to local authorities .. .. .. .. .. 2,790,293 Loans to local bodies .. .. .. .. .. .. 3,550 ,793 Samoan loan .. .. .. .. .. .. .. 110,000 Bank of New Zealand shares .. .. .. .. .. 875,000 Mining advances .. .. .. .. .. .. 55,550 Fruit-preserving industry advances .. .. .. .. 65,110 Cold-storage advances .. .. .. .. .. .. 75,250 General purposes relief advances .. .. .. .. .. 75,000 Fishing industry promotion advances .. .. .. .. 5,215 Kauri-gum industry .. .. .. .. . . . . 75,000 Housing and loans for workers'dwellings .. .. .. .. 399,625 Nauru and Ocean Islands .. .. . . . . . . 539,850 33,616,554 Indirect Productive Purposes— Highways, roads, and bridges .. .. .. .. .. 14,933.854 Old provincial liabilities (mostly roads and bridges) .. .. 878,739 Irrigation land and river improvement .. .. .. .. 1,385,028 Development of mining.. .. .. .. .. .. 802,807 Immigration .. .. .. .. .. .. .. 2,633,918 — 20,634,346 Financially Unproductive Purposes —■ Public buildings, including schools .. .. .. .. 11,029,924 Defence and Maori Wars .. .. .. .. .. 4,607,844 Naval defence .. .. .. .. .. .. .. 1,552,624 Great European War .. .. .. .. .. .. 75,333,648 Revenue deficiencies .. .. . . .. .. 2,952,908 Loans-redemption expenses .. .. .. .. .. 10.050 —- 95,486,998 Public debt outstanding at 31st March, 1926 .. .. £238,855,478

Approximate Cost of Paper.—Preparation, not given ; printing (580 copies), £17.

Authority : W. A. G. Skinner, Government Printer, Wellington.—l 926.

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