A.—No. 1

70

DESPATCHES PROM THE GOVERNOR OP NEW

Legislature in 18G7, chapters S4, 89, and 90, which must be read together. 1. 2 " The Public Revenues Act, 1867," c. 84, s. 2I do not clearly perceive the relevancy of this 44, provides in substance that, after deducting inter paragraph, but it is right to state that the effect alia all sums chargeable on account of so much of of " The Public Revenues Act" is to give up to the interest and sinking fund of loans raised upon the Provinces all the consolidated revenue which the security of the general revenue of the Colonv can be spared by the General Assembly, and that as shall have been made a charge against the notwithstanding this, in the monthly account revenues of any Province, the Colonial Treasurer showing what the Provinces are entitled to receive shall forthwith pay over monthly out of the con- by the Act, several Provinces occasionally, some solidated fund to the Provincial Account of such Provinces invariably, not only receive no revenue, Province the monthly balance appearing on such but become indebted in account with the General account to be due. No other deductions besides Government. It would therefore seem that in those specified are to be made. The relevancy of making the Provincial loans a charge on the whole this remark I hope to show presently. Colony, the Government adopted a course indicating a most careful regard to the interests of Provincial bondholders. I may add that Canterbury on more than one occasion has received less than nothing of Consolidated Revenue, and the deficiency has been recouped out of her Land Fund. 2. 3 By " The Public Debts Act, 1867," c. 89, s. 2, 3I do not read the Acts in question as Mr. it is provided that " The principal, interest, and Selfe does. He has omitted to quote an essential " sinking fund payable upon all Provincial deben- provision. I understand the law to be, that the " tures already issued, or which may hereafter be whole Colony is now responsible for the payment " issued, in accordance with the provisions of this of interest and sinking fund on Provincial loans. " Act, under the authority of any of the Acts or But not that the General Government was required " Ordinances of the Superintendent and Provincial forthwith to pay that charge. If the Governor " Council of any Province of the Colony specified by Proclamation announced that the General "in the Schedule A. to this Act shall from and Government would pay the charge for any Pro- " after the passing of this Act be charged upon and vince, thenceforth such payment would be made " paid out of the consolidated revenue of the Colony by the Treasury. In the meanwhile, if the Pro- " of New Zealand," &c. vince preferred to pay on its own account, it How have the engagements thereby entered into could do so. In any case, if the Province been hitherto fulfilled ? neglected to pay, the General Government became The Act passed 10th October, 18G7. The statu- liable. Such is the law. In practice, some Protory obligation on the General Government of New vinees have gone on, like Canterbury, paying Zealand to pay sinking fund and interest on the their own interest and sinking fund; some have Provincial loans commenced from tliat date? Not arranged with the General Government to pay it one shilling of interest or sinking fund on the out- for them, and to surcharge the Province. The standing debentures of Canterbury has ever been Governor has the power, by Proclamation, to paid by the General Government out of the con- assume the payments by the Treasury, whether the solidated revenue of New Zealand. Province ivishes it or not, but it has not been In June last I asked Mr. Fitzherbert, the author necessary to take such a step. No doubt in a of the Act and the special agent in England for short time all payments will be made by the giving eifect to its provisions, whether he would Treasury, if only for the sake of simplifying the pay the sinking fund and interest on the Provincial public accounts, loans of Canterbury, then about to become due. His reply was that he had no instructions on the subject, and that ho was not aware that the Governor of New Zealand had by Proclamation (see the latter clause of the same section 2) fixed the time and place for such payment. If that clause be directory only and not obligatory, the liability of the Government of New Zealand to malce the payments in question may be indefinitely postponed.* * Here Mr. Selfe is mistaken. The liability isI admit that the 3rd section of this same Public not postponed. The only thing postponed is the Debts Act contains a perfectly equitable provision change of the agent for making the payment, from —that all sums of money thereafter paid by the the Provincial Treasurer Xv the Colonial Treasurer. Colonial Treasurer for interest and sinking fund on Provincial loans shall be charged against the Province in respect of which such payment shall have been made. It can make no difference whether the payment be made by the Colony and subsequently charged by the Colony against the Province, or made by the Province direct in the first instance. It is fair to add that the General Government professes its intention to pay the interest and sinking fund due on Provincial loans for the six months ending 30th June, 18G9. But, as a matter of fact, which I trust your Lordship will see immediately is important, the Province has paid to me as trustee of these sinking funds, since October, 1867, no less than £15,890 10s.—portion of the £41,000 before mentioned —besides interest upwards of £19,000.