ZEALAND TO THE SECRETARY OE STATE.

73

A.—No. 1.

George Bowen may contain; I can only deal with to use the money. The case will probably arise the preamble and the clauses, especially clauses 9, next Session. 10, 11, 12, 16, and 18 of the Act itself. The preamble recites, inter alia, that " whereas " it is expedient . . . that the money invested " on account of the respective sinking funds for " the security or provision for the due payment " of (Provincial) loans should be proportionately " released (!) and placed at the disposal of the " General Assembly" and the clauses I have mentioned seek to carry into effect this proposal. I wish to use language no stronger than the occasion justifies, but I respectfully submit to your Lordship that this intended legislation is unjust, arbitrary, and unconstitutional.. The word " expedient" may mean anything. As I read it in this connection, and by the light of recent events, it means only that it is desirable the Government of New Zealand should obtain from every possible source as much money as they can get, to be expended as portion of current revenue, and as the Government for the time being may direct, partly in conciliating Provinces dissatisfied with the legislation of 1807, or, worse, in inefficient attempts to suppress disastrous outbreaks, brought on by wholesale confiscation of Maori territory, and by land purchases the validity of which is disputed by those who claim to be the Native owners. Ist. I submit that the proposition is unjust to the dissentient English debenture-holders. Several of them purchased these debentures in 1858, on my recommendation. They object to be deprived, without their consent, of the security they already possess in this country, and are not content to receive in lieu thereof the promise of a distant Government to pay in future. Possibly they do not estimate that promise at its real value ; but in such a matter they surely have a right to form their own judgment. The euphemistic phrase " proportionately released" assumes that individual debenture-holders have only a right to that portion of the sinking fund which it is suggested has been paid in respect of the particular debentures they hold. I submit that this is an erroneous construction and restriction of their right, and that the ichole of the present sinking fund of each loan belongs to the whole of the outstanding deben-ture-holders of that loan, at least until the accumulation equals the whole of their united claim? If I 8 I will not of course say what the law may be am wrong in this construction, I shall be glad to upon this point, but as a matter of equity and be set right by any competent legal or financial finance Mr. Selfe's position seems to me absolutely authority to whom the question may be referred. untenable, and it will appear so if the case is put 2nd. I submit that the provisions of the Public thus: By law a sinking fund of (say) 2 per cent. Debts Sinking Fund Act are unjust to those of us on the nominal amount of the whole loan is who are trustees or holders of the funds in question payable for a certain term of years, so as to (section 10). We did not seek the office :itis a reproduce the principal. If a large part of the somewhat onerous and responsible one, and we loan is paid off by new securities, will it be argued shall be glad to be relieved of it; but we certainly that the borrower is bound to continue to invest do not intend to abandon our trust, and our duty annually the same amount of sinking fund to the to those who imposed it on us, at the dictation of end of the term, as if none had been paid off? a Body to whom we owe no allegiance, whose legis- This would be clearly an absurdity ; but if the lation as regards trustees in England (section 9) principle that future payments of sinking fund we believe to be utterly nugatory and ultra vires, may be restricted to the percentage on the outand who, as we believe, have no equitable title to standing part of a loan be admitted, in what the funds we hold for others. It is true, as sug- respect do the past payments differ from the gested in section 10, that we are beyond the juris- future? They both stand on the same ground, diction of the Supreme Court of New Zealand, Either the borrower is bound to go on investing on as we are beyond the legislation of the General the whole nominal loan till the end of the term Assembly; but wo are within the jurisdiction of defined by the original Act, no matter what may the Court of Chancery here. Either the Govern- be the accumulation of money, or the principle ment of New Zealand has an equitable title to the must be adopted that he is bound only to make funds we hold or it has not. If it has, it can such investments as shall produce the principal enforce that right by application to the Court upon the day upon which he has contracted to here. To the decision of that Court we should repay it. The contract made by the borrower of course readily and cheerfully submit. Will the with the lender seems to me a very simple one. agents of the New Zealand Government do the He undertakes to invest annually such sums as 19