A.—No. tf

MR. VOGEL'S MISSION TO ENGLAND.

15

Appendix B.

The Loans,

Thirdly, there were some reasons to be afraid that if a longer time were given, attempts might be made to depreciate the value of New Zealand securities, for the purpose of reducing the price at which the new stock could be bought. On the other hand, we were of course not blind to the fact that, in inviting tenders for so comparatively large an amount, at a very short notice, we were undertaking great responsibilitv, especially as some efforts were made, after we had announced the day, to induce us to postpone it. The certainty, however, that the competition for money on tho London market would be very great the moment the French difficulties were settled, induced us to remain firm on this point, and we have every reason to be satisfied that we were so. 11. With respect to the terms of the loan, there were cogent reasons in favour of making them entirely uniform with those of the consolidated loan, with the consequent probability that the Stock Exchange would admit them to a uniform quotation. 12. In respect to the amount of the loan, we found that we were authorized to raise £500,000 under the Defence and Other Purposes Loan Act, and £1,000,000 under the Immigration and Public Works Loan Act, or a total of £1,500,000. Two hundred thousand pounds of guaranteed debentures there was no doubt would be immediately available; and we had, and have, hopes of being able so to arrange with the Treasury that, after a year, a further amount of £200,000 will be available. The Colonial Treasurer was able to say that the amounts which had been fixed in the Colony were meant as a provision for eighteen months; and assuming that to be the case, and that the second amount of guaranleed debentures could be obtained in twelve months, wo came to the conclusion that by borrowing £1,200,000 on the unguaranteed debentures, we should be leaving a margin of £100,000 over the amount we were authorized to borrow— i. e., that we should be placing the Government in the position of obtaining £1,600,000 without any further issue of unguaranteed debentures; and that we should also be able to state (what no doubt materially assisted the negotiation) that it was not intended for twelve months to issue any further unguaranteed debentures. 13. We wish to be understood that we are by no means certain that the second parcel of guaranteed debentures can be issued until twelve months after the sale of the first parcel. In that case, the Government might decide to sell the first parcel sooner than otherwise would be desirable. But we have been assured that the Treasury will be inclined to agree—if it be found that the terms of the Imperial Act can be construed to that effect —that it shall not be necessary to dispose of the first parcel in order to obtain the guarantee for the second and subsequent parcels ; provided that evidence be produced of the annual expenditure, on the objects contemplated by the Imperial Act, of sums equal to the several instalments. 14. We take this opportunity of stating that it was very gratifying to find, in connection with all the representations made by the Colonial Treasurer to the Treasury and the Colonial Office, no exception was taken to the loans, to the mode of issue, or to the general policy on which those loans are based. In fact, all the proposals made were well received, and such objections as were urged were of a technical nature. We fixed the minimum at £95 10s. In doing so, we adopted a price which, whilst it was an approximation to the net price obtained in the negotiation of the £1,114,000 under the Consolidated Loan Act, we also had reason to suppose would insure the whole amount being taken up. The result answered our expectations. The amount applied for under the minimum was £613,700; the amount at and above the minimum was £1,200,000 ; and the average of the tenders accepted was £95 16s. 9d. 16. We submit that this result is one with which the Colony of New Zealand has every reason to be satisfied. A few days before the issue of the loan, the Bank of New South Wales invited tenders for a small loan of £400,000 for the Colony of New South Wales. The gross price obtained was £98 1.65.; but deducting the allowance for accrued interest, and on account of deferred payments, the net price was really £97 3s. B£d. Id the case of the New Zealand loan, we thought it desirable there should bo no accrued interest; and the value of allowances for deferred payments amounted to ss. 10-J-d. per cent.: so that the net price obtained for the New Zealand loan was £95 10s. 10^d., as will be seen on reference to tho enclosed statement, marked B ; whilst the net price for the New South Wales loan was £97 3s. B|d., showing a difference of £1 12s. lOd. in favour of New South Wales. But, if wo deduct the difference of cost for negotiation—which is at least one-half per cent, more in the case of New South Wales —the result will appear highly satisfactory. 17. When it is considered that ordinarily New South Wales debentures in the market rule from 1 to 2 per cent, higher than New Zealand debentures (at this moment 2 per cent.) ; and further, that the amount borrowed by the Government of New South Wales was very small, whilst the money asked for by New Zealand, besides being of a considerable amount, was but the first portion of a new and large loan—we think it must be admitted that, as compared with the New South Wales negotiation, we have every reason to be satisfied with the result in the present case. 18. If we compare this result with that of the last negotiation on behalf of New Zealand, an analysis of which appears in Statement B already referred to, there is no less reason to be satisfied. 19. It is fair to conclude from these comparisons, coupled with the surrounding circumstances, that the financial proposals, of which the loans represent part, have met with approval in this country. 20. The amount borrowed represents £450,000 under the Defence and Other Purposes Loan Act, and £750,000 under the Immigration and Public Works Loan Act. 21. We shall, with the least possible delay, cause the short-dated debentures to be retired. 22. We append Schedule showing the number of tenderers, and other particulars which may be interesting in connection with the recent negotiation. We have, <&c, The Hon. the Colonial Secretary, Julius Vogel. Wellington, New Zealand. Pjsneose G. Jttiyas.