8.—4

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of the New Zealand Parliament, the Governor of that colony was pleased, by Order in Council on the sth November last, to appoint the Agent-General of the colony together with Sir Penrose Goodchild Julyan to be Agents in England for the purposes of the Stock Acts. You also are so good as to inform me further that it was with much regret the Government found themselves obliged to omit my name from the above appointment in consequence of the Secretary of State having given directions that the Crown Agents should in future cease to be engaged in financial operations for colonies under Responsible Government. Understanding that the kind and flattering terms in which this information is conveyed to me emanated from the Government of New Zealand, I would venture to request you to convey to that Government my thanks; but at the same time I would remark that the Secretary of State's directions to which reference is made did not preclude the Crown Agents from acting for the Government of New Zealand under the Stock Acts. Lord Kimberley's despatch dated tho 19th May, 1881, concludes thus : " While I have no desire to interfere with arrangements under which the Crown Agents are charged with the payment of interest on loans already issued by them, or with the redemption of those loans, or their conversion into inscribed stock, I shall be glad to learn that your Ministers are able without difficulty to make other provision for the transaction of all the business connected with any future New Zealand loans." I have, &c, Sir F. D. Bell, K.C.M.G., Ac, 7, Westminster Chambers, S.W. W. C. Sargeadnt.

Enclosure 3 in No. 12. The Agent-Geneeal to Mr. W. C. Sargeaunt. Sir,— 7, Westminster Chambers, London, S.W., Bth March, 1882. I have to acknowledge and thank you for your letter of the 6th instant. You will allow me to remark that the New Zealand Government did not give to the Earl of Kimberley's despatch of the 19th May, 1881, the interpretation which you now do, and I hasten therefore to say that, as at present advised, I am not able to concur in the view I understand you to take yourself, that the Crown Agents were not precluded by his Lordship's decision from continuing to act for my Government under the Stock Acts. There were two classes of debentures, amounting together to about fifteen millions, in which the Government contemplated an early operation of conversion, namely, the consols and the 5-30s. In both of these, as you are aware, the object was to exchange bonds bearing 4i per cent, and 5 per cent, interest for 4-per-cent. stock. Now, it was of course impossible that this should be done at all without creating an increase of the capital debt; and. the creation of that new debt, as well as the determination of its amount, wore new financial operations of a large and complicated kind, in which, as the Government understood the Secretary of State, it was certainly not his intention that the Crown Agents should engage for us. Moreover, in the case of the 5-30s, there was this other point : that, in order to effect any conversion at all, it was inevitable that provision should be made for paying off, whether to a large amount or a small, any holders who should elect to be paid off rather than receive stock; and this might at any moment involve the raising of a large sum of money by the sale of capital stock, as well as getting temporary advances in anticipation of such issue. Now, we never understood that Lord Kimberloy intended the Crown Agents to do that. But we were not left in doubt in the matter. In the latter part of last year I asked Lord Kimberley to give me an interview on this very question of the extent and effect of the new relations which his Lordship had laid down for the Crown Agents ; and I certainly then understood distinctly that the Crown Agents would no longer be permitted to engage, on behalf of a EesponsibleGovornment colony, in any such financial operations as I have described, but were to bo restricted to the payment of interest and management of sinking fund in respect of loans actually existing prior to May, 1881. If this was not the Secretary of State's meaning, we have all been under a misunderstanding; and, as it would obviously bo very inconvenient to have any doubt on such a point, I propose to bring it before his Lordship at an early date. I have, &c, W. C. Sargeaunt, Esq., C.M.G. F. D. Bell.

No. 13. The Agent-General to the Hon. the Premier. Sir, — 7, Westminster Chambers, London, S.W., sth April, 1882. It soems to me worth while to call your attention to the enclosed article in last week's Economist, referring to the " Profitableness of Colonial Kailways." Although the Economist does not omit its usual comment on the "extravagance of Now Zealand," you will see that this is neutralized by the favourable reference to the improvement that has taken place in the paying character of your railways. The material points in the article, however, are the indication of a growing opinion that, before long, a good colonial 3^-per-cent. stock would be worth nearly par in this market; and the further statement that " the time has certainly arrived" when the leading colonies could, with advantage to themselves, issue even a 3-por-cent. loan. This may be of some inttifestiio you in the consideration of your financial proposals this year. I have, &c, The Hon. the' Premier, Wellington. F. D. Bell.