8.—14

6

2. Consols of 1867, Colonial Issue (£77,000). With regard to this series, I think it will hardly be advisable to include in the operation any but the £64,000 falling due on the Ist January, 1893, as the £13,000 maturing in 1913 only carry interest at 4 per cent., so that it would not be worth while to convert them. 3. Sixes of 1891. 8, LoanoflB6o .. .. .. .. .. .. .. .. .. 74,100 1863 .. .. .. .. .. .. .. .. .. 417,000 At the time of the last conversion, tho sixes of the two series were quoted respectively at 109 to 111 and 110 to 112, whereas now, in consequence of their having to be paid off during this year, they have of course fallen to a little over par; and the equivalent between them and the 3J-per-cent. stock into which they would be converted will simply be fixed by the market price of the stock on the day the conversion is announced. 4. Fives of 1914 (£378,800). Although it might be desirable to include this series in the conversion, the bonds are so firmly held that there is very little chance of bringing in many more at any figure which it would pay the colony to give. They are now quoted, at the same price, of 114 to 116, at which they stood five years ago, and, as the yield of 5 per cent, is assured for twenty-four years to come, conversion into 3i-per-cent. stock would hardly tempt any of the holders to come in except at too high a premium to concede. 5. Old Provincial Loans. £ (a.) Lyttelton Bailway Loan .. .. .. .. .. .. .. 77,700 (6.) Westland Loan .. .. .. .. .. .. ~ .. .. 50,000 (c.) Auckland Loan .. .. .. ~ .. .. .. .. .. 31,600 (d.) Nelson Loan .. .. .. .. .. .. .. .. .. 15,000 (c.) Otago Loan .. .. .. .. .. .. .. .. .. 116,700 (/.) Canterbury Loan .. .. .. .. .. .. .. .. 22,800 Although these Provincial loans have varying dates of maturity up to 1898, it would be advisable to bring them all in if possible. This would necessitate special arrangements with regard to the interest accruing on some of them between now and 1898. The Governor of the Bank, however, makes an excellent suggestion—that the prospectus of the conversion should reserve a power to fix from time to time the rates at which bonds not brought in now could be converted later on. The creation of enough 3cJ-per-cent. stock to extinguish these old loans will enable anything to be done hereafter with regard to debentures that may not be brought in now. For instance, they might either be brought up as was contemplated in 1885, or the Government might wait till the approach of maturity and then call in the bonds for payment: the colony would then be the inheritor of the bonds before their due date, and would be entitled to bring them in for conversion. 6. District Railway Bonds (£189,600). With regard to these debentures, as only £35,000 fall due in October, 1896, while £154,600 go on till 1905 and 1909, it is a question whether it would be worth while to offer conversion to the latter ; but, as the amount involved is so small, it would pay the colony to offer very liberal terms to extinguish them as well as the £35,000, since the addition to capital would be inappreciable in the total of the public debt. 7. Actuaries' Computations of Equivalents. In order to be prepared in good time with the necessary computations of equivalents in the case of each loan that would be included in the conversion, I instructed the Actuaries to prepare tables of equivalents similar to those for previous conversions, and their calculations are now completed. When the former computations were made no 3i-per-cent. stock was in existence, and the Actuaries had first to determine from the market price of 4-per-cent. stock the rate of interest yielded on some of the securities, and then, having arrived at that, they prepared their table of equivalents in 3J-per-cent. stock. The existence of the actual 3J-per-cent. stock has made the calculation of equivalents an easier matter now. Westminster Chambers, Bth January, 1891. F. D. Bell.

Enclosure 2 in No. 8. Conversion of 1891. —Table showing the Equivalent in 3½-per-cent. Stock to a £100 Debenture of the Consols of 1867 (Annual Drawing Loan).

Example : Thus, if prices are — 4-per-cent. inscribed stock, £103; 5-per-cent. Consols, £106, then £114 16s. 3J-per-cent. stock (repayable at par forty-nine years hence) would be the equivalent for £100 debenture 5-per-cent. Consols. A. H. Bailey. 19th January, 1891. Ralph P. Habdy.

[-per-cent. In repayable ;i eight Yei [Scribed Stock, it Par Thirtyars hence. I Price of 84-per-cent. Stock, | repayable at Par Forty-nine Years hence, to yield tile rate of Interest shown in Column 2. (8.) Amount if 3j-per-cen( Const ;. Stock, equi 3ls, at the ui ivalent to a I idershown P: )ebenture of £100 of the 5rices of the latter. -per-cent. Price. Bate of Interestyielded per Cent. | (2.) 105. 105J. 107. 107J. 106. 1001. 10H. (1.) £ a. a. .03 0 0 .03 10 0 .04 0 0 .04 10 0 .05 0 0 05 10 0 .06 0 0 )61 10 0 .07 0 0 .07 10 0 .08 0 0 £ s. a. 3 17 0 3 16 6 3 16 0 3 15 6 3 15 0 3 14 7 3 14 1 3 13 7 3 13 2 3 12 8 3 12 3 £ s. a. 92 6 8 92 16 9 93 7 0 93 17 2 94 7 5 94 17 7 95 7 11 95 18 1 96 8 5 96 18 8 97 9 0 £ s. a. 113 14 4 113 2 0 112 9 7 111 17 5 111 5 3 110 13 4 110 1 4 109 9 8 108 17 11 108 6 5 107 14 11 £ b. a. 114 5 2 113 12 9 113 0 4 112 8 1 111 15 10 111 3 10 110 11 10 110 0 1 109 8 4 108 16 9 108 5 3 £ s. a. 114 16 0 114 3 7 113 11 0 112 18 9 112 6 5 111 14 5 111 2 4 110 10 0 109 18 8 109 7 1 108 15 6 £ s. a. 115 6 10 114 14 4 114 1 9 113 9 5 112 17 1 112 4 11 111 12 9 111 1 0 110 9 1 109 17 5 109 5 9 £ s. a. 115 17 8 115 5 1 114 12 5 114 0 0 113 7 8 112 15 6 112 3 3 111 11 5 110 19 5 110 7 9 109 16 Ol £ s. a.! 116 8 6 115 15 10 115 3 2 114 10 8 113 18 3 113 6 0 112 13 9 112 1 10 111 9 10 110 18 0 110 6 3 £ s. a. 116 19 4 116 6 8 115 13 10 115 1 4 114 8 10 113 16 7 113 4 3 112 12 3 112 0 2 111 8 4 110 16 6