B.—lB.

19-2-2. NEW ZEALA N I J.

£5,000,000 LOAN OF 1921 (PARTICULARS OF THE CHARGES AND EXPENSES IN CONNECTION WITH THE RAISING OF THE).

Laid on the Table of the House of Representatives by Leave.

[Extract.] New Zealand Government Offices, Sift,— 415 Strand, London W.C. 2, 16th November, 1921. I have the honour to transmit herewith the Loan Agents' Account for the £5,000,000 6-per-cent. Stock 1936-51 Loan issued in June last, and required under the following Acts, viz. : — £1,000,000 under the Railways Improvement Authorization Act, 1914, section 4 ; £1,000,000 under the Electric-power Works Loan Act, 1919, section 2 ; £750,000 under the Finance Act, 1920, section 15, for purposes ; £2,250,000 under the Finance Act, 1921, Fart 111, section 10, for public works. The net proceeds of the public issue amounted to £4,618,192 17s. 4d., made up of sums credited to the Public Account at various dates In conformity with section 8 of the New Zealand Loans Act, 1908, it was requisite to dispose of further parcels of 6-per-cent. stock to cover loan expenses, in order to bring the net proceeds up to the full amount authorized—viz., £5,000,000. These subsequent sales on Loan Account amounted to £384,692 6s. 6d., the stock being disposed of at £99| per cent., and the gross proceeds— £381,807 2s. 8d. —credited to the Public Account, .... and making, with the net proceeds of the public loan, the full sum of £5,000,000 authorized. £ a. d. The gross loan receipts amounted to .. .. .. 5,181,848 4 6 and the expenses to .. .. .. .. .. 181,848 4 6 Leaving amount authorized and credited to the Public Account 5,000,000 0 0 Whilst the securities represented thereby amounted to the nominal value of .. .. .. .. .. .. £5,384,692 6 6 Included in the expenses is a sum of £10,010 2s. 2d. for discounts on prepayments, but it is considered that this item should not be included as an expense for the purpose of ascertaining the cost of the loan,'the Government having the use of the money before it was due, and earning interest thereon. In computing, therefore, the net return to the Government this sum has been excluded, as well as the small loss on the first six months' interest and any loan expenses, excluding cables, which may have been incurred in New Zealand. On this basis the net return to the Government is £93 os. 7d. per cent., whilst the net cost, with redemption in 1951 (thirty years), works out at £6 10s. 6|d. per cent., and interest, without redemption, £6 9s. per cent. As, however, the public and private sales differ both in price and expenses, it may be desirable to quote the separate figures in each case, taking into account the loss incurred on the first six months' interest in order to arrive at the true cost to the Government :— £ s. d. (1.) On the £5,000,000 public loan the net return is .. .. .. 92 11 2 Interest with redemption, 1951 (thirty years) .. .. .. 611 4 per cent. Interest without redemption, 1951 (thirty years) . . . . . . 6 9 8 „ (2.) On the £384,692 6s. 6d. 6-per-cent. stock sold after the public-loan issue to complete sum authorized the net return is .. . . 96 15 8 Interest with redemption, 1951 (thirty years) . . . . . . 6 4 9 per cent. Interest without redemption, 1951 (thirty years) . . . . ..640 „ Averaging these two returns, the net return on the total loan is £92 17s. 2d., which is equivalent to interest with redemption in 1951 (thirty years) of £6 10s. lOd. per cent., or interest only, £6 9s. 3d. per cent I have, &c, J. Allen. The Right Hon. the Minister of Finance, Wellington.