Zealand 5 per cents, at £101, and have thus far converted £32,350. The annual
interest hitherto payable by the Province has been £4,000. Supposing the whole
Loan converted at the above rates, the interest, with 1 per cent. sinking fund, will
amount to £3030 per annum for say thirty-five years, when the principal (increased by
the conversion to £50,500) will have become liquidated. By this transaction the
Province is a clear gainer of £970 per annum, besides getting rid of the whole Loan
eventually without any further payment.

The results in respect of the two other Loans are by no means so favourable.

The Loan of £25,000 (1862) at 8 per cent was terminable in fifteen years (1st
July, 1867) by a sinking fund of 4 per cent. This Loan is announced by the Crown
Agents for conversion at £118 with 5 per cent interest, and the principal (increased
to £29,500) to be liquidated in about thirty-six years by a Sinking Fund of 1 per
cent. Up to the latest dates Bonds for £15,400 had been cancelled, and new ones to
the value of £18,172 given in exchange. The Annual Interest and Sinking Fund
have hitherto amounted to £3000, ceasing in eight more years. The Interest and
Sinking Fund will in future (if the whole loan is converted at the same rate) amount
to £1770 for the next thirty-five or thirty-six years; so that to save an annual payment
of £1230 for eight years, or £9840 in all, the Province will have to pay £1770
for at least twenty-seven years longer, or £54,790 in all.

The Loan of £50,000 (1866) at 8 per cent., and terminable in twenty years
(1st July, 1866), by a Sinking Fund of 2 per cent, is also announced by the Crown
Agents for conversion into New Zealand 5 per cents, with 1 per cent. Sinking Fund.
The rate of conversion is £128 10s., which increases the principal debt to £64,250.
By the last mail’s advices, Bonds for £36,500 had been cancelled in exchange for new
ones of the value of £46,902 10s. The Annual Interest and Sinking Fund hitherto
payable on this Loan amounted to £5000, ceasing in eighteen more years. If the
whole is converted at the same rate, the Annual Interest and Sinking Fund will in
future amount to £3855 for the next thirty-five or thirty-six years; so that to save
£1145 annually for eighteen years, or £20,610 in all, the Province will be required to
pay £3855 for seventeen years longer, or £65,535 in all.

The annual saving in Interest and Sinking Fund on the three Loans will be
£3345, but of this saving £1062 10s. is effected by reducing the Sinking Fund of the
£50,000 Loan from 2 per cent, and of the £25,000 Loan from 4 per cent to 1 per
cent.

While my opinions, in reference to the details of the Act under which the
consolidation of these Provincial Loans has taken place, have always been strongly
expressed; and while their condemnation of the measure has been borne out by the
results, I feel bound to express my belief that Mr. Fitzherbert, in his capacity of Agent
for carrying out the consolidation, has done the best that it was possible for him to do
under the provisions of the Act. Nay, further, that had he not seized the favourable
condition of the Money Market he would have had to submit to far more unfavourable
terms, in consequence of the depressed condition to which the native rebellion has
reduced the credit of the Colony.

A further relief may be afforded by the conversion of our Loans not included in
the Public Debts Act, viz.—The Loan of the Mutual Investment Society, now standing at £31,000; the Loan of £25,000 on Mortgage of the Reclaimed Land; and the
Wanganui Bridge Debentures of £16,000. Supposing that these Loans all bearing
interest at 10 per cent. were converted into New Zealand 5 per cents, on the same
terms as the Loans I have just referred to, there would be an annual saving of at least
£2500. An application was made to the Government just before the close of the last
Session to have these Loans included in the Public Debts Act, but the Colonial
Secretary stated in reply that at such a late period of the Session, and after all the
financial arrangements of the Government had been submitted to and considered by
the House, he did not feel himself justified in then entering into the question; but he
at the same time expressed his opinion that had the matter been brought under the
consideration of Ministers at an earlier date, and if the Provincial Government were
prepared to hand over to the Colony the same securities for these Loans as were held