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With a view to meeting the present requirements of the Money Market, and of the Investors in Colonial Covernment Securities this draft provides that the loan may be raised by the sale of Debentures or of Inscribed Stock, or partly of one and partly of the other.
The provisions when the borrowing shall be upon Debentures are contained in Sections 4 to 21 and are such as experience has proved the most suitable for the London Money Market.
The draft Ordinance provides that the Debentures shall bear interest at a rate not exceeding 5 per cent, we do not propose to exceed 4 or perhaps 4 per cent, still it would appear advisable to leave a margin to provide against an unpropitious
market.
In Secs. 22 to 29 provision is made for borrowing on Inscribed Stock. It is not only advantageous but almost necessary when inviting tenders for loans to give the lender the option of Debentures or Inscribed Stock; in a recent casc we disposed of the unallotted balance of a Colonial Government loan, only on condition
that the Debentures should be hereafter convertible into Inscribed Stock.
I transmit also a draft of an Order which should be signed by the Governor under the Seal of the Colony appointing Agents to make the declaration required by the provisions of the "Imperial Colonial Stock Act 1877." Should the draft. Ordinance I have prepared become law, that portion of it which provides for an Inscribed Stock would be inoperative without such an Order of the Governor.
As they may be useful to the Governor, when considering this matter, I transmit also copies of the Colonial Stock Act 1877, 40 and 41 Vic. Cap. 59 and of the further Act of 1880 (Part V) increasing the commuted Stamp duty from 7/6 to 12/6 per cent. on the par value of the Stock.
I will send to the Colony by the next Mail spare copies of the draft Ordinance.
I have the honour to be,
Sir,
Your most obedient Servant,
Honourable R. H. MEADE,
Colonial Office.
(Signed),
W. C. SARGEANT.