470
the risks of the drawing of the Debentures for redemption.
On the other hand the issue of Stock at a discount would
involve the creation of debt by the Colonial Government
to an amount considerably in excess of the £1,100,000
which has been lent to the Chinese Viceroy say to the
extent of 4% and the obligations in respect of this
debt would continue after the Chinese Viceroy would have
paid off the Loan made to him. On these grounds therefore
an issue of Stock would appear to stand condemned, but
there are certain other factors in the case which are
deserving of consideration.
9. In the case of the existing 3% Stock power
exists to pay off the Stock in April 1918 i.e. 2 years
after the expiration of the period at which the completion
of the repayment of the Loan to the Chinese Viceroy is to
be effected, and we would propose that advantage should
be taken of this power. The question therefore to be
considered is what means are likely to exist in 1918 to
enable the Colonial Government to avail itself of the
power of repayment at that date. The existing Stock of
the Colony is of the amount of £341,799 and we estimate
that the Sinking Fund in respect of that amount of debt
will be of the approximate value of £107,000 in April 1918. The creation of Stock to provide the £1,100,000 now
required will however necessitate an increase of the debt
of the Colony to the extent of about £1,145,000 and the question arises what provision can be made towards liquidating that debt in 1918, and this question has been rendered the more difficult by the provision in the Ordinance No.11 of 1905 that the Sinking Fund shall not commence until five years after the Loan has been issued.
-4-
10.