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PUBLIC RECORD OFFICE, LONDON

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COMMERCIAL RELATIONS.

Mr. Kingston.] Oh, that is nothing.

Investment of

TRUST FUNDS.

Sir John Forrest.] We are not ready for a Zollverein yet. you want?

Mr. Seddon.] I want the question of closer trade set at rest.

INVESTMENT OF TRUST FUNDS.

What do

Mr. Seddon.] You have a motion of mine Mr. Chamberlain; in reference to the investment of trust moneys, the removal of a restriction.

The Secretary of State.] Yes, with regard to that there are two points upon which we wish information from the Colonies. I have communicated with the Chancellor of the Exchequer. Before the Government could consider the proposal, they would wish to have information from the Colonies first, in what way they would propose that a Colony which might make default on its loans should be sued in this country?

Sir John Forrest.] How would the Home Government be sued if they made default?

The Secretary of State.] We are not dealing with the Home Government, the Home Government can be sued.

Sir John Forrest.] You cannot recover, though you do sue.

The Secretary of State.] That is quite true.

Sir John Forrest.] You cannot get any money out of them.

Mr. Seddon.] I think we may take it for granted, Mr. Chamberlain, that such a thing as default in the Colonies is impossible. Take the municipal corporations and the railway companies here.

The Secretary of State.] Municipal corporations can be sued, and you can The whole force of the country can be enforce judgment against them. invoked against railway corporations or municipal corporations.

Mr. Seddon.] If it would require legislation to remove the restrictions, speaking for my Colony, any conditions that you like to impose to ensure the safety of the investments we are quite prepared to give.

The Secretary of State.] Another question the Treasury raise is that they could not consent to allow investments in any loan where the rate of interest was considerably above the rate of consols, that is to say, they would have to find a test given by the ordinary market rates of what consols sell at. If, for instance, a loan were to be paying 5 per cent. at the time consols were paying per cent., almost by the nature of the case, by the proof of the market, that is not a sufficiently safe security.

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Mr. Seddon.] We should be prepared to accept that condition, that is a fair condition; that is a fair condition we are quite prepared to consider.

Sir Hugh Nelson.] I think both questions we would be prepared to accept. Sir Gordon Sprigg.] Do the Treasury mean, Mr. Chamberlain, that in regard to colonial securities the rate of interest paid must always bear a fixed proportion to the rate of interest on consols?

The Secretary of State.] Yes, that the rate obtainable, the return I should rather call it, of the loans in which investments are made, must not exceed blank

per cent more than consols.

Sir Hugh Nelson.] That is the interest on the market value of the stock?

The Secretary of State.] No, on the nominal value.

Mr. Seddon.] At the present time by Mr. Goschen's proposals which were carried, the investment of trust funds has been reduced. The trustees are

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If we have an inscribed stock, then investment is. paramount here.

per- missible. If the same Governments have loans not inscribed, trustees cannot invest. It is one of those positions which are scarcely debatable. It is the same Government, the same security, but because one is inscribed stock and the other is an issue of uninscribed loans or bonds, they cannot do it.

Sir Hugh Nelson.] They can convert the bonds into inscribed stock; would not that meet the difficulty?

Mr Seddon.] Even then it has to go before a Chancery judge.

The Secretary of State.] The investment of trust money cannot be in bonds to bearer.

Mr. Seddon.] I know that is so.

Mr. Kingston.] Because they are liable to loss some trustees do not favour

them.

The Secretary of State.] I do not think myself that we can proceed to any If a formal application came we could deal with it, and it is

resolution here.

a question really for Australia especially, whether the matter should not wait for federation.

Mr. Seddon.] I do not see why we should wait.

Mr. Kingston.] New Zealand is not coming in there.

Mr. Seddon.] I do not see why we should be blocked for Australia.

The Secretary of State.] New Zealand would be outside.

Mr. Seddon.] I do not see what harm there can be. There can be no harm in passing a resolution that the restriction in respect to these should be removed. That is all I ask.

The Secretary of State.] This matter is a matter upon which everybody here is extremely sensitive, that is, the absolute security of moneys invested on trust. It is not a question of national benefit or anything of that sort; but it is a question of a class of people for whom, of course, great sympathy is felt, and these people dependent absolutely upon the moneys invested ought to be protected, and to have an absolute security so far as possible. And your legislation already, in many respects, presses much more hardly upon capital than legislation in this country. We do not know how much further you may think it right to press upon capital. You are entirely free to make what legislation and laws you please, and therefore there is a natural feeling that it may be that the security which you offer is not as good as the security which we can offer here.

Mr. Seddon.] I hope you do not think that I am pressing for investments in municipal stock or bonds alone?

The Secretary of State.] I mean the stock of the Colony. And the same feeling which has moved some of the Colonies very strongly against what they call absentee landowners-I am not saying wrongly or rightly, but as a matter of fact-which has moved them to legislation on that subject might also move them hereafter against absentee moneylenders. There might be a feeling that all the money is going out of the country to pay interest upon loans, and that might lead to legislation which would throw doubt and dis- credit on the security. I am not saying that these are justifiable feelings, but I say that they are feelings which exist; and it is very difficult to see what advantage we could get by any resolution of this sort, ard, therefore, I think that a very strong case would have to be made out. I personally very much agree with you.

Mr. Kingston.] I should like to say as representing a Colony which has gone in for absentee land taxation that the total amount of our local and parliamentary taxation does not approximate to the extent of the taxation here upon land.

The Secretary of State.] Upon land?

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INVESTMENT OF TRUST FUNDS.

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