CO129-330 - Public Offices - 1905 — Page 237

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willing to take and hold as they do not involve a permanent lock up of capital, and such Debentures can usually be suld in case of need or be borrowed against on terms which will

not show a loss to the holder.

8. It has appeared to us however that the course of action which is indicated in the preceding paragraph is not one which it is desirable to adopt. It is obviously little more than a staving off of the evil day and speculatim on the probability that the Money and Stock Markets will be in an easier condition a few years hence than they are at present. This we ourselves believe will be the case, but if it should happen that an unsettled state of affairs should exist when the short dated securities to which I have referred mature, there can be no question that the Govern- ments and Municipalities which have issued such securities would be placed in a position of great difficulty in arranging terms on which to meet their obligations.

9. In these circumstances it has appeared to us that in such cases as it may not be possible to make an issue on reasonable terms of Inscribed Stock bearing a low rate of interest, the best course to take is to make an issue of shurt dated Debentures carrying such a rate of interest as will secure the placing of the Loan, and to make the deben- tures convertible into Inscribed Stuck at the option of the holders of the debentures and on terms which shall become less and less favourable as the debentures run to maturity. We have further in such cases arranged that the debentures shall be subject to redemption by drawings at par so that pressure may be brought to bear upon the holders of the debentures to convert into stock in order to avoid being paid off.

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