Sessional_Paper_1893 — Page 77

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2. The works which may be charged wholly or partially to the loan are the completion of the Central Market, the Praya Reclamation, and the Water and Sewage undertakings which have already been begun or are in contemplation, and also the improvements of the Gaol accommodation which are under consideration.

3. It will be desirable that the money should be raised by Inscribed Stock, and not by Debentures as was the case with the last loan. I enclose drafts of the following documents which the Crown Agents have prepared at my request with a view to raising a loan in that manner and converting the existing Debenture issue, viz. :-

(1) General loan and Inscribed Stock Ordinance;

(2) Order in Council authorising the Crown Agents to make the decla- ration identifying the Stock under the provisions of the Colonial Stock Act 1877;

(3) Declaration by the Governor under the provisions of the General

Loan and Inscribed Stock Act as to conversion of existing loans

(4) Request to Crown Agents to act as Agents for management of

Inscribed Stock and Conversions;

(5) Ordinance authorising an issue under the General Loan and Inscribed Stock Ordinance, where the contribution to the sinking fund is to commence from the date of issue of the stock; and

(6) Ordinance authorising an issue under the General Loan and

Inscribed Stock Ordinance, where the date of commencement of contributions to the sinking fund is deferred.

4. It is important to adhere closely to the wording of the enclosed drafts, more especially as regards Nos. (2), (3) and (4). As the public works to be con- structed under the loan now authorised will not be immediately remunerative, it may be well to use the form of Ordinance which defers the contribution to the sinking fund, and to allow such contributions to commence (say) three years after the date on which the interest begins to accrue. The Ordinance should state that the loan is "for the purpose of constructing the public works set forth in the schedule to this Ordinance," and the works specified in paragraph 2 of the present despatch or such of them as you decide to charge to the loan should be mentioned in the said schedule.

5. With reference to the last paragraph of your despatch No. 140 of 19th April last, I have to request you to furnish the Crown Agents with the following particulars, viz. the statistics of revenue and expenditure and the amount of the shipping at Hongkong for the last ten years, and for the first half of the current year, and the present amount of the public debt.

6. I should have wished that the issue could have been deferred, but as the balances are already exhausted, and as the existing commercial depression would preclude the realization of assets by the sale of land, any further postponement of this step may be undesirable.

7. In any case I should not be prepared to approve the suggestion-made by the Committee that further advances should be obtained from the local banks. The disadvantages of that method of raising money, and the comparative advantage (on the whole) of borrowing in this country in gold when borrowing becomes necessary, were pointed out in the Secretary of State's despatches No. 5 of the 30th June, 1885, and No. 21 of the 2nd February, 1886.

I have, &c.,

KNUTSFORD.