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Court, and no steps could be taken except with its authority and consent.
Such is the termination of this unsatisfactory and melancholy affair. The settlement arrived at is one that reflects no credit on the Colonial Government, and it will certainly not be calculated to encourage the investment of British capital in New Zealand industrial enterprises.
The Debenture-holders' Committee have had to grapple with a difficult task. Prior to their appointment, the Courts had determined that owing to a legal technicality in the conditions under which the Debentures had been issued, the Debenture-holders did not possess the security on the faith of which they subscribed their money, and which Mr. Seddon has admitted the Colonial Government itself thought at the time had been granted them. That the moral claims of the Debenture-holders were of the strongest description cannot be disputed, and the Council and Committee are convinced that in the long run it would have been to the interest of the New Zealand Government to have recognised them in a just and liberal manner.
Unsatisfactory as the settlement arrived at undoubtedly is, the Committee may fairly claim that by their efforts the sum first offered to the Debenture-holders has been
increased by about 36 per cent., and, indeed, it may be doubted whether in the absence of their action any payment at all would have been made.
Nicaragua Railways Six per Cent. Mortgage Bonds
of 1886 Redeemed up to July, 1904
Rt. Hon. Lord Avebury, Chair
Rt. Hon. Lord Allerton.
F. E. Cooper, Esq.
Hon. Sir C. W. Fremantle, K.C.B.
External Debt per head
F. B. Passmore, Esq.
General Sir Luther Vaughan,
James P. Cooper, Esq.
50,000 square miles.
Gen. José Santos Zelaya.
Edward Thornton, Esq.
Don Santiago Callejas.
HISTORY OF THE DEBT (FOREIGN).
1827. The proportion of the Debt of the Central American Federation (£163,000) taken over by Nicaragua in 1827 was twotwelfths, or £27,200.
No payment was made on account of this Debt until 18741874.-An Arrangement was made, against the advice of the Council, by which the Bondholders received Post Bills bearing 5 per cent. interest, and redeemable in two, three, and four years, at the rate of £14 for each Old Central American Bond. 1886.-Six per Cent. Loan for £285,000, issued at 92 per cent. by the Redeemable at par in 1919. Specially secured by a first mortgage on the Nicaragua Railways and on the Customs Duties.
1894. Interest fell into default on the 1st July.
1895. The Government and the Council of Foreign Bondholders effected a Settlement of the Debt, of which the following were the chief provisions :—
(1.) Interest on the Principal of £285,000 to be paid from the 1st January, 1896, at the rate of 4 per cent. per annum.
(2.) The Coupons in arrear from 1st July, 1894, to 1st January, 1896, inclusive, amounting to £34,200, to be deposited with the Council, and Certificates to be issued against them for 50 per cent. of their nominal value.
(3.) An accumulative Sinking Fund of 1 per cent. on the Principal of £285,coo, to be applied one half to the redemption of the said Principal, and one half to the redemption of the Certificates by purchases or tenders when the price is below par, and by drawings when the price is at or above par. When all the Certificates are redeemed the whole I per cent. to be applied to the amortisation of the principal. (The redemption of the Certificates was completed in July, 1904.)
(4.) A special Tax of at least $1 gold on each quintal of Coffee exported to be assigned as security for the service of the Debt, and to be continued until all the Bonds and Certificates are redeemed. Warrants representing the whole of the said export duty to be issued by the Govern
ment and handed to the Agent of the Bondholders in Nicaragua; the duty only being payable in such Warrants. After the Agent has collected a sufficient sum to cover the whole of the Debt service for the year, the Warrants remaining in his hands to be returned to the Government.
If the sale of Warrants should not, from any cause, provide sufficient funds, the Government to make good the deficiency.
(5.) The Government to have the right to dispose of the railways hypothecated to the Bondholders on surrendering to the Council of Foreign Bondholders for cancellation £200,000 nominal in Bonds of the existing Debt, in which case the Bondholders release all further lien on the said railways.
The Service of the External Debt of Nicaragua has been regularly effected during the past year. The redemption of the Certificates issued in respect of the arrears of interest under the Arrangement of 1895 was completed in July of the present year, and the whole of the Sinking Fund of 1 per cent. will now be applied to the amortisation of the principal of the Debt.
AMORTISATION OF THE DEBT.
The amount of Bonds purchased for redemption by the London City and Midland Bank up to the time of the publication of the Council's last Report was £21,400, at a cost of £12,273. At the two Amortisations which have since taken place (January and July, 1904), Bonds to the value of £4,600 were purchased, costing £2,786. 15s. The total amount redeemed to date is, therefore, £26,000, and the total cost thereof £15,059. 15s.
ARREAR COUPONS CERTIFICATES.
As regards the sixteenth Amortisation of Certificates, corresponding to the half-year ending 31st of December, 1903, only one Certificate was tendered at £5. 18s. The balance of the Sinking Fund, viz., £939. 2s. 4d. was therefore applied by the drawing, for payment at par, of 156 Certificates at £6 and I at £1. 10s.
At the seventeenth and final Amortisation corresponding to the half-year ending 30th June, 1904, the outstanding balance of the Certificates, viz., £121. 10S., was paid off at par.
The following statement shows the results of the Amortisations of these Certificates.