| Level | Item |
| Reference Number (click to see whole series/group) | G1/376 |
| Extent | 1 file |
| Title | GOVERNOR'S FILE: NEWFOUNDLAND |
| Date | 11 Aug 1933 - 29 Nov 1933 |
| Admin History | Newfoundland appealed to the Bank in November 1931 for a $1m loan to bail out its Savings Bank (which had liabilities of $1.6m and liquid assets of $36,000). Although the bank's liabilities were charged on the consolidated fund, this too was almost exhausted and the Bank refused to be rushed. In the event the Canadian Banks came to the rescue, averting default on bond interest payments due on 1 January 1932. Matters drifted until December 1932 when Newfoundland agreed to the appointment of a Royal Commission in return for help from HM Government and Canada in meeting the 1 January 1933 interest payments. The Commission reported in November 1933 that Newfoundland had no prospect of paying its way even in normal trade conditions and found evidence of extensive graft and corruption. The Newfoundland legislature agreed that the island should be placed under HM Government appointed Commissioners. Newfoundland's external indebtedness amounted to £17.5m, much of it held in the United States (US). The Bank and HM Government were keen to avoid a formal default because of the damage this would do to the British Empire's credit standing and to financial relations with the US. They therefore devised an offer to stockholders which provided that holders of trustee securities (£2m of the total) should continue to receive all payments due to them. Other holders were offered conversion into a new 30 year 3% guaranteed stock which although involving a cut in coupon and deferment of repayment was worth par, more than the existing market value of the unconverted stocks. The episode (not covered in Richard Sydney Sayers's history) sheds light on the responsibility felt by HM Government and the Bank to lenders to Dominion Governments and in particular to United Kingdom (UK) holders of trustee stock. |
| Description | Policy papers. However, the file is chiefly concerned with the 1933 White Paper. |
| Original Reference | S90_1 |
| Keyword | United States of America (USA) |