The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1886-12-28
The LOAN.

We congratulate our morning contem-
porary, the Herald" upon becoming
the mouthpiece Of the syndicate Of Lon
don capitalists" who have recently been
exploiting this country for their own
ends. Above all, We think the Govern
ment is to be congratulated upon placing
its loan in London at I per cent pre-
MUM, although it is a matter of regret
that this 7 per cent should 90 into the
pockets Of the syndicate and not into
those OF the Hawaiian taxpayers His
Excellency Abraham HofFnung, Ha-
waiian Charge d'Affaires at London, We
are told, sent the following dispatch to
Hon. $. N. Damon, of the firm oil Bishop
& Co., and therefore we conclude that
the news is gen uine:
LONDON, December II, 1856
Hawaiian loan enormous success. One
million dollars asked; twenty-five millions
subscribed by public Stock seven pre-
MUM. HoFFNUNG
The plain reading of this dispatch, and
of the dispatch from the syndicate to
Colonel Geo. w. MacfarIane, which we
published yesterday, is that the taxpay-
ers have apparently lost IA per cent on
one-half OF the two million loan in
stead OF making 7 per cent premium.
OF course this statement is subject to
slight modification. The usual commits
sion for floating national loans on the
London market is one-half of one per
cent; but in this case as Hawaii had no
anding in the London market, au-
Ority was given under the original
4 oan Act to pay commission not to
e. coed . per cent on the bonds, saIeable
al par, this commission to include all
cl argos incident to the printing OF
bt nds, etc. Indeed, the schedule ex
pr 'ssly appropriated: '12: Expense
flo ling loan, etc, 86,OOO," which is
ymu IA under 5 per cent of the total
loan.
But the amended Loan Act, approved
October 10, 1886, put it entirely out OF
the power of the Government to protect
the Treasury. 1t made an entirely new
loan, providing that the syndicate should
have the bonds at 90, and guaranteeing
five per cent commission. In other words
the London syndicate was guaranteed
$4,000, GOO e per cent Hawaiian Govern
ment bonds, free of taxes, at 90; and
Mr.. Hoffnung, who should be we'll in
formed of the transaction, says the first
issue of 81 100000 in London was
quoted at seven per cent premium. We
have therefore before us as the result of
the late financial operation this fact,
that 100000 in 6 per cent bonds
were sold or exchanged at Honolulu
for other bonds at 90 per cent of
their face value, thereby losing seven
per cent on that amount to the
Treasury; that 81 100000 were sold
to a London syndicate at the same
. figure; and that when the London
market was tested the syndicate Melted
IA per cent as their share in the
operation, 100000 being placed on
the market. This cannot be re-
garded as very good financing for the
Hawaiian Government; it was admirable
financing for the London syndicate, for
which they should be duly grateful.
We have held all along that 5 per
cent Hawaiian loan could easily have
been placed at par, but that would not
have left margin for plumber. The
financial programme which was cen
gineered through the Legislature" by
Colonel Macfarlane, as the San Francisco
j "Call' not untruly states, did leave u
! wide margin for plumber, amounting to
per cent at Honolulu and IA per cent al
: London, if His Majesty's Charge d'Af
+ flares is to be believed, which we un
p hesitatingly think he is.
"