The Daily bulletin. [volume] (Honolulu [Hawaii]) 1882-1895, 1892-07-26
z, T.
Dairn RuE1efta
TUESDAY, JULY 2G, 1892.
RORNER'S BANKING BILL.


Of paper or rag" money. Horner's
Banking Bill is little more or less
than a measure to provide a paper
currency for this kingdom. Whether
that currency would he rcdcemable !
or irredecmahle does not depend one |
iota on Mr.. Horner's theory or the |
fat of the Legislature. 1t depends
on the laws of finance, with which
plain, everyday people can only be
made acquainted by common-sense
discussion. Thus, in the United
States, the last few months have
witnessed decided setback to the
free silver agitation in the United
States, which setback is attributed
no doubt correctly to the very gen
eral discussion of the question.
Falacy cannot endure against plain
facts with intelligent people.
There are some points in Mr. Hor-
ner's bill and treatise thereon which
seem inconsistent with each other
and at variance with sound policy,
on merely casual reading of the
provisions and the authors commen-
tary. The bill broadly speaking
contemplates an extension of the
Postal Savings Banks functions to
those of general commercial bank
of issue. This new bank, to be
called the Bank of Hawaii, has no
capital and no property on which to
base its issue. 1t is to issue notes
based on the property of those to
whom it loans the said notes. Those,
the borrowers, are both the Govern
ment and private persons.
One of the most glaring inconsist
encies of the commentary with the
measure itself will be seen in the
| following quotations. The treatise
says: "The objection urged that 'if
the Government had bank of their
own from which to draw money, they
would abuse that right and soon run
everything into the ground Such
ObjCctors have never examined into
the merits of this bill or they would
have seen that the Government could
only borrow of this bank by permit
of the Legislature; the amount to be
borrowed must be specified, and the
security also provided by the Legis-
lature." That is what the author
says of the bill, but the bill itself on
that score meagerly says, section 2G,
"The Government is hereby empow-
cred to borrow money from the Bank
of Hawaii by depositing as above
the necessary amount of its own law
full bonds as security" "As above
only indicates a preceding general
provision prescribing Government
bonds as among the securities to be
accepted by the bank for loans. The
bank, it must be remembered, has nc
money but its own notes until tho
public deposits hard coin to compose
more Trustworthy medium. There
fore, the query arises as to what
sense there is in the Government eX.
changing one of its promises to pay
(its bond) for another of its pro
misses to pay (its notes).
Mr.. Horner sets great store by the
history of the American greenhack
which was employed as a means fo
raising funds to prosecute the wa
against the seeded States. Tn
| greenback set forth in effect that on
year after the close of hostiltes tn
bearer would be paid the amoun
/. therein specified at the national treas
ury. AS the fortunes of the Unio
rose or fell so the purchasing powe
of the greenback increased or de
creased. There was nothing benin
it but the credit of the national Gov
ernment, and when that credit suffer
ed from reverses in the field tn
Governments promise to pay wa
+, correspondingly discounted. AitC
the war, when the national industriC
> had revived, and solid money az
cumulated in the treasury, paymer
of the Government notes in speci
was resumed, when they immediatel
q jumped to parity with gold. So
is only the substantial value benin
it which gives paper currency of an
kind purchasing power and valu
as medium of exchange. Th
leads to an examination of what is
be at the back of Mr.. HOIner's shil
Dlasters. which would extend IL