The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1896-04-14
Netting to the company. :.
..S3,300,000
Redemption of old bonds at

Redemption of old bonds at
| par 30 ,oOO,OuC
| Company B has placed its loan, PAID
all expenses, amounting to 100000, and
cancelled old bonds amounting to 3d.
| 300 600 Total expenditure for new loan
| 81 900 000 The treasurer suggests that
| the income will allow the payment OF
| the interest on bonds ga ,000,00O) at
per cent, which amounts to 100000; an
annual sinking fund of IA per cent. on
total bonded debt ($4,000,000), which is
$50, 1000.
He further suggests that this sinking
fund, paid annually and invested at 3
per cent, will in forty years (at ma
turity of the bonds) amount to $685.
900.
United States 4 per cent. bonds, al
though sold at premium, can be
bought at a price to net 3 per cent,
which the treasurer recommends as
good safe investment. The interest we
were paying on the old loan of 6-17
on So ,30O,0 900 amounted to 1912, 437.5 so an
nually. The present interest, including
the sinking fund, amounts to $4,000
annually.
We have, therefore, a net annual
saving, besides the sinking fund Of So,
1880. If we invest this also in United
States bonds netting 3 per cent. we shall
have from this source in interest and
principal at the end of forty years-or
at maturity of our $4,000, 900 loan, 1914,
III 25, which amount added to the sink
ing fund of So, 983, 900, makes a total
sinking fund of $4,177, 171.25 with which
to cancel the London debt of 81 900 900.
Company A may be found at their
old location, where they continue the
home loan," pay their interest regu-
larly and promptly, and at the end of
forty years generously bequeath to pos
terity the old debt of $3,300,000.
1 do not propose that this Govern
ment should follow the example l have
given of Company B and set aside a
sinking fund, if the money is needed for
sound public improvements. But [ have
shown that the present debt of the Gov
eminent could be paid in the same way
out of the possible savings to be derived
from the reduction in interest.
The Government owns land which at
present is as useless to the treasury as
TIE mountains in the moon, and will re-
in so until they are made accessible
by good roads. When the country is
opened up" and made attractive to
desirable, industrious class of settlers,
then and not until then will the Gov
eminent be enabled to sell its now
worthless lands and invest the proceeds
in a sinking fund, which alone should
be more than sufficient to liquidate the
present debt and cover all cost of the
necessary improvements to redeem such
land. The increase of revenue to be de-
rived from the result Of such a policy
would be very large.
To my mind there is great objection
to our stating to the world what we are
willing to pay for the floating of loan.
Let the Legislature fix the maximum
amount of bonds to be issued, and the
rate of interest they shall bear. If the
rate is made mot to exceed + per cent.
or Az per cent" the maximum rate of
interest will be demanded. The same
rule will also apply to the expense; the
full limit allowed by the Legislature
will, of course, be demanded.
3 If the Legislature should authorize
the issua of bonds for the purpose of
consolidating the debt, and possibly al
lowing a margin for urgent improve
menrs, fixed at a maximum limit, and
limit the rate of interest at per cent,
authorizing the Minister of Finance,
with the approval of his colleagues and
the Council of State, to negotiate on
the best possible terms obtainable, the
loan would undoubtedly be made, re-
sulting in the improvement of our
credit abroad, and saving a large am
cunt of annual loss to the public treas
ury. B. F. DILLINGHAM;.
April II, 1896.