The Hawaiian gazette., 1899-03-14


days sgo. that the visible" cola IN toe
Islands vas about sl.s00.00o Hos
much thar. IL 81 Invisible cash, no one
can estimate unless Ne Knows just sow
much has been exported 10 Asls. and
how much OF Il Ia boarded here.
In the statement that the yisibi. cash
Is about si.s0ooO0. 4, appears that
nearly one-half OF Il IL locked up in
the Government vaults.
II was said 10 these columns also.
that the financial history Of the Main
land during the period lssi.lssO
showed that when one-tenth OF the
money In circulation In the States was
locked up In the Treasury Department
the financial interests demanded, and
succeeded IN causing the Treasury de-
partment to let that cash 80 out into
business channels. In order to avoid
stringency.
Owing TO our peculiar and extraord-
mary conditions. 1t does not at all fol-
low that even the locking up OF nearly
one-half OF our coin will produce any
strigency here. so long as there Is
confidence" and any large amount of
cash is not wanted by the business and
speculative interests.
There is, however, another aspect of
the case which should be considered.
What is the effect of this locking up of
coin on the rate Of interest?
In the great centers OF trade Cheap
money" stimulates commerce, and ag-
ricHltural operations. And money Is
cheap when there Is abundance OF 1t.
Until recently money has been loaned
on call" in New York, at two per cent
per annum, and in London and Berlin
at less rates. Gilt edged securities in
those large money centers return hard
ly four per cent interest. The cash
held must bring some return, and its
competition for absolutely good secur-
tiles lowers the rate of interest and
dividends.
Now here is an extraordinary fact.
II the amount of cash in the Islands is
nearly s5,0OO,0OO, as Minister Damon
believes. and he certainly should be
good authority for the statement, the
amount of cash in the Islands Is over
$40 per capita, or nearly double the
amount per capita ON the Mainland and
far above that in England. This enor-
nous amount per capita should make
the rate of interest here lower than in
any place in the world. At rate per
capita on the Mainland similar to the
rate here. Interes, would be much lower
than it is. But in spite of the large
amount per capita here, the rate OF in
terest in commercial affairs is decidedly
high.
II the security on which loans are
made is good there must be some rea-
son for the existence of this high rate.
On the Mainland the existence of the
high rate is due, as rule, to the scar
city OF money. But there Is, as we
say, more money here per capita, than
in any community OF the world IL Mr..
Damon's estimate is correct.
II his estimate is not correct, and
the visible coin is only slS00,000, and
nearly one-half of that is locked up in
the Government vaults, there is at
once a sufficient reason for the present
high rates OF interest.
High rates Of interest do not affect
speculative movements or curtail them,
provided only the money or credit is
to be had, and 1t is believed that the
profits will cover the high rate. But
they do affect the general business in
terests.
The object in presenting these views
OF our financial condition is chiefly to
suggest to the younger men, who are
rapidly becoming the leading business
men, that 1t Is worth while for them tc
take the time to study our fnancia
conditions, SO that they may act intel
ligently when at some time in the fu
ture, financial wisdom may be OF value
Senator sherman, in his best days
and when Secretary of the Treasury
said, that the repeated financial disast
ers We're due to the ignorance of I'll,
bank presidents OF the eastern cities
who were retired dry goods jobbers
and grocery men. He said that anyon,
could run bank in ordinary times
but when trouble came they were Xix,
land lubbers on ship that was in tn,
breakers. Even some OF the bank pres
idents said his statement was true, bu
they retorted do you know any nor
about 1t than We do?" There are real
ly methods of banking that are bette
than "the rule of thumb" But the bet
ter methods are not TO be picked up II