The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1899-11-01
THE Financial SITUATION
VIEWS on ONE REMEDY THAT Is
PROPOSED.
Bankers Discuss the Proposition os
Loaning Surplus Funds-The Legal
Right and the Probable Effect.


BY the first Of next year. it is esti- !
mated there will be a cash balance in !
the Government treasury of 81 600 600 or
more
The financial situation and the rela-
| ton to it of the very large cash balance
in the treasury is receiving much at
tention. Various opinions have been ex-
pressed and various suggestions made
! The Star recently addressed the follow
| ing letter and appended questions to
! the banks of the city. The replies re-
ceived are here presented:
! There has been much current dis
| Cussion Of the large cash balance in the
! Hawaiian Treasury. The suggestion
has been made. both in print and orally
| that If the Government would loan the
| Treasury funds beyond the current
| needs, to the banks, the banks could i'm
turn loan it commercially and thus re-
lieve the so-called tight money mar
ket.' The discussion so far has been
largely speculative and somewhat in
the air
with a view to accurately ascertain
ing the facts, and existing conditions.
which have hitherto been assumed in
this discussion, The Hawaiian Star
would respectfully request an express
ion of your views and a statement of
the facts within your knowledge on the
points suggested by the enclosed ques-
tions. Any other information in your
judgment requisite to a proper consid-
GRAFTON of this subject not suggested
by these question, is also asked"
The appended questions are included
in the answer of G. NJ. Cooke. president
Of the Bank of Hawaii, which follows:
In answer to the three questions you
; have submitted in regard to the finan-
| Cial policy of our Governments so as to
place the large reserve now in the
Treasury in the hands of the people
and thus. relieve the present stringency
in our money market, / beg to reply
as follows;
In your opinion has the Government
the right to loan the Treasury money,
as has been assumed in this discus
siOn?" | have always understood that
lister of Finance to loan out the public
funds, and in view of there being no
provision for Bank Commissioner to
examine into the affairs and books of
, our banks, it is we'll that the public
trusts are so we'll guarded. At the
same time. there may come periods
70 when such restriction will be a serious
t detrment to the public, as was the case
. in 1887, when the Cabinet, by permission
- of the PriVy Council, loaned to one of
- our banks a large amount to tide over
a period when money was much needed
Has not this case established a preced-
, ent? And if a part of the surplus funds
We're loaned to our banks. secured by
/ Hawaiian Government bonds, would nOt
I the money be just as secure as If locked
in the Government vaults?
>. IF so, could your bank advantage
, Qusly use say $3.50, coo or part of that
- amount, paying the Government the
rate of interest you allow on fixed de.
posts?" In reply to this it is my opin.
ion that all the banks could at the
y present time put out a large amount
and thus accommodate many parties
they are obliged at present TO refuse
and who need funds for other thar
# speculative purposes. AS to rate of in
= terest, it should be considered that tn
d public are to be benefited by such
s transaction. The T.. $. Treasury doe
n not charge interest on issues of cur
J. renCy by National Banks for L. 5
a bonds deposited for redemption. Gu
IS Government would be benefited oI
every dollar thus released by taxes up
on the same, as well as on money useC
for permanent improvements.
Il 3. IF so would the financial situation
= be relieved and the general business in
s terests of the community bettered?
10 The question hardly needs an answer
10 as everyone understands that when al
=, abundance of capital is obtainable, i'm
n provements are bound to follow and al
is departments of trade thereby improve
IS ed.
n We are certainly at a disadvantag
here at these Islands being so far ava
a from the worlds money Centers, and /
y is not surprising that at times, espe
cially when such a large drain come
on our community once a year 70
n taxes, that a stringenCy will occur, AM
# especially at the present when so mucl
capital is demanded for the large suga
enterprises that are being established
Respectfully,
,rr,c ~ ,,,r-r-