The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1899-05-09
nong BlNks NhEbEp

ln rup.rI.HU 10 ..a amnuI 0f boo.
usss OOH. Dol .u,.g I.IsHas. .ls sa1f
] iDE capital De- totally Inadequate o..
|,IIIIrE 30 Goo Amyroan Standard
I lh're ure many small place ON UU
Mainland who're vita popula .ion o.
lave 10 t'n thousand ther. az
four or mote bsnks With more capita
than our banks have although "a. tDla
business Uf each town BE- Tar Jess than
! The busingas done in Hawaii The 10.
tai number Of national banks on ths
Mainland IN 1897 was 3.GIs, with o cap.
ital OF sG,i G73.3sj. To this number
should be added the State and private
banks. the number Of which with their
capital l. not here given. The total
banking facilities are much greater
therefore in proportion than they are
in these Islands. II Is not the number
Of people, but the value OF trade and
commerce that really fixes the amount
OF banking capital required. Hereto
fore the agents OF the sugar planta-
lions. with several banks have met
the needs OF the industries, and have
furnished the capital required for our
trade. Conditions have changed. The
expansion OF the sugar industry de-
mands an increased amount OF loan
able funds, and the establishment ~
more banks will facilitate commerce.
One OF the advantages OF National
bank Is that Ii circulates notes, which
are virtually guaranteed by the nation
al government. While the government
demands from the national bank a de-
post OF national bonds which secure
the redemption of the currency Issued
by the bank. the income from these
securities as well as the interest on
the currency issued also accrues to
the assets of the bank.
More than all. these national banks
are subject TO close inspection by the
government and with few exceptions,
the inspection Is rigid. Inspection is
a whip in the hands Of the government
that Is held over the bank officials, and
prevents, as a rule, although not al
ways, the wasting OF the banks re-
sources, by incompetent men. Our
local banks have been singularly free
from dishonest management in the
past. but it is the experience OF all COM
merCiaI communities that the manage
ment of financial Institutions must
change from time to time, and there
can be no perpetual certainty of good
management. The case of the Barlngs
illustrates the uncertainty of IT, even
in the oldest commercial community
Of modern times. There Is at present
but one local bank in these Islands
subject to rigid examination. The
other banks are unquestionably man
aged with skill and honesty, but their
safety. so far MS depositors are con-
cerned, depends upon the high charac-
ter of the management.
AS all values here of land and Of
merchandising. depend upon the CON
ditiOns of the sugar industry, the sue
cess of banks must depend upon the
condition of that industry. That Is.
the banks as well as individuals have
their eggs in one basket. Diversified
industries would avert this financial
danger. There are none.
II Is generally believed that banks
establish industries. 1t is not their
object to do So They serve to facili-
tate trade, and encourage manufactur-
ing and commerce already established,
Where banks have undertaken to
build up a place" they have. as a
rule, failed. These Islands furnish ex-
captions TO the rule. Banks when
wisely conducted are only pawnshops
on large scale, mere money lenders
on large scale and not promoters.
II Is for the facilities they offer in
conducting the business of established
industries that they are OF the very
highest value. and therefore a new
bank, conducted by intelligent men. Is
an important aid TO the commerce Of
the Islands