The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1905-09-15
WOULD TAKE
BOND ISSUE

yesterday that the. Hawaiian Trust Co. 1
has made a verbal offer to the Terri |
tory, which 1t win willingly confirm
in writing at any time, that 1t is ready |
aud willing to purchase any amount Of I
Territorial government bonds bearing |
8 1-2 per cent at 9s.
1t is well known thst there is little |
probability of the Territorial govern
ment beginning to redeem its bonds for
some time TO come. Under the Organic
Act Territorial government bonds must
provide for redemption in not less than
five years and not more than twenty
years.
"The question isl said Mr.. Gait,
"is it not going to be advisable for our
government to issue 3 l-2 instead of A
per cent bonds even if it has to sell
) 1-2 per cent bonds at a discount of
. per cent? In five years time a per
cent bond sold at 101 1900 will net
3 "a per cent per annum. In the same
time 3 IL per cent bond sold at SO
2-10, which is approximately SO, will
net 3 $40 per cent per annum.
consequently it would be to the
advantage of the government to sell
bonds at 3 1-2 per cent even if they
were sold at IS, for the following rea-
sons:
'Before any of these bonds are re-
deemed by the government the inter-
est will be in favor of the territory.
eff we can once sell IL per cent
bonds and establish that rate of inter
est, there is little doubt that future
sales can be made at the same rate of
interest at par, if not at premium.
~ believe, in the event of an issue
of Territorial bonas being made at a
dow rate of interest, that it would be
necessary to advertise for bids, regard
less of the above offer made by the Ha-
waiian Trust Co.. and am of the opinion
that l-2 per cent bond could be
sold at par.
1t is going to be necessary for the
Territory to make further bond issue
IN order that government work may be
carried on.
When Governor Carter as secretary
of the territory went to New York to
float the first issue of 100000 Terri
torial bonds, he was authorized to sell,
y necessary at a discount of 2 per cent
and the bonds were to bear not more
than five per cent interest.
When he got there and went into the
matter, through friends and influence,
he arranged to float those bonds at
IL per cent and sold at q little over
par.
The following year another million
was issued bearing IA per cent and
these bonds were sold at slightly
higher figure than was the case with
the first issue.
When j. r. Gait, treasurer of the
Hawaiian Trust Co., was in New York
early this year on a business trip he
found that it would be possible to re-
fund all the outstanding Territorial
per cent bonds amounting to over $780,
900 and which at that time were re-
deemable with the 4 per cent bonds and
to sell them at par. That means
saving of l per cent or over $4,000 per
year on the total outstanding 5 per
cent bonds.
Gait Immediately cabled the govern
ment officials here and secured through
the Hawaiian Trust Co.'s correspond
cents, the United States Mortgage and
Trust Co. in New York, without any
charge to the government here, an opin-
ion from Dillon g. Hubbard covering
condensed details Of the proper legal
form in which the Hawaiian legislature
should pass bill covering the refund
ing of these 5 per cent bonds. This
opinion was, through the courtesy of
the United States Mortgage and Trust
Co., cabled to the local government.
Judge Dillon, who assisted in render
ing the opinion, stands higher than any
attorney in the United States as regards
an opinion on the issue of government
bonds.
AS everybody knows, the final out
come of the matter was that the per
cent bonds were refunded with the A
per cent bonds and were purchased by
W. G. Irwin at premium of consider
ably over l per cent.
This goes to show how the credit
standing of the Territory has been i'm
proving and increasing in the East.
Where n start was made to float
per cent issue the Territory has sue
ceeded in selling its bonds bearing in
terest at 1-2 per cent, then IA per
cent and finally per cent.
In this connection Calvert Brewer,
secretary of the United States Mort
gage & Trust Co. will arrive here on
the 9th inst. remaining here week
before proceeding to Japan.
There has been great deal of in
terest evinced as to why such concerns
as the United States Mortgage & Trust
Co. should step in, in SO apparently sim
pie a proceeding as a local bond fiota-
tion. This firm UNDERWRITERS the bonds
which would find difficulty of sale if
the underwriters guarantee were not
attached. for there would then be no
ready way of knowing if the sigma
lures on the bonds were genuine or
otherwise.