Evening bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1895-1912, 1906-03-26
LOCKING UP LOAN FUNDS

Deposit of hundreds Of thousands
OF Loan Fund dollars in the Territorial
Treasury. where they will remain un.
Ill expended through appropriations,
again calls attention to the unfortu.
nate system of Territorial finance by
which all this public money Is locked
nm at an expense TO the people. We
are at present urging Congress to
adopt a scheme by which the circulat.
ing medium Of the business community
shall! not be MIXED of the funds col.
lected by the Federal departments. Ha.
wall wants the money kept here and
put into circulation. The demand is
! legitimate.
At the same time this Territory in
its system of public finance sells its
public works bonds and forthwith pro.
ceeds to lock up every dollar of II In
the Territorial Treasury, to be drawn
on only when needed for the work out
lined in the appropriation bill. In 9th.
err words. we are doing Just what we
ask the Federal Government not to do
taking money out of circulation. b
Notwithstanding the proposition has
been bitterly fought and was defeated
at legislative session, there Is no
good reason why this money now tied
up in the Territorial Treasury should
not be placed on deposit in the banks
Of the Territory, proper protection be.
ing guaranteed by the deposit with
the Territory OF security bonds by the
banks accepting the funds on deposit.
Some people think this plan would
help only the banks. because bankers
| have suggested II from time TO time.
They don't realize that the more mon.
/ ey the banks have on deposit, the
lower the interest will rule. phey
don't stop TO think that they as tax.
payers are paying interest on the sew.
eral hundred thousand dollars lying
idle in the Territorial vaults. The
present method. compared with what
ought to be. is not unlike the man
who puts all his savings in his stock
ing and deposits II carefully under the
bed. and his intelligent fellow-citizen
who deposits his funds In a bank
where II is of some use to the commu
nifty and he draws interest.
San Francisco has walked up to the
follies of locking up public money
wnen II might better be OF use to the
people in their business. The Com
mercial News" OF San Francisco, dis
cussing the same principle In its rela
ton to tax funds. says:
THE well.regulated bank will al.
ways make money; II acts as the agent
OF the people, receiving surplus funds
OF one portion of the community for
safe'keeping and loaning to another:
as the community prospers, so does
the bank and any condition which ad
/ versely affects the bank has much
! more disastrous effect ON the commu
uity.
when the withdrawal and locking
up of large amounts of tax collections
. occurs at n time that money IL In
short supply, and as a result panic Is
started. the well.reguated bank will
: still prosper. Its deposits will be less
ana It's loanable funds smaller. but IN,
, Interest rate will be proportionately
, higher; the merchant who is handling
, the products Of the country will suffer;
: he will have difficulty In borrowing
| and what he does get will cost hin
, more; he will be forced to sell his
goods and as others are in the sam,
position the price will be low"
/ Hawaii can well understand this sit
/ uation as experienced In the financia