The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1914-01-23

len Of debt If the property were
spending 5000, 100000 per year Ia inter-
est, and at the same time not reducing
its Obligations, this outlay would not
benefit the property. in other words,
the plantation would not be splitting
wen, although apparently so, instead
OF making some progress, for although
during the same period all Of the per-
nanent equipment. such as mill, pumps,
ete, might have been maintained, the
time would come when all Of this equip
meut would have outlived its usefulness
and would have to be replaced, with
no funds or means available for replace
ment. Any reduction made in interest
charges naturally Influenced the cost
OF prediction to the plantation to inst
that extent and any decrease made
n the total obligations of the com
panT added to that extent to the value
II the property.
Advantage Of Good Times.
.''There are few plantations in this
Territory that have had, at one time
or another, bond Issues outstanding, or
that still have bond issues outstand-
ing and are in a position to do so, or
have been in a position to do so, that
have not during prosperous times pro
vided for the future by retiring far
more Of theseibonds than necessity cali
cd for in the deeds Of trust securing
same, rather than combining themselves
to retiring the amount specified in these
leeds and paying the surplus in divi-
lends: by this action reducing their
obligations and their interest charges
and placing themselves in far safer
position TO meet future contingencies
which might arise in the sugar BUSH
ness. In other words, using every pre-
saution in good times to protect them
elves against bad times which might
follow.
"While there are several presidents
for sinking fund, with a cumulative
feature, in past financial irarsnetions
in this Territory, still a clmu'atiye
sinking fund is unusual, and In the
first instance was regarded with sls,
picion. In other words. &c the $50,
10000 per annum cumulative sinking
fund TO be derived from profits, would
only be an advantage TO the stockhold.
ers OF yonr company in good times ami
ON the other hand, wonld tc a disad
vantage 10 y0iir stockholders in had
times, your Committee is of the opinion
that notwithssanding the prosper us
times Of 1911, the future of the slgsr
Industry was not sufficiently insured, 10
view Of possible tariff IeeislatiSl and
the Increasing total OF the world s ss:s,
ar crops to have wa rnn'cl yen direc,
tors or agents in embodying this at
ure in the new bond issue.
cit was only after going into thi.
matter most fully and exhaustively,
and after preparing tables upon various
prospective annual profits, that your
committee arrived at llnanimoR en-
dorsement Of this particular provision,
As an illrstIation, under the old bond
issue with its six Ier cent per aunun
interest provision, and ten per ceat of
The net profits as provision for
sinking fund. II would take upon an
average Q gross profit, including main
tenanee AMI depreciation. hut, exSIl-
sire Of interest. Of approximately $40.
10000 per annum 10 leave net amount
sufficient 10 pgy the interest up,n the
preferred stock issue, or $42 900 90 Der
annum. This amount OF $l70,b00.0 90
would lie disposed Of as follows:
Interest upon bonds 1920 ,O00. 90
SINKING fund ....s., 5000. 90
Dividends, preferred stork 42,0O0.OO
Surplus to apply some fu-
ture time as a dividend
upon common stock ..s. 100000
III tA. .tt ~ 3 ...n 49,. ~,