The Hawaiian gazette., 1914-10-30
CONTRACTORS MAY
TAKE BONDS UNDER
C0NkL|NG SCHEME
Territorial Treasurer Has Plan.
Whereby Public Works
i Could Be Paid For
RELIEF SUGGESTED IS
CONSIDERED FEASIBLE
Attorney General Rules That
Governor Pinkham's PROPOSE
ton Is Not Tenable
prom Thur.day Aavertiser.l

Y
Where Governor Pinkham failed, be-
cause his "schemeD for the disposal
of bonds to contractors in lieu Of cash
fer work performed has been declared
untenable in an opinion given ycster
day by Attorney General Ingram NJ.
Stainback, D. Lloyd Conkling, terrific,
iial treasurer, sees way out Of the
trouble.
,'My scheme is just one safe way
OF heating the devil around the
bush, I, explained Mr.. Conkling to-
The Advertiser last night.
~ think / have figured out n way
in the matter Of handling the bond
propositions, and, If am not mistaken.
the attorney general does not think
there will be any pilikia about IL, al.
though he could not agree with the
scheme discovered by the Governor.
Bonds to Be Sold to Contractors
"My scheme is TO have the contract.
ors make regular bids for the work
required to be done, as they do under
ordinary conditions; but there must be
en- understanding between the super
intcndent Of public works and the ter
ritorial treasurer to the effect that the
contractors will purchase these bonds,
upon the completion of the work they
undertake TO do, at private sale, the
sale price being at an advance of a
small fraction of one per cent above
par This advance is necessary be-
cause the law requires that the dis.
posal Of bonds at private sale shall be
at figure higher than that obtained
at the last public sale, and in this case
that was at par.
Now, when the work of the contract.
ors is completed, according TO the con
tract, the territorial auditor will issue
a warrant, which may be presented at
the treasurer s Office in payment for
the bonds, or may be deposited in the
bank and a certified check issued which
may be presented at the treasurer q
office, for which check the bonds win
be turned over to the person presenting
the check.
win Be Bona Eide Sale
uEither Of these ways, / think, will
be bona fdo sale, and the scheme IL
just ono safe way Of beating the devil
around the bush. -
Treasurer Conkling received cable
message yesterday from the United
States Mortgage and Trust Company Of
New York, Informing him that 1880
bonds were being mailed, registered
and fully insured, as requested last
week by Mr.. Conkling. In the lot
there are 1900 bonds Of the 800 de.
nomination, 500 of $500 and $50 of
$1,000, making $4,000 Of the new bond
issue of $l,430,000 authorized by the
last legislature and approved by the
President.
should the $750ooO worth of bonds
be disposed Of, harbor work almost to
that amount will be begun and prose.
cuted TO completion. This work is very
urgent, and the harbor commission is
anxious to see the money in sight in
order TO go on with the work.
Governor Pinkham's scheme of dis
posing Of the bonds direct TO the con.
tractors in lieu of cash, mentioned in
The Advertiser last week, did not find
favor with Attorney General Stainback,
up TO whom the Governor passed the
buck in regard to the legality Of his
scheme. 81
Contrary TO Territorial Law
In rendering his legal opinion on the
question the attorney general says, in
part.
"If the legislature had intended that
the contract price of any Improvement
might be paid in bonds, there is no
reason why the intention should not
have been declared, as was done 10
Act 1871, Session Laws 1913, providing
for street improvements. PAGE l9S, see
tion IL of said act provides that:
% Bonds SO issued may be used by
the supervisors at par to pay the whole
or any part of the contract price OF
amy Improvement made as aforesaid, 'or
in the event that such bonds are not
so used they shall then be sold TO the
highest bidder or bidders therefor,
.- and the proceeds thereof shall
be so applied
"'Disposing Of bonds by issuing them
TO contractors in lieu of money pay,
ments could not be called sale by
public advertising for tenders. Con-
sequently the sale (if such it could be
called) would have TO be at figure
Above the last sale, which in this case
was par. IT is clear that the almost
inevitable result Of paying contractors
in government bonds instead of money
will be that the contractors in making
their bids in effect will discount the
bonds. .t
Bonds Would Be Sold Below Par
''In other words, the practical result
win be that the bonds will be sold be-
low par. Few, if any, Of the contract.
ors could take the bonds simply as an.
investment, hut would have TO arrange.
TO dispose Of them, PROBABLY at a dis.
count 70 investors. In making their
respective bids the contractors would
have TO take into consideration the
price they could obtain for the terri
torial bonds and mark up their bids
accordingly.
9Then, too, another factor to be con
sidered is that many otherwise compe,
tent contractors, especially those work.
ing with small capital, could not bid
unless the payments be made IN money,
"a more serious objection is whether