Preheat oven to 350 degrees F (175 degrees C). Grease and flour a 10 inch tube pan. Sift together the flour and baking powder; set aside.
In a large bowl, cream together the butter and confectioners' sugar until light and fluffy. Beat in the eggs one at a time, then stir in the vanilla. Beat in the flour mixture alternately with 1 cup water, mixing just until incorporated. Spread into prepared pan.
Bake in the preheated oven for 60 to 70 minutes, or until a toothpick inserted into the center of the cake comes out clean.
In a small saucepan over medium heat, combine 1 cup sugar, 1/4 cup water, and 1/2 cup butter. Bring to a boil, stirring until sugar is dissolved. Remove from heat, and stir in rum. Pour hot syrup over hot cake. Let soak for 20 minutes.