No. 176.
Mr. Frelinghuysen to Mr. Comly.

No. 118.]

Sir: Your No. 217, of the 8th instant, in which you report the political tendencies now making themselves manifest in the islands and the movement in the direction of onerous taxation of capital and property to a degree which cannot fail to work injury to the foreign interests and enterprise which have built up Hawaiian prosperity, has been read with attention.

It cannot be doubted that indiscriminate and reckless exercise of the tax-levying power by those portions of the native element who have little [Page 344] or no taxable interests at stake must react harmfully on the essential elements insular prosperity. Independently of the consideration that a large part of the operating capital and mechanical enterprises of Hawaii has been contributed by citizens of the United States, this government feels itself so kindly bound to Hawaii by the traditions of past intercourse that it would not hesitate to remonstrate with the Hawaiian Government against the adoption of a short-sighted policy which would be alike harmful to existing vested interests and repellant of the further influx of capital from abroad.

While this government recognized from the first the constitutional sovereignty of Hawaii, and still recognizes her right to adjust internal matters of taxation and revenue on constitutional principles, yet it cannot permit to pass without very urgent protest in all proper quarters a measure subversive of the material interests of so many of its citizens who, on the faith of international comity, have given their wealth, labor, and skill to aid in the prosperity of Hawaii. And it makes this protest the more earnestly, inasmuch as the treaty relations between the two countries (in which Hawaiian interests were even more subserved than our own) are such as to give the United States the moral right to expect that American property in Hawaii will be no more burdened than would Hawaiian property In the United States.

I am, &c.,