No. 206.
Mr. Daggett to Mr. Frelinghuysen.
Honolulu , May 31, 1884. (Received June 14.)
Sir: The commercial and general business outlook of the Hawaiian Islands has been regarded with increasing uneasiness during the past four or five months, and serious financial troubles in the near future are predicted.
This condition is due to a steady decline in the prices of raw sugars since the beginning of the year, and to the notorious extravagance and loose management of a majority of the sugar-planters.
The most of the plantations are heavily encumbered with indebtedness, paying interest at rates varying from 8 to 12 per cent, per annum and compounding quarterly.
[Page 286]As nearly all the available acreage of the islands has been given to cane, other agricultural industries have been neglected, until almost everything consumed, excepting rice, fruits, fresh meats, and garden products, comes from abroad. This has enhanced the general expenses of living, and impelled a corresponding increase in labor rates, which it is hopeless to expect immigration to more than temporarily affect. Hence, while plantation expenses, even with the practice of unusual economy, have been tending upward for some months, the price of sugar has been steadily declining, until it has become a question whether, taking the plantations as a whole, sugar can be produced and sold without loss at current market rates, even with the advantage of free entry into United States ports.
The increased and apparently increasing production of beet sugar in Europe, the opening of competing sugar areas in Mexico, and the growing possibilities of sorghum are all circumstances favorable to a further decline in the price of the commodity to which these islands owe their commercial standing, and planters, as well they may, are watching the market with feverish anxiety.
Hawaiian raw sugars, which two years ago were worth from $130 to $140 per ton in San Francisco, are now begging sale at $95 and $97.50. This means about $80 net per ton to the planter. Can he produce sugar without loss at that price? With plantations free from debt and carefully managed, a small profit might possibly be realized at present prices 5 but few of them are in that condition, and the indications are that many of them will be lost to their owners for their mortgages, while the financial stability of their agents and factors will be tested to the utmost by having the plantations thrown upon their hands by foreclosure at double or more of their market value. Other real values would be affected thereby, and the depression would be general and disastrous.
As an evidence that such a calamity is not altogether unlooked for by the well informed, I may mention that already land-owners have been recommended by the press to devote a portion of their acres to products other than cane, coupled with the admission that should the price of sugar suffer a further decline, say of 1 cent per pound, it could no longer be cultivated with profit on the Hawaiian Islands. Such an event would at once deprive the group largely of its commercial importance, and place it back in its condition of twenty years ago, for it produces but little to-day besides sugar and rice to exchange for the commodities of other lands.
The sugar yield of 1884 will approximate 60,000 tons. What it will amount to thereafter will depend upon the price.
Very respectfully, &c.,