No. 207.
Mr. Daggett to Mr. Frelinghuysen.
Honolulu, May 31, 1884. (Received June 14.)
Sir: The throwing into circulation here of nearly $1,000,000 of the new Hawaiian silver coinage has created a demand for gold so pressing, or, rather, has prompted the sugar agents and bankers to keep so large [Page 287] a part of their gold funds in San Francisco, that other than United States silver suffers a discount of from 5 to 8 per cent, in the purchase of exchange on California. To meet the gold wants of the Government, and possibly in the hope of compelling a return of a reasonable proportion of the gold for which the products of the islands are sold, and which is left in San Francisco for the benefit of exchange, the cabinet council adopted a resolution on the 15th instant instructing the minister of finance to enforce the law of 1876, and on and after the 1st of June proximo compel the payment of all customs duties in United States gold coin.
This action occasioned very considerable comment, and the Honolulu Chamber of Commerce took it under consideration; but no means of relief could be devised by that body beyond limiting the silver circulation of the Kingdom to Hawaiian and American coinage, and reducing its legal-tender capacity from $50 to $20.
On the 28th instant a resolution was passed by the Legislative Assembly requesting the cabinet council to defer the enforcement of the order for the collection of customs duties in United States gold coin until the currency bills before that body could be more thoroughly considered, and on the 29th instant the cabinet council adopted a resolution according to that request.
The failure of the Hawaiian Government for years past to enforce the law of 1876, requiring the payment of customs duties in United States gold coin, has been a continued violation of the spirit of the reciprocity treaty of 1875, and with silver at a discount of from 5 to 8 per cent., as it now is, the acceptance of such coin in the payment of customs duties is, in effect, an unwarrantable reduction of duty charges to shippers to the extent per cent, of the discount, and to the same extent are the free products of the United States deprived of the benefits accorded by the treaty.
Under the circumstances, I feel bound to ask that the law of 1876, requiring the payment of customs duties in United States gold coin, may be hereafter enforced.
I am, &c.,