No. 209.
Mr. Daggett to Mr. Frelinghuysen.
Legation of
the United States,
Honolulu, June 14, 1884.
(Received June 30.)
No. 157.]
Sir: In my dispatch of the 31st ultimo (No. 152) I
had the honor to refer to the continued collection of Hawaiian customs
duties in silver foreign to the United States and Hawaii and of low
commercial value, when the existing law on the subject requires all customs
payments to be made in gold coin of the United States.
As the silver accepted in the payment of customs duties has for some weeks
past been selling at a discount of from 5 to 10 per cent, in exchange for
gold, I deemed it my duty to direct the attention of His Majesty’s
Government to the subject, claiming that the collection of customs duties in
such silver operated substantially as a reduction in duty rates, and was not
in accord with the spirit and purposes of the treaty of 1875. I inclose a
copy of my note to his excellency, the minister of foreign affairs, under
date of May 31st ultimo.
In his reply of the 3d instant (inclosure No. 2) the minister of foreign
affairs, without referring to the question of the good faith of his
Government in accepting foreign silver at rates above its commercial value
in the payment of customs duties, denies that such silver is accepted at the
custom-house, but at the same time admits that the “gold checks “of the bank
of Bishop & Co., in which the most of the customs duties are paid, are,
through an understanding with the Government, cashed into the treasury in
silver.
This very unsatisfactory explanation seemed to call for a more specific
statement of the situation, and on the 5th instant I addressed a second
communication (inclosure No. 3) to the minister of foreign affairs, showing
that the “gold checks” of Bishop & Co., are or may be drawn for Mexican
dollars at par, and in the same currency may be redeemed into the treasury,
thus giving shippers the privilege of paying their customs duties in the
face value of silver worth from 10 to 12 per cent, less than gold.
To this his excellency promptly replied (inclosure No. 4, June 5), admitting
that the acceptance of foreign silver in the payment of customs duties, if
import charges are thereby in effect reduced, is a departure from the spirit
of the treaty of 1875, which had escaped the attention of His Majesty’s
Government, and promising early action by the Legislative Assembly providing
for the resumption of the collection of customs duties in gold coin of the
United States or its equivalent.
My final note on the subject (inclosure No. 5, June 6), accepts with
satisfaction the liberal and friendly concessions of His Majesty’s
Government, and relies upon the Legislative Assembly to restore the gold
standard in the collection of customs duties.
[Page 289]
To accomplish this object a number of bills are now before the Legislature,
and I feel confident that the payment of duty charges in foreign silver will
soon be discontinued.
Very respectfully, &c.,
[Inclosure 1 in No. 157.]
Mr. Daggett to Mr.
Gibson.
Legation of the United States,
Honolulu, May 31,
1884.
No. 249.]
Sir: When the reciprocity treaty of 1875 was
ratified by our respective Governments the legal-tender currency and
unit of commercial value in the Hawaiian Kingdom, as fixed by Chapter
XXVII of the sessions laws of 1872, were the dollar of the United States
and its subsidiary subdivisions. Chapter XLI of the sessions laws of
1876 repealed that statute, and, among other currency regulations,
provided that the gold coins of the United States should be the standard
and legal tender in the Kingdom, and that thereafter all duties on
Hawaiian imports should “be paid in the gold coins of the United States
or their equivalent.”
For reasons not plainly apparent, the law of 1876, so far, at least, as
it relates to the payment of customs duties, has not been enforced, but
duties on Hawaiian imports have been and are still being paid and
received in the debased silver coins of all countries, and accepted by
the Hawaiian customs authorities at rates from 10 to 20 per cent, in
excess of their real commercial value and as much below their
equivalence with the “gold coins of the United States.”
I am prone to believe that the great injustice to the commerce of the
United States caused by this deviation from the provisions of the law of
1876, as also from the provisions of the statute which that law
repealed, must have escaped the observation of His Majesty’s
Government.
If so, I need but direct your excellency’s attention to the fact that the
character of silver now being received for customs duties was selling
yesterday at a discount, in exchange for United States gold, of 10 per
cent, below the value at which it is accepted by the Hawaiian customs
authorities in the payment of import duties, arid to the further fact
that the acceptance of such silver in the payment of customs charges
operates substantially as a reduction of duty rates to shippers to the
extent per cent, of the discount, and to the same extent are the
products of the United States entitled to free entry deprived of the
benefits accorded them by the treaty of 1875. In other words, the
shipper who pays his duties in silver purchased at 90 per cent, for
gold, in reality pays ho duties at all.
Permit me to say that the liability to customs charges of the wares of
all other nations is an element of the treaty equally essential with the
exemption from duty of certain products of the United States. Hence,
since the Hawaiian Government could not in good faith directly remove
all duty charges from foreign imports, it will scarcely be claimed that
it may do so indirectly by accepting in the payment of duties debased
silver at from 8 to 10 per cent, above its current value. In view of the
increasing rates of exchange, and the manifest contravention of the
spirit of the treaty of 1875 in the acceptance by the Hawaiian
Government of debased silver at rates above its value in the payment of
import duties, I respectfully present the matter to His Majesty’s
Government, and, in a spirit of great friendship, ask that measures may
be taken either to enforce the law of 1876, or in some other manner
acceptable to His Majesty’s Government provide for the payment of duties
on foreign imports in the “gold coins of the United States or their
equivalent.”
I am, &c.,
[Inclosure 2 in No. 157.]
Mr. Gibson to Mr.
Daggett.
Department of Foreign Affairs,
Honolulu, June 3,
1884.
Sir: I have the honor to acknowledge the
receipt of your excellency’s letter of 31st ultimo, in which you express
the opinion that there has been a contravention of the spirit of the
treaty of 1875 between this country and the United States of America in
[Page 290]
the acceptance by the
Hawaiian Government of debased silver at the rates above its value in
payment of import duties, and ask that measures may be taken either to
enforce the law of 1876 or in some other manner to provide for the
payment of duties in the “gold coins of the United States or their
equivalent.”
In reply, I have to assure your excellency that you have been misinformed
as to the facts in regard to the subject-matter of your letter. Silver
and silver certificates are not and never have been received by the
Hawaiian custom-house in payment for import duties, except for
fractional amounts that are not represented in United States gold coin.
The Government has for many years past permitted the substitution of
what are known as “gold checks” for actual coin. These are checks on the
bank of Bishop & Co., bearing on their face the promise of that firm
for their payment in United States gold coin. An arrangement has also
existed for many years between the Hawaiian treasury and Bishop &
Co. for forbearance on both sides to demand gold for payments due from
the one to the other until after a reasonable notice. The numerous
drafts on the treasury which Messrs. Bishop & Co. have to present
are in this way set off against the gold checks for which they are
responsible (including bonds and coupons falling due). In this way the
Government and the bank have acted the part of a clearing-house for
innumerable transactions, and saved the community much inconvenience,
and the gold coin, which would otherwise have been in use, much wear and
tear. Your excellency will therefore perceive that the Government has
all along enforced the law of 1876, and taken measures to provide for
the payment of duties on foreign imports in gold coins of the United
States or their equivalent.
I note that your excellency calls the silver coin which is legal tender
here “debased silver.” I am aware that there is a small amount of
foreign coin in circulation which is below weight through long wear or
from being mutilated. This will occur in any country, and no one is
obliged to accept such deficient coin as money. As to the bulk of the
silver circulating here as legal tender, I submit that the term “debased
silver” is not applicable to it. Some of it is United States silver,
some is of more intrinsic value than the American coin with which it is
rated to pass, and the rest is legitimate coin of foreign countries,
passing at a conventional value which suits the convenience of the
public.
I have, &c.,
[Inclosure 3 in No. 157.]
Mr. Daggett to Mr.
Gibson.
Legation of the United States,
Honolulu, June 5,
1884.
No. 250.]
Sir: I have the honor to acknowledge the
receipt of your excellency’s note of the 3d instant, in reply to mine of
the 31st ultimo, suggesting the justice of the collection of Hawaiian
customs duties hereafter in United States gold coin or its
equivalent.
Your excellency assumes that I “have been misinformed as to the facts in
regard to the subject-matter” of my letter, and then ventures the
extraordinary declaration that “silver and silver certificates are not
and never have been received by the Hawaiian custom-house in payment for
import duties except for fractional amounts that are not represented in
United States gold coin.”
Allow me to assure your excellency that I am perfectly informed as to the
methods by which the “gold checks” of Messrs. Bishop & Co. have for
years past been issued to shippers for silver, have been received at
their face value in the payment of customs duties, and, on presentation,
have been cashed in silver or silver certificates. The checks are
purchased by shippers for silver, and in silver or silver certificates
are they cashed into the treasury, and the word “gold,” playfully
mentioned on their face as the medium of their redemption, represents
nothing beyond the agreement of the Government with Messrs. Bishop &
Co. that payment will not be exacted in that currency.
Customs duties, under existing regulations, may be paid as follows: The
merchant, having an account with the bank of Messrs. Bishop & Co.,
the medium through which the customs authorities largely deal with
shippers, may sell his gold for Mexican dollars worth 87½ cents, may
deposit those dollars at their face value, may draw his check thereon to
the amount required, and receive from the bank in exchange therefor a
“gold check” of precisely the same amount, with which he may pay his
customs duties. These “gold checks “are turned into the treasury, and,
on presentation to the bank, may be cashed either in Mexican dollars or
in silver certificates of the Government, which may be issued at par on
a deposit of Mexican dollars.
Thus the shipper is practically enabled to pay, and the Government may
actually receive, his customs dues in Mexican dollars, and while it may
be true that “silver
[Page 291]
and
silver certificates are not and never have been received by the Hawaiian
custom-house in payment for import duties except for fractional amounts
that are not represented in United States gold coin,” your excellency
omits to mention that the collector of customs, who sternly demands gold
from the occasional small shipper who pays to him directly, is
authorized to accept from the larger and more important importer the
“gold checks” of the bank, which are at once redeemed into the treasury
in silver or silver certificates, and the obligations of the bank to
meet its “gold checks” in gold are canceled as fast as made, by the
redemption in silver and return of the checks.
Your excellency also omits to mention the purpose of the adoption of a
resolution by His Majesty’s cabinet council, on the 15th ultimo,
requiring the payment of customs duties in United States gold coin” on
and after the 1st day of June, 1884,” the enforcement of which
resolution has since been deferred. If silver was not then received for
customs duties, why was their payment in gold required after the 1st day
of June?
“Debased coins” are such as have been punched, bored “sweated,” or
intentionally mutilated to such an extent as to deprive them of any
portion of their intrinsic value. Thus, the value fixed upon a punched
dollar by the United States Treasury is 65 cents, a punched half-dollar
35 cents, and a punched quarter-dollar 15 cents. While such mutilations
are unusually common among the coins quite freely circulating here, I
beg your excellency to relieve me of the intention of stating that such
currency constitutes the bulk of the silver legal tender of the Hawaiian
Islands. While such mutilated coins may not be accepted at the Hawaiian
treasury, they are easily convertible in small sums into a currency for
which the bank’s “gold checks “may be obtained at par.
As your excellency admits the arrangement with the Messrs. Bishop &
Co. by which their so-called “gold checks “are received for customs
duties, and as I have shown that such “gold checks” are issued for
silver of low commercial value, and in such silver or its certificates
are redeemed into the Hawaiian treasury, I respectfully resubmit to His
Majesty’s Government the request embodied in my note of the 31st ultimo;
and, in doing so, permit me to say that I do not present the matter in
the form of a demand either on the part of my Government or myself. The
acceptance of foreign silver above its commercial value in the payment
of customs duties cannot but operate as a disadvantage to American
commerce not contemplated at the time of the ratification of the treaty
of reciprocity between the United States and Hawaii, and the continuance
of the treaty relations now happily existing between the two countries
must depend largely upon the disposition and efforts of both to carry
out the spirit no less than the letter of their mutual covenants.
I have, &c.,
[Inclosure 4 in No. 157.]
Mr. Gibson to Mr.
Daggett.
Department of Foreign Affairs,
Honolulu, June 5,
1884.
Sir: I have the honor to acknowledge the
receipt of your letter of this day’s date, in which your excellency
informs me that the “gold checks” issued by merchants for customs
duties, and indorsed as such by Messrs. Bishop & Co., are obtained
for Mexican dollars at equal face value, or for other silver coin or
silver certificates, and are paid by the bank to the treasury in the
same forms of currency, and repeats there-quest that duties on foreign
imports be collected by the Government in United States gold coin or its
equivalent.
In reply I have to inform your excellency that this subject is under the
consideration of the Legislature, and is likely to receive a prompt
solution in accord with the views and wishes expressed in your
letter.
I may at the same time remind your excellency that when the reciprocity
treaty between this Kingdom and the United States was negotiated the
currency law of 1872 was in force, and silver was the only standard
here. I do not think that the possibility of the occurrence of the
exceptional circumstances of the present day was foreseen on either side
at that time, or that when, at a late period, the arrangement as to
“gold checks” was made, a probability of its interfering with the
protection accorded by the treaty with the United States to the products
and manufactures of that country was thought of.
So far as the Government and Messrs. Bishop & Co. are concerned, the
forbearance to collect gold when the law called for it has been mutual.
If, however, the existing arrangement enables importers of dutiable
goods virtually to pay 9 per cent, duties instead of 10 per cent., even
though this be temporary, there is a manifest departure
[Page 292]
from the intention of the treaty—a
departure which the Government has no desire to countenance. I trust
that I shall be able to communicate to your excellency the decision of
the Legislature (at whose express wish the order recently made by the
Government has been suspended from operation) in the course of a few
days.
I have, &c.,
[Inclosure 5 in No. 157.]
Mr. Daggett to Mr.
Gibson.
Legation of the United States,
Honolulu, June 6,
1884.
No. 251.]
Sir: I have the honor to acknowledge the
receipt of your excellency’s note of yesterday, conveying your
acceptance of the position that the payment of Hawaiian customs duties
in foreign silver of low commercial value, as may be done through
existing methods, “‘is a manifest departure from the intention of the
treaty—a departure which the Government has no desire to countenance,”
and the further information that the Legislative Assembly has now under
consideration a measure providing for the collection of customs duties
in gold coin, upon which you hope to apprise me of favorable action “in
the Course of a few days.”
Allow me to repeat to your excellency that the collection of customs
duties in foreign silver, as it now rates with gold, is not merely a
lessening of duty charges from 10 per cent, to 9, but substantially a
reduction from 10 per cent, to the per cent, of difference between such
silver and gold in exchange for each other, and that the “silver
standard “of the law of 1872, which was in force at the time of the
ratification of the treaty of 1875, was specifically United States
silver, to the collection of duties in which to-day no valid objection
could be urged.
Thanking your excellency for the very just and liberal spirit in which,
after full explanation, you have met my suggestions in the matter,
I have, &c.,
