Mr. Daggett to Mr. Frelinghuysen.
Honolulu, February 14, 1885. (Received March 2.)
Sir: It was made public last evening that the Honolulu Chamber of Commerce, on the 11th instant, rescinded its action of the 29th of last November, agreeing to receive as United States gold coin the treasury certificates of the Government made redeemable in gold by an act of the last legislative assembly.
The aggregate amount of outstanding certificates which the Government undertook to redeem in gold was about $1,000,000. After redeeming something over $400,000 of the certificates in this manner, thereby reducing the gold in the treasury to $90,000, the Government has temporarily suspended further redemption in gold.
The silver reserves are sufficient to meet the remainder of the outstanding certificates in that currency; but gold is demanded, and on the announcement by the treasurer that the $90,000 in gold remaining in the treasury would be held to meet the accruing interest on the public debt, and that the holders of certificates must await further gold receipts by the Government, the chamber of commerce has seen fit to rescind its action of the 29th of November.
This movement has been followed by a refusal by the banks and many others to receive these certificates except as representatives of Hawaiian silver, either as deposits or in the purchase of exchange, and considerable embarrassment has resulted. As these certificates were issued on deposits of silver at par, and but $580,000 of them remain outstanding, I cannot but regard this action by the chamber of commerce as hasty, ill-advised, and unfriendly. The certificates will unquestionably be redeemed in gold, as provided by law; but the Government asks that their redemption hereafter may be gradual, and as warranted by the gold receipts of the treasury. This has been refused by the chamber of commerce.
Unless the Government should conclude to convert its own silver coinage at its bullion value into gold to redeem these certificates at once, which is unlikely, the present financial stress must be left to work out its own remedy.
Very respectfully, &c.,