No. 357.
Mr. Merrill to Mr. Bayard.

No. 78.]

Sir: Referring to the bill authorizing a loan of $2,000,000, mentioned in my dispatch No. 74, of July 27, 1886, I have the honor to inform you that the same has been reported from the committee, and after several amendments concerning the purposes for which the money shall be expended, the bill passed the legislature, and was approved by the King on the 1st instant. At the time of the recess of the legislature in July it was generally conceded that no loan was required and the bill would not be further considered, but about the time of the reassembling of the legislature in August, Mr. H. R. Armstrong, an agent of London capitalists, arrived, and soon thereafter the “loan bill” became a prominent measure. After the approval of the bill yesterday, Mr. Macfarlane, a member of the House of Nobles, also being one of His Majesty’s staff officers, sailed on the steamer Australia for San Francisco, where, from best information obtainable, he is to meet the London agent, who had previously departed for San Francisco on the steamer Maravoa, leaving here August 28 on business connected with the loan. It is generally believed, and present appearances certainly indicate, that the bonds will be negotiated in London. I inclose three copies of the act authorizing a national loan as authoritatively published.

I also inclose three copies of an act amendatory of “An act to encourage ocean telegraph cables.” The original act was passed in 1884. This amendment consists in inserting after “San Francisco,” and before the words “the minister” in section 1, the following words, “or any other port or place on the North American continent connecting with the American telegraph system.” As will be noticed, the original act, offering a subsidy, confined the terminal point’ on the American continent to San Francisco, while the amended act extends it to any point on the North American continent.

While the legislature thus indicate a desire to increase the possibilities of cable communication between these islands and the American continent, yet it is generally believed that this amendment is in the interest of the Canadian Pacific Railway Company in permitting it to compete for the subsidy offered, and thus to aid a contemplated connection of Honolulu by cable with the telegraph system of that company.

I have etc.,

Geo. W. Merrill.
[Page 559]
[Inclosure 1 in No. 78.]

by authority:

AN ACT to authorize a national loan and to define the uses to which the money borrowed shall be applied.

Be it enacted by the King and the Legislative Assembly of the Hawaiian Islands in the Legislature of the Kingdom assembled:

Section 1. The minister of finance with the approval of the King in Cabinet Council is hereby authorized to issue coupon bonds of the Hawaiian Government of a denomination not less than one hundred dollars and in the aggregate not exceeding two millions of dollars, in the manner and for the purposes in this act stated.

Sec. 2 Said bonds shall be exempt from any taxes whatsoever and shall bear interest payable semi-annually at the rate of not more than six per centum per annum and shall be redeemable not less than five nor more than twenty years after the date of their issue, the principal and interest to be paid in gold coin of the United States or its equivalent.

Sec. 3. Said bonds shall be signed by the minister of, finance and by the registrar of public accounts and be sealed by the seal of the department of the minister of finance, and shall not be issued at less than their nominal par value in gold coin of the United States of the present standard except that the minister of finance with the approval of the King in Cabinet Council may allow a commission not exceeding five per centum to any person or syndicate which may negotiate said bonds: Provided, however, That such commission shall not be allowed for any bonds sold in this Kingdom or to residents of this Kingdom.

Sec. 4. The sums borrowed under this act shall he placed in the treasury to the credit of the “loan fund,” and shall be paid out for the following purposes and ho other:


1. To recall and cancel all bonds bearing 7 and 9 per cent, interest issued under, any act of the Legislature prior to the date of this loan, and to the interest on the same $300,000.00
2. Encouragement of immigration 250,000.00
3. Honolulu water-works 75,000.00
4. Sewerage of Honolulu 100,000.00
5. Improvement of the harbor of Honolulu and for new wharves 350,000.00
6. Improvement of the streets of Honolulu and roadways of the Kingdom 250,000.00
7. Interisland cable communication 250,000.00
8. New bridges and landings 75,000.00
9. Highway across the island of Oahu 75,000.00
10. Repayment special loan 150,000.00
11. Purchase steam-tug Eleu 39,000.00
12. Expense floating loan, etc 86,000.00

Sec. 5. The minister of finance is hereby authorized to pay out of the moneys so borrowed under this act such commission as may be allowed as commission under section 3 hereof, and such expenses as may be incurred for preparing said bonds and coupons.

Sec. 6. The minister of finance shall make such proper arrangements as will enable the holders of said bonds to receive the interest due on the same either in Honolulu or in the city of San Francisco, or in such financial center as he may deem advisable.

Sec. 7. This act shall be in force from and after its approval.

Kalakaua Rex.
[Inclosure 2 in No. 78.]

by authority:

AN ACT to amend Chapter XLI, Session Laysrs of 1884, entitled “An act to encourage ocean telegraph cables.”

Be it enacted by the King and the Legislative Assembly of the Hawaiian Islands in the Legislature of the Kingdom assembled:

Section 1. Chapter XLI of the Session Laws of 1884 is hereby amended to read as follows:

Section 1. Whenever telegraph communication shall be established between Honolulu and San Francisco or any other port or place on the North American continent [Page 560] connecting with the American telegraph system, the minister of finance is hereby authorized to contract with the person or persons maintaining such telegraph communication for the paying of an annual subsidy not exceeding twenty thousand dollars, and for a period not exceeding fifteen years.”

Sec. 2. This act shall take effect from and after the date of its approval.

Kalakaua Rex.