No. 359.
Mr. Merrill to Mr. Bayard.
[Extract.]
Legation of
the United States,
Honolulu, October 19, 1886.
(Received November 6.)
No. 85.]
Sir: Referring to my dispatch, No. 78, of September
2,1886, in which I inclosed an act to authorize a national loan, I have the
honor to inform you that Mr. Macfarlane, referred to in the same dispatch as
interesting himself in negotiating the bonds in London, returned here on the
9th instant. On the 12th instant the attorney-general, as an amendment to
section 4 of the loan act, offered the following: Provided,That hereafter no bonded debt shall be incurred, nor any
bonds issued prior to the maturity of the bonds issued hereunder, unless
provision
[Page 561]
be first made for the
payment of bonds issued under and in accordance with the provisions of this
act,” which was earnestly supported by the ministry, except the minister of
finance, but was defeated on a division by a majority of 10, and caused the
change of ministry as stated in my dispatch, No. 84, of the 14th
instant.
One peculiar feature of the vote by which the amendment was defeated, was
that nearly all the members of what is known as the opposition party, who
have constantly opposed borrowing and advocated the limitation of the
expenditure of money to the lowest possible sum, suddenly changed, and not
only voted against the amendment offered by the attorney-general, but
supported other amendments, which were adopted, and which I inclose, whereby
the bonds can be negotiated for 98 per cent, of their nominal par value,
while the consolidated revenue of the Kingdom is pledged for the payment of
the interest.
In the discussion of the amendment in the Legislature it was charged that it
was offered in the interest of Spreckels & Co., American bankers, doing
business in Honolulu, to whom the Hawaiian Government now are indebted in
the sum of about $700,000, while a counter-charge was made that those
opposing were acting in the interest of an English syndicate.
I am reliably informed and it is well understood here that in the event the
amendment to section 4 was adopted not only Spreckels & Co. would, if
desired, take the total amount of bonds at par, but that Bishop & Co.,
American bankers of Honolulu, were willing to advance a portion, at least,
of the $2,000,000 on the bonds at par. Even under the law as amended it is
probable a portion if not all the bonds could be negotiated either here or
in San Francisco if an opportunity was offered.
The defeat of the amendment offered by the attorney-general and the adoption
of those inclosed, as well as the evident intention not to offer the bonds
here, doubtless means the placing of the bonds in London, or, at least,
endeavoring to do so before offering them in any other market.
I have, etc.,
[Inclosure in No. 85.]
AN ACT to amend an act entitled “An act to authorize a national loan,
and to define the uses it which the money borrowed shall be applied,”
approved September 1, 1886.
Be it enacted by the King and the Legislative Assembly
of the Hawaiian Islands in the Legislature of the Kingdom
assembled:
Section 1. That section 2 of said act be, and
the same is hereby amended so as to read as follows:
“Sec. 2. Said bonds shall be exempt from any
taxes whatsoever, and shall bear interest payable semi-annually at the
rate of 6 per centum per annum, the payment of which interest shall be a
charge upon the consolidated revenue of the Kingdom and shall be
redeemable not less than ten nor more than thirty years after the date
of their issue, either by means of a sinking fund to be established
after the tenth year of the issue of the bonds or otherwise as may by
the minister of finance, with the approval of the King in cabinet
council, be deemed most advisable at the periods of such redemption; the
principal and interest to be paid in gold coin of the United States of
the present standard or its equivalent.”
Sec. 2. That section3 of said act be, and the
same is hereby, amended so as to read as follows:
“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 the rate of 98 per centum, of their
nominal par value in gold coin of the United States of the present
standard or its equivalent, except that the minister of finance, with
the approval of the King in cabinet council
[Page 562]
may allow to any person or syndicate, which may
negotiate the sale of said bonds a commission not exceeding 5 per cent,
of the first issued portion of the loan, to wit, for $1,000,000, and
such percentage as may be found necessary upon further issues, but not
to exceed 5 per cent, upon such further issues.”
Sec. 3. That section 4 of said act be, and the
same is hereby, amended so as to read as follows:
“Sec. 4. The sums borrowed under this act shall
be placed in the treasury to the credit of the loan fund, and shall be
paid out for the following purposes and no other:
| 1. To recall and cancel all bonds at present outstanding,
issued under any act of the legislature prior to the date of
this loan, special loan and the interest accrued on special
loan and outstanding bonds. |
$1,235,000.00 |
| 2. Encouragement of immigration |
150,000.00 |
| 3. Inter-island cable and electric light, Honolulu |
100,000.00 |
| 4. Honolulu water-works |
50,000.00 |
| 5. Improvement of the harbor of Honolulu, and new
wharves |
100,000.00 |
| 6. Improvement of the streets of Honolulu and roadways of
the kingdom |
150,000.00 |
| 7. New bridges and landings |
75,000.00 |
| 8. Purchase steam-tug Eleu |
40,000.00 |
| 9. Expense floating loan, etc |
100,000.00 |
|
2,000,000.00 |
Sec. 4. This act shall be in force from and
after its approval.
Approved this 15th day of October, A. D.
1886.
Kalakaua Rex.
