No. 361.
Mr. Hastings to Mr. Bayard.

No. 89.]

Sir: Continuing the subject of Minister Merrill’s dispatches of the 2d ultimo and 19th instant, Nos. 78 and 85, I have the honor to report that on the 22d instant Hon. George W. Macfarlane, a member of the House of Nobles, was commissioned by the King as financial agent of the Hawaiian Government to negotiate its loan, and left for London by steamer hence the 23d instant.

Since his departure the minister of finance has advertised in the local papers for tenders for the loan to the amount of $500,000.

From the copy of the loan act submitted with Mr. Merrill’s No. 85, it will be seen that of the sum of $2,000,000 to be borrowed, about $1,235,0,00 is for the redemption of outstanding bonds and other Government obligations. It is also provided that the new bonds may be sold at 98 per cent, of the par value and a commission not exceeding 5 per cent, is allowed for negotiating them.

It being generally understood that this commission would be allowed to home purchasers, thus making the margin on the bonds 7 per cent, less than their par value, numerous applications have been made to the finance office for their purchase. I am credibly informed that bids for the loan have been made amounting to nearly $800,000, or $300,000 more than the portion to be disposed of here.

Under this arrangement parties holding Hawaiian Government securities are enabled to return them to the treasury at 100 or par, and take out the new bonds at 93 bearing the, same rate of interest; i. e., 6 per cent.

The amount to be borrowed is not thought excessive, and although the need for the money to carry on the improvements projected may be urged it is not deemed to be sufficiently so to warrant the sale of Government paper at so large a discount.

I have, etc.,

Frank P. Hastings.