No. 603.
Mr. Merrill to Mr. Bayard.

No. 138.]

Sir: I have the honor to transmit herewith copies of an “intermediate report of the minister of finance,”* containing a statement of the receipts and expenditures of the Hawaiian treasury for the fifteen months ending June 30, 1887, when the present minister assumed office.

The statement shows that of the two million loan authorized by the last legislature, $1,000,000 have been borrowed in London and $500,000 in Honolulu, only $1,264,699.26 of which has been netted the Government in Honolulu and San Francisco, the balance, amounting to $235,300.74, having been absorbed for expenses of floating the loan and interest retained by the London syndicate.

The syndicate in London, it appears, has charged interest on $1,000,000 for six months ending June 30, 1887, whereas the money was not paid until May and June last.

The loan act authorizes the expenditure of only $100,000 for floating the entire loan of $2,000,000, while there has already been charged against the Government $205,300.74 on account of loan of $1,500,000, besides the $30,000 interest retained in London.

I am reliably informed that it is the intention of the present ministers to allow to the London syndicate only the 2 per cent, discount and 5 per cent, commission authorized by the loan act and interest on amount borrowed from the date of its reception by the Hawaiian Government, and, further, that it is not the intention to place any more of the two million loan in London, but to borrow here as needed.

For a detailed statement of the transactions concerning the amount borrowed under the loan act I respectfully refer to pages 2 and 27 of the inclosed report. The indebtedness of Hawaii on the 30th of June last, including the new loan of $1,500,000, amounted to $1,721,000, one million of which is owing in London.

I also most respectfully call attention to the statement, on page 6, of the minister of finance, concerning cable communications with America. The Mr. Coate therein referred to remained here about one week last month while en route to Australia, and it is with the intention of making cable connection between these islands and Victoria, and in the interest of the Canadian Pacific Railroad, that he asks for the three years’ exclusive privilege of landing a cable and the subsidy of $20,000 per annum.

The annual subsidy of $20,000 for maintaining telegraphic communication [Page 833] between these islands and the North American continent, was authorized by the last legislature and referred to in my dispatch No. 78, of September 2, 1886.

I have, etc.,

Geo. W. Merrill.
  1. Not printed herewith.