The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1856-1888, 1879-05-03
The Currency.


The Currency.
Ma. EDITOR The Legislature Of 1876 passed an
" Act to regulate the Currency by which the gold
coins of the United States were made the standard
and legal lender. This law has been in operation
for over two years and yet no United States gold 10
in circulation. I have thought for some time that
the defect in our Act is this: debts Of fifty dollars
may be paid in silver. and debts Of larger amounts
are payable in silver and gold in certain proportions.
We have thus endeavored TO enforce n double stand
ard, l. q. both gold and silver-an impossibiliiy.
According to the well known Law Of political economy
that coins Of lesser intrinsic value in circulation side
by side with coins Of greater value. which pass at
the same nominal rate. drive out the more valuable
coins from circulation. We have found that Ameri-
can half dollars, French FIVE franc pieces and U. 8.
trade dollars, in fact our heterogeneous silver has
driven out the U. s. gold, and silver Is practically
our standard. This will continue to be the case; for
so long as by law every debtor can pay claims
against him which are fifty dollars pr less. in silver.
he will use the cheaper coin 10 do this with and the
gold which otherwise would be used, not being
wanted for this purpose will find its way abroad, be-
ing more valuable. This same principle applies to
the other sections Of our law which allow the pay
ments of larger debts with a certain large proportion
of silver, and which has become q dead letter in our
community, by common consent. The remedy would
be to fix the limit for which silver shall be legal ten
der to debts Of FIVE or ten dollars. and to make the
payments Of oil debts over this amount payable In
gold alone.
The products Of this Kingdom being sold abroad
for gold, we would then receive gold for them here,
and gold would stay.
A few weeks ago I wrote to Prof Sumner Of Yale
College, the author OF o book entitled " The History
Of American Currency" and q recognized authority
in such matters. giving him q sketch OF our currency
laws and the condition Of our monetary affairs. The
subjoined reply from Prof. Sumner explains itself
and will, 1 hope. prove instructive. 1t will be seen
that Prof Sumner fears no disastrous results from
putting q completely gold tender Law into operation
Immediately. We need not. in such a case. fear the
expectation of gold by the Chinese. II they, as well
US ui Uthe.s, have 20 Pay .hoir dsbis here in gold.
sufficient gold for this purpose will remain here and
be in active circulation, instead Of being stored as at
present in the Treasury. 1 have no further room.
but hope that the matter may be discussed seasonal |
bly,. and that the Legislature Of 1880 may pass the
necessary amendments to our law, in order that We
may not continue to do o losing business with Cali
fornia our market. Twenty per cent. on our producgs
is worth saving Your obedient servant,
A. F. JUMP.
NEW HAVEN Apri NJ Aofos
Ny DEAR Sir IL am very much obliged TO you
for the information about your tender laws. The
diagnosis Of your disease is not difficult. Your law
makers have tried the old game; to make it easy for
debtors to pay debts. The only way to do that is to
let them of on paying 90 cents or less where they
owe one dollar. The trouble is that the creditors
cannot be caught after the FIRST time. So you have
simply gone over to a silver standard. and you have
nothing else. When you speak Of American silver
coins, do you mean our halves and q~uartersf II
you do, your currency 10 deprecated over 20 per
cent. below its assumed standard, and the conse-
quences are natural, exchange is high and the export
tation Of gold is profitable. while silver goes TO you.
Neither is it strange that your exports fall below
your imports of merchandise. You do not state the
amount Of paper promises to pay silver aaoat. Are
these also driving out even silyerf
You cannot get gold into circulation while your
law stands as it does.
To answer your questions categorically:
l. The limit $500 for silver is far too high. es-
peciaIly if the prices Of living are low and the wealth
small, i. e. if the mass of the people want and use
only small coins. How does that stand Il S50a
Z" Sarge sum of money - for the masses Of your native
and foreign population
2. Silver ought to be payable for not over $40.
better still So. If you want q gold standard and Sill
yer subsidiary.
8. The restoration Of the gold standard In fact has
nothing to do with the exports and imports one wsy
or the other. Your statistics show exports in excess
Of imports. You say this is balanced by freights and
insurance. 1t is certainly balanced by something.
II you reform your monetary laws the imports and
exports will still balance, because they must always
balance unless you are running in debt abroad or
others running in debt to you. The reform OF your
money laws would, however, correct the exchanges,
and bring you into sound relations to other nations
according to the value Of your products.
You must suffer great loss now in your relations
with California I mean that you do not get a.
much manufactured goods as you ought to. for a ton
Of sugar.
Is not gold at a premium in silver, or in Treasury
Certificates Of Depositl
There would be an export Of gold, / should say. II
there were any more gold in the country than ia
needed to pay duties. If you use gold and nothing
else Except sui sidiary silyer), you need have no
fear that it will go out" in any way to do you
harm. What harm could it do youf You would
drain from California all that was drained from you,
and keep all you needed all the time. l was very
glad to hear from you, and hope that | have answer
ed to the point. Yours very sincerely,
W. g. SUMNER.