The Hawaiian gazette., 1880-03-03
The Currencx 0uestion.


claim this as reason for ignoring either the dan
gers or duties of our position Four years ago the
necessity for dealing with this subject was felt,
and Currency Act was passed winch was, be-
lieve, generally disapproved by mercantile men.
Its provisions were absurd, and would have been
so disastrous in practice that the common sense of
the community had TO come to the rescue of the
Act, and to agree from the outset that the law
should be ignored
In order to protect the Treasury from the gene
raj dilemma, the Act provided that specie which
the Act itself declared 10 be legal tender, should
not be so regarded at the Custom house. The re-
suit was that the Custom house sucked in all the
gold in the country and then the Treasury itself
decided that the Act must be ignored. 1t Is there
fore clear that the law it stands is not adequate
for our needs.
legal tender deprecated currency and gold
standard, ideas and opinions are very much divid-
ed, and yet each of us probably thinks he could
straighten the matter Ill few words l have tried
and do not find it easy but it may be useful to
find out what we want, and then how we can most
easily attain it.
1t appears to me that we have got into happy
go-lucky way of treating exchange, as though 1t
we're flour or matches or some other commodity
that somebody in the trade would no doubt pro
vide whereas exchange is really the cost of trans
porting money from one place to another.
What we want then Is simply currency which
is available for paying debts IN other countries, as
well for circulation amongst ourselves. For
the latter purpose very large proportion of silver
almost exclusively gold.
Now how do we stand to-day? If wanted to
pay $4,000 IN San Francisco, and for any reason
could not get sight drafts should have to send
my money from here. There is available gold
and consequently 1 should have to send about
S11 1000 or more, to pay my debt of $4,000. This
is equivalent to paying 10 per cent premium for
exchange, or it Is equivalent to depreciation of
nearly 10 per cent on my silver.
And let us suppose that six eight of the largest
shippers here combined to raise the rate OF eX-
change to 10 per cent. to-day. In other countries
this would be met by shipments of coin, but that
can not be done here until the loss on shipping
coin would be less than on buying exchange. II
ten men would agree to-day to import all the
money required for disbursements to their planta-
tions, and would not draw exchange for less than
10 per cent. premium, j believe that persons re-
quiring to remit would have to pay that extortion-
ate rate. What else could they do? 1t would
cost them to send silver dollars. If this
be true then we have not a currency available for
rpaying debts in other countries.
So long as the balance of trade was against US,
in other words so long as we had to remit more
money than we had to receive, there was no danger
of our adding to the volume of this unavailable
currency but now that heavy shipments of pro-
duce are going forward the balance of trade Will
be in our favor, and money of some kind will be
brought here. This has already begun, and silver
coins costing in San Francisco $4,000 are brought
here and paid out at 100000. This Is a very
profitable business, and the importers of S1OO,0OO
will divide profit of about 81 600 Now who pays
this profit 1t will be paid by indirect tax on
the community If it is not stopped, silver will
come monthly, until the imaginary case have
suggested will be found to be true, and exchange
will be at 10 per cent
This importation of deprecated silver is most
dangerous element, and might easily become dis
astrous. All plantations pay on IN silver and If
the agents chose to import all their moneys, they
might do persistently and food the country
with silver, leaving those who needed gold or ex-
change to take care of themselves. Of course the
latter would have to add the cost of the gold or
IN he Of all the GOODS and in fine.
we should all then realize that our currency was
deprecated to just that amount. 4
do not wish to excite anxiety, and far less do 1
wish to suggest any blame on those who have I'M
ported silver The locking up of such an unfore-
seen and unnecessary amount of money III the
Treasury has compelled the importation of other
money to meet the wants of the country, and OF
course the importers would bring such money as
would cost least or pay best My object is to draw
attention to the character of our currency and the
necessity for immediate steps to protect 1t from
further Gggravation l think it will thus be evl-
dent that in order to have currency available for
payment of our debts in other countries, we need
to add very largely to our proportion of gold and
to stop all addition to our stock OF silver fortu-
nately the necessities of the islands are such that
we can absorb very large quantity of silver, and
it is probable that we eventually digest all the
silver we now have here. But 1t IS not so easy to
say how we can most simply attain to the currency
we need.
There are two things to be done frst-to pre-
vent at once any further importation of silver
and SecOHd-tO provide by statute perlild-
nent regulation of the currency. 1t seems to me
that the first would be met by a notice from the
Treasury to the effect that in the event OF any
more permits being applied for, for the lntroduc-
ton of silver coin below the standard of United
States silver coin in San Francisco, the Treasury
would refuse the permit would refuse TO receive
such coin at any higher value than the last San
Francisco quotation. This would be OF course to
threaten to depreciate a large part of our cur
rency, but am satisfied the threat would be sHtii-
cient to deter any from risking further impor-
tation.
The second point must be accomplished by
statute. The Currency Act of 1876 should be-as l
venture to think-entirely repealed and new
Act introduced whereby the proportions of gold
and silver that were declared legal tender should
apply to all payments over say $40 or s2O, and the
Custom House should not be made an exception. 1t
is the duty of the State to provide money for the
use of the country, and if the State not only neg
ects to do but actually refuses to recognize in
its chief financial department the money which 1t
declares the country shall recognize, 1t creates
confusion in the whole money fabric.
If twenty men owe me 800 each ought to be
able to pay debt of $1,000 with that money any
where; whereas under the present Act might as
well have $1,000 worth of coffee for all practical
purposes as hope to pay my debt with the 5000 l
had received from my debtors. And even II pro.
cured the proper proportion of gold to pay S2,OOo
| at the Bank might carry 1t to the Custom House,
and it would not be $1,000 at all
| The exacting of gold for the Custom House has
| been a most disturbing element In our currency,
and has fostered the boarding of gold, when by
recognizing all money as of equal proportlonate
value, there would have been no necessity foI
such boarding. And where was the advantage
! The Treasury had no special demand for gold, and
SO very naturally it drew in all the gold IN the
country and locked 1t up in its vaults
! l am inclined to think that if the Legislature
would pass an Act providing that at fixed time af-
ters passage silver should be legal tender to the
extent only of one-half of all payments in the
| kingdom, and after year to the extent only OF
one-fourth of all payments, we should tnd our
selves in safe position with very little friction
Silver would still circulate on the other Islands
plantation drafts silver certificates cheques, notes
| and duties would all be paid IN gold and silver,
and of course no one would import silver without
bringing at least an eqal quantity of gold. In fact
| this might be made part of the statute.
1t will perhaps be alleged that the moment gold
came into circulation, it would be withdrawn for
shipment to China | contend however that Chi
traders would have great difficulty IN procur-
ing gold for this purpose. Retailers Will continue
to receive the bulk of their returns in silver and
will require all the gold they can collect to make
! up the needed proportions in their payments
to their merchants. As a rule if they want gold
they must pay a premium for It, and tins
premium would enable the seller of the gold
to replace it without loss, AT any rate we must
be prepared for some disadvantages and tins
! is one which cannot be at all serious when COM
pared with the disadvantage of our present pros
! pect Besides this, we m1st bear IN mind that
ultimately the rate of exchange Will regulate this
| No man of intelligence will ship gold when he can
realize as mnch by buying exchange and we can
better afford to let that moderate amount OF gold
be shipped to the profit OF some few people than
risk having an exchange at 10 per cent. premium,
as could very easily be the case.
do not pretend to have presented well digest
| ed scheme, but do desire to draw attention to
what we must all admit TO be very serious ques-
ton.
1t is said that fools rush in where wise men
fear to tread" but if by so doing the fools warn
IL and ~rrW,a