The Hawaiian gazette., 1880-07-07
Prof. Sumner ON our Currency.

trust CHACUN.
Prot Sumner ON our Currency.
Mr.. EDrroR,-Upon receipt of my files of Island
papers containing the discussions on the currency
question, l sent them to Prof Sumner for his
review. He very kindly sent me the following
comments upon them which send for the instruc-
tion of your readers, as more valuable than let
ter from myself. am glad to see that Mr.. Davies,
in spite of many errors is approaching the truth,
and feel hopeful that he may yet be classed
among the converts to a sound currency OF Mr..
Green have less hope. He still fingers in the
mists of unbelef 1t would be consistent with his
views of a non-exportable currency, to have cow
ries for money. have no space for more, as Mr..
Summers letter is long, but hope soon to advo-
cate the unpopular cause of our return to good
currency from among you A. f. JUDD.
Geneva, N. Y, June l, 1880.
New HAVEN, May 18th, $780,
Ny dear Mr.. Judd, II must be very brief in COM
menting on the papers you sent me.
L Whether there is a loss of II per cent. in tax
ing American silver If man in the Islands sells
sugar in San Francisco for 1000 gold "dollars' y
and takes his pay in silver "dollars" getting say
l. 100 of them and if these silver dollars will pay
], 100 dollars" of his debts in the Islands, then
the sugar producer or exporter wins 10 per cent
his currency. The standard" of the Islands is
not then American gold dollars but American
silver dollars and whatever the exporter wins (this
10 per cent? comes out of the creditors in the Is
lands.
The dollars imported however must raise prices
the Islands, falling in with efforts of the credi-
tors to protect themselves. am not surprised
that the merchants and bankers should like this
arrangement while it is in action, but it must i'm
medately result In an adjustment of prices in the
Islands such that there is gain or loss to any
body except from the fluctuations of silver. /
mean that your currency would be 10 per cent. be-
low American gold, your prices would be 10 per
cent above American gold prices, and any gains of
bankers afterward would come only from tiuctua-
tions around this point.
cannot imagine that any other state of things
than this exists, taking the data you have given
me. The GAZETTE says We buy exchange at San
Francisco payable in gold and pay more for it
than if gold were plenty How does it know what
would be" if gold were plenty The second
your currency were gold is just what is not pre-
sent IN the facts and must be supplied from the
philosophy of currency and money.
The Islands have in fact the silver standard.
Their nearest commercial relations with the
United States where the gold standard yet exists
and they are suffering from the fluctuations and
inequalities of the two standards, intensified no
doubt by the erroneous notions fostered by the
law which declares that American gold is your
standard.
q l suppose that the Islands are eager BUYERS
and strain their capital and credit to buy abroad
Exchange is therefore against them a rule. This
would cause them to spare their metallic money
and send it away would check the flow of metal
towards the Isls nds. This is why you have such
strong TENDENCY towards cheaper medium.
1t is the strongest reason why you ought to hold
to the best medium since, If you yield to the tend
ency, your currency will degenerate more and
more and the financial state of the Islands will be
chronically bad.
see that the Advertiser says you have gold
reserve for silver certificates. This must produce
a very confused and dangerous state of things in
which the reserve holder and the certificate holder
another. rsF
8. Mr.. Davies admits that the state of things you
criticise will soon come about. There need there
fore, be no argument with him. cannot imagine
that it would take year to reach the situation
have described under l, but if the Islands are in
certain possible relations of trade to San Fran
cisco the effect might be delayed.
4. Your proposition to limit silver legal tender
to $40 would involve raising your currency back
from the depreciation into which 1t has fallen to
the gold standard which you pretend to have If
then Mr.. Davies does not believe that there is any
representation yet he must bold that this remedy
would not cost any pain or struggle at all. When
he calls it drastic remedy he contradicts him
self. If am right in my opinion that your cur
rency has deprecated or is depreciating must
admit that II will cost some effort and struggle to
restore it, but this effort need not be exaggerated
! and you will have to make it sometime or other.
Mr.. Davies in his plan wants to take account of
| the existing supply of coins of either metal. So
long he keeps the limits of silver legal tender at
$50 he Will operate no reform at ALL and his pro-
| Ject OF specifying Inc proportion of silver and
gold in payments over $50 will only introduce more
| CONFUSION ana annoyance Without securing any
aleviation of the effort to restore the currency.
The point is that ioIieH you say that you ieiH
nothing but gold aud stick to il, you ieiH hare
thing bnt gold. AS long as you put off this resolu-
ton and dabble IN silver, you will find 1t hard to
| get gold and reform will be impossible.
g. Mr.. Green thinks it is Contradiction to say
that you must keep coin in circulation and also
must box it up and export it." This is no contra
diction at ALL but one of the bottom doctrines of
money. You never can keep coin in circulation
! unless you are ready to box it up and export it
wherever the balance of your foreign account calls
for it MIR. Green says ~ have always been under
the impression that 1t was considered sound policy
| for each country as far as practicable, SO to ar
range its currency that the coin would not be
exported at the hrst turn of the balance of trade
| against IT." This impression Is very erroneous.
! No country can or ought to so ARRANGE its cur
| rency because to do so would be to refuse to pay
| ones debts. The debts must be paid at maturity
IN money or goods. If the money is sent prices
fall and goods become exportable: or, the bank
| rate is advanced which forces prices down and
goods are exported These two movements are
always unwelcome, because they force liquidation
at a moment when people. are eager to expand
credit and enlarge transactions. This is the very
reason, however, why they are the correctiyes
| which arrest an undue expansion of credit and
speculation just when it is beginning. FIVE could
prevent all export of coin as soon as the balance
of trade turned against us, we should throw this
check out of operation and go to q period of
kitefying TO be followed by disaster and distress
Now there is one other way to meet such an exi
SelICS, anu lHdI ls 10 ueprecldtt the cuIIenCy-tu
let this coin go, and supply its place with silver,
! copper or paper This road also leads through
imitation to disaster.
All can say is that you will have all the gold
you need if you will dispense with everything else
except for subsidiary purposes. You do not need
a Mint. 1t would be foolish expense for you
when you can use American coins. The fact that
you have mines makes no difference. 1t is
easier for you to get gold by raising sugar and
sending it to California than it would be to get il
out of mines in the Islands, if there any. The
permanent interest of all and the solid prosperity
served by the strictest and most conservative
policy about your currency.
Yours very truly, W. G. SUMNER.
Free Rum.