The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1856-1888, 1880-05-08
The Currency Question.
Honolulu, May 9TH, 1880.

SIR II was glad to see the two communica-
tions in the last ADVERTISER and Gazette
from Mr.. Justice Judd and Mr.. Theo. II. Davies,
respectively, upon the currency question, as there
seems to be a general feeling that something
should be done to place our currency on a better
basis than it is at present. On the other hand it
Is to be feared that if a new currency act be pass
ed without a full discussion of the subject by the
merchants and the public, it would run some risk
of either doing more harm than good, or of be-
coming imperative, as the act of 1876 became.
Anything that l have now to say therefore on
this subject is rather with the object of e%liciting
further information and discussion than of offer
ing any remedy of my own for the admitted in
conviences which attend our present currency
system.
If | am not mistaken Mr.. Davies views as ex-
pressed in the communication referred to, are in
accordance with those of the whole mercantile
community here, where he contravenes Mr..
Judd's position, backed though it may be by the
authority of Professor Sumner, that our produr-
GERS lose II or Ia per cent. on the sale of their
products, because the coin or counter, which we
happen to have in general circulation, is intriu-
sically worth that much less than U. S. gold coin
Vi tue cdH6 uOullDdl tdluc-
But it occurs to me that there is an important
principle involved in this discussion which MIR.
Judd assumes to be indisputably correct, and
which MIR. Davies also endorses, as if it were a
self-eyident proposition, which is open to serious
question. Mr.. Judd says: " Unless we can
keep in circulation coin that we can box up and
export without great loss, we shall be at the mercy
of combinations to keep exchange high;'' and Mr..
Davies says: 1--WE must adopt as the bulk of our
currency whatever Is the currency of San Fran
cisco. Our money must be available to pay our
debts abroad, or We shall speedily find our cur
rency fall and our prices rise, which it would be
erroneous to assume had already taken place."
These two are essentially the same propositions,
although the reasons given why we should adopt
the San Francisco currency are not expressed in
precisely the same language by both writers.
But here in fact seems to be just where the
whole difficulty lies-for how can we keep a
coin IN circulation " and 90 box it up and export
it - at the same time? Or, how can we manage,
without serious arrangement of our finances, 81 to
pay our debts abroad - with the identical coin
which we want to retain here as 9 the bulk of
our currency and with which we are to be le-
gally and practically compelled to pay our home
obligations as they become due?
l have always been under the impression that
it was considered sound policy for each country,
as far as practicable. so to arrange its currency
that the coin would not be exported at the first
turn of the balance of trade against it. | am in
clined to think that no country should provide
to pay its foreign debts with its circulating me-
dunn, if it can be avoided, and l am not aware
of any theoretical Or practical reason why the
money of any country should necessarily be
available to pay it's debts abroad"
No country like ours, not a producer of the
precious metals, can possibly 60 on paying its
foreign debt in coin, unless it imports it, or the
bullion TO coin it from, for the express purpose
of exporting it again, which would seem to be an
u~nintelligible sort of proceeding, and whenever
any such country happens to be so situated that
even a comparatively small proportion of its cir
culating coinage comes to be exported, it is
always looked upon, more or less, as a disaster.
In Great Britain, where a strict gold basis is at
tempted to be carried out, and where the law
compels the Bank of England to keep a certain
proportion of sovereigns to meet their issue of
notes, it is often a very serious one, and a very
arbitrary but we'll known system of = putting on
the screw :" by the Bank of England raising its
rate of discount, is adopted to keep the sovereign
at home whenever there appears to be a current
of them setting out of the country. But it is
often asserted, and apparently with reason, that
the remedy is about as bad as the disease.
1 am well aware that it may be answered, that
here it is only comparatively small balances,
owing abroad on the general interchange of COM
that would have to be settled in coin,
and if we could be certain that those balances
would never bear but a small proportion to the
total quantity of the coin in circulation, no seri-
ous difficulty might arise; but we cannot be GER
OF this. How would it have Jared with
US last year, for instance, when we were owing
some hundreds of thousands of dollars abroad
and had no produce ready at the time to pay it
If we had then happened to have had
States gold, forced into general circula-
ton, and had been compelled to rely on it to
meet our obligations here, as it is urged We
should be. there seems little doubt that so large
/ quantity of it would have been shipped to San
francisco, that it would have been impossible
or our merchants and traders to find enough
egal tender here to meet those obligations, and
general financial disaster would probably have
ollowed. Our having a circulating medium
shieh could not Be exported without great loss
vas perhaps all that saved US.
1t is one thing to admit how satisfactory q
ocular and sufficient supply of United States