The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1884-07-23
The Currency Question .

LErTER FROM A FRIEND ABROAD.
Captain Dutton, who will be remembered by
most of our readers, is thoroughly original
thinker. He has given his views on our silver
them.
The silver question in Hawaii certainly interests
me deeply. II my information is correct, you have
| already reached a silver basis. At last accounts
exchange on San Francisco was about per cent
| (which means of course that the silver Hawaiian
dollar is worth about CSC in cold and the price of
| exchange was steadily rising. This was to be e1-
| pected and anticipate that IN a short time e1-
change will reach about 10 per cent, and huctuate
from per cent above, to 1 per cent below that
hgure, according TO the true state Of the balance
OF trade. The result will be that the real purchas
| ing power of wages will be one fifth less than two
years ago, or conversely, prices Of goods will be
! nomtnally, something like 20 per cent higher.
/ MUM.
When your silver dollars have sunk to their
| bullion value as they must do they are likely to
become scarce II the J-franc pieces and Mexican
dollars are still legal tender; for the latter being
the baser currency will inevitably drive them out,
slowly and by degrees, The tax on imported sill
yer will avail nothing for it will be steadily snug
gled in.
Having once reachcda silver basis values. wages
etc will IN time adjust themselves to and though
II would in my judgement, be inferior to gold, !
still It would not be an intolerably bal one il ]
soundly managed The chief difficulty would
naturally be sharp and rather wide fluctuations in
the price of exchange, and alternate Cluts and |
famines Of money. This would be to tue advan- |
tage of bankers and traders and TO the disadvan-
tase of everybody else. OF course the former |
must protect thamseves at the expense Of the /
latter by charging big shares and addiiionalanar-
gins against possible sudden fluctuations. Many /
other ways could be indicated for this is merely
sampe) in which u silver curyency works bad for |
all who are interested in stable values Its gen
eral tendency Is demoralizinc.
10 get back TO gold basis is probably i'm
possible. The evil has already been done and can
not be undone. Creditors have been shaved by |
lF1w fft NNaa. sNHUa.
To SO back 10 the gold standard 1t would be neo-
esslry 70 shave the debtor. You could not do
that. 1t is easy to shave a creditor but not so
easy 10 shave debtor. The former is a lamb, the
latter wolf
There is however, one thing which 1 hope yuu
will resist with all your might, that paper cur
rency Once started on that road there is no turn
ing. Ihe proposal Of bank Of issue Is nothing
but a swindle Of the mos, outrageous kind You
have in Hasaii already more money than you
need By one of those strange paradoXes Of finance
the larger the volume of currency the scrcer does
money seem TO be. The explanation is that Tue
thing which Is really scarce is sonud credit not
money. People who want money and can't Get il
fancy that It is because money is scarce. 1t Is be-
cause they haven the requisite security 10 offer.
They think they have but those who have money
think differently. Hence they elamor for more
money.
A bank Of issue will raise merry hell take
II for granted that the paper authorized to be
issued would exceed the coin reserve required TO
be held by the bank for redeeming its notes; other
wise, WlAt Is The use OF the privilege. BY what
ever excess there may be of notes above the coin
reserve, by SO much is your currency-already too
laree-lnta;ed. 10 the same extent, also, Il is
forced loan upon the community.
Ihe trouble with your currency is summed up in !
one vord-inhation. You have had for several /
years great quantities Of Mexican dollars in circu
ation, as well as five franc pieces. BY Greshani's
law these coins once in the country circulate in 4
preference to more valuable United States cnins c
lnd refuse to 60 out Of the country. In spite of
he duty they filter and leak in a dozen at time 1
md perhaps even larger sInuCgied- Once q
inside the kingdom they stay, and refuse to GO out
II their own accord. You have also had paper o
much | don't know. but certainly / D
more than you need. Finally the new coinage Il
iooded the country with big sum, far IN ezcess c
# your wants for purposes of trade and common b
1changes- The result is reflected in the pramium n
N San FraDcisoo exrhange- Very soon the pre- n
mum will be 10 per cent. When that point Tor n