Kalākaua coinage

Kalākaua 1883 dime

The Kalākaua coinage is a set of silver coins of the Kingdom of Hawaii dated 1883, authorized to boost Hawaiian pride by giving the kingdom its own money. They were designed by Charles E. Barber, Chief Engraver of the United States Bureau of the Mint, and were struck at the San Francisco Mint. The issued coins are a dime (ten-cent piece), quarter dollar, half dollar, and dollar.

No immediate action had been taken after the 1880 act authorizing coins, but King Kalākaua was interested and government officials saw a way to get out of a financial bind by getting coins issued in exchange for government bonds. Businessman Claus Spreckels was willing to make the arrangements with the United States in exchange for profits from the coin production, and contracted with the US Mint to have $1,000,000 worth of coins struck. Originally, a 12​12 cent piece was planned and a few specimens were struck, but it was scrapped in an effort to have uniformity between US and Hawaiian coins, and a dime was substituted. The coins were struck at San Francisco in 1883 and 1884, though all bear the earlier date.

The coins met a hostile reception from the business community in Honolulu, who feared inflation of the currency in a time of recession. After legal maneuvering, the government agreed to use over half of the coinage as backing for paper currency, and this continued until better economic times began in 1885. After that, the coins were more eagerly accepted in circulation. They remained in the flow of commerce on the islands until withdrawn in 1903, after Hawaii had become a US territory.

Background

Native Hawaiians before the arrival of Captain Cook in 1770 used no coins; trade in their agricultural economy was based on barter. Early relations between Hawaiians and explorers were also based on barter,[1] with nails, beads, and small pieces of iron sometimes being used as money,[2] but as more systematic foreign trade began at the turn of the 19th century, coins of many lands came to the islands as payment for exports. The arrival of the missionaries, and the plantations and other commercial activity that soon followed, led to the first currencies generated by the islands: tokens and scrip used to pay workers because of the chronic shortage of small change. The trade ties and cultural connections with the United States led the early Hawaii business community to think in terms of the US dollar, and it became the basis for trade, with the Hawaiian royal government periodically publishing tables of the value of non-US coins in terms of the dollar. This was necessary because such coins, brought to the islands by foreign trade, circulated as a means of exchange alongside American silver and gold pieces.[1]

In 1847, King Kamehameha III issued a one-cent coin, most likely struck by a firm in New England. It was unpopular with merchants, who preferred not to deal with such small amounts. Some were issued in change in government transactions, but only about 12,000 ever circulated. The failure caused the government to reconsider plans to issue more denominations of coins.[3]

By 1883, most coins on the islands were American, due to the close economic integration between islands and mainland. The laws of Hawaii reflected this, making gold American coins legal tender for an unlimited amount and American silver coins legal tender to $50.[4] In 1879, the kingdom issued its first currency notes, technically certificates of deposit, redeemable in silver coin and with denominations ranging from $10 to $500.[5]

At that time in Hawaii, gold coins brought a premium over their face value if purchased with silver; only gold could be used for certain transactions, such as paying customs duties. Silver had been heavily imported into the kingdom in the 1870s despite government efforts to slow the flow with taxes, and thus gold was more expensive there in terms of silver than in the United States, which was more stable monetarily. Any large influx of silver into circulation, such as by the Kalākaua coins, meant that silver in the hands of the public might become worth less in terms of gold. In 1883, Hawaii was in a recession, due in part to a fall in sugar prices because of overproduction.[6]

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