Kalākaua coinage
Originally, a 121⁄2 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.
After legal maneuvering, the government agreed to use over half of the coinage as backing for paper currency, which continued until better economic times began in 1885.
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.
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.
[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.
[6] Finance chair Walter M. Gibson, supported by Minister of the Interior Samuel G. Wilder, pushed a new currency law through the 1880 legislature.
Having the kingdom issue its own coins was one means by which the government hoped to improve Native Hawaiian morale, as their numbers and their influence had both been declining over the previous few decades.
During this journey, he was contacted by the owner of a New Caledonia nickel mining company hoping to use the metal in coinage, and sample five-cent pieces were sent to the king after his return to Honolulu.
He asked for sketches from Spreckels, who provided an obverse showing a full-face portrait of the king; this was submitted to Chief Engraver Charles E. Barber in Philadelphia, who rejected it as impractical.
[12] Barber finished hubs for the four coins in September 1883, and Philadelphia Mint Superintendent A. Loudon Snowden had two sets struck and sent to Preston in Washington.
[13] The formal contract was dated October 29, signed by Spreckels as agent for Hawaii, and by San Francisco Mint Superintendent E. F. Burton.
W. T. R. Marvin, writing in 1883 for the American Journal of Numismatics, said he had been told by those who had seen the coins that "the profile head of the King compares favorably with that of many rulers of much more important countries".
A number of members of the business community, including Sanford B. Dole, objected to the issue on the grounds that so much silver would inflate the currency, and went to court to prevent the government from giving Spreckels bonds in exchange for anything except gold coin, as the law required.
[24] The government opposed the action, which was brought in the islands' supreme court, on the grounds that the silver coins were equivalent to gold.
The chief justice, A. F. Judd, granted a temporary writ of mandamus against the government giving the Dole plaintiffs what they wanted, finding that the coins were not equivalent to gold, and that the coinage and loan acts had been violated.
In the interim at a meeting chaired by the king, the privy council had declared the new coinage a legal tender; once the lawsuit was resolved, the government paid for a half million dollars in coins with a like amount of bonds.
[27] The Hawaiian Treasury had been almost out of cash before receiving the coins, and they entered commerce as the government paid for goods and services, increasing the money supply and risking inflation.
[31] The new silver coins were expected to flow into the Treasury in exchange for gold under this arrangement, but the government refused to implement the law until forced to by the Supreme Court.
To avoid a financial panic, major private banks and businesses agreed to exchange gold for the new silver coins, in which there was little public confidence.
[32] They remained in circulation during the turbulent years of the 1890s in Hawaii, as the monarchy fell and the short-lived republic ended in 1898 with annexation to the United States.
Despite the urging of local interests, it was not until 1903 that Congress acted, ordering that the Hawaii silver coins be exchanged by January 1, 1904, or lose status as legal tender.
Quantities of the remainder were used in the jewelry trade,[34] which bought several thousand dollars worth in the final months the coins remained legal tender.
[35] In the years after territorial status was granted Hawaii in 1900, many sought keepsakes of the vanished kingdom, and a large variety of souvenir items featuring the coins were sold as enameled (and unenameled) jewelry: pins, watch fobs, cuff links, belt buckles, hat bands and hat pins.
