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ing and responsible citizens to see that the present expenses of the
Government are much beyond what the islands can pay and much
higher than wise legislation and proper economic administration re-
quire.' But the difficulty of getting out of the old grooves, of scaling
down salaries, and abolishing useless offices is hard to overcome.
Nearly one-half of the population of the country have no voice in politi-
cal affairs, unless exerted through corruption and bribery. The voting
population is inade up of several nationalities—Hawaiian, Portuguese,
American, English, German, and others, the more intelligent and re-
sponsible of these generally acting together sufficiently to exercise a
beneficial influence on legislation and administration. But the palace
patronage and influence are still considerable, costing the country inore
than it is able to pay and returning to the country no positive advan-
tages.

Directly and indirectly, the palace probably costs the little kingdom
$150,000 per year. A governor, at $5,000 a year, acting in harmony
with' the responsible men of the legislature, would be far better for
the islands than the present monarchical Government. In truth, the
monarchy here is an absurd anachronism. It has nothing on which it
logically or legitimately stands. The feudal basis on which it once
stood no longer existing, the monarchy now is only an impedient to
good government—an obstruction to the prosperity and progress of the
islands. Incapable of comprehending the principles of constitutional
government, more likely to take the advice of unworthy counsel than
of the more competent, the reigning Sovereign insists in dealing with
what properly belongs to the legislature and to the ministers. Thus
the palace is constantly open to superticial and irresponsible courtiers
and to unprincipled adventurers of different nationalities. Instead of
exercising a salutary influence on public affairs it is the center of mal-
administration and of the most vicious kind of politics. It is now,
and it has been for the last twenty years, and is always likely to be, a
fruitful source of public demoralization.

It may be asked why do not the people of the islands at once réform this state of things? There is a considerable number of intelligent, energetic, and excellent citizens, of the different nationalities, in possession of the elective franchise. They are largely Americanized in their opinions and manners. They are sympathetic with American institutions. This is so of the Portuguese, the Germans, more or less of the English, and of the native Hawaiians and half-whites, as well as of the most of those of American parentage. But these unaided and alone can not well make the necessary changes in the existing condition of things. As a crown colony of Great Britian, or a Territory of the United States, the government modifications could be made readily, and good administration of the laws secured. Destiny and the vast future interests of the United States in the Pacific clearly indicate who, at no distant day, must be responsible for the government of these islands. Under a territorial government they could be as easily governed as any of the existing Territories of the United States.

The men qualified are here to carry on good government, provided they have the support of the Government of the United States. Why not postpone American possession? Would it not be just as well for the United States to take the islands twenty-five years hence? Facts and obvious probabilities will answer both of these interrogations. Hawaii has reached the parting of the ways. She must now take the road which leads to Asia, or the other, which outlets her in America, gives her an American civilization and binds her to the care of American

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destiny. The nonaction of the American Government here in thirty years will make of Hawaii a Singapore, or a Hongkong, which could be governed as a British colouy, but would be unfit to be an American Territory or an American State under our constitutional system. If the American flag floats here at no distant day, the Asiatic tendencies can be arrested and controlled without retarding the material development of the islands, but surely advancing their prosperity by diversifying and expanding the industries, building roads and bridges, opening the public lands to small farmers from Europe and the United States, thus increasing the responsible voting population, and constituting a solid basis for American methods of government.

Two-fifths of the people now here are Chinese and Japanese. If the present state of things is allowed to go on the Asiatics will soon largely preponderate, for the native Hawaiians are now decreasing at the rate of nearly one thousand per year. At the present prices of sugar, and at the prices likely to hold in the future, sugar-raising on these islands can be continued only by the cheapest possible labor--that of the Japanese, the Chinese, and the Indian coolies. Americanize the islands, assume control of the “crown lands," dispose of them in small lots for actual settlers and freeholders for the raising of coffee, oranges, lemons, bananas, pineapples, and grapes, and the result soon will be to give permanent preponderance to a population and a civilization which will make the islands like southern California, and at no distant period convert them into gardens and sanitariums, as well as supply stations for American commerce, thus bringing everything here into harmony with American life and prosperity. To postpone American action many years is only to add to present unfavorable tendencies and to make future possession more difficult.

It is proper to consider the following facts: The present Sovereign is not expected to live many years. The princess heir apparent has always been, and is likely always to be, under English influence. Her father is British in blood and prejudices, firmly intrenched here as collector of customs, an important and influential office. She has been for some years and still is in England; her patron there who has a kind of guardianship of her, T. H. Davies, is a Tory Englishman, who lived here many years, who still owns large property in the islands, and is a resolute and persistent opponent of American predominance, bitterly denouncing even the American acquisition of Pearl Harbor. Mr. Wodehouse, the English minister, has long resided here; his eldest son is married to a half-caste sister of the Crown Princess, another son is in the Honolulu post-office, and a daughter also is married to a resident of one of the islands. The death of the present Queen, therefore, would virtually place an English princess on the Hawaiian throne, and put in the hands of the ultra-English the patronage and influence of the palace.

In the existing state of things, with non-American intervention, these palace influences, skillfully handled, are nearly equal, frequently superior, to the power of the legislature. Add to this palace power, in British hands, the influence of an adventurous, impecunious, and irresponsible mob of "hoodlums” and there results a state of things which would put it in the power of Canadian and ultra-British schemers, with a subsidy fund of $50,000, to secure control of the legislature, and by prompt and vigorous action secure Canadian and British fran chises, privileges, and rights entirely legal, to get rid of which would cause embarrassment and expense to the United States and her allies here. As is well known to the Department of State, Secretary Marcy,

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with the approval of President Pierce and Cabinet, authorized the ne gotiation of a treaty for making these islands a Territory of the United States. Commissioner Gregg was authorized to facilitate the negotiation by the promise to pay $100,000 for pensions to the King, chiefs, and other official persons, on condition that the sovereignty and property of the islands should be transferred to the United States.

Commissioner Gregg exceeded his instructions by stipulating to pay, in all, three times the sum which Secretary Marcy named in his instructions. These terms were deemed onerous and unacceptable by the Washington Department of State, and consequently the treaty was dropped, after all negotiations had been completed, the King finally being induced by his Scotch minister of foreign affairs not to sign it, though the King and cabinet had previously given their support to the spirit and terms of the negotiations and the conclusions reached. The embarrassments and objections that then existed as to the number of the royal princes and chiefs, the sinall number of the American population, the want of ready communication with the United States, and distance from Washington, now no longer stand in the way of making Hawaii a well governed and prosperous United States Territory. The reasons for annexation in 1854 were certainly much less adequate and pressing than they are now.

THE EXISITING BUSINESS STATUS.

It is well to consider the existing state of things here resulting from the change in the United States sugar tariff. Only personal observation and a careful investigation of the facts can give an adequate idea of the severe blow sugar raised here has received. The production of sugar being the main business of the islands, the great reduction of the market price has effected powerfully the entire affairs and condition of the islands. I think it underestimating, the truth to express the opinion that the loss to the owners of the sugar plantations and mills, etc., and the consequent depreciation of other property by the passage of the McKinley bill, wise and beneficial as that measure is proving to be for the vast interests of the United States, has not been less than $12,000,000, a large portion of this loss falling on Americans residing here and in California. Unless some positive measures of relief be granted, the depreciation of sugar property here will continue to go on. Wise, bold action of the United States will rescue the property holders from great loss, give the islands a government which will put an end to a worse than useless expenditure of a large proportiou of the revenues of the country, using them for the building of roads and bridges, thus helping to develop the natural resources of the islands, aiding to diversify the industries, and to increase the number of the responsible citizens.

WHAT SHOULD BE DONE?

One of two courses seem to me absolutely necessary to be followed, either bold and vigorous measures for annexation or a “customs union,” an ocean cable from the Californian coast to Honolulu, Pearl Harbor perpetually ceded to the United States, with an implied but not necessarily stipulated American protectorate over the islands. I believe the former to be the better, that which will prove much the more advantageous to the islands, and the cheapest and least embarrassing in the end for the United States. If it was wise for the United

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States, through Secretary Marcy, thirty-eight years ago, to offer to expend $100,000 to secure a treaty of annexation, it certainly can not be chimerical or unwise to expend $100,000 to secure annexation in the near future. To-day the United States has five times the wealth she possessed in 1854, and the reasons now existing for annexation are much stronger than they were then. I can not refrain from expressing the opinion with emphasis that the golden hour is near at hand. A perpetual customs union and the acquisition of Pearl Harbor, with an implied protectorate, must be regarded as the only allowable alternative. This would require the continual presence in the harbor of Honolulu of a United States vessel of war and the constant watchfulness of the United States minister while the present bungling, unsettled, and expensive political rule would go on, retarding the development of the islands, leaving at the end of twenty-five years more embarrassment to annexation than exists to-day, the property far less valuable, and the population less American than they would be if annexation were soon realized.

It may be said that annexation would involve the obligation of pay. ing to the Hawaiian sugar-producers the same rate of bounties now paid to American producers, thus imposing too heavy a demand on the United States Treasury. It is a sufficient answer to this question to say that it could be specifically provided in the terms of annexation that the United States Government should pay 6 mills per pound$12 per ton—to the Hawaiian sugar-raisers, and this only so long as the present sugar-bounty system of the United States shall be maintained. Careful inquiry and investigation bring me to the conclusion that this small bounty would tide the Hawaiian sugar-planters over their present alarming condition and save the islands from general business depletion and financial disaster. Could justice to American interests in the islands and care for their future welfare do less than this?

To give Hawaii a highly favorable treaty while she remains outside the American Union would necessarily give the same advantages to hostile foreigners, those who would continue to antagonize our commercial and political interests here, as well as those of American blood and sympathies. It is a well authenticated fact that the American sentiment here in 1890, the last year of the great prosperity under the sugar provisions of the reciprocity treaty, was much less manifest than before the treaty had gone into effect, and less pronounced than when Secretary Marcy authorized the negotiation of the annexation treaty 1854. It is equally true that the desire here at this time for annexation is much stronger than in 1889. Besides, so long as the islands retain their own independent government there remains the possibility that England or the Canadian Dominion might secure one of the Hawaiian harbors for a coaling station. Annexation excludes all dangers of this kind.

Which of the two lines of policy and action shall be adopted our statesmen and our Government must decide. Certain it is that the interests of the United States and the welfare of these islands will not permit the continuance of the existing state and tendency of things. Having for so many years extended a helping hand to the islands and encouraging the American residents and their friends at home to the extent we have, we can not refrain now from aiding them with vigorous measures, without injury to ourselves and those of our “kith and kin," and without neglecting American opportunities that never seemed so obvious and pressing as they do now. I have no doubt that

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the more thoroughly the bed rock and controlling facts touching the
Hawaiian problem are understood by our Government and by the
American public, the more readily they will be inclined to approve the
views I have expressed so inadequately in this communication,
I am, sir, your obedient servant,

JOHN L. STEVENS.
Hon. JOHN W. FOSTER,

Secretary of State.

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NOTE.-On the following pages will be found statistics from the Hawaiian census reports of 1890, touching the population, the different nationalities, the principal property owners, the amount of Government revenues and expenditures, Government property, etc., which will help educate the views I have expressed in the preceding pages.

J. L. S.

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