Department of Finance of the Kingdom of Hawai‘i

Corporate body

Department of Finance of the Kingdom of Hawai‘i

• Finance Department

1846-1893

The establishment of a Hawaii Treasury Board in 1842 (Constitution and Laws) was the first official step taken to organize and manage the nation's finances. G.P. Judd, Timothy Haalilio, and John Ii were appointed, on May 10, 1842, the first three members of the Board. The Hawaiian government had incurred a large debt and the Treasury Board was set up to institute a financial system and to initiate revenues to pay off this debt and deal with other growing costs of the new government. One of their first policies, aimed at increasing revenues, was the initiation of an import duty (January 1843) of 3% which later escalated to 5% (June 1845). In order to clarify what constituted a government debt, the 1842 Constitution and Laws passed legislation aimed at restraining the king and chiefs from incurring further government debts. The statute required that no debt would be paid by the government "unless the debt be contracted through the Treasury Board, and the obligation have the signature of the King and Premier."

The Finance Department and the post of Minister of Finance was officially organized by legislative enactment in 1846. The statute (Session Laws, 2nd Act, Part III) relating to the organization of the executive departments describes the Finance Department as follows:

"That in order to conduct with greater certainty and system the several executive functions reposed by the Constitution in the king and premier, there shall be and is hereby created, a department to be styled the 'Department of Finance;' over which the minister of finance, created by an act to organize the executive ministry, shall preside, residing and having his place of business at the seat of the Hawaiian government…"

The act further defines the duties of the department including: internal taxes, foreign imposts, currency and coins, departmental fees, fines, government realizations, keeping books of the respective transactions of each bureau, etc.

The government continued to face increasing expenditures for public works projects as commerce and agriculture grew. These expenditures caused large debts which eventually could not be met by the government's ordinary revenues and borrowing became necessary. The Legislature of 1855 authorized the Minister of Finance to negotiate the first loan and further schemes involving loans and the issuing of government bonds (to cover the loans) became common.

"By the Civil Code of 1859 two important changes were made in the fiscal system designed to increase the revenue of the government: (1) a tax on one quarter of one per cent of assessed valuation was imposed on real and personal property; (2) duties on foreign imports, except alcoholic liquors, were doubled, from 5 to 10 percent. These changes did not cause a substantial increase in revenue immediately, but they did ultimately accomplish that result." (Kuykendall, p.176, Kingdom 1854-1874)

The earliest legislation dealing with taxes appears in the 1840 Laws and here the government sets up internal taxation in the form of a poll tax (on people), a land tax (by volume assessed in swine), and a labor day tax (on people) for public works projects. These programs were overseen by the Governors of each island with the assistance of a tax officer appointed by the King and Premier.

The 1859 tax on real property, mentioned earlier, was a frequent cause of public complaint. Not only because the rate of taxation kept increasing, it rose from one quarter of one percent in 1859 to one percent in 1886, but because the taxpayers disagreed with the assessed value placed on their land. The responsibility for choosing assessors was the task of the Minister of Finance, and tax collectors were appointed by the Governors of each island. In 1887 (Session Laws, p.65), the Minister of Finance assumed the duties of the island governors in the appointing and supervising of tax collectors. On April 1, 1889 (Session Laws 1888. p.82) the Minister of Finance became responsible for appointing one assessor and collector of taxes (called an "Assessor") for each taxation district (four altogether) with the approval of the Cabinet. These Assessors in turn appointed as many deputies as necessary "with the concurrence of the Minister of Finance…to properly perform the duties of assessing and collecting the taxes.” (Session Laws 1888, p.83). On June 12, 1896, an act to provide for the assessment and collection of a tax on income from and after July 1, 1897, was approved.

The Treasury Board and its successor the Finance Department both recognized the inadequacy of available currency, as the Hawaiian government had none of its own and had to rely on various foreign specie. Gold and silver coins, usually of United States origin, were the predominate circulating currency of the Hawaiian Islands. The first coin, a copper cent, was issued by the Hawaiian government in 1847 but gained only limited circulation "owing to the prejudices of the common people against the metal, and more perhaps, the prejudices of merchants against very small transactions." (Finance Report, 1851) Coins were again issued in 1883, when one million dollars in Hawaiian silver coinage was struck at the San Francisco mint in denominations of dollars, half-dollars, quarter-dollars, and dimes.

In 1859 (Civil Code, Section 479) a law was passed to alleviate the problem of insufficient currency.

“For the purpose of promoting convenience in business and exchange between the different islands of the kingdom, it shall be lawful for the Minister of Finance, in his discretion, to receive any current funds on deposit, to any amount not less than fifty dollars, and to issue certificates of deposit thereof, payable to bearer, on demand, without interest.”

The first certificate was issued on October 10, 1859 and people could obtain the paper money (certificates) by presenting their silver or gold coins at the Minister of Finance office for exchange. During Kalakaua's reign the law was amended changing some of the requirements and more notes were issued. These certificates were never widely used as currency due to fears that the notes could be counterfeit and that they were not readily exchangeable for hard coin.

Besides treasury notes, a principal banker (Bishop & Co.) tried to rectify the problem of lack of negotiable large denomination currency by depositing a large amount of silver coins in the Treasury. "For this amount, payable on demand, without interest, receipts" were issued "of various denominations, which being indorsed by the depositor, pass current as money, and are very convenient in payment of large amounts at the Custom House and elsewhere." (Finance Report, 1868)

With the passage of the Organic Act in June 1900, the Territorial government discontinued issuing paper money (certificates) and the 1903 United States Congress passed a law making it illegal to circulate Hawaiian certificates as money after January 1, 1905.

The following is a list of the Ministers of Finance through annexation.

Ministers of Finance
G.P. Judd - (President of Treasury Board, May 1842), April 1846 - September 1849
Edwin O. Hall - (acting) September 1849 - September 1850
G.P. Judd - September 1850 - September 1853
Elisha B. Allen - September 1853 - June 1857
Lot Kamehameha - (acting) June 1856 - May 1858
David L. Gregg - May 1858 - August 1862
Lot Kamehameha - (acting)
Charles Gordon Hopkins - November 5-30, 1863
C. de Varigny - December 1863 - December 1865
Charles C. Harris - December 1865 - December 1869
Stephen H. Phillips - (acting) May 1867
Ferdinand W. Hutchison - (acting)
J. Mott Smith - December 1869 - August 1872
Robert Stirling - August 1872 - February 1874
P. Nahaolelua - February - October 1874
John S. Walker - October 1874 - December 1876
John M. Kapena - December 1876 - July 1878
Simon K. Kaai - July 1878 - August 1880
M. Kuaea - August - September 1880
John S. Walker - September 1880 - May 1882
John E. Bush - May - August 1882
Simon K. Kaai - August 1882 - February 1883
John M. Kapena - February 1883 - September 1885
Charles T. Gulick - (acting) September 1885 - June 1886
Paul Kanoa - June 1886 - July 1887
W.L. Green - July 1887 - July 1889 (withdrew due to illness)
S.M. Damon - July 1889 - June 1890
Godfrey Brown - June 1890 - February 1891
H.A. Widemann - February - March 1891
Samuel Parker - (acting) March - July 1891
J. Mott Smith - July - October 1891
Samuel Parker - (acting) October 1891 - January 1892
H.A. Widemann - January - September 1892
E.C. Macfarlane - September - November 1892
Wm. H. Cornwell - November 1-8, 1892
Peter C. Jones - November 1892 - January 13, 1893
Wm. H. Cornwell - January 13-17, 1893
Peter C. Jones - January 17 - March 15, 1893
Theo. C. Porter - March 15 - May 1893
S.M. Damon - May 1893 - November 1899
Henry E. Cooper - (Ad interim) June - July 1899
Henry E. Cooper - (Ad interim) September - November 1899
Theo. F. Lansing - November - December 1899
S.M. Damon - December 1899 - June 1900

The basic structure and duties of the Finance Department and the Minister of Finance defined by the 1859 Civil Code remained unchanged through annexation except for changes in the rate of taxation and specifications of those persons or things taxed.

Constitution and Laws, 1842
Session Laws, 2nd Act, Part III, 1846
Civil Code, Section 477, 1859
Session Laws, 1887
Session Laws, 1888
Session Laws, 1896

• English

Kuykendall, Ralph S. The Hawaiian Kingdom, 1854–1874: Twenty Critical Years
Constitution and Laws, 1842
Session Laws
Finance Reports

2020-11-23, Joel Horowitz: Entered into AtoM
2022-03-07, Carol Kellett: updated authority record dates; successor entities.