The Kalākaua coinage is a set of silver coins of the
No immediate action had been taken after the 1880 act authorizing coins, but King
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 They remained in the flow of commerce on the islands until withdrawn in 1903, after Hawaii had become a US territory.
In 1847, King
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
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.