The Burlington weekly hawk-eye. [volume] (Burlington [Iowa]) 1860-1876, 1863-10-24
Financial System of tlss United
8toteO-GOl0 and Credit.

Financial System of tFs United
StStes-GOld and Credit.
The BEEcHEs, September 20, 1867
nave read something upon many difficult
questions; but upon nothing have ever
seen so much mystery and misapprehen-
sion as upon that of credit and money
People will confound the most opposite
things, such as money and capital, credit
and property, public and private credit,
paper and specie, and for want of two or
three simple principles, entangle all the
subjects Of finance. In the United States
the popularity of our condition confounds
both ourselves and the economists of Eu-
rope. Europe laughed at the idea of our
carrying on an enormous war without bor-
| rowing money of them. Everybody re-
members the awful predictions Of the Lon
don Iimes-that we were going on rapidly
| to financial ruin and bankruptcy. The
rebels said the same, and added bread ri
OTIS and other terrible things to the sad pic
ture. What a contrast with that picture is
the result! undertake to say that the
financial prosperity Of the United States
was never so greatas it is this day. Never
was its business so active; the basis of it's
credit greater; or the value of property
higher. shall not stop to prove this, but
| it is susceptible Of the most exact proof. I
shall here only, by way of Introduction to
a fuller discussion of our financial and
| commercial condition, state some of the
| elementary facts. -.
In the first place, money (no matter
| of what composed) is mere machine
to do certain piece of work.
1t stands on the same footing as spin
ming wheel or a cotton gin. Its business is
property. It has no other business. There
are two other elements involved in its use:
its cheGp'sesS and its convenience. As be-
tween paper and gold, paper is both cheap
er and convenient. Hence it is that all
modern communities prefer paper to coin,
and the commercial tendency Of the age is
to substitute paper, as far as possible, for
carry hundred dollars in his pocket (ot
Il gold captal) to make certain exchange,
when he can do it for five cents? The
common sense Of mankind prefers paper
when there is no danger of loss. How
completely money is mere machine of ex.
change may be illustrated by the journey
OF DR.. Barth. He leaves England, for ex.
ample, with bill Of exchange. He finds
that on the coast of Africa they win take
nothing but silver dollars. At Tripoi be
converts his paper into silver dollars. He
leaves Tripoi with 8 bag of silver, and
goes into the interior of Africa. But at :
certain point in the interior, silver come.
his dollars into strings Of shells. called
eos.rtes From that point the little shell.
paid for everything, just as much as if they
had been English gold. They had no in
trinsic value, but they were the currenc,
of the country, and, at q certain point, tn,
shells and the silver had an exchangeabl,
value. Now, in this transaction, the pape
, was more convenient than the silver, ant
the silver more convenient than the shells
And (markD the most civilized nation uset
. the paper. Now, the only difficulty abou
q the paper is, that If it has no exchangeabl,
value tor property, it may be loss on tn,
holders hands. This is the only thing tina
depreciates paper money. We have an ex
ample in the difference between the notes O
! the rebel Confederacy and the United
States Government. The United States note!
, are worth ten times the rebel notes. WHY:
> There are two reasons: First, because
everybody believes the United States bott
can and will pay their notes; and, secondly
because the United States notes are con
vertible into bonds, whose interest is paya
DIE IN gold, which, by the well known laws
, of finance,is equivalent to paying the bonds
. themselves in gold. Nobody believes the
! rebel notes will be paid; and they are moi
! convertible into any kind of value; hence
. they must continually depreciate. Mr.
Robert Toombs says this is in consequence
of quantity. This is mistake He may
: Aohe Guc greater OF less ana, ne
!. cannot raise the value of a note, which the
holder knows, ifleft in his hands, is a dead
loss. These being the principles by which
money is governed, the present credit O,
the Government is obvious. It rests, first
on the ability of the Government to pay its
notes; and secondly, in the fact that it does
pay ya them ia ID, by Raying the interest Of the
vertible into bonds, (Which are only large,
notesO and the bonds bear interestin gold
Thus all the paper currency of the United
, States is now actually specie paid, to the
extent of which the capital OF the country
can be absorbed in bonds. What is the
limit Of that absorption That undoubtedly
is vital question, and shall consider il
will mention only two or three facts, which
will serve as generalization of that sub.
ject. In the first place the property of the
nation is answerable for the debts of the
nation, if the people be an honest people,
and heretofore we have been the most
honest nation in the world. The property
of the loyal States is worth intrinsically
about fourteen thousand millions of dollars.
It can undoubtedly have public debt OF
thirty per cent, or even four thousand mil
lions, In the State of Ohio, the Commits
sioner OF statistics has shown, by indispu!
table facts, that the whole debt-State, cor
porate and private does not exceed twenty
lyeoe per CeftG VI tAe property ibis may De
taken as a unit for the country, and shows
that the vast property Of this nation is cap
able Of bearing an immense debt, in addi-
ton to the, present liabilities. But aside
from all this, these National Bonds are
4 themselves property of the most conven-
lent kind. 1t is simply means of
making mnch Of the fixed prop
erty convertible and 3changeable.-
| Now is this convertibility loss? [
should like to see the man who will prove
that the issuing of United States Bonds is a
loss to the nation. 1t is simply making it