, 1870-07-14
THE NATURE OF PAPER MONEY

assuming the form Of active opposition,
THE NATURE OF PAPER MONEY.
One of our Illinois II. C.'s, who is IN
ardent candidate for re-election-Hon. E.
c. 1ngersoll, of the Peoria District has
been enlightening and astonishing Con-
gress with disquisition Oh the nature of
money. Here are few Of his amazing ut
terances on this subject:
q MI. Speaker, the gentleman from Ohio CIR,
GaIaeld,, IN his remarks yesterday, said: Moth
Ing is money except that which Is worth the
amount expressed on the face Of it, That which
gives It va11e Il the promise that 1t will soma day
e psa TT t n1oposo1 ct tais
false 1t is decidedly old 1ogy, and belongs TO the
1osstliferous period. Money may possess no IN
win ls'nn sSme day be paid impa:s to T. necessarily
g Gold or silver coin would hare no value a.
general consent, agreed rha. a certain amount of
1t OF certain nneness Shall be receivable In pay
msnt Of deS,s or in exchange for anything
"our people hayefor several years past been COL
ducting the entire business OF the country upon
paper money not based on coin; neither is 1t con-
ene III pte Saa a. =, ne Spnon o. ne nSds a
its yAlue as circulating medium OF money Is not
enhanced one tota, because 1t Is presumed that 1t
I'LL 6u1uE uA$ Oe p8u OF IEuCGMeA III COLI"
We can imagine that General Garfield
was paralyzed by the shock Of SO much new
light on the nnture of money, and left
speechless, for there is no record that he
attempted any reply, or that any other
member attempted to refute the truth Of
those assertions But editors are not SO
| easily rendered speechless from the effect
of Congressional gas az the honorable gents
themselves, therefore We venture, without
t1epidntion, to take issue with the gentle
man from Peoria.
Suppose the government should an
nounce that it is now prepared to redeem
its greenbacks in coin and to make good
this assertion the Secretary of the Treas
ury was authorized to sell bonds in suf6-
c5ent amount to pay of the notes, what
would greenbacks be worth the day after
such announcement? They would ad-
vance to par instantly. Common sense
accepts the truth of that statement But
this simple test annihilates Mr.. Ingcrsoll!
nonsense, that the value of the paper
money is in no way dependent upon coi1
redemption.
Suppose, again, that Congress should pms.
a bill repudiating the future payment or re.
demption Of its notes, and announcing te
the world that, while they were still a legal
tender in payment Of debts, and would be
received for taxes, they would never be re.
deemed in gold or exchanged for bonds,
would they retain their present market
I values Who believes it? Does Wall
street: The passage OF such bill would
send gold to 800 within week. It Is e1-
t1emely doubtful whether they would re-
tain purchasing power of even 2s pc,
cent And this test of A1r. Ingerson's
proposition shows that he is Us wild as
hawk in his notion that the existing 1scur:
rency is not enhanced one iota because i!
is presumed that it viii some day be paii
or redeemed in COIN"
It is very apparent that Mr.. Ingersoll ha.
never aualyzed the nature of so-callsd
paper money" We trust that his con
stituents ne not equally ignorant, for, il
that case, it would be the blind leading ths
blind. Let US consider the matter little
In the first place, Paper money has no in
hinsic value beyond that of the cotton,
linen, or silk material On which it is printed
It is, therefore, of no value in itself
Whatever purchasing power it possesses il
derived from the promise, or pledge, on it,
face. A bank note is simply q urittez
promise of bank to pay the bearer Ger
tain commodity that has known .1narke
price or exchangeable value. A Treasu1,
note is precisely the same thing. In tht
Inter case, it is the Federal Government
that promises to pay something to The
holder. The gist of the note is the prom,is,
Of ths maker. The note is merely the proof,
in black and white, Of the promise, or III,
written acknowledgement of debt, ant
the negotiable value of the note depend:
upon the known solvency Of the maker, til,
interest it bears, and the time when pay.
able
A greenback is note Of the government
given for value received, payable at ths
Treasury Of the United States, at Ner
York, as many gold dollars as It calls for.
There is nothing else in which it is payable,
except gold The holder has the option to
tender it to the government for taxes, or te
his neighbors for debts; but the govern.
nent is bound to redeem it in coin. TIL,
greenback is, therefore, based on coin,-A1r
IngersoA to the contrary notwithstanding
Why, then, is the greenback note moi
worth par in gold2 Simply because th.
government neglects to fulfil its promise.
1t has not repudiated; it is not insolyent ;
does not deny the obligation; it does not
declare that it never will redeem those notes
in gold It simply pleads present inability,
and says it has not gold enough on hand to
make good its promise;, it wants more
time; after awhile it will either redeem
them, according to promise, or give bonds
in exchange for them.
But the failure TO redeem has reduced
the negotiable value and purchasing powe,
of those notes. Like any other protested
paper, they are at discount, and are
shaved by the brokers when sold 10,
gold. and shaved by everybody when er.
changed for goods or labor. Their market
value varies in proportion to the demand
on the brokers for conversion into gold.
II the brokers would refuse to buy them at
any price for gold, what would they be
worth Mr.. Ingersoll has never thought of
that. No man can he sure that they would
be worth thi1ty-three cents on the dollar.
Their market value, or purchasing power,
is measured by what per cent on their face
the gold brokers will give for them. This
price depends on two things: First, the
faith of capitalists in the ability Of tho gov
eminent to redeem them, and the probable
time when it will be done; and, secondly,
the demand for gold for expectation, as
compared with the supply Of the American