The New York herald., 1873-11-24

amount equal to its face at the time Of issue, he
should receive like i've per cent bond therefor.
Thus 1t viii be seen the bond, being made con-
vertibe and recoverable into currency, would
practically become currency ITSELF save where the
holder desired greenbacks In small amounts for the
purpose OF paying laborers or some petty trafic
where small amounts were to be paid out to diner-
ent persons. BY this means the United States
| would gain the amount OF interest PAYABLE upon
| those bonds while they were in the hands OF tho
Treasurer; but It Is not probable that it would in
practice be very considerable sum, yet 1t would
be saving to the United States equal to the
amount now paid to the banks on their currency,
while the United States loaned back to them the
money which they have invessed in its bonds.
THIS would at once bring our currency, not
to specie payments-which never existed In fact
in the history OF the country. because. although
banks have promised to pay specie, yet we all
know that when any specie was demanded they
| were always unable to pay-but to specie basis
because our five per cent bonds in Europe are now
as an investment, at par, and they would be worth
no less because in the United States new use was
| found for tnem use which would tend to make
them more valuable at home and abroad and
bring them back here and thus the interest
| which we are now obliged to pay to the foreign
/ holders.
We are aware OF but two objections to this pro-
1 pOsltiOH lu0 HTStv WHICH Is SOneLlme5 uTgeu, Is,
that to bring that number OF millions OF bonds into
q condition to be used as currency at the will OF
the holder would produce such extension OF the
currency as injuriously to raise the prices OF prop
erty and unsettle values-in other words, that 1t
| W oud produce .fnnation.n
This CRY is always raised by the creditor portion
| or the country whose claims upon their debtors
| will always be rendered more valuable by any
contraction and less valuable by any extension OF
the currency to repress any movement in the latter
direction. 1t will be observed that while by con-
| traction ofthe currency the value OF every other
species OF property brought down, yet that
species OF property represented by the debts owed
from the debtor to the creditor portion or the peo
ple VIII not be lowered although this is by far the
largest item or personal property. To illustrate:-
III owes 81, COO and contraction OF the currency
diminishes the value OF all his property, he is in
much less able to pay that debt than before but
the amount OF the debt is not diminished, but, on
the contrary, relatively increased. Therefore any
infation Of the currency which raises the value OF
every species OF property which may be used as the
means OF payment by the debtor, while it does not
| enhance the amount OF the debt, might well be
regarded by the debtor portion OF the community
as blessing.
Yet Is it true that the proposition that we have
made would be in fact innatons 1t will be admit
! ted. we suppose, especially by those who believe
that the remedy for all monetary evils Is an influx
OF gold into the country, that II the government
| anybody else should issue many millions oil gold
| dollars such issue would not be imitation. How,
then, can an issue OF any amount OF currency, the
exact equivalent Of gold, each dollar Of which will
| bring gold in the markets OF Europe-as our five
per cent bonds are now selling there for that value
be any lndations II issuing gold dollar would
not be, certainly Issuing its equivalent would not
be. The common idea Of infation was derived
! from state OF things under the old specie paying
| banking system, when certain small percentage
! OF gold varying from Is to Is per cent
was held in the vaults Of the banks for the redemp
ton Of their circulation OF 100 per cent that the
further issue OF such circulation would lessen the
means Of redemption and the disproportion of
| paper to gold would be increased by any further
issue. This was innation; and hence the idea that
all extensions OF currency necessarily in1la-
| tions.
| 1t would be difficult TO show that the greenback,
| issued in exchange for the five per cent bond,
would be any less valuable than the present green
back limited in its issue to $3.50 600. 1t would
have the same and no greater or less pur-
chasing power. 1t could be put at interest at any
moment by reconversion into bond bearing five
per cent interest," which Is greater rate Of inter-
| est as an investment than that for which the gold
dollar can be invested in any country in the world
the greenback, or It's correlative, the five cent
bond, would always be as good for the purposes
investment II not better than any gold dollar
held by the subject OF any gold circulating coun-
try, and Of course 1t must have an equal purchas-
ing power.
! The only other objection that has been urged to
our proposition is that the government ought not
| to be called upon to keep on hand an amount OF
greenbacks sufficient to answer the possible con-
version of the large amount OF five per cent bonds
AS we have before limited, such conversion in prac-
! tlce never would be necessary called for The
bond, bearing interest while in the possession OF
the holder and It's interest ceasing when deposited
| in the Treasury, would never be converted into a
greenback in practice unnecessarily, because that
would involve the loss OF Interest," and in all lrger
transactions the bond itself would, with It's accu-
muated interest, be used as a circulating medium,
and only converted when money Tor payments IN
small amounts was needed
or course the limits OF this article forbid the
sderation of details OF provisions for carrying this
system into practice, but a moments rejection
| will show that they would be neither complicated
! nor numerous.
! An advantage, which will at once occur to any
one. of this system OF currency, and controlling
! one, would be that it would regulate ITSELF When
| ever the bond more valuable for currency
| than an investment at five per cent it would be
| drawn out OF the pocket Of the holder and used
| such. Whenever 1t became less valuable as cur
! rency than as investment at five per cent it
would place itself on interest at that rate; and all
temptation to use 1T in order to obtain interest
prevent its lying idle which is the source or much
or speculation, would be taken away.
| Again, such system OF conversion and recon-
| version would do away substantially with deposits
OF money either with banks or private bankers ION
call' at low rate OF interest, which has shown it.
self under all systems OF finance the fruitful
OF panics, money fluctuations and consequent
dlsarrangement OF business AFFAIRS. The very large
sum which could be made &C once available Tor
currency whenever the rate OF interest would rule
nigh enough to call it out would efectuay preveIs
all sock -upsr OF currency for the purpose OF rails