The New York herald., 1873-11-27
THE MONETARY SITUATION.
What the People Know About an
Elastic Currency.
The Introconvertible Plan from Pop
ular Standpoint.
VIEWS OF CORRESPONDENCE.

New YORK, Nov. "a, 1873.
To THE EDITOR OF THE HERALD
have read carefully the communication pub
lished by you on Monday, signed "Necker," and
would like to ask your spondent where does
he propose TO get Ave per cents from to carry on
this convertible and recoverable currency plan
He says there are $3.50 OF these outstanding
Now, we all know how this loan was noated, viz.
through syndicate who disposed OF the bonds In
Europe ana to the national bank here in exchange
or the six per cents deposited by them as secur
tty for their circulation What the national banks
hold are already hypothecatcd, and what are held
In Europe are
BEYOND OUR REACH.
as we have not the money to buy them back, for il
we had we would not want 'Neckers'' plan Ol
relief
This plan is NOT new, having been brought
before the people in letter OF Horace F.
Day, first Vice President OF the National Labor
Union, addressed December I, 1872, to the chair
man OF the Congressional Democratic Committee
Mr. Day, in the course OF his argument urging GER
tain reforms, said :-"D0 you ask what can, what
ought we to dor answer again, begin with the
finances. Here is our first and greatest evil. Let
Congress pass law creating 1000 100000 OF three
per cent or 65-100 per cent consols or,
as we call them, bonds, convertible and re-
convertible into legal tender certificates OF value,
stamped, coined money made OF paper, corre-
spending in denomination with our greenbacks.
Sell these bonds and pay on in tins money or as
best we can, no matter how, so we keep ialth with
our original contracU all other United States
bonds.' This plan OF a new issue OF 85l0o per
and from legal tenders is substantially the same as
that OF Treasurer spinner, involving temporary,
at least, increase OF the interest burden OF the
country, while Mr.. Days plan Of purchasing up
the present outstanding debt with the proceeds OF
the great loss which would accrue to the United
States In the premium such outstanding bonds
would suddenly acquire should the United States
60 into the market under such circumstances as
purchaser; and secondly, from the simple fact
that SO many OF our bonds are held abroad. A
close examination OF the subject has shown,
that this plan would not work. Business re-
quires more than the mere lntroconvertbiity OF
governments with currency lorits relief now, while
as to any progress to be made towards furnishing
an elastic currency by sucn lntroconyertlbllity Il
would be very slight.
RARELY AT ANY TINE, DURING THE PANIC WAS
MONEY uNPRoCuRABLE ON GOVERNMENT BONDS
at the legal rate OF interest; but the men who
most needed money did not have the government
bonds. Business men cannot afford TO have so
much capital virtually retired rom their business
TO meet an emergency which might never occur,
but which the too general lookup OF money in such
way might occasion, this plan leaving 1t IN the
power power OF specuiators, by bringing ABOUT such a
money market at any time. In the test thus ap.
Piled to the introconvertlhle bond scheme,
Whetner this quality be extended only TO the
nVe per cents or extended to all present out
standing bonds OF the government or conferred
only as premium upon the new 65-10O per cent
certlncates, to induce their rapid absorption at
home, s TO be found but little relief in
exist in our present financial system lie deeper
than such remedy as Is there contained Can
reach.
WE HAVE TO DEAL WITH CUMULATIVE ILLS
tnat nave grown up since the first outbreak OF
the rebellion. We have to retire our $400, 100000
Hentng nothing but the credit Of the government,
and substitute therefor gold as the basis OF bank
only but tn representatve Of vaipe tnat It repre-
sents debt III the great national ledger wherein
our domestic exchanges are set Gown, ana M ,n tnai
tender and national bank note alike. We must
learn further that promissory note, check or
backs or bank notes, debts deriving their currency
value from the credit that is behind them, which
credit to be sound requires the existence OF
something material, at least equal in value to the
DEBT IL has created. These are distinctions that
require to be borne in mnd as In their knowledge,
understanding and practice is to be found the eau
tion and conservatism so necessary TO true bank
ing: The pubic, on the contrary, are too apt to
would on being told when the thermometer stood
at zero that there was no such thing as cold 1t was
only an absence OF heat.
CREDIT Is ONLY EuPHBMIsA
invented by people who owe money to save their
neTe woua be ewer HAD the
back regularly borne In our daily exchanges Its
proper relation TO gold, and been quoted at
discount nom gold, does any one suppose that
gold would nave reached the extreme premium 1t
did Certainly not. With the visible dcprecia-
tion of the greenbacks would have come gradual
retrenchment, economy in public and private
affairs, and their redemption before now. But In.
making the greenback dollar legal tender to the
extent of one dollar Congress put a premium on
extrayagancA and on reckless expenditure, Just IN
the proportion its acceptance as one dollar was IN
excess OF its real value as compared with gold.
These are faults in our present monetary system
that must be eradicaed. Congress will ia short OF
proper appreciation OF the problem before 1t If it
does not provide Tor the gradual retirement OF the
greenback currency. Com alone Is money. be-
chandise value equal thereto. This, paper can
never possess. Hence coin alone should be the
Of e But the tSan ns
supply OF bullion will permit Of there must be
another currency to supplement It's employment.
shall such paper currency acquire the confidence
OF the peopleY This is very simple, by requiring
such security behind 1t as Is equivalent TO It's lace
THE PROPER INTRoCONvBRTiBLE CURRENCY, Ex-
cHANeEABLE ALIKE FOR GOLD OR MERCHANDISE
at par. 1t Is perhaps needless to repeat that
only under free banking system can such o cur
rency be obtained. TO limit the security OF bank
an unfair discrimination against other securities
equally as good and more readily obtainable, and
sion when business needs called Tor It. At the
same same time y is equally necessary that
this matter OF security-a supervision which
properly belongs to the COMPTROLLER Of
be organized a great national clearing house, with
power to apply general laws operative In this re-
spect designed to secure safety with the widest
freedom. Only such restrictions should be imposed
upon banking as would guarantee security to the
public; all else would be undue interference. We
do not wish to lose the uniformity OF our currency
as Ii now stands, nor its safety, but we want to
give IL elasticity responsive to the needs OF the
people operating through their own channels, the
government only standing by to see to an honest
administration. Unless these principles are held
clearly in view by Congress all measures Of reform
VIII prove but temporary expedients. **#.
NEW YORK, Nov. "a, 1879
To THE EDITOR or THE HERALD
Your earnest article upon currency this morn.
ing, encouraging the expression OF all views,
prompts me 70 offer lew remarks, founded upon
many years consideration OF the subject In this
and other countries.
Hrst-1he money OF a country, whether in coin
or paper, should emanate from the government
the security being national and the pront iran
chlse OF the people.
Second-spccie currency Is Incompatible with en-
,eIprlse ana active industry. Too limited circu-
ia.nng meuium drives people to inertness.
Muu-ine volume OF paper or auxiliary crCu-