The New York herald., 1875-08-28
PAPER VS.. COIN.
Letter from Wendell Phil
lips on Currency.
LEGAL TENDER NOTES.
The People Stand Be-
hind Them"


Tender Club 1t gives in forcble language that gentle
mans views the delicate question of circulating
medium, and will be read with interest by all who
money want it,
AUGUST %, 1875.
Mr. EUGENE BEEBE Secretary OF the Legal Tender
Club
DEAR sR-I appreciate the great Importance OF your
agitation to prevent further contraction OF the cur
rency and am sorry shall not be able attend your
meeting in September 1t seems to there but
two questions to be touching currcncy:-
First-Upon what basis shall 1t rest
Second-How much of it shall we havef
long time ago there might have been third--of
what shall 1t be made, gold and silver paper But
the experience of business long answered that
inquiry and settled it beyond recall that throughout
Christendom the currency be paper 1t idle to
talk to-day of specie basis That gentle hallucination
has been encouraged to quiet tmd and delude the
But the thing itself has really existed for
fifty a hundred years Great Britain where, il any
where, such basis could be maintained, has to-day
fifty cents of coin to 800 of paper. Patterson,
Science of Finance, pp s. g. 81, 2s 81, 49, Edinburgh,
1861
Amy individual may have that nty cents provided he
does not need it, and provided there is special
son why he should have it, If at any time his business
absolutely requires that he should have that fifty
of coin at that time he cannot have It, specie basis Of
fifty cents coin to support 500 paper 1t reminds
of that Irish six bottle topper who always down
drink with small bit of strawberry at the bottom of
his wine glass and kept 1t there through the evening
at gave fine flavor to the wine" Doubtless that
fifty cents coin gives strong specie flavor the
system of British paper and makes Bull feel warm and
comfortable.
Political economy settles very few points by theoriz-
ing. Now and then experience decides question: and
II passes into accepted and undeniable truth In this
way business experience has decided that currency in
civilized and commercial nations, must rest on credit
and consist of paper Thus experience first
question; the currency does and must rest on
credit Whose shall that credit be Shall 1t be the
credit of banks and their the credit of the
nationa This question also experience has answered
Before the had banks resting each on its
own credit. We all remember the result Tho bills Of
bank ceased generally to be hundred miles
from its counter. You lost ten per
cent in changing those of the South and West
for Eastern bills; and Horace Greeley demurcy told the
committee who paid him handful of Western bills 'If
convenient should much prefer a we'll executed
counterfeit on some Eastern bank" What makes
national bank bills good and equally good, everywhere
to-day? The nation stands behind them Such notes
pass everywhere, and everywhere at the value,
because the nation guarantees them All the cur
rency have rests national credit directly ind-
rectly. No man can give why they should not
all rest directly national credit; why all bank bills
should not be withdrawn and legal tenders supply their
place.
In building house you do not put platform be-
tween the house and its foundation. Certainly not
Your walls directly on your foundation. To-day
the nation pays the banks $40 OOO 900 allow
them to play the useless part of standing between it
(tEe nation) and its currency. Dr. Franklins
hero, who asked his victim TO pay for heating the
poker, a most reasonable person and a Solomon
compared with ourselves in this matter have heard
of incompetent man put under guardianship and
obliged to pay trustees literally for taking Of his
property but heard OF put under guardian
ship and paying his guardian literally and then obliged
to do all his business BESIDES which is exactly
We furnish the credit that supports these bank
bills and then pay the banks for using that credit
Bageho the highest authority in England says the
public takes Bank of England bills without inquiry or
hesitation because knows that in any emergency the
government will sustain the bank. Here bills pass
because the government is distinctly pledged to do
The two great commercial centres have drifted into
currency based, in fact government credit and they
deliberately accept the situation
Our first question ton what shall currency rest7)
is fully answered by facts In commercial nations 1t
rests, and must rest on government credit
Second-How much currency shall we haveH
ueClue or ever
did decide this question. Currency made up of bank
bills, deposits, notes. bills OF exchange &c. is like any
other article of manufacturc-we make much of it
need The business of a country, when not inter-
fered with always settles the of Its currency
Business creates everywhere and at all times Just such
and just 80 much currency as 1t needs Banks and
retaries of treasures imagine they determine the
amount Of the currency AS well might Old Probability
claim that he determined tho weather He and they only
record what mighter forces do Hats Shoes wagons
rails cloths, cotton wheat-one year want more
the next year ess-who decides The dealers In the
article and the of it Does anybody advise going
back to other days and having board Of
decide how much wheat shall be planted and how much
cotton, how many loaves wagons made ? No such
obtrudes himself tho public. But thousands
clamor for allowing bank directors and them alone
settle the amount OF the currency. And they are al
lowed more control than any other agency. The New
York city banks alone increased the currency
So 600 900 49, 95 2OO) in month"; September 1874
and decreased it So 900 900 n of March, 1873
This aristocracy in the money manufacture is odous
opoy, alien institutions and harmful TO our
prosperity What should we say If 500 men and such
friends they chose allowed to plant wheat and
mine iron while every one else was forbiddcnS
Yet this is but another name for present bank
system. Let cease hcn to have any plan either to
enlarge the currency Let the government
stand ready to issue all the currency any business
wishes and give good security for at low interest
and convertible into long bonds If necessary in order
TO conciae existing prejudice let tho capital of these
bonds, having long terms to rum be payable in gold
Make grccnbacks legal tender for all purposes customs
and all government dues included. There is every
reason why this should be done. History is repeating
itself England knew prosperous years
than from 1900 to 1920, during which she neither had
gold, nor wished TO have it, promised to pay gold
any whatever All that while she extended and
contracted her currency without any regard whatever
TO gold. Her enormous trade and expenditures were
all paper and only paper resting credit and nothing
else. We had similar prosperity during the war and
after on the same terms In 1920 England yielding to
theorists and drcamers, tried to put this wine into
old bottles and dragged her business back to methods