New-York tribune., 1875-10-09
INITIATION FALLACIES.
A LETTER FROM EX-SECRETARY McCUI~
LOCI.


RFsoLUTIoNs-wuY NOT HAVE CHEAP WHISKY
WITH CHRAP MONEY!
To ihe Editor Of The Trtbune
SIR: Mr. Phillipss letter TO the Legal Tender Club
may be fine rhetoric, hut it would he difficult TO find
in the same compass many transparent faliacles
and erroneous statements Ii is true that through
ont ChrstcndOm" paper is made. to large extent,
substitute for con but ii never does its work well
except when it is the equivalent of coin. 1t s only
when paper money becomes deprecated and drives
spccie out OF circulation that it becomes mischiev-
As long it has the purchasing power of coin it
isa hcathfnl and convenient substitute for it. When
it has not this power it fails TO perform its proper
Office Nor does it, when it is the equivalent of
coin. take absolutely its place II merely shares the
field with coin and by increasing the volume of cur
rcncy gives stimulus TO enterprise announcement to
industry. and assistance by facilitating credit to men
of moderate means in competing with caltahsts
In Great Britain in Germany in France, in Holland
and other prosperous European States there is moro
coin IN circulation and in the banks than bank
notes II not in Italy because there currency
(which, by the way, il not half so deprecated as
our logaltenGer notes. drives specie away, as 1t
does in the United STATES But even Italy. notwith-
standing the cxpcnsiycness of her large standing
army is moving in the right direction, aud the indi-
cations are that within a brief period she also VIII
have a bank note currency equal to coin.
Mr. Phillips SAWS that political economy "settles
few points," that il is experience which decides
nucstiOrs and that buSiEess experience has decided
shat currency in civilized and commercial nations
must rest upon credit and consist of paper" With all
proper defeIeace to such high authority, venture
20 assert that the experience of civilized ana COM
nercial nations has decided no such thing; that ON
the contrary it has decided that currency shonld
rest upon CON- and that no currency which is not
the equivalent Cf coin or in other words, which has
not the purchasing power of coin, should he toicr-
ated For proof Of the correctness of this assertion,
point TO ,he present condition Of all the leading
commercial s. tates Of Europe.
SPECIE IN BANKS.
Mr. Phillips also cOntcuds that specie cannot be u
proper basis for currency, because there is not
enough of it held by the hanks to redeem their cir
cuatng notes and he illustrates his point by com
pairing John Bull to the siXbOtte topper who re-
Trained from drinking tho wine he 50 dearly loved,
in order that he might enjoy the delightful! fragrance
of the strawberry at the bottom Of his glass. MI
Phillips has doubtless beeI close observer of the
habits OF topers. and Of their power of controlling
their appelitcs bat he certainly presents them IN
different light from that in which most men
have Lecn in the habit of regarding them. A
topper who could sit "a whole evening with
the tempting liquid unta5ed before him, in order
wine but OF the small bit of strawberry" which 1t
covered. would be worth going to see. What a sub
iect for "A IIocarth" would such topcr have been
''The vast system of British paper" which Mr..
Phillips speaks of is not Onc-haf Of the amount OF
thc paper money in circulation III the United states.
There is, a. have SAID coin enough and more than
enough in Great Britain to redeem every dollar VI
paper money Tiers is in circulation within her
boundaries 1t is not, it is true, ell held hy the
banks; but enough is held by them to enable them
10 meet promptly all calls that are likely to he made
upon thcln and bank notes have everywhere III
Great Britain the purchasing power of CON- 10 re-
quirc banks to keep constantly IN their vaults
specie enough to redeem their notes would
defeat the main object for which banks OF
issue have been created. A large portion of con-
vertibe bank notes in all commercial countries, is
so much needed for actual and daily use that there
is never dancer OF its being presented Tor iclenp-
tion. The bauks of the United States have unGouht-
rdly held too little specie IN proportion I" th'ir
circulation but il all the panlcS that have OcctlFe
land panics viii occur IN all tEtcrprlslng aud com
mercial natiOnsi it Is their ac0sitorS ana not the
notchoders that have compelled them to shut Their
doors As have before said, banks OF issue exist IN
all commercial countries. They have eNiNt'd III the
United States from the foundation oil the HoNtrlic
nent and they will exist in some form to Che end OF
IT, Badly as they have been heretofore managed
the country has advanced IN wealth ana population
in % manner of winch We may bt justly lN1ud' o"T
national banking system iC1uHtS Wlat iS r'qHlTtu
by no other banking system in the woIll-aud IN
that consists It's Superiolity-that every dollar OF
bank notes i'm circulation Shall be secured 10y
than its cquiyalen; in value. Can there be better
circulating medium than this
TIE LESSONS or EXPERIENCE.
Mr. Phillips states that in building house
do not pa; platform between the house and the
foundation :" neither do we make the foundation tie
house Bani. notes which are furnished by the Gov
ernment 10 the banks in exchange for United STAKES
1,,,l, ,,1icI, oro worth rrcfuiuIn Oo'1 would
seem 20 rest upon the solid foundation that hr. Phil
lips speaks a. The statement that the
banks stand between tine Government and
the people at cost OF S2oOoo,CoO a
wear 10 the latter Is cXaggeTdtiOu. The
interest which the banks receive Oh the bends which
they are compelled 10 deposit with the treasurer Is
0yrrstate1 and no deduction il made Tor the taxes
10 which H. banks are subjected but il the banks
were the ganeTS to the extent named, would thai e
"A sufficient reason either iOr returning 60 The od
state bank system (which banks OF the wildcat
nature would not obic.t tor, OF for keeping up direct
ISSUES by the Government Of dcpreciatad currency
in comparison with the evils resulting from WHICH,
according to high Authority, ordinary tyranny oD-
preston. ard ercosgrc 'ara''oa bear iigd|y' -
Mr.. Phillips has not arFrcheid, made nance
special study: but. being thoroughly VeTsed III MS
tory he can doubtless inform t:oSe whom he may
address or the clubs 20 which he nay hereafter
write letters, what country has tired the cXperent
of direct issues OF notes without damaging c1iiSe
0uences. The eX Xperiment wac tried on our SIDE III
Continental times, and more recently by IN" Coded-
crates France tried If with aSsignats and lnal!-
dots-wiib what success history informs us. VIII
Mr. Phillips or some brsrher inilatiOnst name the
country IN which the experiment has worked wen
England sees merit IN IT, France seems To regard
one trial sutiicieat. United Germany il now reNls-
ING her financial system, and yet Bismarck to whom
the world attributes great sagacity and ability with
our example before hm, docs not take To IT.
What q Ort-sightcd man he must be to regard
banks as the proper intermediary Tor fuIAlshlhS u
proper circulation to The Germans thus Flting,
platform between che foundation and the house" he
IL erecting! How wiiifuy blind not to adopt sys,
TEN whicn is working 80 charmiugly III the United