Litchfield enquirer., 1875-10-21

he want to facilitate those business trans actions with his system of 1nconvertible bonds If so, how? As understand the system-the peculiar claims of which l mean to discuss at length another time the inconvertible bonds are to be given by the government to those who deposit currency in the Treasury, and are to be ex- changed for currency again at the option of the holder. Now, is the governmentto to to discount notes and bills of exchange and accommodate private business with time loans? Is that possible?
 CHILDISH CONCEPTION.
 Mir. Phillips affects to look down upon me with some condescension as only na- tive of Germany. He was born in this country and lives in one of the finest com mercial cities of Union; but has he the faintest conception of what is going on in the busy life around him? If he has he would himself enjoy a hearty laugh at the ldsa of supplanting our system of checks, notes, and modern bank facilities with his system of greenbacks and lnconvertible bonds" He would understand that such a substitution, even If we multiplied our greenbacks ever so much, would produce so serious a contraction as to bring the business of the country to an almost ab- solute stand-still. The conception is so utterly childish that we wonder how it could have arisen in the brain of g man of only average good sense in this nine- teenth century. So much for the first point.
 FACTS FROM THE WAR.
 Second-Mr. Phillips impugns my IL -R " respectable economist the world over, that the expansion of an irredeemable pa- per currency will result in it's deprecia- tion. He says : Suppose we double the real currency (meaning greenbacks) will and especially the price of gold ?'' and show that during the war the premium on gold went up or down irrespective of the quantity of the paper currency issue. During the war of course it did. Mir. Phillips seems to Ignore the first princi- ples governing the value of an irredeema- ble paper currency consisting of govern ment promises to pay. That value will be affected by two things the credit of the government issuing 1t, and the relation the volume of the currency bears to the requirements of the business of the coun- try. What Is 1t the credit of the govern ment depends upon Its honest intention to redeem its pledges and it's present or prospective ability to do so. As to the former there was no question, but as to the latter, the vicissitudes of the war pro- duced from time to time serious doubts If MT. Phillips does not know the effect, the history of war will inform him. He will find that every battle we lost and every period of Encouragement at the standstill of operations raised the premium on gold, and that every battle we won lowered it, until, finally the surrender of Lee and the end of the war brought it down with Q bound. Although the quan- titv of the currency in circulation had been diminished, every sensible man, un- 'derstanding the reason, will not find this surprising. It Is surprising only that any man, pretending to good sense, should have to be informed of that reason. But can Mir. Phillips really be in earnest when he declares the expansion of an irredeem- able currency will. of necessity, act upon it's value as to gold or to reduce generally it's purchasing power, as soon as the Vol ume of such a currency exceeds the amount which would circulate in gold and notes convertible into gold Can he not understand that the dishonored prom ises to pay of government must necessa rily lose in value the greater their amount and less the probability of their redemp- ton ? Assuming his own tone of argu- ment, would inform him that there is country called the United States, which once had an irredeemable paper currency called Continental money which was in- creased in quantity until it shrunk in val ue to nothing.
 FRENCH AssIGNATs
 There is country called France, which had an irredeemable money, called ''As- sjgnats," which became so plenty that q bushel of it would not buy potato. .
 There is country called Russia and one called Austria. both of which have had experience with irredeemable paper money, demonstrating the same principle. Mir. Phillips has probably heard of these things, but there is evidently q vast field of study for him before he writes on this subject again.
 DISHONEST QUOTATIONS.
 He argues also that the quantity of an irredeemable currency in circulation has no connection with prices, and in support of that thought he quotes John Stuart Mills Political Economy, as follows :-"I apprehend that bank-notes, bills or checks, as such, do not act upon prices at all What does act on prices is credit in what ever shape given and whether it gives rise to any transferable instruments ca- pablo of passing into circulation or not Then Mir. Phillips quote Professor Bona. my Price in confirmation of the same doc- trine. l cannot, it seems, expect Mir. Phillips to be polite, but I might expect him to be candid. Does he not know that John Stuart Mill, in the passage quo- ted, does not speak of an irredeemable paper currency at all, but does speak of of bank notes convertible into coin !? Is Phillips ignorant of the difference between the irredeemable paper money and a cur rency convertible into coin? It would seem so, for otherwise common honesty would have prevented him from quoting a sentence from Mr. Mill, referring to one as referring to another. As Mir. Phillips desires to know what Mir. Mills thought of an irredeemable paper currency in that respect would refer him to pages SS-1O4, Political Economy, second volume. I will select only 8 passage at random :- ''TO the increase of an incOnvertible cur rencv, if permitted by law, there is no check. The issuers may add to it indefi- nitely, lowering it's value and raising pri- ces in proportion. They may in other words, depreeiate the currency without limit" Page 90). Mir. Phillips has evil dently studied John Stuart Mill to advan- tage. Has he studied Bonamy Price !? Unfortunately have not his book on currency before me, but may recommend it to MT. Philips and all those who are still afflicted with the irredeemabie paper currency distemper. know Professor BOnamy Price very well, and have person. ally discussed with him this very question. feel warranted in saying to Mir. Phillips that if he should assert before Bonamy Price that the expansion of an irredeema- ble paper currency beyond the amount which would circulate in gold and notes convertible into gold would not infate prices, the Professor would anxiously in- quire after his health. So much for the second point. .s.. .. ExTRAvAGANcE AND CORRUPTION.