The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1876-04-08
KELLYIsM.

true, the FREE TRADER firmly believes 'ha'
the only paper currency of the country should
be issued from the national treasury, ana tha'
by making the greenbacks redeemaole IN
government bond bearing suiticientiy h'gh
rate of interes: to bring them up to or within
fraction of par with g0ld-say bond al
or AZ per cent. interest, and by gradually,
AZ their charters expire, taking up the ISSUES
of the national bank sand supplying their
place with treasury notes, always redeemsoie
either in gold or government bonds NJ par
with gold1 the government could, in few
years, convert most of its and per cent IN
Gcbtedness IN Al or per cent bonds, or even
bonds bearing a lower rate of interest, besides
giving us the best currency In the world
But in asserting to plan like this, the FREE
TRADER is very far from being considered
as endorsing or asserting to Campbellism, or
Kcllyism, which the Age IN the above has IN
view. Kellyism, as explained by Judge
Kelly in a letter to his constituents, Is this
That the treasury and all the subtressuries
and repositories of the l. ). are to receive
deposits of legal tender notes In sums OF you
and its mulliples, and in lieu thereof are 10
give L. S bonds bearing 1855 per cent inter
est, which bonds are again to be paid on de-
mand, with accrued interest, in legal tenders.
| or the legal tenders thus received, one
fourth are to be held as reserve iund, 70
meet 3.65 per cent bonds which may be pre-
sented for payment and the other three
fourths are to be used in the purchase or re-
demption OF the outstanding Indebtedness OF
the l.. S.
The first objection the FREE TRADER makes
to this plan is, that it is too expensive. One
enormous expense it involves is the additional
horde of public officers that would be needed
to run these numerous branch treasures or
fiscal agencies TO make the proposed eS'
changes Of bonds for legal tenders and race
oersa. But another expense would arise IN
this way: Mr.. Kelly proposes "now-and by
now mean within the next SIX months, 10
issue $5OOOOO,00O Of these 1865 per cent
bonds to be exchanged for greenbacks. Inter
est on these bonds would be $lS,250,OU per
annum. But onetourth of the proceeds OF
these bonds is to be held ia reserve to redeem
bonds with. That reduces the $jOe,OjO,OOO
to 1875 600, 900, upon which these SlS, 100000
interest must be paid, raising the interest to
about per cent. Add to this at least per cent
for additional officers needed, and the Kelly
plan would raise the interest on the national
debt to per cent, whereas Bristow Is conf
dent he can in a few years fund the entire
debt at about and ~ per cent.
Another objection the FREE TRADER
makes TO the Kelly plan is the irightful bust
ness disturbance it would Involve. There
are SAID to be at present about $l00,OOOOo,
of idle money or currency in the banks above
the ordinarily necessary reserves. This Il
said to be a very large sum, aud deplorable
evidence of stagnation in the trade and busl
ness Of the country. But Mr.. Kelly would
not only take these $780, zoe, 900, but $500,
600, 900 more from the ordinary channels o.
trade ami turn them over to the government
to be used in buying up present indebtedness
4 to be converted iuto new Indebtedness more
expensive than the old.
Another objection the FREE TRADKr
makes to the Kelly plan refers to the ruinous
effect the "interconvertible" feature must have
in times Of a money crisis or panic. Panic,
are conceded on all hands to be the result of
an overextension or abuse of credit Jay
Cooke borrowed $lJ,000800 and with thai
sum for basis expended s50,000,eeO ON the
Northern Pacific railroad. His success s,imu
lated others, and at the same time he was
building two miles day of the n. i. rail
road, four thousand miles OF other new rail
roads were under contract, and their construc
ton driven at the same high speed. The de
mand for railroad iron thus created drove
several hundred rolling mills at the same
high speed And these rolling mills, and tn,
retailers who supplied them and their hands
with goods, and the jobbers who supplied the
retailers, and the manufacturers who supplied
the jos,bers, all drove business at the same
high speed, with $45 of credit TO $l5 in cash
When Cooke collapsed came the panic. Now
up to THIS time money was plenty and flush
because every body had credit and little money
! in proportion TO the business done was need
ed Bu, when the panic came everybody
wanted money. If somebody had stood ready
to lend Cooke even $j,o00.000 towards pay
ing the $i5 100000 he owed, the panic might
have been averted; or if many other railroad
companies, OF iron masters, or traders OF
manufacturers could have had scasona6lC
loan to the amount of even half of what they
owed, many bankruptcies might have been
avcrted But Their. were In all the country
probably not SlOe, 100000 of loanable curren
cy to meet I 900 900. 900 OF Indebtedness. In
der the old state banking system the banks
would afford partial relief in such eases by
suspending specie payment and making lib
erJ loans 20 safe customers. But what reliei
would the Kelly system afford IN such case
Every idle greenback, instead of being loaned