Ottumwa weekly courier. (Ottumwa, Wapello County, Iowa) 1872-1899, 1876-05-31
Tho 3.85 bond scheme-Oontractin
tho Currency.

Tho 3.85 18ond Scheme-Uontractim
| tho Currency.
The Democratic State conventions
in Indiana, Kansas and Ohio have
| laid down as the platform of all Ma
tional Banks shall be Withdrawn, and
that the government shall issue in
lieu thereof legal tenders; that the
holder of any portion of this curren-
cy can deliver it to the Treasury and
receive therefor a national bond bear
ing 1866 per cent. interest in gold or,
upon surrender of the bonds, may
get the currency again. This is the
platform of the whole Grcenbacl;
party in the United States, except that
part of them propose currency inter-
crest OH the bonds.
The argument employed is that
such currency will eqnalize the
market; that it will always sup
Iply the country with money
equal to the wants Of trade = that Il
will produce an abundance of cheap
loanablc money; that it will greatly
reduce the rates of interest, and the
notes, being a legal tender in the pay
ment of all debts, public and private
will always be at par--with 1866 bonds
There are, we regret to say, people
who believe that this scheme of inter-
convertible currency and bonds will
make and keep money abundant and
interest low. Money is always seek
ing Investment; the holder of surplus
cash is always on the watch for some
certain, permanent, and easily made
mn nf ~ vrySvN II
money. Ifthe owner cannot use it
in his own business, then the money
is for loan. The greenback is at a
large discount below gold. To pnr-
chase or 8 per cent. government
gold bonds with currency at present
rates would be unproductive. The
money, therefore, now finds its way
into savings banks, where the depos..
itor receives 5 or g per cent, or into
national or State banks, where the de-
positor is allowed some interest on
his balances or some accommodation
in lieu thereof. The banks, i'm addi-
ton to their own capital, lend out
these dedosits, and the money thus
aggregated constitutes the loanable
funds of the country.
1t is proposed to "increase' the
amount of these funds by offering to
every man who has 500 of spare or
idle money a national bond at par,
bearing 322s per cent. interest in gold.
This is offered in competition with
the savings banks and all other banks
and deposit institutions. The interest
offered is 4 per cent. in paper value.
The bond is a national one, and is ex-
posed to none of the dangers of col
lapses or frauds which occasionally
attend banks. The interest is paya-
BILE promptly, and the bond itself can
be converted into currency or paid
out as currency without notice. As
a security it is desirable. There is a
thousand millions of dollars deposit
ed in the savings banks, and a thou
sand millions in other banks, by
whom the money is loaned to mer-
chants, and manufacturers, and build
ers, with which to construct build
ings, to purchase goods and materi-
als,pay wages, handle crops, aud gen.
orally carry on the trade, building,
and production of the country.
But now comes the government
into the market. Lit offers to the own
ers of all this money $70OOOO,OOO of
national bonds, bearing 1865 per cent.
interest in gold. 1t offers to pay these
people, whose savings and surplus
are now loaned to the banks, $25, ,0OO,-
600 in gold annually for the use of
that much of their money. Does
anyone suppose that the offer will be
disregarded Does anyone believe
that the hundreds of millions of dol
lars of money which have been living
unemployed in the banks since the
panic, would not have found rapid
investment in bond bearing 1865 in
tercst in gold?
At the first symptoms of the panic
the money in the banks, and had
there .r wn,.1;2 ;265 bond then available
transfer trans T Of ail fliasN fhliaNe eulAeeR lAeeR general
these bonds, breaking pretty much
every bank tn the United States.
Ii ought to be visible to the most
ordinary man that every dollar taken
out of the national and State banks
savings or other banks. put into
these bonds is a dollar withdrawn
from the iodadbie find to the bust
ness and enterprising classes, and is
SO much currency locked up in the
Treasury and wholly unavailable for
s'the wants of trade" Instead of in
creasing and making permanent the
amount of currency needed to car
ry on the building and commerce of
the country, the facility of converting
the currency into bonds is the certain
means of producing not only c0aty'ac-
ton, but an absolute st,iagency. The
moment money becomes scarce, there
will be general demand on the
\ hanks, and the latter, deprived OF
their deposits, must contract or sus-
pend their loans and discounts. The
wholesale merchant, unable to have
the paper of his customers discounted
must stop credits; the manufactures
or builder, unable TO get loans TO pay
wages or purchase material, must
suspend business and discharge his
operatives; in short, credit will be
destroyed and all things will be bro't
down to the hard-pan of cash pay.
ments. The currency will be locked
up in 1856 bonds.
How is the money to be got out OF
the 3.65 bonds? Ii must be by the
offer ofa larger interest. The larger
the interest offered, the less desirable
and the less secure is the investment
Men getting 1865 in gold interest, free
of taxes, on an Investment of 100 pa
per dollars, worth S5cents each, will
not exchange that permanent, profit
able, and safe investment without
such an offer as will at once signify
the hazard of the business. There mus
not only be an increased rate o
interest but it must include lib
eral margins to cover all possibl,
peradventures and mishaps.
There is in Chicago to-day 5000
to be loaned on good security at Z OF
8 per cent. to the one dollar that cal
be obtained by an offer of IL or 20 pei
cent, for the higher the interest tn,
worse the security. Speculative loans
ceased in the panic of 1873 desperate
credit has passed out of existence, ,ant
men now prefer certainty at low in.
terest to chance at any price.
The scheme of offering $25, 600 COX
in gold annually to all persons whit
have money for which they have nj
use in their own business, and t
raise this $25, 100000 in gold by ex
ira taxation, is the present embodi
ment of Democratic wisdom. 1t is {
scheme to tax the whole people of thu
United States to pay twenty-five mil
lions in gold interest to people wht
have unemployed and unproductiy,
money. 1t is scheme TO draw on
of the savings banks and other bank
$7OO,OOO,0OO of money now loaned fol
purposes of trade and lock it up il
the Treasury permanently. 1t is tt
produce immediate contraction.
wholesale stringency, that must sud
denly close every bank and other loaI
office, except the pawnshops destro,
lcredit, stop every mill and mine ani
workshop which requires to borrow
money, cut off the wages funds, ami
hilate trade, and bring the business
of the country to stand still. Ant
this scheme il deliberately propose
by Democratic statesmen as a mean
to increase and make permanent =,
supply of currency equal to the de