The New York herald., 1876-03-12
TINKERING THE CURRENCY.
A REPLY FROM Mr.. POTTER.


To THE EDIroR HERALD
Tie HERALD objects to my plan raising the bank
note currency the OF United States bonds bear
ing gold interest, or Of coin:-
l. That the effect of such a measure would be to
Danish gold from the country and postpone specie pay
forever for If the choice were gwen to the banks
to redeem their notes In specie or such oonds they
would never pay gold. gold reserve would earn no
interest but bond reserve would steadily yied them
FIVE per cent and they would keep their whole reserve
in the proposed bonds which would be the only prac
teal legal tender Tor the discharge Of debts.
How will this plan 'banish gold2" 1t proposes to
locate about $4O0 600 600 OF national bonds in the
Treasury Washington In addition to those now
there security for bank notes to be issued IN place
OF Treasury notes to be withdrawn and also TO locate
$500 900 of the public debt represented by
these Treasury notes. within the country, and to dis
tribute the interest in gold annually upon all this to
our citizens (al who choose become interested
national banks instead of sending it abroad in pay
ment of pr nclpal or interest upon foreign loan VIII
this tend to Danish gOldy
Again. Why ri the choice be given the banks TO re-
deem in specie or bonds" would they never pay
godln The HERALD is correct in saying, "A gold re-
serve would earn nothing but bond reserve would
steadily them nve per cent, but not correct IN
saying they would keep their whole reserve in the pro
posed bonds 1t is essential part of the plan that
the banks only hold their bond reserve drawing IN
terest so long they pay out coin TO redeem. When
they redeemng in coin they must pay OUT these
bearing bonds at par and interest, and thus
lose this ofpront Under this plan that banks
would not redeem in bonds, but would redeem In
coin SO long as this was possible to them
and the bonds worth par in com, is us certain as
the Holy Writ. "Whcre mans treasure Is there
Will his heart be Also" The plain and certain opera
tion Of this plan will be that as the national banks
receive gold as interest IRON government and from
other sources they Will pay this out upon all obliga
tons demanding from them either gold or interest
earning bonds, and gold will thus pass immediately
into general circulation, except sufficient TO protect
their reserve in Understanding bonds which they
will hold. Buying and selling gold Will be without
encouragement or profit, and WILL II may be hoped,
pass away.
But the HERALD thinks lawful money bonds wholly
mpractcable as legal tender, and redemption OF the
bank notes IA them equally impractlcabe. Again,
Whyy Ii is part OF the plan that the lawful money
bonds be issued sin such denominations a. will be
convenient for the redemption OF the bark note
currency" While bonds might be Issued of the same
denominations throughout as the national bank
notes without any more inconvenience than
Is experienced in issuing these notes them
selves II would not be necessary to issue them
In lower denominations than five or ten dollars Bills
OF aud dollars could be presented Tor redemp
tion these amounts with less Inconvenience than
would arise from smaller bonds. Ihe plan as pup-
lshed through nadvertence, did not state how notes
Of smaller denomination than bonds would be re-
deemed aud The HhRALD's criticism is sound TO this
extent In using these bonds legal tender between
individuals the bonds and coin would be used together
To make up the tender a. gold and silver were for
merry used for the same purpose.
la rcdceming bank notes with these bonds the only
Inconvenience which couId arse would obvated by
requiring the party calling for redemption, request
OF The bank, TO pay or tender ia coin or law u money
the accrued interest upon the bond to be received IT.
the HERALD thinks this plan Will intensity pancs,
IL is least uncalled for. But how II do this
when IL enables every prudently managed bank
in the country to meet at all times its Liabilities,
rcstrains them by the constant obligation to redeem,
and keeps the people all the time conscious that by
reasonable demand upon the banks Tor redemption
they will only compel the banks to return them their
own bonds at pary
If the pan will give a sound sufficient, self
adapting currency at all times OF the same value with
United States bonds bearing gold interest or coin and
thus make national credit beneficial Tor the
tire country IL shall be Tor bondhoders, is sui
ne for Ia fail
this. Will The HERALD show why 1t Will lalY
.. B. POTTER.