Buchanan County bulletin. [volume] (Independence, Iowa) 1869-1891, 1876-10-06
The Inter. Convertible Bond Theory.
For the Bulletin.


For the Bulletin.
When the greenback orators and
writer's first began to breach the sub
ject of new kind of currency, their
theories were as diverse as the hues
of an autumn forest, but above the
din and Babel of noise sounded clear
and sonorous the voice of Butler
recommending the most audacious
and impossible plan of them ALL
At the sound of his voice smaller
men held their peace or modified
their theories or substituted Buffers
for their own, until now there is a
substantial agreement throughoutthe
country, upon the Butler basis, the
most prominent feature of which is
that the new currency is only re-
deemable in bonds bearing 3 and 65-
100 per cent. interest In paper.
Why was the interest put so low?
TO make it extremely Improbable to
exchange the currency for bonds,
however excessive the supply of cur
rency might become. In other words,
it is an ingenious plan for forcing a
constant imitation of the currency
If the honest intention was to render
the currency elastic and changeable
in amount to suit the wants Of bust
ness, the interest would have been
fixed at the same rate that experience
has shown to be the rate that our
bonds command in the markets of
the world. That would be simple
and plain and might, under circum-
stances that a vivid imagination
could conjure up,regulate the amount
of currency IN circulation to "suit
the wants of trade"
Why was the interest made paya-
bic in paper instead of specie? Be
cause if payable in specie, the bonds
would have certain and absolute
value, and that would give the green
back certain value, and thus the
money would be just as good for a
poor man as rich man, and you
couldn't bull and bear the greenbacks
up and down to enrich spectators
and rob honest men. 1t would give
a degree of stability to our financial
system, and stability is the particu-
lar thing the Butler plan aims to
avoid, else he would have made the
interest payablein "gold and silver"
the only money recognized by our
constitution. Even if payable in
specie, the rate of and 65-1OO
per cent. interest would force our
currency from 90 cents, its present
value, down to Is cents on the dol
lar, because the present ascertained
rate of interest at which our bonds
can be negotiated in open market is
between ~ and per cent. in gold,
and the bond, being perpetual, will
go down in the same ratio that the
rate of interest is reduced, and the
currency having no support but the
bonds, must go down with them
Where will they go now, with the
interest not payable IN money at all,
but only in q promise-a promise
that promises to pay in promise
that is redeemable with another
promise? | have no doubt they will
go where the rich men wish to send
them for their own private gains.
Now, unless the whole history of
finance is to be reversed, the holders
OF the new grecnbacks will never
wish to exchange them for any such
bonds, it matters not how excessive
the amount of currency in the coun-
try, for the simple reason that they
can do so much better. Initiation
Arrays increases the rate of interest.
This is so naturally, logically and as
a matter of fact. Initiation seems
(only seems) to increase values, Just
as the currency increases, this stimu-
lates speculation that doubles up pri-
ces that creates All unlimited demand
for money, that carries up the rate
of interest. This is inevitable. At
ter the war of 1924 there was an
imitation period, prices doubled, in
terest doubled, everybody ran wild,
bnt the country was comparatively
small, so the epidemic ran only two
years. In 1917 the bubble burst, and
prostration and distress followed.
In 1S34-35-36 the country was again
visited by the scourge of imitation,
prices doubled, interest doubled, ev-
erybody wanted to speculate, and an
exceeding great number tried their
hand at it-and got bit. In 1887 the
bubble burst and spread distress and
ruin over the whole country.
In 1853 the plague Of initiation
again visited our shores, and contin-
ued through "a, '55 and 80. This
was distinctly within my recollection.
1t spread nearly over our whole coun-
try, but was not quite uniform be-
cause it was caused byan cxtravagant
issue of paper money by the local
banks-the only kind then existing
and in some parts they were more
prudent and conservative, but gener-
ally the banks did all they could to
fan the excitement. Prices advanced
to an unprecedented figure, flour
touched Is dollars per barrel. and
interest followed the invariable law,
and in Massachusetts (where | then
lived it went from and per cent. |
up to Is and 20, which was equiva-
lent to rise to 80 and 40 per cent.
in the West. Early in 1857 the
whole thing collapsed, the bubble
burst, the banks suspended, nearly
half the business men of the country
were bankrupt and distress and con-
sternation spread over the land.
OF the last fearful imitation but
little needs to be said. We are
from it at this very hour
1t is mentioned in this connection
only to call attention to the fact that
followed the same old rule. !
In Iowa the rate went up to an exor-
bitant figure. On real estate security
30 per cent. was frequently realized,
25 was quite common, 90 was gencr-
al, Is was very low, while good notes
were shaved, just as you could light |
on chaps, at rates amounting to from
40 to 100 per cent per annum and
even higher