Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1878-10-04

financial plan would have wholly satisfied
me, but it would have held the country.
WENDELL PniLLIrs.
ArGusTA, Me-, Sept -, ISIS.
Wendell PhiAips, Esq.
My DEAR R:-l remember the CONVEX
sation in the Senate Chamber to which you
refer, and beg to recall to you-possibly
more fully than then stated-the objections
TO the interconveriiblc bond as the basis of
| our currency. am aware that many wise
men besides yourself have approved and ad-
yocated this theory. The power to hold a
bond which ray at any moment he convert
cd into legal tender notes for its lace value,
and to have iegal-tender notes which may at
any moment be converted into bond at par,
appears at first sight attractive. But no
sche me is more deceptive or delusiye. and
will briefly state the objections which seem
to me insuPerab!e.
OBJECTIONS TO THE SCHEME.
First-lf the bonds be of sufficiently high
rate of interest to float the currency even
to an approximate equality with coin-say !
per cent or thereabOut the inevitable ten
dency will be for the currency to run into
the bond rather than for the bond to be e1-
changed for currency: and this with such
force ard volume at critical times as to COM
pei scarcity of notes, an overcoming
stringency in the money market and gen
eral instability in affairs.
Second-If Won make the bond OF n rate
so low as to avoid the tendency and the dan
ger lust stated, You of course abandon all
idea Of having your currency at par with
coin. If your incontervertible bond Is worth
but IS or 80 cents on the dollar in coin, you
thereby fix tie value of your currency at 20
or - per cent below par, and you Danish
coin from your circulating medium absolute
IL and finally. So that, ii your bond be one
that will float a currency at par with coin,
it will steadily and irresistibly tend to con-
tract its volume And if you seek to avoid
this result by lowering the rate of interest
on the bond you render equality with coin
impossible. In either event the scheme
would work its own destruction-swift and
sure.
Third-No device was eyer conceived that
would give a more complete advantage to
unhealthy speculation of all kinds than
the intel convertible bonds. Several times
within the PAST ten years we have witnessed
a d" lookup" of grcenbaeks by Wall street
combinations, with view to financial
ends, which we're at war with the public
good So promising and so profitable were
these ends that the spectators could afford
to have many millions of greenbacks lie idle
in order to force a stringency in the money
market Your interconvertible bond would
open the way for this class of financial
operators to clock up" greenbacks and have
the Government pay them interest on the
whole amount. while they might be con-
spring to derange the business of a CONT
nent, and depress the value of every farm
er 5 crop in the land. In other words your
theory would force the Government to be an
accomplice in every gambling scheme devils
ed in Wall street against the peace and pros
perity of the country.
FUurth-Eyery year as the Spring bust
ness closes and Summer Genes upon us,
there is a vast accumulation of money that
lies idle for three or four months at the
financial centres: in the vaults of the banks,
in the safes Of capitalists, in the treasures
u railway, and in the strong boxes Of in
surancc companies. During that period
nearly ncfourth OF the yeap-there are
from one hundred and fifty to two hundred
millions of idle dollars in New York and the
other great money centres, and these dollars
all belong to rich men. Your interconverti-
| lie bond would provide an admirable mode
for these capitalists to take large amount
of interest from the Government at a season
when they cannot got it from any other
source. But | question whether it would
be quite fair to tax the whole people during
the hot months of Summer in order to insure
to the wealthy capitalists of the country a
good income on that large sum of money
which would otherwise be idle while they
are enjoying the mountain air and the sea
breeze.
Fifth-The intcrconyertible bond would
lead to postponement in the payment of
small bills and debts in the domestic bust
ness Of supply in everyday life. In our
present system a large sum Of money is
carried at all times on deposit without inter
est When bills are presented from the
butcher, the baker or candlestick maker"
the man having money on deposit not draw
ing interest readily pays them, for there is
no profit to him in putting off his creditor.
But once teach every man who has sur
plus OF ready money that he can deposit it
with the Government and draw interest
thereon, and the inevitable tendency is to
place it there and keep it there as long as a
creditor can he denied. avoided or eyaded.
The advantage in all branches of trade and
labor Of promptly paying small bills, not
drawing interest, is incaiculablc. The in
terconvertihle bond would stop this at once,
and would array the ayarice ard cupidity OF
the mOneved-cass against it. The interest
paid by the Government would 60 into the
pockets OF the rich and the interconverti-
Die bond would again make the Government
IN accomIlce with the capitalist in with
holding his honest dues from the working
Government meanwhile paying
he rich man interest on the money that
honestly belonged in the poor mans pocket
Sixth-I4 it rot apparent, from the con-
alterations thus hastily summarized, that no
Orm of currency could he devised which
would lie 81 constant and 50 oppressive as
he interc0ntoryertiblc bond in the ia ration
/ would impose On the people? 1t would
make the t;uycrnment the constant repOsi-
DRY for tie surplus money of the rich. who
would use it the resting place for fortunes,
saiting Il more permanent and more profit
BILE Investment In thOrt. the hole scheme
could end in making the Government an
werahlc Tor interest On money that for the
i,uc could not be used in any other invest
nent Itwuuld incur the general odium Of
f taxing the many for the benefit of the
cw, of exactns from the poor contribu
ion to pay interest ON the rich man money,
I a time when the Government did not need
ana could not use 1t.
No WAY IRoyIDED TO sTcuRE COIN.
You urge that our party should have taken
round III favor OF 1.-The Governments
suing OF all the paper note currency, the
inc to he legal-tender everywhere and ioT
very purpose" Your language implies
lore than you really meant to convey, for
our everywhere" is necessarily limited to
ur own country, and you proceed yourself
D limit the "legal-tender Tor every pur-
ose" by declaring that the principal and
interest of your incOnteryertibc bonds shall
C payable in coin" The moment you
AXE the ground tina: the principal and inter
1t of the bonds shall be paid in coin, you
eIaratc yourself absolutely and irrecon- ,
ilably from the advance guard of the Green {
ack school OF iinancIers who refuse 10 in
ur any obligations to pay coin. And you
ill observe that while Your theory proposes
0 pay both principal and interest Of your
onds in coin, you provide no way to secure ,
he coin, but make your paper-moncy legal =
,nder for customs and all other dues You /
ZEN to approve the wisdom of Republican /
'gislatiOn in 50 far ~ to make Government /
Dnds payable in coin, but you iail to go 1
18th the same Legislation in providing an Q
hcicnt and certain mode of securing the 4
lin | note this IA among the most glar
x defects OF your interconyortible theory 7
ne among many that render its adoption by !
le Republican party impossible. More !
ger the scheme would have proved lament ,.
by insufficient To appeasc the demands Of !, /,
&c fiat money advocates. 1t would not !
en- have proved II "sop To Ccrberns, and g
have rcsortcd to it would Justly have cx- /
'sed the Republican party first to ridiculc v
ID then to disaster. II
But 80 long n you acknowledge the value "
coin as a means of steadyiDp your system 1