The Elk County advocate. [volume] (Ridgway, Pa.) 1868-1883, 1878-10-17
BLAINE.
HIS LETTER TO WENDELL PHILLIPS.
The Senator from Maine Answers Some Per-
tinent Inquiries-He States Clearly His
Position on the Currency Question.
AUGUSTA, ME-, Sept. %, 1878.

| L beg 10 recall To y0u-pOssibly more fully than
1 then stated-the objections to the intercon-
vertible bond as the basis of our currency.
am aware that many wise men besides yourself
have approved and advocated this theory The
power to hold a bond which may at any mo-
ment be converted into egal-tender notes for its
r face value, and to have legal-tender notes which
= may at any moment be converted into O bond
= at par, appears at first sight attractive But
C no scheme is more deceptive or delusive, and 1
f will briefly state the objections which seem to
me insuperable
: OBJECTIONS TO THE SCHEME.
f First-If the bond be of sufficiently high rate
, of interest to float the currency even to an ap-
$ proximate equality with coin-say four per
cent or thereabout-the inevitable tendency
: will be for the currency to run into the bond
rather than for the bond TO be exchanged for
9 currency, and this with such force and volume
3 at critical times as TO compel q scarcity of
! notes, an eyer-recurring strngency in the
money market and a general instability in
affairs.
} Second-If you make the bond of rate so
low as to avoid the tendency and the danger
just stated, you of course abandon all idea of
having your currency at par with coin, If your
interconvertble bond is worth but rs TO 80 cents
on the dollar in coin, you thereby fix the value
of your currency at 20 or 25 per cent below par,
and you Danish coin from your circulating
medium absolutely and finally. SO that, If
your bond be one that will float currency at
par with coin, it will steadily and irresstibly
tend to contract its volume. And If you seek
to avoid this result by lowering the rate of in
terest on the bond, you render equality with
coin impossible. In either event the scheme
would work its own destructon-swift and
sure.
Third-No device was conceived that
would give more complete advantage TO un-
healthy speculation of all kinds than the inter-
convertible bond. Several times within the
past ten years we have witnessed a "lock-upn
of greenbacks by Wall-street combinations
with a view to financial ends, which were at
war with the public good, So promising and so
II profitable were these ends that the spectators
/ coule afford to have many millions of green
/ backs lie idle in order to force a str1ngency
in the money market Your interconvertible
bond would open the way for this class of finan-
cial operators TO 'lock-up' green backs and
have the government pay them interest on the
II whole amount, while they might be conspirng
II to derange the business of a continent and de-
II press the value of every farmers crop in the
land. In other words your theory would force
II the government to be an accOmplice in every
/ gambling scheme devised in Wall street against
4 the peace and prosperity of the country.
II Fourth-Every year. as the spring business
II closes and summer comes upon us, there is a
4 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 capital
| lists, in the treasures OF railways, and in the
| strong boxes of insurance companies. During
| that period-nearly one-fourth of the year
there are from one hundred and fifty to two hum
/ dred millions of idle dollars in New York and
\ tue other great money centres, and these dollars
|, all belong TO rich men. Your intercon vertible
|| bond would provide an admirable mode for
II these capitalists to take large amount of inter-
| est from the government at a season when they
! cannot get it from any other source. But ques
| ton whether 1t would be quite fair to tax the
4 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
N they are enjoying the mountain air and the sea
n breeze.
n Ffth-The nterconvertib!e bond would leap
to postponement in the payment of small bills
| and debts in the domestic business of supply in
every. day life In our present system large
sum of money is carried at all times deposit
| without interest. When bills are presented from
the butcher, the baker or the candlestck maker,
the man having money on deposit not drawing
interest readily pays them, for there is no profit
to him in putting off his creditor. But once
teach every man who has surplus of ready
money that he can deposit it with the govern
4 ment and draw interest thereon and the inevit-
able tendency is TO place it there and keep it
there as long as creditor can be denied, avoided
, or evaded. The advantage in ali branches of
trade and labor of promptly paying small bills,
not drawing interest, is incalculable The in
| terconvertible bond would stop this at once and
would array the avarice and cupdty of the
moneyed class againstit. The interest paid by
the government would go into the pockets of the
rich; and the intercon vertible bond would again
| make the government an accomplice with the
ptailst in Withholding his honest dues from
le workingman, the government meanwhile
iying the rich man interest on the money that
5)nestly belonged in the poor mans pocket.
Sixth-Is it not apparent, from the consider
iations thus hastily summarized, that no form of
currency could be edevised which would be so con-
stant and so oppressive as the interconvertible
bond, in the taxation it would impose on the
people? IL would make the government the
constant repository for the surplus money OF the
rich, who would use ii as the resting place for
fortunes, waiting more permanent and more
profitable investment. In short, the whole
scheme would end in making the government
answerabe for interest on money that for the
time coald not be used in any other investment
1t would incur The general odium of taxing the
many for the benefit of the few; of exacting from
the poor a contribution TO pay interest ON the
rich mans money, at time when the govern
ment did not need IL and could not use ii.
NO WAY PROVIDED TO SECURE COIN.
You urge that our party should have taken
ground in favor of "the governments issuing
of all the paper-note currency, the same to be
legal-tender everywhere and for every pur-
pose" Your language implies more than you
really meant 10 convey, for your "every-
where' is necessarily limited TO our own coun-
try, and you proceed yourself to limit the legal
tender for every purpose by declaring that the
principal and interest of your interconvertible
bonds shall be payable in coin." The moment
you take the ground that the principal and
interest of the bonds shall be paid in coin, you
separate yourself absolutely and irreconcilably
from the advance guard of the Greenback
school OF financiers who refuse 10 incur any
obligations TO pay coin. And y III will observe
that while your theory proposes to pay both
principal and interest oi your bonds in coin,
you provide no way to secure the coin, but
make your paper-money legal-tender for GUS
toms and all other dues. You seem TO ap-
prove the wisdom of Republican legislation
in so far as 10 make government bonds nav