New-York tribune., 1879-09-09
THE A BIC OF FINANCE.
XVI.
INTERCOyVFRTIBLE CURRENCY.

money lOtned VIII fall. that the holder OF bills
can get higher interest by converting them into
bonds. Again, when money il too scarce. the rate
Of interest for which currency lends will rise above
the rate paid ol the bOuds. and cause bonds 60 be
converted into notes. Any serious or lack of
currency men argue, would thus be promptly cured.
If not prevented When greenbscks were not re-
deeuable, tins scheme found an excuse in some sup
posed need Of - elasticity" " in the currency. Bat
there is excuse for it. in any form phase.
tor already have n better, safer, and more truly
elastic currency than it possibly could secure No
one would now propose it but for one Object-to get
cheaper debt-paying paper than that which we
already have. Naturally, that form of the scheme
which would give the cheapest and worst kind of
paper money is the form generally urged namely.
that the bills should be issued without limit. and
should not promise to pay anything. and that the
principal and interest OF the bonds should be pay
able only in the bills.
This il merely "fat" pepper with a very thin dis
guise Unlimited in quantity, 1t would have no more
value than Autumn leaves. or sands ot the sea-
shore. IL gains valne by being convertible
for the bonds are better than the bills when they
promise finally 70 pay. II dock-leaves are worth
nOtin d0c-ro0t is not worth any more because IL
promises To pay great many dock-leaves hereafter.
" But the bouds bear yearly interest II IS sad.
80 do docks and other worthless weeds, and mnch
more than 3G5lOo per cent yearly. As long As the
interest is ne paid IN bills which have no Vaue'
how can 1t give value 70 the bonds And how can
such bonds give value TO the bills II finance, rs IN
physcs. no man can lift himself by bis own boot
straps Everything tnrns the value Of the bills;
what will they buyi The very olject OF the
scheme i 10 get cheap bills, that debts can be
wiped out at small cost. But if they are cheap to
those who want TO paw debts with them. they are
also cheap TO those who take them for interest ON
bonds. II plenty enough TO be easily got, they will
buy little first. and nothing after old debts have
been wiped ont. When the paper ceases 10 buy, the
bonds which promise To pay more paper Will have
no value ana can give none 10 the bills. " Will
vouch for his INTEGRITY, 7saia the svndier, intro
ducing his aceomphce. " But VINO Will vouch for
your was the answer. Ii the bonds voueh for the
bills. what gives any value TO the bondsi As well
have currency composed Of thistlesseds, convert
ibe into Canada thistles. which bear interest IN
more thistlc-secds.
Like plain fat money" this paper can be sup
Tcrted by its debt-payiug power only MS long as
there are old debts 10 be paid. IA the aim is
10 get nd of debts eheaply, it would he better to
proclaim a Jewish year Of iabiee, ard thHs 10 wipe
theul all cut with false Pretenco of payment. A.
soon as it j. found that Size intere0RveruOle'
bills are cheap. As they ant 10 be. and there
fore buy but e, people VIII stop lending or trust
though r. debt-paying power i remain, every
body mnst rea'ze, and, a. the on.r way 20 protect
himself, everybody who can frs; sponge Of his own
debts will stop taking the paper OF letting Others
get into debt TO him. Thus this money must start
Just where dish0n0red lcgal-tender notes end. md.
after r0hblng an creditors, must rob wOrkr glen to
the llst and die on their hands.
some propose 20 limit the amount Of the bills 10
be issued, IN order 90 prevent them from being
worthless But that would make them too scarce
for the people who want them 20 pay debt with.
What use Is there in issuing any new kind Of paper
if it il not 20 be more UienFy, easy 90 get, and
cheaper, than the notes are now But If II Is mere
plenty II viii be less desired and therefore wiz buy
less. ANY paper that has once begun 70 sink IL
value. or buying power it has been shown, tends
to sink SIN further constantly, becanse people dis
trust it, expect 1t sink, and put mp their prices
and charges a. far as they None would be-
heve that the trst Issue would be the last. No
ton has ever been able 20 keep within any limit the
issue OF n lega-tender that Is not redeemed, and
currency II depends for value entirely upon the
ability 1f a nation 20 90 what no nation has ever
done is dted only for the region that is paved
with good Intentions prudent farmer would
never hire man Who is in the habit IF burning
down the barns Of his employers. 4 prudent nc-
ton viii not trust itself 20 any kind Of money
brought ruin upon industry and ira &c.
Finally a few proposa nat tine bills shall be con-
vertible into honest bonds which promise coin and
bear interest ID COIN They think this would give
q desirable elasticity to the curreDcv. and when
notes were not redeemed the plan had some excuse.
But now the notes convertible lnto gold itself.
The currency has a real elasticitya faculty of in
creasine or decreasing in volume according to the
real needs OF the country. IL we have too much.
gold goes out and the unerring laws or nature take
care that only enough goes out 70 remove the ex-
cess If we have too little. gold comes IN, rs more
than 80. .OOO, 900 came in August. and more than
Sj.9OOOOO IN the first week of September and the
uuerrug laws of nature take that only much
comes AS we really need. When gold comes, real
eapital is added to our resources and expansion OF
that kind does not threaten 10 make the notes bad
again. We get only what we can pay for. and
speculation is forced TO keep step with the solid
progress Of the country in production and wealth.
Bat the volume OF intereOnyertlhe bills would DC
governed solely by the rate of interest il THIS ooun
nv alone. A gigantic speculation pushes up the
rate Of interest surely any increase IN real pro-
duction of wealth. or legitimate activity Of trade
Bills would tow out fast, if wanted for reckless
gambling only, AS if needed for productive indus
try Without any gain in real wealth the Wild te-
yer of gam bling would demand and get more cur
renev. winch, III turn would make the fever
still hotter There would be safeguard whatever.
More and more of our capital would be taken away
from legitimate les. and thrown 20 feed the flame
of speculation. But even children have saying,
" Whatever goes I'D must come down." Prices can
not 20 I'D IN balloon forever, and the Inevitable
end of such a frenzy Of speculation IS a crash.
Suddenly ruin would tall upon industry Fright
would seize men Of capital. who would rush their
money by the millions into interconvertible bonds
for safety. Then violent contraction would COM