Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1880-08-28
A SPECIMEN GREENBAcKER "HIsToR-
ICAL FACT"

In answer to the statement that no pa
per currency has ever been kept at gold
par without sufficient coin reserve to
protect it, a Greenbacker Journal ian
nounces as an historical fact that the
$50, 000,0 600 of paper money issued in
"lS6l, and which had no specie reserve
60 to back it, never fell below gold par,
simply because it was by law made legal
tender for all dues, public and private,
customs included" When historical
facts of this nature are announced, they
deserve to be examined with some care.
a few details in regard to the demand notes
referred to will show how fragile is the
support this &c historical fact supplies to
the fat money theory. The demand notes
of 1861 were in the first issue but $50, =
100000 but an additional $40, 900, 600 was
authorized towards the close of the year.
When first issued, though they were re-
ceivable for customs dues, the banks re-
fused to accept them, and the Government
was compelled to take them on deposit,
and pay five per cent. per annum
interest on them, in order TO
get them into circulation This
also is an "hstorical fact and it has
rather singular bearing upon the the
DRY that if the Government viii only &C
cept any kind Of paper for customs dues,
it can prevent it from depreciating Sub
sequently, when the country had been
flooded with greenbacbs, the first issue of
demand notes, or rather the half of that
issue which had been left outstanding,
grew into request with the importers for
the purpose of paying customs dues, and in
this way, since they operated as gold GER
tiicates, they were kept at par. But mark
the issue. The Government was in urgent
need of gold to pay the interest on the
debt, then increasing at the rate of 81, $50,
900 a day. So long as the demand, or
''gold notes, as they were called, were
outstanding, it could not obtain the gold it
needed. The consequence was that it was
obliged to go into the market and buy gold
at a heavy premium, and that its
operations in this way raised the
price Of gold, end thus increased
the burden of the debt and the
pnblic expenses. The Government, there
fore, gained nothing, but instead suffered
heavy losses, through the denland-note
system, and as the demand notes were not
circulated as currency. but were altogether
confined TO supplying the uses of the i'm
porters, they had no effect upon prices.
The idea that if the Government had
made the $780, 900, 600 of legal tender
notes, which it authorized the Issue of in
February, 1862, also receivable for custom
dues, they would have been kept at par, Is
wholly without Justification. Even with
the small first issue of demand notes it
was found necessary to pay interest on
them in order to induce the people to have
anything to do with them, and they only
remained at par subsequently because they
were accepted by the Government in lieu
of gold at loss to itself.
The Government would not have gained
anything, nor would it have prevented the
depreciation Of the greenbacks, by making
them receivable for customs dues. Had it
done so it would still have had to buy gold
in the market, and the premium it would
have had to pay would have beenregulated,
as in all such cases, by the redundancy OF
the paper currency. The fact is that the
case of the old demand notes is not in
point at all, and proves nothing in
regard to the question at issue. To
fortify their case the fat money people
must bring forward an instance of a
paper currency which was in general cir
culation, under normal conditions. being
maintained at par in the absence of any
coin reserve. We assert that no such in
stance can be found in the history of any
nation, living or dead. There has never
been case of an unprotected paper cur
rency which did not depreciate, and the
history of the United States from the com.
mencement of the government up to the