Omaha daily bee., 1890-04-18

| A"' SFCttt
| Chicago Tribune.
A correspondent of the Tribune AYERS with
| great solemnity that the government has
been guilty of issuing "fiat bonds and pass
| ing them over to bankers, who have made
| these securities the basis for an output of
fiat money! styled by courtesy National
bank notes. This absurd idea arises from an
| inability to see the difference between Great
| ing money and borrowing it,. BY fiat of the
| Almighty the precious metals have indie
structible value and other peculiar qualities
which distinguish them from other mineral
products and make them useful as money
throughout civilization. Governments can
add nothing to the value of this sort of fiat
money beyond establishing a system of coin
age by which the weight and tineness of the
metal can be certified and guaranteed, and
hence be learned by an ordinary per-
son at glance If government
finds its supply of the precious metals
inadequate it, can meet the exigcncy by in
creasing taxes on its people or by Offering its
securities in the markets of the world and
raising money by borrowing During the
late rebellion the United States did both 1t
added to and advanced the rates Of internal
and tariff taxes and not being able to pro-
cure enough money in this way, it borrowed
on both interesttbearing and non-interest
bearing charlottesville bonds constituting
the former and the greenbacks the latter form
of the security offered. In issuing the green
backs, i. e., non interest bearing notes, the
government agreed to take them itself in pay
ment of certain debts and made them legal
tender as between individuals, and it is on
this transaction that notions about fiatism
absolute money! etc, are based.
In issuing bonds the government simply
put in themarlzet its interest bearing obliga-
tions and borrowed what it could on them.
1t had no fiat by which it could compel capi-
talists to buy them, nor could it dictate the
rate at which they sold. 1t bound itself to
repay the money advanced with interest at
fixed time, and in order to increase its power
to borrow on these securities aud get money
to subdue the shareholders rebellion it
agreed to charter national banks and allow
the bonds to be deposited as circulation
pledges In every step the government took
in disposing of its bonds it was borrower
merely striving to maintain its credit and to
offer terms by which it could procure the
maximum amount Of money and pay the
minimum rate of interest. In issuing the
greenbacks, however, the government raised
money by forced loan. 1t made no
effort to create 'fiat money!" but put out its
notes and pledged itself to redeem them in
coin. The greenback notes were made pay
able to the bearer, but not ut any fixed time
and they bore no interest Being thus non
interest bearing and somewhat indefinite
promises to pay money they remained for a
long time way below par and rose and fell
with the huctuating fortunes of the war, and
did not become equal to gold until specie pay
ments were ordered to be resumed and the
treasury was ready to redeem grecnbacks in
coin on demand. To make up for the de-
fectS and weaknesses of these notes and en-
able the government to use them to better
advantage as IA means of procuring forced
loan, they We're made legal tender in paw
ment of debts In so doing the government
did not create money or make value by fiat,
but merely used its arbitrary authority to
scale down or wipe out debts and dictate to
creditors that they must accept de-
preciated greenbacks in discharge of dues
owing to them. From the day of the first is
sue the government did not succeed in Great
ing greenback worth 100 cents on the dollar |
until it was ready to redeem the notes in gold
on demand. Before that time they represent
ed merely more or less uncertain promise |
to pay, and they rose and fell just as it |
seemed the promise would be kept or not
There was as much fiatsm or legal-tender
quality in the greenbacks when they were
worth 40 cents en the dollar when worth |
100. The greenbacks differed from ordinaty |
promissory notes only in that they bore no
interest and HAD no day fixed for redemption, |
but the government tried to Offset these de-
fects by mating them legal tender. 1t was
able to employ them in procuring forced !
loan and comIkA their use as money, but it |
could not maintain them at par until ready to
redeem them. % The government created no
money, but got Nv from bond sales, forced
loans and taxation No mortal can make par
money by fiat M