St. Paul daily globe., 1894-01-15
THOUGHTS ON CURRENCY.
The Scope and Limitations of the
Greenback.
CHAPTER Ill.

town order, merely q draft drawn by
the government against its revenues, it
follows, of course, that the volume of
such drafts is determined by the amount
of revenue that is collected from the
people.
To Illustrate. let us suppose that dur
ing 1894 S5O0,000,000 worth of wealth is
to be collected from the people in taxes
for the support of the United States
government. 1t follows, then, that the
government has $500, 900, 900 10 draw on.
The real revenues. of government, of
course, are the materials purchased for
public works. food and clothing for the
army and navy, services of public serv-
ants, as president, senators, representa-
tives. cabinet officers and their clerks,
army and navy officers and their men,
and all the great horde of government
employees.
70 each person from whom any ma
terlal5 or services are obtained the gov
ernment hands out an equal nominal
value of government drafts, called
Creenbacks. 1t is plain that in accept
ing the greenback he has not yet got
his pay. When he buys something that
he needs from one of his fellow men. he
hands the greenDackS to him in pay
ment.
Now, the first man has got his final
pay, but the second man has not When
will the second man get his pay? When
he has passed the greenback to some
body else for some valuable thing that
he needs. But how about the last man?
How will he get his pay?
Well. the government provides for
collecting S50O.0OO,090 of taxes. 1t issues
from time to time during the year $780,
O0O.000 of greenbacks to pay the eX-
penseS OF government, and provides for
taking those greenbacks in payment of
taxes. Therefore every greenback
issued will be needed to pay taxes with.
When u man takes greenbacks to the
treasury to pay his taxes he gets
his receipt for taxes paid-then he is the
last man, and he has now got his pay.
The tax receipt is his pay.
His obligation to the governm ent has
been cancelled. He no longer owes that
debt
The circle of exchange is now COM
plete. Out of the treasury window
passed the greenback in exchange for
services or materials furnished the
government. 1t is now simply an un-
paid draft-an evidence that the gov
ernment owes the holder an amount
equal to the face of the greenback.
From hand to hand the greenback
passes, until finally some one gets it
who owes the government some taxes.
He takes the greenback to the treasury
and, in effect. says: ST owe you $40
in taxes. You owe me $40. This green
back says so. will give you the green
back. Now l do not owe you. and you
do not owe me. Our debts are both
paid"
Simple, isn't it? The government
got its real revenue when the greenback
was paid out. The taxpayer got his re-
ceipt when the greenback was tnrned
Ill again at the public treasury. While
the greenback was out it formed a most
perfect currency or circulating medium
for the people.
AS the incomes of government are
necessarily equal to its outgoes, there
will be constant stream of greenbacks
flowing out Of the treasury to meet pub
lie expenses, and substantially an equal
volume flowing in to get tax receipts.
How large the amount of greenbackS
will be that are out among the people
will depend on how long the tide flows
| out before it gets around to flow in
| again.
Our present currency Of greenbacks,
| silver dollars, halves, quarters, dimes,
| ETC., silver certificates and coin notes, is
| most peculiar and unscientific hodge
| podge: but, in its issues, it is all of the
| same nature with the greenback. 1t is
| all nothing but government drafts, flow
| ing cut of the treasury, passing through
| the channel of circulation, and finally
| flowing back into the treasury again.
| there to end one circuit and begin an
| other.
The present volume of our currency
| Of this character is somewhere about
seven hundred millions. AS very little
or none of it is now being presented for
| redemption III gold-it being redeemed
| constantly in tax receipts-lt follows
that about seven hundred millions can
readily and naturally be maintained in
| circulation.
As the population of the country in
| creases, the necessary revenues will
| Increase, the volume of greenbackS will
| naturally increase in the same propor-
| tion, and the amount per capita will
| remain about the same.
Here desire to point out some Oe the
| fallacies into which, it has seemed to
me, the so-called "greenbackers' and
"fatists" have fallen.
| Not appreciating the real nature of
| the greenback, they fell into the error
| of supposing that the Socalled govern
ment fiat" made it valuable, when in
reality its value rests solely on the fact
| that the government in some way re-
| 6pQmc jt-nSnolIU Inv raaaiHyintr + for
taxes. sometimes by paying gold for it :;
but it makes little difference, for the
| gold has to be got by taxation.
| Not realizing that a government has
| no more business to overdraw its ac-
count against the people than an indi-
vidual has to overdraw his account at
the bank-not seeing that the volume of
| greenbacks would regulate itself-the
"fatiStS" have wasted much valuable
time and almost hopelessly confused
| the people by planning all sorts of
arbitrary schemes for fixing the vol
ume of the greenbacks at so much per
| capita, each ''tiatist' doctor having his
| own idea as TO how much it should be.
Not grasping the principle that the
| government should never pay out
| greenbacks, except to meet public eX-
| penses, our 'fiatist'' brethren have
| concocted all sorts of schemes of gov
| ernment loans on land and farm prod
ucts, with all the cumbersome and ex-
| penSive machinery necessary thereto,
and the numberless fat jobs for sehem-
| ing politicians that would neceSsari ly
| follow in their wake.
Not realizing that receiving the
| greenback for taxes is the simplest and
most perfect redemption, they have
loudly and persistently declared that
| the greenback needed no redemption.
All these fallacies, and more, have
| they fallen into, because they did not
take the trouble to do little hard
thinking. But time and discussion are
| great teachers, and there never has
been a, period in the worlds history
when SO much thought was given to
| questions of finance as now.
| Our next chapter will deal with the
question OF legal tender acts.
~ n