Capital journal. (Salem, Or.) 1893-1895, 1895-09-06
FIAT VERSUS CREDIT.
Reply Of a Portland Cores
pOndent
TO 1.-THE JOURNALS DEMAND
For Intrinsic Value and Use Of
Government Credit.
70 1.-THE JOURNALS DEMAND
PoRrLANp. or, Sent. 5, ls95.

PORTLAND, Or, Sept. 8, 1895.
EDITOR JoURNAL:-1 ask for space
to answer your criticism of my former
article on the money question 10 your
paper of Aug. 20, and In order to do 90
intelligently cannot do better than to
take our two propositions, as you out
lined them In your answer the follow
lug day. In my answer to your prop.
osItion will quote some authorities,
recognized as such, too, by the single
standard press and advocates generally.
You say:
IA Portland correspondent who
writes on the money question con.
founds the credit of the government
with it's fiat power. The fiat power oi
the government Is undoubtedly a great
factor In a currency system. The pto.
pie are apt TO conclude that whatever
is stamped as money by tue govern
ment will go as money. No doubt the
confidence Of the people in their gov
ernment 10 the greatest element Of
strength and solyency for any currency
system. But the fiat OF the govern
ment and the confidence Of the people
are both dependent upon the compli-
ance OF the government with certain
elementary principles Of finance. One
Of these Is that all paper money must
be redeemable In metallic money OF
certain intrinsic value. This our cor.
respondent denies. He asserts that
more intrinsic value is given by the |
stamp Of the government than by the
commercial value that inheres In the
metal Of which the coins are made.
This is the old greenback idea. But as
we understand IL, the fat OF the gov
ernment was only made perfect when
II made Its credit perfect, and was
prepared TO redeem every one of them
In coin."
As a general answer to your PROPOSE
lion, 1 will say: All money Is fiat
money, whether II be OF gold, silver or
paper and that II is not the "credit" OF
the government, that gives money ITS
value. But the power or authority OF
he government that gives 1t value and
hat alone. in support of this ] will
Iuote you portion Of the constitution
4 the United States 1t says: Congress
hall have power to coin money and
egulRte the value thereof" AS the
'uthOrity Of congress as there granted
y the constitution has been questioned q
efore today and settled by the su- 1
RENE court OF the United States. ,
Till quote II also: "WhRt ever power {
here is over the currency, is vested In ,
ongress. If the power to declare what @
money is not In congress, 1t Is aDihi- q
'ted"--supreme court reports, 18th iI
Wallace page 545. That ls the opinion d
} expressed by the highest tribunal of u
ar land. Al
AS practical illustration OF the O
AluO Of the "power" of the govern @,
lent as compared with its credit; be- +
geen 1852 aud 1868 during and after h
le war; the United states government IA
Id bonds to the amount Of 81, ,049, ,975,-
o. These bonds were all drawing a [,
gh rate of interest, payable In coin." m
ot the government was only able to v.
Allze from the sale OF these bonds o,
,S7l, ,424, ,2Ss, or only 81 per cent, of at
cir face value, and that In depre- tlc
tied paper currency not worth so Tic
uts on the dollar. While at the same ha
ne and during the darkest period Of an
. war the government issued S04.- of
200 of legal tender paper notes an
thout any "promise to redeem" In tn
ythlng, but having the full function no
money In every particular. They re- on
lined At par with gold during the ri,
ole OF that time and haYe 10 the ey,
sent day. Surely, no one will claim leg
, "lntrlnslcp value for "Abe Lin fiat
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