The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1897-07-17
Why the Greenbacks Should Not Be
Retired

aid: 1 am very glad to see that your
paper and other writers are taking up
the matter of the proposed retiring of
the greenbacks and substituting bank
notes in their stead and showing the
evils of such a course. There are three
great objections to it.
First-The greenbatks draw no inter-
est, and the government bonds on which
bank notes are based do.
Second-It would give the banks too
great control and Interest in the finances
of the government, which they then
could manipulate as they saw fit.
Third-It would,n not make our money
any "sounder' than at the present time
or do away with the present endless
chain" for drawing on the gold reserve.
In the first place, the greenback is the
governments promise to pay. and as
long as the governments credit is good
the greenback will be at par. The bank
note is simply a banks promise, backed
by bonds deposited with the treasurer at
Washington, and is in no way any better
than the other.
The greenback costs the government
only the price of the paper and printing
and is full legal tender for all debts.
while the bank note is not legal tender at
all except by courtesy.
The reason the banker favors retiring
the greenback is because of the interest
he indirectly gets on the bank note. As
this is manipulated a bank with $4,000
would buy 100000 worth of bonds, and
by depositing these with the treasurer at
Washington would receive back 100000
in bank notes, making an actual invest
r,,a Of IN a
interest on the 100000 worth of bonds
they would receive $4,000 interest or 20
per cent on the money actually invested.
After deducting 1 per cent tax for circu-
lation, the sinking fund and expenses
in the transaction, they still have an in
come Of over s2500, or nearly 10 per cent
net after deducting everything. Then,
they can loan out the 500 600 at per cent
net, or $4,000, and in this way receive a to-
tai interest of $500 on the entire amount
invested, and this is the reason for their
great cry for currency reform" 1t does
not come from the workingmen, bust
ness men or farmers. What they all
want is more money and not more taxes
in the form of interest to be paid to the
banks and Wall street.
II the advice of the late Indianapolis
convention of bankers should be adopted
by congress, the l per cent tax or 5000
would be taken from the expense column
by the repeal of the tax on circulation
and $40 900 will be taken from the cost of
investment so that the profits would
amount to S3436 on an actual investment
Of S9666, or more than SO per cent. If,
however. the increased demand for
bonds raised the premium to Is per cent,
we could only calculate on a little less
than S3436 on an investment of S14,66
or nearly % per cent.
l copy the last paragraph almost YER
batim from Bryans book, THE First
Battle" and this is the subject he re-
rerred to in his great address al Haz-
ards pavilion. The banks would then
be receiving an unheard of interest in
the form of usury on very little money,
and it is only natural for them to favor
such a plan if they can manage to pull
the WOOL over the eyes of the people.
Such a law would cause far greater dis
tress in a short time than even the de-
monetizing of silver, for no government
can afford to pay such an interest and
continue to exist for any length of time.
The second objection needs but little
enlarging on. 1t has been the aim of
the moneyed classes and Wall street for
years and now seems nearer of accom-
plishment than ever before since the
days of President jackson The infamous
circular issued by Charles Hazard, an
English banker, to the bankers of the
United States in the summer of 1862 said:
Slavery is likely to be abolished by
the war power and chattel slavery de-
stroyed This / and my European friends
are in favor of. for slavery is but the
owning of labor and carries with it the
care of the lalsrer, while the modern or
European plan, led on by England, is
capital control of labor by controlling
the wages; this can be done by control
ling the money. The great debt that
capitalists will see to it is made out of
the war must be used as a means of con-
trolling the volume of money. To accom-
plsh this bonds must be used as bank
ing basis. 1t will not do for the green
back, as it is called, to circulate as
money for any length of time, for we
cannot control them, but we can control
the bonds, and through them the bank
issues"
And the panic circular of March II,
1898, issued by the American Bankers
association TO all HdtlOnaI banks, SAD.
The interests of nationl bankers re-
quire immediate financial legisla ton by
congress. Silver silver certificates and
treasury notes must be retired and ma
tional bank notes upon a gold basis made
the only money. This will require the
authorization of from $500, 600, 600 to ST.
600 100000 of new bonds as basis of
circulation. You will at once retire one
third of your circula ton and call in one
half of your loans Be careful to make
money stringency felt among your
patrons, especially among influential
business men,"
That these and other circulars of
similar character are genuine cannot be
disputed for copies of them are in ex-
istence today and can be produced. Fur
Their proof of their truth and correctness
are given by the words of the late but
not lamented president, Grover Cleve-
land, and the present secretary of the
treasury, Lyman 7. Gage. This is the
course that has been followed for the
last five years or more, and the results
are now only too plainly shown all over
our land.
Retiring the greenbacks would not
protect the gold reserve, because Sec
rotary Gage would then do the same as
ex-Secretary Carlisle proposed to keep
our money sound" by redeeming the
silver, silver certificates, etc., in gold
when demanded, and the "endless chain"
would still be in, existence The nroner