The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-02-01
GOLD AND DEBT.

gold AND DEBT.
To the Editor of the Globe.
WIN you please answer few questions?
see you are liberal in answering questions
ana It should be So as only through the
press the people are able to learn something.
purlng the last campaign the great hight
obligations should be paid in gold or its
equivalent. The gold men won. So far, all
wen and good; whether to the advantage OF
the people or not the future will learn.
1t was told that ali the coin the government
received during the last civil war was only
Sd5o OoO GOO, and the war debt was over 81 0Oo.-
o O Now, 1t naturally appears that this
enormous debt was-made with paper money,
ana should be paid with the same kind OF
money, with the same intrinsic value that
tnose ponds were bought with. IT am
wrong, wish you would explain.
William Ulrich.
Fountain City, Mimi, Jan. 27, 1897.
The question raised by our CORE
spondent is one that puzzles a great
many people who are not familiar with
the financial conditions Of the period
during which the national debt was
created. The government, during the
war, issued, from time to time, green
backs called United States notes, which
1t made legal tender at their face
value. 1t also borrowed money to carry
on the war for the Union by selling its
bonds. No matter what prices were
paid, all financial transactions then, as
now, were conducted on the basis of
the gold standard. Thus, although the
greenback was nominally worth it's
face, 1t f1uctuated up and down, and
It's actual value as currency was
measured by the premium on gold. So,
during the year 1864, the average value
OF the paper dollar was 40 cents. The
government, at the same time, disposed
of its bonds for cash on the gold basis,
and it mattered nothing whether gold
or greenbacks We're paid for them, be-
cause they were sold in the open mar
ket, and it was precisely the same
thing whether they were paid for with
one dollar in gold or two dollars in
greenbacks, when gold was selling on
the exchange at two to one with paper
money. The question is not what was
received in a fair and open transac-
ton, to which both parties agreed, but
what ought to be paid. If a man holds
a mortgage on good property for 81 900,
and the stress of his circumstances is
such that, after offering it openly to
all purchasers, he can get only $500 in
cash, that is his misfortune and closes
the transaction as far as he is con-
cerned. If the mortgagor afterward
pays up the entire principal Of $1,000,
it does not vitiate the sale of the paper.
The real point to be considered in
this case, however, is that no bonds
whatever are now outstanding which
were issued during the war period Ev-
cry dollar of the bonded debt of the
United States today represents bonds
issued either in exchange for those
earlier ones, under the authority of
various refunding acts, or bonds &C
tually sold and paid for in gold, as
those issued during Mr.. Clevelands ad-
ministration. All these transactions
were strictly on the gold basis The
bonds. are payable by their terms in
coin Of the United States The United
States has repeatedly pledged itself to
maintain all it's currency on the level
Of the gold dollar. Every holder of a
government obligation today, there
fore, is man who gave either gold or
it's exact equivalent in the shape Of
another bond for The evidence of debt
that he holds. There is no such thing
as intrinsic" value" Purchasing pow
er is what we understand our corre-
spondent to mean. and to keep this
stable it is necessary that the gold
standard be maintained.