The Washington times., 1934-04-13

tereSt which ''''8sS
they pay. 3
- Thus bonds -
are in no sense
currency" and Lewis Ha"ey
they do not affect prices as cur
rency circulation does. >
Notes, such as greenbacks, are
payable at any time on demand,
II they are any good. # they are
good, they constitute a current"
obligation Of the Government,
and are thus a dangerous kind Of
debt. Otherwise. they are not re-
deemable and, not being secure,
tend to lose their value.
e They circulate as money, and
pay no interest. No one wants to
hold them. Not being self
lquidating, they are "inelastic"
and cause the worst kind Of in
flation.)
N' 2. Should the Government
mot force bond holders to take
greembacky in exchange, thus
~ eliminating interest and
taxes to pay bond interest, and
~ Increasing circulation to aid
recovery?
5 In part, this question answers
itself. The Government should
should not repudiate its promise
to those who lent it money by
buying its bonds. It promised to
pay money Of certain kind, and
to nay interest for q certain time.
# governments don't keep prom
iseS to citizens, what can we
trust?
Such action would ruin Gov
ernment credit. It could not bor-
row any more. It would then
have one Of two recourses: Cd
It would have to increase taxes
to pay all expenses on a a cash
basis, or % pay all expenses IN
greenbacks. In the latter case,
everybody would be taxed, because
prices and cost of living would
rise.
Do you think the Government
can borrow without paying? Is
it not better to borrow on bonds
at low interest than to borrow
, (by force) on "greenback" issues
which compel everyone to pay
the tax of high living costs and
Of having their money depreciate
in value? = -.
As to aiding business, just note
that we now have so per cent
more dollars than we had at the
peak Of our greatest prosperity.
3, Are greenbacks not backed
by the wealth and resources OF
the nation, just like bonds?
No. OF course, the wealth and
resources are the same. But
bonds have to be redeemed, and
so they can he issued only as the
national resources permit. They
have a definite tie-up with the
resources. But greenbacks are
not redeemabIe, and have no
definite tie-up with the nations
resources.
And let me ask you, What re-
sources to pay has the nation but
taxes? How then, could taxes
be reduced by substituting green
backs for bonds? If the nation
were to raise less taxes, it would
have less resources. Then where
would the backing" for the green
backs be?
4, Is it not a fact that the
. gold payment obligations Of
the United States were so
many times in excess of the
gold held that they could not
be paid in gold?
No. The obligations to pay
gold. did not fall due as a
total at one time. Banks and
governments always have more
credits outstanding than they
have gold reserves to cover. They
simply arrange the due dates Of
their various obligations as they
can meet them separately.
They also count on confidence
in their credit standing, know
ing that people will not all de-
mand gold at once. Thus they
are Cor should be) careful not to
issue so much paper that people
will mistrust the adequacy Of
the gold reserves they hold.
If a nation or q bank issues
more paper promises than it
can pay when due. in some
thing which has a definite value,
it does a great wrong.
The great beauty of the gold
standard is that, if honestly ad-
hered to-, 1T prevents the issu-
ance Of more credit than can
be paid. .o,.
The great evil Of greenbacks
lS that they mean forced credit
with no definite limit and no
definite payment.
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