Year: 1878




WENDELL PHILLIPS, ESQ.,:


My Dear Sr,-I remember the conversation in the
Senate chamber to which you refer, and I beg TO
recall to you-posslby moro fully than then stated
the objections to the inter-convertibe bond as the
basis OF our currency. am aware that many wise
men besides yourself have approved and advocated
this theory. The power to hold bond which may
at any moment be converted into legal tender
notes for its face value, and to have legal tender
notes which may at any moment be converted into q
bond at par appears at first sight attractive But
noscheme is more deceptive or delusiye and will
briefly state the objections which seem to me insu-
perable.


First-If the bond be OF sufficiently high rate OF
interest to float the currency even to an approxf-
mate equality with con-say four per cent or there
aoout-the inevitable tendency will be for the cur
rency to into the bond rather than Tor the bond
to be exchanged for currency; and this with such
force and volume at critical times as to compel
scarcity Of notes, r-recurring stringency in
the money market and a general instability in
affairs.


Second-lf you make the bond OF rate so low as
to avoid the tendency and the danger Just stated,
you Of course abandon all idea of having your cur
rency at par with coin. II your inter-convertible
bond is worth but IS 80 cents the dollar in coin
you thereby fix the value of your currency at twenty
or twenty-five per cent. below par and you banish
coin from your circulating medium absolutely and
tinally.--So that, If your bond be one that
will float currency at par with coin it will steadily
and irresistby tend to contract its volume. Aud IL
you seek to avoid this result by lowering the rate Of
interest on the bond, you render equality with
coin impossible. In either event the scheme would
work its own destruction n-swift and sure.


Third-No device was ever conceived that would
give more complete advantage to unhealthy specu-
lations of all kinds than the interconvertble bond.
Several times within the past ten years we have
witnessed "loc up" of greenbacks by Wall street
combinations, with view to financial ends which
were at war with thepublic good. So promising and
profitable theseends that the spectators could
afford to have many millions Of greenbacks lie idle In
order to force a stringency in the money market.
Your inter-convertible bond would open the way
for this class of financial operators to 'lock up''
greenbacks and have the government pay them in
terest on the whole amount, while they might be
couspiring to derange the business of continent and
depress the value of every farmers crop in the land
In other words your theory would force the govern
ment to be an accomplice in every gambling scheme
devised in Wall Street against the peace and pros
perity of the country


Fourth-Every year as spring closes and summer
comes upon us, there is vast accumulation Of fmoney
that lies idle for three or four months at the nan-
cial centres in the vaults Of the banks, in the safes
of the capitalists in the treasures OF railways and In
the stroDg.boxes of Insurance companies. During
that period-neary one-fourh Of the year-there are
from one hundred and fifty to two hundred millions
of idle dollars in New York and the other great
ey centres and these dollars all belong to rich men,
Your inter-convertible bond would provide an ad-
mirable mode for these capitalists to take large
amount Of interest from the government at a season
when they cannot get it from any other source. But
Iqueson whether it would be quite fair to tax the
whole people during the hot months o. summer In
order to nsnre to the wealthy capitalists OF the coun-
try good income on that sum Of money which would
otherwise be idle lille they enjoying the noun
tain air and the sea breeze


Fifth = the inter-convertible bond would lead TO
postponement in the payment of small bills and
debts in the domestic business of supply in every
day life. In our present system a large sum OF
money is carried at all times deposit without in
terest. When bills presented from the butcher
the baker or candlestick MAKER" the man having
money on deposit not drawing interest readily pays
them. for there is no profit to him in putting of bis
creditor. But once teach every man who has
surplus of ready money tnat he deposit 1t with
the government and draw int thereon and the In
evitable tendency is to place 1t there and keep it
there as long creditor can bs denied, avoided or
eVaueu. Inc advantage IN all branches OF trade and
labor of promptly paying small bills, not drawing
interest," is incalculable The inter convertible bond
would stop at this and would array the avarice
and cupidty of the moneyed class against it. The In
terest paid by the government would go into the pock
cts of the rich; and the inter convertible bond would
again make the government an accompliee with the
capitalist in Withholding his honest dues from the
working man,-the government meanwhile paying
the rich man interest on the money that honestly
belonged in the poor mans pocket


Sixth-Is it not apparent, from the considerati
thus hastily summarized, that no form Of currency
could be devised which would be so constant and 80
oppressive as the nterconvertible bond in the taxa
tion it would impose on the people? 1t would make
the Government the constant repository for the sur
plus money of the rch who would use it as the rest
ing place for fortunes waiting more permanent and
more profitable investment. In short, the whole
scheme would end in making the Cover nment
swerable for Interest on money that for the time
could not be used in any other investment. II
would incur the general odium of taxing the many
for the benefit of the few of exacting from the poor
contribution to pay interest on the rich mans money
at a time when the Government did not need it aud
could not use it.


You urge that our party should have taken ground
in favor Of "the Governments issuing of all the pa
per nots currency the same to be legatender every
where and for every purpose" Your language i'm
plies more than you really meant to convey for your
everywhere" is necessarily ted toour own coun-