EXTINCTION OF INCONVERTIBLE PAPER. 399 



only end the exchanging of goods and that embraces every idea 

 and object connected with the currency. 



Q. You consider it a fundamental principle that paper should be 

 convertible into specie on demand? 



A As I have said before, inconvertible currency is so vicious, so 

 radically bad, that I feel no interest in makeshifts. There is only 

 one step to be taken amputation. 



Q. That is to say, contraction? 



A. That is not contraction, but the extinction of inconvertible 

 paper. Anything short of the extinction of the currency is so radi 

 cally and fundamentally bad that I have no interest in comparing 

 the relative goodness or badness of any expedients. 



Q. How would you extinguish it? 



A. You recollect the Bank of England was forbidden to pay. 

 That was from mere alarm, from fright and the popular ignorance of 

 banking. 



Q It is precisely the same here. Our National Treasuiy is for 

 bidden to pay? 



A. Ah! but the motive is different. The inconvertible currency 

 of your country is a tax. By means of this species of paper the 

 Government has got hold of the property of the nation, and it has 

 kept it. The property has gone and the public in the place of it 

 has got a species of paper. It is the Government s business to re 

 store the property, clearly. In England at the close of the last cen 

 tury in the agitation of war, and banking being very unfamiliar then, 

 the Government got desperately frightened. The Bank of England 

 was going to be stopped and ruined. In a state of war and panic 

 everybody likes to lock up his property in a commodity that is a re 

 ality. Then people rushed for gold. 



Q. Was not the case very much the same here ? 



A. No. The motive here was simply as it was in France, Italy, 

 and Austria. The Government wanted to get hold of the property 

 of the country without paying for it, and the inconvertible currency 

 is a tax. Government got the powder, shot, guns, soldier s clothes 

 for nothing but a species of paper. That, in my idea, is a tax. 



Q. Do you think Secretary McCulloch was pursuing the right 

 policy ? 



A. Decidedly he was, and the only right thing to do now is to fol 

 low his example. In the case of the Bank of England three years 

 were given, I believe, for resumption. The act providing for a re 

 turn to cash payments was passed 1819. At the end of three years 

 the bank paper \vas to become convertible paper. To illustrate an 

 important principle let me mention here that during a very consid 

 erable time, while the bank restriction was going on, the inconvert 

 ible paper did not fall to a discount. In the latter years it did fall 

 to a discount, so that a guinea became worth twenty -seven shillings 

 in paper. That is a very instructive fact if we ask ourselves the 

 question &quot; how is that? &quot;Why were the bank note and the guinea of 

 equal value for several years, and of unequal value in later years?&quot; 

 The reason is this, that in the earlier years of restriction which was 

 the injunction placed by the Government on the Bank, as being a 

 great national institution, not to pay its notes in gold the Bank 

 did not issue more notes than the nation wanted for use. Conse- 



