NO DANGER IN CONTRACTION. 403 



stances, under a convertible currency, would be to allow a free issue 

 of bank notes, but to tax the issuer? 



A. I don t say free issue, but I believe the intermediate-agency of 

 some private corporation is the true method. 



Q. To require, as now, the security of United States bonds would 

 be a good provision under a convertible currency ? 



A. Yes. I have always advocated the principle that the deposit 

 of such things as national bonds is a legitimate and proper security 

 to be required of the issuer of notes. If you have private issuers 

 of public money the nation has the right to say to such private is 

 suers, &quot; You must guarantee to us not only that we can put you 

 into the courts, but something more that you shall have the means.&quot; 

 Another illustration. In 1825, the English nation incurred great 

 disasters from banks breaking which had the right of issuing notes, 

 and in not a few instances those notes were only paid at half a crown 

 to the pound. It is against all principle that such a thing should 

 be possible in public money. Therefore, that led to the suppression 

 of the one pound note, which was a mistake, and it led ultimately 

 to that clause of the Bank Charter act which will in time extinguish 

 the whole private circulation of England, and leave only notes of 

 the Bank of England. 



Q. The present condition on which national bank notes are issued, 

 viz. , the deposit of United States bonds with the Treasurer, would 

 then be a safe rule for the issue of convertible notes, or free bank 

 ing, as we call it ? 



A. Provided the notes are effectually realizable in gold on demand, 

 there can be no possible objection, and there may be great advan 

 tage in any quantity of notes being on sale to the public, provided 

 they are rendered perfectly safe by the deposit of adequate security. 



Q. But this rule would not be a safe one with inconvertible cur 

 rency ? 



A. If this rule is applied to inconvertible currency it does nothing 

 to avert the disastrous vice of the currency losing its one indispen 

 sable feature of not fluctuating in value. 



Q. There is no system of redemption of one kind of inconvertible 

 paper with another that will mitigate the evils of incontrovertible 

 currency ? 



A. I call that all hocus pocus. 



Q. You consider the premium on gold, as quoted here on the 

 street, as a tolerably accurate measure of the depreciation ? 



A. I presume so. I am not aware of any circumstances showing 

 it is not. 



Q. Is the common dread of contraction among our people well 

 founded ? 



A. Not at all. There is great confusion in the meaning of the 

 word money. Very little of the business of these great modern 

 nations is transacted by money proper currency. It is a mere 

 trifle mere change. The money is not the thing lent by banks or 

 by lenders. Do you suppose if I wanted to borrow 20,000 of my 

 banker, in London, for a mercantile operation, I should touch one 

 sovereign or bank note ? Do you suppose the trade between Eng 

 land and the United States is done by currency ? Do you suppose 

 the grain of the western men is paid for in currency ? It is a fatal 



