it would have deprived us of the one we now have, without furnishing any substitute at all.
That such would have been its effect is evident from these considerations, namely:—
It is a settled principle that a paper currency depends, for its true and natural market value, wholly upon the redemption that is provided for it. It has, and it can have, no more true or natural market value than the property with which it is to be redeemed. A paper currency, therefore, that has no other redemption than that of being convertible into interest-hearing bonds, can be worth no more in the market than are the bonds themselves, and, consequently, no more than it is worth for conversion into the bonds. And it is worth nothing for conversion into bonds, unless there are some one or more persons who wish thus to convert it. In other words, it is this demand for the bonds, as investments, that alone gives the currency any value in the market. A convertible note of this kind, therefore, circulates as money only because some one or more persons want it for conversion. And it circulates only until it falls into the hands of such a person. When it falls into his hands, he converts it, and thus takes it out of circulation.
The destiny, therefore, of all such convertible paper, that is in circulation as money, is finally to be converted into bonds; and thus taken out of circulation. And there is then an end of it, so far as its being currency is concerned.
We saw the operation of this principle so long as the greenbacks were convertible into bonds. The conversion went on so rapidly that we should soon have had no greenbacks at all in circulation, had not the conversion of them into bonds been stopped by law. And our greenbacks now remain in circulation only because they are not convertible into bonds.
For the reasons now given, if our whole national debt were to-day in circulation as currency, having no other redemption than that of being convertible into 3.65 bonds, it would be worth for circulation no more than it would be worth for such conversion; and, as a natural consequence, it would rapidly, though not instantly, be converted, and thus taken out of circulation; and we should then have entirely lost it as a currency. And, as the scheme
