“a demand for money by a high rate of interest will call forth these bonds.”[1]
He means by this that, in times of “scarcity of money,” “a high rate of interest”—that is, a higher rate than the bonds themselves bear—will induce a holder of these bonds to reconvert them into legal tender notes, in order to lend them!
This is certainly furnishing “more money” with a vengeance. The real value of the notes corresponds precisely to the value of a 3.65 interest-bearing bond, and General Butler would allow the people to have no money at all, except in some rare emergency, when the “scarcity” is so great as to induce them to give a higher rate of interest than the money is really worth,—enough higher to induce the bondholder to surrender his investments, and become a money lender instead.
This is equivalent to saying that nobody shall be permitted to borrow money, except in those emergencies when he will submit to be fleeced for the sake of getting it!
And to make it impossible for any body to borrow money, except at this extortionate rate, he would “prohibit by the severest penalties every other person, corporation, or institution from issuing any thing that might appear in the semblance of money!”
And this proposition comes from a man who proposes to furnish the people with “more money,” and thus save them from the extortions of the present money dealers!
However such an extortion might occasionally relieve an individual, who was so sorely pressed as to consent to be fleeced, it would do nothing towards supplying the people at large with money; because the money thus issued to an individual would not continue in circulation, unless it should constantly pass from hand to hand at a price beyond its truce value; that is, at a price beyond its value for conversion. The result would be that the people could have no money at all, except upon the condition of their constantly giving more for the money than it was worth!
- ↑ See his speech in New York, October 14, 1873, reported in the New York “Daily Graphic” of October 15.
