With the amount of United States notes to be
issued permanently fixed within proper limits and the Treasury so
strengthened as to be able to redeem them in coin on demand it will then
be safe to inaugurate a system of free banking with such provisions as
to make compulsory redemption of the circulating notes of the banks in
coin, or in United States notes, themselves redeemable and made
equivalent to coin.
As a measure preparatory to free banking, and for placing the Government
in a condition to redeem its notes in coin "at the earliest practicable
period," the revenues of the country should be increased so as to pay
current expenses, provide for the sinking fund required by law, and also
a surplus to be retained in the Treasury in gold.
I am not a believer in any artificial method of making paper money equal
to coin when the coin is not owned or held ready to redeem the promises
to pay, for paper money is nothing more than promises to pay, and is
valuable exactly in proportion to the amount of coin that it can be
converted into. While coin is not used as a circulating medium, or the
currency of the country is not convertible into it at par, it becomes an
article of commerce as much as any other product.
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