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Still more daring, it went so far as to arrange to pay the so-called "Continental army" by means of bills of credit, redeemable by the united colonies. Later, in 1775, it appointed a secret committee to correspond with friends abroad, and undertook extensive measures for raising troops and accumulating military stores.
Accustomed to the truck system in agriculture, the managers often paid wages in scrip always good for supplies at the company store but redeemable in cash only at infrequent intervals. The operatives therefore sometimes found that they had exchanged one sort of economic dependence for another.
The bonds of the Government bearing only 4 per cent interest have been sold at or above par, sufficient in amount to pay off all of the national debt which was redeemable under present laws. The amount of interest saved annually by the process of refunding the debt since March 1, 1877, is $14,297,177.
This interest was not to be redeemable at a faster rate than eight dollars upon the hundred, annually, including the yearly interest, and it was left to the option of the public creditors to subscribe, or not, to this new loan. The amount of state debts assumed by the general government, by the act, was twenty-one millions, five hundred thousand dollars.
The measures taken by the Secretary of the Treasury will probably enable to pay off in the course of the present year the residue of the exchanged 4.5% stock, redeemable on January 1st, 1834. It has therefore been included in the estimated expenditures of this year, and forms a part of the sum above stated to have been paid on account of the public debt.
Amont-Gray, A. P., i. 780. As for the feudal rights which brought in money to their owners, it was generally felt, at least by the Commons, that they must be redeemable; that the persons liable to pay on their account must be allowed to buy them off by the payment of a certain sum down, where the ownership was true and fair.
These bills were to be redeemable within six years, and were to bear an interest of five per centum per annum, to be paid at the time of their redemption in specie, or, at the election of the holder, annually, in bills of exchange drawn by the United States on their commissioners in Europe, at four shillings and six pence sterling for each dollar.
In Manchuria the Japanese have forced the introduction of several hundred million dollars of paper currency, nominally, of course, based on a gold reserve. These notes are redeemable, however, only in Japan proper. And there is a law in Japan forbidding the exportation of gold. And there you are.
This was to be done by reducing the rate of interest on the government bonds to three percent and by making them convertible into legal tender currency and convertible back into bonds, at the will of the holder of either. In other words, the greenback currency, instead of being, as it was at the time, an irredeemable promise to pay in specie, would be redeemable in government bonds.
It is unsafe to leave the settlement of this question to Congress, the Secretary of the Treasury, or the Executive. Congress should make the regulation under which banks may exist, but should not make banking a monopoly by limiting the amount of redeemable paper currency that shall be authorized.
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