Page:Speeches, correspondence and political papers of Carl Schurz, Volume 5.djvu/313

Rh the Government now? Some financial philosophers of the fiat persuasion say that when the Government put its stamp upon the silver dollar, and made it a legal-tender, it created in it a value as good as that of the gold dollar, and its duty is fulfilled, once and forever. Is this true?

Soon after the beginning of our civil war the Government issued the greenback. The greenback dollar was a bit of paper on which was printed the promise of the Government to pay the holder one dollar—meaning one dollar in gold coin, for nobody thought of anything else. It bore the Government stamp and was made a legal-tender for public and private dues, except duties on imports. At first, when there were but few greenbacks out, and it was hoped that the war would speedily be ended and the Government would soon be in condition to redeem the greenback, that greenback passed at par with gold, in spite of its not being receivable for duties on imports. But as the war continued and the quantity of greenbacks grew larger and larger, the public confidence as to the Government soon becoming able to redeem them was shaken, and the greenback, in spite of the Government stamp and its legal-tender qualities, fell in purchasing power compared with gold. Gold rose to a premium as against the greenback and went out of circulation. This gold premium rose and rose as the quantity of greenbacks out increased, and at the same time the period when the Government would be able to redeem them seemed farther removed.

But the civil war came to a happy ending, the issuing of greenbacks was stopped, the redemption act was passed, the Government gathered gold and the greenback rose to par with gold again. The stamp of the Government and the legal-tender quality had neither saved it from depreciation nor secured its return to par with gold. What