But greenbackism differed from the scheme of
Lassalle in that it would utilize the government's enormous Civil War
debt, instead of its taxing power, as a means of furnishing capital to
labor. 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. On the other hand, if a
government bondholder could secure slightly more than three percent by
lending to a private borrower, he would return his bonds to the
government, take out the corresponding amount in greenbacks and lend it
to the producer on his private note or mortgage. This would involve, of
course, the possible inflation of legal tender currency to the amount of
outstanding bonds. But inflation was immaterial, since all prices would
be affected alike and meanwhile the farmers, the workingmen, and their
cooperative establishments would be able to secure capital at slightly
more than three percent instead of the nine or twelve percent which they
were compelled to pay at the bank.
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