Overflight, 11

“If the Government can issue bonds, why can't it issue money and save the interest?
A few clearheaded and firm individuals, such as Abraham Lincoln, have insisted that the Government can.
The late Thomas A. Edison once stated the matter this way:
«If our nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets money brokers collect twice the amount of the bond and an additional 20 percent, whereas the currency pays nobody but those who contribute directly in some useful way.
It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay: But one promise fattens the usurers, and the other helps the people.»
… Thus there is little opposition to the Government's printing bonds and then permitting the banks to create the money with which to buy those bonds; but proposals that the Government itself create the money instead of the bonds have always set off tremendous political upheavals. Bankers are politically very powerful, even in wartime. For example, Abraham Lincoln set off a political furor when he insisted upon having the Government issue $346 million in money (the so−called greenbacks) instead of issuing interest−bearing bonds and paying interest on the money.
What would the Government have paid in interest costs if the "greenbacks" issued in Abraham Lincoln's administration had been issued as bonds?
Abraham Lincoln's administration issued a total of $450 million in "greenbacks", or "U.S. notes", as it was authorized to do by an act of February 25, 1862. If instead of issuing "greenbacks", the Lincoln administration had issued interest−bearing bonds, as urged, naturally, these bonds would still be a part of the Federal debt today. Assuming that the Government had paid an average 5 percent interest a year on this amount of bonds, it would have paid out $2.3 billion by 1964, or approximately five times the amount of money the Government would have borrowed. It is a fallacy to think, as many do, that the "greenbacks" were inflationary. In the only sense that matters, the relative or comparative sense, they were not. That is, $450 million in "greenbacks" is no more or less inflationary than $450 million in bank deposits or any other bank money created to pay for $450 million in interest−bearing bonds.”
Wright Patman, U.S. Congressman, Chairman of Committee on Banking And Currency and of Subcommittee on Domestic Finance, A Primer On Money, Printed for use of the Committee on Banking and Currency, 1964