New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-01
WASHINGTON.
THE LATEST FINANCIAL PROJECT.

PROPOSED ISSUE OF GOVERNMENT N'
ING LOW RATE OF INTEREST
fyRoM A REGULAR CORRESPONDENT OF THE TRBusE'l
WASHINGTON, Oct. sl.-It has been announced IN
various quarters that among the proportions 10 DC
presented TO the next Congress will be new issue
of Government bonds OF certificates, bearing rate
of interest not exceeding.365 per cent per annum.
II is said that Gen. Butler will propose the issue OF
such a bond, convertible into greenbacks at the
pleasure of the holder 1t has been heretofore re-
ported and believed that the President VIII advocate
such an ISSUE and that it is favored at the Treasury
DEPARTMENT. Conversation with number OF the
prominent officials about the department Indicate
the following to be the views which number Oh
them hold and which will without doubt find ex-
preston in the forthcoming reports. There ls gem
eral disposition TO favor the low interest certhcates
chiefly because Of the belief that 1t would prevent
deposit of large amounts by the country banks with
the city banks, thus inducing the country banks 10
retain their surplus funds in their vaults, for
use at a time when they are most needed 1t Is be-
leyed that the suspension of the banks in the City
of New-York was caused mainly by the de-
mand of the country banks upon them
for large amount subject to draft which had been
attracted thther by the payment of interest on de-
posts, and which was invested IN call loans which
were not available when demanded. The country
banks would not send their surplus to New-York II
they had at their command Government security
which they could purchase at par, and which could
be easily converted into greenbacks when de-
manded. No such security can now be obtained,
except at large premium. The English banks hoiu
but q small amount of reserve, but their surplus
funds are invested in English consols bearing three
per cent interest, which can readily he converted
in the market into cash. with slight depreciation
in any monetary panic.
II is thought that such an Issue could also be mace
of a1eat use to the aborng classes for If these GER
tifcates were issued in sums of $50 the earnings OF
this class could be safely invested in such funds
giving to the Treasury the permanent use OF large
sums of money at this low rate of interest such
bond would in fact, become savings bank tor the
people without any necessity for the machinery OF
savings institution. 1t is believed that since the
manic the confidence of the aborng classes has been
shaken in the savings banks which have received
their deposits and now refuse to return them except
upon notice of from 30 to 60 days. These deposits
are known to be likely to be called for only in small
amounts and all that is needed is to offer to the
laboring man an investment which Is SAFE ana
which can be readily converted into money IL re-
auired. Ii is thought that the Government might
utilize such certificates, and by the investment vi
half the amount received i'll $50 bonds reimburse
itself for the whole amount % interest paiu upon
the new certificates and at the same time serve tho
laborng classes in the manner that the iaooi-
ing men in England served through the organ
izaton of postofice savings banks, without any OF
the cumbersome machinery and risk Of such instltu-
tions The Controller of the Currency, in his last
annual report recommended the issue OF such certl
fcates for the use of the banks, Inc paragraph
containing this recommendation is AZ follows:
The variations in the liabilities requiring reserve III tue
Cty Nar-X Work. rpV ~.
outside of NewYork during the dull season. send their
surpus means TO that city for deposit upon interest," 10
await the revival Of business. The banks IN inc Oy OIL
NewYork at such periods of the year. have no leglt-
mate outlet for these funds, and are therefore threat
ened with loss The Stock Board takes advantage OF this
condition ~ alrs. speculation IL stimulated by the
of money and market Is round Tor tho lde
funds upon doubtful coaeras and the result IL seen IN
tie increased transactions at the Clearing house. WHICH,
during the past year. exceeded $2oo0oOo or an aver
ace of more than SlOC 100000 day-not oneha OF when
was the result legitimate business the total amount
of transactions being greater than that Of the bankers
clearing house of City OF London. The evil arises
largely from the payment by the banks or interest on
deposits-an oldestabshed custom which cannot easily
be change by legislation. considerable portion Oh
these deposits would remain at home II they could be
used at a low rate OF interest, and made available
at any time upon the return OF the season
OF active business. No sure Investment Of this
IL,
universal custom rs to send forward the useless dollars
from vaults comparatively insecure to their CORE
spondents the CITY, where they arc supposed to be
safer and the time earning dividends Tor snare
holders. A Government issue bearing a low rate OF
interest TO be counted as certain proportion OF the
reserve and increase of The amount when the cou-
try banks are required to keep hand Is the proper
remedy for such state OF things. Such an issue need
not result in imitation for the currency invested would
be in the possession OF the Government II the currency
Is held the objection is the loss OF interest 20 the Gov
ernment; but this loss would be no more than just
rebate upon tho six millions Of dollars OF taxation
annually paid by the banks to the Government, at time
when almost every kind OF internal taxation has been
discontinued Such reduction OF taxation should not
be grudgingy made II the result shall be to give elias
ITCHY the currency, TO strengthen and steady the
money market 10 give additional security 10 hun
dred millions OF dollars belonging 10 depOstors by
tanning in the vaults OF the banks large amount Of
funds for legitimate business purposes, which would
otherwise be upon the Stock Board to unsettle
values throughout the country and alternately increase
and depress the price of every commodity.