New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1880-12-16

cities, while IN regions more remote Irom
monetary centres it IL usually still higher.
Mr.. Knox shows that the profit on circulation
protected by four per cent bonds would be
only 1.3 per cent.
The pending bill contemplates the future
use of three instead Of four per cent bonds as
basis for circulation. This would make the
profit Just l per cent less than 1t appears In
the calculations of the Controller. When
| money can be loaned at 6 per cent, the profit
on circulation under the pending bill would
be only seven tenths OF 1 per cent yearly.
When money can be loaned at per cent, as
it can In the greater part OF the western ana
Southern States, the profit on circulation
under the pending bill would be only three
tenths of per cent yearly. 1t is the belief
of nearly all competent 6nanciers that profits
so very small would not induce the banks to
retain their present circulation. If not, the
eject might be sudden and violent
contraction of the circulation, possibly even
to the extent of the whole amount now
covered by the $2O9, 100000 bonds about to
become redeemable.
Moreover, this section of the bill prevents
any future use of four or four
and half per cent bonds In OBJ
tanning new circulation. Banks or lndiyid-
uals now holding such bonds, who might be
disposed to use them in any case OF severe
stringency i'll the markets as basis for OBJ
tanning new or additional bank circulation,
would be prevented by the passage of the
pending bill Enormous contraction might
result, while the present safeguard against
any disastrous contraction-the power of any
IL - ppiz
and take out new circuation-wOuld be
taken away. 1t may be supposed
that the silver certificates might be
issued in place of the bank notes Retired But
apart from the unhtncss of these notes Tor
large circulation, there is the difficulty that
they can be issued only in exchange for silver
coin deposited, and the amount of such coin
now held by the people is small. Nor can it
be increased more than about So, 600, 600 per
month with the present capacity of the minis.
Before July /, 1881. only about $12,OOO,OOO
can be added to the silver coin now avail
able; there are only $2l, 100000 standard
dollars in the Treasury against which certit-
Gates have not already been issued, and only
a part of the silver now in the hands of the
people would be deposited for that purpose.
This would by no means take the place OF
SlSS, 900, 900 of bank circulation, now Sc
cured by bonds about to become redeemable,
which might be surrendered within six
months.
Secretary Sherman carefully guarded against
this danger in his recommendations. He pro-
posed that the National banks, in lieu OF the
reduction in profit on circulation, should have
their taxes on capital and deposits removed.
! This would place them in about the same
position with circulation based on three per
cent bonds, as they were supposed to occupy
| in the computations Of Controller Knox, with
circulation based on four percent bonds. Their
! direct profits on circulation would be small,
but, their expenses being reduced, they would
make about as much money rs ii the profit on
circulation were from 1.3 to IL per cent.
| NitL this feature. there was no danger that
the plan of Mr.. Sherman would cause sudden
or violent contraction of the circulation. But
no corresponding provision appears in the
plans of the Committee of Ways and Means.
Ii would be grave mistake for Congro ss to
act upon the funding bill, in its present form,
without fully considering tie possible cOnse-
ounces as to the supply Of currency.