New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-12-01
THE pIANS or MR.. KNOX.


THE PLANS or MR.. KNOX.
Az usual. the report of Controller Knox IA one
of the earliest of the annual reports OF public
business 1t is usually one of the most interest
ing and valuable, and probably will be this year
also. The statistical portion OF the report mas
been in part anticipatedby the aid OF recent
official statements, but its recommendations
will receive especial attention because oil MI
Knox's recognized ability and merit.
Mr. Knox discusses at some length ana Win
decided favor q proposition which was mem
Toned some time ago rs having originated with
him. In effect. it is to Issue $S05, 600 or
three per cent bonds, having twenty-five years
70 RIM, in exchange for SOC, 100000 of fourper
cent bonds now outstanding. A similar propo-
sition would also be embraced Win ieglru !"
the fonr and ONE half per cents, though the rate
of premium allowed in the increased amount Vi
bonds issued would be different III Is reasoheu
that this operation, as respects the cte"'t"''
wouid be "a virtual payment OF $lOo,ooO'Ooo
ipt.rest in advance that the larger principal
ot the bonds would render them available Tor
loans to n larger amornt; and that the Govern
ment wonld save part nf the money which IL
vou,d otherwise be compelled to pay. The cir
cumstance that the principal of the debt would
thus be increased apparently does not seem W
Mr.. Knox very serious objection. lheoreC-
cally it is not. in one point or view Inc inter
est annually payable on $500, 900 at 3 per
cent would he less than the interest Cd
500 600. 900 at per cent. But the question
is whether the people want to increase the prln-
cipal Of the debt.
Practically. this is a proposal to borrow
money now. 70 the extent OF 800, 100000, in
order 70 avoid the payment of $4,000,O0O
yearly for twenty-five years. This proposal Is
made. too. mt a time when the Government Is
having of debt at IL rate absolutely unprece-
dented in any country. The people are IN no
wov suffering from excess of taxation, and,
though they strongly resent the refusal OF Coh-
rress to reduce the taxes when 1t could have
done so safely and wisely, there Is hardly a puo-
lie man of any party who ventures to propose
that debt-payiDg shall cease altogether. Ger
tainly, the people do net want 10 stop debt-pay-
inc. though they wish TO have the debt reduced
less randy. To borrow money at such time,
70 Oblgate a Government i'll such a position To
pay 800, 100000 in 1907 in order to have
that sum advanced to the Government by It's
creditors at the rate of $l.OOO,OOO yeaiy Is
certainly proceeding of questionable value 10
the people. We do not need IL borrow money.
II is a less hardship, and IL much more con-
sonant with the proud and honorable temper or
the people, to ply the interest that we owe
than to run into debt for it.
The principal reason for this proposition
would have more weight than it now has If
Congress should again fail to reduce taxation.
a. ,,,H inf he
and one-half and three per cents would endan-
ger the stability of the National banking sys
TEN. But in that case also, the abSurdity Of
borrowing $4,OO0,000 a year to pay interest,
even while paying oft $l5O,OoO,OOO year OF
principal, would be more glarlug. On the other
hand, if Congress does its duty, tie taxes VIII
be so reduced tlat the outstanding three ana Tour
per cents will remain for years an aicquac basis
Tor bank circulation. And, finally, even II any
change should be deemed necessary, it would be
much easier to obtain from Congress authOrza-
ton for the issue of circulation amounting to 80
pcr cent OF the market value OF bonds on de-
post than to induce it to increase the public
debt 100000 $1,000 The latter proposition
Mr.. Knox also mentions as an alternative with
favor. We cannot see why il should not have
been definitely and exclusively recommended
in preference to the debt increasing plan.
The four per cents are now worth 12O, let
us say. st 90 per cent of market value
SlOS. 900 in circulation could DO issued upon
bonds for 100000. But, if exchanged for
S115, 900 new three per cents, the bonds would
support circulation of only SOB, 800. Yet
the larger circulation would be more safely pro-
tected by the four per cents than the smaller
by three per cents, because, if the current rae
of'interest should rise or the public credit be
disturbed, the decline in the price of a bond
bearing only three per cent interest would be
likely to be inconveniently large and rapid.
Tnere is less danger of such decline in bonds
redeemable at the pleasure Of the Government,
like the new three per cents, because the Gov
eminent might be expected to call them in If
they should drop below par. BH a bond for
twenty five years bearing only three per cent
" ould not be regarded "a desirable purchase
al par in conditions OF the money market which
have often been seen, and may he seen again.
PRAYER DAYS And PLAYDAYS
A good deal OF patriotic encouragement may