Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1882-12-04
Report Of the Comptroller of the
Currency.

The annual report of Comptroller of the
Currency Knox, an abstract of which appears
in another column, will excite more than
usual attention from what he has to say a.
to the future of the coin and paper circulation
of the country. The public debt is being a,
present rapidly reduced, and in view of this
the Comptroller sees probable future con-
traction of the currency, for which he deems
some provision should be made in order TO
avoid financial trouble. If the public debt
continue to be paid as rapidly as during the
past three years all of the interest bearing
bonds will be surrendered and cancelled, and
as the circulation of the national banks is
based on these bonds, there is a danger tina;
that circulation will be rapidly retired and
such contraction of the currency ensue As
will affect the price of commodities and Gre
ate serious embarras SINE ats in the business OF
the country. The Comptroller expresses the
belief however. that Congress W Ill soon provide
for 80 large reduction of the revenue that
a sufficient amount of bonds will remain for
the security of the bank circulation. In case
this is done he favors proposition that has
been suggested in financial circles that the
whole OVERWHELMING debt be placed at 8
and 4 1-2 per cents. at 10 per cent. premium,
and issuing therefor per cent. bond bear
ing the same date of maturity as the bonds
(which are to be surrendered. Should this
be done, as Mr.. Knox believes it possible,
the present high premium on government Sc
curites would almost entirely disappear, the
temptation to dispose of them in order to
realize the premium would also no longer
remain, and the volume of circulation would
respond more readily to the demands of bust
ness. The whole amount of bonds then out
standing held by the banks and the people and
available for circulation, and not payable AT
the pleasure % the government, would be
nearly 81 ,054 200, 900, a sum amply sufficient
rs a national basis for the next twenty years
Mr.. Knox regards the benefits of this plan to
both the holders and to the government as
apparent. 1.-The holders would receive in the
10 per cent premium portion of this interest
in advance. which would be available for
loans at rates greatly exceeding the borrow
ing power of the government which is now
less than per cent. The government would
be enabled by this use of its surplus to save
portion of the interest which otherwise il
would be compelled hereafter to pay" Mr.
Knox thinks, however. that if the presen,
policy of the government is to be pursued, SC
that no or only small reduction in the ser
vice is to he made, thus rendering it neces
sary to continue the rapid reduction of the
debt, even though the bonds are to be pur
chased at price fixed by the holders, it will
then become a matter of the greatest impor
lance for Congress to consider the extension
OF the basis on which bank currency is issued,
or its enlargement as to include some other
form of security besides government credit
Altogether the problem which he presents to
Congress is one which will need to be con
sidered with a good deal of care. There is a
good deal OF doubt about the propriety OF
adopting the plan.