New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-11-26
GOVERNMENT REPORTS.
THE CONTRACTION OF CIRCULATING NOTES
CONTROLLER KNox's SUGGESTIONS AS TO THE
LEGISLATION NEEDED.

CONTROLLER KNox's SUGGESTIONS AS TO The
LEGISLATION NEEDED.
WASHINGTON, Nov. 25.-Under the head Oh
"Contraction OF the National Bank Circulation Con-
troller Knox says In his annual report: unless tnere
shall be legislation by the present Congress which sna
reduce the receipts Of the Government 1t s probable ha1
the United States bonds will continue to be paid at the
same rate during the past year, In when event III
the hrees will be called for redemption WITHIN the neh
three years. This win reduce the bonds neld
by the banks from $50 millions 10 loI
millions, and cause a contraction in the
National bank circulation of about sixty millions per an
mum. This large contraction will be somewhat reduced
by the action OF those banks which substitute ana ae
per cents in place Of the 3s but the amount long
held by the banks may also be reduced by that class Oh
banks which may conclude that Ia for their interest 10
avail themselves OF the premium at the time when, In
their opinion the value Of said bonds shall reach the
maximum price in the market"
HOW CONTRACTION MAY BE AVOIDED.
at evident the Controller says, that unless thee
"a additional legislation the bonds held security for cir
culation will rapidly diminish New legislation may,
however postpone the payment Of the public debt or
the profit circulation to increase sufficiently 10
induce the National banks invest in the long per
cents whcrere not TO mature for period or twentyOur
years The contraction OF the bank circulation may DC
avoided by reduction of the redundant revenue and there
IL no doubt that this IL the true policy. INC cVll
tho conversion of the long bonds into three cents by
offering inducements to the holders OF these bonds 10 e
Govefnnent paying to the holders thereof reasonable
amount for their difference In value The principal CD
lection made this proposition il that the Government
would pay to the holders large premium upon the bonds
or years the three per cents are paid there
| is no reduction in the revenue me surplus VIII
shGsed by The Government at rate to then fixed by
the holders thereof, which Will he rate much hgner
than that now proposed The premium to be paid TO me
reduced by providing that the circulation TO 70
posted by the National banks as security therefor shall
be subject the present tax OF per cent per annu
10y pOnng the time for their payment Such leg5
ation would make the bonds more valuable for TINS
purpose than for any other ana would Dc nkSy 20 pre-
and this the bonds would be more desirable
fore been issued The contraction would also be avoided
by providing for the removal OF the tax on ciTculaon
aud the increase OF the amount OF circulation TO ne Issued
to the banks upon the bonds deposited by them"
THE GAIN BY REDEMPTION or NOTES.
Tho Act OF July p 1882 provides that the gam resulting
from a failure present National bank notes Tor redemp
ton shall enure to the United States Upon this subject
the Controller says: "Thls gam does not properly be-
long 10 the United States or the banks Issuing the
notes II really belongs TO the owners of such circulating
nnes al tc Time OF their loss or des ructiOn. The
amount Of gain accTuing from the nonedempton or CIR
Cnaing notes can soon be approximately estimated, and
bou he atbor1cd TO he carried to the credit OF in
solycrtbank redemption account I'm the Office OF the
Treasurer II this fund should be used Tor inc purpose 0,
r,rciu notes of nsolyent National banks thc ayas OF
whose bond. might be insufficient for that purpose, tue
issue safely be increased To- rate not chceeuhg
helowc- market value OF the bonds during the caeIa OF
fiscal year prcyousto the deposit Experience ms SHOWN
$40 uNuu each 500 OF bonds, SlOO Ol en-
culatiug notes had been i5suCi uI0h cSClSJ go
OF United states bonds dcpoaitoi, there would NOT
have been any loss To me "oN,rhlcs,' OK W W
the holder, OF the circulating notes 1t any .,ol
the National banks which have failed during tu,,
l94 twenty years Int that there might nave Dth m al
donal loss TO the dcpo.tors, depending upon the claiac
tor OF the asset. held m place oil the pouOu ol Doi
. which, this suppuritlun, Wodu nave ut'h l'',N
, Bat human nature remains the same, ana
Congress would not ho Justified, under me lit'Ih'
, system, I'm authorizing lhe issue vi a.. -
yud the amount az security deposited, ~ such legislation
would offer inducements 10 unplhCpr1 men 10 o1-d
ain
LEGISLATION authorizing such account a. mas b'cH 7s
.c-tcd opened I'm the office OF the treasurer "o,
u.urc the Government against any possible l"s "nu m
irtsr OF circulation upon bonds together WIN ll' ~
n ! peal of the tax upon CTtuldipu N"' ~, -,
tbr effect Of supplying the country WITH hahE clI'uiaol
p Tor thr next twsny.ioHr years; OF uhu ,n' w
The four per cent bonds aud W1bdhf "'U"ul au',
~, s,f,t fund thus provided to tur amount OF HshS
dollar. Thi-rdaliou would have the enc, 20 alNIh,'
tho price The bonds, but the advance "uud nlns ln'
mo the market SIN leaving sufficient prom 10 max
G Tho investment desirable ~ pledge for CIRCULATION
,.Wlr the Controller Is of the opinion lha te aAJo
10 the crcu atiuc medium 81 lh' ~, i, t.,
10 three wears hts been more than ruu''hl =" sulG ~,
n, rgn4t, demands ot business hc believes tlal Ec il
contraction of the currency now luniurn, g.ot ny
allowed take place too riiluy' OF ' u' 80, H.
"a Gv -r.L contraction be- replaced 10y substitute ''
p J1-irrhle than the bank notes In crculati m
The issue Of additional Treasury notes VIII N'"N'H '
= r,s,r and br likely 90 create doubts on the part
v .np. 81 the holders To tue ability ul the 'oN'il
p, ,,rnf ip nav gold ON demand, aud the toVCfuhth
" holder the OItou OF pay mcui, may AZ any uIc p
~ NATHAN unnu the silver -audlr advancing me p''
f. of products and dcmonctzlng the entire g3I CO.
r. oi tie country IN such crisis tr ',l 1' ~ N" 49,
T. rI.y Will be continually diminished on the one hA
H. ~ IA, pfc.rututiu ul IT, notes Tor payment "ilo u
r,,nc ON Tho other hand, viii not bc incroaSrl 10y Gu
- toms duc, paid ~ golj n present, but ny lhC I'
D. f.ilyrr ,loufs aud silver certificates, which VIII uhu
IL existing laws sooner OF Later diNt ever! uOlH W ~
w. coin ~ circulation. bringing upon ' &
greater contraction than that when u Il no" popo''"
mn