Morris tribune. [volume] (Morris, Minn.) 1880-2000, 1883-11-28
NATIONAL CURRENCY
Another Extract From the Report OF
the Treasury Comptroller.
He Gives His Views az to How 30
Prevent an Injurious Con-
traction OF the Cur.
rency.

WASHINGTON CRY, Nov. 81. Comptroller
Knox, in lis forthcoming annual report
says: "The secretary of the treasury has
been compelled, on account OF the large
receipts of revenue in excess OF expendi-
lures, to call in rapidly for payment that
portion of the bonded debt which is payable
at the pleasure of the United States. Dur
ing the year ended Nov | more than
$l05, 100000 of the public debt has been
aid and all of the remaining 315 per
cent. bonds, amounting to $91, 596, $50,
have been called for payment and ceased to
bear interest on November1. Notwithstand-
ing the fact that 262 new banks were organ
lied during the past year, with capital OF
$2S, 654, $50 depositing S., $50 of bonds as
security for circulating notes, the aggregate
amount on deposit for that purpose has di-
unfinished from 1852, 400, $50 to 1852, 9O7 300, a
reduction of s19, 5sS, $780, The total amount
of bonds outstanding, held by the banks
and by the people, which are available for
circulation and not payment at the pleasure
of the government, and which cannot be re-
deemed except by purchase in the market, is
as follows: Four Per cents, payable July l.,
1907, $737, 946, $50; Al per cents. payable Sept
| l, 1891, $250,0O0000; railways Us, payable
1895 to 1899, So, 622 52; total, 81 052, $40 062
sit is evident that unless there is additional
| legislation the bonds held as security for cir
culation will rapidly diminish. New legisla-
! ton may, however, postpone the payment of
the public debt, or cause the profit on cir
| culation to increase sufficiently to
induce the national banks to invest
| in the long per cents. which
are not to mature for period of twenty four
| years. The contraction of the bank circuia-
ton may be avoided by reduction of the
redundant revenue, and there is no doubt
that this is the true policy. The radical cure
for the evil of all accumulation of large sur
plus" says the secretary in his last report,
sis in the reduction of taxation so that no
more will be taken from the people than
enough to carry on the government with
economy, to meet all its obligations that
must be met from year to year, to pay off
with reasonable celebrity the part Of the debt
which it may pay at pleasure, and to provide,
through the sinking fund, for the payment of
that which will become payable by and by.
"The contraction of the bank circulation
may also be avoided by the conversion of
the long bonds into per cents by offer
ing inducement to the holders of these bonds
to exchange them for 3 per cents to mature
in 1907, the government paying to the hold
| ers thereof reasonable amount for their
difference in value. The principal objection
made to this proposition is, that the govern
ment would pay to the holders large pre-
MUM upon the bonds held by them, but it is
| evident that in the course of two or three
years after the 8 per cents are paid, if there
is no reduction in the revenue, the surplus
will enormously increase, unless the long
| Nv Ia
at rate to be then fixed by the
holders thereof, which will be rate much
higher than that now proposed. The
premium to be paid to holders of these long
bonds may be considerably reduced by pro-
viding that the circulation to be issued upon
the proposed bonds when deposited by the
national banks as security therefor shall not
be subject to the present tax of per cent.
Der annum, or by postponing the time foI
their payment. Such legislature would
make the new bonds more valuable for this
| purpose than for any other, and would be
likely to prevent their withdrawal until
maturity, if once deposited, and for this rea
son the bonds would be more desirable as a
basis for circulation than any which have
heretofore been issued. The contraction
would also be avoided by providing for tbs
removal of the tax ON circulation, and the
increase of the amount of circulation to be
issued to the banks upon the bonds deposited
by them. y Other propositions have
been suggested i'll order to postpone or pre-
vent contraction of national bank circula
ton, which is now imminent but the comp
| troller considers that, so long as there is 6
sufficient amount of United States bonds out
standing, legislation should be shaped as Il
continue them in use as basis for nationa
bank circulation"
The holder of government bono, )" Comp
troller Knox says, "can readily borrow
money upon it as pledge from bank to thu
amount of IS per cent. of its market value
and it is not surprising that banks should pre-
fer to relinquish their circulation rather thar
deposit as security bonds having a margin Of
more than one-third of the circulation issued
A law authorizing increase of issue to 80 or 9;
per cent. upon the lowest market price dur
ing the calendar or fiscal year previous to the
deposit, together with the repeal of the tai
| upon circulation, would result in the deposit
of a sufficient amount of the per cents Il
| maintain the circulation at about it's present
aggregate"
Circulation, Mr.. Knox says, could be safely
issued to many of the national banks, to al
amount exceeding their capital or bonds de
posted; but congress would not be justsfiet
under the present system in authorizing tn,
issue of circulation beyond the amount of Sc
curity deposited, as such legislation would
offer inducements to unprincipled men tx
organize banks and issue circulation
for fraudulent purposes. Comptrollel
Knox, while believing that the addi
ton to the circulating medium of TIN
country during the last hree years has beef
more than sufficient to supply the Legitimate
demands of business, thinks that the larg
contraction of the currency now imminen
should not be allowed to take place too rap
idly, or the deficiency caused by such con
traction be replaced by substitute less de
sirable than the bank notes now in circula
tion.