The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1883-11-27
KnOX's Plan,

circulation is the most interesting
and important part of the document
ana has not been published. The
comptroller refers to the probability
of all these to be called for redemp
tiOn within the next three years,
and says this will reiuce the bonds
held by banks from 1888 ,OJO,OC0 tC
$151 100000, and cause a contraction
of national bank circulation of
about $50. 900, 900, per annum. 1t is
evident that unless there is addi-
tional legislation the bonds held fol
security of circulation will rapidly
diminish. New legislation NAV,
however. postpone the payment OF
the public debt Or cause the profit on
the circulation 10 increase suffi
GENTLY to induce national banks TO
invest in long 4s, which are nos to
mature for twenty-five years. The
contraction of bank circulation NAV
be avoided by the reduction OF rev.
enue, and there is IN doubt that this
is the true policy. The contraction
of bank circulation may also be
avoided bo the conversion Of long
bonds into three per cents. by
Offering an ildlcement TO holders
OF bonds to exchange them for three
! per cents TO mature in 1907, govern
ment paying the holders thereof a
reasonable amount for the difference
in value. The premium 10 be paid
to holders of these long bonds may
be considerably reduced by pro-
viding that the circulation TO be is
sued upon the proposed bonds when
deposited by national backs, as sc,
Guilty therefor, shall not be ,ubject
to the present tax of one per cent.
per annum, Or by pOstponement of
the time Of their pay ment. Con-
traction would also be avoided by
providing for the removal OF the
tax on circulation, and increase the
amount of circuiatiOn to be issued
by banks upon bonds deposited by
them. The comptroller considers
that so long as there is sufficient
amount of United States bonds
outs anding legislation should be
sh shaped as to continue them
in use AS basis for national bank
circulation. With the decrease Of
interest and the decrease Of profit
upon circulation in the value of
bonds will also decrease. There
is no prOpriety or justice in author
iziDg the issue OF 800 upon every
500 per cent. bond with par, and
refusing to issue like proportion
upon 4 per cent. bonds worth SILL.
The holder of government bond
can readily borrow money upon 1t
as pledge from d bank to the
amount of 95 DER cent. OF its market
value. and il is not surprising that
he should prefer 10 relinqulsh the
circulation rather tnan deposit as
as security bonds having a margin
of more than third of the circula- !
ton issued. A law authorizing the !
increase OF the issue to 90 or 95 per
cent. upon the lowest market price |
during the calendar or fiscal year
previous to the deposit, together
with the repeal of the tax upon cir
would result in the de osit |
of sufficient amount of ~
and AIS per cent. to main
tain the circulation at about
the present aggregate. he amount
of gain to Government from acct
dental loss or destruction of circu-
lating notes, the Comptroller says,
does not properly belong to the
United States OF the banks issuing
the notes, but to the owners of the
notes at the time Of the loss, and
the gain thus accruing should be
carried to the credit of the insolvent
bank redemption account in the
Office of the treasurer. The Comp
troller believes the proposition to
convert long bonds into these is
more desirable than the proposition
10 increase the rate of circulation,
and that the large contraction of
the currency now imminent should
not be allowed to take place too
rapidly, or the deficiency caused by
such contraction SHOULD be replaced
by a substitute lie desira ole than
the bank notes II circulation. Knox
calls attention to the statement that
the contraction of the currency may
be supplied by imported gold, by
the annual product of mines, or by
the coinage of the silver dollar, on
which silver certificates are now
issued, and shows the excess of gold
imports is growing smaller, and the
probability that the gold now held
by the United States Will, not
long hence, be greatly dimin-
ished. The substitution of standard
silver dollars for retired circulation
would be simply introducing an in
ferior currency. IL answer to the
proposition that Treasury notes, as
we'll as silver certificates, may he
issued in the place Of bank notes. to
be retired, the comptroller says the
Treasury is EN- barassed with
revenue greater than it needs and
greater than 1t can judiciously dis
curse. Under such circumstances
he authority OF Congress to print
additional Treasury notes will lead
to still greater embarrassment TO
place Treasury circulating notes at
4 time when the most important
subject before Congress is the re-
1uctiOn of retirement revenue and
,he employment of a surplus ever
lowing Treasury. II it were poss-
BILE to issue additional Treasury
notes when the revenues of the