The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1883-11-28
KNOWS REPORT.

document
Contraction of National Bank Circula-
ton.
wAsHNGToN, d. C., Nov. 25.-That portion
of Comptroller Knox's report relating to the
contraction OF National Bank circulation is
the most interesting and important part of
the document. The Comptroller refers to
the probability that all threes will be called
for redemption within the next three years,
and saws this will reduce the bonds held Dy
banks from 1858, 900 900 to S15I, 600 0OO and
cause contraction of National Bank circula-
ton OF about SEQ 000, 900 per annum. 1t evil
dent that unless there is additional legisla.
ton, the bonds held as security for circula-
ton Will rapidly diminish. New legislation
may. however, postpone the payment of the
public debt or cause the profit OH the circu-
Iation to increase sufficiently as to induce
National Banks to invest in long per cents
which are not to mature for twenty-four
years. The contraction OF the bank circula-
ton may be avoided by the reduction of the
redundant revenues, aud there is no doubt
this is the true policy. The contraction of
bank circulation may also be avoided by the
conversion of long bonds into per cents by
offering inducements to holders of bonds to
exchange them for 3 per cents TO mature in
1897. the Government paying the holders
thereof a reasonable amount for the differ
holders OF these long bonds may be consider
ably reduced by providing circulation to be
issued upon the proposed bonds when de-
posted by National Banks as the security
therefor, shall not be subject to the present
tax of per cent. per annum, or by postpon-
ing the time OF their payment. The contrac-
ton would also be avoided by providing for
the removal OF the tax Oh circulation and in
crease of the amount of circulation, to be
issued TO banks upon the bonds deposited by
them
The Comptroller considers that so long as
there is sufficient amount of United States
bonds outstanding, legislation should be so
shaped as to continue them in use as basis
for National bank circulation. With de-
crease in interest and decrease in the profit
upon circulation. the amout of issue upon
the value of the bonds will also be decreased.
There is no propriety or justice in authoriz-
ing the Issue OF 500 upon every 500 ) per
cent. bond worth par, aud refusing to issue a
like proportion upon the 1 per cent. bond
worth $l21 The holder of the Government
bond can readily borrow money upon il as
pledge from a bank TO the amount of % per
cent of its market value and it is not sur
prising that banks prefer to relinquish their
circulation rather than deposit As security
bonds having q margin OF more than one
third the circulation issued
A law authorizing the increase of issue to
80 or 80 per cent. upon the lowest market
price during the calendar or fiscal year pre-
vious to deposit. together with a repeal of
the tax upon the circulation, would result
in the deposit OF a sufficient amount of and
y per cents to maintain the circulation at
about the present aggregate
The amount of gain to the Government
from accidental loss or destruction of
circulating notes" the Comptroller saws
does not properly belong to
the United States or the banks issu.
ing the notes, but to the owners of the notes
at the time of the loss. and the gain thus ac-
cruing should be carried to the credit of the
insolyent bank redemption account in the
Office OF the Treasurer" The Comptroller
believes the proposition TO convert the long
bonds into IS IS more desirable than the
proposition to increase the rate of circula-
ton, and that the large contraction of the
currency now imminent should not be al
Lowell to take place too rapidly, or the def
cheney caused by such contraction will be re-
placed by substitute less desirable than the
bank notes now in circulation.
Mr.. Knox calls notice to the statement
that the contraction of the currency may be
supplied by imported gold, by the annual
product of the mines. or by the coinage OF
the silver dollar upon which silver certifi-
Gates are now issued, and shows that 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 diminished The substitution of the
standard silver dollars tor the retired circu-
Luton would be simply the Introduction of
an inferior currency.
In answer to the proposition that Treasury
notes as well as silver certificates may be
issue in place of bank notes to be retired
the Comptroller says the Treasury is EN-
barfassed with a revenue greater than the
needs, and greater than it can judiciously
dsburse. Under such circumstances the
authority of Congress to print additional
Treasury notes will lead to still greater EN-.
barrassment, and place Treasury circulating
notes in circulation at time when the most
important subject before Congress is the re-
duction OF the redundant revenue and EN-
ployment of the surplus overhO "
ing the Treasury. If it were possible to
issue additional Treasury notes when the rev.
enues of the Government are so much greater
its expenditures, and simultaneously with
the yearly addition of silver dollars now au
tnorized by law, it is evident that such steps
would lead plainly from the gold TO the sill
yer standard. The issue of additional treas
ury notes will weaken the Treasury and be
likely to create doubts of the ability of the
Government TO pay gold on demand, and the
Government by dec timing to pay in gold,
thus taking from the holder the option of
payment may at any time bring the Nation
upon silver standard advancing the price
of products and demonstration of the en-
tire gold coin of the country. In such
crisis, the reserve gold of the Treasury will
be continually diminished on one hand by
the presentation of its notes for payment,
while its revenue on the other hand will not
be increased by the customs duties paid in
gold as at present but by the return of sill
yer dollars and silver certificates which will
under the existing laws sooner or later drive
every dollar of gold coin out of circulation,
bringing upon the country much greater
To-, &Iof &c 70