The Rock Island Argus. (Rock Island, Ill.) 1877-1885, 1883-11-27
ACKNOWLEDGEMENTS
Another Extract From the Report Of
the Treasury Comptroller.
He Gives HIS Views "a to How to
Prevent an Injurious Con-
traction OF the Cur
Fency.

prevent an AJUrs0us 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 Oar
ing the year ended Nov. ! more than
S105, 000 OF the public debt has bean
aid and all of the remainiL,. 81 per
cent bonds, amounting to S9l, SOC, $50
have been called for payment, and ceased to
bear interest on November l. Notwithstand-
ing the fact that 2G2 new banks were organ
lied during the past year, with a capital of
SIS, 654, $50 depositing 50 375, $50 of bonds as
security for circulating notes. the aggregate
amount on deposit for that purpose has d.
unfinished from 1862, 400, $50 to 1852 907, 300,
reduction of S19,5SS, $50. 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,
1897, $737, 946, $50: AZ per cents. payable Sept.
l, 1891, $3.50, 900, 900; railways Is, payable
1895 to 1892 S64 622, 5l2; total, 81 053, $40 0G2
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
cuiation to increase sufficiently to
induce the national banks to invest
in the long 4 per cents. which
are not to mature for a period of twenty four
years. The contraction of the bank eircula-
tiun may be avoided by reduction of the
redundant revenue, and thera is no doubt
that this is the hde 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 oil
with reasonable celebrity the part of the debt
which il may pay at pleasure, and to provide,
through tho sinking fund, for the payment of
that which viii become payable by and by.
'fhe contraction of the bank circulation
may also be avoided by the conversion of
the long bonds into per cents by offer
ing indncement to the holders of these bonds
to exchange them for 5 per cents, to mature
in 1897, the government paying to the hold
ers thereof a 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
bonds are then purchased by the government
at rate to be then fixed by the
holders thereof. which will be a 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
per annum, or by postponing the time for
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, il once deposited, and for this rea-
son tue 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 the
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. Other propositions have
been suggested in 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 a
sufficient amount of United States bonds out
standing, legislation should be shaped as to
| continue them in use as basis for national
bank circulation"
The holder of government bond, u Comp
troller Knox says, "can readily borrow
money upon it as a pledge from bank to the
amount of 95 per cent of its market value,
and it is not surprising that banks should pre-
fer to relinquish their circulation rather than
deposit as security bonds having margin OF
more than ne-third of the circulation issued
A law authorizing increase of issue to 90 or 81
per cent. upon the lowest market price dur
ing the calendar or fiscal year previous to the
| deposit together with the repeal of the tax
| upon circulation, would result in the deposit
OF sufficient amount of the per cents tc
maintain the circulation at about its present
aggregate"
Circulation, Mr.. Knox says could be safely
issued to many of the national banks, to an
amount exceeding their capital or bonds de
posted; but congress would not be justsfiet
under the present system in authorizing thu
issue of circulation beyond the amount of Sc
curity deposited, as such legislation would
offer inducements to unprincipled men t.
organize banks and issue circulation
for fraudulent purposes. Comptrollel
Knox, while believing that the add
ton to the circulating medium of tin
country during the last hree years has beef
more than sufficient TO supply the Iegitimat;
demands of business, thinks that the larg
contraction Of the currency now imminen
should not be allowed to take place too rap
idly, or tho deficiency caused by such con
traction I've replaced by a substitute less dc
sirable than the hank notes now in circula
! tiou