New-York tribune., 1884-02-04
Mr.. KNOX ON FLNANCLlL MEASURES.
THE CONTROLLERS OPINION OF THE BILLS IL RI
IATioN To BANK CIRCULATION.

THE CONTROLLERS OPINION OF THE BILLS IL Re-
LATlON To BANK CIRCULATION.
A TRIBUNE reporter at the Hotel Brunswick
Oh Tuesday evening asked Controller JOHN Jay KNOX for
his views upon the financial situation. Mr. Knox sad
"The estimated contraction of bank circulation for the
current yesr is 100000 900. will be fully that unless
there should be reduction OF the revenue 20 prevent
tic calling IN OF the cent bonds, twothrs OF
which are held by National banks security FOR their
circulating notes. when the surplus accumu-
ates the only way dsburse il Is by calling in and pay
ng the per cent bonds When these bonds arr hs
paid the hesitate purchase four cents TO TO
place them basis Of circulation, rs the ious are sell
Dc at nearly % in the market premium of one-rcurh
the face value The banks IL is clear, viii not 10 any
tent purchase -hese bonds for such basis.
.'Ths LEGISLATION now pending Congress purposes TO
remedy this difficulty. The propositions are, first, to
fund per cents, which mature IN 1907. into three
per cents paying fifteen per cent in cash difference
I'm value 90 those holders who VIII voluntarily agree TO
such en- exchange Secondly 10 increase the re OF issue
upon the long ninety per cent OF their current
market value IN other words 10 authorize the issue OF
100 cents upon three per cent bonds 1O3 cents four
andhalfs and 10 10 cents upon fours. The third
measure which has received the approval OF the Finance
Committee OF the Senate proposes TO issue S1CO Of
circulation on each 500 bond, whether It i- tlIce,
or fourand a-half four per cent. THIS latter pro
position which Is likely 10 pass both Houses, wouid give
some relief and ia very much better than legislation
The profit circulation based the four per cents
under tbs bill, where the rates of interest size
per cent would probably not exceed sixtcnths Of OF
per When the rate OF interest seven per cent,
the ,roat would much exceed fourtenths OF Per
cent So that the banks IN the West ana South that
hold three per would have little indncement
deposit fOurs m place OF their threcs they called
"The proposition 10 issue circulation 90 per cent OF
the current market value would give profit four per
cents where the OF interest is per cent Of
,,I In and !,
where rates are per cent Of nearly per twould
Increase the premium the fours slightly and
bring them into market, where there would be
a gradual demand to replace the called
threes This proposition woud give relief TIE objection
to is that bases circulation on ucuatng standard
Bus the of Is fixed at 10 l2 for the next
ten years, and then reduced per cent each year there
after, until the amount Of circulation shall reach par this
objection is fully answered.
In my opinion the bill offered Is that now pending
In the Senate, known as the Aldrich bill, which converts
the into hrees giving 10 per cent In cash 10 the
holders as Rducement to make the exchange.
The new tlnees which arc TO be issued under
it are 10 run until 1907, the same date
tued The threes would he worth los 10 100 in
the market satisfied that nearly all OF the holders
of the fours would be glad to make such an exchange,
for the reason at the cash which they would receive
the transaction could be loaned at SIX per cent Wlie at
present invested IL Is in the premium, II does noyeld
AN income very much III excess OF 2l2 per cent. Ihe
beautiful feature Of this proposed bill Is that on each
OO000OOO of new long threes issued. Sl5oOOOCO OF
revenue would De dsburse tans preventing Ine necessity
Of calling that amount OF the threcs which are pay
IT
600 600 were exchanged during the present year, il
would sovc the necessity Of calling $450O0OO0 Of old
cOutrac. ion Of the circulation would DC thus avoided
through a process which 1. both ADVANTAGE 10 the
Government and to the banks There would be No
further anxiety anywhere the subject for The tIee
now held ny tie banks would coatBue to De held by
them long the process OF exchange o the fOurs 10
long hrce continued feel certain that long prior
10 he 1unuIiy OF and hafs III OF the fours VIII
have been converted ntO long threcs the Government Mt
that date (Which viii be lSJl having bond Of any
kind outstanding bearing interest at higher than
terC