Jasper Republican, Volume 2, Number 14, Rensselaer, Jasper County, 17 December 1875 — The Comptroller of the Currency on the Greenback Question. [ARTICLE]

The Comptroller of the Currency on the Greenback Question.

In his annual report the Comptroller says: It has been proposed to withdraw the National Bank notes from circulation and to authorize an additional issue of $400,000,000 of “ greenbacks,” the latter to be interchangeable in sums of fifty dollars for Treasury notes, bearing interest at the rate of 8.65 per cent, per annum, or one cent per day on each SIOO, and to repeal all acts tending to a resumption of payment in specie. The “greenbacks” re. ceived by the Treasury, in exchange for the 8.65 notes are to be used for the purchase of 6 per cent. 5-20 bonds, to save interest to the Government. The non-interest-bearing certificates of deposit now held by the banks, and amounting to $50,880,000, will at once be converted into “ greenbacks,” and these, together with the $150,000,000 of cash reserve also held by the different banks and bankers of the country, will be speedily exchanged for 3.65 notes. These latter notes will be used by every clearing-house in the country for the payment of balances, and a large proportion of the circulation will then consist of the new inconvertible in-terest-bearing notes, so that the whole authorized issue of these bonds will soon be in demand. If the amount of the interestbearing notes be limited to $400,000,000, and a reserve of 25 per cent in legaltender notes be held in the Treasury, the amount of the latter, which may be invested in United States 6 per cent, bonds, will be $800,000,000. This sum will purchase $250,000,000 of 6 per cent, bonds, assuming that the average premium is not greater than at present—2o per cent. The amount of interest saved upon the $250,000,CO.) of 5-20 bonds retired will be $15,000,000, while the interest paid by the Government on the $400,000,000 of 3.65 notes outstanding will be $14,600,000, the net saving to the Government being $400,000. But through this process the present tax on bank circulation, amounting to $3,250,000, will be lost, so that instead of saving $400,000 the Government will by this experiment bo actually the loser of $2,850,000. If, however, the issue of 3.65 notes shall be increased to an amount equal to that of the legal-tender and National Bank notes combined, the loss in interest to the Government would be somewhat less than before stated, but equal to at least $250,000. It therefore seems evident that the substitution of the proposed expedient in place of a system which has been in successful operation for the last thirteen years will result in a loss to the Government instead of a gain. The National Banks, as ha 9 been seen, are disposed to retire their circulation, and it is probable that during the next year a very large proportion of it will be voluntarily surrendered, but if the preposition now under consideration should be adopted many of the banks would go into liquidation, and the loans to a very great extent be called in for the purpose of distributing their present capital and surplus among their stockholders, who would, without doubt, generally organize under State systems and as private bankers. By this course a large proportion of the State taxes, now amounting to an average of about 2 per cent, upon capital, would be saved to tbe banks, as a result of a conversion of their capital or deposits into interest-bearing notes, which, like other issues of the Government, would be subject to taxation neither by national ifor State authorities.