Private banker

In 1857, shortly before Minnesota was admitted to the United States, Knox and his brother, Henry M. Knox, launched their own banking house, J. Jay Knox & Co., in the city of St. Paul with the financial backing of their father. In October 1859, they purchased the Central Bank of New Ulm, Minnesota, a note-issuing bank organized under the free banking law of Minnesota, but continued their office in St. Paul. By June 1861, pressures of the Civil War contributed to a devastating depreciation in the bonds used to secure notes of the Central Bank, and the Knox brothers allowed the bank to fail. Note holders were eventually paid 30 cents on the dollar for Central Bank notes. This experience significantly shaped Knox's opinion on banking.^[7]

Knox became an advocate of the system of national banks proposed by U.S. Secretary of the Treasury Salmon P. Chase and contributed ideas to the national bank debate, advocating safe and convertible notes of a uniform type for all national banks, backed by the guarantee of government bonds.^[8] He authored two influential articles on the matter, published in Hunt's Merchants' Magazine in 1861 and 1862, which gained the notice of Secretary Chase.^[8] Chase would bring Knox into the service of the Treasury Department in 1863.^[5]

Government career

Working in the Treasury Department throughout the closing years of the American Civil War, in 1866 Knox was put in charge of the Mint and Coinage Correspondence for that department.^[8] He authored a report on the San Francisco Mint in 1866 and later in that same year discovered a $1.1 million misappropriation of funds in a similar report on the activities of the New Orleans Mint — the largest such misappropriation in US government history up to that time.^[8]

Knox was made Deputy Comptroller of the Currency in 1867. In that capacity in April 1870, Knox prepared a 100-page report codifying the mint and coinage laws of the United States.^[5] This was followed in June 1870 with another report of similar length, collecting the views of mint employees and financial experts and providing for legislation to eliminate the silver dollar from circulation.^[5] Knox's proposal was passed into law after a few amendments as the Coinage Act of 1873 — an event which triggered a rapid fall in the price of silver and which ushered in an era of bitter currency debate which dominated the political landscape for the better part of three decades.^[5]

President Ulysses S. Grant promoted Knox to Comptroller of the Currency in 1872.^[9] He was reappointed to a second 5-year term by President Rutherford B. Hayes in 1877, and to a third term by President Chester A. Arthur in 1882.^[9]

On May 1, 1884, Knox resigned his post in order to become president of the National Bank of the Republic in New York City.^[10] At the time of his resignation he had served 17 years in the Comptroller's office as part of almost 22 years in the Treasury Department, making him the longest serving officer in that department.^[9]