The Indianapolis journal., 1897-11-21
CAGES FINANCIAL PLAN.
Secretary of the Treasury Answers
Boston Editors Questions.

BOSTON. Nov 2O-The Journal this
morning says: 1.-The plan proposed by the
secretary of the treasury for reforming the
currency is of vast Importance to the whole
country In commercial and financial CEN
ters like Boston the interest on the part
of all business men has been so great that
every detail of the proposed plan has been
scrutinized with the greatest care and fully
discussed. AS result of a study or the
various parts Of Secretary Cages plan and,
after consultation with the leading imam
ciers, the editor of the Boston Journal ad-
dressed to Secretary Gage, under date OF
Nov. 49, a letter embodying the following
questions which cover the points OF de-
tail, upon which doubt as to the secre-
tarys exact contention has been expressed:
'First-You put no limit of time within
which the secretary of the treasury shall
substitute interest-bearing bonds for de-
posit of currency. Would it not be fair to
make some limit and not allow the banks
to feel that you got the money in and they
got no interest except the saving of " OF
per cent. tax?
"Second-When you say the government
shall guarantee the payment Of all circu-
lating notes of the banks, do you mean
Immediate payment, or only ultimate pay
ment? 1t would make quite a difference in
whose credit became shaky which course
the government was going to take.
Third-We have also heard 1T questioned
whether 1T was wise to invest the per
cent. guarantee fund held by the govern
ment in bonds, as they may fiuctuate in
value and it is suggested that it might be
safer to hold it in money.
"FOurth-IS the redemption fund of 5 per
cent. to be counted by the banks as part
of their legal reserve"
Secretary Gage has replied as follows:
0VynH ok Of f1an fTcf lnfc mo-
ment to reply to yours of the 18th inst, in
which you wish me to state more clearly
some of ihe points in my recommendations.
l will therefore say:
"First-That it is the purpose in mind
to substitute interest-bearing bonds as Sc
curity for circulating notes, in substitution
of currency previously deposited, as rap
idly as the printing bureau can have them
issued and in proper form. In fact the de-
lay would be very brief.
'Second-The idea of requiring a deposit
of currency to begin with is to make sure
that there will be no contraction at all in
this operation. Money will go out as fast
as it comes in. The guarantee of the gov
ernment,' l understand, to mean guar
antee for immediate payment; not ultimate
payment.
''Third-As to the investment of the 2
per cent. guarantee funds, if invested IN
government bonds, I will say, that if 2h
per cent. gold bonds are issued the fluctua-
ton Will not be violent unless the debt
hereafter should be greatly Increased and
as the investment would probably be a
growing sum the risk of fall could be
easily sustained by that guarantee fund.
"Fourth-The redemption fund of per
cent. q may conclude to recommend III per
cent. instead of 81 is not to be counted
as part of the legal reserve against de-
posits.
II feel much gratified at the friendly in
terest you have taken in the suggestions
made by me- l do not know that they are
the best that could be made, but 1 feel
quite certain that If they could all be
adopted, the government would find itself
as a bank of issue (and that is what it is
and what it will be for some years to come)
in an enormously better position than il
now is. Very truly yours.
LYMAN T. GAGE'S