The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-06-09
RIVER AT s a. NJ.
sIR. CAGES PLAN.

The people of the country, who have
been inclined to repose considerable
confidence in Secretary Gage as a di-
rector of national finance, and who
have been encouraged by public init
nations of his scheme and public prom
Uses OF its fulfllment, will be vastly
disappointed with the outline of the
financial measure upon which he is
said to be working It has been made
clear by this time that every man is
bound to be disappointed who depends
upon the Republican party, or any Of
its agencies, for anything that is in the
line Of sound public policy. The general
financial views of Mr.. Gage, however,
would hardly prepare people for the
cOnglomerate idea now credited to him.
AS far as we can judge, it is a national
banking measure pure and simple His
scheme includes the gradual retirement
of the greenbacks which is wise and
necessary, and the substitution there
for Of national bank notes, which is
unnecessary y, uIiAFiSe anu CdlCuldCeQ
only to give new impetus to the de-
mand for the free coinage of silver
We have always contended that the
system upon which. the national banks
are based is unscientifc, unsound and
fit only for such an emergency as that
which gave it birth. 1t was most de-
sirable at the time of it's inception TO
provide note currency which should
restore the confidence utterly Destroy
ed by the wild cat state banks that
preceded it. 1t was necessary. also. to
create a good market for government
BONDS; hence, the national banking sys
tenn. The idea underneath 1t, how
ever the idea that an evidence of debt
IS a proper basis for an issue of money.
is utterly fallacious It is a relic of
the days when kings and parliaments
traded to great financial concerns the
privilege of issuing money for the peo-
pie in exchange for enormous loans
with which to carry on foreign wars
or to consummate schemes of domestic
Improvement. 1t is less reasonable TO
attempt to base true system of money
upon debt than it is to base if unon
a metal, even though overvalued.
The volume of the issue of national
pank notes is controlled altogether bv
the interest Of the banks issuing them
and reflects only partially, indirectly
ana ciumsily the needs Of trade. AS the
rate Of interest upon national bonds
now used as the exclusive basis for
these notes, has fallen year bv wear
the inducement to enlarge or ayo,
MAINTAIN note issues has declined
Notes will not be issued unless there
is profit in it. 1t is necessary. there
fore, if the $S46, OOO,OOO of greenbacks
now outstanding are to be retired to
present favorable terms to the. banks
In order that they may expand tbai,.
issues correspondingly, and that the
change may not cause a contraction ne
the currency. We make this statement.
not as our own belief, but as inter-
pretlng what must be the views of
Secretary Gage. The incentives SIP
geSted in his plan are the reduction ~
the tax on national bank circulation
from per cent to u Of 1 per cent. the
permission to issue notes to the faao
value of securities deposited, instead
of only 80 per cent, and, it is limited a
probable permission to use state and
municipal bonds as a basis for notes
to The extent Of so per cent of their
face
This is one Of the most pernicious
ideas thai have ever been advanced in
finance. The use Of local securities as
basis for money issues would promote
an era of wild f1nanciering second on,v
in its dangers to another issue Of pure
fiat money. 1t IS more Objectionable
than the latter, in that the profits of
It would so exclusively TO financial in
stftutions, instead of into the federal
treasury and through that to the peo-
pie. The fundamental principles of
sound money and sound banking would