Evening star., 1897-02-01
MIR. GAGE on FINANCE.

His Discussion of the Question In a
Letter to Mr.. Springer.
In response to an invitation to appear
before the House banking and currency
committee in '94, Mr.. Lyman ]. Gage, who
has now been selected to be Secretary of
the Treasury under Mr.. Mckinley, thus
discussed the financial question in a letter
to Mr. w. M. Springer, then chairman of
the committee:
First National Bank of Chicago,
Chicago, December 10, 1894.
Dear Sir: l am honored by receipt of
your request to appear before your COM
mlttee on Saturday next, or on some day
prior thereto, In the recommendations of
the President and the Secretary of the
Treasury concerning the currency.
The notice is short that l cannot ar
range to be present in person, but beg very
briefly to state here the conclusions at
which I arrived.
Agreeing with the criticisms made by
these officers of the government as to the
present weakness of our situation, and the
great desirability of separating the govern
ment from the direct responsibility of cur
rency issues l am persuaded that the
country is not ready to accept their rec
concentrations as to the methods proposed.
In making any change the method should
be SO simple that all can comprehend it,
and 1t should be seen that the incidental
efectS would not be in any direction dis
turbinS to trade. commerce or industry.
believe that the Baltimore plan" car
ries the true principles of credit cur
rency, but We cannot reach 1t by any step,
and years may intervene before it could be
realized. In the meantime, the way of the
government to step out of the currency
business and place the burden of redemp-
tlcn upon the banks is plain.
Authorize the issue of $3.50, 1000 600 of 215
per cent bonds, payable at such time as
Congress may elect twenty-five years de-
"a n yhcn~ ihorc
Accept in payment United States legal
tender notes or treasury notes, the same
to be Cancelled.
Amend the national bank act so that
banks can obtain note issue to the face
value of bonds deposited as security for
circulation. Reduce the tax on circulating
notes to one-half of l per cent.
Ihls done, national bank notes would
make good the vacuum caused by the re-
tirement of government notes; in fact,
there would be some expansion under it
TO be followed later by some contraction
through forced redemption of bank issues,
IL IL be true, as some claim that the vol
ume OF circulating media in the United
states is larger than can be maintained
and that the outflow of gold is nature =
method OF equalizing things. If this be so,
II contraction through the expectation of
gold, or by the retirement of a portion of
the paper money, be a logical sequence of
our situation. then. in that case the gov
ernment being safe from demands, the
cams WIN outstanding would
be obliged TO bring their issues within mar
rover limits: but all this would work itself
out, and need not be dwelt upon at length
now. e N
me problem is this: To take the govern
ment out of the note-issuing business
~ without contracting the currency in
the process. '''
G9orf - Without nc inviting to expansion.
secretary Carlisle's plan is subject to the
danger involved under the last suggestion
Yours, very truly,
H. LYMAN J. GAGE
HON. W. NJ. Springer, Chairman Banking
ana Currency Committee, Washington
d. C. e 'oii'
+. S.-Were the above suggestions to re-
1--WE e serious consideration, there are some
features OF the national bank act that
would would require amendment in order to give
lio:uers easier and cheaper access to the
point OF redemption than now exists. Re-
stored, but these are details which T viii
pass by. Will