The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-12-10
A POOR IMITATION.

Aside from the few Republican echoes
in the press who have not brains
enough to understand any financial
plan, and approve of Mr. Cages recon-
mendations simply because they were
made by the party's secretary of the
treasury, these are the subject of very
general criticism. 1t is remarked on
disappointment, that a man of Mr..
Cages supposed ability should not have
been able to do better than he has in
submitting the scheme outlined. In the
first place, it is not practical. In the
second place, it contains plan for
wild expansion of unsecured currency,
from which every sound financier
shrinks in amazement. In reality, it is
not difficult to understand what Undue
ed Mr.. Gage to evolve this idea. The
milk in the cOcoanut flows very easily.
He has simply copied the idea of Sec
rotary Chase when the national bank
ing system was established. The pur-
pose of that system was not to supply
the United States with paper money,
but to furnish a market for the gov
ernment's bonds. What the treasury
needed was gold with which to carry
on the war. To get gold it must sell
bonds. To sell bonds it must find buy
ers. In order to induce capital to in
vest there was offered to it the ex-
traordinary privilege of issuing 80
cents worth of paper money for every
dollar that was put into the govern
ment's strong box. The national bank
ing system was not a system to give
the country a currency. That was the
last idea in the minds of the inventors
of it. 1t was a scheme to sell the gov
eminent bonds for cash, and it worked
well. Now Mr.. Gage has simply imi-
tated this idea, though he falls i'm
mensely below the financial acumen and
carefulness of the financiers of a gen.
Grafton ago.
He, too, wants to sell bonds He
wants to provide for 5000 zoo, 900 worth
of low-rate securities to be used in re-
firing the greenbacks. He wants to get
that paper money locked up. In order
to secure this $500, 900, he proposes
to offer the privilege of issuing paper
money. But, whereas the trainers of
the national banking act, in granting
this immensely valuable privilege, did
take care that the people who handled
r the notes should be we'll secured by the
deposit of government bonds, Mr. Gage
gives away the right for nothing and
lets the people take care of themselves.
His scheme is that the national banks
of the country should put up fund of
5000, 600 in paper money. In order to
take advantage Of the note issuing
clause, the bank must have deposited
an amount equal to so per cent of it's
capital. Let US suppose, then, that ma
tional banks having an aggregate cap
ital of $40O, 100000 have put up bills to
the amount of 5000, O00, OO0 They would
be entitled, under Mr. Cages plan, to
issue $100000,000 of paper bills against
their assets. For this privilege they
pay nothing. They are authorized to
put out their own notes, dollar for
dollar, for their 100000, 900 in cur
rency. They will get the right to
issue S1OO,OOOO0O extra, to loan it out at
the market rate, to reap all the profit
and to hold this as an absolute monop-
oily for a simple privilege which is not
to be extended to anybody else.
We might note in passing that
the plan does not even have
in view the accomplishment of
Mr.. Cages purpose. 1t would
not necessarily take out of circulation
one dollar of the legal tenders. AS stat
ed by Mr.. Gage, the deposit of 5000, OOO,-
900 could be made in legal tenders,
treasury notes or silver certificates.
That last addition is immensely signifi-
cant. The silver certificates amount
in volume to pretty nearly as much as
the greenbacks and the treasury notes
combined. The whole 5000 600, 900 to be
deposited could be paid by silver GER
tificates without difficulty. Therefore,
we might sell these bonds, grant the
privilege of note issue and not reduce
by single bill the volume of green
backs outstanding. To this end the
country is supposed 10 create a new