Evening star. [volume] (Washington, D.C.) 1854-1972, 1897-10-30
PLAN OF sEe'Y GAGE
Interest in His Announced Currency
Pe19.|
NO COMPROMISE T With SILVER
Readiness to Ebhasge Gold fo
Slyerr
Ii L
A CAUSE FOR SURPRISE


Much interest is taken in the outline of
financial policy submitted yesterday to the
President and cabinet by Secretary Gage.
The suggestions made are just about what
has been anticipated, but the official state
ments takes the matter out of the field of
sre culation. So
1t is in accordance with the view of the
leading bankers of The country and crafty
ing to those who are opposed to any CON-
Fl omise with the silver sentiment" There
is nothing. eauivoeal on that point The
only thing in it that is viewed with some
surprise is the statement that the treas
TRY has declared itself ready whenever
recessary to the maintenance of this par
ity to exchange on even terms at the pleas
ure of the holder, either form of the me
tallic money for the other"
1t has been said by some thai it was
the policy of the treasury not to regard
the coin silver dollars as basic money, but
it has never been understood that the
department held itself ready to give goll
in exchange for silver coin, which is
equivalent to making the silver coin re-
deepca ole in gold. :
1t was supposed when the endless chain
was in operation drawing out the gold re-
serve from the treasury that the only sorts
of currency available for the purposes of
getting the gold were the greenbacks and
the so-called Sherman notes of 1890.
This statement, however, indicates that
the silver coin and silver certificates might
be used n the same way, by being present
ed for redemption in gold.
Secretary Cages Plan.
The Secretary says that his predecessors
in caice since the war have regularly, in
their. annual reports. called attention to the
menace to the public credit occasioned by
the continued use of the large volume of
demand liabilities represented by the legal
tender notes. and have frequently arpo aled
for legislation to remove the danger.
In addition to the $46000,00O of legal
tender notes, and $114Wo.000 of treasury
notes, the government must hold itself in
readiness to maintain the free Interchange
ability with gold for sf4O.OOO.OO0 in silver.
The aggregate of these liabilities amounts
to SOOOOO,O0O, although the government
may never be called upon to pay this at
any one time, or any large portion of it at
time. From this the Secretary proceeds
to argue that the traditional $1OO, 900. 900
gold reserve is inadequate, matter how
good the conditions of the country OF the
confidence of the people. Conditions of
prosperity and happiness are not always
assured he says '-''
The Secretary then says:
Reduction of GoveHamaent obligations
The condition of n3e Treasury in its re-
lation to demand obligations requires that
one OF two steps be taken The one NAV
De large reinforcement TO the permanent
gold reserve. The other may be by an
important reduction IN the objectional
form of liabilities. The latter is, in nv
opinion, the more desirable.
My first recon- nenflati is that
proper Legislation be- enacted which will
establish separate and apart from the or
binary operations of the treasury as they
relate TO revenue and expenditures de-
partHent to be designated and known as
the issue and redemption division. To this
division the sum Of Hs]e5. 1le. 200 lin gold coin
should be set over from fhei general fund
In the treasury, to be Used only for re-
demption proposes; that all the silver dol
lars now held for redemption of silver GER
tf1cateS, and all the silver bullion and dol
lars coined therefrom, brought under the
act OF 1880. be passed to the same account
:. turther. that the sum of 100000. 900,
IN tne legal tender notes of the United
states. known as greenbacks, be collected
as hereinafter described and deposited In
the said department of issue and redemp-
uon' TO be disbursed therefrom only upon
tne receipt In exchange therefor of an
equivalent amount of gold COIN Such gold
"hen so secured, to be held in said de-
partment as part of the general redemp-
ton fund"
The second recommendation of the Secre
tary Is for the refunding of loan bonds at
me rate OF 2k per cent. principal and in
terest payable in gold.
On the subject of national bank notes the
Secretary recommends
The National Hanks
FIRST. Permit national banks to be or
ganized with minimum capital of s25, 600
IN any place having "a population of 1000
inhabitants or less
Second Reduce the rate of taxation on
circulating notes secured by deposit of
bonds to one-half Of 1 per cent per annum.
hereafter organized to issue circulating
notes to the par value of the refunding
bonds hereinbefore provided deposited by
them with the treasurer of the United
states And further allow such banks as
shall avail themselves of the opportunity
to deposit as security with the treasury of
the United States greenbacks. treasury
notes. or silver certificates to the amount of
s2oo,ooo.O0 against which there shall at
once issue to them by the controller of the
currency national bank notes to an equal
amount, it being further provided that
from time to time, at his convenience the
Secretary OF the Treasury shall substitute
LOT the sreenbacks treasury notes and sill
yer certificates SO deposited to secure cir
culation bonds of the same class and char
acter as the refunding bonds first named
to the amount of $200,000O00 Such bonds
10 De chargeable to said banks and by them
accounted for at such price (not less than
par) as the market quotations may indicate
to be their fair market value. During the
perlou Oh time intervening between the de-
post OF greenbacks, treasury notes and sill
yer certificates and the substitution of the
bonds by the Secretary of the Treasury the
circulating notes specifically issued there
for shall be exempt from taxation. Upon
such substitution of bonds the funds re-
leased thereby shall at once be transferred
by the Secretary of the Treasury to the
bureau of issue and redemption.
Fourth. After said banks have depos-
tied such bonds, greenbacks, treasury
notes or silver certificates to the amount
of 30 per cent of their capital, they shall
be permitted to ISSUE ,baHk notes in addi-
ton to the 50 per cent thus provided to
the extent of % per cent of such de-
post, which said Draper foent may be I'M
secured by any direct pledge of security,
but issued against the assets of the bank.
Fifth Extend the guarantee of pay
ment by the government to all circulat-
ing notes of the bank whether issued
against deposited security or against as
sets. -, Is ate
sixth To secure the government
against loss if any. attaching to its guar
antee, tax OF pen cent per annum on
unsecured circulatiOuJ shall be levied to
create safety fund; which fund shall be
invested by the Secretary of the Treasury
and the controller of the currency in gov
eminent bonds. In aAdl1pn to such fund
the government shall Be further protected
by having first lien upon all assets in
case of the failure Of the issuing bank.
Seventh. All notes, shall be redeemed in
the city Of. New Yofk Satsthe subtreasury
thereof and at SUCH other subtreasuries