The Goodland republic. [volume] (Goodland, Kan.) 1891-1907, 1898-12-09
GAGE ON CURRENCY.
The Secretary Of the Treasury
Makes His Annual Report
MONEY CIRCULATING IN PORTO RICO.
Secretary Gage Condemns the Present
Financial System OF the United States
and Advocates = Bank Note
Currency In Ita Place.
MONEY CIRCULATING IN PORTO RICO.

washington, Dec 1.-Lne report OF
the secretary Of the treasury to the
speaker Of the house Of representatives
was made public yesterday. In the
report Secretary Gage says: The rev
enues Of the government from all
sources for the fiscal year ended June
80, 1898, were s494, SS3, g5275- The ex-
penditures for the same period were
S532, 8s1, 2OLS S.
In discussing the question Of in
ereasing the American mer chant ma
rine the secretary says:
War with Spain and the annexation Of the
Hawaiian archipelago. which have changed
the political and commercial relations Of the
United States not only with Cuba, Porto Rico
Hawaii and the Philippines, but also with the
continents between which and North America
those islands are stepping stones. require the
prompt adoption OF al Affirmative maritime
policy BY the United States
The subject Of money in Porto Rico
Is discussed at length. The secretary
saysi
The existing currency Of that island consists
OF silver coins known as pesos and CentavOs-
| The coins bear no fixed relation TO gold not
being anywhere redeemable in the yellow coin
1t IS unnecessary here 70 point out at any
| length the general evil results upon industry
and commerce Of a currency medium 50 out Of
harmony with the words money as 70 induce
a widely huctuatinE rate OF exchange It is
highly important that American capital should
ind no obstacles in its transfer to and from
Porto Rico.
It's, therefore. suggested that, at the proper
| time, action be taken by congress to assimtlGte
| the currency OF Porto Rico 70 that OF the
United States. so Tar and so rapidly as this can
/ be done without unduly disturbing existing
i conditions and contract relations in Porto
| Rico This. IL is believed. can be accomplished
BY making customs dues in the island payable
l in American money, yet receiving the silver
pesos and centavOs at a fixed relation to our
dollar.
The subject Of currency and bank
| ing is treated at length. The secretary
| says:
In submitting my report feel it my duty TO
! impress upon congress as best I may. the i'm
pOrtant subject Of currency and banking re-
l form With a financial system condemned by
| the Judgment Of the most experienced and wise,
! both at home and abroad. its evils illustrated
| in daily business and emphasized in recurring
panics We fail. with an Obtuse timidity. to face
| the questions which must be met and rightly
| solved before industry and commerce can be
| established upon enduring conditions Of secu-
| rity.
| The arguments against government issues OF
paper money as q medium for commercial eE-
| changes have been fills made and need not be
/ repeated in detail Its rigidity. its failure to
| meet demands where demand is most urgent,
/ the dependency Of the whole industrial struc-
/ ture upon the state Of the revenue and public
expsndfture-these are important links in that
chain Of argument The menace TO our domes-
| tic affairs, several times recurring from
| threatened change in the standard under which
/ they are carried on. aud our foreign trade set
| tied, has been a companion evil-perhaps the
| greater Of the two.
The proposal to substitute bank issues for
| government notes is opposed With many honest
prejudices ana assailed BY bitter denunciatiOns-
! The first arise from failure to comprehend
/ the true philosophy Of a paper currency and
must Be patiently considered The latter OBJ
| scure the question by reckless statements,
/ charging that all propositions for currency re-
| form are bank cOnspiracies to exploit the PEG
! pie
! IshaIl not be outside Of my duty IL venture
I to point out in at least one important respect,
| the advantages to the poorer districts Of the
/ country Of a properly constituted bank curren-
! Cy. Il may be done BY fairly describing the
course Of the financial movement IL now
I goes on. and BY presenting in contrast the
| movement as il would 20 on under the cOndi-
lions advocated 1t is a familiar fact that,
/ in the period OF harvesting and crop moving.
the currency is strongly drawn from the
/ centers TO the country districts When this
movement is over, the currency again tends to
I ward the centers- The currency flows to the
| center 70 pay loans OCcasiOned By its use and
| other general Indebtedness. and also to secure
the benefit Of the country banker for portion
I OF his funds which in dull period would other
I wise lie unemployed in his hands At present,
/ the currency 50 sent consists almost entirely
/ Of leEal-tender notes and treasury notes-that
! is TO say. in the money which the law recOg-
/ nizes as lawful reserve Thus received by the
I bankers in the money centers, it becomes
! reserve for deposits in the relation Of
one to four Now, deposits may
/ be increased By loans as well as BY the deposit
I Of cash a loan for $1,000 or 100000 goes 70
I the borrowers credit upon the banks books
and swells the deposit account By 50 much
True, the borrower may check against this
i - IL Ha--nH
the same bank, in which case it is mere trans
fer to another account. OF. II ft be deposited in
] another bank and paid in money By the lending
bank. IL is still q transfer The total deposits
I % al the banks are sEelled By this original
7 loan
In confirmation that this expansive move
msnt IS fairly described quote from the New
York Herald Of November Is as follows Com
/ pairing yesterdays clearing house, statement
/ with that Of i've weeks ago. Il appears that the
/ banks hold -15OJo.ooO more money and have
/ expanded their loans BY the surprising
amount OF s51,5O0. 900, the increase in de-
l posts resulting from these two items being no
/ less than g66 90. 90" II can be easily per
ceived that this possibility OF Increasing loans
I against an inflow Of reserve funds IN the pro
/ portion OF four % one is . temptation 20 which
/ the city bank is likely 70 yield It must be re-
! membered that this inward movement % cur
/ rency from the countrT occurs At the time Of
| year when commercial activities are the least
| and the general requirements for the use Of
/ The Efforts OF the banks at the cen
/ tiers 70 increase their loans cause in
/ terest 70 fall The fan in the rate
OF interest causes interest and diFi-
i deud paying securities 70 rise The rise in Sc
curfties induces speculative buying The spec
ulaEfFe buyer becomes the banks borrowing
customer The banker is thus enabled 20 put
out his funds. IS he is apt 20 term &c. though
be really does no such thing he keeps his
funds. but. in the way described. he sEeIls his
deposit liability until his funds on hand are
made ansWerable 20 the rule OF one cash 20 four
liabilities, or = per cent against his de
positsf'
II is fl the condition above described. with
varying degrees OF regularity and intensity
that the financial status is found when the
crops IN the vest and south approach harvest
I that IS 20 SAY. maximum OF loans and
deposits a minimum in cash reserves
During the season until then the
country banker has found that his
drafts and cheeks on his eastern correspond
suts. distributed 70 his customers. supplied
their needs FOR instruments % exchange and
payments but he finds that foz-she payment q
Z farm wages. ths purchase s1d transfer o. farm
rrod1Gts. such instruments ara not adsquate.
cash Is required for these purposss. sithsr IN
metallic money O. pspGr currency IBIS forces
hia g make FeqEislliqn n ne foEm q