Phillipsburg herald. [volume] (Phillipsburg, Kan.) 1882-1905, 1898-12-15
NATIONAL FINANCES.
Radical Currency Reforms AdvO-
Gated by the Treasury Secretary.
MR. Gage strongly Champions n Bank Note
Currency and AaSaila Government Notes
-FavOra Bountles for the Merchant
Rnrlno-War Revenue Tax.


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 $494, $685. 959.75 The ex'
penditures for the same period were
S532, 8st, 2O1.Sb.
In discussing the question of in-
.creasing the American merchant 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 an Affirmative maritime
policy by the United States
The subject of money in Porto Rico
is discussed at length. The secretary
says:
The existing currency OF that island consists
,of silver coins known as pesos and centavos.
The coins boar no fixed relation TO gold, not
being anywhere redeemable in the yellow coin
1t is unnecessary here TO point out at any
and commerce OF currency medium so out of
harmony with the worlds money as to induce
"a widely huctuating rate OF exchange 1t Is
highly important that American capital should
find no obstacles in Its transfer to and from
Porto Rice,
1t Is, therefore, suggested that, at the proper
time, action be taken by congress TO assimilate
the currency OF Porto Rico TO that OF the
United States, so far and so rapidly as this can
-, tgN.. .tsagV Ntprf
conditions and contract relations In Porto
Rico This, 1t is believed, can be accomplished
by making customs dues in the island payable
in American money, yet receiving the silver
pesos and Centayos at fixed relation to our
dollar.
The subject of currency and bank
ing is treated at length. The secretary
says:
In submitting my report I feel 1t my duty to
impress upon congress as best may the i'm
portant subject Of currency and banking re-
form. With u financial system condemned by
ythe Judgment Of the most experienced and wise
both nt home and abroad, its evils illustrated
In daily business and emphasized In recurring
panics, we fail, with an obtuse timidity, toface
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 a medium for commercial ex-
changes have been fully made and need not be
repeated In detail It's rigidity, It's 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
expendture-these are important links in that
chain OF argument The menace to our domes-
tic affairs, several times recurring from a
10, eNo nIar tun oh
they are carried on, and our foreign trade SET
tied has been companion evil--perhaps the
greater OF the two.
The proposal to substitute bank issues for
government notes is opposed with many honest
prejudces and assaulted by bitter deuunciations
The first arise from failure to comprehend
the true philosophy Of 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 peo-
pie.
shall not be outside Of my duty II I venture
to point out in at least one important respect,
the advantages to the poorer districts Of the
country Of properly constituted bank curren-
cy 1t may be done by fairly describing the
course Of the financial movement as it now
igoes on. and by presenting in contrast the
movement as it would go on under the condi-
JlOnS duNONdlSus ~ Is "a lulnllluI luCb bubUt
lin 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-
ward the centers. The currency flows to the
center to pay loans accustomed by its use and
other general Indebtedness, and also to secure
the benefit Of the country banker for portion
of his funds which in dull period would other
wise lie unemployed in his hands AT present.
.tsA.. 81. Ntva1
of legal-tender notes and treasury notes-that
is to say, in the money which the law recog-
nizes as lawful reserve Thus received BY the
bankers in the money centers, 1t becomes a
reserve for deposits In the relation Of
one to four Now deposits may
he increased by loans as well as by the deposit
of cash. A loan for $4,000 or 100000 goes to
the borrowers credit upon the banks books
and swells the deposit account by so much
True, the borrower may check against this
fund, but his check may also be deposited in
the same bank, in which case it is mere trans
fer to another account or, II 1t be deposited in
another bank and paid in money by the lending
bank, it is still a transfer The total deposits
of all the banks are swelled by this Original
loan.
In confirmation that this expansive move
ment is fairly described quote from the Few
York Herald Of November 10 as follows: Com
pairing yesterdays clearing houSe) statement
with that OF five weeks ago. it appears that the
banks hold ;13 0OO, 900 more money and have
expanded their loans by the surprising
amount of 51,5OO,0OO, the increase In de-
posts resulting from these two items being nc
less than $685. 900" 1t can be easily per-
ceived that thi possibility OF increasing loans
against an inflow Of reserve funds in the pro-
portion Of four to one is temptation to which
the city bank is likely to yield 1t must be re-
membered that this inward movement OF cur
rency from the country occurs at the time o.
year when commercial activities are the leas
and the general requirements for the use o.
loans In the interior are the smallest
The efforts OF the banks at the cen.
ters to increase their loans cause in.
-terest 20 fall The fall in the ratt
of interest causes interest and div
-dend paying securities to rise. The rise In Sc
-curities induces speculative buying. The spec
'ulative buyer becomes the banks borrowin'
customer The banker is thTs enabled TO ''pu
out his funds" as he is apt to term It, though
he really does no such thing He keeps hi
funds, but in the way described, he swells hi
deposit liability until his funds on hand arr
made answerable to the rule Of one cash to fou
liabilities, or 20 per cent against his de
posits"
1t is In the condition above described, will
varying degrees OF regularity and intensity
that the financial status is found when tn,
crops in the west and south approach harvest
that is to say, o maximum of loans ant
deposits minimum in cash reserves
During the season until then n,
country banker has found that hi
drafts and checls nm his aastern corresnond