The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1898-12-09
GAGE ON CURRENCY.
The Secretary of the Treasury
Makes His Annual Report.
HONEY CIRCULATING IN PORTO RICO.
Secretary Gage Condemns the Present
Financial system of the United states
and Advocate, a Bank Note
Currency In Its Place.

was made public yesterday. In the
report Secretary Gage says: The rev.
enues of the governme from all
sources for the fiscal year ended June
80 1898. were S494, 1888, 953.75. The ex-
penditures for the same period were
$500. 3Si, 20l3
In discussing the question of in
creasing the American mer chant ma
rine the secretary says:
War with Swain and the annexation OF the
Hawaiian archipelago. which have changed
the political ana commercial relations OF the
United States not ony 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 pesos and centavos.
The coins boar fixed relation to gold, not
being anywhere redeemable in the yellow coin.
1t is unnecessary here to point out at any
lenRth the general evil results upon industry
and commerce OF a currency medium so out OF
harmony with the worlds money rs to induce
q widely huctuating rate OF exchange. IL Is
highly important that American capital should
find no obstacles in its transfer to and from
Porto Rico.
II is therefore, suggested that at the proper
time, action be taken by congress to nssimilate
the currency of Porto Rico to that OF the
United States so far and so rapidly as this can
be done without unduly disturbing existing
conditions and contract relations In Porto
Rico. This. II is believed, can be accomplished
by making customs dues In the island payable
in American money yet receiving the silver
pesos and centavos at fixed relation to our
dollar
The subject of currency and bank
ing is treated at length. The secretary
says:
In submitting my report feel II my duty TO
impress upon congress best I may. the i'm
portant subject Of currency and banking re-
form. With financial system condemned by
the judgment OF the most experienced and wise.
both Mt 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 n medium for commercial ex-
changes have been fully made and need not be
repeated In detail. Its rigidity. its failure to
meet demands whore demand Is most urgent,
the dependency OF the whole industrial struc-
expenditure-these are important links in that
chain Of argument The menace to our domes-
tic affairs, several times recurring from a
threatened change in the standard under which
they are carried on, and our foreign trade set
tled, has been companion ovil-perhaps the
greater OF the two.
The proposal to substitute bank issues for
government notes is opposed with many honest
prejudices and aSsalled by bitter denunciatons.
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 conspiracics to exploit the peo-
pie
/ shall not he outside Of my duty II / venture
ca point out In AT least one important respect,
the advantages To the poorer districts Of the
sountry Of properly constituted bank curren-
cy It may be- done by fairly describing the
course Of the financial movement MS IL now
goes on. ana by presenting In contrast the
movement rs IL would 20 on under the condi-
tions advocated, IL is familiar fact that,
in the period of harvesting and crop moving.
the currency Is strongly drawn from the
centcrs TO the country districts When this
movement Is over the currency again tends to-
ward the ccntcrS The currency flows To the
center TO pay loans accustomed by It's use and
other general indebtedness. and also to secure
the benefit Of the country banker for a portion
Of his funds which in u dun period would other
wise lie unemployed in his hands At present,
the currency 80 sent consists almost entirely
Of lega-tendor notes and treasury not's-that
Is TO say, in the money which the law recog-
nizcs uS lawful reserve. Thus received by the
bankers IN ths money centerS, II becomes Il
reserve for deposits in the relation OF
one to four Now. deposits may
be increased bv loan rs well rs By the deposit
Of cash, a Olu for fll,0DO or 10000 goes ia
the borrowers credit upon the banks books
ia no .rt4lt
True the borrower may check against hi,
fund, but his check mny also be deposited IN
the same bank. In which case IL is "a mere trans
fer to another account; or II IL bn deposited In
another bank and paid IN money by the lendinl
bank. II Is still transfer. The total deposits
OF all the banks are swelled by this origina
loan
IN confirmation that this expansive move
mont Is fairly described quote from the New
York Herald OF November 10 rs follows: Com
pairing yesterdays clearing housed Statement
with that OF five weeks ago. II appears that thu
banks hold l3OO,OD more money ANA hnvj
expanded their loans by the surprisini
amount of sbl 800 0JJ, the increase In de
posits' resulting from these two items being NJ
less than t66.OJO 90" 1t can be easily per
oeived that this possibility Of increasing loan
against an inflow OF reserve funds in the pro
portion OF four to one is temptation to whcl
the city bank Is likely TO yield II 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
tiers TO increase their loans cause In
terest to fall The fall In the rat
of interest causes interest and divi
dend paying securities to rise, The rise in Sc
curitcs induces speculative buying. The spec
ulativc buyer becomes the banks borrowin
customer The banker is thus enabled 10 'pu
out his funds as he is apt to term II, thong
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 ar
made answernble to the rule OF one cash TO fou
liabilities, or % per cent against ms de
posits"
IL is In the condition above described wit
varying degrees of regularity and intensity
that the financial status is found when Tn
crops In The west ana south approach harvest
that is to say maximum OF loans an
deposits, minimum in cash reserves
During the season until then IN
country bunker has found that hi
drafts and checks on his eastern correspond
Al a.,