New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-12-20
GAGE TO THE BANKERS.
THE GREENBACKS A LEGACY OF WAR
NECESSITIES.
BANK NOTES SHOULD BE SECURED BY
ASSETS-THE PRESENT SYSTEM
A
ANTIQUATED.

1t has frequently been conceded that the bank
ers of this metropolis have little to learn from
those of any other city in the New. World or the
Old, but Lyman j. Gage. Secretary of the
Treasury, gave them considerable food for
thought in a speech which he made to them last
night at the Waldorf-Astoria. The occasion was
the annual dinner of Group No. S-the Manhat-
tan group-of the New-York State Bankers
Association. and the big ballroom Of the hotel
was filled with the members of the organization
and their friends. 1t had been expected almost
up to the last moment that two members of
President McKinley's Cabinet would make after
dinner speeches, but John D. Long. Secretary Of
the Navy. was obliged to send word that the i'll
ness of his wife and the pressure of business
connected with the signing of contracts for eleven
warships would prevent his being present.
Alfred c. Barnes, who acted chairman, in
introducing Secretary Gage as the first speaker
of the evening made a reference to the war
taxes, saying he hoped they would all be re-
moved now that the war was over. Mr.. Gage
prefaced the speech which he had prepared for
the evening by reminding Mr.. Barnes that al
though the torrent of war with Spain had ceased
it was still ''sprnkling" in the Philippines, and
the policy of a prudent banker was always 10
keep reserve on hand for every kind of rainy
day. The Secretary's use of the word "spr1nk-
ling raised laugh, and then Mr.. Gage passed
on to the regular toast that had been set for him
The Treasury and the Banker
WHAT THE SECRETARY SAID
He began by reviewing briefly the history of
questions relating to public finances since the
close of the Civil War. and called attention TO
the fact that many Of these questions must yet
be considered as unsettled Particular attention
was directed to the great intimacy now apparent
between the affairs of the Treasury and the
general operations of business which did not
exist at the close of that war Then he said:
Under the financial exigencies Of that awful
strain we learned to take up peoples goods oy
giving them indefinite promise to pay, en-
dowing that promise with the power 10 as
charge the obligations OF private co1trace i,
ing discovered, or believing we had discovered
the greenback Though adopted with fear and
hesitation by all thoughtful statesmen to be
powerful help in time of war; we were easily
led to believe in il as blessed agency in time OF
peace. The greenback became associated in the
sentiment of people with things sacred IL
was battle Scared bloodstained. and every
effort to throw upon it the light OF economic
truth and still is in many quarters resented
as a sacrilegiOus deed. What is the present
situation? We have in circulation among the
people and as a reserve fund in the banks $346.
100000 of Government notes. They constitute an
enormous public debt payable on demand. We
have, will soon have, substantially S6OO,OOO-
GOO of silver, or paper representatives of silver
whose parity with gold value the Government is
under obligation to maintain. The ultimate
measure of this obligation is the difference be-
tween the commercial value of the money metal
and the face value at which 1t circulates The
difference is not far from $3OO,OOO,OOO.
We have a system of banknote currency whose
volume is but family related to the needs of the
community which properly constructed bank
currency most economically serves. 1t is now
controlled TO volume by the price of interest
bearing United States bonds in Wall Street.
Our Independent treasury absorbs the circu-
lating medium when active business most re-
In 70 AfchF IA
falling revenues. the effect of industrial dull
ness. bring about an excess in expenditures. IN
dustrial activity increases the public revenue.
but is checked, if not throttled by its enlarged
contributions 20 the idle funds in the public
treasury.
It is these influences which have brought our
industrial and commercial life into too dan
gerous dependency upon public finances
This marriage between these two whom God ana
not join together ought to be put asunder But
not by any hasty South Dakota divorce method
is the separation to be accomplished. The chill
dren of this wedlock must not be dishonored
Time, attention and great care must be eXer-
cised.
TALK WITH SOUTH AMERICAN MINISTER
The Secretary then reported a conversation
he recently had with the Finance Minister OF a
well established South American Republic and
confessed to humiliation, as a citizen of this
greater Republic at the clear perception Of
economic relationships and the evident willing
ness the Southern statesman displayed to forego
tempting advantages in the present out Of Obedi-
ence to the requirements Of higher considera-
ton The Finance Minister of the Republic re-
ferred to said that his country sanctioned
branch banks because they believed a fagot Of
many twigs was safer and stronger than the
separated twigs could be-
The system had worked well and they had
had no bank failures for many years. Their
banks had issued notes to circulate as money,
limited in amount by their relation TO capital
and by the percentage Of specie they were re-
quired to carry against note issues In his coun-
try they did not require banknOtes to be Sc
cured by the deposit of Government bonds, be-
cause the banknote was considered entirely safe
to the holder now, and to require deposit OF
Government bonds would tie up bank capital
needed for the uses OF industry and trade. e Be
sides said the Southern minister" Mr.. Gage
went on we think that the Governments $
finances should be involved to the smallest de-
gree possible with general industries and busi-
ress affairs II we should, unhapplly. become
engaged in a protracted and exhausting war. the
Continued page three.
QUALITY OF CHAMPAGNE.