Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1901-12-30
SHAN| 5 FINANCE VIEWS
Agrees With Gage on the Merits
Of an Asset Bank
Currency.
Thinks That Same Would Be
Unwise Now Because OF
Popular Prejudice.
His Nebraska Speech Define
His Views..Has Reputation
Among Bankers.

| Des MONIES. Dec. 30.-Governor
Shaw Endorsed the administration OF
Secretary Gage of the treasury depart
nent in the highest terms. He ex-
pressed his admiration for Gage and
for his methods of administering his
office, and complimented him as IAN
ideal executive"
1t was reported that Governor
Shaw had given out a statement In
which he Endorsed Cages financial pol
icies. and that he had said he COM
mended these policies except as to asset
currency. Governor Shaw. however,
did not so to these lengths. He did
not indorse or refuse to indorse Secre-
tary Cages recommendations. He
gave out the following statement:
Il have spoken In the highest and
most complimentary terms of Secre-
tary Cages administration OF the office.
Further than that I have not spoken
and shall not speak. Whatever have
said must be given no other interpreta-
ton than that / decline to discuss
financial policies at this time
Governor Shaw, when asked for his
referred to his address given at Nor
folk, Neb., April %, 1901. This ad-
dress was published In the June num-
Der of the Bankers Journal. 1t is as
Fsumed Governor Shaw still entertains
the views he set forth at that time.
In this address he said as to asset
currency:
Il have been asked to say something
on the subject of bank circulation based
on assets. This is not an issue in pol
itics. nor have we any legal provision
therefor. shall, therefore, not at
tempt to defend it. am willing, how
ever to go on record as in favor Of an
elastic currency, and II believed there
was no other way to secure an elastic
currency, other than asset currency,
then I should advocate such an issue.
II am mindful of the fact that it is
claimed that an elastic currency places
the control of the volume In the hands
of the bankers. Who should control
the volume? am willing the railroads
shall determine the number Of cars to
be used, for they will build cars as long
as there is demand for them. The
cars Of the western railroads are all
employed when the crops are being
moved: but literally acres of cars stand
ION sidetracks retired from circulation
while the crops are growing. II the
cars could be constructed as cheaply
as currency can be issued, they would
be burned in the spring and rebuilt IN
the fall.
but as / have said, do not believe
it necessary to resort to asset banking
in order to provide, an elastic currency.
I recognize public prejudice, akin to
fear, against a currency based on as
sets and prejudice, so long as 1t exists,
constitutes an element OF danger, even
when the thing itself. against which the
prejudice lies, contains no element Of
danger. believe that a graduated tax
on currency based on government
bonds would result in elasticity. That
I may make myself clear, permit an n
lustration, but do not understand me as
advocating, or so much as intimating,
the correctness of the scale of taxation
I suggest. l make 1t only to bring out
an idea
Suppose banks were permitted to
issue volume of circulation equiva-
lent to one fourth Of their capital
stock, at tax of say one-fourth per
cent. Then permit an increase OF one
half per cent, then to increase again to
three fourths at a relatively increased
rate, and then to increase again to
equal It's capital stock at 1 per cent
tax. / believe this would induce the
banks to carry large volume of
government bonds. They are good as
sets, especially for banks with large de-
posits. Then instead of selling these
bonds to increase it's cash-its circula-
ton in time of stringency-they would
be kept on deposit in Washington. and
on call an increase Of circulation would
be issued to retire when not needed.
''When a western bank now needs
more circulation, more cash, 1t redis-
counts it's commercial paper, and Is
compelled to redeem 1t at a,given date.
and pay a much higher rate. Let the
banks be permitted to increase their
circulation when needed, to be retired as
soon as the demand for 1t ceases, and
keep ever present the inducement to
retire 1t when not needed, and elias
ITCHY is secured.
II repeat, that currency based on
assets contains, in my jugdment. no
element Of danger except popular
prejudice This will vanish as the
question is discussed and explained by
those who make a study of 1t. Tho
depositor would be in no worse con-
dition than now. Whenever a bank
fails, the assignee finds its bankable
commercial paper hypothecated. In
other words. 1t has Increased its cir
culation at a high rate of interest. and
1t does this even after 1t ceases to be
solvent. 1t certainly would be no
worse to allow a government issue after
special examination"
ECLIPSE OF COSTLY JEWELS.