The Washington times., 1901-12-09
Secretary Gratified by Len
iency Of Criticism.
GOOD POINTS OF PROPOSED SCHEME.
Avoidance of Financial Pitfalls and
Panicky Disturbances Well
Nigh Assured, He Thinks, if
His Ideas Prevail.

Secretary of the Treasury in his late an
nual report to Congress have been muci
less unfavorable than Mr. Gage expected
they would be. To use the Secretary'i
own words, he thinks his views have re.
ceived very kind treatment"
Since the report was made public last
Tuesday MIR. Gage has received clippings
of numerous editorials from newspa pers
published in New York, Chicago and other
large cities. and has received visits in hi.
Office from several leading Senators and
members of Congress, who came express.
ly for the purpose OF discussing his pro-
posed banking scheme.
This. Mr.. Gage says, is precisely what
he wanted. He invited criticism. and
would have been disagreeably disappoint-
ed if the criticism had not come He
recognized that nothing could be realized
from his plans unless the publication of
them should arouse sufficient interest TO
provoke a widespread discussion.
Secretary Gage talked freely yesterday
OF his new banking scheme He spoke
especially of his reasons for believing that
the argument for legal tender notes or
'greenbaeks" in preference TO bank notes
is fallacious.
Why GrecnbncISs Are Undesirable.
1T is a long story" he said. Ito tell
why the greenbacks, in my opinion. are
undesirable, but it is a bad condition
when we find there are outstanding $685.
0Uo.0O in redeemable paper and a gold re-
serve of only $3.50, ,000, ,O0O in the Treasury.
The Government, strictly speaking has
no assets as q private business institu-
tion has assets A bank issues currency.
but 1t does so only up to the limit OF GER
tain definite resources which are con-
stantly and carefully supervised by the
Federal authority. Its issues of notes are,
at the maximum, strictly dollar for dol
lar against Government bonds deposited
with the Treasurer of the United States.
The disadvantage of greenbacks over
bank notes in the system which / propose
consists also in the exr ensiveness to the
people. Ii is a less economical form of
currency.
The objection has been made that un-
der the proposed new plan for banking
and currency the private institutions
would reap a profit that the Government
might just as well enjoy for itself. The
same criticism is made under our present
system. The answer to that is that the
banks take the risk, perform the labor
and devote their energies TO The conduct
Of this business. Why not ask why mill
owner should be allowed 10 enjoy profits
from his business, or the merchant or
the steamship company? AS long as it
is recognized that banks are q useful
agency in the community and that they
have an important place in the great
ppt hz x4hfr oh, f.,ds ~
are carried on. they should be allowed to
provide the most convenient means in the
form OF currency with which TO perform
these functions"
No Fears of Wildcat Currency.
Mr. Gage said he had no fears that un-
der the system which he proposes there
would be any return TO the old condition
Of wildcat currency. and he did not con-
template that banks would be formed for
the mere purpose of making a profit out
Of currency. Il happened. be said that
the bank Of which he was president for
some years in Chicago, with a capital of
S3. .000, ,0OO never issued a dollar OF cur
rency during the period Of his incumben
cy. OF course. this condition would have
been changed probably had such a system
In national bank currency as he now pro
no idea that new banks would spring up
for the sole purpose of Issuing currency.
Issue OF Circulating Notes.
The radical new departure OF allowing
banks to issue circulating notes up 10
the limit of their capital with only go per
cent deposit of Government bonds will
bear the most searching analysis. Mr.
Gage believes. The creation OF q guar
snty fund by annual contributions from
the capital stock OF the banks. amounting
20 lis Of per cent he relies upon as an
adequate insurance against loss
To Retire the Gre, nback..
At the same time, the deposit OF 20 per
cent of the capital in legal tender notes
Of the United States would in time ac-
eomplish his earnest desire TO retire the
Ereenbacks from circulation On the
basis OF the present total capitalization
OF the banks. sl32 O00 600 in greenbacks
would be turned into the Treasury as
soon as the banks should organize under
the proposed new law.
He predicts that the present capitaliza-
tion under the successful operation OF his
plan would be Increased within three
yearr TO $1,000 C09 zoo and the deposit of
rreenbacks would, therefore. rise TO
coo. 600 OF these notes still in circulation,
but this amount would gradually be re-
tired as new banks organized. Thus the
change from grcenback circulation to
bank note circulation would be accom-
plisbed by degrees. and. as Mr.. Gage said
yesterday. the change would make no
suppression; that is. no disagreeable i'm
preston. on the industry and commerce
Of the country
Results of Experience.
The proposed guaranty fund IL based 10
seme extent on experience. the Secretary
says. He refere to the time. forty years
ago, when the so-called safety fund"
was feature OF the State banking law Of
New York. The banks. under that law
passed through one Of the worst financial
panics in our history. The moneys con
stituting the safety fund were diverted
20 another purpose, but II Is a mere mat
ter OF little figuring MIR Gage says. TO
show that had they been used to pay the |
losses OF the failed banks. all obligations
would have been disposed of and large
balance OF the fund lofl over This cita-
tion from actual experience Is re-enforced
by the computation made by the Actuary
of the Treasury under the Secretary's di-
rection. which showed to his satisfaction
that a guaranty fund OF the kind proposed
would have afforded ample protection to
all the banks of the country during the |
hast thirty-siN years. a period in which |
occurred two OF the most disastrous nan
les ever known IN the United States As
the Secretary said in his annual report. |
there would siill be left a balance of the !
guaranty fund amounting to more than |
81, 900. 600.
Fire Effects ~ Damage
About $50 o'clock last night. George !
Palmer turned in an alarm from box 26i |