The sun. [volume] (New York [N.Y.]) 1833-1916, 1901-12-05

reduced from $40, 347, ssl on Nov. I. 1890,
to s2s,47 ,22S on Nov. IS, 1901. mas
much as our revenues are nov greatly
in excess Of our expenditures. the Seore-
tary of the Treasury recommends that
the revenues be reduced to the extent
of $50, OO0, 900, and he proposes as a first
step in that direction the repeal of all
the miscellaneous war taxes.
The chief feature Of the Secretary's
report, however, is his suggestion for
reform in our system of national bank
ing. Pointing out that the chief function
of banking is TO extend and contract
credit at proper times, he shows how
undue imitation arises from an improper
extension of credit, and panics similarly
occur from a frightened contraction OF
it. If some means could be adopted
whereby the strength OF association
could he secured and the surplus
power Of the safe and strong extended
in confidence to the support Of the weak
and exposed" the evil results of panics
would be minimized. The Secretary
indicates his opinion that a large central
bank with multiplied branches would,
indeed, give the highest assurance OF
protection against the present evil OF
individual banks, but declares that such
a proposition. in the present state OF
popular sentiment, must be regarded as
impossible of realization. 1t is also I'M
derstood that a bank circulation based
entirely upon Government bonds is not
flexible enough, for it makes the amount
Of the circulation dependent upon the
price Of the bonds rather than upon the
needs of the country. At present the
tendency seems clearly TO be toward a
greater relative increase in the require
ments of the business community for
currency than in the quantity OF Govern
ment bonds with which the note issue
can be secured.
Mr.. GAGE suggests, therefore, that
any national banking association depos-
iting 80 per cent. OF it's capital in the
form Of United States bonds at their
par value and 20 per cent. Of its capital
in greenbacks with the Treasurer Of
the United States shall be entitled to
issue it's circulating notes TO an amount
equal to its capital, such banks paying
in addition semi-annually to the Treas
ury of the United States in trust al
amount equal to one-eighth of 1 per cent.
on their capital stock respectively, such
payments to constitute a Guaranty
Fund for the protection Of any bank
which may become insolvent. If this
were done, there is a possibility of a
safe expansion of banking currency Of
about $500, 900 600, while at the same
time the muoh-hoped-for redemption Of
the g~reenbacks would be virtually Sc
cured to the extent of about 5000, O00, 900.
Mr.. GAGE contends that an examination
of banking operations in the country
for the last t~hirty-six years shows that
if some such plan as this had been
adopted, all bank currency would have
been safe at all times and there would
have accumulated already an unused
to the credit of the Guaranty
Fund of 1927, 4?l $50.
Entire comprehension Of Mr.. CAGES
plan can be obtained only by reading
his argument for it as printed in to-day's
Opinions concerning it will by
means be unanimous, but il will be
admitted by all that the Secretary has
made an interesting and eloquent plea.