The sun., 1901-12-06

tie population has increased but slightly
moro than 2s per cent. Whatever the
future may have in store, therefore,
the past has erred, il at all, in the Line OF
increasing the money supply rather
than decreasing it, The dangers sug-
gested by Mr.. GAGE seem overdrawn.
The plan proposed by the Secretary of
the Treasury is simply the old-fashioned
one OF note issuing by national banks on
their general assets. The safeguards
laid down by the Secretary as necessary
for the issue are considerably greater
than those previously suggeoted by
friends Of the project. Bank notes se-
cured hy the general assets Of the bank
by q redemption fund Of the Treasury
consisting Of 80 per cent OF the entire
issuc in Government bonds and 20 per
cent. in ereenbaclts, and by further
small guaranty fund established by
the Government, would not be IA safe,
admittedly, a. the old security OF de-
post of Government bonds up TO the
entire amount Of notes Issued. An
analysis OF the history OF national banks
for the last thirty-six wears, made by
tf1s- actuaries Of the Treasury, shows
that II this system had been in existence
the notes Of the national banks issued
under il would have been entirely secure
ard there would have been q consider
sble unused surplus still in the Treasury
to the credit OF the guaranty fund.
Banls issuing notes upon their general
Assets are commonly called wildcat
institutions, and their record Of failure,
with the lamentable financial disasters
consequent thereto, is a long one, The
analysis Of banking history made by
Secretary GAGE extends only to 1855,
at which time there were few wildcat
banks in existence. Would 1t not have
been better II the Secretary had ex-
tended the period OF his analysis to the
time when these institutions rose and
dourished and fell? Possibly the re-
suit OF the test would have been un-
changed. but, If such were the case the
fact would have powerfully strength
ened Mr.. CAGES plea.
But we imagine that the chief obJec-
ton with which Secretary GAGE will
have TO contend in Congress and from
general popular sentiment is that his
plan will afford too greet favors to the
national hanks. Why should these
national banks, already enriched enor-
mously by our laws. 80 greatly, indeed,
that the money power has become
permanent issue in politics, be allowed
TO reap further benefits from this addi-
tional issue OF circulating notes? Why
should not the large profit accruing
from the transaction accrue to the ma
tional Treasury, instead OF 20 private
individuals and corporations? Mr.
GAGE admits that this inquiry is very
plausible but he avers that to make the
answer TO IL clear would require a more
extended treatment than he could give
in his message 10 Congress II Is sin
ocrclv TO be hoped that he will take occa-
sion at some future time TO state his
answer to this objection with the same
force and clearness with which he has
propounded the other portions OF his
scheme.
o There must remain very great doupt,
too, whether any such scheme OF note
issuing by thousands Of national banks
over the country on theft general assets
would serve TO make the dangers OF
financial panics any less than they now
are. II IL is conceded that the security
OF the notes put out by these banks
under the new system will be less than
that which az present exists, II would
seem that fear OF the validity Of these
notes will be greater in the future than
il has been in the past, and to that "N-
tent. the dangers of panic viii not
b. lessened but increased. Everybody
now knows that bank note Is as good
as a Government bond viii that con-
yi,tiun bo held as firmly under Mr.
CAGES plan'