The Ohio Democrat. (Logan, O. [Ohio]) 1886-1906, 1901-01-17
A PERNICI0Us THEORY.
Cages Scheme to Lend Excess
of Revenue to Bankers.
TGREJAsTs A RAID ON TREASURY.

on Capital and surplus-A Proposi-
tion to Get the Peoples Money and
Then Charge Them Interest on 1t.
Facts to Ponder.
was never more prominently made
manifest than by Secretary of the
Treasury Gage in his address to group
s of the New York Bankers associa-
tion at the financiers' recent annual
dinner. Secretary Gage spoke on "The
Treasury and the Banker" and as n
banker himself, he showed he was In
favor of loaning the governments mon
etary surplus to his fellow bankers
who are naturally anxious to see the
continuation Of a financial excess as
an existing condition. He also, while
deprecatng the idea Of an immediate
abolition of the entire war revenue tax,
advocated the repeal of that portion of
the law which assesses the capital and
surplus of the banks. In the course
Of his address he said:
taking the last 80 years, what was
the average sum on hand in excess of
an ample working balance locked up
In the treasury? 1t averaged about
$50,000,000. Had this sum been placed
out at interest In the banks at 2 per
cent per annum how much would the
treasury have been bettered? Not less
than $32,000,000. Have we not been
guilty of a great economic waste by
reason of our public treasury system?"
Answering the secretary's last ques-
tion by admitting that the taxing pow
ers have certainly missed an opportuni-
ty to make money out of the surplus
and casually referring to the fact that
for "a out of the 80 years the taxing
power was in the hands of the Repub-
licans, whose aim has always been to
create surplus, we will return to the
false theory Involved in the PROPOSE
tion to lend excess of revenues to
bankers while relieving the same indi-
viduals of payment of their share Of
the governments expenses. 1t is a
most pernicious theory, theory so bad
that tn possibility Of its application
would receive no consideration were it
net that the man who advances it is
part of an administration which is
strongly supported by the present con-
gress and which will be more firmly
upheld In it's vagaries, financial and
otherwise, by the next national legis-
lature. Taking the secretary's words
for what they mean, bankers sue
cessful raid on the treasury may be
expected at any time. 1t is pleasant
prospect-no taxes to pay on capital
and institutional surplus and the privi-
lege of securing the peoples money at
2 per cent. To put the matter shortly,
Secretary Gage wants to tax the peo-
pie for the benefit of the banks.
According to the secretary, whose
word in this connection cannot be
doubted, the people of the United
States have been taxed S50,0OO,O00 q
year more than has been necessary.
This amount is arrived at by averaging
the excess for 80 years and does not
take into account legitimate surplus
to which he refers as working bal
ance. He does not deal with the ques-
ton Of compounding or relending the
2 per cent received from the bankers
or he could have figured out a much
greater return than $32,000,000 Put
ting that aside, then, we will see who
would have made the greatest profit
out Of the scheme, the people or the
bankers, for, Secretary Gage to the
contrary Notwithstanding, it Is not
within the province of our government
to make profit. Its expenses are paid
by the people, and all excess should be
returned to the people by a reduction
In taxation.
For at least the 80 years instanced
by the secretary the usual business
rate of interest has been 6 per cent.
If an ordinary business man today
goes into a bank for accommodation,
he has to pay that price for the money.
In extra large transactions lower rates
have prevailed. For extra hazardous
loans a higher figure has been obtain
ed. So, for the purposes of this dis
cussion, per cent Is fair basis of
calculation. This leaves us In a posi-
ton to perceive bankers borrowing the
peoples money from the treasury at 2
per cent and lending it back through
commercial channels at an increase Of
per cent. yielding the financiers $64.-
100000 clear profit for the 80 years,
twice as much as they would have paid
the treasury. This drain would not
have been In any way made UP by the
$50, 900 growing out of the bankers
payment of 2 per cent because that
money would have been only an In
crease Of the surplus and therefore to
reason for reduced taxes. When the
surplus got too big, 1t would be partly
disposed of by increased expenditures
by extravaganza trying to hide the
faults of the extortion.
The surplus this year is almost $780,
100000 About S25,000,O00 would be
a fair working balance, and that sum
need never be increased In times of
peace. There have been arguments
advanced for the reductions In the war
revenue tax. If the government has
had no trouble In rolling up an average
surplus Of S50,000.000 per annum In
many years when there were no stamp
duties, why not abandon the idea of
reduction and demand complete aboli-
tion? We don't want to lend money
to bankers. Yet II Secretary Cages
plan were In operation every man. wo-
man and child, black. red. yellow and
white, rich and poor, In the country
would be In the position OF contribut-
ing more than 81 per year for that