The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-12-29
GOV. sHAW'S BELIEFS
Continued From First rage.

banking" neither does he advocate II.
He thinks an elastic currency can pe
nroviaed without resort to that metnoa
At the same time he is not afraid OF let.
ting the bankers control the Voluihs o.
currency. ,l.....s-
.orhis orestion of bank circulation,
based on assets he said Is no. ~
ieeua in notifies. nor have we any iesal
nroviston therefor. / shall. therefofe5enot.
atten1pt to defend it. L am willing, now
ever to 60 on record as in favor or an
elastic currency, and if l believed there
was no other way to secure an elasuc
currency. other tnan asset currehey5fsiiAs
should advocate such an lsspe.ssas.a zssa,
ST am mindful of the fact that 1t IS
claimed that an elastic currency pidee''
the control of the volume IN me ha.lee
of The bankers Who should cohtroi eiT
volume? I am willing the raliroads Sns, nv,
determine the number of cars 10 pc useo'
for they will build cars IS 'oI3s - ~
is q demand for them. The cars OF t1e
western railroads are all employed when
the CROPS are being moved; but htefa4ly
acres Of cars stand on 5ldatracks, re-
tired from circulation, when the crops
ara growing. If the cars could ne con
structed as cheaply as currency gam pe
issued they would be burned inss7lllhlSssr
spring and rebuilt in the fall
But as l have said, DO not eetieNe'
il necessary to resort to asset nanKlaS
in order to provide an classic CURRENCY
recognize public prejudice AKIN TO
fear against a currency based on assets;
and nreiudice. so long as it exists, con-
stitutes ain element of danger, even when
the thing itself against which the preJus
dice lies contains no element OF DANGER
10 nf
81 believed that graduated tax on
currency based on government pohas
would result in elasticity. That / may
make myself clear, permit an llusEratloh
Int do not misunderstood me as adve-
eating, or so much as inttmatlng, TIE
correctness of the scale of taxation
suggest / make it only 10 briag ont
an idea Suppose banks were permitted
to issue a volume of circulation equiv
aIent to one-fourth of their capital stock,
at a tax say of u per cent. Then per-
nit an increase of one-half It's calAtat
| stock at p per cent then 10 increase
| again to three fourths at relatively III
| creased rate. and then to Increase again
to equal it's capital stock, at l per cent
| tax. [ believe this would induce the
| banks to carry larger volume of gov
eminent bonds They are good assets,
especially for banks with large deposits
Then instead of selling these bonds to
increase its cash-its circulation In time
of stringency-they would be kept on
deposit in Washington, and on call an
increase of circulation would be issued
to be retired when not needed.
''When a Western bank now needs
more circulation, more cash, it ied]s-
counts it's commercial paper ana is COM
nelled to redeem it at a given date and
! l,;c 10 I OF
/ be permitted to increase their circula-
ton when needed, to be retired as soon
as the demand for it ceases ana Keep
ever present the inducement to retire It
when not needed, and elasticity Is Sc
cured
Gov. Shaws ideas on national banks are
equally fixed Said he: II consider our
national bank system one of the best IN
the world 1t was great and wise con-
! ception. Suppose it were abolished. ahe
| government would still owe the debt. If
| the bonds were held abroad the interest
would have to be paid just the sar1e,
and this interest would help to settle the
balance of trade and would reduce the
! importation of goods in proportion to its
| volume rate of interest would be
! charged higher than now.
| Bonds Increase, Rates Decrease.
| cility for using government bonds as the
| basis of national bank circulation has
/ increased the value of these bonds has
| increased, and rates have decreased, un-
til our government obligations now circu-
| late at lower rate than the securities
| of any other country on the map.
1.-The government could now borrow
practically at IL per cent interest. 1t
would probably be compelled to pay 8
per cent, 21A at least, but for the national
| bank system"
Gov Shaw also has decided views on
| the bankers right-nay, his duty-to en-
| gage in the public discussion Of these
| national financial problems, even though
he be accused of interfering in politics
| or mixing politics and business.
| To the free discussion of these ques-
| lions by bankers and others who can
/ speak with knowledge he looks for The
! creation of such sound public opinion
! and a stable currency as viii make amer
lean financial eenters the clearing nous
! es of the world"