The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1901-12-29
Governor Shaw Declares He Has
Never Criticised Methods of
Secretary of Treasury Whom
He Is to Succeed
HIS POSITION ON
CURRENCY QUESTION
Was Plainly Stated in an Ad-
dress Before the Northwestern
Nebraska Bankers Association
Feb. 22, 19O1-What He Said
At That Time

Des Moines, Iowa, Dec. 29.-Gov.
Shaw, to an Associated Press reporter
tonight denied having given an inter
view regarding Secretary Cages treas
ury policy. On the contrary he has
positively refused to give such inter-
views. He has, however, spoken in
most cordial terms his approval of Sec
rotary Cages administration of the de-
partment.
The governor has been very busy all
day receiving congratulations by wire
and mail and entertaining visitors who
called to pay their respects. The let
ter of the President has not yet been
received by Gov. Shaw but is shortly
expected.
Fearing that he had been misunder-
stood or misquoted Gov. Shaw tonight
authorized the register to publish the
following concerning his alleged COM
mitment to any described treasury ad-
ministrative policy:
Il have spoken in the highest and
most complimentary terms of Secre-
tary Cages administration. Further
than that l have not spoken and shall
not speak This statement must be
given no other Interpretation than that
l do not propose to discuss these prob
lens at this time
In an address before the Northeast
ern Nebraska Bankers Association on
Feb. %, 1901, Gov. Shaw said in refer
enCe to asset currency or bank circu-
latiOn, based on such: Il have been
asked to say something on the sub
ject of bank circulation based on as
sets. This is not an issue in politics,
nor have we any legal provision there
for. | shall, therefore, not attempt to
defend it. I am willing, however, to
go on record as in favor of an elastic
currency, and if / believed there was
no other way to secure an elastic cur
rency other than asset currency, then
l should advocate such an issue
Il am mindful of the fact that it is
claimed that an elastic currency plac-
es the control of the volume in tia
hands of the bankers.
81 am willing the railroads shall de-
termine the number of cars to be used,
for they will build cars as long as there
is demand for them. The cars of the
Western railroads are all employed
when the crops are being moved, but
literally acres of cars stand on side
tracks retired from circulation while
the crops are growing. If the cars
could be constructed as cheaply as cur
rency can be issued, they would be
burned in the spring and rebuilt in the
fall.
But, as I have said, [ do not be-
1eve it necessary to resort to asset
banking in order to provide an elastic
currency. | recognize a public preiu-
dice, akin to fear against a currency
based on assets. and prejudice. so long
as it exists, constitutes an element of
danger, even when the thing itself
against which the prejudice lies con
tains no element of danger
''T bpliayp tbo+ q
currency based on government bonds
would result in elasticity. That | may
make myself clear, permit an iIlustra-
tlon, but do not understand me as adj
Nocating, or so much as intimating.
the correctness Of the scale of taxa
ton l suggest. l make it only to bring
out an idea.
suppose banks We're permitted 10
issue volume of circulation equiva-
lent to one-fOurth of their capital stock
at tax, of, say one-fourth per cent.
Then permit an increase Of one-haIe its
capital stock at One-half per cent shan
to increase again to three-fourths, at
relatively increased rate. and then to
increase again to equal it's capital
stock, at one per cent tax believe
this would induce tine banks to carry a
larger volume of government bonds.
They are good assets. especially for
DduhS WIN large deposits. Then, in
stead of selling these bonds to increase
its capital-a circulation in time of
stringency-they viii be kept on depos-
it in Washington and on call at in
crease of circulation would be issued,
to be retired when not needed.
Il repeat that currency based on as
sets contains, in my judgment, no ele-
ment of danger, except popular pre-
judice. This will vanish as the ques-
ton is discussed and explained by
those who make a study of it. The
depositor would be in no worse con
ditiOn than now. Whenever a bank
fails, the assignee finds its bankable
commercial paper hypothecated In
other words it has increased its circu-
latiOn at a high rate of interest and it
does this even after it ceases to be
solvent. 1t certainly would be no
worse to allow a government issue af-
ter special examination"