New-York tribune., 1902-12-04
SECRETARY SH4IV'S REPORT.

An Intelligent stranger familiar with the
rrircinIes of noIitical economy but ignorant of
conditions as they exist in the United STATES
could scarcely read the annual report OF 'he
Secretary of the Treasury. sent TO Congress yes
terdav EXCEPT in wonder and amazement he
would learn of the magnitude of the business
of the country and of the marvellous prosperity
of the people but would be put to his wits emu
70 account for such a state of affairs. in view
Of the fact that the chief financial ofhcer OF the
Government found it necessary TO devote the
greater part of his report to a demonstration OF
the inadeuuacy aud unitness of the financial
system on which this mighty structure is based.
Secretary Shaw. like many of his predeces-
sors. has been obliged TO take the attitude of an
elementary instructor. Last year Secretary
Gage gave 10 the country luminous and able
exposition of the first principles of banking.
hut so far as action by Congress is concerned
his efforts at instruction have yet TO bear fruit
This year Secretary Shaw returns 10 the at
tack. and points out clearly and forclbly many
of the evils of the present system which are
CRYING for remedy. Reviewing his recent ef-
forts to prevent disastrous monetary strln-
gency the Secretary shows the inefficlency OF
the means at his disposal to cope with the stu
alton which. by the way, he ought never to be
called upon 10 do. The national Treasury was
full TO oyerfowing with idle money. The very
prosperity of the country was in large part the
means of bringing about this result. hut the
riciditv of the independent treasury system
made this enormous accumulation OF revenues
as utterly unavailable for the purposes of bust
ness as though the money were at the bottom of
the sea.
Once the revenues are covered into the Treas
ury there is 10 way to get them out except in
er1Y ~
bonds. What little relief the Secretary could
give under the law was TO hold internal reve-
nue. receipts Oh deposit In national banks so
that they should not reach the Treasury, but
even IN accomplishing this many good authori-
ties believe that the law was at least strained.
The purchase of bonds to any great extent was
out Of the question because Of the limited avail
able supply. Not only would their extensive
purchase by the government elevate the price
beyond reason, but would defeat its own end
by curtailing national bank circulation and cut
ting off the security by which government de-
posits are retained in the banks. Moreover If
such system were TO remain in vogue it would
be necessary to create permanent govern
ment debt in order 10 maintain it. With the
purchases made for the sinking fund and the
rapidly approaching maturity OF many OF the
bond issues, 1t IS question of a comparatively
either to secure circulation and deposits or to
be used as relief agency in the hands of the
Secretary of the Treasury.
Secretary Shaw believes that national bank
circulation based the security of general
assets instead Of on specific security is per-
fectly practicable and absolutely safe. He
would not plunge headlong into an unlimited
issue of such currency, but urges the adoption
Of the principle by gradual stages as expert
ence discloses its wisdom and its limitations
He offers no specific plan, satisfying himself
with calling the attention OF Congress to the
fact that his responsibility ends when he has
pointed out TO IL the needs and dangers of the
situation. The remedy lies in legislation On
the subject of branch banks the Secretary is
inclined to doubt that general conditions in
this country justify attempt to Introduce
the system
Regarding the proposition to make silver coins
interchangeable for gold, Mr. Shaw believes
the existence of nearly six hundred million
irredeemable silver dollars worth less than 90
cents each, a greater menace to the business
of the country than would be involved In the
assumption by the government of the respon-
sibility of exchanging them for gold on de-
mand. In connection with such a change In
the law regarding silver, he would make na-
honal bank notes specifically payable In gold.
mus throwing on the banks part of the burden
OF providing gold for export purposes
The Secretary further urges action by Con-
gress authorizing the coinage of the silver
bullion now On hand into subsidiary coins in
stead of standard dollars. and the recoinage of
existing dollars into subsidiary coins when the
supply Of bullion is exhausted
1t is true sthat financial doctors disagree
among themselves as to the best means to cure
the Ills TO which attention is called In Secre-
tary shaws report but that the Ills exist all
agree. 1t will be sad commentary on popular
government in America If the Congress of the
United States cannot and will not take up the
subject and discover some solution.
PRUDENT Use OF CITY FUNDS
The plan of the Municipal Art Society for the