The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-11-10
Amount of Advertising
carried by the Mime
apolis Papers for October
The Reform Movement.

1t is said at Washington that the dis
continuance Of the acceptance Of state
and municipal bonds as security for gov
crnment funds deposited in the national
banks, as permitted by Secretary Shaw
since Oct 1, is part Of the reform pro-
gram of President Roosevelt, who has al
ready, expressed himself unfavorably to
! the practice, too frequent on the part of
; the government, of coming to the aid of a
money market made stringent and panic
tending by the heavy discounting by the
banks of paper of the speculative element.
There has been some adverse criticism
of Secretary Shaw to the effect that he
issued his permission to substitute state
and municipal bonds for governm ent
bonds as security for government depos-
It's in the nationals. with view to open
ing the way for the substitution Of other
than government bonds as the basis of
national bank note issues for circula ton.
This hypothesis emanates from those who
strenuously oppose asset currency as the
basis of note circulation. But, there is
no law in the federal statute book which
cu}-ltion basis, and, If such change is
ever made it will have to be the work Of
congress. The national banking act re-
quires government bonds and no other for
note security. Mr.. Shaw issued his per-
mission of Oct.. as one method of re-
lieving the money market because. the
banks were averse to paying the higher
prices for government bonds as basis
for new issues. There Is no doubt, how
ever, that ultimately, with the increasing
tendency to organize new national banks,
and the resultant increasing demands
on the available stock of United States
bonds as securities for new issues of cur
than governments for circulation basis
will have7to be seriously considered.
1t is we'll that the administration has
indicated opposition to the practice of
rushing to the aid Of the money market
I'M New York when there Is money string
ency caused by stock exchange speculative
Eexcesses, to which the banks have min
istered by large discounts of speculative
paper, pulling down their reserves which
ought to have been kept up to meet any
extraordinary demand in the autumn for
scrop-movfng purposes. Thus, in this year
Of marvellous business and industrial pros
~,perity the abnormal condition of the New
York money market for two or three
months was manifestly a stock exchange
stringency, where speculation was very
active so long as the banks were. ready
to discount speculative paper. Had the
banks acted conservatively there would
have been no occasion for the government
to purchase bonds at high figure to re
lieYe the situation. -,-. -: $500. g,
81 It is not the governments business tt
help spectators out Of the hole by bono
purchases; it is enough to deposit mucl
of the idle surplus In the nationals on ade
quate security. Before the republican
party entered upon the control Of thu
government in 1861 democratic, admins
.trations fed the speculative market will
treasury funds Read the history. Of tn
crisis of 1857. It shows that the demo
cratic administration, upon the prenion
ition OF trouble and sometime before tn
actual crash, began to furnish fuel for tn
feeding Of, speculation and the purchas
of bonds only increased overspeculation
In 1873 the money disbursed by the gov
eminent was largely boarded. So, it wa
in 1898.
2 AS to the deposit of government fund
i'll the nationals, the late Secretary Win
dom held that such deposits to an amour
largely in excess of the needs Of the pub
lie service is wholly unjustifiable on tn