New-York tribune., 1902-12-04
THE TREASURY REPORT
BANKING AND CURRENCY RE-
FORMS URGED.
xFcRETsRY SHAW POINTS OUT DE-
FrcTs IN THE PRESENT SYSTEM
VAST MONETARY OPERATIONS
REVIEWED.

washington Dec S-The annual report OF Sec
,sfsrv shaw covering the operations of the Treas
Try Department for the fiscal year lso- was eeht
20 Congress to-day. AS means for securing fee
a times Of financial stringency the Secretary sas
rs sees no affection the Issuance OF nauoii3i
he,L circulation based on general assets under
-,roper safeguards instead OF on government ponoS
alone as at present, and that there snoulo NC
fewer restrictions on deposits OF puOhc Lul,u0 "
the national banks. The chief features OF the re-
port follow;
BANKING.
Recent events not only justify but enforce the
1onSinston that our banking system is imperfect
During certain months of the year interest," raoss
that speculation invited thereby When t1 me
time arrived s for mgng oTips e price of govern
,nenr bonds rendered the maintenance OF nauondf a.
oSrreney vas retired with great Tapidity
The department exerted sxeTy ln4eGc
its authority counterae! This natural were
During the early spring the surplus reVeuss orT
tions as maintained their limit OF clTc9iat
tf zen We're oR no deposits made Later in the
season when ], became sPpa1ent @ oeTtan Ie arise
-he dspartnent suggested 10 certain depository [
sssIsnes Of additional circulation This suggestion
submitted 10 eighteen OF ohF to Which
ffteen responded with orders for printing Stzusoeo
1 sT1sla9e; e sy7q = 5s Later additional deposits
were made but they were made mostly Win IL suF 1
sn amount equal 70 "a aPa @ e more circulation was
POST ~ cti 1gter an otter was made accept
es security for deposits already made the SUI
sfitution of state and certain municipal nonds at
3 reT esrT Of their face value in lieu Of govern
,1ent bonds then on denoslt on c9l4toiT }5 b ,ee
the basis Of immediate circulation IN lbs "dE,
means Of these several mst9ods no the degaFfgmsPt ng cent
secured in round figures s26coaoo increase & OF Cr1
cuation from the national banks holding govern
unent deposits
DErREASE IL BANK CIRCULATION
T,urinr The twelve months from November 70
is 70 H0yePher ,s3ta 70 s y over 5ee Rs% and an
initial circulation aeregating in ro9Ra Ristng na
s 5a-,ls was increased more than s4Soeeoeo
The increase in circulation hoWeTer SurTg r !i
IS nenfest that but for the extraordinary induce
ens offered BY the depaTmednt ,pin f6e Vear Te
notwithstanding the organization OF neM f+ai
Of about 50 o53eno In fact. national hank crenla-
tion did decrease very nearIX soVevVo t M. 5
partmte' ff t9 tbat date FuiiT s56Oo0o0 Increase
o,,id have been secured had the law permitted its
rapid retirement when no longer needed ..
Is anparenf Government bonds are scarce. and
those outstanding are hed IN arge paFt onanies ~
snd are uot available for circulation Inc bonos
that are en- the market are heG f a. rci,IsfIon un
profitable whenever the rate OF interest," appIoAi-
e frequent purchase and retirement of bones 2a6
renders the amount axsaT o1;nS @ ~ nonIlafien ad-
ssittonsl BANKING facilities and expanding trade
! therefore believe the time has arrived when II
win be necessary to ADOPT one OF Two nern1etugted
as basis for national bank circulation. and addir
sarse stgr,e' other system must be provided. ,,
BY the ect of Congress approved Marcn Is, ss iuo;
ndebtedness maturing prior TO IS aZo far a possib
hnf for the fact that present conditions continue
the government viii be in funds SUFFICIENT 10 als-
charge this Indebtedness at the time II msturss- f
The question has. therefore presented IseI @ Ioa
government additional time upon an Ioent-
edness not vet due when there rs Iaif prospect ee
ft can be met according TO its terms s, -
There other reason why s,+ffI the ssfneng Rpsd e.
this indebtedness Is oeefe9 - oi ~ nI5h1ie finds
IN the Treasury. and financial conditions make u
70 ngrcbase government bonds. At present there
IS other way 70 put aecumqIaJeo & sgFPas hons
are not held by banks by business concerns, SO,
Is promptly advanced This is not mentioned for
the purpose of criticising those VINO may hola S4
sirnpiy to state an Important factor in the equa-
,on Should tie bonds falling cue ev IN can nnf he ear
tended at a very low rate of interest payable on
fsfe pGees eo to g the government Had the depart
rnent however exercised the discretion WITH alen IN
IT is clothed by the act referred 70 aho oHerea 10
refund. it is probable that portion OF me o1ld ont
stan standing bs ana q faf &
lstIen might aEs fSS"f lsS ouER, L eE best 20 20 ef
acton {hat e a fns ee Wise determine by additional
sdditionai circulation will be necessary. Out
rs'is sure It even if their aTef value would Justify
their use BY the banks It is even doubtful # ma.
11ona1 s m ae sramfsgeoHs to 81 banks lower
oa circulation would be counteracted very pr9Eptiy
by corresponding advance IN the price OF ponas zones
holder.
ASSET CURRENCY FAVORED
see no objection TO the issuance Of circulation
based upon general credits if properly ssdegusTG
ed Neither do believe IT necessary 70 make cur cur
rencv thus issued first lien upon assets A very
saeT s H 9Ssibie pS5 loss The government actuary
has Demonstrated that tax OF one-eighta od per
from the beginning Of oyr national banking system en-
TO the present time hsd eaSn oank Tased Ms ta lx
suppose il be called premium on insurance ana
the Ta @ toe redeem their circulation at re-
eerTe cities and the government would never suf-
Ultimate loss. The lowest tax suggested BY any
one would far exceed any possible loss ana me me
people and still realize profit When thus guar.
. Isea & ana efaTs f fs benS f issue Currency BASED
on general assets would be as acceptable ard as
seus,' hovrever the wisdom of making provision
tr ne sss 0 o sof0 That Would fear unfortU
nate results but in al hnancisi iesaon I ta cr me
fency be suddenly and undulg inflated gradSat @
,hcTess N S,sSv Scregse Would be most
unfortunate Several other safeguards VIII natur-
ally suggest themselves and need not ne CONSIDERED
I an MOI prepared at this time to recommend
opinion that the peculiar conditions Of this country
would not be conserved by such POLICY; Greater
be conceded also that the system works well in
gsTsed and widely eeparated interests as this
n order the parent bank shall be able to
stsrd TIE needs of these communities and neither
experience observation lustifles the conclusion
better course, for the present at least would oe