The sun., 1902-12-04
REPORT OF SECRETARY SHAW
NE ADJ Of tTES THE fSSIE or
ASSET Currency.


WAsHI"GroS. Doc. -Thr annual report
of Cr 'ary e ~" Tr asury Shaw Wa,
submitted To the Speaker - the Hnu-"
to-day. The most important rari OF the
report doa'H with the inability Of the c3un-
try's present banking - .',in 10 afford an
increased circulation when ulpn'y becomes
tight" Additional circulation will b.. nee
essary, MIR SHAW says and h" believes that
one # two policies / 'Ist b. adopted ei her
the Government debt mus, b. p"rp"tuatcG
a. n basis f.: national bank c.rcu,a''on md
additional boud- ISSUED ~ occasion may re-
quiIc, or some other system must uc pro-
vided. He goes So far as 10 say ,ha' he secs
no object ion 10 the issuance by national
banks of circulation based upon general
ASSETS. If properly ~afogIarded, instead of
upon Government bundS alone. "a az pres
ent, Tn" Srcrrtary'- argument on this
subject j. a. follows
'Rcccnt events not only Justify but en-
force the conclusion that our banking
system il impcrioC During certain months
Of tho wear Interest rates dropped danger
ouslv low dangerous IN tie sens. hat
spt 'uIGIou was invited thereby. When
the time arrived for moving crops rates
advanced alarmiugy high. Meantime the
price Of Government bonds rendered the
maintenance of rational hank circulation
Improbable. and ruis class of currency
was retired with great ilpiditv.
The DcparI mcut tNeriod every influence
,, NV - '""'.'r"'I
''"'ai contraction ana means 90 S'v-
sra method, pa" y .rrtm.ui secured j.,
round ftur S. 600 Ooo increase If cir,u-
latinn ron, tho y,r.,...l I.,L- h.,Li;,,o
,-..'...... "'''""h
'''''' "'"''' ~ i"N'>.
DECREASE or CIRCULATION
.nuri,gtb.t,vo mantle sr,.,., ., =,
40, : NV 80 ".,n' - 'ru'' Ny. ~
i"'i' 10 NOV. ~ iSE, w. no" banks were
chartered "uta capita. Of over sBp IN. zoe.
Arl an initial circ,lait.- 40. cra,i,y f.,
rotnl nur,n.rs. s,5o,opo. viii, ia, c',,;,,I
=, -. -. 80 ".'"' nv ''i''dl
''' .."i' '''As was Ih'''aS"l
oira,,,,,i,, '.,D'.''' i,' H,'' eaNo !"
nor,Ls ,,s..,,, ..,,,.',. sao ,"-, 80, .r,
va "'"S ''"u s-"'"'"'' mus II
l. manifest 'hal 'ut for the extraord.uary
inducements offered bv the Depart mnut
national bank circulation wouli hay. c,,-
tracted during the wear, Notwithstanding
the organization of new bank, and ths
sggregate increase in national bank capitaI
Of about t75.OvOu1J In eaCt. ..at,nnni
bank circulation did decrease very nearly
81, 600 900 during the fiscal year crIiuy
June 80. The efforts of ;ln Department
to Increase circulation were not resortad to
until after tha; d.. IdIly s5oUp on
increase could have been secured had tho
law permitted its rapid retirement when n,
longer needed
THE reason for this tendency toward
contraction is apparent Government
bonds are scarce. and those Outstanding
are held in large part bv trust estate.
saving banks, and in suTauce companias
and are pot available for circulation The
bonds thai are on the market are held AT
prices which render their US. a. security
Tor circulation Improbable whenever tho
rate OF lnterss. approNimatcs per cent
i therefore believe the time h1s arrived
when 1t viii b. necessary to alop' one of
Two policies; either the Government debt
must be perp"tuat"d as a basis for national
pafd circulation. and additional bonds
issued ~ oC sion nav require. or some
other system must be provided
EFFr.>p,sl uEptrcArrn
"Bvtha NO, .t ,,,..,,,..-. - IN
l., rtbn n ,n,r, ,,S '"t W. :" '',h ",
nl hny,.. ln o',", ,n". " l''l'id
Iq25 Tbis Jscr,,'n,, vm,'I "'"i u ''1iR !, ,"I i"
-. "n '.oo'c'L"h "oGid nave tee.
10, 10 ar =, a. y tslhr" out i"r the TACT
G"y..r,,,ft,, I'm 'I'.'' Io''s 'Ut' Hhuo ~
ia d,scIar,,,, 80 80 II. nus eH'".h'i'
il ,uai,1ra. fh E "' w." NM
presented itself for solution. SIpll III, ID
partner - ~ 'h" g""t Of the Goverrn"it, I,
e'ri' ",'"l'l" IA nm" ui'plI an lnG"t'"d'."sS
i', EtI uu'' "iI"A tMef" II ialr pros. ect hat
y ~ '' iI''l ''"I'lHH TO Us ttflhS'
i"e. d" or" .lii"r reason WHY the refund
.s ~ ms n'd'h'e,ii'>s ls deemed ui doubt
~ oA At""'i''E. "h"ii"'"r iler" II sun
PIuA "i PHpn' tnn"s H. IN" Treasury, aud
.'Ia'tI", '"i"l'l"le max" 1t adv shtl"
."d' II y" Tr'.s"d, :! l.'"u!ncs ioC'ssarN
10 pufchaS' -" ,"ri ncrt tD.Gs. ~ p.'S,.,t
N'i" i II" "li"r say 10 pat a, au. p.a'rd
~ sui'inr revenues promptly ia cir'ulaticr
me aNal'dh" BONDS ar" lpt lcld Nv banks
or bV hH =" "sS C"u""'is. -, Nr"lrv"r
tie roN'Tiit"n' l. purchds r, 90"
price n promptly v'C,d. Should o.
tohGs falling du" iu the near future /"
permitted =" mature, they can J." extended
~ very low lai" ot interest. payahlr OIL
demand, md 'hc holdr,s thereof can 10
longer u,ctat" prices TO III" Government
fiad IN" D"partm"ut, however exercised
~" discretion with which II j. clothed hv
the act rc'err'd to, ard offered 70 ,rftrG,
II II prbhabl" tha' Ior'iun Of tine Oi,ir;al d.
lrg irdrH'cGrc.s f the GuNrrumei' would
have lecu presented ard a slight incfeas.
in circulation might have fpI'nwed T.
Vow o. ir"..' considerations T. has leon
thought Los. 'n defer pctiou that TN, cur
r"nt session of the cohr rress may. if II shan
deem wise, determine by addi,iorgl icc,..
latioa the 'rjtlre pplicvof th. government
,.,.-,, -. -.-.
~ ""rN' '"N"hfp'
Additional clr"ri.'iuv will be Necessary
equat" To ~""ur" II even ii their market
VaIue Would justify ihcir u q 10y tie h.lhs
IL Ii even doubtful Il nat iOnHl bank cur
~ At4ft. I...sa.