Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-12-03
Interehangeability Of Govern
ment Obligations Favored.
NEW BANKING SYSTEM
LEADING RECoMMENDATIoN OF
SECRETARY SHAw's REPORT.
Estimated Surplus for the Current
Year s4s, 200, ooo-For Next Year
$50, ooo, ooo-canal Bonds.

Secretary Shaw's annual report to Con-
gress, made to that body today, recon-
mends the interchangeability Of gold and
silver, and the redemption of all govern
ment obligations in gold. He likewise
thinks that national bank notes should be
made payable in gold
Secretary Shaw also gives his approval
to some system of credit currency. but does
not undertake to supply Congress with g.
plan for that purpose. His recommended
tons are brief and business like. His sur
vey of the field is follows:
Make the Parity Specific.
1.-The statute now provides that parity be-
tween all forms of money shall be main
tanned A former Secretary Of the Treas
ury expressed the opinion that some
what similar statute authorized the re-
donation of silver in gold. If that be the
intention. l submit it would be better to
express the same in specific terms. 1t has
been found necessary. in order to maintain
the parity of greenbacks and treasury
notes. to expressly provide for the redemp-
ton thereof in gold / am not unmindful of
the claim that parity will naturally con-
tinue so long as the government accepts
silver In payment Of revenues. If this be
true. there would be no danger to the gov
eminent should the two coins be made in
terchangeable.
L believe the treasury of the United
States would be in less danger with an ex
press provision for the exchanged bility of
gold and silver than under existing laws.
At the present time the treasury furnishes
all the gold needed, whatever the purpose
for which it is demanded, and certainly no
more would be required for commerce, and
not much for boarding, should all doubt
as to the status of silver be removed. On
the contrary, If all forms of money were
made the equivalent of gold then all occa-
sion for boarding one coin more than an
other would vanish, and the danger to the
treasury would be diminished instead of be-
ing increased. The ability of this govern
ment to fulfill its promises has never been
questioned. but doubts arising from unex-
pressed policies have caused more than one
crisis.
Should 1t be deemed wise to provide for
the exchangeablity of gold and silver then
national bank notes might be made payable
in gold. In this way there would be shifted
to the banks the greater burden of furnish
ing gold for domestic use and for export
and this, in the event of an unfavorable
balance of trade, might prove of great adj
vantage to the government. 1t would be
rnanifestly unjust, well Illogical, to
require banks to redeem their notes in gold
so long as legal tender silver remains ire
deemable and interchangeable
There can be no valid reason, legal,
economic or equitable, why the government
should not redeem in gold all it's own obi
cations, whether they be represented in
paper 100 per cent fiat, or in silver go per
cent fiat. When the government expressly
guarantees Its own issue no objection can
appropriately be urged against requiring
banks to pay their notes in gold. On the
contrary, / see many advantages to be
gained, especially with respect to our for
eign commerce, by making every obligation
between the government and the people and
between individuals payable in money every
dollar of which shall be the equivalent of
25.S grains of standard gold, and on which
a demand for this equivalent can be di-
rectly or indirectly predicated.
An Imperfect Banking System.
Recent events not only justify but en-
force the conclusion that our banking sys-
tenn is imperfect. During certain months
of the year interest rates dropped danger
ouSly low-dangerous in the sense that spec
ulation was invited thereby. When the time
arrived for moving crops, rates advanced
alarningty high. Meantime the price of
government bonds rendered the mainten-
aDce of national bank circulation unprofit-
able. and this class of currency was retired
with great rapidity. The department exer-
cised every influence within its authority to
counteract this natural contraction. |
therefore believe the time has arrived when
1t will be necessary to adopt of two
policies; either the government debt must
be perpetuated basis for national bank
circulation, and additional bonds issued as
occasion may require, some other system
must be provided.
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