The sun. [volume] (New York [N.Y.]) 1833-1916, 1902-12-04
Secretary Shaw's Report.

SECRETARY SuH"s NepOTt.
The annual report OF the Secretary Of
the Treasury for 1902 Is, with the eXcep-
ton of its ultra-radical stand on the
question of asset currency, a simple
summary of the operations Of the Treas
ury Department for the last fiscal year.
The notable events Of the year are de-
clarei TO be the magnitude attained by
the Treasury's available cash balance
and its enormous holdings of gold. II is
well to bear in mind, however, that the
available cash balance has been greatly
decreased in the current year and that
the Treasury has now actually less money
on hand in its own vaults than it has had
for very long time past, Customs reve-
nuos have increased far more than was
looked for, ofsetting the reduction in
the internal revenue made by the new
statutes
The most cursory examination OF
the Secretary's report yields striking
testimony as to the national affiuence
ing Oct. 81, 1902, the net increase in
the number OF national banks in the
country was 800: the circulation taken
out by these banks added, Of course,
greatly to the supply Of the countrys
circulating medium. Referring to the
provision for the supply of funds for the
construction Of the Tsthmian canal, the
Secretary calls attention to defect in
the law providing for an issue of $780,
00O,OOD United States bonds for that
purpose The bonds bear interest only
az the rate Of per cent, per annum, and
they are, therefore hardly available as
security for the circulation of national
banks, inasmuch as the present Govern
ment tax on such circulation is | Der
cent, or half Of the net revenue of the
canal bonds. The Secretary recommends
that any national bank circulation Sc
cured by deposit of canal bonds shall
be subject only to the same tax as that
imposed on the circulation secured by
the per cent consols Of 1890.
The Secretary says that the Treasury
Department takes pride in the fact hat it
has cndeavored to secure liberal and
equitable administration of the laws
governing the collection of duty on per-
sonal baggage. Other matters touched
upon, concerning which we refer our
readers to the full report text of the re-
port, are tho Alaskan fisheries, the pneu-
matte despatch system and questions
of immigration, Chinese exclusion and
national quarantine. The Secretary ia
vors by implication the grant of ship
ping subsidies and the increase of appro-
prations for light house establishment.
At present the silver coinage of the
country is kept at par with gold by in
direct means, There is no express pro-
vision of law protecting the holders of
silver coins, although there are those who
hold that the statutes of the Government
do now authorize the redemption of silver
by gold. Secretary SHAW thinks, and
people will be inclined TO agree with him.
that this redemption should be provided
for in specific terms. 30 that the inter-
changeability of gold and silver in this
country will be settled beyond perad-
venture
The Secretary maintains that the pres
ent banking system of the country il i'm
perfect II Is so constituted, in his opin-
ion, that at certain times interest rates
drop to low figures, inviting dangerous
speculation; then, when the time arrives,
such as the crop-moving period, when
business demands greater amount of
funds for its own use, these interest rates
tend to rise abnormally high, threatening
panic. The Secretary recounts the recent
measures taken by the Treasury Depart
ment 10 provide additional circulation.
He declares that the Fundamental error
in our present banking system is the lin
itation Of the security Of this circulation
to Government bonds. As these bonds
are now held at very high prices and are
continually in process Of retirement by
purchases for the sinking fund, the base
of tho circulating medium Of the country
thus tends to continually contract, al
though the growing business Of the coun-
try requires it to continually expand
The Secretary, therefore, declares that
it Is necessary for either one Of two poll
cies TO be definitely adopted by the Gov
ernment. Either the Government debt
must be perpetuated as basis for ma
tional bank circulation and additional
' " - '-""' ne occasion mnv require.