The Washington times., 1902-08-30
East and West Volunteer
to Relieve Any
Stringency.
INCREASE IN CIRCULATION
Financial Interests Praise Latest Move
of Secretary Shaw-Issue to Be Made
Only in Case of an Emergency-No
Trouble Anticipated.

The large banks of the country have
responded readily to the Secretary's
suggestion for the relief of arv money
stringency that may result from the
movement of the crops. They have
agreed to take $l5.O0O.C additional cir
culation. Four Chicago banks are to
take one-third of that amount. The
banks of New York, Boston. Philadel-
phia, Pittsburg. and Cincinnati will take
the other two-thirds, or S1O,OO0,0 600
Secretary Shaw has shown his conf
dence in the financial condition of the
country. He does not believe there is
any real financial stringency affecting
credits. With the enormous crops this
year the demand for currency in Sep
tember viii no doubt be greater than
usual.
Element of Elasticity.
Secretary Shaw hopes to introduce an
element OF elasticity into the present
system by this method. He sees a wide
difference between currency stringency
and a necessity for relief of the inan-
ctal condition by strengthening credit.
He believes that the increased demand
for currency in one or two months OF
the year to meet an emergency can be
met better by the banks than by the
Treasury.
The law has provided the means by
which the banks can increase their cir
culatioh to meet this demand, but the
high price of Government bonds and the
small! profits in circulation have led the
banks to take out the smallest amount
of circulating notes that will be neces
sary for their business.
Consequently they have circulation
amounting to little more than one hal;
their capital while the law provides
that they may issue bank notes TO the
full amount OF their capital, ,-..-,
Increase Circulation.
Secretary Shaw has simply requested
the national banks to be ready to in
crease their circulation. If the emer
gency arises they will be ready to meet
it If there is no emergency the banks
will not issue additional circulation.
Secretary Shaw said last Wednesday
that there had been no request for re-
lief of any kind from the banks. That
statement was literally true. The banks
nave ma0e no requests. ellTeT .loF lnt
purchase of bonds by the Secretary or
for increased Government deposits.
But Secretary Shaw did not wait for
such requests. He forestalled them by
the action he has taken. He began sew
eraI weeks ago by communicating with
the banks which usually ask for relief.
and he presented to them this method OF
meeting the call for more currency to
move the crops.
An official of the Treasury Department
said yesterday:
Secretary Shaw has done a proper
thing in asking the banks to increase
their circulation to meet a possible
emergency. The rule has been for the
Treasury not TO anticipate such emer
gencies, but wait until they developed
an apparent stringency, and then give
such relief as the bankers requested.
The bankers arein business for profit,
and they did not hesitate TO use the
crop movement to secure Government
aid, which was of permanent advantage
to them. They used the currency strin-
gency to call on the Treasury for in
creased Government deposits, or the
request that the Secretary buy bonds.
The Government deposits, as a rule,
remained in the banks after the emer-
gency passed, and the United States
notes paid out for bonds went into the
banks reserves, where they were used
10 quadruple the credit of the banks"