Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-09-05
Secretary Shaw on Currency Reform.


before the National Association OF
| Merchants and Travellers. 1t was
| strong public utterance, marked ny
clear-headed grasp of the principals
involved in the general question OF cur
rency reform, and suggesting remedies
for existing evils that were at once
simple and practical.
At the very outset he took occasion 70
point out the difference in the exlstlns
condition of the money market, and
that which prevailed in 1893.
Notwithstanding the fact that we
have had somewhat prolonged
period of liquidation, and that there
has been a marked shrinkage in the
price of securities, the general prosper
itv of the country has gone forward
undisturbed, and there has been no
noticeable falling off in the general
volume of business.
The reason of this, and the fact that
there has been no recurrence of the
conditions prevailing in 1898, Secretary
Shaw believes, and with good reason,
to be attributable to the passage of the
gold standard act of 1900. This act
makes it the duty of the secretary OF
the treasury to maintain at parity
with gold every form of money issued
by the government. In this very fact is
found the stability of business today, as
compared with panicky conditions of
ten years ago. We have one standard
of value for all forms of money-and
that the best. Herein is the basis OF a
public confidence that has gone serene
ly through conditions, that would have
seriously disturbed the business world
under different circumstances.
Secretary Shaw does not hesitate TO
give his views as to the reforms most
needed to afford the elasticity in our
currency system necessary to carry the
country safely through the ext
gencies of crop moving or of any eX-
ceptional demands for purposes OF
liquidation. He believes that it would
he wise to allow national banks to issue
additional circulating notes to the
amount of one-half of the face value of
the bonds deposited with the secre-
tary of the treasury for the security OF
their circulation. In advocating this
opportunity for a temporary expansion
of the currency in response to special
needs, Secretary Shaw does not for a
moment lose sight of the evils that may
result from a redundant currency.
TO guard against this he would have
the additional and special circulation
which he advocates bear tax of per
cent. and have it retired at the option
of the bank, or by order of the comp
troller, by merely depositing in the
United States treasury, in lawful
money a sum equivalent to such out
standing special circulation.
Mr. Shaw thinks that this plan for
the expansion of the currency would
adjust itself automatically to the
money needs of the country. During
the period of crop moving, or in times
of snecial stress the banks could well
afford to pay the required per cent.
tax in order to be able to accommodate
l,,,f stress
which could never be more than tenn
porary in it's character-was over, THIS
tax would render the special circula-
ton improbable, and it would prompt
ly be retired.
There can be little doubt, but what
such an additional currency would be
absolutely safe. Since the establish
| ment of our national banking system
during the storm and stress of civil
strife, when 1t became at once potent
factor for the preservation of our
| National life, it has been the most
| practical method of meeting the
money needs of the American peo-
nile that has ever been devised. 1t has
given us a uniform currency. and its
notes have rested upon the solid bed
rock of the national credit. None of
them have ever been defaulted. In the
| whole history of the government only
4O6 national banks, out of total or
more than 5000 have failed, and as the
the New York Post points out more
| than one-half of these paid their credi-
tors In full, principal and interest.
A tax of one-eighth of one per cent.
per annum upon circulation would have
sufliced to cover all losses from failed
| bank notes during those forty years
With this record to go upon, and with
| a per cent. tax at it's disposal the gov
eminent might safely adopt Secretary
| Shaws suggestion and 'underwfit4'
or guarantee the notes issued in the
| extra circulation provided by the plan
which the secretary advocates. This
done, and the general public would ac-
| +lo,,, WIFI, tIo gonna ohoollIta sense