The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1903-09-03
How Mr.. SHAW WOULD
IMPROVE CURRENCY
He Favors Not an Elastic Dol.
lar, but Elastic Volume of
Dollars.

CHICAGO, Sept. 1.-Two hundred
business men from all parts of the
country listened to Secretary of the
treasury Shaw talk on "The Business
outlook" at a banquet given tonight
at the Auditorium hotel by the Ma
Ilonal Association of Merchants and
travellers. Secretary Shaw declared
tnat what was needed was not an
elastic dollar, but some provision by
which, automatically, the aggregate
volume Of dollars would Increase
whenever and wherever more dollars
were needed and would promptly re-
tire when not needed. Following is an
extract from the address:
There is now no statutory prohibit
ton against the well-nigh inherent
right of banks to issue circulating
notes. This right exists throughout
the United States, but subject to a tax
of 10 per cent per annum This tax is
proh1bitory. If I were given authority
TO formulate a measure that would
provide the requisite elasticity to our
present currency system, l think
should add an amendment permitting
national banks, with the consent of the
comptroller of the currency, to issue a
volume of circulating notes equal to so
per cent of their bond-secured circula-
ton, at a tax of 6 per cent, the same to
be retired at will or by direction of the
comptroller, by the deposit of an equal
amount of lawful money with any SUBJ
treasury.
Three things 1 know. First, this
additional circulation would spring in
to existence almost instantly whenever
ana wherever interest rates advanced
to the point of profit Second, 1t
would as promptly retire whenever in
terest rates became normal Third. 1t
would be absolutely safe-as good as
n
with a slight and immaterial change
IDENTICAL in form and appearance-for
the government. amply protected by
the per cent tax, would underwrite
It, But you say this is emergency
currency. Anything more Is imitation.
1t has the advantage, however, over
emergency currency so-named, and
over legalized clearing house certifi-
Gates, in that 1t injects into the COM
merce Of the country no new or doubt
ful form of money, and the presence
of these notes will not advertise the
stringent condition which is the oc-
casion of their existence. The only
persons who would know of its exist
ence would be the COMPTROLLER. the
bank and the few people who would
take sufficient interest in the published
statement of the bank to compare the
volume of circulation with the amount
of government bonds on deposit in the
treasury. Prominent among the bene-
fits, if not the principal benefit, would
be the substantial guaranty against
sudden increase in interest rates, and
an equally important guaranty against
dangerously low rates of interest.
Each locality would be able measur-
ably to provide for it's own emer-
gencies.
But you say this would be no aid
to commerce under ordinary conditions.
l reply that under ordinary conditions
the present volume is sufficient, and
the country might well rejoice when
ever the comptroller was able to re-
port no dollar of this additional circu-
lation in existence. do not intimate
that this is the only way to secure
elasticity. I only say it is one way,
and 1t is an effective way, and 1t pos
sesses no element of imitation, but
would afford a very respectable cush-
ion against sudden financial concus-
sions, and few people ask more. There
Is nothing original or novel in the
scheme. 1t is simply the German plan
slightly modified to conform to our
present system