Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1903-05-13
FOR ASSET CURRENCY
Former Secretary of the Treas
ury Gage Argues In Its
Favor
MONEY SUPPLY INSUFFICIENT
Lyman Gage Believes Some Form of
Asset or Credit Currency is Requir-
ed in the Interest of the Whole
country-Dowes Advises Caution and
Says no Risk Should be Taken.

Sherman, Tex, May 13.-LetterS from
Former Secretary of the Treasury Ly-
man j. Gage. James B. Forgan, of Chi
cago, and former Comptroller of the
Currency Charles G.. Dawes, of Chi
cage. were read before the Texas
Bankers Association, which met here
in annual session. Former Secretary
Gage discussed the question: rs the
sufficient?"
Il answer the question:" said Mr..
Gage. "by expressing the very grave
doubt whether it be adequate in volume
and a clear conviction that it is no.
economical in character. The provi-
sion for supply ought to have reference
to recurring needs. responding in vol
ume when occasions for use of cur
rency are the greatest, and retiring
naturally as the requirements grow less
eXacting."
+ He argued for credit or asset cur
rency, saying the following PROPOSE
ton could be successfully supported:
Il. Such a currency is required In
the interest Oh liie NIioie eouH'iS'
SO The protection of the note holder
against depreciation or loss may be
made entirely inadequate.
g. There need be no dangerous
credit expansion thru bank notes is
sues if reasonable limitation be inn
posed as to volume, and proper sys-
TEN of central redemption be provided.
II. Such currency would go Tar
toward arresting the annually recurring
anxiety occasioned by the impairment
of bank reserves, called into temper
airy use, as they are, to serve as med
ium of circulation in the movements
OF crop harvesting.
'.5. 1t would tend TO steady the rates
of interest in the central cities and pre-
vent the violent and costly rerturba-
tons between money as drug AMI
money impossible to borrow and thus
save the individual investors the great
losses now so frequently experienced
by reason of fluctuations in the money
market.
"6. 1t would be in the interest es-
pecially of the agricultural classes, at
fordlng them as it would an adequate
supply OF u safe circulating medium
of exchange and payment, on terms
more favorable than they could other
wise enjoy"
The letter of James B. Forgan also
discussed the question of sufficiency OF
the country's money supply. He said
in part:
"The supply of money periodically os-
cilates between overabundance and IN
adequacy, in accordance with the de-
mand for it, which varies with the sea-
sons. The supply being arbitrarily fix
ed in quantity, bears no relation TO tse
varying demands Of commerce, anu
there is not even an attempt IN ous,
monetary system to adjust the supply
to the demand.
"Our monetary system is not the sole
cause of these alternating fluctuations,
but it lends itself to them and is aux
Hilary to other causes. Our national
banking system and the government
treasury system also aid and apet
them, and the three together are re-
sponsible for them. II these three
systems were adjusted to the needs OF
commerce, as they should be, their re-
lation to commerce would be to develop
it on sound basis by establishing
steady markets. Their influence would
be to prevent rather than to cause any
such oscillations as now take place be-
tween easy, tight moneyspeculation and
srasnation, imitation and depression.
..To add to the money now in cip~a-
lation more of the same kind until the
supply shall equal the maximum re-
quirements of commerce, without pro-
yiding means for it's contraction when
these requirements are at their MIMI
mum, would only iperpetuate the evils
of our present system. What we re-
u,lire is a more elastic currency.
AZ believe that the privilege of lssu-
ing limited amount of asset currency
may be safely granted to natlonal
banks under proper regulations. Mr.
Eowler's bill now before congress Is
based on correct principles, but is de-
ticient in its details. What 1t needs is
TO have a committee of bankers elabor-
ate out of it the details of practical
PLAN
Former Comptroller Dawes urged
that in the passage of any provision
for elasticity in the currency the FOL
lowing principles should be firmly kept
in mind:
u. There should be no radical ex-
periments made, and we should risk IN
no degree whatever the absolute safety
and solidity of our present bank note
currency in order to secure additional
huidity.
~ II we can safely inject an ele-
ment of elasticity into our bank cur
rency. we should see to 1t that we are
not furnishing a currency which can be
used as a basis of current business and
speculation in terms like the present,
thus adding to the perils OF panic IN
stead of mitigating them.
80 We cannot secure elasticity IN
any asset currency issued by national
banks of the United States to be so
limited in the amount of it's issue as to
be undoubtedly safe, without the inn
position of a high restrictive tax. of
not less than per cent, and probably
per cent, thus providing for its cir
culation only in times of the high inter-
est rates which accompany enforced
contraction of banking and business
credits in panics and crop moving per-
iods.''
There was a large attendance of
bankers from all over the state.