The San Francisco call., 1904-09-06

the Pacific Union Club there were
gathered seventy-four representatives
Of San Francisco's highest financial
and commercial institutions, regardless
of politics. The feast was rendered by
the Commercial Club and the invita-
tiOns were non-partisan and directed to
those most interested in hearing the
views of the Secretary of the National
Treasury. Frank ]. Symmes presided.
+. S. Stratton, Collector of the Port,
was the head and front Of the affair,
and he did himself proud in setting
forth the proper place Of San Francisco
in the commerce of the Far East.
In speaking to the business men OF
the West Mr.. Shaw was not backward
in setting forth his ideas of finance.
His address follows:
In every line OF business equipment is of
prime Importance The United States has
taken first place in the commercial world
and I believe IL has the best financial sys-
tenn in the world l am not here TO say that
cur financial system is perfect, but as neither
political party is proposing any change in
the system / think Il will not be deemed in
appropriate If l express the opinion that IT
is the best system. all in all, in existence.
First. it is stable. Every dollar IS actually
over $500 COO 600 Of straight fat money, but
IL is expressly redeema BILE in gold, and a gold
reserve OF Si5O. 600 600 is especially set aside
value OF our silver is more than $500, ,O0O. 600
less than fits current value. but II is made
the duty OF the Secretary OF the Treasury to
maintain the parity OF all forms OF money
coined issued by the Government This can
mean nothing else than that silver at least.
II not silver certificates. are to be redeemed
in gold whenever presented The national
bank note IS redeemable in lawful money and
secured by a deposit OF Government bonds.
We therefore have the largest volume Of cir
culating medium in the world. and its re-
demption or exchanged bility for gold practi-
cally guaranteed by the Government So safe
and secure is cur system at every point that
no one thinks Of examining the character of
the money that may be rendered. He only
inquiries as to its genuineness. IL genuine
he knows that Il is as good gold.
This nnuch 1 have said preliminary TO the
currency system IS not elastic BY elasticity
do not mean an elastic dollar but an elastic
volume Of dollars. In practice there is
adversely to our need Whenever the reserve
in the banks runs low there Is induce
ment 10 retire circulation for the purpose oi
selling the bonds thus increasing the reserve.
Whenever rates OF interest high il is un-
profitable TO maintain national bank circula-
tion. Therefore. when money is scarce there
is another inducement TO its retirement Ger
tsnly banks whose reserve has run low will
not exhaust this reserve in the purchase OF
Government bonds as a basis OF circulation
which is not available reserve. Therefore.
when money is scarce and interest rates high
circulation. Whenever money is plenty and a
drug the market there is an inducement to
increase circulation. for under such conditions
national bank circulation is maintained at a
profit
Tie farmer needs more grain sacks at har-
vest time than in seeding time and 1t is
equally true that the country needs more
money in harvest time than in seeding time.
Here on the coast the farmer retires his grain
sacks when he dsposes OF his crop; but the
banks are unable to contract their medium of
exchange with the disposition Of the crop.
Railroads retire their unneeded medium Of ex-
change. freight cars during the growing =
placing them SiQetraCkS.
freight could be reissued cheapiy a
bank note the railroads would burn their cars
in the spring and rebuild in the fall. Banks
might retire their unneeded money during the
summer but there is inducement so TO
seeks investment at very low rates Of interest
and when needed in the fall 1t is occupied.
REMEDIES NOT APPARENT.
While this weakness in our system is quite
universally recognized there is a great diver
sty Of opinion 10 the best remedy. 1 am
well aware Of deep-seated prejudice against
asset or credit currency. L do not join in this
apprehension. however. Permit to suggest
and do not suggest II coupled with a recon
mendation that II be adopted There may be
something better. am simply suggesting the
desirability OF adding the element of elasticity
10 our system. and IL IL is TO be added some
plan must be devised. This is one Suppose
the national banks are granted permission 10
issue a certain volume of currency either
based upon the capital of the bank upon the
amount Of bond secured currency. and are
F
ing the time this currency is out. Certainly
the currency will spring into existence when
ever money IS scarce. and If the banks are
. compelled 10 pay . per cent interest thereon
they will retire IL the pinch is over.
II can be retired by deposit of an equal vol
ume OF money at any of the subtreasuries II
bill The volume Of money would be contract
ed by the deposit as well by the actual de-
struction of the bank bills issued The Gov
I ernment can afford to guarantee the redemp-
ton Of this credit currency. The inter est
charged would vastly more than cover all pos
desire TO so on record as being opposed
to the Issuance Of any currency that the Gov
eminent does not guarantee, and I am equally
opposed to the Government guaranteeing bank
currency without being first amply secured.
But one fourth OF / per cent interest on the
have described would pay the Insurance. Any
insurance company would be glad to take the
Iency should be kept sacred to the redemp-
tion Of the currency OF any failed bank
The only other plan that seems to me at all
feasible would be permission to issue a small
volume Of heavily taxed currency based upon
bonds other than Government bonds / am not
certain however that this would prove as
elastic as some Of the friends of the plan con
tend II seems to me that the banks when
their surplus is running low. can hardly be
expected to purchase any kind Of bonds as a
basis OF circulation.
CAUGHT THE LISTENERS.
The Secretary of the Treasury was
hSAcHeu " anu dppiduueu his IDEAS
met with the approval of men of af-
fairs, who give keen judgment to every
thing affecting commercial and finan-
cial progress.
But the dinner was not altogether a
national proposition. Mr.. Stratton had
something TO say about the business OF
the port Of San Francisco and the pros
perity of the Pacific slope. He dis
cussed the relations of this commercial
empire with the Orient. He set forth
that the entire imports of the United