Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1905-12-09
SHAW AND METCALF URGE REFORMS
Secretary Of Treasury Method Giving Elasticity
currency-Federa License Corporations.

necessity IOT an eldSllC currency has
received fresh emphasis in the finan-
cial conditions of the last few months.
Millions were lent approximately at l
per cent in midsummer and call mon
ey reached 25 per cent in November.
The exceedingly low rate was about
as dangerous as the high rate, for the
latter was the logical result of the
former. Such extremes can and should
be rendered impossible
Leslie M. Shaw secretary of the
treasury has submitted his annual re-
port to congress and as shown in the
foregoing, dwells upon the necessity
of a more plant and expansive cur
rency He deems the fluctuation in
interest rates a constant menace to
financial serenity and security and sug-
gests a remedy in granting national
banks permission to issue an increased
volume of guaranteed currency.
Secretary Shaw also cautions con-
gress against lavishness in appropria-
tions for the ensuing year, saying a
very small cloud in the financial sky
will reduce customs receipts material
1y. Federal supervision over trust
companies is again urged with en-
phasis.
Elasticity of currency may be OBJ
tanned according to the secretary by a
slight change in the law.
II suggest the advisability of per-
uniting national banks to issue vol
ume of additional government guaran-
teed currency equal in amount to SO
per cent Of the bond-secured currency
maintained by them but subject to a
tax Of or per cent until redeemed
by the deposit of like amount in the
treasury" says Mr.. Shaw. by elimin-
ating the words secured by United
States bonds deposited with the treas
urer of the United States from ma
tional bank notes now authorized, the
additional currency would be identical
In form with that based upon de-
post Of bonds, and it's presence would
not alarm, for it would not be known.
No new and distinct or unguaran-
teed form of money should be inject
ed into our system. The tax would be
ample. and more than ample, to cover
the risk to the government in guar
anteeing redemption. Mannestly this
additional currency would not spring
into being until interest rates ex-
ceeded per cent, and it would as
promptly retire when rates became
normal. Under these or any similar
provisions 10 per cent money would
be well-nigh impossible, and the treas
ury department would be saved a
most embarrassing responsibility.
This may not be the only means of
adding an element of elasticity to our
currency system. the need Of which is
universally recognized. suggest it
as the plan which, to my mind seems
most. feasible and one fraught with
. no danger"
The total governmental receipts the
last fiscal year, as shown in the re-
port, were s697 .1O1. 269.95, and the ag;
gregate expenditures amounted to
$3.50. 105 1885, the deficit being $685.
004,228.60 After counseling congress
to keep extraordinary appropriations
as low as possible, Secretary Shaw de-
clares it may be found necessary to
provide more revenues, and adds:
Fortunately, the treasury holds a
surplus Of sS0,000000 above reason
able working balance, available If I'M
expected conditions should arise. This
surplus, in my judgment, should not
be encroached upon deliberately, for
1t will be found convenient to offset
the results of political or economic
disturbances certain to arise in the
! near or remote future
me secretarys warning against the
Ss~roofrtnfo6 pnorafinnc nf trIJst rom,
panies includes the suggestion he
made year ago.
Few states require trust compa-
MES to carry any reserve whatever
he asserts. Some of these institu-
tons carry none, and few G. them
carry much. They are permitted by
law to engage in well-nigh every kind
Of legitimate business appropriate to
private citizens or corporations. Many
of them are convenient adjuncts of ma
tional banks, and some, | fear, are oc
casionally used as a means of en-
croachment upon the reserve contem
plated by statute"
The secretary suggests "the pro
priety of a law giving trust companies
of large capitalization in large cities
the privilege of Incorporating under
federal law with corresponding super
vision.'' He adds that the more con
servative companies would accept the
opportunity and that others virtually
would be forced to follow suit
The secretary promulgates the doc
trine of treating the American export
er more literally and says the law
respecting drawbacks of duty moneys
should be revised and simplified The
existing statute he points out, allows
O. drawback equal to 80 per cent of the
duty paid upon imported material
when such material is worked over il
this country and exported as newl!
manufactured goods. The secretar!
suggests that the French law is 1
good basis for legislation.
The secretary in his zeal for in
craasing our export trade makes
strong recommendation for Legislation
which will encourage the American
merchant marine. Subsidies are no
spoken of, however.