Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-09-28
Addresses Bankers at Cleve-
land, Ohio.
SOME TIMELY TOPICS
URGES MORE ELASTIC CURRENCY
SYSTEM.
His Speech Was the Feature Of the
Morning Session and Was
Well Received.

CLEVELAND. Ohio. September 2S.--The
address OF Secretary OF the Treasury Les
lie NJ Shaw was the feature OF the morn
ing session today of the convention of the
Ohio Bankers Association. He urged that
a more elastic currency system be adopted.
Mr.. Shaw said
The fact, and think 1t is fact, that
the United States has the best currency
system In the world, does not imply that
the currency system of the United States
Is perfect or that 1t cannot be improved.
1t is as safe as any system In the world
because it is established on the only safe
basis known to man-the gold standard.
It is the most convenient system in the
world because 1t is constructed on the dec
imal or metric system. It Is not necessary
to carry a lightning calculator In order
to make change.
The system is not perfect largely because
1T is non-elastic. It fails to respond in vol
ume to the changing needs of seasons and
of localities. Attention has been called to
this many times and by many people. That
there will be no further currency legisla-
ton until we shall have experienced a
panic occasioned by this want of elastic
ity. am convinced. The country does not
appreciate the danger. and until the dam
ger is fully understood no remedy will be
applied. We came nearer such a panic
September 80, 1902. than most people APP
preciate. The fact that we then escaped
does not raise a presumption that we will
always escape it. glazing defect at
vital point will sometime, sooner or later,
assert itself. Meantime a remedy should
be discovered, discussed, and as far as
possible agreed upon. so that 1t may be
promptly applied when the people are
ready for 1t.
Annually we have an excess of money
during the spring and summer months. An
nually we pass through period of anxiety
as we approach the period of crop moving.
for annually the volume of money Is rel
atively insufficient to meet this sudden In
crease Of business
Imitation Not Needed.
We do not need and must not have In
1ation. The average amount of money is,
in my Judgment, abundant. The difficulty
lies in the fact that the volume remains
stationary.
Now, what shall be the remedy? Shall
1t be asset currency? In the popular ac-
ceptation of that term, answer, no! Asset
currency, as commonly understood, would
mean imitation, and that we must not have.
Asset currency as commonly understood,
would be supported only by the solvency
of the bank of issue. That must not be.
Shall it be emergency currency? In the
popular deception of that term, answer
no. The United States originates more COM
merce than any other country on the map.
but our chief commercial city Is not the
worlds clearing house. 1t ought to be, but
1t is not. One reason why it Is not, Is the
fact that 1t has some times reSorted TO
clearing house certificates, which is plea
of guilty to an indictment charging bad
management locally or bad legislation ma
tionally, and the financial world charges
both Clearing house certificates must
never be authorized by law. Let those who
love our country and those who conserve
her credit set their faces against such
course with the same intensity as they
resist the free and unlimited coinage Of
silver. Clearing house certificates debase
our currency with the consent of those who
are supposed to be the best financiers In
would debase it through political upheaval.
The threat of both. doubt not, contributes
to that distrust which prevents foreign
bankers from keeping their International
edy shall be. it must not advertise our
calamity our extremity.
The Best Remedy.
Among the many remedies suggested,
none appealed to me as strongly as the au-
thorization of additional national bank cir
culaton. This method involves the right
of national banks to increase their crcula-
ton in an amount. perhaps equal to so
government bonds secured circulation, on
which the bank should pay tax OF
or 6 per cent during the time 1t Is MAIN
tained and the government, In considera-
ton Of this tax. should guarantee its re-
demption.
You may call this. If you please. an emer-
gency provision. So 1t is, but II fntects
into our circulation no new form of money
as an element Of alarm. BY eliminating
the one statement on the present bank note,
this note is secured by bonds of the
United States" the additional currency
could be made identical with that based on
government bonds. The controller of the
currency and the bank issuing the currency
would alone know of its existence. 1t
would not advertise its existence or our ex-
tremity and / can scarcely conceive of
conditions under which 1t would remain
out sixty days. 1t could be printed and
kept ready for issue as occasion might re-
quire and 1t would be retired, not by gath
ering up each individual bill, but by deposit
of an equal volume of money with any sub
treasury. Then the notes, as they came
in. would be charged against this deposit
until 1t was exhausted. after which re-
demption and reissue would run on as be-
fore.
Harvey D. Goulder of Cleveland delivered
an address on foreign commerce. Others
who spoke were James r. Branch Of New
York whose subject was The American
Bar kers' Association Money Order" George
Guekenberger of Cincinnati. r. w. Fire
stone of Lisbon. Ohio. and w. A. Graham
of Sidney, Ohio Various reports were sub
TRAD and ted iIpon.