Omaha daily bee., 1906-02-08
SHAW REPLIES TO BANKERS
Secretary Reviews the Resolutions of the
New York Chamber Of ommeroe.
GENERAL ACCORD ON RESULT SOUGHT
Difference Arises "a TO Method of
Accom- pIishment and Secretary
Thinks His Plan o. Hest
One Yet Proposed.

WASHINGTON. Feb 7.-secretary shaw
has received through Jacob n. Schiff Of
New York a copy of the resolutions recently
adopted by the Chamber of Commerce Of
New York City. in which exception is taken
TO some of the socretary's we'll known views
on the subject OF currency legislation. In
his reply the secretary says under yester-
days date: ~ ~t'.
My Dear Mr.. Schin. I am I'm receipt of
your letter. of February 2, accompanied by a
copy OF the report of the committee. on
Chamber OF Commerce. ot those who study
tne question nine men out of ten agree that
rency system elastic. uP but Of the nine who
unite that something should be done. II Is
difficult TO find two who agree on the meas
tees report I find this language:
The redemption of the national bank
notes Is limited to a total of SS.OOo.Oo0 per
month, thus tying up to a large extent, the
only source OF redemption we have"
me most. unfortunate feature. of this
limitation on the redemption of national
bank circulation. a.
some Illustrations in Point.
The secretary points out that the commit
tee recommended the repeal of the law re-
ferred to and says:
In the face OF the fact that the banks at
New York City alone returned to the treas
tional bank notes during the single month
of December last. the. foregoing recommen-
dation tustifes my regret that the commit
zee dld not give the subject that considera-
ton which is its due While there is q law
limltlng the amount OF lawful money which
TIE banks may deposit for the retirement OF
circulation to S,0o0O0o- per month, there Is
no limitation on redemption of national
bank notes and no limitation on the retire
ment Of national bank circulation by banks
that which to deposit their own notes. The
limitation Is upon the contraction of law
ftl money by the deposit thereof for the re-
tirement of bank circulation l beg to sug-
gest that in my opinion the repeal Of the
provision would not effect the remedy
Logically banks find It profitable to retire
their reserve whenever money is worth ex-
cessively high rates of interest. / regret
that the committee OF the Chamber of Com
Inerce did not study the question in the
light of the actual operations of the banks
of New York City. The repeal of the $4,000
900 per month limitation on the amount of
lawful money that can be taken out OF cir
culatton for the retirement of national
bank circulation would make il possible TO
Fetire all our national bank circulation in O
given month, II national banks STUDIED the
question as closely as do few banks in
New York City.
Deposit of Government Funds.
In your letter you urge that the chamber $
recommendation that the secretary OF the
treasury be authorized to deposit all public
FUNDS, except the gold reserve and q, reason
at reasonable rate Of interest. should ti''b be
brought TO the immediate attention of con-
gress l think favorably of the commit
tees recommendation that these deposits
be at a reasonable rate OF interest pro-
vided they be made without specific Sc
curity. You being a banker. must recog-
nize that banks cannot afford to pay per
cent interest on government deposits except
when interest rates are below per cent
security. 1t is not likely, however, that
any bank would surrender government
| deposit simply because of a fiuctuation in
afaQ nf fntn rautc ,,,iIi
see that the two recommendations of the
chamber, II they had any effect whatever,
would result in further expansion during
the seasons or plenty and further contrac-
ton when interest rates are high.
also note the suggestion in the report
that additional circulation equal to so per
cent, OF. the bQud-sseured circulation main
siye and result IN Imitation. Nearly ali
local, stringencg. me scarcity of money
%hsh called IL forth The b Of the
| or Commerce was, e confined ito New York
| City and therefore local.
Circulation Tax n Regulator.
Had the stringency been as acute through
York in December l doubt whether an
! increase of national bank circulation equal
| to so per cent of the aggregate circulation
! II less than the limit authorized by law
| did prove excessive. If less than the limit
authorized by law did prove SUFFICIENT &c
restore normal rates of interest certainly
! no more would issue II subjected to a tai
| OF or per cent, The whole theory oi
| heavily taxed circulation Is to prevent
excessive Issue at any time and to insure
| its retirement when normal conditions are
| restored, But this Is simply a detail anc
not essential to the method outlined in my
| report.
While the committee in general term.
| declared against the plan briefly stated il
the report OF the secretary OF the treasury
| which Is substantially the system now anc
| for many years in successful operation II
| Germany, 1t failed to point out any defec
| therein except as to the volume of add
| tional circulation that might be issued IL
| case OF an emergency. You will quite agre,
| with me, l think. that greater latitude Of
| discussion would have ensued had the com
| mittee formulated some system OF it's own
| While think the German plan the bes
| and most practicable. l do not consider 4
! the only workable method II none othei
| can be formulated. however, there is grea
| hope that sooner or later the country will
| agree upon the recommendation contained
| in the report. Very truly yours
| L.