The Montgomery advertiser., 1906-02-08
SHAW TO sCHIFF
SECRETARY DISCUSSES REFORMS
 or NATIONAL FINANCE.
While All Agree that Greater Elasticity should Be Provided, Hardly Two
 Can Agree as to the Means.

F .
 Washington, Feb. 7.-Secretary of the Treasury Shaw has received through Jacob H. Schiff, Of New York, & cOpy of the resolutions recently adopted by the Chamber of Commerce Of New Fork City in which exception is taken to some of the Secretary's views of the subject of currency legis- lation. In his reply the Secretary says:
 My Dear Schiff: I am in receipt of your letter of February 2, accom- panied by copy of the report of the Committee on Finance and Currency of the New York Chamber of Commerce. Of those who study the question, nine men out of ten agree that something should be done to make our currency system elastic, but of the nine who unite that something should be done, it Is dif1cult to find two who agree on the measure that should be adopted.
 'In, the committees report find the language, The redemption of national bank notes Is limited to a total of $S,- 000,e00 per month. thus tying up to a large extent the only source of redemp- ton we have
 The most unfortunate feature of this statement Is the fact that there is no limitation on the redemption of nation al bank circulation"
 The secretary points out that the committee recommended the repeal of the law referred to and says:
 'In face of the fact that the banks at New York City alone returned to the treasury for redemption over $12,- 100000 in national bank notes during the single month of December last, the foregoing recommendation justifies my regret that the committee did not give the subject the consideration which it is due.
 Loans Are Lacking.
 Al N amount of lawful money which the banks may deposit for the retirement of circulation to $3000.00O per month, there is no limitation on redemption of national bank notes and no limitation on the retirement of national bank cir culation by banks that wish to deposit their own notes The limitation is upon the contraction of lawful money.
 T beg to suggest that in my opinion the repeal of the provision would not effect the remedy. Logically banks find it profitable to retire their circu- lation, sell their bonds. swell their reserves whenever money is worth ex cessively high rates of interest. I regret that the committee of the Cham Der of Commerce did not study the question in the light of the actual ope- rations of the banks of New York city
 The repeal of the $3,000,O00 per month limitation on the amount of law full money that can be taken out or circulation for the retirement of na- tional bank circulation would make it possible to retire all in National Bank circulation in a given month if all Ma tional Banks studied the question as closely as do a few banks in New York city"
 Tn your letter you urge that the Chambers recommendation that the Secretary of the Treasury be authoriz- ed to deposit all public funds except the gold reserves and reasonable work ing balance in National Banks at a reasonable rate of interest should be brought to the immediate attention of Congress. I think favorably of the committees recommendation that these deposits be at reasonable rates of interest provided they be made without specific security.
 You bankers must recognize that . banks cannot afford to pay two per cent. interest on government deposits except when interest rates are below eight per cent. If compelled to give