Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1906-10-11
Addresses the Kentucky
Bankers at Louisville.
Gives His Views Of What Should
Be Done With Banking System.


Louisville, Ky, Oct. 1O.-Leslie NJ.
Shaw, secretary of the treasury, today
addressed 200 Kentucky bankers and
their guests. who assembled here for
their annual convention. The secretary
said in part:
All the leading financial countries Of
Europe have large central banks more
or less directly under government con-
troll. Such an institution, known as
the Bank of North America, was Gre
atcd III this country in the year 1871 but
it was of short life. A similar insti-
tuition known as the Bank of the Unit
ed states, was incorporated in 1871 I'M
der charter expiring in 1911. which
was never renewed. The Bank of the
United States of America was incorp-
GRATED in 1916 under 20-year charter.
In 1882 President jackson vetoed q bill
to renew this charter and the year
following directed the secretary of the
treasury to remove government funds
thcrcfrom, and it soon went into liquid
alton.
n sub-trcaSury act was passed in
1910 and repealed one year later. The
present treasury system was estab-
liShed in 1876.
lnnumerable reports by committees
of bankers have been made. much has
been spoken and more written in con-
demnatiOn of the independent treasury
system and in favor of the substitu-
ton Of a large central bank, patterned
after the Bank of England. or the Bank
of France, or the Bank of Germany. 1t
is doubtful, however, whether the sy3-
ten will ever be radically changed.
The national banking act of 1863 and
1864. While not in terms amendatOry
of the independent treasury system,
must be treated in connection there
with and as an addition thereto; and
it seems to me wiser to perfect what
we have rather than to attempt its re-
placement. If the people can be brought
to recognize the treasury somewhat in
the nature of a great government bank.
and the national banks as branches
thereof, il will be found that our sys-
TEN is not in all respects unlike that of
European countries.
OF course the Bank of England and
similar institutions can do many
things that the treasury cannot do.
The treasury cannot make commercial
loans. but this is not essential. So far
as relates to the handling Of public
money and conserving commercial in
demand, and its withdrawal from the
channels of trade in periods of redun-
dancy, retarding or facilitating exports
and imports of gold as conditions indi-
cate advisable. the system we have, IL
properly operated. can be made to ac-
complish much of what is contemplate
ed by those who advocate the large
central bank.
Instead of criticising the present sys-
TEN, therefore, as awkward, cumber-
some and uncouth. it seems to be bet
ter to accept it as the settled policy Of
the country and then improve it by
clothing the secretary of the treasury
with greater discretion and enlarged
powers.
The national banks Of the country
have shown a most commendable dis
position to cooperate with the treas
ury The wish of the secretary of the
treasury has been the pleasure of these
banking institutions. Much praise has
been accorded the treasury department
for the sale of the Panama bonds, but
| am pleased to bear record that tho
price obtained would have been impos-
sihlc but for the hearty cooperation or
the national banks. The president or
one Of these institutions writes me that
his bank would buy liberal portion
Of the issue and pay whatever price l
thought appropriate. Others expressed
more or less freely their desire to as
sst in placing the government obliga-
tions at price satisfactory to the head
of the treasury department.
The present law expressly makes ma
tional banks the fiscal agents of the
government. and authorizes the depos-
it of public money therein on any Sc
curity satisfactory to the secretary or
the treasury.
The amount Of reserve to be carried
by national banks is now fixed by stat
ute. l think this should be left with
the secretary of the treasury to deter
mine from time to time and as the ext
gencies Of the case require. A statute
Continued on Page Three.)