Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-10-10
SHAW At LOUISVILLE
Address at Annual Meeting of
Kentucky Bankers.
PRAISED NATIONAL BANKS
For Commendable Cooperation With
Treasury.
EXTENDED AUTHORITY ADVISED
Secretary Thinks That His Depart
ment Should Have Increased
Powers to Deal With Reserves.

LOUISVILLE, KY, October 10.-Leslie
NJ Shaw, Secretary of the Treasury. today
addressed two hundred Kentucky bankers
and their guests, who assembled in the
parlors Of the Gait House for their annual
convention
Secretary Shaw said in part:
All the leading financial countries of Eu-
rope have large central hanks, more or less
directly under government control. Such
an institution, known as the Bank of
/ North America, was created in this coun-
try in the year 1871, but it was of short
l1te Similar institution, known as the
Bank of the United States, was incorpo-
| rated in 1871 under charter expiring in
1911, which was never renewed. The Bank
OF the United States of America was in
corporated in 1916 under a twenty-year
charter In 1892 President Jackson vetoed
Dill to renew this charter and the wear
following directed the Secretary of the
treasury to remove government funds
ti-erelTom, and 1t soon went into liQuda-
ton.
suotreasury act was passed in 1870
ana repealed one year later. The present
treasury system was established in 1915.
lnil!merab!e reports by committees of
Eankefs nave been made, much has been
spoken and more written in condemnation
OF the independent treasury system and in
favor of the substitution of a large central
bank, patterned after the Bank of England
or the BANK of France, or the Bank of Ger
many. 1t is doubtful. however, whether
the system wiz ever be radically changed
TIE national banks of the country have
most commemorate disposition to CO.
operate with the treasury The wish of
the Secretary of the Treasury has been the
pleasure of these banking Institutions. Much
praise has been accorded the Treasury De-
partment for the sale of the Panama bonds,
but L am pleased to bear record that the
price obtained would have been impossible
but for the hearty cooperation of the ma
t!onal banks. The president of one of these
institutions wrote me that his bank would
buy liberal portion of the issue and pay
whatever price 1 thought appropriate
Others expressed more or less freely their
desire to assist in placing the government
opllgat1ons at price satisfactory to the
head of the Treasury apartment
Extended Authority N eded.
''The present law expressly ma es ma
tional banks the fiscal agents of the gov
eminent. and authorizes the deposit of pub
factory to the Secretary Of the Treasury
In my opinion, it would be both wise
and safe to clothe the Secretary of the
Treasury with authority to require banks to
Increase their reserve at certain times,
when money is redundant, and to expressly
permit the maintenance of somewhat
lower reserve at other times. Money is
frequently dangerously plentiful in sum-
mer and dangerously scarce in the fall and
winter. Speculation is encouraged by low
rates of interest. sometimes below 1 per
cent in July and August, and thereby
much money employed which is suisse
quently needed to meet the demands in
cident to fall and winter commerce. CO.
operation among banks cannot be secured,
except by the direction Of some one man.
One banking institution will not deprive
itself of legitimate profits, while making
provision for the future, which will inure
to the benefit of all alike. If this additional
authority were granted, the reserve of the
country could be increased in midsummer
from $5O,OGGOO0 to s1Oo,Ooo,Coo without at
fectng business in any way, and in the
fall and winter the ordinary reserve could
be decreased, and in this way a very mark
ed element of elasticity would be provided.
Il am not unmindful of the fact that
the pubic heSitates to grant extraordinary
authority, Iut the public holds the
head of the Treasury Department largely
responsible for business conditions. This be-
Ing true, and justly true, it is only fair
that he be given ample authority and en-
arged discretion