New-York tribune., 1907-01-01
SHAW SEES NO DANGER
COUNTRY PROSPEROUS.
Secretary, an Resum6, AdUises Cheer
fulness and Conservatism.

IN everything except tl1ankfulness"
Secretary Shaw thus concludes resume Of
the years financial record. which he says has
been prepared in response to multiplied requests
In round numbers he places the receipts for the
calendar year 1906 at s625. 100000 and the expen-
dftures at $3.50. 100000. or an excess of receipts
over expenditures of s59oo0o0o. AS there has
been no change in the tariff laws or the laws re-
lating to internal revenue. Secretary Shaw says
the large increase in receipts is due solely
extraordinary trade activity. The total expendi-
ture, however. for 1906, compared with 1906
he says, shows decrease of only s5,00000o.
Discussing the finances of the government for
the six months of the present fiscal year just
closed, the Secretary says that the books Of the
Treasury show surplus receipts over expenditures
of s25o0o,o 600, as compared with a deficit Of
ss.0ooooo for the corresponding months of the
previous fiscal year. The cash in the Treasury is
$780, 600, as compared with S171000,000 a
year ago, an increase of $4,000. 0o0 The cash in
national bank depoitories is s15s,ooo.ooo. as
compared with se5 600 900 year ago, an increase
of. ss4 600 600 and the total cash in the general
fund is s35s.00o 900. as against s242,o0o0oo a
year ago Against this cash there are liabilities
at the present time $4,000 600 greater than at
the same time last year. The available cash bal
ance has increased during the year s101,o0O,OOO
With the general fund standing at s231.0oo,ooo
Secretary Shaw remarks that the bonds matur-
ing July l. 1907 can be paid If II shall be deemed
wise and still leave a working balance OF more
than 20,o0o.ooo. If the owners would accept the
money, he says, the bonds could be paid now,
but he doubts If any considerable number Of the
holders would accept payment at this time, be-
cause they are Of the class who care for little
else than certainty Of security and exemption
from taxation. Mr. Shaw says he has thought
hi Tha
cretion Of paying these bonds ar maturity or of
refunding s-ch portion as he may deem appro-
pirate.
During the last twelve months. the Secretary
continues the money in actual circulation,
elusive OF the amount in the Treasury vaults,
has increased over 2o0oOoO 900 OF this increase
s145 600 is available for bank reserve and
600 is in national bank circulation.
This" he saws seems 10 he a complete
swer TO the oft repeated and I'll advised criticism
that the independent treasury system necessarily
results in contraction when money is most need
ed" He maintains therefore, that the existing
money stringency Worldwide in Is extent. is
traceabIe in no respect and in no degree 10 the
independent treasury system of the United
States. He says the manifest and admitted
shortage has been caused by the unprecedented
prosperity in this country and reasonable pros
perity everywhere. The people of the United
States, he declares consume. per capita, more
food more clothes more Of everything than any
other people in the world. and when prosperous
they import very largely. This. he asserts, nat
urally encourages industry everywhere. and un-
usual business activity calls for unusual
amount of actual money and Of credits based on
actual money
AS TO the currency system of the United States
Secretary Shaw says that in his Judgment it per-
rlits adequate expansion. but that its weakness
IS its failure to produce contraction. The VOL
ume of money, he contends, does not respond TO
the volume Of business. The annual increase
he adds, may be sufficient but there is no an
nual contraction during the dull summer months
only the unthinkng and I'll advised" he SAYS,
charge the admitted strfngency solely or largely
TO stock and bond speculation
Just now speculation in real estate is at high
tide, and the opinion is expressed that as much
money is tied up in options and margins In real
estate as in options and margins on stocks and
kbonds He continues:
~ II is idle TO complain Of the inevitable The
= spirit of speculation is among us and like the
drink habit. those most addicted frequently
the loudest IN denunciation. IT i'll becomes the
real estate speculator to decry every other man
Hesitation of desire get rich quick. The epi-
tibet black banded between pot and kettle Is
never Instructive, and just now ii is not even
entertaining.
money market also is alluded to- The Secretary
says:
A larger crop Of cotton than usual and an
unprecedented yield Of cereals, fruits and every
other agricultural product has filled granaries
and warehouses to overf1owing and congested
every important railway. A few years ago the
freight cars of the country averaged forty miles
e day, but owing TO the present congested con-
dition and insufficient terminal facilities and fac
tory sidinss they now average only twenty-five
miles day.
In the absence Of more trackage and increased
terminal facilities increase in the number
adequate relief Non-perishable freight is
shifted 70 side tracks TO make room for that
which is more important. This delayed freight
however, IS owned by some one, and some ones
money is thus tied up The producer has sold
II, though il has not reached the consumer IT
is represented somewhere by borrowed money
and the delay in shipment extends the loan The
same is true Of all material on It's way to fac
tories
Cooperation between the commercial banks
of the country, the Secretary holds is impossible
because the Sherman antitrust law forbids It.
He says:
Instead have approximately twenty thou
send institutions engaged I'm commercial bank
ing. each a law unto itself so long as IL does
not violate statutory requirements with respect
, 20 investments and reserve AS a natural and
unavoidable result. combined effort is made
midsummer 10 provide ample reserve
the strain inevitable upon the return
business activity incident to the fall
"a winter months. Under our present sys-
ytem the only possible contraction during the
GUNNER and the only possible provision for the
fan is accomplished by the Secretary of the
Treasury Withdrawing government deposlts
from the banks when these funds are not needed
and restoring them TO the channels of trade as
the needs Of business require. BY keeping
reut rein wild speculation may be prevented
and in most instances a resultant crash ayerted
Unfortunately the banks are not the ONLY nor
the principal sufferers from contagious financial