Abilene weekly reflector. [volume] (Abilene, Kan.) 1888-1935, 1907-11-14
MUST Be ELASTIC
Former Secretary Shaw Says Only
Weakness Of Our Currency 10
Its Nom Elasticity.
GREATER POWER FOR BANKS
Mould Have Them Empowered 70 q
sue Additional Circulation
Without Deposit 70 g. X
cure Redemption. NJ

New Haven. Conn, Nov. l2.--Fol
mer Secretary Of the Treasury SHAY
addressed the chamber Of commerce
here Monday night upon the needs o
q more elastic form OF currency.
In the judgment Of Mr.. Shaw, thu
only weakness Of the American none
tary system Is that the currency Il
non-elastic, that its volume does mo-
respond to changing seasons and TIL
varying needs Of trade.
"There were Indications as early al
August" said Mr.. Shaw, that people
were Withdrawing money and locking
Il up. It was the incipient symptom
Of o disease which always first shows
Itself In this way. In addition, In
creased commercial activity incident
to the return Of business men from
summer vacations, a ripening crop,
and the inlaying Of stocks Of mer'
chandise, caused an unprecedented
demand for money. Still, the aggre-
gate volume remained fixed and non.
elastic.
'EIad the national banks been en-
powered to issue additional circula,
tion equal to 50 per cent of their CAPT.
tai without deposit to secure It's re-
demption, but subject to q tax Of s
per cent an aggregate increase Of
1900, 100000 would have been possible
and s2O0,0OO,0O0 would very likely
have been issued. The people would
have carried to their safe deposit
vaults or taken home for concealment
. national bank note as readily as q
gold certificate and they would have
been as Just safe.
"The redemption Of the existing ma
tlOnal bank note Is now guaranteed by
the government for 1t is secured by a
deposit Of government bonds which
are direct obligations Of the govern
ment. I grant that It IL illogical for
tie government to guarantee bank
notes, but the people have become 80
accustomed to money bearing in one
form or another the obligation Of the
government It would be willing to con.
cede the guarantee to this suggested
additional issuance Of bank notes.
II do not believe II possible to make
an elastic currency based on collateral
security. II would be impracticable
to have the government pass upon the
Solvency Of commercial paper deposit.
ed as a basis Of circulation, and the
banks would find It quite as difficult
TO get bonds with which to secure ad.
dltlonal circulation as to get the
money itself There is no occasion
for the increased issue until the banks
have exhausted their cash resources,
and when their cash resources are ex.
hausted they have nothing available
with which to buy bonds.
"Of course the banks should not be
permitted to issue this uncovered ad- |
ditional circulation without the con.
sent Of the comptroller Of the cur.
rency. When the request is submit
ted the comptroller will naturally look
at the record Of the bank at the time
Of the last Official examination or he
will cause a special examination to be
made and grant or withhold to be
sent in the light Of the record in his
ONCE. BY having the additional cir
culation Identical in form with the
bonds secured. which we now have,
the increase would pass unnoticed
and therefore cause no alarm IA very
important feature as view It."
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