The daily morning journal and courier., 1907-02-01
SEC. SHA V ON PENDING
 FINANCIAL LEGISLATION
ONLY WEAKNESS AT PRESENT IS THE WANT OF
 ELASTICITY.

Root of the Evil Which is Experienced
 at Frequent Intervals Is Not an In-
 adequate Volume of Circulation but
 Want of Responsiveness in the Vol
 ume of Circulating Medium-System
 of Credit Currency Logical and
 Reasonable.
 New York, Jan. S1.-The Missouri So- ciety of New York city gave it's annual banquet at the Waldorf-Astoria hotel tonight. Three hundred and fifty sons of the Border State" were present. The principal guest of honor was Sec retary of the Treasury Leslie M. Shaw. He spoke on Pending Financial Leg islation." He said, in part:
 United States money is certainly as convenient as any known to commerce. It is also stable and secure. The head of the treasury department is required by law to maintain the parity between all forms of money coined or issued by the United States, and national bank notes are redeemable at the treasury of the United States in lawful money, re- gardless of the solvency of the bank of issue. As result no one hesitates to accept anything that circulates as money. In all these respects present conditions cannot be improved. The only weakness is want of elasticity This defect has been pointed out so many times and discoursed upon at such length, and so many remedies sug- gested, that it seems impossible to say anything new or interesting.
 "The root of the evil which we eX- perience at frequent intervals is not an inadequate volume of circulation, but a want of responsiveness in the volume of circulating medium. A currency which fails to contract when money is plentiful and cheap will of course fail to expand when money is scarce and dear.
 Much has been said in favor of the adoption of a system of credit curren- cy in this country. If we were creat- ing a new system I am inclined to think it would be the one adopted. It is log ical and in every way reasonable. Nat urally, unrestricted credit currency is elastic. No more is issued than is needed and when 1t is no longer need- ed it retires automatically. There are several reasons, however, why the sys- tenn must not be adopted in its entirety in this country, and every, reason for safeguarding in several ways whatever issue may be authorized.
 "The bill recently reported from the committee on banking and currency of the house authorizes a maximum issue of a fraction over OOOoO,OOO. If every national bank in the United States should avail itself of this new privilege, and if the authorized issue should prove relatively as responsive to the changing needs of business, there would be an annual contraction of about fifty millions in bank-note currency between the maximum issue in the fall and the minimum issue of midsummer, and a corresponding fifty million increase in bank-note circulation when the crop moving period arrived. This fifty mill lion increase in national bank notes would be equivalent to a deposit in na- tional bank depositaries of twelve and one-half millions from the treasury, believe the proposed measure wholly inadequate.
 '"The bill is recommended, however, as remedial, and it's enactment is urged as an effectual preventive of the oft recurring monetary stringency, the presence of which is universally ac- knowledged to be most dangerous. "I am strongly in favor of the issu- ance of a volume of bank-note circula- tion in excess of the par value of the bonds deposited. I am not, however, in favor of separate and distinct kind of currency. In my judgment, this ad- ditional circulation should be guaran- teed by the government, and the fact recorded on the present bank note, to the effect that the same is secured by a deposit of government bonds, should be eliminated and in lieu thereof the note should contain the following: This note is guaranteed by the United States
 If any legislation is to be had, let it be solely for the purpose of relieving the country from these frequently-re- curing stringencies. No plan should be devised primarily to enable the banks to make greater profit. The banks of the country are doing fairly well now, and business is prosperous. Nevertheless, we are confronted sev- eral times year with conditions ad- mittedly dangerous. Let a plan be de- vised which will effectually protect against this danger, and all will be well. I doubt not the proposed legisla- ton would prove profitable to national banks, especially elsewhere than in re- serve and central reserve cities but I do not believe it would result in any perceptibe elasticity. In other words, its remedial features are inadequate, and remedial legislation is all we need.'