The Oskaloosa herald., 1908-01-09
.SHAW'S PLAN FOR
ELASTIC MONEY.
WOULD LET NATIONAL BANKS
ISSUE MORE CURRENCY.
CHARGE TAX ON ADDITIONAL.
This Would Provide Cash Where Most
Needed and Put It Out Of
Circulation When Not
Needed.

Des Moines, Iowa, Jan. 4.--Spealxing
before the Bankers Club of Des
Moines last evening, Ex.Secretary L.
M. Shaw of the Treasury Department
outlined his idea of elastic currency
in brief as follows:
The plan which to my mind presents
the fewest objections is to allow our
ume of supplemental currency, subject
to tax Of per cent or per cent
during the period of it's maintenance.
| deem it important that the supple
mental currency shall be identical In
form with some money regularly in
Icirculation; otherwise its presence
would alarm, and do more harm than
good. | deem it important, also, that
its ultimate redemption in gold be
guaranteed by the government. |
realize that this is illogical, but the
American people have been schooled
to believe in Government guaranteed
money, and any departure therefrom
would meet with very general dis
trust fatal 10 commerce. !, therefore,
deem it wise to supercede the state.
ment on the present bank note "this
note is secured by United States
Bonds" with the statement this note
is guaranteed by the Government"
With this change the supplemental
currency to be issued by the national
banks can be identical with that which
Is secured by deposit of bonds. So
generally; so wellnigh universally sol
vent are our banking institutions that
the Government would be taking slight
risk to guarantee the ultimate re-,
demption of all this supplemental cur
rency and the proposed tax would
many fold cover the risk.
Those who think the Government
should insure deposits can find no OBJ
lection to such guarantee, for bank
note is almost identical with certiti-
cate of deposit, payable to bearer on
demand and it would never be parted
with or paid out by the bank except
in exchange for something believed to
be equally good.
If the banks were permitted to is
sue to the extent of an average OF %
iper cent of the capital graduated, ac-
cording to the size of the cities and
towns where the banks are located,
the aggregate volume would be ap-
proximately $4O0,O00,000. The Great
Champion of Free Silver is now rec
ommending that the government shall
guarantee all national bank deposits,
aggregating over $4,000.00O,0oO, and
| this without compensation or hmita-
ton or restriction of any kind or ma
ture. The plan which | have suggest
ed contemplates as a condition prece-
dent to the issuance of any uncovered
currency the consent OF the Comp
troller. This consent will naturally
be with.holden from such institutions
as are not conservatively managed.
The tax would many fold cover the
risk. Thus the public would be pro-
tected. for the notes would be guar.
anteed by the government; the exist
ence of the supplemental currency
would not cause alarm, for 1t would
be identical in appearance with the
ordinary bank note; it would spring
into existence where needed, and
when needed, and it would be prompt
lly retired by a deposit OF like
amount of any form Of money. with a
sub-treasury, whenever the rate OF
Interest became normal and the de-
mand therefore ceased. In other
words 1t would be elastic for it would
contract as well as expand.