The Washington herald., 1908-02-20
Gage Calls Senator's Measure
a Mere Makeslfft.
HE LIKES ONE BY FOWLER
Former Secretary of Treasury Gives
Expert Opinion Before House Bank
Present System-Finds Hope In the
Proposed LHW-VieWs on Panic.


man J. Gage. Mr.. Gage made an elabo-
rate argument, going into the elementary
principles Of banking and recommended
curative remedy for existing evils,
rather than a mere temporary makeshiit
which might or might not be taken ad-
vantage OF in time of panic.
AS such makeshift, MI Gage char
acterized the Aldrich bill, while he gave
his unqualified approval TO the Cowler
plan Of credit currency. The relief sought
10 be offered by the AIdrich measure, he
said, might be taken advantage Of once
in ten years when there was a panic.
But" he continued. "a the meantime
it puts US 10 sleep. It is a gentle mar
cotic which puts us into a repose from
which We viii suffer many q nightmare,
and from which We would awaken at
last In trouble and agony"
Asked TO explain his opinion as to the
cause Of the recent panic. Mr.. Gage as
signed as one of the reasons the loud
voices OF denunciation which have come
from certain quarters recently" by which
members OF the committee understood Mr.
Gage 20 make yelled reference to utter
ances from the White House.
Tells of Old Days.
In opening his remarks. Mr.. Gage at
some length told of his experiences in the
days Of State banks, and compared those
whose notes were issued upon the credit
system with those whose note issues were
based upon State bonds, declaring that
the former met the needs Of commerce
and industry much more satisfactorily
than the latter.
Mr.. Gage said he was so favorably i'm
pressed by the system OF credit currency
that when the State banks were taxed out
OF existence and we began our present
system OF national issue, after coming
into control Of large financial institu-
tion. he had not allowed his bank to issue
notes under the national bank act
Continuing. Mr.. Gage discussed the
Bank of France. and told of the various
disturbances which had occurred in the
French republic. through all of which the
Bank of France, with its credit system
OF notes. had passed without difficulty
Only once had II suspended specie pay
ments on its notes. which was for the
purpose Of preventing large exports Of
gold.
Our national banking system. he said
IS not an effective system. 1t is not in
viting TO the public. for not more than
one-haf Of the banking institutions have
embraced the provisions OF the act Each
bank is an individual unit with no nat
ural power Of attraction towards another
bank, and when a panic comes each seeks
TO protect itself
In time Of panic the banks refuse to
perform their function, namely. TO give
their credit in exchange for the credit Of
the con1uprrOffz-- hs ~bo,- -,
sst upon the credits due them from the
community. The government itself. he
said would not trust the national banks.
which We're its own creatures to the e1-
tent Of accepting a certified check upon
one OF them
Have Received Lesson.
We have, I believe" said Mr.. Gage.
received a painful lesson from which
we may rightly gather that our banking
and currency system must be put on a
new and better foundation. There are
obstacles which must be met and re-
moved as a necessary part of any ade-
Quate reform. These obstacles consist OF
certain financial artifcialties in govern
ment finance. which. while they exist.
make return 20 principles dictated by
economic law nearly or quite impossible.
These artihcialties menace the fnan-
cial strength Of the government and
emDarrass the true path 10 a wise and
adequate system. They are. first the
legal tender note, greenback. II Il were
necessary 10 issue them in the beginning.
they should have been retired long ago.
Mr. Gage characterized the Fowler bill
as comprehensive measure. containing
evidence that the author understood the
principles that underlaid banking and
currency, and had brought forth meas
ure which, in contrast 10 the one offered
~ the Senate, reached to the fundamental
The one stumbling block which he found
IN the Fowler bill was the guarantee of
deposits. He had fallen down on that
himself. but after studying tbA syhiect
he had come TO the conclusion that il
was just equitable, and right II he
were banker and haunted by the fear
OF default 10 his creditors, he would be
glad 70 take advantage Of the provisions
OF the Fowler bill. but would look with
grave apprehension upon the measure Of
fered In the Senate
He believes we have approached n crie,.
In our legislative functions IN relation "a
banking and currency. and while we are
not in a political panic about It we should
undertake a work which will cure the
evil permanently, rather than adopt 2
makeshift which can only be taken adj
vantage of in time Of crisis, and perhaps
not then.
As to Cause Of Panic.
When Mr.. Gage had concluded his re-
marks Representative Crawford. Of North
Carolina, asked what he thought had pro-
duced the recent panic In answer. Mr.
Gage went into an elaborate exclamation
of the operation Of banks in the reserve
cities In tying up their money in securi.
ties upon which they could not realize
cash when the demand came from the
country banks for money 70 move crops.
When the demand came the banks could
not realize upon their longtime obIiga-
tons, and in the absence G any system
OF credit notes. they were powerIess 10
help themselves
Then too. he said there were loud voices
or denunciation from certain quarters
and that scared the investors. To this
was added the newspaper accounts OF the
situation. and ii was not unnatural that
the consequences, which were witnessed
ensued.
He had been informed two years ago
he said, that when crisis came the
knickerbocker Trust Company would BE-
one OF the first 10 feel its effects, and
this warning had been realized
SpaaiRrds 10 BE Citizens.
The House Committee on Insular At
fairs yesterday reported favorably a bill
TO confer citizenship on Spanish residents
s.rI u