The Oskaloosa herald., 1909-10-21
THE CENTRAL BANK
u Is Institution
~ America.
By Raymond, In Chicago Tribune
By Raymond, In Chicago Tribun

Philadelphia, Pa, oct. ZU.-Take
banker from little Iowa town, make
him governor of the state, transplant
him to Washington as secretary OF
the treasury, give him some exper-
fence in New York banking house,
and finally land him as the executive
head of big banking institution in
Philadelphia, and you will necessarily
find in him the accumulated wisdom
of sharp experience.
| This is Leslie nj. Shaw, once COVER
nor of Iowa and secretary of the
treasury, and now president OF the
First Mortgage Guarantee and Trust
company, one of the solid institutions
of Chestnut street. Mr.. Shaw has
not changed much since the days when
| he used to stir Wall street with a
long pole, and when in his breezy west
ern fashion he shocked the old heads
of the treasury department by discard
ing all of the old presidents ana con-
Quoting business on new lines. The
former secretary of the treasury has
never taken his finance at second
hand. On the contrary, he has been
distinctly original, or at least always
Independent. {
Difference Here and Abroad.
When | saw the former secretary OF
the treasury in his bank Office, where
he sits in full view of the public, it
did not take long to discover that he
is not in favor of a central bank Of
issue such as has been proposed by
President Taft, and as will almost
surely be recommended by the mon
etary commission.
1 Il do not believe in central bank
in this country at least" says Mr..
/ Shaw. Conditions here are radically
different from those which exist
abroad, and it will be impossible for
us to translate institutions TO Ameri-
ca which work well enough in Eng
land, France or Germany. We have a
dual form of government and this
! fact must never be lost sight of. Each
state has the right to establish a
banking system of it's own-at the
same time, the nation has a right to
control the currency and to establish
a national banking system of its own.
The former secretary, ike almost
every other practical banker, Is quite
willing to agree that the present cur.
rency system is inadequate, and, in
| fact dangerous. The difficulty, he
says. lies in the fact that our curren-
cy constantly expands, but never con-
tracts. Frequently the expansion takes
place when there is not the slightest
necessity for it. .Promissory notes,
| checks, drafts, certificates of deposit,
bills of lading and every other instru.
| ment of exchange expand and con
tract entirely in harmony with the
| needs of business. The currency alone
Is non-elastic. .
Shaw's Position on Proposition.
In discussing the financial situation
and the proposition for central bank
Mr.. Shaw recently wrote out the fol
lowing public statement, which eX
presses his position with great clear
ness:
1T is proposed to charter large
!
to issue currency against credits. II
this plan is to result in anything but
initiation, there must be some means
to enforce contraction. The national
banks can be required to return this
currency for prompt redemption, but
the state banks are not subject to
federal control. These state institu
tons can hold this central bank cred
it currency in their reserve indefinite
Il.
Possibly some plan can be worked
out to secure contraction short of
severe tax upon the issue, but am
compelled to doubt it. A more serious
objection, to my mind, lies in the fact
that our efforts are so diversified
that no one bank and no one group
of governors of one bank can under
stand or comprehend the interests of
the various communities. Who can
understand the requirements of the
fruit industry of California, florida,
and Oregon; the grain industry OF the
Pacific coast and the great northwest;
the cotton industry of the south; the
cattle industry of Kansas City, Omaha
and Sioux City, and the manufactur.
ing, mining and mercantile interests
of forty-siX states?"
Quaker City People Well Informed.
Besides this academic objection Mr..
Shaw comes down to the one thing
which seems to be troubling the con
servative banking element of Phila-
delphia. 1t must be remembered that
the second United States bank, which
Andrew Jackson drove out OF exist
ence, was privately owned Philadei-
phia concern, started with a govern.
ment charter and special privileges,
so that the people of this city are par.
ticularly well informed as to what is
likely to occur when great central
bank Is chartered. Therefore Mr..
Shaw says, in way voicing the opin-
ion of his associates here:
'Let 1t be borne in mind that 1t will