Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1910-12-08
OUR MONETARY
SYSTEM IS BAD
Secretary of Treasury Declares
In Annual Report 1t
Breeds Panics.
ALL RESERVES DESTROYED
Urges AbOIishing of Red Tape and
Use of Business Methods in
His Department.

Washington, Dec. S.-Currency re-
form; extension of the scope of the
national banking laws, in the event
of no immediate general change of
the monetary system: civil service re-
tirements; a customs service free from
practical" politics; business-like
methC1s in the daily transactions Of
the government and a general aboli-
tion of red tape wherever it clogs the
wheels of the governments business,
are among the recommendations con-
taiuef in the annual report of Franklin
MacVeagh, secretary of the treasury,
presented TO congress today.
Saving of SIS,OOO,OOO.
The expenses of government in the
fiscal year 1912, for which this session
of congress is asked to appropriate are
estinlted at $500 494,O1312 The es-
timatad expenditure on the Panama
canal are given as $500 ,S47.69, max
ing j total of $6S7, ,860.81. The es-
TINA IS. If carried out, represent net
savings of about $1S,0OO.OO0 in the
executive departments as compared
with the appropriations for the cur
rent fiscal year.
hSJ,lDIS 10Y lJl-. OtCISIdlN MAJ
Veagh estimates, will be $3.50, 100000
which would leave an ordinary surplus
of around $4,000, 900 If the treasury
should continue TO pay for the Pana-
ma canal out of the cash drawer as at
present, such a surplus would be turn
ed 10 a deficit of $7,414. .S60S1.
Secretary MacNeagh expresses the
hope that the monetary question will
come irto congress detached from sec
tiOnal or political considerations.
Panic Breeding System.
"OJr system can fairly be called a
panic breeding system" he says.
whereas every other great national
banking and currency system is panic
preventing As long as we continue
under cur present system we are liable
to pariCs and the devastations of pan
les reach republicans and democrats
and all parts of the country alike.
Panics are no longer necessary and no
ilonge- respectable. 1t is for the gov
eminent TO say whether we shall have
panics in the future or not. 1t is
a mere matter of choice
we have no system of reserves;
our banking system destroys them. II
pretended 10 be reserves and then
forces the New York banks to lend and
abolish them. Our system, instead of
building up a reserve, destroys it as
fast aS it inclines to accumulate
Would Tax Bonds.
I In connection with his criticism of
the money system, one of Secretary
MacV eaghs most important recon-
mend1tions concerns future issues of
Panama bonds of which 1920, 100000
we're authorized by the tariff act The
secretary renews the recommends
tpns he made last year for legislation
to tax the new bonds at one and one
half Ter cent. if used by national
banks for circulation and intimates, as
was announced in news dispatches,
few days ago. that it might be more
preferable to issue the new securities
for liz, cstment purposes only at a rate
of three per cent.
As = check against the use of the
bonds as the basis for a further inia-
ton lf the national bank currency, he
suggests that a circulation tax of even
two rer cent would have the effect
of making them Improbable for banks
to use for such a purpose and at the
SAM time would make them attrac-
tive 10 investors without injuring the
two per cent bonds of which more then
s7OO. coo 600 are outstanding Another
means of accomplishing the same end.
the secretary suggests, would be for
congress to authorize an issue of $50
OO0,C0 or S1O,OOO,OOO of the banks at
three rer cent without the circulation
privilege.
Wakes system International.
If here is no prospect of immediate
change in monetary system the secre-
tary thinks the American National
banking system should be developed TO
iperfC1 n an international function.
There is a clear need OF banking IA
cilitias in foreign countries where
there Is American commerce, he says:
we shall never be full fiedged
commercial nation" he says, unless
We haze merchant ships of our own
and foreign banks of our own. We
shou:d have banks al all ports that are
,impo-tant to our commerce"
The treasury's relations with the
business communities are unbusineg3-
like, artificial and burdensome. the
secretary declares and he recommends
legis Station to permit the payment of
revenue to the government ny certi-
fed deck guarding the government
against loss.