Graham guardian., 1910-12-16
DEPLORES SYSTEM
Secretary Of Treasury Says
''Panics Are no Longer
Necessary

Currency reform; extension of the
scope of the national banking laws
in the event of no immediate gen.
eral changes in the monetary sys
tenn; civil service requirements; 8
custom service free from "practi.
caP' politics; business-like methods
in the daily transactions of the gov.
ernment and general abolition OF
red tape wherever it clogs the
wheels Of the government business,
iare among the recommendations
contained in the annual report of
Franklin McVeagh, Secretary of the
Treasury, presented to Congress De-
cember 9Th.
The expenses Of the government
in the fiscal year 1912, for which this
session of congress is asked to ap-
propriate, are estimated at $780,
494, ,0l3.l2. The estimated expendi-
lures of the Panama canal are given
at $56, ,920, ,847.69, making total of
$6S7, Ala, ,860.S1. r
The estimates, if carried out, rep
resent net savings of about $13, ,000,-
900,
Receipts for 1912, Secretary Nc
Veagh estimates. will be $500, ,OOO,-
600. which would leave an ordinary
surplus of around $4,000, 900. If
the treasury should continue to pay
for the Panama canal out of the
cash drawer as at present, such a
surplus would be turned to deficit
of 81, ,414,S ,S60.81.
Secretary McVeagh expresses the
hope that the monetary question
will come into congress detached
from sectional or political considera-
tions.
Our system can thoroughly be
called panic-breeding system" for
he says, whereas every other great
national banking and currency sys-
tenn is panic-preventing. AS long
as we continue under our present
system, we are liable to panics and
the devastation of panics reach re-
publicans and democrats and all
parts of the country alike. Panics
are no longer necessary and no long
er respectable. 1t is for the gov
ernment to say whether we shall
have panics in the future or not.
1t is mere matter of choice.
We have no system of reserve.
Our banking system destroys them.
1t concentrates in New York what
are pretended to be reserves and
then forces the New York banks to
lend and abolish them. Our sys-
tenn, instead of building up re-
serve, destroys it as fast as it in
clines to accumulate"
The secretary renews the recon-
mendations made last year for legis-
lation to tax the new bonds at one
and half per cent, if used by ma
tional banks for circulation, and in
Inmates, as was announced in news
dispatches aNfew days ago, that it
might be more preferable to issue
the new securities for investment
purposes only at a rate of 8 per
cent.
AS a check against the use of
bonds as basis for further infla-
tion of the national bank currency,
he suggests that a circulation tax of
2 per cent. would have the effect of
them Improbable for banks
to use for such purpose and at the
same time would make them at
tractive to investors, without injur-
ing the 2 per cent. bonds of which
more than $7.0OO,00O are outstand-
ing.
Another means of accomplishing |
the same end, the secretary sug-
gests, would be for congress to |
authorize an issue of $50, 900, 900 or |
800. 900, 900 of the bonds at 8 per
cent. without the circulation pro-
vision.
If there is no prospect of immed-
ate change in the monetary sys-
tenn, the secretary thinks the Amer
can national banking system should
De developed to perform an inter-
national function.
There is clear need of bank
ng facilities in foreign countries
where there is American commerce."
,e said. I'VE shall never be full
lodged commercial nation unless we
lave merchant ships of our own and
'oreign banks of our own. We
should have banks at all ports that
ire important to our commerce."
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