Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-12-04
HE SOUNDS A WARNING
Government Will Be to Blame for
Panics, Secretary Says.
OUTLINES RELIEF MEASURE
Head of Treasury Shows How Gus
toms Frauds Have Been Checked.
Announces Future Plans.

uhreasoned and unScientific" banking
and currency system. of the United
States. Franklin MacVeagh. Secretary of
the Treasury, freely warns Congress in
his annual report. submitted today, that
the federal government, as long as the
present scheme exists. will be exclusively
responsible for the commercial, indus
trial and social disasters which flow
from panics and attack, directly or in
directly, every home in the nation.
The present system promotes and de-
velops panics and legislation is urgent
declares Mr.. MacVeagh, in outlining his
idea Of the necessary general provisions
Of an adequate relief measure. Aside from
affording flexible and elastic currency
and reserves. such a revision, he says,
should bring the banks into organized CO.
operation and provide for central
agency through which they could work
together. free of political or trust con-
troll.
Foresees Large Deficit.
According to the estimates Of the
Treasury Department, the Secretary for
sees deficit Of So $50. Oe3. exclusive of
Panama canal expenditures. for the fiscal
year ending June 30. 1914. the first fiscal
year of President Wilson's administra-
ton. Including the canal expenses, the
deficit is estimated at So. 100, 40. The
canal expenditures, he adds, however.
may be paid under the law from bond
sales. The estimated receipts for that
year are $71O,OOO,OOO, while the ordinary
appropriations are estimated at $780,
506,O23, and the canal expenditures at
$50, liza 49,. Undoubtedly having prob
able tariff revision in mind. the Secretary
announces that these estimates are based
md Low,
For the current fiscal year. ending
June 30 1913 Mr. MacVeagh estimates
that there will be surplus of $4,000 30.
exclusive of Panama canal expenditures,
canal transactions. He estimates re-
ceipts for this year at 711.OOO,O00. and
ordinary disbursements at 500. 100000.
People Are Helpless.
In connection with financial reform,
Mr.. MacVeagh says the people are help
less. under existing evils. The present
system never permits free action at any
time. because it's liability to sudden con-
straint and restriction is always a part
Of the nations financial consciousness.
There never is time continues the
Secretary of the Treasury. when there
is any long look ahead; except when We
are In the midst Of a panic when there
is long look of disaster ahead. There
is never a long look of ease and con-
venience and prosperity ahead
In the crop-moving season, Mr.. Mac
Veagn points out. there is a special stress
and restraint. and the Secretary found
an object lesson in the conditions during
the past autumn when the banks were
called upon to finance the movement of
record-breaking crops. necessitating the
employment of nearly all Of their avail
able resources under our constructing
system"
Due to Conditions.
"This relief which is SO urgently needed
by the legitimate business and enterprise
of our people," he adds, lis not relief
from a financial situation built up by
financial world itself. but is from sys-
TEN and conditions superinduced by the
government; and forced upon the bust
ness community and upon American So
ciety The banking and currency Sys-
tenn is the product Of federal law; and
there can be no relief from 1t until Con-
gress acts. And this is why con-
gressional action is urgent
Pointing out that the banks fortunately
had been able to finance the crop move
ment of the past autumn unaided by the
government. the Secretary says that the
anomalous relation between the Treasury
Department and the general financial
world is a part Of the system to be re-
formed. He added:
Taking large sums OF actual money
out of the ordinary financial use and
locking it up as a dead mass in the vaults
of the Treasury is a proceeding I'M
scientific and unreasOned as any other
part Of our unreasoned and unscientific
banking and currency system"
Suggestions for Relief.
A relief measure reforming the bank
ing and currency system. the Secretary
declares. must include. among it's neces-
sary features, provisions for never-failing
reserves and never-failing currency. and
for the perfect elasticity and fiexibility Of
both: for the permanent organization
and organized cooperation of the banks.
which are now suffering and causing the
nation to suffer by reason of their I'M
organized state; for central agency, to
represent and act for the organized and
cooperative banks-this agency to be Sc
curely free from political or trust con-
troll, but with the government having ade-
quate and intimate supervision of it:
for independent banking units-so indie
pendent that no one bank can be owned,
controlled or shared in in any degree, di-
rectly or indirectly, by any other bank;
for the equality of all banks national or
state, both as to standards and as to
functions-so that every requirement
made of a national bank must be COM
piled with equally by a state bank, and
every function or privilege enjoyed by a
state bank shall be enjoyed by a national
bank; for the utilization and the fiuidity
of bank assets; for the scientific develop
md