Evening star., 1912-11-24
TAKE TREASURY OUT OF BANKING
IS SECRETARY MACVEAGH'S PLEA

Three years later they were reduced to
100000. In the fiscal year 190S-l809 the
banks
This state of affairs places in the hands
OF the Secretary Of the Treasury a power
greater than any American should have.
Inc power OF the Secretary to influence
the money market by deposits or with
drawals of public funds is always dam
gerous. No government officer should
have this power. 1t has been a great bur-
den. | believe. on the shoulders OF every
recent Secretary of the Treasury De-
Has Dangerous Power.
If the people realized how dangerous is
the power in the hands of the Secretary
or the Treasury, they would insist that
the treasury be at once taken out Of the
banking business Accu stoned as we are
to government Interference with the
money market. few Of US realize how the
Treasury In the past few years has exer-
c1sed the central-bank function of regu-
lating the discount rate. The Treasury,
by alternate deposits and Withdrawals
OF the public money in the banks. as well
as by other devices, has attempted to
regulate the discount rate
The Treasury Department should be di-
the banking business, and the way to
erect the reform is plain. We should
nave In this country quasi-public in
sttution not only to hold the ultimate
cash reserves of the banks and to regu-
late the rate Of discount but to act as
the fiscal agent of the government.
Such an institution would hold the gov
eminent balances as deposits, and the
government could check against them
just as any large business concern checks
against Its BALANCES in bank. With the
government balances deposited in such an
institution. the business of the country
would never be disturbed by the Treasury
hoardlng up cash, and the Secretary of
the Treasury would no longer be forced
to meddle in the money market.
New Banking System Urged.
Taking the government out of the bank
ing business is only one phase of the re-
form Of our banking and currency system
in which all Americans should be deeply
interested
The principal requirements of a new
banking and currency measure are that 1t
shall provide a practical immunity from
serious panics-such an immunity as is
enjoyed by the other leading financial ma
tons; that it shall abolish the habitually
recurrent ordinary stringences in the
money market. which keep relations be-
tween the bankers and the business men
of the country almost continuously at
skies and sevens; that 1t shan remove
the defects OF our domestic exchanges:
that it shall enlarge and develop the IA
cilities of our foreign exchange system:
that it shall properly develop the discount
market; that it shall wholesomely assist
in regulating the interest rates and MAX
ing them uniform throughout the coun-
try; that ii shall put an enc 10 the tend
ency which forces our bank balances into
speculative channels and save them for
regular trade and commerce. To meet the
case it is necessary to have an elastic
currency, available reserves and every
necessary provision and power both to
permit and to check the expansion of
loans
Foreign Commerce.
The new banking system will also have
pleteness ample banking facilities for our
foreign commerce. commerce that with
the proper governmental encouragement
will be worldwide and world-varied. II
is idle to expect that we shall ever have
developed foreign commerce without
a developed foreign banking system.
AS long as We have the present banking
and currency system we shall have pan
ics-and no longer Does not this alone
create state of emergency? What
doubt should there be of the urgency OF
this legislation? Why should it take an
other wasteful and degrading panic to
impress Congress? Why cannot 1907 suf-
fee?
There are many other things of prime
Importance to be secured through none
tary reform, but il nothing were to be
| secured but emancipation from panics
there would be abundant imperative rea-
sons for immediate action by Congress.