Newark evening star and Newark advertiser., 1912-12-04
BLAMES SYSTEM
FOR MONEY PANCS
Sec. Macveagh Recommends
Elastic Currency, Reserves
and Central Banking Agency.

WASHINGTON, Dec. 4.-strongly
urging radical reform of the "unrea-
soned 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 COM
mercial, industrial and social disas-
ters which flow from panics and at
tack, directly or indirectly, every
home in the nation.
The present system promotes and
develops panics, and legislation is ur-
gent declares Mr.. MacVeagh, in out
lining his idea of the necessary gen.
eral provisions of an adequate relief
measure. Aside from affording fieX-
ible and elastic currency and re-
serves. such a revision. he says,
should bring the banks into organ
lied cooperation and provide for a
central agency through which they
could work together, free of political
or trust control.
Foresees S2e,558,OeS Deficit.
According to the estimates of the
treasury department, the secretary
foresees a deficit of S22, 556, ,023, exclu-
sive of Panama canal expenditures,
for the fiscal year ending June 80,
1914, the first fiscal year of President
Wilson's administration. Including
the canal expenses, the deficit is esti-
mated at s52, 730. 455. The canal ex-
penditures, he adds, however. may be
paid under the law from bond sales.
The estimated receipts for that year
are $40. 900, 900, while the ordinary
appropriations are estimated at 1872,
6.O23 and the canal expenditures at
$50, 174432
In connection with financial reform,
Mr.. MacVeagh says the people are
helpless, under existing evils. The
present system never permits free
action at any time, because it's liabil-
ity to sudden constraint and restric-
ton is always a part of the nations
financial consciousness.
the secretary of the treasury, when
there is any long look ahead, except
when we are in the midst of panic,
when there Is long look of disaster
ahead There is never a long look
of ease and convenience and prospsr-
ity ahead"
Especial stress In orop-Moving Season.
In the crop-moving season, Mr..
MacVeagh points out there is spe-
ciaI stress and restraint and the sec
retary 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 en-
ployment of nearly all of their avail
able resources under "our construct
ing system"
This relief, which is so urgently
needed by the legitimate business and
enterprise of our people, he adds. rs
not relief from a financial situation
built up by a financial world itself,
but is from a system and condition
superinduced by the government, and
forced upon the business community
and upon American society. The
banking and currency system 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"
A relief measure reforming the
banking and currency system, the
secretary declares, must include,
among Its necessary features. provi-
sions for never-failing reserves and
never-faillng currency, and for the
perfect elasticity and flexibility of
both; for the permanent organiza-
ton and organized cooperation of
the banks, which are now suffering
and causing the nation to suffer by
reason of their unorganized state;
for a central agency. to represent and
act for the organized and coopera-
tive banks-this agency to be secure
ly free from political or trust con-
troll, but with the government hav-
ing adequate and intimate supervi-
sion of It; for independent banking
units-so independent that no one
bank can be owned, controlled or
shared in in any degree, directly 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 national bank must be
compiled with equally by a State
bank. and every function or privi-
lege enjoyed by a State bank shall be
enjoyed by national bank; for the
utilization and the fluidity of bank
assets; for the scientific development
of exchanges-domestic and foreign;
for foreign banking as an adjunct of
our foreign commerce, and for taking
the treasury department out of the