Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1912-12-05
TREASURY SIMPLY
CENTRAL BANK, IS
VIEW OF M'VEACH
No Reform Until It Is Taken
Out of Banking Business,
Declares Secretary.

Washington, D. c.. Dec. 2.---"No re-
form OF the banking and currency sys-
tenn can be adequate which does not
take the United States treasury out of
the banking business said Franklin
MacVeagh. secretary of the treasury,
In discussing the need of currency leg
islation.
We have become SO accustomed to
banking operations of the treasury
that we have not realized how 1T has
developed into a powerful central bank.
The treasury is the strongest bank in
the world as regards metallic reserves.
AT one time the treasury was the
strongest note-issuing bank and 1T may
become SO again."
Mr.. MacNeagh said. in part:
when the independent treasury sys-
tenn was established the idea was that
all the. funds of the government should
be stored in the treasury vaults in the
furm of money just as the medieval
war lords kept their treasures in strong
boxes.
THE independent treasury system
was established in troublesome finan-
cial days. when the state banks We're
not the safest places for the deposit
of money. Tho people decided that the
public funds should be kept in gov
Noullss iOI safety.
Railroads Could Make a Panic.
.'3ut in these days of well-organized
national banks, conducting their BUSH
ness under the watchful eyes of the
government. everyone keeps his sur
plus funds in some bank Not only do
private individuals and great corpora
| lions bank their funds from day to day.
but all the municipalities and state
governments use the banks for the safe
| keeping of their money.
The national government alone
| holds to the medieval custom of keep
| ing its funds stored away in vaults
| No other great government does this.
In England. France, Germany and
| other leading countries, government
funds are deposited in banks like the
| funds of any other business.
Imagine the storm of indignation
that would be aroused if the railroads of
| this country should insist on being paid
| for transportation in money. and then
hoard this money for weeks and
| months in strong boxes.
| THE gross receipts of our railroads
| are in the neighborhood of $4,000, 100000
| year. III the railroads boarded their
receipts in money for only four months
they would pile up billion dollars. or
| nearly a third of all the money now
circulating in the country II this
money We're taken out of the vaults of
the banks it would mean such a panic
| as no country has ever seen or ever
| will see.
Receipts Irregular.
1.-THE receipts and disbursements OF
/ the treasury are most irregular. The
| treasury receipts in 1907 exceeded the
disbursements by $91 100000. Two
| years later the disbursements exceeded
the receipts by s1lS,000,0O0 For the
past two Years receipts have again ex-
| ceeded disbursements.
/ ", n,-o1 f,Iv,1 in, no f~an rv~Vr
was $272,000,000 in 1907; three years
later it had fallen to $10600000O Un-
| der our present system OF keeping q
large surplus government fund iale in
the treasury these wide variations in
the yearly balance not only seriously
/ disturb the money market and the bus
mess of the country, but force the
secretary of the treasury to enter &C
i lively into the money market as pa
| ternal overseer OF the machinery of
| credit.
This state of affairs places in the
hands of the secretary of the treasury
a power greater than any American
| should have. The power of the secre-
| tafy to influence the money mark let by
deposits or Withdrawals of public funds
| is always dangerous.
mo government officer should have
| this power 1t has been Il great burden,
l believe. on the shoulders of every re-
cent secretary of the treasury depart-
| ment.
IF the people realized how dangerous
is the power in the hands Of the Sec
rotary of the treasury they would In
sist that the treasury be at once taken
out OF the banking business.
| Accustomed as we are to govern
ment interference with the money mar
ket, few of us realize how the treas
ury in the past few years has exercised
the central bank function of regulating
the discount rate.
The treasury, by alternate deposits
and Withdrawals of the public money
in the banks, as we'll as by other de-
vices. has attempted to regulate the
discount rate.
Immunity From Panics.
Taking the government out Of the
banking business is only one phase OF
the reform of our banking and cur
rency system in which all Americans
should be deeply interested.
The principal requirements of new
u banking and currency measure are that
1t shall provide a practical immunity
from serious panics--such an immu-
nifty as is enjoyed by the other leading
A financial nations; that it shall abolish
the habitually recurrent ordinary
stringencies in the money market
which keep relations between the bank
ers and the business men of the coun-
~ try almost continuously at SKIES anC
sevens: that it shall remove the defects
of our domestic exchanges; that 1T shall
enlarge and develop the facilities OF
our foreign exchange system; that II
shall properly develop the discount
market; that it shall wholesomely as
sist in regulating the interest rates and
making them uniform throughout the
country: that it shall put an end tt
the tendency which forces our banl
balances into speculative channels and
save them from regular trade and com
merce.
ITO meet the case it Is necessary t.
have an elastic currency. available re
serves and every necessary provision
and power both to permit and to checl
the expansion of loans.
NOTED EDUCATOR DIES.
II Lynchburg. Va, Dec. DIR. VIII
! lam Waugh, Smith, chancellor of tn
Randolph Macon System of Colleges
. president of Randolph-Macon Woman
college of Lynchburg and founder o
the Woman's college and Randolph
Macon academies at Bedford City, Va
and Front Royal, Va. died here earl
! today after lingering illness.