Show BOLD AS ITS BASE Secretary Shaw Favors Convertible Con-vertible Currency TO EXPAND CIRCULATION Ho Recommends the Coinage of SlIver SlI-ver Bullion In Treasury Into Subsidiary Sub-sidiary CoinDoubts the Wisdom of Making Provision for Issue of Credit Currency to Limit of Banks Capital Is Not Prepared to Recommend Rec-ommend Branch Banks Conditions Not Warranting It Washington Dec 3ln his annual an-nual report submitted to Congress today to-day Secretary of the Treasury Shaw shows the receipts from all sources for the JlKcal year 1002 to be 3S3tl2 < 2SOl7 and the expenditures SoDnOUSyoifiT Compared with the fiscal year 1901 the receipts decreased 51I9D02JO15 and the expenditures decreased TS7776195r > l The revenues of the Government for the current llscal year are estimated at 5GO1020 o0 The expenditures for tho I Bame period are estimated at 651020 G30 or L surplus of 5ISOOOOOO 1 It Is estimated that the revenues for I the fiscal year 1004 will be 72376766L Tho total estimated appropriations exclusive of sinking fund for the same I period arc 567701077030 or an estimated esti-mated surplus of 51SIOSS770 I CURRENCY QUESTION DISCUSSED The Secretary goo Into an exhaustive discussion of the currency question and says The statute now provides that parity between all forms of money shall II be maintained A former Secretary of the Treasury expressed the opinion that I a somewhat similar statute authorized the redemption of silver In gold If that be the Intention I submit It would be better to express the imc In specific terms It haw been found necessary In i order to maintain the parity of greenbacks green-backs and treasury notes exprcasly provide for the redemption thereof In gold I am not unmindful of the claim that parity will naturally continue so long as the Government accepts silver In payment of revenues If this be true there would he no danger to the Government should the two coins be made Interchangeable EXCHANGE OF SILVER I believe the treasury of tho United States would ho In less danger with an express provision for the exchangeability exchange-ability of gold and silver than under existing lawn At the present time the troasury furnishes all the gold needed whatever I the purpose for which It IB denmndodand certnlnly no more would he requlrtd for commerce and not as much for hoarding should all doubt aa to the Hiatus of silver be removed On the contrary If all forms pf money sere made the equivalent of gold then all occasion for hoarding one coin more than another would vanish and the danger to the treasury would be diminished dimin-ished Instead of being Increased The ability of this Government to fulfill Its promises has never boon riuestioned but doubts arising from unexpressed policies have caused more than one crisis crisisNATIONAL NATIONAL BANK CURRENCY Should It he deemed wise to provide I for the exchangeability of gold and silver sil-ver then national 1 bank notes might be made payable In gold In this way there would be shifted to the banks the greater burden of futnlshlng gold for domestic use and for export and this In the event of an unfavorable balance of trade might Drove of great advantage advan-tage to the Government It would be manifestly unjust as well 03 Illogical to require banks to redeem their noten In gold so long as legaltender silver remains Irredeemable and unexchange able EXCHANGES IN GOLD There can be no valid reason legal economic or equitable why the Government Gov-ernment should not redeem In gold all Its own obligations whether they be represented In paper 100 per cent flat or in silver CO per cent flat When the Government expressly guarantees its own Issue no objection can appropriately appropri-ately be urged against requiring banks to pay their notes In gold On the contrary con-trary I see many advantages to be I gained especially with respect to our foreign commerce by making every obligation ob-ligation between the Government and the people and between Individual payable In money every dollar of which Phall be the equivalent of 25S grains of standard gold and on which a demand for this equivalent can bu directly or Indirectly predicated The Secretary recommends the coinage coin-age of silver bullion In the treasury Into subsidiary coins BANK SYSTEM IMPERFECT I On the subject of banking thu Secretary Secre-tary says that recent events not only justify but enforce the conclusion that our banking system is Imperfect lie tells of the efforts of the department to increase circulation by various means resulting In an Increase of but 26000 000 and concludes The frequent purchase and retirement of bonds renders the immmt available for circulation gradually loss I while rapidly rap-idly growing population additional banking bank-ing facilities and expand I UK trade MUR goHl tho nood of an ovcrlncronslng circulation cir-culation I I therefore hollovc the lime bus arrived when It will be noco sar > to adopt ono of two pollclns cither the Government debt must be perpetuated 11M a bupls for national I bank circulation I ind i addition bonds Issued us octMnlon may require or somo other system must provided ADDITIONAL OIRCTLATION I Additional circulation will bo noecssdry Outttaiidlng Govormnnnt bonds are Inudo cmato to secure It won If their I innrknt valuo would Justify thMr ueo by 1 the iKinhfl 11 I t In 1 ova doubtful If I national bank currency buscil on Government honda can bo mude ndvnntngooun to brinks A lower tax nn circulation would be coiinlrruclcd very promptly by a ear respondIng advance In tho prlco of tho bonds and the profit wpuld accrue to tho present bondholder I sec no objection to the iBsunnco of circulation based upon general credits If properly safeguarded Neither do 1 bcllovo It necessary to moire ourr incy thus IsHiiod 1 a llrt lion upon aanelK A vory small tux upon circulation would he sufficient to cover any possible los CREDIT CURRENCY T doubt however the wlmJom of making mak-ing provlHlon for the IflBtwnco 1 of credit currency to the limit of lilt banks capital cap-ital Not that I would fear unfortunate results but In nil financial legislation the greatest caution must be exercised lost the currency IM Miiddenly and unduly un-duly lntli ted A gradual Inorenfo In dir culiitlnii li 1 ivpllnicrli Imperailvo but I n sudden mill unnprrtffHiy lnrrons < > would br most uuforluriaro Several other sufc giuinls will nituriillv Suggest themselves and need not be considered In thin rcjwrt AF TO BRANCH BANKS 1 am not prepared at thin time to recommend rec-ommend branch banks Recent events I confirm a previous opinion Hint th < peculiar pecu-liar conditions of this country wonld not bo Qonnervcd by such a policy Orenter economy In management may IO conceded con-ceded It may he conceded also tint the system works well In some couutrlds but no other country has such dlvorsttled and wldolyscpuruteu Interests ali tMj In order that the parent bank ahnll V ° nblo to servo widely I separated I communities r It must first understand the necdn nt these communities and neither experience nor observation Justifies the conclusion that such intimacy Is likely to exist r think a i fir better course for tho present at least would be to provide an cln tlc cur runcy available In every banking community commu-nity and sufficient for the nriccll of that locality Thin 1 think can Uo accomplished accom-plished either In the way I 1mvulullmuted or by several other methods GOVKRNMBNT DEPOSITS On the Iuhjl ct of public deposits the Secretary says If authority were granted to make deposits de-posits without security after special examination ex-amination l hl and t iuch rates riI Interest us tho Secretary of the Treasury might determine quite nn element of alnpUcity would be provided whenever a surplus of I reonue existed By advancing or lowering I lower-ing the rate of Interest an equilibrium I could be maintained throughout tho country I coun-try and the Interest charge wouldmore than cover any loss nut If It should bo docmcd unwlso to permit the loaning of public funds without with-out apcclllc security It certainly would be well to authorize deposits direct from the treasury and as now upon nntliifactory security Jf such authority bath existed during tho last few months the something moro limn S20WOWO which wits puld to tho owners of Government bonds would have been deposited In u lurpo number of re servo cities throughout tho country and the relief afforded would hnvc oeen finally final-ly i pcrmnnint and more widely appreciated appre-ciated I |