Show ELASTIC CURRENCY IS NEEDED SAYS LESLIE H. H SUA SHAW W NEW HAVEN 12 12 Former Form r Secretary of tho Treasur Treasury Leslie M. M Shaw was the guest t of oC honor and principal speaker at the thc annual chamber of commerce dinner last night I to In the j judgment ent of Mr Shaw w the only weakness of the American monetary mone mone- tary system is that th the currency is non uon- clastic elastic that its volume does docs not Dot respond re reo re- re spond to chan changing in seasons and the varying varying needs of or of trade There indications as early earls as August said eaid Mr Shaw that p people were withdrawing money mony and l locking lock lock- ck in ing it up It was WilS th the incipient symptoms of a q disease easo which always first shows itself in iu this way In addition addition ad ad- increased commercial activity incident to tho the return of business men from summer vacations a ripening crop and the laying in-laying of stocks ot of mer merchandise caused an unprecedented demand for money money Still t the e gate volume rema remained fixed and and non non- elastic Had the National banks been empowered empowered em em- powered to issue additional circulation circulation circulation tion equal to 50 per cent ent of th their 1 capital without a deposit to secure its redemption but subject to a tax of 5 6 per cent an aggregate increase of would have hae been possible and would very verv likely likel have been issued The Tho people would have bare carried to their safety deposit vaults or taken homo home for lor concealment a National bank note as rapidly as a agold agold J. J gold certificate certificate- and the they would ha have vo been just as safe gate The redemption of the existing Na National National bank note is now guaranteed bv by bythe the Government Go for it is secured by bya a deposit of government o bonds which are direct obligations of the Govern ment I grant that it i is illogical for forthe tho the Government to guarantee bank banknotes banknotes notes note but the people have ha become so 50 accustomed to money bearing in in ono one form or another the thc obligation of the II Government Go it would be hI willing to concede the guarantee to this suggested ug additional issuance of bank notes c I I 1 do do not believe it possible to tn tomake tomake make an elastic clastic curr currency based on co collateral col lateral security It would o be impracticable impracticable im ira- practicable to to have the Government Go pa pass s upon the solvency of oC commercial paper deposited a as a basis of oi circulation circulation circa circa- lation and the banks would find it quite juitt a as difficult to get et bonds with which to secure additional circulation as to tu get JEt the money itself There is no oi for Cor the increased issue Hilt until un Hil- t til il tho the banks have liae exhausted their cash resources and InrI when their r cash resources resources re resources re- re sources are exhausted they the have ha nothing noth ing available with which whir to buy bonds Of Of course the banks should not be beI permitted to issup t this is uncovered additional ad ad- I circulation rr without th the consent of the Comptroller cr of the Currency When tho the request is submitted the I Comptroller will naturally look at the record of the hank bank at the tho time of tb the thelast thelast last official examination or he will cause a special r cia examination to be he made mad and grant rant or withhold consent in iii tho the light of the record in his I office By having the a additional cir circulation circulation cir cir- identical in form Corm with tho the bonds secured sec wh which ch we WP now DOW have the tb- increase would rs ras unnoticed and therefore causo cause no a a very ery im jut important feature as I view yiew it I |