I GIFT OF Mrs. Bernard Moses fF The character and amount of money per capita in any country are determined ■olely by the local conditions un A MKST A L. TROUBUa Let us inquire first, then, what the organic or c>onstitutional weakness is. It began by the Government issuing its first paper money, possibly of necessity, but foolishly kept in circulation long 15 aftfir the nerefS'ty, if any ever existed, had disappeared; and it is no guaranty of wisdom simply because the Supreme Court has decided that Congress could make nothing but a piece of paper, that was always being redeemed and yet is never retired, a legal tender. There are a great many things that Congress can do and does do that are supremely and superbly foolish, and conspicuous among its acts of this character was the act perpetuating the exist- ence of the greenback long after its purposes, if born of necessity, had been served. If a small portion of the money that was used in paying off the Government bonds which could not annoy us had been applied in liquidating our demand obligations, we would have been saved an immense amount of financial trouble, and a vast amount of interest, too, before we have finished the green- back chapter. But we were not satisfied even with getting $346,- 000.000 for nothing throughout eternity, so we started out upon the silver scent; and while we were cunning enough in the act of 1878 to hide behind the coined dollar deposited, we had the hardi- hood in 1890 of increasing our demand obligations at the astound- ing rate of $50,000,000 a year, with no way of meeting them ex- cept the taxing power of the Government. We did not even assure the people and the world of our good faith by putting up a redemption fund corresponding with that lodged against the greenbacks. CREDIT STRAINED. What happened? We soon found that technically we had, in- cluding the national-bank notes, about $1,000,000,000 of demand obligations out, and only the same $100,000,000 we thought neces- sary to protect the $346,000,000 greenbacks, when, in fact, we ought to have had at least $300,000,000 of gold under the circum- stances. • DISTRUSTED BY ALIi. All classes of our people, to say nothing of the business men, and particularly the bankers, were looking each other mysterj' ously in the face and inquiring whether it might not be well to hide away some gold. The foreign broker, wanting to appear conserva- tive and protect his client, and of course get another commission on an excnange of securities, advised extreme caution, pointing out that it would be impossible for the United States to maintain 2703 16 the gold standard, and that it was in a position, in fact, to slid© from under when the crash came. What has been the result? The American people of every class have been hoarding gold, while the foreigners have been with- drawing their investments, and, what is quite as bad for an unde- veloped country, withholding their money from us. OUR DEMAND OBLIGATIONS REQUIRE SALE OP BONDS. The large outstanding demand obligations of the Government enable those who want gold at home or abroad to force the Gov- ernment to go on forever paying these greenback and silver de- mands over and over again, and yet they may never be retired. The only remedy left to the Government under the present cir- cumstances is to sell bonds in advance and comer the $500,000,000 greenbacks and Treasury notes, about which there is no possible doubt as to what the Government has got to do, and then wait for a test case of a silver certificate, which must result in the same conclusion and the Treasury be confronted with $335,000,000 more of demand obligations, while the Government, which the unthink- ing call the richest in the world, in this very connection finds itself without any of those resources of a bank to meet its debts and literally stripped of every means of defense except its power to tax the people. Was there ever a more pitiable spectacle in the world? From the foregoing we have diccovered some of the disastrous effects growing out of our organic difficulties. We have observed: First. That on account of doubt gold constantly left the Treas- ury and the country. Second. That our people nursed their gold, and the United States Treasury was compelled to furnish all the gold that was wanted for any purpose whatever, without having any resource except the power to tax the people, and yet must continue an un- limited amount of the paying business of a bank. How shall we meet the first difficulty and prevent a stream of gold from flowing out of the country and stop the drain on the Treasury by our own people? There is and will be but one permanent cure, and that is an un- equivocal measu're of value approved and adopted by all the lead- 2763 17 ing commercial nations of the world, and determined by all human experience to be best suited for settling the balances of trade. EXPLICIT TERMS IMPERATIVE. So long as political parties straddle, and so long as it is possible for members of Congress to declare that the bonds of the United States are in terms payable in silver as well as gold, and so long as one branch of Congress or the other shows its disposition by a vote to take advantage of the word "coin," so long will a most expensive, indeed possibly a ruinous, doubt hang over this country. COMMON HONESTY A NECESSITY. Of those who declare that we are on a gold basis and are going to pay our obligations in gold I would like to inquire, Why do we not put it in black and white and save this country millions in interest every year, and secure hundreds of millions for invest- ments to develop our vast resources? For there is no country on the face of the earth with our citizenship, civilization, well-estab- lished laws, and natural resources (which are the magnets that determine where capital goes) , and therefore so assuring to capital, as our own, if the measure of value were only unalterably fixed. How shall we overcome the second difficulty, that has made this great country ridiculous and may render it financially impotent, because the people demand that this debt-doubling process shall cease, little dreaming of the consequences that must ensue? If we would escape the incomprehensible trouble in either event, we must cease the anomalous position of filling all the paying func- tions of a bank without any of its natural resources. In other words, the two remedies for our organic difficulty are these: riTND THE DEBT. First. Refund our national debt in long-time 2 per cent gold bonds, furnishing a basis of circulation for our national banks and thereby giving to the people a money redeemable in gold over the counter of the bank of issue, thus utterly destroying the gold- hoarding habit at home, and dissipating the last vestige of doubt and fear abroad. RETIRE ALL DEMAND OBLIGATIONS. Second. Get the Government out of the banking business by converting the greenbacks and Treasury notes into metal reserves 2763—3 18 of the national banks, and send the silver dollars whirling into the tills of onr merchants and over the counters of our banks. NATIONAL CREDIT ALWAYS SAFB. This done, the credit of the nation can not be threatened in times of peace and ought to be maintained unimpaired in times of war. Its business would then be just what that of New York, Chicago, or San Francisco is — the collection of money for the pajTnent of current expenses — and every dollar of the $625,000,000 of gold in the United States would be free money, and would be taken from the safe-deposit boxes, drawers, and stockings and turned into the channeda of commerce. OUR TROtTBLB BTOT LACK OF RJS V ISN UlS. So far as I have been able to discover, there is but one other view entertained with regard to our organic weakness, and that has been entertained by my fellow-Republicans — indeed, originated with them — but which is far more political than philosophical, and which will not stand the test of fact established by investigation. Beginning with President Arthur, we were warned continually of the danger that would grow out of expanding our demand obli- gations, and all recognized economic writers pointed out the dan- ger long before President Harrison left his office. Even before there had been a deficiency. Secretary Foster was panic-stricken and the Republican Administration had prepared and was ready to issue $50,000,000 of bonds for no other purpose than to build up the credit of the nation by increasing the reserve. I think it will not be denied by anyone who will take the trouble to study the changes from 1878 to 1893 that had the Government begun in 1878 to cover the depreciation of the silver coined with a proper reserve of gold and continued that policy down to 1890 and through all the operations of the Sherman Act to 1893, gradually increasing the reserve up to about §300,000,000, there would have been no apprehension with regard to the ability of the Government to meet its demand obligations, even though it was compelled to sell $150,000,000 of bonds to cover the deficit growing out of the lack of revenue. If this be true, then it is clear that it was simply the expanded credit and not the lack of revenue. After much honest and earnest investigation on my own part, 19 I am satisfied that the lack of revenue has been in no sense the cause of the trouble, although I am of the opinion that it has served to scrape the scab off a most angry, violent, malignant, and festering sore and kept it a running one. The real trouble was in a lack of that prudence on the part of the Goverument that a good banker usually exercises in increasing his reserves as his demand obligations expand, LJLRGE GOVKRrrMENT RBSSBRVB UNWTGTB. But what a frightful waste this prudent policy would have in- volved, the locking up of $300,000,000 of money for no other pur- pose than the safe conduct of a most unwise and foolish policy. Nor would the popular will of the country remain silent while so vast a sum was being withdrawn from the channels of trade and the currency correspondingly contracted. This inherent or con- stitutional evil from either point of view was to breed discontent and disast-^r. While discussing this fundamental difficulty, it may be well to allude to the objection, that has been urged to the gold cure here proposed, on the part of the so-called bimetallist, but the more accurately described silver monometallist, and that is an inter- national bimetallic arrangement. A WORD TO BIMETALLTSra. To these so-called bimetallists I think we may confidently say that so far as the public sentiment of this country goes two things have been established beyond all peradventure: First. That the American people are unalterably opposed to the free and unlimited coinage of silver. Second. That if this country hopes to secure an international arrangement for the free coinage of silver at any ratio, they will be far more successful in their endeavor to do so if they place themselves squarely upon the gold standard, showing to all the rest of the world that there is absolutely no possibility of this country adopting the free coinage of silver while the other great commercial nations of the earth take all the gold and leave ua nothing but silver. The way to reason with the selfishness of nations is to exercise the power of compulsion, and the mere possibility that this great country may in some moment of aber- ration adopt the free-coinage fallacy stands in the way and will 27ti3 20 do more to defeat an international arrangement than all other causes combined. USE OF METAL SALT7TART, Then there is another class, who would sacrifice everything to convenience, instead of all convenience to principle, and who urge the inconvenience of using metal instead of paper money, when, as a matter of fact, the salutary effect of having tHe metal among our people offsets it tenfold. Among these are even those who would not propose to have anything but good paper money, and yet urge the inconsequential consideration of convenience while a great principle is involved, even the credit of the nation. The question of convenience can only be considered after the problem has been solved upon sound economic principles. Having pointed out what seems to me to be the organic disor- ders, and dissipated the erroneous diagnosis of those who claim that an our woe is due to lack of revenue, and having pointed out that the very objection of the theoretical bimetallist is really his best if indeed not his only hope of success in securing an interna- tional arrangement, and having brushed away the dewy sugges- tion of convenience, 1 think we have clearly discerned the true organic weaknesses from which we are suffering. These being the fundamental difficulties, there can be no ques- tion about the remedies that have been suggested. Assuming that our measure of value has been placed beyond the reach of cavil and forever settled, and our Government has no connection whatever with the currency of our countr}^ except as trustee, let us proceed to inquire what the functional trouble is affecting our monetary system, OUR PHESENT BANKING ST8TBM BAD. I am one of those who believe that we have one of the best bank- ing systems in the world in some respects, and who also believe that it is equally bad in others. All the superficial defects, all the apparent evils, like eruptions on the human body, which are due to disorders of the blood, are due either to too much or too little money to handle the commerce of this great country at any given time. Any banking system like our own, which results in a currency panic in one city or several localities or possibly all over the United 21 States every time there is the slightest commotion in any depart- ment of commerce, is like an epileptic patient who goes into fits upon the slightest provocation. Everybody asks, "What is the trouble?" And everybody who has taken the time and trouble to investigate the subject answers, •'The want of a sound, elastic currency." TBUTH AND PATHIOTiaM, NOT TRADITION AND PREJUDICE, SHOULD CON- TROL OUR TnOUGHTS. We have reached a point in this matter that demands patriotic and heroic action. Wo should at once acknowledge evdry established fact and fol- low every vein of truth wherever it may load, if happily we may find a solution to this intricate problem, and save our country from the stress of a continual financial storm and bring back con- fidence in us throughout the world and secure the blessing of prosperity to our own people. It has been with this spirit that I have pursued my study and indulged my thought, which has stripped me of some pet notions and dislodged many of my preconceived ideas that were born of political bias or were the children of wishes growing out of party zeal or the inheritance of some tradition partially true or utterly false. And now, when I pass my country in review and contem- plate the stupendous losses and frightful havoc of recent years, I am impelled to hope that Diogenes may again appear with his candle and not cease his search until he has found a clear, frank, and honest political platform upon which the American people can fight this thing out, as they are longing to do. As in 1858 Abraham Lincoln foresaw that this Government could not endure half slave and half free, so now it is clear that the domestic prosperity and commercial supremacy of this nation among all the nations of the earth wait alone upon our unequivo- cal declaration and irrevocable decision as to our measure of value. OUR PEOPLE FAVOR THE GOLD STANDARD. The American people, strictly honest, highly intelligent, and supremely brave, are in favor of the gold standard as a measure of value because all history has shown it the most stable metal, all experience has proved it best suited for settling the balances 2763 2S of trade, and all the leading commercial nations of the earth have approved and a lopted it. And while our people are in favor of the use of so mucli paper and silver money as is consistent with prudence and the demands of business, they are unalterably op- posed to the free and unlimited coinage of silver. THE EXPERIENCE OF OTHERS SHOULD INFLUENCE US. In discussing this question we can not take the position of the schoolmaster, the theorist, or the dogmatist; but with a full and perfect knowledge of our present currency, our individual bank- ing system, the extent of our country, and the magnitude of our commerce, we siiould attempt the solution of this most difficult problem. The experience of other countries, so far as they have established principles that are equally adapted to our condition, is valuable; but we can not assume that everything that has worked well elsewhere will necessarily work equally well here. It is a ques- tion very largely of discrimination and adjustment. However, it is no evidence that because conditions elsewhere are very different from our own, that their experience is of no value to us, or that what has been well done there can not be equally well done here. Common sense here, almost more than anywhere else, must servo as a ballast to theory. Prejudice must give way to truth, and selfishness to principle. ▲ SUDDEN CHANGE UNTTISB. To suppose that the people of the United States will give up a secured currency in a day, a week, a year, or a decade even, for a credit currency, is a most violent presumption, even if such a thing were sound in principle. Again, even if they were willing to do so— and credit currency is sound beyond a perad venture in prin- ciple — 1 do not believe that such a step would be wise. Banking is a development; it is the result of evolution; and each of the great commercial nations has its own system of banking which is still in the process of evolution. While our movement should be in the direction of radical changes, the movement itself should not be radical, so that what may be proposed may be tested and gradually adjusted to the vast and complicated factors in- volved in our commerce and banking. 23 SECURED CURRENCY IS INELASTIC. That any system of secured currency does lack and must lack all the elements of elasticity I presume no one here doubts. If, however, there are those who think that our system has ever responded and contracted as the demands of commerce required, they have only to consult our bank-note circulation by years and be convinced that it has practically been controlled by the nor- mal demand of money on the one hand and the profit on the bonds on the other, and has often been lowest when it ought to have been highest, ana highest when it ought to have been lowest. There is no pretense that it has been taken out every fall when the crops were to be removed and has automatically contracted when they were disposed of. It was $146,000,000 in 1865, $340,- 000.000 in 1875, $301,000,000 in 1877, $352,000,000 in 1883, and $122,000,000 m 1830. It is now about $200,000,000. A TBITLT ELASTIC CURRENCY WILL ALWAYS REFLECT LOCAL CONDITIONS AND COMMERCIAL ACTIVITY. No system of currency will ever have the quality of true elas- ticity which does not reflect commercial activity and which must pay a tax when it is idle; hence the normal demand throughout the year will be the only material factor affecting the issue. It will readily be seen why we have money panics somewhere nearly all the time and everywhere some of the time. Under a properly regulated system I think one may saf elj'' say there should never be a currency famine anywhere at any time. The great bulk of the money, the normal money, of any country, may be gold, silver, and secured currency, no one of which, nor all of which put together, is elastic. But to properly and ade- quately provide for the extra demand for money to handle crops and manufactures, to meet the disturbed conditions in commerce and the flurries in finance, somethmg more is needed and de- manded. THE NATIONAL DEBT WILL SOON BE PAID OFF OR MUST BE FUNDED. Again, it is admitted that it will not be very long before tho national debt will be paid off or much reduced. We all remem- ber what consternation there was throughout the whole country about contraction when President Harrison was paying off the national debt at the rate of about $100,000,000 a year during part 27«3 24 of his Administration. Our system had absolntely no power of self- adjustment. Some were demanding that we have State bonds for security; some suggested city bonds; some urged rail- road bonds; some sought relief in the repeal of the tax on State banks, while the bankers met at Baltimore and issued the plan bearing that name. All was confusion; all was chaos; nothing was done. Now that there has been a slight increase in our bonded indebt- edness, some talk as though it were to continue throughout eter- nity. In the light of a surplus revenue of $1,333,000,000 from 1879 to 1889, such a suggestion is idle talk, for everybody knows that if the Government were disposed to do so it could wipe out this entire debt in five years, and that to distribute the liquidation over a period of ten years would render the burden so light as not to be noticed. Nothing is more certain than the absolute necessity of some system to succeed the present one in the course of time, and nothing is more important than that there should bo an evolution in passing from one to the other and not a revolu- tion, with all its shocks, misfortunes, disasters, and ruiru lONORANCE OF TERJIS. As a preface to what I am going to say, I will venture the asser- tion that you can not mention the matter of credi£ money in any chance meeting of a dozen business men that some of them — in- deed, in most instances a majority of them— will not shrug their shoulders and think of what they may remember, if age will per- mit, or what their fathers have told them about "red-dog," '* yel- low-dog," or some other dog money, as though they had heard or read all about all kinds of money, when, as a matter of fact, all they know about it is that there really was "red-dog" money, and that the dog died. Neither the cause nor the circumstances surrounding his death seem ever to have entered their minds. But, discarding the follies of the past, let us inquire into our necessities and misfortunes with a determination of overcoming them, if possible. LOANIJfQ DEPOSITS AND LOANTK-a BANK NOTES ARE IDENTTCAl* As a preliminary but fundamental truth, I suppose all my lis- teners realize that there is not the slightest difference between a bank which has $100,000.capital and $100,000 of deposits subject to 25 check, with $75,000 of its deposits loaned out on sixtj^-day two- name paper, and $25,000 reserve, and a bank which has $100,000 capital and $100,000 of credit notes outstanding, $75,000 of which having been loaned to identically the same men as in the former case and on the same conditions — sixty-day two-name paper, with $25,000 of notes turned into cash for a reserve against the $100,000 of notes. When there are abundant deposits there will be no notes issued imder ordinary circumstances, but where there is little wealth in the form of money, but great wealth in other forms, and much money needed to develop it, there notes will be issued. CITY AND COUNTRY COMPARED. This fact can be illustrated by a comparison of the national banks of the city of Now York in 1884 having $i6,000,000 of capi- tal, with all the national banks of the State of Massachusetts, out- side of Boston, having $45,000,000 of capital. In the former the deposits amounted to $184,000,000, and the banks' circulation was but $13,200,000; while in the latter the deposits were but $45,400,- 000, and the circulation outstanding was $35,800,000 — about three times as great. SUrrOIiK SYSTKIC Again, during the operation of the Suffolk system at Boston, which was before Yankee ingenuity was crystallized into millions, and every river, stream, and rivulet was turned into a source ol wealth, the country banks had no deposits to speak of, and manj of them, considering the inconvenience of travel and the slowness of mail, were, speaking from our present facilities for both, thousands of miles away. Some of the Maine banks with an actual capital and downright honesty were, though more remote then in a business sense than California is now, issuing their notes and clearing at Boston, thus enabling the sturdy sons of that then far- off region to develop the great resources of that section. So it was with nearly all of New England; but the current redemption which the system enforced kept their money absolutely good. BANK OF FRANCE LOANS ITS NOTES. Allow me to call your attention to the condition of the Bank of France January 1, 1895. Its capital is $36,500,000, with deposits, public and private, of $103,480,000; its outstanding notes, $701,- 140.000. The amount of cash on hand is $636,980,000, showing that JBB3 26 the bills receivable taken in for the notes issued have been paid oif and the notes are still outstanding. It must not be forgotten in passing that the legal note issue, at present, of the bank is §800,000,000; but it does not seem to issue it and foolishly loan it just because it can do so. It will be observed that it had $100,000,000 still unissued. Again, it must be remembered that there is not one dollar of specific security for any part of the whole $800,000,000 issue, which is a legal tender so long as redemption is maintained. This vast issue rests upon and is protected by the bills receivable taken in exchange for the notes, or the proceeds of those bills receivable which have already been paid off. CREDIT CURREXCY IN GREAT BRITAIN. Great Britain, too, has her system of credit notes and metal method of expansion. The banks of England and Wales, outside the Bank of England, have the power to issue credit money amount- ing to £4,813,400, or about $35,000,000. But on the 1st day of January they had outstanding only $10,000,000, leaving credit money to be issued, if needed, amounting to $15,000,000. SCOTCH BANKS. The Scotch banks have an authorized issue of credit money amounting to $13,381,750, and on the 1st day of January had out- standing only $0,985,675, leaving to their credit and unissued about $7,000,000, which could be put out if conditions called for it. IRISH BANKS. The Irish banks have an authorized circulation of credit money amounting to $31,772,470, and on the 1st day of January there was issued only $15,000,000, leaving to their credit and unissued $10,772,470. From these facts is it not reasonable to conclude that the same degree of caution is exercised in issuing credit notes as in loaning the deposits of the banks? A careful comparison of the figures shows that on the 1st day of January, 1895, they had issued less than 50 per cent of their authorized credit circulation, which ag- gregates about $70,000,000. It must not De forgotten in this connection that we are now dealing with a country of vast accumulations and immense bank deposits. The prudence of the credit issues of Great Britain are 2Z4J3 27 certified to by the fact that in Scotland, the home of the system, there have never been bat three bank failures worth mentioning. HBTAJL EXPANSION OF THB BANE OF BHQL-AJ/m. In the beginning of my comment upon Great Britain I alluded to her system of metallic expansion. The position of the Bank of England is a most unique one, in that when they need more money or gold in England, London being the clearing house of the world, it is obtained by simply raising the rate of interest to a point that will attract gold from the money centers of the Continent, and against this the issuing department puts out its Bank of England notes, SUSPENSION OF THB ENGLISH BANK AOT. Notwithstanding the various facilities for meeting exigencies, the Bank of England, owing to the fact that a limit was placed upon its issuing power by the act of 1844, which it was supposed at the time would forever end all panics, suspended, as it is called over there, and the limit set aside October 25, 1847, No- vember 12, 1857, and May 12, 18G6. In February, 1861, and in May and September, 18G-1, the condition became critical also, while in 1873 the suspension of the act seemed certain for some days. By many it is now thought that it was a mistake to set a limit, for on all occasions when the emergency has arisen she has suspended the act and issued the requisite amount of money to meet the demand. OERMAN BANKINQ. At the foi-mation of the German Empire, when the financial arrangement was being adjusted, the English act of 1844 was largely followed, except in this particular power of issuing credit money, for they had learned by experience and observation of the English system that there was no limit except that set by neces- sity when the crises recur. LIMIT OF ISSUE PASSED, No limit was fixed, but rules and restraints were established to keep it down to a certain point — 885,000,000 marks, or about $100,- 000,000 of money — which was apportioned among the several banks, with the privilege of passing the limit if cash of a certain descrip- tion was held; but, having passed the limit of issue fixed without cash to cover, the only penalty was a tax of 5 per cent per annum upon the notes issued. This limit has several times been passed 2763 28 by the smaller banks, and also by the Reichs Bank itself, the in- stitution representing the Empire. This happened in the case of the Reichs Bank in December, 1881 ; in September and October, 1882; in Decern Der, 1884; in January, 1885; in December, 1886, and three times in the latter part of 1889. The overissue September 30, 1895, was $9,200,000; October 7, 1895, was $4,100,000; Decem- ber 31, 1895, was $29,400,000. On some occasions the issues were much beyond the fixed limit, and it is now certain that in several instances the German community was saved from the shock of panic and the spasm of contraction which would have been in- evitable if they had been acting under the English banking act of 1844. But nearer home, even at our very doors, we can find an apt illustration of automatic banking currency. CANADIAN SYSTEM. Canada has no mint of her own, but uses our gold pieces as her standard money. The Canadian system is founded upon the Scotch system, many of her leading citizens and most prominent bankers being of Scotch origin. The banking capital of Canada amounts to $62,196,391, or bears about the same proportion to their population that our banking capital bears to our own. The Canadian banks have the right to issue credit money to an amount equal to their paid-up and unimpaired capital, which would be $62,196,391. But, as a matter of fact, they have never exceeded $38,000,000, and the greatest expansion in any one year to move the crops was $7,000,000, while January 1, 1896, it was only $32,565,179, about one-half the limit. Each of the banks is interested in getting out its own money, and therefore is equally interested in keeping the current of re- demption running strongly all the time over the counters of all the other banks. It is a most striking fact that while we are scarcely ever out of a money panic, and consequently a currency famine, Canada does not know what either means. ALL EXPERIENCE JUSTIFIES CREDIT CURRENCY. It would seem from all these illustrations — the Suffolk system, the Bank of France, the Scotch banks, the Irish banks, the Eng- 2763 29 lish banks, the German banks, and tlie Canadian banks— we may fairly conclude that credit currency is as good as any in the world, and, indeed, in case of war, when securities often go out of sight, it is better, because resting upon sixty-day bills receivable, which are almost certain of payment without delay or loss, at least a very great portion of them. ARE WE AN INFEtllOB PEOPLE? To the man whose reply is — and this is the only answer to this array of evidence — the plan may work well in all the rest of the world but would not do for us, I desire to say that such an ad- mission is an impeachment of our civilization; a plea of guilty to the charge that we are a violent people: a confession that our pru- dence and money-saving qualities are overshadowed by those of every other nation (which is not true); a declaration that we are unfit for self-government, and consequently seK-control, which more than a hundred years of the most glorious history of the human race contradicts and rebukes. Would any man seriously contend that the president, cashier, or board of directors of a bank would be more foolish in loaning the notes of a bank than its deposits, when circumstances will bring them to its counter for redemption with the certainty and prompt- ness of the checks drawn against its deposits? "But," said one of the Banking and Currency Committee the other day, "such an expansion will lead to unwise speculations and all its evil consequences." What has just been said olearly shows there would be and could be no undue expansion of money calling for an immediate metal redemption any more than there is to-day. CREDIT, NOT MONEY, STARTS SPECULATIONS. Have you ever inquired into the subject of booms and financial cataclysms with a view of ascertaining what, if any, connection they have had with money — real money — money currently re- deemed? Have you ever thought it out to the last analysis and found that the increase of money has had absolutely no connection with the great speculations throughout the world during the past thirty years, but that every one of them has been due to our gam- bling instinct, encouraged by an undue expansion of credit and invariably long credit? 2763 30 Have yon ever thonght of it? There has been absolutely no connection between the per capita circulation in the United States and the various booms and consequent shrinkages. From 1865 to 1873 our circulation contracted from $20.57 per capita to $18.04 per capita. In 1885 and 1898, respectively, our circulation was $23.02 and $23.85 per capita. Increased circulation had absolutely nothing to do with the Birmingham, Dallas, Kansas City, Wichita, Omaha, Minneapolis, St. Paul, Duluth, Spokane, Seattle, Tacoma, and Los Angeles speculations and reactions; nor a thousand others in the United States and elsewhere. Increased circulation had nothing to do with the Australian bubble. Increased circulation had nothing to do with the South American gambles. Increased circulation had absolutely nothing to do with that unlimited buying of the London market, from 188G to 1890, when you could seU almost anything from a beer saloon to an undiscovered continent in that market NINETY-TWO PER CENT OF OUn BUSINESS IS DONE BY OHECKS AND DRAFTS. Now, since a system of credits in the form of checks and drafts performs over 92 per cent of our work and constitutes the vital factor in effecting nearly all our commercial exchanges, and since we have discovered that all the leading commercial nations of the world have successfully employed credit money based upon the liquid wealth of commerce, and have thereby escaped the difficui- ties and misfortunes necessarily growing out of an inelastic cur- rency, and since an erroneously supposed connection between currently redeemed credit money and credit expansion does not exist, in fact that they bear no relation whatever to each other, have we not found a remedy for our ever-recurring panics and currency famines? For these it will certainly prove a specific cure, while for our whole people a source of profit and advantage that can not be measured or comprehended because of a better distribution of the normal amount of our money and a natural, constant, and ade- quate supply at every point where it is needed to handle our prod- ucts or develop our resources. Having discovered our ills and the proper remedies, it is our task, taking into account every fact and condition, to draft a bill am 31 that will do what we have found necessary to preserve our finan- cial honor and conserve our commercial prosperity. EVTLS TO BE OBVIATED. First. We have seen our vast national banking interest, consist- ing of 3,712 institutions, with resources amounting to $3,423,629,- 343.63, and transacting a business of more than $80,000,000,000 per annum, between the rising and setting of the sun, pass from one political representative of one Administration to that of another, when our banking interests, as a matter of fact, should be free of and unaffected by political caprice or change. Second. We have found that there is a possibility of doubt about our measure of value, when it ought to be undoubted, unequivocal, uncnangeable. Third. We have found our money hoarded by banks and indi- viduals and congested in the financial centers, when confidence should take the place of fear and money seek the channels of trade. Fourth. We have found our Government with a bonded debt of $847,362,920, bearing, mainly, 4 and 5 per cent interest, when it ought to be funded into a popular loan at 2 per cent as a basis of circulation, saving over $15,000,000 annually to our people. Fifth. We have found our Government bound to redeem an unlimited amount of obligations, with no power to meet them except by taxing the people, when it ought to have no demand obligations except current expenses. Sixth. We have found our Treasury warehousing $500,000,000 of silver, coin value, when it ought to be circulating among our people. Seventh. We have found our Government a guarantor of the obligations of our banks, when it should be acting only as trustee for the note holders. Eighth. We have found eight different kinds of money in cir- culation, when there should be but two besides gold and silver. Ninth. We have found a system of currency as fixed in quantity as the stars, never varying necessarily with the months or the years according to the demand, but which may all be withdrawn to-morrow, if the bonds do not pay, when our currency should increase and decrease with the ever- varying exchanges of our wealth. In verification of this it is well to observe that during 27e3 those years of most wondrous development— from 1881 to 1890— our note issues fell from $325,000,000 to $123,000,000. Tenth. We have seen legitimate commerce and development languish because of the restraint and high rates resting upon money, when it should automatically spring into activity at a reasonable rate of interest as the demands arise and disappear when the work is done. THE PROPOSED CHANGES \rOULD PRODUCE MOST SALUTARY RESULTS. That all these difficulties may be obviated and these advantages secured without in the smallest degree disturbing public confi- dence, bringing the slightest shock to trade or commerce, or in any way affecting the finances of the Government or banking in- terests of the country, except to greatly simplify and immeasur- ably strengthen both, every frank and thoughtful man will admit after careful consideration. It has been to accomplish these objects that I have prepared this bill which I now submit to every candid thinker without ref- erence to party affiliations, confident that his judgment must at once approve its purposes and will, upon a thorough and exhaust- ive examination, adopt and advocate its principles. Appreciating the breadth and technicality of the subject, I shall venture to discuss each provision of the measure in its order and point out its purpose and effect. DISCUSSION OF THE MEASURE BY SECTIONS. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That there shall be, and there is hereby, created and established a department of finance, which shall have entire and exclusive control and supervision of all national banks, their right to take out secured circulation and issue their notes. Sec. 2. That there shall be three ministers of finance, who shall take the place of the Comptroller of the Currency and constitute a board of finance; and said board of finance shall conduct the said department of finance. That said ministers of finance shall be appointed by the President, by and with the advice and consent of the Senate, and the term of oflfice shall be for a period of twelve years, at a salary of $10,000 per annum; and said ministers shall be removed only by and with the consent of the Senate for cause stated in writing. That the term of the first three ministers shall be for twelve, eight, and four years, respectively. The minister appointed for twelve years, and his successors, shall be known as first minister of finance, and he shall pre- side at all meetings of the board of finance; and the remaining two ministers shall be known as associate ministers of finance. PRESENT LAW NOT CHANGED. These two sections refer to the same subject-matter, and while they make no material changes in the law, the effect of them would 2763 8S certainly be to take the banking interests of the conntry ont of politics, as only one minister could be appointed during each Presidential Administration. triSDOM AlfD SAFETY IN ADVISORY BOASD. Whether under the supervision of a single individual, however capable, banks have not been permitted to drift into irretrievable ruin on the one hand and often placed in the hands of receivers without warrant on the other, to the very great loss of all con- cerned, no one can ever definitely know. But inasmuch as the national banking act requires the association of at least five peis sons to form a bank, the Government has always presumed there was wisdom and safety in a consulting board as against a single individual. PRESENT CRISIS DUE TO WANT OF WISE GOUNSSXi. Indeed, it is hardly too much to assume that if we had had such a board of advisers, our present dangers might not now threaten us, for it is only after the horizon of any man is widened so that he can comprehend the needs of the entire country and his opin- ions are ripened and strengthened by that intelligence which is begotten of experience that his suggestions call for that weighty consideration which may well determine legislative action. MINISTERS SHOULD BE REMOVED FROM POLJTICALi INTLiUENCS. So long as men hold office at the will of the people or change with party succession so long will their opinions be colored by popular sentiment and influenced by prevailing prejudice, pos- sibly a most salutary influence upon the usual legislative duties, but certainly most harmful to the judicial determination of any question, a fact that the fathers of the Constitution appreciated when they protected our Supreme Court against it by a life ten- ure of office. L.ONO SBRVTCB IMPORTANT TO USEFUIiNESS. Is not the character and importance of the great department of finance of 70,000,000 people such as to make it imperative that it be removed from any possible influence springing from the waves of passion that sweep over the country during our national con- tests? Again, every man who comes into the office of Comptroller must necessarily bring with him all the prejudices of his environ- ment and the narrowness of local conditions, unless happily he 276S-3 34 has been a man of large and wide experience. It wonld be most natural for him to think that the section from which he comes is the most important one simply because he knows nothing of any- other; and until he can compare them all and view them as they actually are, treating them with equal justice, he will be compara- tively unfit to fill so great an oflice. Nor can any man, however clever, hope to arrive at a proper appreciation of all the various sections and their still more varied interests within the present term of office. Indeed, just at the iexpiration of it he has arrived at a point in information and experience where his services ought to be of some real value to the Government. WITH A LOW SALARY THE OFFICE IS A MERE STEPPING STONE TO POSITION. Nor is the present compensation of the Comptroller of the Cur- rency such as to retain any man of commanding ability longer than to develop an opportunity for his services in one of the large financial institutions of the country; and bo to-day it is little more than a stepping-stone for that purpose. This Government is entitled to and ought to have the ablest of its men in this most important department of public administration. Most important of all, because it has to do with and controls the very lifeblood of the nation's commerce and domestic trade; and if we shall rightly solve this great financial problem, there ought not to be any banks of discount to speak of operating outside of the provisions of the national-bank act. The number of institutions under the supervision of the Government will then exceed 9,000, while their assets will soon approach a ten-billion mark. Does not common prudence require that so vast an interest, affecting as it does the affairs of every individual and institution within our borders, shall not be subject to the passions of politics, to the ill health, death, or resignation of a single individual whose services may be more appreciated by some corporation than by the Gov- ernment? IMPORTANCE OF A CONTINUING BODY. The term of office in this department should be for a long period of time and should not be subjected to the caprice of any Admin- istration which may happen to come into power upon a wave of prejudice, which is invariably given to a narrow policy, and is usually deaf to the voice of reason. It is of the utmost import- tance that those in charge of the office should be a continuing body, 2763—3 35 80 that the information and traditions accumulating from year to year shall be handed down to the respective successors. Each member of the board, as he comes into it, would be steadied by those who are his associates and who have accumulated much knowledge and valuable experience, which, through conference, he can at once make his own. Create this office upon these lines, which are commensurate with its character and responsibilities, and it will call for the ablest of our men, and will retain them if the remuneration is such as to justify the aacrifice of their lives to the public service. OBQANIZATION OV BANES AND riJNBINO OP DEBT. Sbo. 3 That any national bank now doing business, or any otter flnancial Institution doing a similar business, or any number of persons may. in ac- cordance with existing law, so far as the same is consistent with this act, organize upon the following terms and conditions: If any corporation or association of persons described as aforesaid shall de- posit with the United States Government any of the United States bonda now outstanding, or any that may bs hereafter issued which, at their stated Talue as herein set forth, (a) shall be equal to the required amount of circu- lation in the respective cases specified, (6) the United States Government shall issue to said corporation, in lieu of said bonds so deposited. United States Government bonds bearing interest at the rate of 2 per cent per annum (c) equal in amount to the value thereof, both principal and interest of said new bonds being payable in gold coin, and to have the like qualities, privileges, and exemptions provided by the act approved January U. 1875. entitled "An act to provide for the resumption of specie payments*" and said new bonds shall thereupon be deposited with the United States Government, and circu- lation known as United States Government bond notes shali bo issued to said corporation n an amount equal to the new bond.«» so deposited, said United Stat<^s Government bond notes bein^ in denominations of $10 or multiples thereof. (a) That the United States Government bonds now outstanding shall be received at the following prices, to wit: 2s. reg _ Q. Mar. 95^ 4s, 1907, reg _. Q, Jan. 109i fe, 1907, coup Q. Jan. llOj 4s, 1925, reg _ Q, Feb. 120^ 4s, 1925, coup Q, Feb. 120^ 68, 1904, reg Q. Feb. 113| 5s, 1904, coup Q, Feb. 113| 6s. cur'cy, '98, reg :..J. & j. lo^j 6s, cur'cy, '99 reg J. & J. 105 4s (Cher.), 1897, reg _ March. 103 48 (Cher.). 1898. reg March. 103 4s (Cher.). 1899, reg „ _ March. 102 and that from and after the passage of this act said bonds shall be received upon the same incotne basis, respectively. (b) All banks organized under this act shall takeout for issue United States Government bond notes in proportion to their respective capital, as follows: All banks having a paid-up capital of $1,000,000 and over shall take for issue $500,000 of such notes; all banks haring a paid-up capital of $200,000 and less 8768 36 than $1,000,000 shall take for issue an amount of United States Government bond notes equa] to one-half of their respective capitals; but no one of said banks shall take for issue less than 200,000 of said notes; all banks having less than $200,000 of paid-up capital shall take for issue an amount of said United States Government bond notes equal to their respective capitals, and each bank shall pay into the United States Treasury one-fourth of 1 per cent per annum upon the notes so taken out for issue as a part of the fund to be cre- ated and known as " United States national bank note redemption fund." (c) The first one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1945. The second one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1^40. The third one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1935. The fourth one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1930. The fifth one hundred million of said 2 per cent bonds that are issued In exchange for other United States bonds shall become due in 1925. The sixth one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1920. The seventh one hundred million of said 2 per cent bonds that are issued in exchange for other United States bonds shall become due in 1915. The 2 per cent bonds that are issued in exchange for the balance of the United States bonds then outstanding shall become due in 1910. That the amount of United States Government bond notes which the banks organized under this act are required to take out for issue may be gradually reduced and retired as follows: Twenty-five per cent thereof may be retired in 1910, 25 per cent in 1915, 25 per cent in 1920, and the remaining ;i5 per cent in 1925. All other holders of United States Government bonds are hereby author^ ized and entitled to exchange the same at any time prior to January 1, 1899, for the said new 2 per cent United States Government bonds upon the in- come basis hereinbefore set forth. DOES NOT CHANGE PRESENT t.A"W. The first paragraph in this section does not in any way alter the present law under which a national bank may be organized, bnt extends to them, as well as all State banks, the privileges of this act. Banks desiring to avail themselves of the advantage of the act must take out for issue the amounts of United States Government bond notes specified for their respective capitals, having deposited with the United States Government the requisite amount of the new 2 per cent Government bonds, which may be obtained either by surrendering a proper amount of old bonds at the schedule price or legal-tender money in accordance with section 17 of this act. COMMUNITIES WITH SMALL BANKS NEED MORE NOTES. That banks of smaller capital shall be entitled to take out a greater amount of circulation in proportion to their capital is based upon the experience of banks in the past, and is intended to antio- ipate the greater needs of localities where there is little wealth in the form of money, banks are fewer, and capital invariably smaller than in the great financial centers where the capital of the banks is large and the deposits so great as to preclude the necessity for a corresponding issue of notes. NO CONTRACTION OF CURRENCY. The schedule has also been arranged with a view of preventing any possible contraction of our present currency; so that while the $346,000,000 of greenbacks are retired, they will be replaced to the last dollar with gold coin, or United States Government bond notes, which, like the greenbacks, stand upon the credit of the Government, being secured by United States Government bonds payable in gold coin. THE GREAT COMMERCIAL NATIONS HAVE SECURED THE REQUISITE AMOUNT OP GOLD. But it may be asked whether there is ample gold in the world to meet the requirements of commerce and trade. Does Great Britain want any more? No; she has $580,000,000. Does France want any more? No; since 1873 she has increased her holding from $122,500,000 to $772,000,000. Does Germany want any more? No; the Imperial Bank has accumulated $434,890,067 since 1875, and she has $675,000,000. Does Holland, Belgium, Switzerland, Denmark, Norway, or Sweden want any more? No; they have $125,000,000. Does Russia, which has increased its holdings from $119,000,000 in 1872 to $488,000,000 inl89G, wantanymore? Possibly $50,000,000; certainly not more than $100,000,000. Does Canada wantanymore? No; she has $16,000,000. Does the United States, which has increased its holdings from $135,000,000 in 1873 to $625,- 000,000 in 1896, want any more? No. The only thing that is now wanting to the United States is assurance to the world that there is not the remotest possibility of a single obligation being dishon- ored within our borders, either municipal, corporate, or personal, on account of a change in our standard of value. AMPLE GOLD IN THE BANKS AND TREASURY TO SUPPLY THE ENTIRE BANK RESERVES IN GOLD. If every national bank in the United States held its entire re- serve in gold, they would require only $315,068,321. They now have $160,723,800, and the United States Treasury holds $142,811,- 118 more, making a total between them of $303,535,008, from which 2763 38 fact it is clear that while under this bill the national banks, accord- ing to the estimates of the actuary of the United States Treasury, would be required to hold only $189,000,086, they could actually have, if they preferred to hold it if this measure were in operation, $:303,535,008, and there would still be left for the remaining banks in the United States $335,000,000 more, which would at once come from its place of hidmg if this question were taken out of the field of debate. GOLD SUPPLY. What are the probabilities of the future supply? From 1492 down to 1893, a period of four hundred years, the world produced only about $8,000,000,000 of gold, of which about $4,000,000,000 is used in the form of money. The product of the last year reached $215,000,000, an annual rate that will furnish more gold in the next forty years than the world produced in four hundred years prior to 1893. Certainly from such a showing no one of the com- mercial nations of the world will find any difi&culty in obtaining any small addition they may require to supplement their present holdings. METAL CIRCULATION DESIRABLB. Why have no denominations of bond notes lower than $10? First. Because the presence and use of the largest possible amount of metal among the people exercises a most salutary in- fluence. WORK FOR OUR SILVER. Second. We have about $500,000,000 of silver on hand, and it could be made to do the work of the one-dollar bills, amounting to $40,960,091; of the two-dollar bills, amounting to $38,348,497, and of a large portion of the five-dollar bills, amounting to $345, 168,884, or a total of $314,477,372. THE GOVERNMENT DEBT SHOULD AND MUST BE FUNDED. Why fund the national debt in long-time 2 per cent gold bonds? First. Because a very large portion of it will have to be funded in any event in the near future, as it will come due at a time and in such large blocks as to render extension necessary. Second. The debt should be evenly distributed through a long period of time, so as to relieve the people from any burdensome degree of taxation during any given year. Third. By a statement of the actuary of the Treasury Depart- 2763 39 ment prepared for me, the present annual interest charge on tho Government debt, excluding the Pacific railway bonds, amounts to $34,387,290, while the annual interest charge upon our entire debt, if funded into 2 per cent bonds, would amount to only $18,903,009.56, making an annual saving to the people of the United States of $15,484,280.44, or more than $1,250,000 per month, certainly an item well worth saving, since it would exceed $150,- 000,000 every decade— quite a sufficient reason in itself for funding the national debt. Fourth. To have our secured circulation based on so low a rat© of interest as to preclude such an appreciation in the value of the bonds as to lead banks to dispose of them and retire the notes, thus contracting the volume of money and disturbing business condi- tions. Fifth. It should be funded in gold bonds, because gold is the standard of value of the civilized world, and we can not afford to have a different standard on account of our vast commercial rela- tions with other nations. Again, if we hope to have the capital of the world flow into our country and assist us in developing our resources, the terms of our obligations must be placed beyond cavil or question. Let us now eliminate the last possible doubt with regard to it, and we shall have unlimited capital remaining permanently with us and at the lowest rates of interest in the world. THIS LIMITED LEOAL-TENDER QUALITY IS THE PRESENT LAW. Sec. 4. That said United States Government bond notes shall be a legal tender between all national banks and shall be redeemed in gold coin when presented for payment at the bank of issue. These United States Government bond notes are redeemable in gold coin at the bank of issue, and not by the Government, for the following reasons: First. The Government should not be responsible for them be- yond the proper custody of the guaranty fund and bonds secur- ing them. GOLD REDEMPTION OP BANK NOTES BY THE BANK OF ISSUE ONLY. Second. These notes, constituting the great bulk of our paper money, should be good enough to pass for their face around the entire globe, and this could only be possible by making them re- deemable in gold, the recognized money of the world. 2763 40 Third. They should be redeemable only over the counter of the bank of issue, because they are as good as gold, being secured by the gold obligations of the Government; and the expense and trouble of Government redemption would therefore be unneces- sary. Sec. 5. That at the same time that said corporation, if located in a reserve city, shall deposit United States Government bonds as aforesaid it shall also deposit with the United States Government United States legal-tender notes or gold certificates, or both, of such an amount that it, together with the gold said corporation has on hand, will equal 15 per cent of its deposits; and the United States Government shall deliver to said corporation gold coin in lieu of said legal-tender notes and said gold "certificates. Said corporation shall also deposit at the same time with the United States Government United States Treasury notes or United States silver certificates, at the option of said ministers, or both, which, with the silver coin then held by said corpo- ration, shall amount to 10 per cent of its deposits, and the United States Gov- ernment shall deliver to said corporation in lieu thereof silver coin of an equal amount; and said legal-tender notes, gold certificates. Treasury notes, and silver certificates shall be thereupon canceled. Said corporation shall thereafter keep as a reserve 25 per cent of its deposits in the following kinds of money: At least 60 per cent of said reserve shall be in gold coin, and the remaining 40 per cent of said reserve may be in silver coin or United States Government bond notes: Provided, however. That in ieu of one-half of such reserve, cash on deposit, subject to check, may be held in reserve cities. Seg. 6. That at the same time that said corporation, if located outside a reserve city, shall deposit United States Government bonds as aforesaid, it shall also deposit with the United States Government United States legal- tender notes, or gold certificates, or both, of such an amount that it, together with the gold coin said corporation has on hand, will equal 9 per cent of its deposits; and the United States Government shall deliver to said corporation gold coin in lieu of said legal-tender notes and said gold certificates. Said cor- I)oration shall also deposit at the same time with the United States Govern- ment United States Treasury notes or United States silver certificates, at the option of said ministers, or both, which, with the silver coin then held by said corporation, shall amount to 6 per cent of its deposits, and the United States Government shall deliver to said corporation in lieu thereof silver coin of an equal amount: and said legal-tender notes, gold certificates,. Treas- ury notes, and silver certificates shall be thereupon canceled. Said corpora- tion shall thereafter keep as a reserve 15 per cent of its deposits in the fol- lowing kinds of money: At least 60 per cent of said reserve shall be in gold coin, and the remaining 40 per cent of said reserve may be in silver coin or United States Government bond notes: Provided, however. That in Ueu of one-half of such reserve, cash on deposit, subject to check, may be held in reserve cities. THE GOVERNMENT SHOULD GO OUT OT THE WAREHOUSE BUSINESS. The purposes of these two sections, the first applying to banks in reserve cities, the latter to those outside, is to convert the demand obligations of the Government into gold and silver and put the metal into circulation among our people, or use it for reserves of xhe banks, so that hereafter all the reserves of the banks shall be gold and silver or an equivalent of gold. ^03 41 CONTRACTION IMPOSSIBLE. It will be apparent to the most casual observer that for every gold certificate, Treasury note, or silver certificate a corresponding amount of gold or silver will go out as they are retired, and, there- fore, that no contraction can take place on their account. It might possibly be different in the case of retiring the greenbacks; for if the Government should sell bonds and draw gold coin from the banks with which to redeem the balance of the greenbacks, or about $200,000,000 of them, after allowing for the $146,000,000 of gold now in the Treasury, there would necessarily result a con- siderable contraction. But this would not be necessary, and it would not be done, for the schedule which determines the issue of the banks will give us $435,000,000 of United States Government bond notes, or $200,000,000 more than we now have of national- bank circulation, the amount now being $234,000,000. OOL.D IN BANKS AND GOLD REQUIRED. The actual amount of gold that all the national banks would require if 60 per cent of their reserves were held in gold, as re- quired by this bill would, according to the estimate of the actuary of the Treasury, reach only $189,000,986. But the national banks now hold $160,723,890; therefore the Government would not be called upon to sell any bonds for coin, but would exchange a large amount of them, about $200,000,000, for greenbacks under section 17 of this act. IN FUNDING THE DEBT AND RETIRING THE GREENBACKS THE NET GAIN TO THE GOVERNMENT WILL BE $11,484,280 PER ANNUM, Here we may probablj^ be met by that common objection of the politician that the people are unwilling to exchange this non- interest-bearing currency, amounting to $200,000,000, for $200,- 000,000 of 2 per cent bonds. We have already shown that the Government would save more than $15,000,000 annually by fund- ing the debt, from which, if we deduct $4,000,000 on account of interest on the $200,000,000 of bonds to be issued for the redemp- tion of the greenbacks, we shall still have a net annual gain of $11,484,280.44, or nearly $1,000,000 per month. But should we gain nothing by the transaction, do we want to keep the green- backs out any longer, considering the danger and expense of doing so? 87» €2 DANGER OF DEMAND OBLIGATIONS. Of the danger to which they constantly subject us we have all now become aware. Of the great expense incurred in maintain- ing them Hon. James H. Eckels, Comptroller of the Currency, has advised us in his report for 1896, page 106, where the chief of the loan and currency division of the Treasury Department fur- nishes the following detailed statement: COST TO THE GOVERNMENT OF MAINTAINING THE GREENBACKS. Cost of the gold reserve, inclttding liability for principal of bonds sold and interest thereon to their maturity. Principal of bonds sold for resumption purposes: 1877 and 1878 $95,500,000 1894 100.000,000 1895 62.315.400 1896 , 100.000.000 Total principal 357,815,400 Interest at 4 per cent on the average amount of the free gold in the Treasury from January 1, 1879, to January 1, 1895 93.440,000 451,256.400 Interest from January 1, 1895, to July 1, 1907, on $95,500,000 4 per cent bonds of 1907 47,750,000 Interest from January 1, 1895, to February 1, 1904, on $100,000,000 5 per cent bonds 45,416,666 Interest from February 1, 1895, to February 1, 1925. on $62,315,400 4 per cent bonds 74,778,480 Interest from February 1, 1896, to February 1, 1925, on $100,000,000 4 per cent bonds 116.000,000 Total cost, including liability, except United States notes outstanding 7»>.20p,546 Add amount of United States notes still outstanding 346.681.016 Total cost and liability 1,081,881,563 If the United States notes had been funded on the 1st day of January, 1879, into the thirty -year 4 per cent bonds of 1907, then being sold, the total cost to the Government therefor, including interest from January 1, 1879, to July 1, 1907, would be as follows: Principal of bonds $346,681,000 Interest from January 1, 1879, to July 1, 1907 395.216.340 741.897,340 Difference in favor of converting the United States notes into bonds 339,984,222 GOVERNMENT ISSUES HAVE BEEN DISCARDED BY ALL. THE LEADING NATIONS OF THE WORLD, The experience of all nations has demonstrated the fact that government issues of credit currency are the most expensive and dangerous form of money; therefore such issues have been retired 2763 43 and the United States Government is left in the grotesque com- pany of India, Italy, Japan, and Russia. Sec. 7. That the United States Government shall not pay out or reissue any United States legal-tender notes or gold certificates from and after the 1st day of January, 1898, but the same when received shall be canceled and destroyed; and further, that the United States Government shall not pay out, issue, or reissue any United States Treasury notes or silver certificates from and after the 1st day of January, 1899, but the same when received shall be canceled and destroyed. The preceding section fixes the dates when the Government shall begin to cancel any of its demand obligations as fast as they may come into its possession, but the time is postponed so that the process may be gradual and the effect unobserved, the banking interests of the country having already adjusted themselves along the lines laid down in this measure. PROVISIONS FOR CREDIT CURRENOT. Sec. 8. That any corporation organized under this act may. with the per- naission and under the supervision and control of the board of finance, issue its own circulation, which shall be furnished by the United States Govern- ment and be known as United States national-bank notes. Said United States national-bank notes shall be issued in denominations of $10 and multiples thereof, and shall be a first lien upon the assets of the bank issuing the same, and also upon the liability of the stockholders, and may be issued only in the following manner and upon the following conditions: First. Every bank Issuing United States national-bank notes shall at all times maintain against the amount of such notes outstanding a reserve cor- responding to that required against its deposits. Second. Any bank that shall have complied with this law may, with the consent and under the supervision and control of the board of finance, issue an amount of United States national- bank notes equal to 20 per cent or one- fifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be outstanding at any time a tax at the rate of 1 per cent per annum. Third. Said bank may issue a second amount of such notes equal to 20 per cent or one-fifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be outstanding at any time a tax at the rate of 2 per cent per annum. Fourth. Said bank may issue a third amount of notes equal to 20 per cent or one-fifth of its paid-up and unimpaired capital, and shall pay upon such an amount thereof as may be outstanding at any time a tax at the rate of 3 per cent per annum. Fifth. Said bank may issue a fourth amount of notes equal to 30 per cent of its oaid-up and unimpaired capital, and shall pay upon such an amount thereof as may be outstanding at any time a tax at the rate of 4 per cent per annunx Sixth. Said bank may issue a fifth amount of notes, equal to 20 per cent or one-fifth of its paid-up and unimpaired capital and shall pay upon such an amount thereof as may be outstanding at any time a tax at the rate of 5 per cent per annum. i. Seventh. If the amount of United States national -bank notes issued by any bank shall exceed at any time the paid-up and animpaired capital of said 27(i3 u bank, a tax at the rate of 10 per cent per annum shall bo paid by said bank on such excess. Eighth. That said ministers of finance are hereby authorized and em- powered to suspend one-half of said tax upon any one or all of the said sev- eral issues of United States national- bank notes at any time after 1910, and at any time after 1930 said ministers of finance are further authorized and em- powered to suspend any portion of the tax then remaining except the 10 per cent referred to in paragraph 7. ADVANTAGES TO NEWER SECTIONS OF OUR COUNTRY. That great injustice and immeasurable injury is being done to those portions of the United States which are only partially devel- oped, either because of their newness or of adverse conditions such as have prevailed in the South for a quarter of a century by not furnishing them ample money with which to handle their prod- ucts, no one who has investigated the subject will deny. ANYTHING FOR RELIEF. The undoubted injustice and the unquestioned injury prevailing in all those sections are the sole causes of the intense feeling which exists there and is impelling the people to seize upon anything that promises relief, even the free coinage of silver, although it can be demonstrated that it would only make matters still worse. But what else can they do when nothing better is offered to them and they are convinced that their conditions could not possibly be worse? The American people are confronted with a desperate movement upon the part of a very large portion of our citizens. Shall we solve the problem and give them a fair and equal show with the balance of the country, or shall we allow this storm to gather and ■weep over us with all its devastating consequences? WINDOM ON ELASTIC CURRENCY. In his report for 1890 Secretary Windom well said: In my judgment the gravest defect in our present financial system is its lack of elasticity . * * * The demand for money in this country is so irreg- ular that an amount of circulation which will be ample during ten montlis of the year will frequently prove so deficient during the other two months as to cause stringency and commercial disaster. The crops of the country have reached proportions so immense that their movement to market in August and September annually causes a dangerous absorption of money. The lack of a sufficient supply to meet the increased demands during those months may entail heavy losses upon the agricultural as well as upon other business interests. The truth of Secretary Windom 's statement is most vividly por- trayed in the following diagram, which proves beyond all question of doubt that there is absolutely no relation between our currency 45 and the movement of our crops and the commercial and trade waves of our country. The following diagrams were prepared by Mr. L. Carroll Root, of New York: 5 ? S ? 1 1 1 10 CO i 8 \ \ \ I s i i \ \ V \ \ \ i : I 1 1 1 Oi CO i I i i i < a i 2 i 6 ^ 1 1 1 i • / /J 1 5 § S S ? 1 1 Tlie data given in the heavy line are the statements of outstanding circula- tion ordinarily quoted. They include, however, notes still held in the vaults and tills of the issuing bank; and, to the extent that this amount varies at different seasons of the year, this puts the circulation on a different basis from the others described, and thus vitiates comparison. Fortunately we have the required data given on the same basis as in the other systems for the five dates in each year for which reports are made to the Comptroller of the Currency. This information is platted on the diagram in the broken Hne and is such as to indicate that even if we had similar figures for weekly or monthly periods the elasticity shown would not be materially greater. 2763 46 First. It will be observed that the movements of currency in 1894 and 1895, what little there was, bore no relation to each other; that is, the slight increase in amount of currency in 1895 having no counterpart in the corresponding months of 1894. Second. It will be observed that there was practically no varia- tion in the amount of national-bank notes (see heavy line) during the twelve months of 1894, while an actual response of currency to trade demands would have sent the line indicating the demand in the months of August, September, and October, up to the 125 mark, if indeed not beyond the very limits of the chart itself. CDRRSINCT MOVKMKXT CONTRADICTING NATURAL. LAW. Third. It will be observed that the increase of circulation in 1895 came at a time when it was not required by any demand of trade, viz, from April to July, when indeed it should be approach- ing the lowest limit, barring the simple element of quarterly div- idends payable July I. What, then, was the cause of this slight increase in circulation? Is it not clearly explained by the fact that just at that time the bond syndicate was being formed and the United States bonds were selling at a price at which circulation could once more be taken out at a profit, even if trade did not demand it. And yet, when the crying demands of the cotton and grain growers, the stock raisers, and the manufacturers como from every section of our immense domain, asking for hundreds of millions with which to handle their products, there is abso- lutely no way under our present system of currency of increasing it to the extent of a single dollar. UtUted States national banka. At the close of — 1894. Circulation. Per cent. Circulation. Per cent. January ......... February March April May June July Aug'ust September . October November . December $207,862,107 207, 479, 520 207,87.5.695 207.833.(J32 207.245.019 207.a53.244 207.5;W,(H)6 207.592.215 207. 564, 458 207.565.090 206. 686. 337 206. 605. 710 101.4 101.2 101.4 101.4 101.1 101.1 101.2 101.3 101. 3 101.3 100.8 loas $2a5,297,5n 20,5,043.6.51 207.541,211 209.719,850 211,478,716 211,691,035 211,372.045 212,3;}9.200 212.851,934 213.887,630 213. 960. 598 213,716,873 100 100 101 3 102.3 103.1 103.2 103 1 103.5 103.8 104.3 104.4 loi.8 47 United States national banfcs— Continued. Date. Exclusive of bank's own notes on hand. Circulation. Per cent. December, 1893.. February. 1801 . . May, 1894 July. 1894 October. 1894.... December, 1894. . March, 1895 May, 188, 2«I9. 211. .581.130 882.833 514.419 984. 5at 370, 704 391.327 4^]().B23 028.806 480, 399 066.813 766.713 889,750 102.8 101.5 100.7 100 100.6 100.7 100.2 102.5 103.2 104.5 105.4 106.4 The currency systems of all the leading nations stand out in most striking contrast with those rigid conditions from which onr producers «H?e suffering incalculable loss. The following dia- grams and tabulated statements clearly indicate in what months of the year the demand for currency is greatest in the various countries, and precisely what it is at all times, because it corre- sponds with more or less exactness, according to the degree of elasticity, to the ever- varying requirements of production and transportation. For a clearer understanding and better appreciation of each illustration, the main features and peculiar characteristics of each system will be pointed out. Since there is no country in which crop conditions are so like our own as Canada, attention is first called to the currency movements there, where there is the fullest play of expansion and contraction, as demonstrated by the fact that at no time has the amount issued approached the maxi- mum limit. CREDIT CURRENCY IN CANADA. Under the Canadian law, bank charters are granted only where the subscribed capital reaches $500,000, of which at least $350,000 must be paid up. The banks may establish branches and issue and reissue notes to the amount of their paid-up and unimpaired capital. These notes are a first lien upon the assets of the respec- tive banks, but are not a legal tender. They are issued in denomi- nations of $5 or multiples thereof and payable to bearer on de- mand, and intended for circulation. The paid-up capital of the Canadian banks now amounts to $62,156,255, and yet the note issue averages only about $30,000,000, and has never exceeded $38,000,000. The highest point of their issue is invariably reached 2763 48 in October of each year, when the crops are being moved, as indi- cated by the following diagram, covering the years 1894 and 1895, 5 § S S S 1 1 "s '" " 1 o <: 8 ^^ rl ^ n ^ 5 } > i s 5 J 8 ^--^ 1 y 1 < t w e >* J? '^ ■^ <• K Z z < 1 — CI "1 1 4 > i s I \ S § 5 2 2 S 1 Canadian banks. [38 banks.] 1894. Circula- tion. Per cent. 1 1895. Circula- tion. Per cent. $30,571,375 30,603,267 30,702.607 29,996,472 28,467,718 30,254,1.59 29,801,772 30,270,366 33,3.55,156 34,516,651 33,076,868 32,375,630 107.6 107.8 108.1 105.6 100.2 106.5 104.9 106.6 116 121.5 116.5 114 January 31 $38,917,276 28,815,434 29,414,796 29, 152. 152 28, 429, 134 30,106,578 29,738.115 30.737,622 32,774,442 34,671,028 34,362,746 33,565,179 101.8 February 28 March 31 101.5 March 31 103.6 April 30 April 30 May 31 102.6 May 31 100 June 30 June 30 106 July 31 July 31 104 7 August 31.. Augusts! 108.3 September 30 October 31 September 30 October 31 115.4 122.1 November30 December 31 November 30 December 31 119.5 114.7 2763 49 CREDIT CURRENCY IN SCOTLAND. Since the Canadian banking system was founded largely npoii the Scotch, it is most fit that attention should be directed next to the banks of Scotland. Banking in Scotland began in 1695, more than two hundred 5 §- S 2 s i 1 o 1 < 5 ^^ o a? \ > 21 i < ••^ S ) s 1 o 0 25.45.5,050 25.380.045 25, 719. 700 25.530.210 25.257.935 25.509.470 26.363.260 26.(X)6.545 25.776.975 25.430,180 25.78:3.310 25.508.575 25.44:3.915 25.111.430 25.015.810 25.2.57.070 25.176.705 25.325.105 25.676.480 110 10 ^ 11 108.5 17 18 108 4 34 25 107.5 31 Aug. 1 109.8 Feb. 7 109 3 14 15 108.3 21 .. 22 106 28 29 105. 7 MfiT 7 Sept. 5 107. 1 14 ^12 : 106 4 21 19 _. 26 105.2 28 106.2 At)r. 4 . Oct. 3 10 „. 17 109 8 ^ ii::::::::: 108.3 18 107 4 25 24 105 9 >r»y 2 31 107.4 ^ 9 Nov. 7 106 3 16 14 106 23 21 104.6 30. „ . 28 ,.. Dec. 5 104 2 June 6 105. 2 13 12 .. . . 104 9 20 19 105 5 27 26 107 1895. Circnlation. Per cent. 1896. Circulation. Per cent Jan. 2 £25.918.775 25,519.480 a5, 202, 515 25.015.550 24,926.845 25,119.885 24,725.820 24,629,095 24, 794, 165 25,071.110 24,893.195 24.679.400 25,287,16) 26, 123, 765 26,316.7.35 26,018.345 25,978,690 26,2;J8,675 26,213,295 25. 796, .580 25, 523, 4;50 25.840.215 26.085.835 25. 493. 685 25.as4.490 26. 101. 185 108 106.3 105 104.3 103.9 104. 7 103 102.6 103 3 104.5 103.7 102.8 105.4 108.8 109:8 108. 4 108.2 109.3 109.2 107.5 106.3 107.6 108.7 106.2 105 8 108.7 July 3 £26.309.820 26. 672, 700 26.420,710 26.244.885 26,831.660 26. 759. 640 26.436.975 26.4.57.030 26.289.815 26.556.315 26,310,950 26.2:2.5.115 25.898.520 27.113.025 26.762.935 26.523,165 26,103.565 26. 188. 740 26.2137.005 25. 907. 965 25.4439.355 25.497.595 25.815,040 25,-565,960 25. 720. 120 26,274.190 109 8 9 10 .... : 111 I 16 17 110 1 23 24 109 3 30 31 . 111 8 Feb. 6 Aug. 7 111 5 13 ^ 14 :.: 110 1 20 21 110 3 27 28 109.5 110 6 Mar. 6 Sent. 4 13 Jk:::::::: 109 6 20 109 3 27 25 107 9 Apr. 3 Oct. 2 113 6 10 111 5 17 16 110 5 24 23 108 8 May 1 30 109 1 ^ 8 Noy. 6 .. 109 3 15 13 20 107 9 22 106 1 29 27 106 2 June 5 Dec. 4 11 107.6 106 5 12 19 18 107 3 26 24 109.5 BANK OP ENGLAND COMPARED WITH OTHER ENGLISH BANKS. To bring into bolder relief the very great difference between the currency movements of banks having the power of credit ex- pansion, even though limited, and those of a bank requiring gold deposits, even with all the vast power of the Bank of England to control its supply, attention is called to the diagram and tabulated Ji763 55 statement of the joint stock banks of England, most of which are located in London and doing business under the same conditions and right by the side of the Bank of England, making the com- parison so fair and perfect in every way as to justify a most con- clusive deduction with regard to the wisdom and safety of a credit currency and the struggle the Bank of England is making against a great natural law. English joint stock banks. [London Bankers' Magazine.] 1894. Circulation. Per cent. 1894. Circulation. Per cent. Jan. 6 £1.098.126 1,0'.«.73;> 1,089.540 1,074.425 1,064.139 1.058.919 1, 0.54. 830 1,042.524 1,051.326 1,058,281 1,073.143 l,099.5a5 1,136.637 1, 142. 008 1,140,663 1, 149. 4.55 l.lt.9.068 1.163.267 1.148.349 1,109.264 1.087.872 1.049.ti.50 1.037.978 1,036.388 111.6 111.8 110.7 109.2 108.1 107.6 107.2 105.9 106.8 107.5 109.1 111.7 115.5 116.1 115.9 116.8 118.8 118.2 116.7 112.7 110.6 106.7 105 5 105.3 July 7 £1,052.132 1,035.806 1,021.128 1,008.638 1,014.173 l,0O5.a54 993.857 984,357 985,798 995,270 1,005.940 1,037.320 1,086.655 1,101.673 1,097.523 1,092.397 1,102,562 1,116.622 1,112.149 l,120.2n 1,098.687 l,057.a55 1.060.383 1,046,550 106.9 13 ^ 14 105.3 20 21 103.8 27 28 102.5 Feb. 3 Aug. 4 103.1 10 ^ 11 102.2 17 18 25 101 24 100 Mar. 3 .. .. Sent. 1 100.2 17 ^15.:::::::: 101.1 24 22 102.2 31 29 105.4 Anr. 7 Oct. 6 110.4 14 ..::. 13 111.9 21 20 111.5 28 27 111 May 5 Nov. 3 112 12 10 ii;3.5 19 17 113 26 24 113.6 JtlTlft 2 Dec. 1 111.7 16 15 107.5 23 22 107.8 80 29 106.4 1895. Circulation. Per cent. isas. Circulation. Per cent. Jan. 5 £1.054.994 1,057.846 1.040.321 1.023.970 1,023. (HO 1,015.395 1,(XX5.700 1.001.143 1,014.251 1,028. l(K) 1.043.310 1,08;}. 1.52 1.125.409 1,126.488 1,106.936 1,107.641 1.13;}. 859 1.144.689 1.141.6J)8 1.119.609 1,111.536 1,062.064 1,044.013 1,047,499 107.2 107.5 105.7 104.1 103.9 103.2 102.2 101.7 103.1 104.5 1(J6 110.1 114.4 114.5 112.5 112.6 115.2 116.3 116 113.8 112.9 107. 9 106.1 106.5 July 6 £1.060,135 1,044,298 1,017.6.58 1,008,428 1,011, 1(6 1,004.567 996.801 999.430 1,005.&50 1,002.714 1.015.887 1.042.733 1,090.758 1, 108. 722 1,104.596 1.10(J.397 1.110.181 1,126.0;}8 1. 127. 205 1,130.314 1,107.385 1.0.53.308 1.0.52.606 1,040,667 107.7 12 13.. 106.1 19 ... . 20 103.4 26 27 102. 5 Feb. 2 Aue. 3 102.8 9 ^ 17.:::.:... 102.1 16 24 101.3 23 31 101.6 Mar. 2 21 102.3 16 101. 9 23 103.2 30 28 105. 9 Apr. 5 Oct. 5 110.8 13 12 112.7 20 19 112.3 27 26 111.8 May 4 . Nov. 2 112.8 ^ ii::::::.:: 9 114.4 18 16 114.7 25 23 114.9 June 1 30 112.5 15 Dec. 14 107 22 . 21 106.8 29 28 105.8 2763 56 IMPERIAL BANK OF GERMANY. But the Imperial Bank of Germany illustrates this principle more strikingly even than the joint-stock banks of England., That the framers of the German act were largely influenced by many of the provisions of the English bank act of 1844 there can be no doubt; but the differences are still more striking than the 5 s ? g 1 1 1 \P y s ^_^__ ' > '^^ z V ^ > i c T -->. ■ u ^v^ m 1 * \ i / IC i ^.^^ J CJi M \ 00 1 ^,— — . — ^^ »^ s ■ 5^ < a^ , -~. «^^__^ ' * ^-^ • ^ M ^ ,k f i J _,^ _5_ \ . > \ O ^^ — ' . — ^ > < o / < *\ t^ > u I JL • < rf a •^ 3 u 05 1 ^-^ o » z 00 u •-I 1 i 1 <^ -^^ i w , ■^~— ^.^^ < "•-«,. a ^v • > S y s ^ 4 ,^ r .___ 5 § S 8 1 ? J points of similarity. The German act, witn its very high order of tests for soundness, provides for a system of free banking, pure and simple, with a repressive burden in the form of a 5 per cent tax. The notes, which are not a legal tender, are issued against the general assets of the bank, which remain entirely within its con- trol, no part of them being set aside to specially secure the notes. 67 •' The law has simply provided by suitable measures that tho affairs of the banks, including its issue of notes, and the money and securities held by it, shall meet certain tests of soundness, believing that botn the ultimate solvency of the bank and the prompt payment of its circulation are thus made secure.'* (Dun- bar, Theory and History of Banking, 195.) AUTHORIZED CIRCULATION. It fixed a limit of authorized circulation requiring a reserve of one-third in cash or its equivalent, and that the other two-thirds should be covered, by two-name paper running ninety days or less, and that all notes issued beyond the limit so fixed should be covered by .cash. However, observing that the want of elasticity 2763 58 had proven a constant danger to the Bank of England, the act provides that should the Imperial Bank issue its notes in excess of the limit and without covering the same with gold coin, it should simply pay interest on the excess of its notes at the rate of 5 per cent per annum. NOTE ISSUES EXCEEDING THE LIMIT, The act was passed in 1875, and the first issue of its notes sub- ject to the tax occurred in December, 1881, arid afterwards in the following years: September and October, 1882; December. 1886; in the latter part of 1889 (when the excess reached $26,000,000); in 1890, 1892, and 1893. The note issues of the bank December 31, 1894, amounted to 1,835,545.820 marks ($458,886,455), while the balance due creditors in accounts current amounted to 434.742,297.44 marks ($108,685,- 474.38), and the deposits without interest were only 556,669.70 marks ($139,167.42). IMPERIAL BANK LOANS ITS NOTES INSTEAD OF DEPOSITS. It should be observed that for every dollar of deposits without interest at the Imperial Bank of Germany $3,298 of the bank's notes are outstanding, making it essentially a bank of note issues as distinguished from a bank of deposit; nor does the Imperial Bank of Germany stand alone in this respect among all the great banks of the world, for the Bank of France belongs distinctly to the same class, as we shall now see. [Please compare this with the United States National Bank Diagram.] Bank of Germany. 1894. Circulation. Per cent. 1894. Circulation. Per cent. Jan. 7 15 Marks. 1.072,(555.000 1,014,231,000 96(J,()71,(X)0 953,172,089,(KX) 998.004.0(X) 980, 281. (XX) 966.406.0(K) 951,45)9.010 97.5. 346. OIK) 9(54.925.000 962. 182, (KX) 973. iy7,0(X) 1. 126.4(K).00() 1. 115.925.0(K) 1.058. 872. OtK) l,0;}().9Ol.00() 1.078, 856, 0(K) l.062.6;59.(XX) l.a52.787.0O0 1.036. 503. 0(K) 1.064. 627, CKX) 1.040. 868. (MXI 1,038. 828. (XK) 1,079. 68-2. 0(K) 1,211,232,000 118.7 114 23 23 109 5 31 - - 31 Aug. 7 111 8 Feb. 7 109 8 15 ^ 15 108 2 23 23 106 5 28 31 Sept. 7 109 2 TVTnr 7 . 108 15 ^15 107 6 23 23 109 31 Apr. 7 30 Oct 7 126.2 125 ^ 15 15 23 Nov.^h:::::::: 15 23 ^ 30 Dec. 7 15 23 31. 118 5 23 115 4 30 Mav 7 120.8 119 ^ IS.::.::::: 117.9 23 116 31 119 2 June 7 . - 116 5 15 116 3 23 120 9 30 135 6 2763 59 Banh of Germany— Continued. 1895. Circulation. Per cent. 1895. Circulation. Per cent. Jan 7 Marks. 1,164,040.000 1,101, 472. 0(tO 1,052. 922. (HtO 1, 0,55. 61 14, 0( to 1,024,074.000 998, 4.50.0; 10 968,210.000 984.088.0(K) 980. 813. (MH) 97:}, .571. 000 99:}.27;J.0(K) 1, 1.57,191, OiKt l,i;}0. 181,000 1,069. 673. 0< to l,041.9:}8.000 l,095.7:i5.000 1.074.3(11.000 1,(151, 243, (KIO 1.027, 210. (XK) 1,060.031,000 1,048.129,000 l,0.-)4.5;-)7,0OO 1.069.291.000 1,227.712,000 130 123. 3 117.9 118.2 114.6 111.8 108. 4 110.2 109.8 109 111.2 129.5 126.5 119.8 116.6 122.7 120. 3 117.7 115 118.7 117.4 118 119.7 137.4 July 7 Marks. 1.186.459,000 1.126.670.000 1,076, 758, »)0 1,09:}, 49.5. 000 1.076,173,000 1, 0.57, 6;}9, 000 1,040,681.000 1,073. 886, (X)0 1.0ol,.5;}6,000 1,059.9J)2.000 1.079. 82:3. (XK) 1,282,764.000 1.244, 93:}, (KK) l,176.7a5,000 1.148.707,000 1,192, 095, 000 1,161.5:}0.000 1.141.619.000 1.117,608.000 1.148.755.000 1.093, 7:34, 0(X) 1.087,877,000 1.135.181,000 1,320,089,000 132.8 15 23 31 Feb. 7. -.....- 15 ^ is:.:::::.: 23 31 Aug. 7 15 23 126 3 120.6 122.4 120.5 118.4 23 116.5 28 31 ^-'•J::::::::: 23..- 30 Oct. 7 120.2 Mar. 7 118.9 15 118.7 2:3 .. 120.9 31 Apr. 7 15 143.6 139.4 15 131.8 Zi 30 May 7 15 23 31 June 7 15 23 30 23 31 Nov. 7 15 23 30 Dec. 7 15 23 31 128.6 l;33.4 130.1 127.8 125.1 128.6 122.5 121.8 127.1 147.8 BANK OF FBANCB. The Bank of France differs in its organization from both that of Germany and England. Its capital is 183,000,000 francs ($36,- 500,000) . and its note-issue privilege is fixed at the enormous figure of 4,000,000,000 francs ($800,000,000). There is no law determin- ing how much specie or security of any kind shall be held against the notes outstanding which are a legal tender so long as the bank maintains specie redemption of them. The notes outstanding January 1, 1895, amounted to 3,679,215,530 francs ($735,843,041), while the deposits, public and private, were only 633.988,983 francs (§186,597,796). But the cash on hand was 3,304,835,974 francs ($660,567,195), from which it is clearly evident that the cash was the proceeds of notes issued and still outstanding and was not made up of deposits. Do not the conditions and practices of these two last great banks establish beyond question in the minds of every frank man the fundamental truth that there is not the slightest difference between loaning out the notes of a bank and loaning out any deposits it may have? All the notes are just as liable to be presented at the same moment of time as the deposits are to be drawn during a single hour of a day, and no more so. There are certain conditions that make the deposits in the bank safe. There are also certain conditions that will make note issues 2763 60 sound, and the most important condition, and I ought to say the essential counterpart of note issues, is current redemption in gold coin or its equivalent. Bank of France. , 1894. Circulation. Per cent. 1894. Circulation. Per cent. Francs. 3,615,2(X),000 3,594,200,000 3,613,700,000 3,568,100,000 3,611.400,000 3,543,900,000 3,531,100,000 3,487,700,000 3,529,500,000 3,510,000,000 3,510,200,000 3,464,10u,000 3,455,800,000 3,518,800,0(X) 3,530,900,000 3,515,400,000 3,472,900,000 3,588,800,000 3,512,000,000 3,482,700,000 3,438,500,000 3,537,000,000 3,440,100.0;)0 3,419,600,000 3,390,100,000 3,399,400,000 103.5 107.8 108.4 107 108.3 106.3 105. 9 104.6 105.9 105.3 ia5.3 las.o 103. 7 105.6 105.9 ia5.5 104. 1 107.7 105.4 104.5 103.2 106.1 103.2 102.6 101.7 102 July 4 Francs. 3,473.400,000 3,480,800,0(X) 3,4.55,800,000 3,412,800,000 3,453.000,0(X) 3,382,100,000 3,367,000,000 3,325,400,000 3, 366, 400, (XM) 3,365,600,000 3,369,700,0(X) 3, 376, 51)0, (XX) 3.380,600.000 3,457,900,000 3,471,700,000 3, 493, 200, (HX) 3,455,400,000 3,531,700,000 3,494,000,000 3, 509, 900. OCX) 3,462,400,000 3,5053,700,000 3,479,500,000 3,445,700,000 3,458.500,000 3,483,800,000 104.3 10 ^11 18 104.4 17 103 7 24 25 102.4 31 Aug. 1 103 6 Feb 7 8 — 101 5 14 14 101 21 22 100 28 29 101 Mar. 7 Sept. 5 101 14 ^ 12 101.1 21 19 101 3 28 26 101.4 Adt. 4 Oct. 3 103.7 ^ 11 10 104 1 18 17 104.8 25 . . 24 103.7 May 2 9 31 Nov. 7 106 104.8 16 U 105 3 23 21 103.9 30 28 105.1 June 6 Dec. 5 104 4 13 12 103.4 20 19 103.8 27.. 38 104 5 1895. Circulation. Per cent. 1895. Circulation. Per cent. Jan. 3 9 Francs. 3,681,500,000 3,637,200,000 3,659,600,000 3,632,600,000 3,751,800,u00 3,634,100,000 3,600,900,000 3,579,600,000 3,678,100,000 3,606,400,000 3,595,700,000 3,572,200,000 3,576,900,000 3,626,500,000 3,642,400,000 3,624,300,000 3,590,900,000 3,628,500,000 3,568.800,000 3,550,500,000 3,512,200,000 3,549,000,000 3,519.100,000 3, 496. 500, OCX) 3,474,100,000 3,463,200,000 110.5 109,1 109.8 109 113.6 109 108 107.4 110.4 108.1 107.9 107.1 107.3 108.8 109.3 108.7 107.7 108.9 107 106.5 105.3 106.5 105.6 104.9 104.2 103.9 July 3 10 Francs. 3,533,600,000 3,500.400,CX10 3.497,500,000 3,424,81)0.000 3,475,500,(K)0 3,404,500,000 3,379,400,000 3,3;34,100,000 3,342,800,000 3,375,800,000 3, 362, 000, (XX) 3,3;)3,100,000 3,365,800,000 3,488,6(X),0CX) 3,486,800,000 3, 522, 600, OCX) 3,483,900,000 3,628,7(X),000 3,533,600,000 3,520,600,000 3,495,200,000 3,508.600,000 3,505.800,000 3,473,900,000 3,474.600,000 3,486,400,000 105.7 105 3 16 17 24 104 9 23 102 7 30 31 104 3 Feb. 6 ^"^-il 102 1 13 .. 101 4 20 21 ICX) 27 28 Sept. 4 100 3 Mar. 6 101 3 13 ^ i*::::::::: 100 9 20 18 .. 100 9 27 25 101 Apr. 3 Oct. 2 104 7 ^ 10 9 104 6 17 16 105 7 24 23 104 5 May 1 30 Nov. 6 108 9 ^ 8 106 15 . 13 105 6 22 29 20 37 104.9 105 3 June 5 Dec. 4 105 3 12 11 104.3 19 36. . 18 36 104.3 104 6 NOTE ISSUES OF SMALL. BANKS. If, then, it is as sound in principle to issue notes as to take de- posits, it is as safe to permit a small bank to issue its notes as to g7B3 61 take deposits, therefore the objection must be made to the small banks' power to issue notes on broader grounds than its unwisdom in general, the objection being equally good to the same small banks accepting deposits and becoming responsible for them. But is not the stor^^ of all those little banks which served the people of New England so well under the Suffolk system, by issuing their notes m ? < > ;> ^1 at a time when the people of New England had no money to de- posit in the banks, as well as the story of the Scotch banks, cover- ing a period of one hundred and fifty years, issuing their notes when the people of Scotland had no money to deposit, and yet en- joyed a large use of the notes which the banks issued— a full an- swer to a mere opinion without a fact to rest upon? 2763 62 KTEW HAMPSHIRE BANKS UNDER THE SUFFOLK STSTEM. For a thorough understanding and a proper appreciation of what was done under the "Suffolk system," I submit a statement of the conditions of the banks of the State of New Hampshire on the first Monday in June, 1860. [For statement, see page 64.] It will be observed in examining this statement that while the capital was $4,991,000, the deposits were only $1,211,551.88, and yet the notes issued by the banks amounted to $3,117,444, and the amount of gold on hand (for specie then meant gold) was only $253,496.35, or only 5| per cent of the notes outstanding and depos- its combined. It must be remembered in this connection that all the notes cleared through the "Suffolk system " were selling at. a premium in all parts of the United States, and therefore the people of New Hampshire actually enjoyed the use of the amount of the notes issued, $3,117,444, or nearly three times the amount of the deposits, and that the notes served identically the same purpose that the same amount of deposits would have done. CAPACITY OF OUR PRESENT BANKS OPERATING UNDER A SIMILAR LAW. Comparing what the banks of New Hampshire then did with what some of our States might do to-day under the provisions of this bill, it will be found that if the money were demanded and the credit of those wishing to borrow were good, the banks of Vir- ginia, out of their own resources, without borrowing money in New York or any other money center, could furnish her people with $12,217,416; the banks of Georgia could furnish her people with $16,548,905; the banks of Mississippi could furnish her peo- ple with $4,521,325; the banks of Texas could furnish her people with $28,678,850; the banks of Iowa could furnish her people with $43,156,321; ttie banks of South Dakota could furnish her people with $4,696,164; the banks of the State of Washington could fur- nish her people with $17,438,200; the banks of California could furnish her people with $59,800,205, and so on through the entire list of States. But I will content myself with representative States in different sections of the country. That this could be done with absolute protection to the note holders and entire safety to the banks is verified by the experience of the banks included in the " Suffolk system." EXPANSION OF CURRENCY UNDER THE SUFFOLK SYSTEM AND COST OP REDEMPTION. " The circulation of the New England banks in 1858 was less than $40,000,000, and the redemptions for that year through the Suffolk S7(t3 63 Bank were $400,000,000. Every note, therefore, on the average, passed through the redemption agency ten times a year, or a little less often than once a month . This frequency of redemption not only- tested the solvency of the banks by the ultimate test of a banking currency, but it kept the circulation constantly adjusted to busi- ness conditions. The redemptions through the Suffolk agency were $76,248,000 in 1834 and increased to $105,457,000 in 1837. There were fluctuations during the period of specie suspension, but the redemptions increased progressively to §137,000,000 in 1845, $230,000,000 in 1850, and $341,000,000 in 1855, until they reached their maximum of §400,000,000 in 1858. The expenses of carrying on the redemption agency reached a maximum of $40,000 in 1858, making an average expense of 10 cents per $1,000 (or one one-hun- dredth of 1 per cent, or one- tenth of 1 per cent per annum). The suspension of specie payments by the banks of the counti-y at the close of 18(51, as the result of Secretary Chase s issue of Govern- ment demand notes, arrested the regularity of redemptions through the Suffolk system, and was superseded before resumption by the national banking system. The Suffolk system was never sus- tained by formal law, but it maintained New England bank cur- rency for a generation at a par with gold, and prevented any losses to note holders larger than a fraction of 1 per cent of the entire volume of circulation." In the face of all this evidence I do not believe that anyone will have the hardihood to deny the safety and wisdom of ingrafting upon our banking system this right of note issue, safeguarded in the outset as this bill provides. GRADUAL ADOPTION. It will be observed that precaution has been taken to replace all of the United States notes with gold and United States Govern- ment bond notes, so that no part of our present money shall be displaced by bank notes until the system has been fully tried in supplj'ing the extra amount of circulation that may be required to move the crops or products in every part of the country, or meet any monetary crisis. Since, then, the money in circulation to-day, if properly distributed, would approximately meet the normal demand, the introduction of this system into our financial operations must necessarily come gradually, and will also be steadied by the graduated tax, and, in addition, be under the con- stant supervision of the ministers of finance. 27t)3 84 A statement of the condition of the several banJcs in New Hampshire as they and 18, chapter IW, of the revised statutes of Name of bank and place of business. Amoskeag, Manchester Ashuelot, Keene Bank of New Hampshire, Portsmouth... Bank of Lebanon, Lebanon Belknap County, Laconia Cochecho. Dover City, Manchester Claremont, Claremont Citizens', Sanbornton Connecticut River, Charlestown Cheshire, Keene Cheshire County, Keene Carroll County, Sandwich Derry, Derry Dover, Dover — Farmington, Farmington Francestown, Francestown Farmers and Mechanics,' Rochester Granite State, Exeter Great Falls. Somersworth Indian Head, Nashua Lake, "Wolfboro Langdon. Dover Mechanicks', Concord ._ Merrimack County, Concord...... Manchester, Manchester Mechanics and Traders', Portsmoutli... Monadnock. Jaffrey Merrimack River, Manchester Nashua, Nashua - New Ipswich, New Ipswich . .... New Market. New Market. Piscataqua Exchange, Portsmouth Pawtuckaway, Epping Pittsfield, Pittsfleld Peterboro, Peterboro Pennichuck, Nashua Pine River, Ossipee - Rochester, Rochester Rockingham, Portsmouth State Capital, Concord Salmon Falls, RoUinsford Strafford, Dover Sugar River. Newport Souhegan. Milford Somersworth. Somersworth Union, Concord Warner, Warner Weare, Hampton Falls Winchester, Winchester White Mountain, Lancaster — Total Amount of capital stock actually paid in. $200,000 100,000 150,000 100,000 80,000 100,000 150,000 100,000 50,000 100,000 100,000 100,000 50,000 60,000 100,000 75,000 60,000 60,000 100,000 150,000 150,000 75,000 100,000 100,000 80,000 125,000 141.000 50,000 150,000 125,000 100,000 60,000 200,000 50,000 50,000 50,000 100,000 50,000 80,000 200,000 150,000 50,000 120,000 50,000 100,000 100,000 100,000 50,000 50,000 100,000 50,000 4,941,000 Amount of debts due the bank se- cured by pledges of its stock. $14,300.00 None. 5,169.53 1,500.00 None. 400.00 1,150.00 3,700.00 None. None. None. None. None. 500.00 400.00 1,500.00 None. 200.00 6a5.00 4,513.25 None. 500.00 None. None. None. None. None. 4, 325. 00 None. 700.00 None, None. 600.00 None. None. 1,375.00 None. None. 1,050.00 1,500.00 None. 2,550.00 None. 580.00 3,025.00 4,950.00 None. 1,938.81 None, None. 57,585.58 Value of real estate belonging to the bank. None. $3,500.00 None. 2,800.00 None. 4,244.51 4,366.83 None. 94,373,71 None, 4,000.00 3,300.00 500.00 1,500.00 6,000.00 3,385.82 None, None. 4,000.00 3,439.74 None. 1,050.00 4,304.98 1,200.00 2,465.00 None. None. None. 3,173.37 None. 1,000.00 None. 400.00 None, 2,835.55 None, None, 500.00 1,200.00 5,000.00 None, 2,594.11 4,500.00 None. 1,276.08 None, None, None. None. 3,300.00 1,000.00 75,725.98 o On interest, h Including $2,000 in capital stock, Bank of Mutual Redemp- tion, c including $^3,000 in capital stock, Bank of Mutual Redemption, d §200 interest, in advance; $100 on interest, e Interest disbursed, f Interest ad- vanced, g Interest paid in advance, h Including §1,200 in capital stock. Bank of Mutual Redemption, i Including stock in Bank of Mutual Redemption. 3 $992.04 interest, paid in advance; $150 on interest. 2763 65 existed on the first Monday of June, 18G0, made in conformity to sections tt New Hampshire, approved December 23, 181*2. Amount of all debts Amount of all debts due to the bank. due from directors, either as principal or sure- ties, speci- fying: whether on inter- est or otherwise. Amount of specie in the vault. Amount of bills of other banks on hand, and checks. Amount of deposits in the bank. Amount of deposits in other banks for the re- demption ofitsbills. Amoxmt of the bills of the bank then in circu- lation. $344,273.85 $3,560.00 $5,999.79 $5,883.00 $49,984.76 $38,687.26 $133,829 149,913.03 a 3, 100. 00 4,339.85 4,289.00 14,212.44 22,000.75 61,045 230,340.65 2,119.29 9,194.33 3,540.39 43,804.33 6, 453. 63 44,133 168,44(1.43 a 500. 00 15,331.30 1,535.00 15,831.63 34,874.69 89,745 136,303.46 a 310. 00 4,671.04 2,536.95 13,531.55 13,531.55 76,554 170,019.08 a 251. 71 2,556.a3 2,169.00 36,684.70 611,330.03 41,273 210.383.95 850.00 1,694.61 1,900.00 13,330.81 27 013.06 72,227 180,697.33 a 355. 00 4,730.85 1,168.00 22,876.40 c9,191.28 64,000 94,373.71 d300.00 2,373.03 1,635.50 10,501,87 14, 914. 10 47,563 161,888.00 c 3, 050. 00 4,100.00 400.00 6,316.18 2,840.00 50,316 173,438.30 4,339.50 5,035.00 21,014.22 14,139.39 69,681 170,570.41 "/'I'iso.'oo' 5,213.35 1,070.33 19,918.20 10,500.43 67,616 75,350.09 2,542.27 3,i;i3.18 3,839.00 73.00 6,443.03 35,258 95,767.87 ^1,200.00 3,753.47 1,697.00 9,119.30 /i 5, 105. 46 34,706 181,343.41 800.00 2,770.30 2,814.00 18,038.47 16,316.60 76,429 113,3.50.37 790.00 1,939.30 561.00 11,267.23 11,690.47 38,188 111.384.99 None. 2,565.50 3,609.00 10,975.55 c 18, 398. 28 55,506 90,430.81 /1, 770. 00 2,950.15 606.00 1,874.71 ill, 272. 88 41,333 165,854.67 7 1,142.04 fcl,000.00 6,319.67 3,970.00 33,870.69 39,613.64 78,057 214,619.53 3,909.93 1,424.00 13,308.77 11,895.23 62,840 255,570.62 None. 7,413.43 3,478.00 29,491.74 c 28, 204. 06 97,338 136,270.47 g 1,105. 77 2,764.19 55.00 7,951.12 7,494.96 59,250 183,634.90 1,386.30 3,877.24 2,874.74 23,336.64 14,542.84 72, 776 221.073.45 None. 10,364.31 6,151.00 57,99().60 31,654.38 97,233 155,351.94 None. 12,813.41 7,813.37 54,067.30 44,860.04 66,630 288, 798. 64 g3,500.00 4,058.76 4,517.00 74,833.49 71,672.57 106,967 292.306.79 None. 8,703.07 2,566.53 96,087.49 19,842.13 61,063 83, 730. 87 212.50 4,528.89 1, 746. 90 11,840.53 23,106.40 44,591 235,004.67 3,347.14 4,918.00 34,288.50 c 21, 595. 33 64,636 253,304.27 None. 13,405.95 427.00 26,293.31 13,626.73 100,918 134,973.43 300. fK) 4,994.35 750. 19 10,02:3.69 36,788.81 63,378 153,713.93 f^ 1,203. 00 3,240.53 316.00 49,079.50 618,381.93 59,238 282,306.05 7,333.00 7,764.31 2,o;m.16 66,790.31 30, 733. 92 51,316 83,500.14 g 1,9.51. 66 2,643.68 2,311.34 9,195.21 Z 4, 940. 21 30,386 89,938.53 a 750. 00 2,686.59 2,800.00 5,939.15 12,237.65 43,883 98,950.31 a7(X).00 2,896.35 2,807.80 11,730.71 10,012.37 48,109 153,048.18 / 200. 00 2.806.97 4,089.00 21,316.33 24,742.23 56,509 101.180.06 m 534. .59 1,538.24 22,3.00 ll,CCe.47 64,136.00 44,119 118.674.38 None. 3,089.13 7, 46;]. 00 5,430.93 5, 575. 35 47,538 33iO, 144. 17 None. 7,093.90 945.30 47,133.35 18,276.98 67,144 245,86.3.00 a 1,750. 00 9,281.36 4,756.93 25,959.67 28,133.39 99,691 75,611.67 g 153. 00 1,849.97 935.00 ' 9,909.11 11, 935. 56 26,988 217,044.98 a 1,404.87 3,680.89 4,899.75 48, 6.54. as 38,318.S9 73, 166 94.680.66 None. 4,043.95 500.00 1,837.33 3,301.84 45,000 144,501.17 /1, 89.5. 43 3,a50.88 3,461.33 6,761.45 c 18, 818. 98 • 63,919 146,070.53 ol,316.30 2,500.88 1,511.50 9,785.49 67,019.11 40,910 203, 708. 63 3 1,506. 00 11.538.68 5.314.00 63,553.93 c 22, 855. 02 79,773 99.101.79 200.00 2,855.74 15,989.06 10,953.53 3,256.15 43,920 67, 730. 93 7,400.00 1,901.94 354. 00 2,390.13 7i 7, 407. 33 23,521 144,891.66 a 4, 777. 39 4, 718. 44 5,531.91 3,785.76 5,154.37 57,117 77,030.08 a 1,720. 50 5,550.40 6,500.30 3,110.50 5,300.80 41,080 4,330,918.68 1 65,981.61 353,498.35 150,390.97 1,311,551.88 911,199.47 3,117,444 7c S70() also as surety; $;500 on interest, in advance. I Including S1,000 capital stock, Bank of Mutual Redemption. ?u $319.19 on in t«rest: 8:215 not on interest. State of New Hampshire, Secretary of State's Office, June 15, 1S60. The abave is a true statement of the condition of the saveral banks in this State as returned to this office. Attest: THOMAS L. TULLOCK, Secretary of State. 276^-5 68 THE COXDrXTONS OF OUR COUXTRY DEMAND TT. Let us now speak of its adaptation to our conditions and needs and the advantages that must necessarily come to ns from its adoption. First. As to our condition and needs, it is to be observed that a comparison of our condition, domain, commerce, and population with those of the countries mentioned clearly establishes the fact that if an elastic currency has proved of an inestimable advan- tage to them, it would be of a still greater benefit to us. For, owing to our immense products at great distances from our finan- cial centers, more particularly in our partially developed sections, it becomes absolutely necessary that the local banks provide money by e^jpressing bills of lading and the notes of oar merchants and farmers to the great commercial centers and, borrowing money upon them, ship it out to the various sections thousands of miles away, and when our crops and products are marketed, ship the money back to the far-off centers and express the notes and other collateral home again. What wo do in this line of business is without a parallel anywhere in the civilized world. Lingering prejudice may breed pernicious and unfounded sus- picions, but experience, common sense, reason, and justice plainly point the way. IN PRIXCII'LE Af.L SECTIOXS ARE STMILAULT SITUATTO. Second. What advantages will uecessarily follow the adoption of this system in this country may be more clearly seen by some concrete illustration. Choose, if you will, the city of New Orleans, tho cotton center of the South; or Kansas City, handling the varied crops o'' the central West; or Fargo, lying in the lap of our great- est wheat region in the central North; or Seattle, struggling with the diversified products of the great Northwest; or Los Angeles, unab'e to handle the golden fruits of southern California for the want of an adequate currency; and what is true of these greater centers is etiually true of every community having banking facili- ties throughont the entire length and breadth of our country. Certainly it will not be denied that the notes and bills of lading in the banks of New Orleans, or any other city, are just as good security there for the redemption of any notes the banks them- selves may issue as they are tied ux) in bundles and held in New JS763 67 York City for the security of the currency that may bo shipped South. The amount of money used in either case would be the same; the amount of security the same. WHAT A DANK ACTUALLY DOES TO GET CUriRENCT. Then what is the difference? Lot us see. A New Orleans bank which has a capital of $500,000 ties up in a bundle $125,000, or perharps §150,000, of its best notes- and ships them to its New York correspondent, and borrows, if perchance there is no panic on, $100,000 of money, paying on an average about 6 per cent per an- num for it, and loans it out to move the cotton crop in its section. As it must pay the express two ways on the $150,000 of discounts or notes and the express two ways on the $100,000 borrowed, the producers of the South must pay anywhere from 8 to 10 per cent for the money, and should do so. considering the risks and what it costs the bank, for we must remember that the banking busi- ness pnys no great return upon the capital engaged in it. The repoit of the Comptroller of the Currency shows that the average earnings of all the national banks of the United States were only 5 per cent for the year ending March 1, 1895, and 5.4 per cent for 189G, which is a low rate, considering the risks involved in the double liability of stockholders. Some of our people seem to think tliat national banks are favored institutions. That this is a mistaken idea and that its advantages, if any, are open to all of our people alike, lot me call your atten- tion to the following facta: O.N-LY ONE-TUIUr) OF OCR BANKS ARE NATIONAL. First. If the national banks aro si)ecially favored, why do not the sev«raJ thousand trust companies, State banks, and private banking firms organize at once under that lawr There are out 8,671) national banks, while there are 5,708 State baJiks. Second. No one who is a conservative adviser ever suggests national-bank stock to the widow or aged, or those with limited means, because the risk in holding it is so great. Tliird. The shares are only $100 each, so that any frugal person may invest in the stock of a national bank if he desires to do so. Fourth. We must not forget that if banking under a national- bank charter was so mucli more profitable than any otJier busi- 2Tej ness. men of means stand ready at all times to engage in it, bringing the profits down to or below the level of all other investments. DEMAGOGUES TAKE ADV^AXTAGE OF IGNOKA>^CE TO AHOUSE PREJUDICE. This suspicion or misapprehension that the Government is ex- tending through the national banks to some one something that everybody else can not get has given birth to a kind of prejudice— the child of ignorance— excited an unwarranted jealousy, and developed a groundless opposition in some localities to a system that has raised the standard of banking in this country and pro- vided the American people with a currency as sound as any in the world, and calling for the admiration of all civilized nations. Now, recuiTing to the special matter in hand, let us suppose that this same New Orleans bank, with its $500,000 capital, was organized under this bill. What could it have done under the section now being discussed? WHAT A BANK MIGHT DO UNDER THIS MEASURE. The bank need not tie up and ship away $150,000 of its best securities, but keeping them m its own safe issue $100,000 of its own notes at a cost of 1 per cent per annum instead of 6 per cent. Will it be necessary to state that this difference of 5 per cent in the two instances will, every penny of it, amounting to $5,000 on every $100,000 loaned, come out of the merchants, farmers, or producers, and practically all of it out of the farmers or pro- ducers? Again, we should not fail to observe that the tax paid on the circulation goes into the United States Treasury to help pay the expenses of the Government, and to that extent the people will be relieved of taxation. FARMERS AND PRODUCERS "VrrLL REAP TUB ADVANTAGE. Will anyone seriously urge that any portion of this heavy charge will be borne by the bankers? Nor will anyone at all familiar with the laws of trade doubt that the people— farmers and pro- ducers—will ultimately get every farthing of the advantage gained, for competition would very soon bring the bankers' share of profit to a fixed limit, not varymg much from its present mar- gin, thus saving to the people, the producers of our country- farmers and laborers— anywhere from 1 to 5 per cent per annum upon the capital borrowed to carry on the commerce of the country. 2763 69 The valne of our finished product, it will be remenlberea, now annually exceeds $12,000,000,000. Mr. Edward Atkinson, the statistician, has estimated that in the transformation from the unmined coal and iron, the unbroken forest, and the fallow fields to ihe homes in which we live, th« things we wear, and tnose we eat, there are at least three transfers of this vast property, or $36,000,000,000 passing from man to man. Is it not reasonable to suppose that at least two- thirds of this amount is handled with borrowed capital? If so, even if the loans ran but sixty days and 1 per cent can be saved on this two-thirds, or $24,000,000,000, the people— the producers — will be the gainers by $240,000,000 every year, or more than two-thirds of all the green- backs still outstanding. Shall we not cancel them if we can more than make up for them in every succeedmg year, to say nothing of the frightful loss they are entailing upon the country every month, and the danger to which the Government is sub- jected because of them? Let the reader estimate what the gain to the producers would be if the loans on this $24,000,000,000 ran six months! What if they ran for the year? More than $1,000,000,000! FALSE ASSUMPTIONS SHOULD BE DISCARDED. Is it not a mere fetich to hang on to the greenbacks, then, de- ceived by the hallucination that the Government can make some- thing out of nothing, when it has been proved in this case, as in all others, that mistakes and falsehoods only lead to misfortune and disaster? If the experience of all other great commercial nations added to tliis ratal delusion is not convincing enough to detei-mine our action now, we shall simply have to wait to be taught by more bitter lessons still, and more crushing disasters, what has already been demonstrated beyond the shadow of a doubt. EQUALIZATION AND LOWERING OF RATES. Under the operation of this provision of the bill there is still another object to be attained that is founded in justice and con- serves the welfare of the people in all portions of our country alike. It is the equalization of the rates of interest in every sec- tion of the land, from Niagara Falls to the Gulf, from Cape Cod to the Golden Gate. Wherever there is banking capital, a de- 2763 70 mand for money, and an equally abundant supply of equally good commercial two-name, thirty, sixty, and ninety day paper, there the rates snould and will oe practically the same. Rates of interest will not then be, as now, particularly low in one locality because there is considerable wealth in the form of money and securities, and particularly high in another notwith- standing there is abundant wealth in the form of cotton, com, cattle, wheat, and the various other products of the earth simply because it awaits a better day for disposition or sale. The ques- tion will not then be so much whether it is stocks and bonds on the one hand and cotton and corn on the other as whether it is good liquid wealth in some form— cattle, nogs, corn, cotton, and wheat being regarded as good wealth, as quick assets, if only the banks have the facilities tor carrying them. OBJECT OF GRADUATED TAX. It will be observed that the tax imposed upon the circulation is an increasing graduation. The object is to give it a repressive effect just in proportion as the expansion increases under the vary- ing pressure from the crop movement to the demands of an acute and general panic. The same principle is illustrated in the 5 per cent tax imposed upon the credit circulation of the German banks whenever it passes a certain limit. It is also illustrated in the operations of the clearing houses of New York, where they charge 6 per cent upon clearing-house cer- tificates, and in Boston, where they charge 7 per cent upon them, confident in all these instances that the tax will compel the retire- ment of the issues. So far this system has worked perfectly, the retirement of the circulation following quickly upon the disap- pearance of the cause. UNITED STATES NATIONAL BANK NOTE REDEMPTION FUND. Sec. 9. That all taxes so paid to the Government upon said Uni ted States Government bond notes and said United States national-bank notes shall constitute and be known as the *• United States national-bank note redemp- tion fund," and be held exclusively for the redemption, first, of the United States Government bond notes; second, for the United States national-bank notes in the event of the liquidation ot any bank organized under this law: Prvvided, however. That when said '* redemption fund " shall exceed 5 per cent of botn the United States Government bond notes and the United States national-bank notes such excess shall belong to the United States Govern- ment and may be used by it to defray its general expenses. 2708 71 For a better understanding of the above section from the stand- point of actual experience I herewith submit a tabulated state- ment showing the total circulation, amount of notes of failed banks for each year since the system was established, and the percentage they bear to the total circulation for each year: Year ending October 31— Total cir- culation. Circula- tion of failed banks. Per cent of the cir- culation of failed banks to the to- tal cir- culation. 1863 1864 $58,813,980 201,635,205 293,086,959 299,094,824 300.116,958 299. 724, 791 301.859,275 324.475.207 340.990.825 348,347,674 348.785.9(»6 343.176.018 319.867.070 315. 871. 190 319.&10.560 325.120.018 342,048,322 aT8.924,9(J2 360,982.713 .350. 759, 675 332,452,944 314.872.928 300,990,506 271.651.587 23!), 044, 822 201,744,089 179,449,958 171,978,673 172,0;)l),921 208,701,189 207, 140, 104 213.491,147 234,437,572 1865 $44,000 2J)5.000 248.900 321,800 45,000 129,700 03 1866 ....„ .09 1867 1868 1869 .25 .11 .03 1870 .04 1871 1872 1,388.393 2,522,100 2;i0.0fl0 6;J8. 676 540.609 951. 728 1,322.725 516, 825 506.143 ""999.'406' 108.200 850.120 486.550 302.960 386,597 557,811 56.250 171,450 641,352 623,153 1,573,6:34 626, 786 916. 682 761,500 .41 1873 .72 1874 .07 1875 1876 .19 .17 1877 1878 1879 1880 1881 1882 .30 .41 .15 .15 T28" 1883 .03 1884 .26 1885 *. .15 1886 .10 1887 .14 1888 .23 1889 .03 1890 .10 1891 .37 1892 .36 1893 . .75 1894 .30 1895 .43 1896 .31 Average for period .303 From this tabulated statement, showing that an average tax of one-fifth of 1 per cent on the total circulation for thirty-three years would have covered all the notes of the failed banks, we may certainly assume that the tax imposed will much more than cover the notes of failed banks in the future, and that a 5 per cent safety fund will prove more than ample to take care of any emergency that may arise. When we recall the fact that had there been no bonds to secure the national-bank notes for thirty years the note holders could not have lost to exceed $1,139,253, of 2763 7» which $958,247 was still in unclosed accounts, we may confidently believe that this provision will not only insure the notes, but will be a source of large profit to the Government. CLEABING-HOUSB DISTBICT8. Sec. 10. That the board of finance shall divide the United States into clear- ing-house districts, and each bank organized under this act shall belong dis- tinctively to some one district, and the number of such district shall be plainly and prominently printed upon the said United States national-bank notes issued by the banks located therein. The several banks of each district, upon receiving United States national-bank notes belonging to any other district, shall forward the same to a bank in a clearing-house city, which shall return them to the district to which they belong. The object of the foregoing section is to insure the constant redemption of the United States national-bank notes, to materially strengthen our banking system, and becomes essential for the fol- lowing reasons: OUB STSTSM WOTTLD BHQUIRB THEM. First. Our individual banking system does not in itself give tw the same facilities for forcing current redemption that large banks with branches in all parts of the country would, and current re- demption, it must be remembered, is the essential counterpart of a credit system of currency. THBT WILL DISTRIBUTE OAPITJLIi BBTTEIL Second. This system of districts will draw the normal money- gold, silver, and United States Government bond notes — to the redemption or clearing-house centers and keep it better distributed throughout the year. CURBJBINCY WILL ALWAYS EQUAL DEMANDS. Third. The tendency wiU be to keep the credit money at home, so that it can be retired whenever the bank issuing it desires to do so, and thereby save the tax when there is no further use of the money in circulation. PROFIT ON CIRCULATION WILL GO TO EACH DISTRICT. Fourth. This system will enable every district of the United States to furnish whatever credit money it needs by sending all credit notes from other districts home and putting out its own, and thereby save all the profit on circulation in each district to the district itself. Fifth. But the most important and far-reaching effect of this 78 provision is the advantage and protection it gives to every bank belonging to a clearing-liouse district. EVERT BANK SHOULD BE AS STRONO AS AT.T. COMBINES. It is important to observe and remember that every bank belong- ing to a clearing-house district is individually as strong as the combined capital of all the banks included in the district; and it is not at all likely that there would be a clearing-house district with a capital less than $25,000,000, and probably none less than $50,000,000, while the large cities would be many times stronger than that even. WITH THE STRENGTH OP CENTRALIZED BANKING WB SHAIiL HAVE THB ADVANTAGE OF ^DIVIDUAL BANKING. This plan would give us all the power of the most perfect cen- tralized system of banking in the world, with all the advantages of individual banking institutions. In fact, I am of the opinion that in power and facility it would surpass any system now in operation. While it would be perfectly independent in its parts and responsive to the demands of every locality, it would be free from the caprice and discrimination of a management hundreds and perhaps thousands of miles away. IT Wllil. INSURE GREATER CAUTION. It will be admitted, I think, that any bank belonging to A clear- ing-house district will exercise greater caution in loaning its funds, or in issuing its notes, than it would were it not a member of some district, for it must realize that it is in a measure under the sur- veillance of the associated banks and can not afford to fall under any suspicion on account of poor management; hence the moral effect must necessarily be to improve the character of all our bank- ing, a matter that is always of the very greatest importance to the commercial world. REDEMPTION OF NATIONAL-BANK NOTES. Sec 11. That the said United States national-bank notes shall be a legal tender at par between all national banks, and the same shall be redeemed upon presentation at the bank of issue in gold coin, or at the option of the bank of issue 40 per cent thereof may be redeemed in United States Gov- ernment bond notes. The first provision of this section is the same as that now on the statute books with regard to our present bank notes. The object of making these United States national-bank notes redeemable in the United States Government bond notes as well 74 as gold is to protect the metal reserve of the bank for the first few years, until the banks can accumulate the necessary stock of gold and adjust themselves to the new conditions; and yet, since the United States Government bond notes are themselves redeemable in gold at the bank of issue, it amounts to a gold redemption. FACILITIES FOR REDEMPTION OF NOTES. Sec. 12, That each bark organized under this act and doing business out- side of a clearing-house city shall select some national bank in the clearing- house city of its own district through which it shall redeem its United States national-bank notes in gold coin, or. at the option of said redemption bank, 40 per cent thereof may be redeemed in United States Government bond notes, and for said purpose shall keep on deposit with said bank a reserve of 5 per cent of the amount at any time outstanding, and said 5 per cent may be con.-^ldered a part of its required reserve. The object of this section is to insure the cun-ent redemption of bank notes by facilitating in every way their presentation for re- demption, and thereby constantly testing their soundness and bringing them back to the bank of issue for retirement if they should be needed no longer in circulation. BANKS WITD $20,000 CAPITAL- Sec. 13. First. That in cities with less than 2.000 population banks may be organized under this act with a capital of $20.fX)0 or any greater amount in multiples of $.'>.0()0: but no bank shall be organized in any reserve city with a less capital than $100.(«X). Sfecond. That under such regulations and restrictions as shall be established by the said ministers of finance, national banks organized under this act may establish branch banks by and with the consent of said ministers, such branch banks to hav* the right to receive deposits, make loans, grant discounts, and buy and sell exchange, but in no case to be permitted to issue circulating notes other than those of the parent bank. It shall in all respects be consid- ered as a part of the parent bank, and in each case where such branches are maintained the ministers of finance shall receive, in the reports of the Cen- tral bank, a statement, properly sworn to and attested, of the condition of its branches. Said ministers of finance shall also have the right of separate and inde- pendent examinations, and they may. whenever they deem it neceasary. re- quire, before granting the right to any bank to maintain branches, that the paid-up capital stock of such bank be increased to an amount to be fixed by them. BRANCH BANKS MAY BE DESIRABLE. That the present minimum limit of $50,000 capital for national banks prevents the establishment of them in many places where they are much needed, all are agreed; and whether a capital as small even as $20,000 would serve every locality and meet all con- ditions there is very great doubt. Indeed, this is particularly true, as everyone knows who has studied this question from actual ob- 76 servation, in localities wliere a considerable amount of money Is required for a few months every year and very little or no demand at all during the other months, a circumstance that can only be met by the establishment of a branch. Otherwise the people can never have local and convenient banking facilities at all. How- ever, that the location of small banks and the opening of branches should be carefully investigated and great discretion exercised in granting such privileges will be apparent upon a moment's thought, for while the accommodation of the people should be a constant study, their absolute protection should never be for- gotten. GOVEUNMEXT REDEMPTION OF NOTES IN CASE 01'' FAILURE. Sec. U. First. That in the event of the liquidation of any national bank organized under this act the United States Government shall redeem, upon presentation after notice given as herein provided, any of said United States Government bond notes or said United States national bank notes, reimburs iug itself for the full amount thereof out of the a.sset9 of said bank, and dis- tribute the remaining- assets among the depositors and all others having claims in the same manner as now provided by law. Second. That from the time of the suspension of said bank up to the date sot by said ministers of finance for the redemption of said United States national-bank notes they shall bear interest at the rate of 5 per cent per an- num. Such notice shall be given in some newspaper printed in the clearing- house city where sjiid notes were cleared; but nothing herein contained shall be construed to impose any liability upon the Government of the United States, or any of its representatives, beyond the amount available from time to time out of said *' United States national-bank note redemption fund." ADVANTAGE OF A UNIFORM SYSTEM OF CURRENCY. One of the greatest benefits, if, indeed, not the greatest, growing out of our national banking system has been the fact that all of the notes have been equally good every vzhere. The note of the bank with $50,000 capital is as good as the note of the bank with $5,000,000 capital; that instead of a currency issued under as many different banking laws as there were States, and having as many different values as were represented by the ever-changing credit of 10,000 banks, we have had a uniform currency good not only at home but abroad. We have learned our lesson, and our people will not be satisfied with a currency that is not uniform and equally good in all parts of the country. Therefore we want no money that w^ill not stay away from home simply because it has no standing elsewhere and every transaction forces its holder to suffer discount. We. do not want a dollar that is too poor to 2703 76 stay away from home and mnst necessarily be a constant sonrce of loss to the holder, who invariably turns out to be a laborer if unfortunately a bill should prove to be utterly worthless. It is the duty of this Government to establish a system of currency that will protect the note holder against the possibility of a loss of the millionth part of a cent. No man living anywhere under our flag should be compelled to hesitate a moment about taking any money circulated within the confines of the Republic, which is to-day, practically speaking, owing to our railway facilities, tele- graphic and telephonic communication, and intimate commercial relations, one extended neighborhood, one gigantic city reaching from the Lakes to the Gulf and extending from ocean to ocean. Therefore we want no State-bank notes, but a national currency protected and ultimately redeemed by the Government. Such a currency section 14 guarantees to the American people. INSURANCE OF DEPOSITORS. Sec. 15. First. That any bank organized under this act may at any time after 1905, with the consent of the ministers of finance, insure its depositors against loss by paying into the United States Treasury 1 per cent upon the average balance of deposits of the preceding fiscal year, and one-half of 1 per cent upon the average annual balances thereafter until the amount so paid into the United States Treasury by said bank shall amount to 5 per cent of the average balance of said bank for the last preceding year, and that said ministers of finance may then suspend said tax for the time being. If the deposits of said bank shall increase, or for any reason the amount of the in- surance fund to the credit of said bank shall be less than 6 per cent of the deposits, said ministers may reimpose said tax of one-half of 1 per cent upon the deposits of said bank; and if said bank shall fail to pay such tax at any time after the payment of said 1 per cent the amount already paid by said bank shall be forfeited to the United States Government, and the insurance of said depositors shall thereupon cease. Second. That the amounts of money so received shall constitute and be known as the " depositors' insurance fund," and each bank shall be entitled to receive interest upon the amount standing to its credit in said " depositors' insurance fund," at the rate of 3 per cent per annum, and the same shall be adjusted annually on the 30th day of June. Third. That in the event of the suspension of payment by any bank so in- sured of any of its liabilities as they accrue the United States Government shall, within sixty days thereafter, no reorganization then pending, pay the depositors of such bank in full all their just claims, if no question has been raised thereto; but nothing herein contained shall be construed to impose any liability on the Government of the United States, or any of its represent- atives, beyond the amount available from time to time out of said " depos- itors' insurance fund." Fourth. That the United States Government shall thereupon reimburse itself out of the assets of said bank for any and all such moneys paid out on 2763 77 account of said deposits, less the amount standing to the credit of said bank in said "depositors' insurance fund;" and the remaining assets shall be dis- tributed among the creditors in the same manner as now provided by law. KO CLASS OF INSUBANCE IS MORE IMPORTANT, WISE, AND JUST, AND THE PEOrLE SHOULD DEMAND IT. I am fully aware that in the outset this section will provoke some discussion and gives apparently a better field upon which those differing may array themselves than almost any other pro- vision in the bill; but this partial admission of some possible ob- jection is not due in the slightest degree to a want of soundness of the principle involved in this section of the measure, but sim- ply because such a provision has never been made a part of any banking system. That it will ultimately find its way into all, I have no doubt, for there is no business of such extent as that of banking where to-day the records are so well preserved and will enable the student and statistician to arrive at a basis of insurance that will be as reliable as these; not even mortuary tables upon which nearly every human life, in our own country at least, is car- rying some insurance. The fire-insurance system of the world is based upon data that enables the actuary to furnish a line of premiums that gives upon large averages an almost mathematically certain result. The principles that control in the vast operations of both life and fire insurance are identical with those upon which this pro- vision rests. But my maturer thought impels me to the. conclu- sion that in neither is there so much need of averaging risks and escaping the consequences of misfortune as in the proposed rem- edy for the crash and widespread ruin that almost invariably follows bank failures to-day. It will be observed in this connec- tion that the provision is purely voluntary in its operation, and imposes no burden or risk upon the Government beyond those of a trustee for the fund created. That we may be able to consider the question in a most practical way, I have obtained from the actuary of the Treasury the follow- ing tabulated statement, which, I have no doubt, will disclose a most surprising and gratifying result to every student of those great movements that look in the direction of equalization in material things and social conditions: 2763 78 Year. Deposits- total of all banks. Deposits or Tailed banks. Per cent of total deposits that would have paid deposit- ors each ytsar. 1863 SS, 497. (582 78,070.545 336.427.;J85 5:58. 799. 4:5:3 5:57. 785. 71t> 55;). 874. 645 550.540.172 522.6i;G.547 594.a56.347 008,925.580 015, 470, 770 043.883,078 002.5:51.811 029.0J59.525 631.709.700 613.807.2i»5 073.258.42:5 870. 8:54. fW7 1.0:33.168.117 l,0r>8,871,688 l.a54,220.122 1,009.749.551 1,070.496,54:5 1.151.010,262 l,252.3*il,057 1,307,12:5,561 1,426.204,779 1,506.425). 4:59 18H4 1805 0.2G 1800. .31 1807 .02 1808 .00 1869 . . . .04 1870 1871 2. 4(>3. 6;54 521.:375 G, 7o;5. 7:52 3:J2.268 2. 4 10. .-,92 1.427.429 4.961.622 2,015.140 472.061 778. 9iW 2.654.090 3,2511.890 009. 705 0,994.302 3,0:57.5:30 974.5:51 0,27:5.257 2, 460. 477 937,907 1.0.58.511 16,;3:32,07l 904. 689 14.575.50.5 ;3.«>13..597 5,672,511 .42 1872. .. .09 1873 1.09 1874 .05 1875 .36 1870 .23 1877 .77 1878 .33 1879 .07 1880 .09 1881 .26 1882 .31 1883 .00 1884 .69 1885 .... . , .29 1886 .m 1887 .50 1888 .11 1889 1890 .07 .07 1891 1,556.877.110 1.745.849.469 l,r/)9.731.110 1.071.89:3.716 1,703,406,071 1.05 1892 . .06 1893 .91 1894 1895 .22 .33 The average per cent for each year, from 1864 to 1895, inclusive, upon the total deposits that would have been sufficient to pay the depositors in fall, had absolutely nothing been realized from from the assets of the banks, was only 0.31, or less than one-third of 1 per cent per annum. ALL CLOSED BANKS SHOW AM AVKRAOE OF 75 PER CENT RE TUUNS. The lowest percentage of dividend paid to the creditors of any failed national banks whose affairs are closed was that of fourteen and a fraction, to the creditors of the Cook Coianty National Bank, of Chicago, fll., being No. 38 on the list of banks placed in the hands of receivers. The next lowest percentage of dividend was seventeen and a fraction, to the creditors of the Tennessee National Bank, of Memphis, constituting No. 5 on the list. The average percentage of dividends paid to creditors of insolvent national banks who.se affairs are entirely closed is about 75 per cent.— .Reporr o/ f/te CoviptroUer of the Cmnency, 1896, page 31. THE INSURANCE TAX COULD NOT EXCEED ONE-TWELFTH OV 1 PER CENT PER ANNUM. Taking the experience of all insolvent national banks whose accounts have been closed, it is to be observed that the actual 2SSi 79 insurance charge upon the deposits of national banks would have been one- twelfth of 1 per cent per annum or a total of but 3i per cent in thirty-three years. Would this not have been a most insignificant and inconse(iuential cost to the banks compared to the great and almost incalculable benefits it would have been to trade and commerce to have saveil from failure that great army of merchants who have been brought to ruin by the failure of the banks with which they were keeping their accounts? Let us weigh a matter of such moment carefully and come to our final conclusion with the utmost deliberation, especially since the chief if indeed not the only objection is that it is a new proposition. With all of our bank notes ultimately redeemed by the Gov- ernment, as provided in the preceding sections, and the depositors of the national banks insured against loss in case of failure, it is confidently believed that bank failures would be reduced to a minimum; that money panics would be unknown; and that we would escape the most unfortunate and serious consequences growing out of bank failures, the ruin of the merchants and trades- people. , HOW THE TWO FUNDS SHALL BE INVESTED. Sec. 16. That all moneys received by the United States Government on account of the tax upon United States Government bond notes and United States national-bank notes, or on account of the taxes paid to insure deposit- ors against loss, may be invested in the followinj? cla.sse.sof securities, and no others: First, United States Government bonds or United States certificates of indebtedness; second, the bonds of any State which has not defaulted in the payment of either principal or interest of any of its indebtedness for twenty years just preceding such investment: third, the bonds of any city in the United States having a population of more than 10;).0CX). and which has not defaulted in the payment of either principle or interest of any of its in- debtedness for twenty years just preceding such investment. REASONS FOR THE INVESTMENTS. But for the fact that some provision that the funds accumulated in the " United States Government bond note redemption fund" and in the "depositors' insurance fund "should bo invested in some kind of securities, two objections might arise: First, it might be objected that a large amount of money was being withdrawn from the channels of trade: second, that the Government should allow interest on so considerable a sum, which it would not be prudent to do unlcvss there were some income from that source to offset such allowance. 80 PO"W^EB rOB PUTTING THE ACT INTO SUCCESSFUL OPERATION. Sec. 17. That for the purpose of carrying this act into effect and enabling the banks organized hereunder to maintain their required reserves, and for the purpose of equalizing and adjusting the relative use of gold and silver in the United States, the ministers of finance are hereby authorized and empowered to sell and dispose of any of said new 2 per cent bonds at par for gold coin, or to exchange the same for any of the legal-tender money of the United States at par: the bonds so sold or exchanged to be issued in denom i nations of $25, or multiples thereof, at the option ot the buyer, and to become due and payable in 1950; and the said ministers, for the same purpose (with the concurrence of the Secretary of the Treasury), are also authorized and empowered to exchange from time to time gold bullion or gold coin for silver bullion or silver coin, and silver bullion or silver coin for gold bullion or gold coin. Every man of affairs will at once realize that it will be of the utmost importance that the ministers of finance be able, in a move- ment so comprehensive as this, involving as it does the complete readjustment of our finances and recomposition of our currency, subject to the approval of the Secretary of the Treasury, who is responsible for the proper conduct of the income and expenditure accounts of the Government, to do anything that the purposes of this act render necessary. LIMIT OF LOA*NS TO OFFICERS AND DIRKCTOB8. Sec 18. That the loans and discounts of any bank organized under this act granted to its executive officers or employees shall in no case directly or indirectly exceed 10 per cent of the capital, and the same shall be secured by proper collateral, or by an additional signature or signatures of financially responsible persons to the notes taken, and that the same bo made only upon the written approval of a majority of the board of directors and a separate record thereof kept. Sec 19. That no loan shall be made to a director not an executive officer of the bank except either upon a deposit of good and sufficient collateral security, or upon a note given therefor, bearing, in addition to such director's own name, the signature or signatures of one or more flnanciaUy responsi- ble persons, or unless a resolution has been passed by the board of directors and signed upon the record by at least a two-thirds majority thereof, giving to such director a line of credit covering any advances to be made to him. PENALTY ATTACHING TO ANY OFFICEU OK EMPLOYEE. Sec 20. That any president, vice-president, cashier, assistant cashier, or employee of any bank organized under this act who shall be convicted of un- lawfully borrowing or using any of the funds of the bank with which they are connected shall be imprisoned for ten years, and any officer of any such national bank at the time of its failure shall be ineligible to any official posi- tion ii» any national bank thereafter. BANKS MUST NOT PROMOTE. Sec 2L That it shall be unlawful for any national bank to engage in the promotion of any enterprise, or to loan the funds of the bank upon the bonds or securities of incomplete and partially developed projects of any kind, such as partially constructed railroads, streetcar lines, electric-light, gas, water, mining, manufacturing, or irrigation plants. 2763 81 DIRECTORS MUST EXAMINE THEIR BAI7KB. Sec. 22. Tliat upon a day in each year, to be designated by said ministers of finance, the dii-ectors of the national banks shall be, and are hereby, re- quired to make an examination of the affairs of the bank with which they are connected and submit their report thereon upon blanks furnished by said ministers, and said report shall be signed by at least three-fourths of said directors. The following extract from the report of the Comptroller fnlly justifies the greater care these sections impose upon the directors and the stricter rules they establish for the officers in the conduct of a national bank: CAUSES OF FAII^URE OF NATIONAL BANKS AND DUTY OF DIRECTOBg. A careful examination has been made into the causes of failures of national banks and the number failing from each cause, from 1863 to 1896, with the fol- lowing result: Three have resulted from defalcation of oflScers; 22 from defalcation of officers and fraudulent management; 1 from defalcation of officers and ex- cessive loans to others; 2 from defalcation of officers and depreciation of securities; 19 from excessive loans to others, injudicious banking, and depre- ciation of securities; 18 from excessive loans to officers and directors and de- preciation of securities; 6 from excessive loans to officers and directors and investment in real estate and mortgages; 3 from excessive loans to otheps and depreciation of securities; 4 from excessive loans to others and invest- ments in real estate and mortgages; 1 from excessive loans and failure of large debtors; 8 from fraudulent management; 15 from fraudulent manage- ment, excessive loans to officers and directors, and depreciation of securities; 12 from fraudulent management and injudicious banking; 8 from fraudulent management, defalcation of officers, and depreciation of securities; 5 from fraudulent management, injudicious banking, investments in real estate and mortgages, and depreciation of securities; 9 from fraudulent management excessive loans to officers and directors, and excessive loans to others; 19' from injudicious banking: 54 from injudicious banking and depreciation ot securities; 13 from injudicious banking and failure of large debtors; 13 from investments in real estate and mortgages and depreciation of securities; 43 from general stringency of the money market, shrinkage in values, and im- prudent methods of banking, and 8 were wrecked by the cashiers. The inevitable conclusion to be drawn from a study of the causes resulting in these failures is that in the great majority of instances those directly re- sponsible for the management of the banks involved, both directors and executive officers, have been negligent of their duties and wanting in insist- ing upon the employment of methods of ordinary safety and prudence. It follows that every bank failure has caused more or less loss to creditors and shareholders, and subjected those connected with these institutions to criti cism. The relation which the Comptroller's office bears to the banks and its method of examinations have been so much a matter of public discussion that it seems wise at this time to call the attention of both Congress and the public to these relations, and the duties which it is believed rest directly upon and should be discharged by those whose oaths make it obligatory on them to conserve the interests of the bank. The duties resting upon directors are not in contemplation of law merely formal ones to be met in a formal manner only. It is expected that they shall be thoroughly conversant, both in general and in detail, with the man- ner of the conduct of institutions with which connected and the method* 276a-6 8S employed. Bank directors should know whether the best bookkeeping methods are used in their banks, whether precautionary measures in the verifying of entries upon ledgers and pass books are taken, and whether employees, from president to bookkeeper, are engaged in speculative enter- prises and employing the bank's funds, thus endangering the safety of those trusting the bank. The character of the internal management necessarily makes the institution a safe or an unsafe one.— Report of the Comptroller, 1806^ pages 31-32. POWER OF ASSISTANT CASHIER. Sec. 23. That the assistant cashier, in the absence of the cashier, or on ac- count of his inability, shall be, and he is hereby, authorized to sign the circu- lating notes of the bank, and sign and make oath oradrmation to the reports called for by said ministers of finance showing the condition of the bank with which he is connected, and such oath or affirmation and all others required of bank officers may be administered by any notary public or commissioner of deeds. At present the law limits the authority which this section gives to the assistant cashier, to the cashier, which very greatly inter- feres with the proper conduct of the business of many banks in cases of absence or sickness of the cashier, and therefore this pro- vision simply facilitates the performance of the duties of the cashier. GOVERNMENT CHARTERS FOR CliBARlNO HOUSES. Sec. 24. That the clearing houses of the respective districts shall act under charters granted by the United States Government, running for fifty years and authorizing them to effect clearances between banks and to do other business for and between banks, in accordance with such rules and regrula- tions as may be prescribed by said ministers of finance from time to time. The above section states so clearly its object that when the importance of convenient places for the clearance of exchanges and the current redemption of the note issues is considered in conjunction with the general purpose of this bill, no one will doubt the wisdom and necessity even of granting national char- ters to the clearing houses as well as to the banks, as they are an important and essential adjunct in completing a sound currency system. POWER OF the secretary OF THE TREASURY TO MEET ANY DEFICIENCY. Sec 25. That to provide for any temporary deficiency now existing in the Treasury of the United States, or which may hereafter occur, the Secretary of the Treasury is hereby authorized, at his discretion, to issue certificates of indebtedness of the United States, payable in from one to five years after their date, to the bearer, in gold coin, of the denomination of $25, or multiples thereof, with annual coupons for interest at a rate of interest not to exceed 3 per cent per annum, and to sell and dispose of the same for not less than an equal amount of gold coin at the Treasury Department and at the subtreas- uries and de.signated depositories of the United States, and at such post-offices as he may select. And such certificates shall have the like qualities, privi- leges, and exemptions provided in the resumption act (approved January 14, 1875, entitled "An act to provide for the resumption of specie payments ") for 2763 83 tlie bonds therein authorized. And the proceeds thereof shall be used for the purpose prescribed in this section, and for no other. Sec. 2a. That all acts or parts of acts inconsistent with the foregoing shall be, and the same are hereby, repealed. That the United States Government should have power to meet any emergency that may arise on account of its lack of revenue, no man of business sense will deny. Nor can it be assumed that this Government, any mure than a private business, will alwaj^s have a surplus revenue even with a change in our tariff laws. A large surplus is not now necessary; therefore, should we succeed in adjusting our incQme to our expenses the coming year, changed conditions might shortly bring about a deficit, which could only be provided for in two ways during that current year: First. Close the courts and other departments of the G overn- ment. Second. Temporarily provide the means for carrying them on by the sale of certificates of indebtedness under the authority given by this provision, to which every reasonable man of patriotic and practical instincts and business experience who is not con- trolled by partisan prejudice nor hope of temporary political ad- vantage will give his hearty approval and unqualified support. Having now discussed in detail the various provisions of the proposed measure, I desire to call attention to certain matters that invariably present themselves in any intelligent discussion of this all-important subject. THE PI.AN ADOPTED MUST BE CLEAR EVEN TO THE LAYMAN. First. It would be useless to waste time even in discussing any measure, to say nothing of passing it, unless upon examination it could be readily understood and from the advantages it offered would at once attract practically all of the bank capital in the country, so that we would have a uniform system; therefore it becomes pertinent to inquire whether banks would immediately organize under this act should it become a law. IT MUST BE SUCH AS TO AT ONCE ATTRACT THE BAJfKING CAPITAL OF THE COUNTRY. In the first place, they would do so because of the protection and moral support the clearing houses provided for would give at all times, and more particularly when any stress was thrown upon the banking interests of the country, 87ti3 ' 84 In the second place, they would regard it quite a sufficient ad- vantage of itself, in a great mi -doe. Gold and silver. do.... Silver do Gold Gold and silver. do.... do.... Silver Gold and silver. Total ItolSi I to 15f 1 to 15 J Itolo} Itoloi 1 to 14. 95 1 to 14.28 1 to 14. 38 1 to 13. 957 1 to 14. 38 ltol4.38 1 to 14. 38 1 to 14. 38 1 to 14. 38 1 to 14. 08 1 to 151 1 to 15J 1 to 15i 1 to 13. 69 ltol5 1 to 14. 88 1 to 14. 88 1 to 14. 88 1 to 12. 90 lfcol5j 1 to 14. 28 1 to 15. 08 1 to 16.} 1 to 15} 1 to 15} 1 to 16. 18 ItolS 1 to 14. 28 ltol5i 1 to 15} 1 to 15} 1 to 15. 98 1 to 14.38 i"to'i4."95 71,900,000 39,300,000 38,400,000 52,300,000 6,300,000 30,900,000 3,000,000 2,2fJ0,000 18,(X)0,000 5,100,000 5,400,000 2,300,000 44,500,000 4,800,000 2,000,000 4,800,000 2,300,000 126,0()0,(KJ0 22,000,000 4,900,000 7,()0(J,000 12,600.000 5,600,000 33,000,000 44,000,000 295,000,000 3d0.0;)0,000 £70,801,000 5, SOU, 000 1,800,000 1,000,000 3,300,000 5,000,000 100,000 $672,200,000 c 584. 000, 000 c 772, 000, 000 6675,000,000 650,000,000 c 100, 400, 000 c 16, 000, OIK) 6500,000 c 38, 600, 000 c 5, 100, 000 c3S,600,000 cl,500,000 c 167, 200, 000 c26,800,000 c 7, 500. 000 c 8, 500, 000 c 16, 500, 000 c 488, 600, 000 650,000,000 6130,000,000 d 129, 300, 000 6 5,(K)0,000 6500,000 6 40,000,000 c 79, 500, 000 c 16, 000. 000 615,000,000 c4, 000, 000 6 800,000 c600,000 c4, 000, 000 4.143,700,000 a November 1, 1898: all other countries January 1, 1898. 6 Estimate. Bureau of the Mint. c Information fui*nished through United States representatives. dHaupt. e Except Venezuela and Chile. /Actually the silver standard, but has since January 1, 1887, adoted gold standard, 2763 95 gate and per capita in the principal countries of the world. Stock of silver. Full tender. Limited tender. TotaL Uncovered paper. Per capita. Gold. Sil- ver. Pa- per. Total $555,600,000 c 431,300, 000 692,000,000 650,000,000 cl2,500,000 '""b566',m c25,000.000 c53,900,000 c3, 500, 000 630,000,000 c 97, 000, 000 cl2,000,000 635,000,000 c 69, 300, 000 ;i 950, 000, 000 6750,000.000 d 240, 000, 000 c5, 000, 000 61,500,000 c3, 000, 000 63,400,000 c 193, 300, 000 cl, 000, 000 $75,800,000 c 121, 700, 000 c 57, 900, 000 6115,000,000 67,000,000 c26,500,000 c 2, 100,000 61,000,000 c 49, 300, 000 c7,400,000 c 10, 600, 000 c 1,700, 000 c 40, 000, (100 c3, 300, 000 c2, 000, 000 c4, 900, 000 c5, 400.000 640,000,000 d 10, 000, 000 67,000,000 d5, 200. 000 c 18, 500, 000 d2, 000, 000 cl, 000, 000 61,500,000 63,400,000 $631,400,000 121,700.000 492,200,000 207,000,000 57,000,000 39,000,000 2,100,000 1,500,000 49.300,000 7,400,000 10,600,000 1.700.000 65,000,000 56,200,000 2,000,000 4.900,000 5,400.000 43,500,0(X) 40,000,000 7.000,000 5,200,000 97,000,000 12,000,000 35,000,000 87,700,000 950,000,000 7.50,000,000 242,000,000 6,000,000 1,500,000 4,500,000 6, 8a), 000 193,300,000 1,000,000 $424,400,000 clll,800,000 c 98, 000, 000 c 126, 100, 000 c 72. 500, 000 c 168. 500, 000 c 14, 300, 000 c 14, 200, 000 c 103. 000, 000 c 59, 700, 000 c 11, 800, 000 c3, 000, 000 c 204, 500, 000 c32,500,000 c3, 800,000 "*c4i606,'600 c 467, 200, 000 c 4, 000, 000 c8, 000, 000 6 550,000,000 137,000,000 ca5,ooo,ooo c 4, 100, 000 $9.35 14.86 20.10 12.91 7.93 3.25 5.33 .23 2.14 1.00 7.15 .65 3.76 5.58 3.75 1.77 7.17 3.88 2.27 28.53 18.47 .39 .09 1.11 1.81 2.76 8.33 4.00 .24 .12 40.00 3.10 12.82 3.96 9.05 1.26 .70 .68 2.74 1.45 1.96 .74 1.46 11.71 1.00 1.02 2.35 .35 1.82 1.43 .74 7.70 2.14 .97 3.21 2.08 63.68 1.03 .83 4.50 2. 38. 10.00 $5.90 2.84 2.55 2.41 11.51 5.45 4.77 6.45 5.72 11.71 2.19 1.30 4 6.77 1.90 2.00 3.70 .32 1.43 15.28 .12 '6."63 4.10 $24.03 35.47 19.28 9.96 10.80 7.36 10.60 14.16 11.30 2.69 9.81 24.06 6.65 2.79 11.52 7.93 4.09 27.96 19.21 8.41 3.66 17.38 3.80 3.33 2.08 63.68 9.82 9.16 12.60 2.30 38.78 50.00 3,616,700,000 620,200,0004,236,900,0002,558,000,000 g Includes Aden and Perim, Ceylon, Hongkong, Labuan, and Straits Settle- ments. /iF. C. Harrison. t Indian currency committee report. J By imperial decree has adopted the gold standard since January 1, 1897. 2763 96 From a careful study of this table everyone must be driven to admit the following facts, which will dispose of a vast amount of misinformation and a myriad of misstatements now floating about the country: LOCAL CONDITIONS ANB ECONOMIC LAWS WILL DETERMINE THE PER CAPITA CIRCULATION. First. That if any country fixes by law what kind of money it shall have, local conditions under the operation of economic laws will determine what the amount per capita will be. By referring to the following gold-standard countries it will be observed that there is a great divergence m the per capita circu- lation. Hawaii, which mines neither gold nor silver nor has any mint of its own, has $40 per capita in American gold coins, the highest of all the nations. Then follow in their order Austral- asia, France, Egypt, England, Germany, United States, Denmark, Norway, Canada, and so on down to Sweden, with only $1.77. But a much greater divergence will be found in the silver- standard countries by referring to the Straits Settlements, which have $63.38 per capita, the highest, and in their order Siam, Mexico, Central American States, China, South American States, down to Russia, which has the lowest, or only 35 cents per capita. It will be noticed that witn the exception of the first two, the gold-standard countries use more silver than the silver-standard countries themselves use, which is additional proof that local conditions and economic laws, and not the free coinage of metals, determine the amotmt of the metal used. GOLD WILL BE OBTAINED. Second. If any country unequivocally selects gold as its stand- ard it will obtain all of that metal it requires, as evidenced by the fact that nearly all the gold reserves have been acquired during the past twenty years, the leading nations having increased their holdings from $1,200,000,000 in 1873 to $4,143,000,000 in 1896. THE SELECTION OF GOLD AS A STANDARD IS THE RESULT OF EVOLUTION. The gradual adoption of the gold standard during the past quar- ter of a century by all the civilized nations of the world has been as distinctly the result of evolution as the adoption of steam in the place of the patient sail or the faithful horse, and more recently the subtle power of electricity in tne place of steam; the use of 8763 97 the telegraph for the more sluggish mail; the telephone for the telegraph and the messenger boys. In commerce the end sought is to bring the producer and consumer together at the least pos- sible expense or loss. Freight rates have been driven to the lowest possible point; the middlemen must be eliminated everywhere; the insurance against accidents must be made a nominal sum; doubts must be banished; speculation must be reduced to a mini- mum; exchange, always a tax upon the producer and consumer, must be in a common and universal measure of value and cost no more than a fair rate of interest for the use of the money involved; for that nation which is handicapped by the speculation incident to a different and varying measure of value will be distanced at the very start and doomed — a fact which is thoroughly under- stood and appreciated by every nation that has tried it and suf- fered from the ruinous disadvantages under which they labored. The latest to learn this lesson are Russia and Japan. GOOD MONEY AND PRICKS BEAR NO RELATION TO BACH OTHllR. Third. That the amount of good money per capita in circula- tion under normal conditions bears absolutely no relation to the price of articles except so far as the price may be affected thromgh the rate of interest money commands and the sacrifices producers must make in selling their products under adverse conditions there is no longer any doubt. COMPARISON OF PER CAPITA CIRCULATION. By referring to the table it will be observed that France has nearly double the money per capita that England has, yet everyone knows who has inquired into the subject that almost every article you want to buy is cheaper in France than in England— just the very reverse of what the free-coinage advocate telis us would be true. Then there is Canada with only $9.32 per capita, about one- quarter of that of France, and yet things are much higher in Can- ada than in France. It will be found upon investigation that prices average about the same in all of the following countries, notwithstanding the great difference in the per capita circulation. Greece has only $7.36, about one-fifth of that of France; Norway $6.05, about one-sixth of that of France; and Sweden $2.79, or considerably less than one-twelfth of that of France. From tnese lacts we must conclude that the condition, habits of the people, 2763-7 98 and practices in the use of money, pass books, checks, drafts, and other devices determine the quantity they use, and that the quan- tity bears no relation whatever to prices. NEITHER. THE FIIEE COINAGE OF METALS, NOU MINES, NOR MINTS. NOIl STAMPS UPON COINS BEAR AXT RELATION TO PER CAPITA CIRCULATION. It is a most curious fact that the two countries which have the highest per capita circulation, having, respectively, the gold and silver standards, liave neither gold nor silver mines, nor mints, nor coins even bearing their own stamp. Hawaii is upon the gold standard with a limited legal tender of $10 extended to silver, but with neither mines, mints, nor coins, has accumulated $40 per capita in gold bearing the American eagle, and $10 per capita in silver, a few of which she had coined at the San Francisco mint. The Straits Settlements, which is upon the silver standard, with- out mines, mints, or her own coins, has accumulated $03.68 per capita of Mexican dollars and subsidiary coins which were pre- pared by the London mint for the Hongkong market. Peru has mined great quantities of silver for several hundred years, and its mints have been in existence for more than three hundred years, and it is estimated coined on an average 6,000,000 pesos per annum, or a total of over 1,800,000,000 (about $1,800,- 000,000 coin value). Yet Peru with this vast output, has been upon a paper basis at times, with no silver whatever in circula- tion. Although her paper money, after the Chilean war, became worthless and she adopted the silver standard, having soon found that the drain upon her resources because of the losses in exchange would drive her from the markets of the world, she has recently adopted the gold standard and prohibited the importation of silver coins. Mexico, too, has been a marvelous producer of silver, and has eleven mints, which together, from 1537 to 1894, turned out $'5,350,- 819,537, or a per capita cii'culation for her present population of $205; and although her annual coinage of silver exceeds $2 per cajjita, she has only $7.70 per capita in circulation. ' Australasia, the second largest producer of gold in the world, turned out in 1895 $44,798,300, and coined in 1894 $35,203,048, or a production of $9 per capita and a coinage of $7 per capita in 99 a single year; and yet she has only $26.53 per capita of gold in circnlution. Russia, a large producer of gold, mining about thirty millions an nually, has accumulated only §3.88 per capita, while neither Great Britain nor France has any gold mines to speak of (France hav- ing produced only $107,000 in 1895 and Great Britain none), yet have together $1,350,000,000 of gold coin, France having $20.10 per capita and Great Britain $14.80. The United States illustrates this truth equally well, if, indeed, not more strikingly. Our production of gold from 18G1 to 1879 amounted to $794,050,000, and our silver product amounted to $381,050,000, or a total of $1,175,700,000; and yet not a dollar of either circulated during this period, because of the local conditions then existing in the United States. Although the United States has produced upward of two billions of gold, or $300 per capita for our present population, we have in circulation only $9.35 per capita; and yet we have had our own mints and free coinage of gold from the beginning of the Government. In the face of these facts, then, can anyone deny that the char- acter and amount of money per capita in every country are deter- mined solely by the local conditions under the operation of economic law, and that neither the gold nor silver mines nor mints control, or even bear the slightest relation to the amount of gold or silver in circulation. Now let our friends who maintain that free coinage will give us more money explain these various facts and illustrate their con- tention by a single example. This truth is further illustrated and established by the follow- ing tabulated statement, prepared by the Treasury Department and issued in Circular 123, pages 53, 54, which gives the per capita circulation in the United States since 1800: 2763 100 statement of the specie and bank-note circulation of the United States in Year. Number of banks and branches. Estimated bank notes outstanding. 1800 $10,500,000 28,000,000 44,800,000 61,0(]0,000 77, 000, (XX) 91,500.000 91..500.»HX) 94, 8^39. .570 103,692,495 140,3:11,038 149,18.5,890 116,138,910 135,170,995 106,968,572 107,290,214 83,7 4,011 58,563,608 75,167.646 89,608,711 105,552.427 1^5,519,766 128,506,091 114,741^,415 131,366,526 155,16,5,251 171.673,000 188,181,000 204,689,207 186,9.52.223 195,747,950 214,778,822 15.5,208,344 193,306,818 1810 1820 18;^) 1831 1«32 l«3;j.. WM .506 704 713 788 829 840 901 784 692 691 696 707 707 715 751 782 824 879 1835 1836 1837 1838 1839 1840 1841 1842 . 1843 1844 1845 1846 1847. 1848 ... 1849 1850 1851 1852 1853 1854 1,208 1,307 1,398 1,416 1,422 1,476 1855 : 1856 1857 18.58 1859 2763 101 tM years specified from 1800 to 1859, with amount of circulation per capita. Estimated specie in United States. Total money in United States. Specie in Treasury. Money in circulation. Population. Per capita. $17,500,000 $28,000,000 a$l,500,000 $26,500,000 5,308,483 $4.99 30,n!K),000 58,000,000 a3, 000,000 55,000,000 7,239,881 7.60 24, m). 000 69,100,000 2,000,000 67,100,000 9,633,822 6.96 32,10(1,000 93,100,000 5, 755, 705 87,344,,'J95 12,866,020 6.69 32,100.000 109,100.0(X) 6,014,540 93,0a5,460 1?,, 221, 000 7.04 30,446 7,857,380 167,310,266 19.276,000 8.68 9«, 000, 000 185.608,711 7,658,306 177,950,405 19,878,000 8.95 97,000.(X)0 202,552,427 9,126,439 193,425,988 20,500,000 9.43 120,000,000 225.519,766 1,701.251 223,818,515 21,143,000 10.59 112,000,000 240,506,091 8,101,353 232,404,738 21,805,000 10.66 120,(;00,000 234,743,415 2,184,964 232,558,451 22,489,000 10.34 154,aX),0tX) 285,366,528 6,604,544 278,761,982 23,191,876 12.03 186,000,000 341,165,251 10,911,646 330,253,605 23,995.000 13.76 204,000,000 375,673,000 14,632,1;% 361,040,864 24,802,000 14.63 236,(XX),CM)0 424.181,000 21,942,893 402,238,107 25,615,000 15.80 241,000,000 445,689,207 20,137,967 425,551,240 2^,433,000 16.10 250,000,000 436,952,223 18,931,976 418,020,247 27,256,000 15.34 250. (XX), 000 445,747,950 19,901.325 425,846,625 28,083,000 15.16 260,000,000 474, 778, 822 17, 710, 114 457,068,708 28,916,000 15.81 260,000,000 415,308,344 6,398,316 408,810.028 a9, 753, 000 13.78 250,000,000 443,306,818 4,339,276 438,967,542 30,596,000 14.35 a Specie in Treasury estimated. 2763 102 statement of the coin and paper circulation of the United State* Year. 1«61 1W)3 1SG3 1864 i*i5 )8t)6 1807. ].Sd8. 1869 187U. 1871. 1872. 1873. 187-t. 1875 l«7tt 1877 1878. 1879. 1880. 1881. 188a. 1883. 1884. 1885. 188G 1887, 1888. l!S89. 1890. 1891. 1892. 1893. Ih94 1895. Coin in United States, in- cluding: bullion in Treasury. $2ai 25() 25 25 25 25 25 25 25 25 2;-) ,000.000 ,()OtJ,000 ,000 ,(K)0.(HJO ,(K)0,(HK) ,(KXJ,OI)0 ,(KX),UX) ,(XW.(HJO ,(XH),()00 ,000,000 ,000.(K)0 .(KX).(KK) ,0(X).000 ,i,6l0 7X1,024,781 773,27:1,509 738,264.550 697,216.341 689,205,669 fi91,253,3ti3 711,56.1,313 7.58,67:1,141 776, ,5J>6, 880 87:}, 74^, 768 904,:}8.5.250 945, 482, .513 905,532,390 892,928,771 970.5tH,259 974,738,277 991,754.521 1,0:32,039,021 1,139,745,170 1,10«», 988,808 1,168,891,623 1,137,619,914 1,120,012,536 Note 1. — Specie payments were suspended from January 1, 1862, to Janu- ary 1, 1879. During the greater part of that period gold and silver coins were not in circulation except on the Pacific Coast, where, it is estimated, the specie circulation was generally about $25,000.(100. This estimated amount is the only coin included :n the above statement from 1862 to 1«75, inclusive. NoTK 2.— In 1876 subsidiary silver again came into use, and is included in this statement, beginning with that year. 2i763 103 from ISGO to 1896, inclusive, with amount of circulation per capita. Total money. Coin, bul- lion, and paper rao ey in Treasury. Circulation. Population. Money in United Slates per capita. Circu- lation per capita. $442,102,477 $0,695,225 $435.407,2.52 31,443,321 $14.06 $13.85 45:2. 005, 767 3.(500,000 448.405.767 32,0(54,000 14.09 13.98 a5a.4o:i.o79 2:1, 754. im 334.697.744 32.704.(X)0 10.96 10.23 674. 8(57. :.'8:} 79.47:3.24.5 595,;J94,0:^ a}.;365, 000 20.23 17.84 705,588.0157 a"), 94 5, 589 (569.(541.478 34,046.(XK) 20.72 19.67 770.1»'9.755 55,426,760 714. 7( ►2,995 34,748.000 2:1 16 20. .57 754, :i:i7, 2.54 80.8:W.(J10 673, 48.;, .244 a5, 469. 000 21.27 18.99 728,:.'(K).6l:i 66. 208, 543 661,992.069 3(5.211.(K)0 20.11 18.28 716, 55.}, 578 36.449.917 (580, KK}. 661 36. 973. (KM) 19.38 18. a9 715.;i'.l.l8U 50.898.289 664, 4.52. 891 ;^7, 7.56. 000 18.95 17.(i). O')o. 847 40. 7:}8, 9154 722,314,88.3 46.;r);3.ooo 16.46 15. .58 791, 2; vJ. 576 ft2.120,iH2 729, 1:32.6: }4 47,598,000 16.(52 15.32 l,0:-)1.5,-il.r4l 2:52. 889. 748 818.6:31,793 48,8(5(5.000 21. 52 16.75 1.2.»: 2:}:.'. .546. 909 973.:}82,2:J8 50, 155, 783 24.0-1 19. 41 1.4<;6.54l.82:i ■21>2.;}0£},704 l,114,2:}8,119 51.31f).(H)0 27.41 21.71 1, 480, 5:51, 71 !• 3)6.241. 3(J0 1.174,2140.419 52,495.0(K) 28.20 22:37 l,64:}.4«l.81ti 41:1 184, 120 1. 2:30. ;30.5. 696 53,693,0(M) ;30. 60 22.91 l,7t»5,4.'H,l8H 461,528.2211 1.24:3.92.5.969 54.911.000 31.0*5 22.65 1,817, 658, o3. 525. 089, 721 1,292. .568. 615 56.148.000 ,32.37 2:3. (r2 1 . 808, .5.M». 69 1 55;'), 8.59, 169 l,2.-)2.7()0,.52.'. 57.4(t4,000 31.5(1 21.82 1,900.442,672 582,lX«,525t 1,317.539.14:1 58.().s(J.0O0 ;S2.a9 22.45 2,002.955.949 69(4. 785, 079 1,;372, 170,870 59.974.000 :u. m 12.88 2 O75.a-.0.711 (5!>4.989.0«)2 1,38I,;}^51.(549 61.289,000 ;3;i.86 22.52 2. 144.2215. l.V. ;i (.974.88*' l,4:i!l,2;-)l,27(» 62,622,2.50 ;34.24 2:^. 82 2. I a-.. 224, 07. -> 69r.78:},36.>« 1.497.440.707 6:3. 97.5. 0(K) ;u.3i 2:3.41 2.:}72..5!«l,5(i: 771.2.52,314 1.(501. ,347. 187 65, 520. 0(J0 3(5. 21 :^4.44 2.:}2:i.4! 7.59,626.07; 1,6(:0 898,70,^ (•i8,;397,0(H» ;3.5.39 24.28 2. ;«>.s. (507, 421 79(5. t5;:8. 9i: 1,601. 9(^.8. 4;;i 69, 87.S, (JOO ;34.:3;3 22.93 2,.U5.r.;^l.:fc.~ .s;}9,(Khl.3(t l.;5(H5,6;31.02 71.;390.00() ;32.86 21. 10 Note3.— The coinage of standard silver dollars began in 1878, under the act of February 28. 1878. Note 4.— 8])ecie payments were resumed January 1, 1879, and all gold and silver coins, as well as gold and silver bullion in the Treasury, ai'e included in this .statement from and after that date. Note 5.— This table repi-esents the circulation of the United States as shown by the revised statements of the Treasury Department for June 30 of each of the years specified. 27 03 104 CIRCULATION IN UNITED STATES AT DIFFEIIENT PERIODS COMPARED WITH PRICES. Although prices were high during the first years of the century, our per capita circulation was about $5. While prices fell very much about 1840, our per capita circulation had doubled. Again, if the circulation from 1863 to 1878 be reduced to the gold stand- ard, the result would be as follows: 1803. 18(53. 1804. 18G5. 9.0,1 12. 29 9.67 13.08 1871. 1872. 1873. 1874. 1875- 1876. 1877. 10.19 16.18 15.85 16.29 14.92 14.47 15.19 1878 15.19 1860 13.48 1867 13.23 186.S 13. ]6 1869 13.23 1870 15.22 It will be observed that there is about 50 per cent more money in circulation per capita to-day than in 1873, and yet average prices were about 20 per cent higher in 1873 than they are to-day, mak- ing a divergence of about 70 per cent— just the reverse of what the free-silver advocate tells us. CIRCULATION IN DIFFERENT SECTIONS OF THE UNITED STATES TO-DAT COMPARED WITH PRICES. Finally, let us compare the present monetary conditions of some of our States in different sections of the country: Capital, State. Capital. Surplns. Deposits. Popula- tion. surplus, and de- posits per capita. Rhode Island $19,947,000 $6,237,000 $36,510,000 345,000 $129.37 New York 555,519,()(H) 206. 256, (XK) 1,869,343,000 5,998,000 438.66 North CaroUna.. 5,394,000 1,087,000 10,618,000 1,618.000 10.56 Mississippi 3,518,000 715,000 9,560,000 1,290,000 10.69 Arkansas 5,154,000 856,000 8,313,000 1,128,000 12.69 South Dakota... . 4,486,000 715,000 8,194,000 329,000 40.71 "Washington 17,388,000 4,231,000 19,144,000 850,000 116.46 The actual money per capita would probably not exceed 20 per cent of the capital, surplus, and deposits, or 25.87 for Rhode Island; 87.732 for New York; 2.11 for North Carolina; 2.13 for Mississippi; 2.53 for Arkansas; 8.14 for South Dakota, and 23.29 for Washington. It must be admitted by every candid man that if there were any relation between the per capita circulation and prices every- thing in Rhode Island would be 12 and everything in New York 43 times higher than in North Carolina or Mississippi, although 105 as a matter of fact a vast amount of mannfactures are shipped to the two latter States, while their products in turn are higher in the Eastern States, to which they are sent for a market. So we find, both in comparing the different nations of the earth, taking our own history for a hundred years and the relative con- ditions of our several States to-day, there is absolutely no relation between the amount of money in circulation and prices. THE POORER OR CHEAPER PIECE OF METAL. WILL ALWAYS DRIVE OUT THE BETTER OR DEARER. Fourth. There is no country to-day with the free coinage of gold and silver that is not upon a silver basis exclusively, with no gold whatever in circulation. Fifth. There has never been a time anywhere in the world when free coinage was given to two metals that they circulated side by side evenly, neither displacing the other, but on the contrary the invariable result has been, without a single exception, that the so- called bimetallism brought about absolute monometallism — the use of that dollar only which was made of the cheaper quantity of metal. W. A. Shaw, in his History of Currency, page 178, says: The second idea which is commonly entertained with regard to the action of France during this later period, viz, that her action secured for the world at large a fixed and steady ratio, is equally— indeed, still more— fallacious. At no point of time during the present century has the actual market ratio, dependent on the commercial value of silver, corresponded with the French ratio of 15J and at no point of time has France been free from the disastrous influence of that want of correspondence between the legal and the commer- cial ratio. The opposite notion, which prevails and finds expression in the ephemeral bimetallic literature of to-day, is simply due to ignorance. NATURAL, NOT COINAGE, LAWS DETERMINE THE RELATIVE VALUE Ol" METALS. One might pertinently inquire if the attempt on tho part of France to maintain a parity after 1803 had the tendency of bring- ing the commercial and legal ratio of gold and silver together, although they never remained together for a day, what was it that kept them just as nearly together for two hundred years prior to 1803? Is it not evident that what she attempted to do had abso- lutely no influence whatever upon the commercial value of either metal? METAL BASIS OF GOLD AND SILVER COUNTRIES COMPARED. Sixth. By referring to the above table and carefully comparing the seven silver countries, which are the most inferior in com- 2763 106 merce and civilization, with the twenty-seven gold-standard countries, which contain all the leading nations of the world, it will be found that the metal basis in value and per capita circu- lation of the gold-standard countries is incomparably broader than the basis of the silver-standard countries. Therefore when we are regaled with the fears of the bimetallist that there will not be base enough for the commerce of the world in the use of gold alone, it is to be observed that it is physically impossible to have two bases, and as between the two, gold has proven incom- parably the broader and better base, and up to the present time has been found in sufficient quantity to meet every commercial burden or demand laid upon it, and proven itself to be peculiarly suited to meet all of the requirements of trade and the financial systems of the entire world, always keeping pace with its gradu- ally increasing use. PRODUCERS SWINDLED THROUGH THE SILVER STANDARD. It is also certain that whenever we have left the gold standard or trifled with it, we have gravitated certainly and irresistibly to a lower standard— silver or paper— and thereby been thrown out of joint with all the rest of the commercial world, and have been compelled to pay enormously for the privilege of doing business upon any other standard on account of the speculation in exchange. It is not too much to say that on our approximate two billion of foreign business there would be a loss of at least $250,000,000 which our producers would have to bear, while all our domestic commerce would be subjected to the jugglery of the middlemen, and the producers of this country would be robbed right and left under the pretense of a risk that silver might fall. Facing these incontrovertible facts, can any candid man of intellect, common sense, and patriotic inspiration find one single reason why we should hesitate for a moment about our policy? What we want above all thmgs is an unequivocal standard of value, the standard of the civilized world, and a system of cur- rency constantly redeemable in that standard, and one which will respond to trade everywhere and at all seasons of the year, insur- ing low rates of interest, equal privileges, and equal justice every- where. Free coinage will not bring a single one of these things, but in their stead doubt, disaster, losses, and ruin incomprehen- sible. 107 HAS THB SELECTION OF THE GOLD STANDARD WORKED INJUSTICE. But has the selection of the gold standard by all the civilized world resulted in injustice to the people or any part of them? If so, that injustice should be righted. If, however, some have suffered by the adoption of the gold standard only as others have suffered in all countries and all ages on account of some important discovery or process which has bene- fited the great mass of the people, relief should not be demanded or expected. It is claimed by some that gold has appreciated and is appreciat- ing to-day, and because of this fact, and just in proportion to that appreciation, the debtor, who must pay his obligations in gold values, is injured. If there has been any appreciation in the value of gold then it is true that, to the extent of such appreciation during the time the debt of any individual has been running, such debtor has been injured. LIFE OF BANK LOANS. But the average length of bank loans does not exceed sixty days, and no one will contend that there ever has been such an apprecia- tion in that length of time, at least that any man can estimate it if there has been any ; therefore all bank loans may be dismissed from any further consideration. LIFE OF REAL ESTATE LOANS. The average life of loans upon real estate, farms, and city prop- erty is approximately about three j^ears. Now, can anyone say that gold has appreciated during any given three years to an ap- preciable degree? If so, in what three years? GOLD APPRECIATION OR DEPRECIATION. How shall this question of appreciation of gold be tested? Cer- tainly all will agree that the most reliable standard is human labor. Measured by this standard, has gold risen or fallen? That is the question. According to the Senate report called the Aldrich report, it will be discovered that wages, measured in gold, have more than doubled since 1840. For the information of those de- siring to know the exact and whole truth with regard to this question. I submit the following table, found on page 176, volume 3, of that mo3t exhaustive, comprehensive, and valuable report ever made upon the subject of wages, prices, and transportation: 2703 108 WAGES FOR FIFTY YEARS. Relative wages in all occupations, 18U0-1S91, grouped by different methods. Year. Simple average. Average accord- ing to im- portance. 1840 87.7 88 87.1 86.6 88.5 86.8 89.3 90.8 91.4 92.5 93.7 90.4 90.8 91.8 95.8 98 99.3 99.9 98.5 99.1 100 100.8 1C2.9 110.5 120.6 143.1 152.4 157. 159. 6 162 163.3 l(>3.6 166 1G7.1 161. 5 158.4 152.5 144.9 143.5 139.9 U1.5 146.5 149.9 152.7 152.7 150.7 150.9 1.53. 7 155.4 156.7 158 9 160.7 83 5 1841 79 9 1842 84.1 83 IsS....: 1844 83 3 1845 85 7 1846 89 1 1847 91 3 1848 91 6 1849 90 5 1850 90 9 1851 91 1 1853 91 8 1853 93 3 1854 95 3 1855 97 5 1856 98 1857 99 2 1858 97 9 1859 99 7 1860 100 1861 100 7 1863 103 7 1863 118 7 1864 134 1865 148 6 1866 155 6 1867 164 1868 164 9 1869 167 4 1870 167 1 1871 166 4 1873 167 1 1873 166 1 1B74 163 5 1875 158 1876 151.4 1877 143 8 1878 140 9 1879 139 4 1880 143 1881 150.7 1883 153 9 1883 159.3 1884 155.1 1885 1.55 9 1886 155.8 1887 156.6 1888 157.9 1889 163.9 1890 168.2 1891 168.6 2763 109 Premium on gold and gold value, of United States legal-tender notes from 1869 to January 2, 1879. Year. Average currency value of gold each calendar year dur- ing sus- pension of specie payments, Jan. 1,1862, to Jan. 1, 1879. Average gold value of United States notes each calendar year dur- ing sus- pension cf specie payments, Jan. 1, 1863, to Jan. 1, 1879. Year. Average currency value of gold each calendar year dur- ing sus- pension of specie payments, Jan. 1, 1862, to Jan. 1, 1879. gold value of United States notes each calendar year dur- ing sus- pension of specie payments, Jan. 1,1862, to Jan. 1, 1879. 1863 113.3 145.3 103.3 157.3 140.9 133.2 130.7 133 114.9 88.3 68.9 49.2 63.6 71 72.4 71.6 75.3 87 1871 111.7 112.4 113.8 111.2 114.9 111.5 104.8 108 89.5 89 87.9 89.9 87 1863 1873 1864 1873 1865 1874 1866 1875 1867 1876 89.8 85.4 99 2 1868 1877 1869 1878 1870 APPRECIATION TKSTED BY WAGES. When it is recalled that these are the wages in currency from 1862 to 1878 it will be found upon examination that while wages appear in the table to have been about as high in 1873 as 1891, they were in fact lower by 12 per cent, or were only $1.46. When account is taken of the disturbance of both wages and prices caused by the war it will be found that from 1840 to 1892 there was a constant gain in wages paid in gold, and when the statistics for 1892 have been gathered it will be found that the average wages paid that year will approximate $1.75 per day, the highest ever paid to man, and that, too, in the best money in the world. GOLD FALLEN OXE-HALF, OR WAGES DOUBLED SINCE 1840. The inevitable conclusion from these facts is that either wages have more than doubled since 1840 or gold has fallen or depre- ciated one-half in value. Again, let us test the question of appreciation of gold by a com- parison of charges for its use. We all know that any commodity falls when abundant as compared with the demand and rises when scarce in comparison with the demand. APPRECIATION TESTED BY THE INTEREST ON GOVERNMENT BONDS. Gold was scarce and dear during the war, the rate of interest paid in currency being more than 15 per cent at times. To-day the Government could borrow gold at 2 per cent per annum if 2763 no ^ere were no doubt whatever about its repayment, as is evidenced by the fact that it can fund its entire debt into a 2 per cent gold bond because that very act would forever settle our standard of value. Therefore gold must be abundant and cheap to-day as compared with 1873, when it cost more than three times as much per annum for its use, the rate of interest in gold then being more than 6 per cent per annum. It will be noted that the advocates of free silver, when discussing this question of appreciation, never go back of 1873 nor deal with wages, the most reliable test, nor the rate of interest, but force upon the public view the curse of falling prices— just as though anything could be too cheap in normal conditions when you want to buy! WHY SILVER HAS FALLEN MORE THAN GOLD. Gold has varied much less in value than silver because it more nearly represents human toil as distinguished from mechanical or chemical processes. This truth is illustrated by the fact that while about 80 per cent of all the gold now produced is obtained from free ores, about 90 per cent of the silver is produced from refractory ores, or as a bi- product of other metals. The improved methods of treating low grade silver ores, which have been rendered available by the construction of the trans- continental railroads, has given a downward tendency to the prices of silver which will not stop until the mines of Mexico and South America have been brought within easy reach of smelters by transportation lines, and the commercial uses of silver have been determined. The present probabilities are that the price of silver will con- tinue to decline until it reaches about 25 cents per ounce, or a ratio of about 80 to 1 of gold. THE REAL BATTLE OF MATERIAL CIVILIZATION. Right here is the real and the whole battle of material civiliza- tion, whether the producer on the farm or in the factory shall get more and more for his labor — tliat is, be able to buy with the proceeds of his toil more and more of the necessaries and comforts of life. It follows, therefore, that liigher wages are in inevitable, constant, and eternal conflict with cheaper products. But every human faculty, every human endeavor, and all legislative power 2763 IJl are set in motion to cheapen every factor that goes to make up the things we all want to buy, for nothing is cheap enough when we are" buying, although everything is too cheap when we are selling. The farmer does not complain because his implements, which cost him only one-third of what they did twenty years ago. are now too cheap. The mechanic is not complaining because he can buy his Sunday suit of clothes for less than one-half of what it cost him twenty years ago. ARE LOW PRICES A CURSE? Are low prices a curse, then? They may be, but only when they are produced at the same or an increasing expenditure of human labor. When the necessaries of life are produced at a lower cost of human toil, they are to that extent and must be a greater blessing to the human race. Therefore, if the prices of 1891 were about what they were in 1840, notwithstanding the almost incalculable advantage in new processes, inventions, discoveries, methods, and means of trans- portation, with wages more than double what they were then, the American people of all classes have certainly gained enormously in the struggle of life, and have moved upward and onward in the march of civilization. That my candid readers who are seeking to know the whole truth about this matter may be fully inf onned, I herewith submit tabulated statements found upon pages 100, 106, and 107, volume 3, of the Senate Report on Prices, Wages, and Transportation. Again, taking 1840 as a starting point and 100 as a basis, com- parison is made for fifty-two years. 27e3 112 Table ^.—Relative prices of agricul- Year. Barley. Clover seed. Corn. Cotton, upland, middling. Flax- seed. Hemp, rough. Hides. 1840. 1841. 1842. 1843- 1844. 1845- 1846. 1847- 1848. 1849. 1850. 1851 . 1853 . 1853. 1854. 1855. 1856. 1857 . 1858. 1869. 1860. 1861. 1862. 1863. 1864. 1865. 1866. 1867. 18G8. 1869. 1870. 1871. 1872. 1873. 1874. 1875 . 1876. 1877. 1878. 1879. 1880, 1881. 1882. 1883. 1884. 1885, 1886. 1887. 1888. 1889. 1890 1891 83.1 88.3 70.8 71.4 73.4 77.3 81.2 90.9 100 81.2 101.9 103.9 98.7 109.1 151 162.3 161 116. 9 142.9 111.7 100 84.4 77.3 168.8 24(J.3 165. 6 181.8 191. 6 150 178.6 142.9 120.1 136.4 178.0 152.6 149.4 128.2 110.4 146.1 129.9 116.9 149. 4 122.1 110.4 100 103.9 102.6 110.4 89.3 101 92.9 173.3 96.7 100 55.2 141.3 88.3 110 98.3 101.8 83.3 86.7 118.3 120 13:3.9 116.4 135.2 180.3 176 115.3 120 100 99.4 112.1 123 176.1 326.1 130 226.6 154.1 209.3 199 i;m.7 124 114.3 139.9 151.4 22.5.6 200.9 98.1 84.7 90.3 112.1 1U7.5 187.3 139.9 114.4 140.2 97.3 90.5 115. 1 78.5 104.8 85.1 103. 3 85.1 74.9 71.3 83.6 96.7 112 93.8 95.3 90.9 102.5 120.4 109.8 125.5 99.6 102.2 104 133. 8 100 79.3 86.5 128.2 229.8 132.4 138.2 192.7 164.4 141.1 126.5 110.5 93.8 97.1 139.3 96.4 82.5 84.7 70.7 76.4 75.4 109.3 100.7 90.2 89.5 71.5 68.1 7.5.1 75.1 57.8 81.7 89.1 83.2 85.5 68.2 78.6 55.5 70.5 85.5 107.5 62.4 97.1 129.5 84.4 93.6 98.8 86.1 91.3 113.3 143.4 123.7 106.4 100 198.8 522.5 781. 5 1,119.1 453.2 365.3 198.8 247.4 254.3 156. 1 182.7 173.4 169.9 143.4 121. 4 101.7 102.9 99.4 96 106.4 109.2 105.8 98.3 93.6 93.1 87.9 87.9 96.5 100.6 96 80.3 74.5 82.2 68.6 72 2 83! 8 95.4 67 68.4 77.6 80.9 106.8 87.5 84.6 96.4 121 123.1 140.1 90.7 111.2 98.9 100 88.8 121 196.3 220.1 22:3. 9 232.8 191.8 205.3 176.3 154.8 136. 3 135.4 143.4 146. 1 117.2 97.8 102 111.9 97.8 97.9 104. 9 94.3 107.1 107.1 90.3 89.7 87.9 112 110.8 127.3 82.8 148 80 64 56 56 50.4 88 92 103 80 72 78 120 124 144 100 88 100 56 84 108 188 240 160 150 176 120 84 96 128 116 88 100 76 80 104 96 84 140 108 92 76 96 104 92 93.5 70.8 58.1 63.2 70.3 57.3 50.1 45.5 51 64.3 70.7 76.8 75.7 76.3 95.7 121.4 112.1 109.1 108.9 100 IW 118.3 130. 5 136.8 99.3 101.8 109.9 119.3 124.7 119.1 124.6 134.1 128.2 121 110 98.8 114.3 111.9 109.8 120. 6 115. 7 114.6 103. 1 105. 7 104.5 89.3 98.4 90 74.8 80.1 70 2763 113 tural products— individual products. Meat. Oats. Rye. Timothy seed. Tobac- Wheat. /-^ __ 1 Beeves. Hogs. Sheep. co. average. 65.8 50.5 103 79.6 82.8 94.1 72.8 87.3 60.5 54.8 126.8 89.2 98.3 91.2 61.6 91.4 57.9 53.3 70.6 75.8 66.2 55.9 95.6 72.8 66.2 43.5 ""40"' 69.9 80.3 88.4 58.8 56.3 65.2 57.9 .59. 8 86.3 84.7 68.4 58.5 70.2 73 82.8 61 105. 9 87.3 81.6 60.3 71.2 78.1 89.4 61.7 100. 7 100.6 76.6 57.4 92.2 79.3 98.9 75. 9 '"Iq" 142.5 108.3 87 69.1 81.4 100.6 86.9 65.5 89.5 87.9 101.4 61.8 88.3 8:3.8 83.1 53.2 94.1 76.4 107 79.4 78.3 83.3 97.2 61.8 111.1 86.9 120 102.9 76.4 94.3 118.9 68.2 "90*" 104.6 86.9 117.2 103.1 70.2 92.5 134 91.2 80 118.3 109.6 V)9.2 73.5 64.2 94.8 114.3 92 A 100 127.5 115.3 86.3 76.8 81.7 102 12:3.2 73.7 120 132.7 152.9 125.7 78.5 122 114 111.5 102.6 120 117.0 147.8 125.6 73.7 1.52.4 120. 6 103.5 92 117.6 108.3 13:3.8 124.1 131.2 126.4 114.2 104.9 117.6 89.2 122.6 174.4 107 119.4 96.3 74.2 i;J4.6 101. 9 78.1 134.4 76.3 106.4 99.1 82.1 "66"' 108.5 103.8 97.5 1(X).7 90.6 102.3 100 100 100 100 100 100 100 100 100 93.9 56 85.3 90.2 87.3 67.8 95.3 92.3 91.7 91.4 58.7 127.4 150.3 80.3 71.9 186.9 86.7 131.7 110.3 61.7 137.4 183.7 138.5 10:3.4 178.3 101.2 176.6 192.3 186.3 196.2 227.5 184.5 211.6 200.2 116.4 2.59.8 212.9 218.4 174.3 156.9 127.4 174.6 125.8 140.5 194.6 202 16-5.1 151 149 159.2 m. 1 107.7 115.9 171.7 174.7 110.3 i;}9. 8 WS. 7 204.5 109.4 137.9 213.4 171.4 158. 6 150.4 115.7 189.5 191.1 127.1 166.5 193 172.8 179 15;>.8 126.8 167.3 148.4 133 168 119.1 162.4 161 IM. 3 1.24.8 i;}9. 9 114.6 212.3 158.1 84.7 146.9 143.2 77.1 119.8 138.6 118.5 124 187.5 118.2 130.4 157 80.6 156.7 115 108.3 139.4 181 118.5 129.3 137.6 77.2 127.2 136.6 113.4 124.2 215.5 130.3 132.6 147.4 103.3 147.2 158.8 119.7 114.5 180.2 121.5 137.5 154.3 ia3.2 146. 9 117.6 114.6 107 160.8 94.6 126.1 128.6 97.4 1:37. 2 112.4 104.5 76.7 145.7 101.3 11.5.1 118 86.8 131.2 88.9 94.9 58.7 148.9 117.2 110.7 114.1 60.8 116.5 75.8 82.2 73.9 137.4 106.6 98.8 124.8 63 121.5 94.1 101.9 92.6 119.3 84.2 98.4 128.3 8:3.6 137.5 110.1 l:i2.3 105. 1 137.8 112.3 109.9 155.3 105.8 149 119.6 140.8 121.7 134.4 93.3 121.1 1(58. 8 134.4 137.4 103.4 101.3 83.8 141.1 116.4 114.4 154.3 82 126.6 92 92.4 56.3 138.2 88.8 100.3 160.1 83.6 126.5 81.5 88.2 60.2 152.6 83.5 104.7 136.2 68.3 118.3 86.6 79 76.3 . 122.3 71.1 93.9 129.1 74.8 124.7 93.5 70.1 83.1 100.6 74 96.5 124.5 81.2 121.6 92.6 70.1 96.9 122.5 73.6 94.9 140.7 100.8 125. 9 78.1 83.4 75 110.8 71 95.7 111.2 74.7 140.5 68.3 63.7 58.5 122.2 86 91.3 121 70 139 114.7 87.9 58.9 129.8 70.8 97.4 138.1 79.3 137.8 86.6 123.6 51.4 140 87.7 97.1 27C3-8 114 For the total number of these articles gold prices were calcu- lated. Table 30.— Relative prices in each year, 181*0-1801, in gold, for all {223) articles^ grouped by different methods. Year. All articles simply averaged. All articles averaged according to impor- tance, cer- tain ex - penditures being con- sidered uniform. All articles averaged according to impor- tance, com- prising 68. 6U per cent of total expendi- tures. 1840 116.8 115.8 107.8 101.5 101.9 103.8 106.4 106.5 101.4 98.7 103.3 105.9 103.7 109. 1 113.9 113.1 113.3 113.5 101.8 100.3 100 100.6 114.9 103.4 133.5 100.3 13<). 3 137.9 115-9 113.2 117.3 133.9 137.3 133 119.4 113.4 104.8 104.4 99.9 96.6 106.9 105.7 108.5 106 99.4 93 91.9 93.6 94.3 94.2 93.3 93.2 98.5 98.7 90.1 89.3 89.8 93.1 96.7 96.7 92 88.9 93.6 99.1 98.5 103.4 103.4 106.3 108.5 109.6 109.1 102 100 95.9 100.3 84.1 96.1 88.3 114.3 107.9 108.8 100.3 107.5 112.7 112 106.4 108.2 106.5 102.4 103 101.7 96,6 103.4 105.8 100.3 104.5 101.8 95.4 95.5 96.2 97.4 99 95.7 96.2 97 7 1841 98 1 1842 90 1 1813 84 3 1844 85 184.') 88 2 1846 95.2 1847 95 3 1848 88 3 1849 83 5 ia50 89 2 1851 98 6 1853 97 9 18.>J 105.5 1854 105 18.55 .. 109 2 185(5 112 3 18r>7 114 1858 113.2 1859 102 9 I860 100 1861 94 1 \mi 101.6 1863 91.1 18t>4 110 7 1865 107.4 1866 134 1867 123.2 1S68 125.6 1869 . . 112 3 1870 119 1871 122.9 1873 121.4 1873 114.5 1874 . . 116.6 1875 114.6 1876 108.7 1877 107 1878 ... 1(J3.2 1879 95 1880 104.9 1881 108.4 1883 109.1 1883 106.6 1884 103.6 ],S85 93.3 1886 93.4 1887 94.5 1888 96.2 3889 98.5 1890 93.4 1891 94.7 2763 115 Relative prices by five-year periods, Ifi'^O-lSOl, for all articles grouped by different methods. Periods. All articles ainiply averaged. All articles averayed accortling to impor- tun.ie. cer- tain ex- penditures being con- sidered uniform. All articles averaged according toiuipur- tance. compiis- ing U8.00 per cent of total expendi- tures. 184(M4 108.8 103.2 1UC.6 108.2 131.5 178.8 137.5 110. y ia5.3 93.3 92.3 93.9 93.3 99.4 107.1 114 156.5 123. G 108. 9 lot. 4 93.7 96 91 1845-40 90.1 185()-.>t {•9.1 lS55-o9 110.3 l8«i(M)4 ..., 120.5 lStK>-«9 182. 4 1870-74 134.4 1875 7'.) 112 9 lSSO-8-l 10(3.3 188.V8D 9.). 2 1890-91 - 94. 1 FARM PUODUCTS LOWER IN 1840 THAN 1891. To ascertain what the prices were in gold from 1862 to 1878, in table 3cJ, reference should be had to the table already referred to on page 109. The average price to the farmer on these fifteen products for the first eight years— 1840 to 1847, inclusive— was 69.6, w^hile the average price for the same jBfteen products for the last eight years — 1884 to 1891— was 96.4, or more than 38 per cent higher during the last eight years than the former. BILVEK AND CROPS BEAR NO REU4TION TO EACH OTHER. When due consideration is given to the resources and facilities of the farmers to-day as compared with 1840, it can be demon- strated that each man can accomplisu twice as much, which is equivalent to doubling the prices of his products. We are con- stantly told, you will remember, by the advocates of free coinage, that prices of crops ana silver always rise and fall together, but when we recall the fact that silver was $1.32 per ounce in 1840, 98 cents in 1891, and is oniy 63 cents to-day, we must be convinced that sucn a statement has not a scintilla or eviaence upon which to rest. It will be admitted, for the sake of argument, that prices have fallen some since 1873, but not so rapidly as prior to that time, as evidenced by the foregoing table, although silver did not fall at all from 1864 to 1873, the period of greatest fall m prices. 27<« 116 It remains to observe in this connection what caused the low prices from 1840 to 1845, the high prices from 1853 to 1873, the low prices from 1885 to 1891, and the still lower prices from 1893 to 1896. » LOW PRICES OF 1840 EXPLAINED. At the close of the Napoleonic wars in 1815 commenced that long peace, during which the working force of the world recuperated for a quarter ot a century and turned its entire attention and energy to the production of those things that were needed by man- kind, and so successful were they in every endeavor that they made it possible to obtain the necessaries of life at lower prices than the world haa ever before enjoyed. HIGH PRICES OP 1863 TO 1883 EXPLAINED. Then came in rapid succession those military events which called the men from the shop and the field and converted the great producing army of the world into an army of wasteful con- sumers and actual destroyers of property of every kind. The war with Mexico raised prices about 25 per cent. Then followed the revolution in Germany, the French Revolution, the Crimea, the war of Napoleon 111 to make Italy " free from the Alps to the B3a," the Franco-English expedition against China, the great rebel- lion in the United States, the conquest of Mexico by Napoleon III, tne Franco-Prussian war, the era closing with the Turko- Russian war in 1877. Since then the world has been following exclusively the arts of peace and the human family has been unremittingly devoting itself to the production of the necessaries of life, ana has been assisted in this effort by the most marvelous discoveries and inventions in the history of mankind. The result was that prices of everything except labor continued to fall in a normal and natural way, as they should, down to 1892, when the prices of 223 articles in most common use again reached about the same level of 1840, as indicated in the tabulated statement No. 30, from page 100, volume 3, Senate report on prices, wages, and transportation. (See page 114.) RETROSPECT OF THE CENTURY. Before considering the period between 1893 and 1897, let us look backward for a moment from 1892 over the history of the United States and consider how, if in any way, the fall of prices could 117 have been prevented, and how now the exchangeable valne of the products of the United States can be increased. Certainly no one will deny that the period between 1879 and 1893 was not only the most prosperous in the history of our own country, but the most marvelous in development and advancement ever experienced by any people in the nistory of the world. HOW TO PREVENT PRICES FROM TALLINO. In the light of the past, then, the exchangeable value of the products of labor could only have been kept from falling from 1873 to 1893 in the following ways: First. By the perceptible mcrease in the wages of the producers of the 333 articles covered by the above tabulated statement. Second. By a disuse or destruction of a very considerable num- ber of those methods and processes by which all the necessaries of life have been greatly cheapened. Third. By setting one-half of the human family to killing the other half and destroying and wasting a considerable portion of the accumulated property now contributing to the convenience and comfort of mankind. But will any of the advocates of higher prices urge the adop- tion of either of the last two methods? Certainly no one will withhold his hopes that the first may continue to gain until the equitable adjustment or labor and capital is reached. 1840-1850 AND 1880-1890 COMPARED. When one compares the prices from 1840 to 1850 with the prices from 1885 to 1891 and finds that they are upon identically the same level, he wonders, in the face of all recent discoveries, in- ventions, methods, and processes, including the use of steam and electricity, why prices have not fallen to at least one-half what they were in the earlier period; and, indeed, they would have done so but for the simple reason that as rapidly as advantages have been gained in facilities in production wages have constantly risen until now, as we have seen, they are double what they were in 1840. Certainly no frank and careful investigator will claim that he can discover the slightest trace of the effect caused by silver legis- lation upon the affairs of this country between the years 1840 and 1891. 2763 118 It remains, therefore, only to inquire into the events since 1893 and ascertain the causes of our misfortunes, study the sources of our ills, and clearly determine the factors that have produced the long-to-be-remembered crisis of 1893 and mark the reasons for its painful continuance. SPECULATION BEQAX IN 188i AND ENDED IN PANIC IN 1893. Beginning with 1884, simultaneously with the same movement in nearly all parts of the civilized world, our people entered a speculative era which terminated in the panic of 1893. THE CAUSES 01" THE PRESENT CRISIS. During these nine years the spirit of speculation crept over every section and into every locality of the land, firing the gam- bling instinct of the people with that false philosophy that some- thing can be made out of nothing. The result was that all classes invested their fortunes or earnings or the proceeds of mortgages upon their homes in the construction bonds or stocks of railroads, street-car lines, gas companies, or bought lots cut out of farms surrounding every city and village in the land, until all our ready money was consumed in nonproductive investments. Finally every man became frightened at his neighbor's condition, credit was universally exhausted, and forced liquidation began and has been going on steadily ever since. FREE SILVER WILL NOT ERADICATE THE OAMBLINa INSTINCT. Certainly no one will claim that the free coinage of silver will in the slightest degree relieve this situation nor eradicate the in- stinct that makes the whole human family gamblers at times. NATIONAL CREDIT IS BTRAINXD. While individual credit was becoming exhausted, unfortunately for our nation and our people, the Government was laying a break- ing strain upon its credit by increasing its demand obligations at the rate of fifty millions a year, without increasing its reserve to the extent of a single dollar, until we exhibited to the world ^he pitiable spectacle of having more than a thousand million demand obligations out and but a paltry one hundred million to protect it, which in more conservative days we thought necessary to protect only $346,000,000 of United States notes. 119 FREE COINAGE WILL NOT STRENGTHEN THE CREDIT OF THE NATION. Certainly the advocate of free coinage will not claim that the credit of the Government would have been strengthened by an unlimited amount of the very thing that was fast carrying us on to repudiation? Weakened by the expenditures of all the cash accounts of the people and the exhaustion of personal credit, and with our national credit strained to the breaking point, we were in no condition to bear the suspicion that this nation might construe the word ' ' coin " to mean silver as well as gold, thereby compelling our creditors — indeed, all creditors — to accept 50 cents of value as a full payment for 100 cents of obligation. This was the logical and inevitable result of the free coinage of silver; hence its agitation and accom- plishment would not only not have relieved us, but plunged us still deeper into commercial trouble and made our financial ruin complete. TREE COINAGE WILL NOT PRODUCE REVENUE NOR LESSEN EXPENDITURES. Notwithstanding this combination of untoward circumstances, which called for the highest order of statesmanship and financial skill, little or no thought was given to the real problem calling for immediate solution. But the legislative department of the Government enacted a law that, either because of what it prom- ised, threatened, or did actually do in failing to produce sufficient revenue to support the Government by an average of about fifty millions a year for four consecutive years, brought this, the wealthiest and most powerful nation of the world, to the very verge of bankruptcy, dishonor, and eternal shame. Now, it can scarcely be believed by anyone that the free coinage of silver would, on the one hand, have increased our revenues to the extent of a single cent, to say nothing of $300,000,000, nor reduced our expenditures a single cent, to say nothing of $300,000,000. These were the positive, direct, and incidental causes that led to the crisis of 1893, which has been protracted by unnecessary war cries and the persistent demand of a portion of our people that the Government of the United States offer its people in the redemption of its obligations a dollar that could not exceed 50 cents in actual value. 120 ACUTE LIQUIDATION WAS NOT RELIEVED BY A PROPER CURRENCY SYSTEM. Severe as has been the strain, difficult as has been our prob- lem, complicated as has been the situation, unfortunately our currency system has not been such as to assist in relieving us in the slightest degree from the consequences of acute liquidation, but on the other hand actually precipitated it with all its disas- trous results. FREE COINAGE WILL NOT GIVE US AN ELASTIC CURRENCY. Now, no one who is at all familiar with the science of exchange will claim that the free coinage of silver would have furnished the one essential element — a responsive and elastic currency — which might and probably would have saved us from the shock of panic and prevented the waste and destruction in values that necessarily follows a change from a credit to a cash basis. Herein lies the secret and full explanation of the ruinous prices of the past four years, and therefore no student of a judicial tempera- ment will attempt to draw any inference from these abnormal times upon which to base a course of reasoning that he can apply to natural conditions. IF HIGHER PRICES IS THE ONLY OBJECT WE SHOULD START THE PAPER MILLS AND PRINTING PRESSES. From this review of nearly sixty years of our history we are justified in concluding that not a single theory advanced by the advocate of free coinage is substantiated by facts established by our own experience or those of the world, and are compelled to say that if with given wages higher and higher prices are desir- able without regard to an increased exchangeable value of the products of labor the United States would be unwise in stopping at any form of metal money, and should at once resort to the paper mill and printing presses. WHAT IS MATERIAL CIVILIZATION. If, on the other hand, the purpose of this commercial struggle and material civilization is to give greater and greater purchasing power to a day's labor, so that every home may have more and more of the comforts of life, and instead of our present necessaries becoming luxuries many present luxuries may become and be regarded as necessaries, greater purchasing power should be given to every day's labor, the whole world should continue in the arts of 27«3 121 peace, and we shonld welcome every discovery and process that would tend to lessen the cost of those things that make life worth living. THE TWENTIETH CENTURY WIIX OPEN WITH THE FIRST REAL BATTLE FOR COMMERCIAL. SUPREMACY. The twentieth century will open with the first really great battle for the commercial supremacy of the world. With what arms shall we enter the fight? Shall we depend upon bows and arrows while our competitors arm with the most approved muskets? Shall we depend upon the old wooden hull, with its white wings stretching out from the mast waiting patiently for a favorable wind, while other competitors traverse the sea in steel-clad grey- hounds? Shall we subject every producer of the United States to an unequal contest by tlie adoption of a measure of value that will suffer a discount at every turn in every market of the world, when this trade contest is to be settled by a one-quarter, one-eighth, one-sixteenth, or one thirty-second of a cent? THE DISADVANTAGE IN EXCHANGE ALONE MEANS FAILURE. The certain disaster that is sure to follow the disadvantage in exchange alone by a country using a different measure of value from the great commercial nations of the world has been so keenly felt that Japan and Russia, the only two remaining silver-stand- ard countries where the light of civilization has begun to dawn and the energizing thrill of commerce has been felt, have since the 1st of January adopted measures establishing the gold stand- ard. Russia, by an Imperial decree of January 3, 1897, established the gold standard, reducing silver to the place of subsidiary coins, while Japan, by legislative enactment just passed both legislative bodies, has determined a ratio for gold and silver — 32^^ to 1 — with the distinct purpose of establishing within their own realm the gold standard also, and reducing the use of silver to the subsidiary coins. If the United States would take her proper place at the head of all nations in the grand march of civilization, she must remove all barriers between the genius of her people and her mighty army of producers and the world's consumers, instead of inviting the most fatal obstacle to her supremacy. 2763 122 THE DEMAND OP THE HOUR. Theories must give way to experience; fancy must yield to facts; patriotic impulse must override blind partisanship; prejudice and false assumption will wither in the sunlight of truth. This great question, involving as it does the hope of the people and the future of the nation itself, calls loudly for the display of candor, earnest thought, moral courage, the highest order of patriotism, and our best statesmanship. In conclusion, therefore, let me express the hope that in the consideration of -this subject at least no attempt will be made to overlook, forget, and much less obscure or suppress the truth, but that the responsibilities of the citizens of this Republic may be kept constantly in view. A careful study of each proposition and the adaptation of the various principles involved in this measure to our condition and needs will, I think, justify the following conclusions: Fii'st. Our banking business would be taken out of politics. Second. Our Government would be taken out of the banking business. Third. We would escape the expense and danger always attend- ing fiat money issues. Fourth. We would save in interest on our national debt $12,000,000 every year. Fifth. We would demonstrate to the world that our credit was higher than that of any other nation, the rate of interest on our public debt being reduced to 2 per cent, while that of Great Britain is 2|. Sixth. Our measure of value being definitely determined and permanently established, hundreds of millions of dollars from abroad and at home would instantly seek the channels of trade and at constantly lowering rates of interest, affording every good enterprise ample means for its nromotion. Seventh. Every dollar of our currency would be good enough to pass current in every land and travel around the entire world side by side with the Bank of England notes. Eighth. The entire reserves of our banks would be crold or its equivalent. Ninth. A vast amount of gold and silver, taking the place of 123 our smaller bills, would circulate among all our people with a most salutary effect. Tenth. Our smaller villages and more remote places would have the advantage of banking privileges, and equal justice would bo meted out to every honest man entitled to credit. Eleventh. The producers of every kind and in every section would be supplied with ample currency at reasonable rates of interest to handle or hold their crops or manufactures until they desired to dispose of them. Twelfth. The rates of interest would be much lowered and equalized throughout the United States, Thirteenth. Instead of our eight different kinds of money we would have but two besides gold and silver, and ultimately but one. Fourteenth. All holders of notes would be guaranteed against loss, the United States redeeming them in case of liquidation. Fifteenth. All depositors in national banks could be insured against loss in case of a bank failure. Sixteenth. Bank panics and currency famines would be impos- sible, and therefore unknown. Seventeenth. The cotton and grain growers, the stock raisers, and manufacturers would soon learn that their own property — stock, grain, cotton, and merchandise— is as good a basis for money in the form of currency as gold or silver, and that the only prerequisites are a fixed measure of value, means of repayment, and a good name. Eighteenth. The credit of the nation could not then be strained and brought in question, as it has been during the past four years, paralyzing trade, prostrating commerce, ruining enterprises, and destroying all credit, which has become so important a part ot modern civilization. Nineteenth. All banking institutions would seek protection under this law, the system would become uniform and universal, the individual would be better served, and the public better pro- tected. Twentieth. Doubt would give way to certainty, fear to hope, confusion to order, hesitation to confidence, and upon our integ- rity and intelligence would rest the beneficent smile of Providence. Let us hope, then, that in the consideration of a subject that should be absolutely free from political prejudices, the bitterness 27t53 124 of the partisan contest may disappear; tliat the charge, insinuar tion, and suspicion even of dishonest intention on the part of a great portion of the American people may linger no longer, but that, with a full realization of the v/rongs suffered and injuries and losses inflicted upon them, we may, as true men, patriotic citizens, and wise legislators, having in trust the interests not only of our own immediate neighborhood but of every section, anfl of every man even living under our flag — realizing that he is £)ur brother — seek out the cause of his complaint and study how to guarantee to him equal opportunities under the operation of just laws. 2763 INDEX Page. Advantage of new system reaped by farmers and producers 06 Advantages to banks of H. R. 5'J 83 twenty specific 122,123 Advisory board, advantages of 33 Agricultural products, table showing relative prices of 112,113 Alternating standard a curse 93 Appreciation of gold 107 tested by wages 109 in terest on Government bonds 1 09 Arthur (President), warning by 18 Assets, banks may issue notes against 8 Government may reimburse itself out of insolvent bank's 11, 76 note holder should have a prior lien on 81 notes against, how issued 8,43 Assistant cashier, powers of , to sign notes, etc 13,82 Atkinson, Edward, estimates of 09 Australasia 98 Baltimore plan, the 24 Bank loans, life of 107 note circulation, amount of 23 notes, redemption of national 73 officers, oaths of, how administered 13,82 of England compared with other English banks 54 diagram showing circulation of 51 forfeiture of issues of other banks assumed by 53 metal expansion of 27 notes a legal tender 53 secured circulation of 53 table showing circulation of, 1894-95 54 France, diagram showing circulation of 61 table showing circulation of 60 loans its notes 25 organization of 59 Germany (Imperial), authorized circulation of 57 essentially a bank of note issues 58 loans its notes instead of deposits 58 note issues of, exceeding the legal limit 58 notes of, not a legal tender 56 table showing circulation of 58 Banking capital must be attracted by any new plan 83 function. Government must be relieved of the 17 in Germany - 27 Canada - 23.47 Scotland 49 interests should bs unaffected by political changes 31 system bad, our present 20 the result of evolution - 23 Banks can maintain gold payments better than the Government 86 2763 125 126 Page. Banks, causes of failure of 81 diagram showing circulation of 45 directors must examine their 81 earnings of C7 in other countries maintain gold payments 80 ma J' insure depositors against loss 10.76 issue notes against assets 8.43 not speculate 12.80 must not promote enterprises. 80 national, not favored institutions 67 New Hampshire, table showing condition of, under Suffolk sys- tem 64, C5 note issues of small 60 note^ shall be a legal tender between 9,73 of city and country compared 2o organization of 35 outside clearing house districts, how they shall clear 9, 74 possibilities of the present, under a "bufifolk system" 62 proportion of State and national 67 shall organize, how 5.35 small, need more notes prox>ortJonately 36 table showing circulation of 46 deposits of 78 total resources of 88 with $20,(X)0 capital authorized 10,74 Battle for com nercial supremacy, twentieth century will open with first real 121 of material civilization, the real 110 Bill n. R. 50, advantages to banks under 83 discussion of, by sections 33-83 enabling clause of 80 eriiarantee funds provided in 11,79 penal provisions of 12,80 system proposed by, to bo gradually adopted 63 text of 4 twenty specific advantages secured in 122,123 what a bank might do under 68 6442 redrafted in H. R. 50 14 Bimetallism, international 19 so called, has always brought about monometallism 105 W. A. Shaw on 105 Bond notes, amount of, that banks shall take out 5,35 redeemable in gold at bank of issue. 39 shall be alegal tender between banks 6,39 syndicate of 1895 46 Bonds, appreciation of gold tested by interest on 109 exchange of present bond^ for new 6,36 fund the national debt in gold 17 Government must sell, to obtain gold 86 how to be issued ,.. 35 may be exchanged for gold or legal-tender money 12,80 sold for revenue 13,82 of United States payable in silver as well as in gold 17 our demand obligations require the sale of 18 prepared by Secretary Foster 18 price at which they will be received 5,35 when due 6 8763 127 Page. Branch banks maybe desirable 74 Branches, banks may establish.. 10,74 Business done by drafts and checks 30 Canada, credit currency in 28,47 Canadian banking system 28 banks, diagram showing circulation of 48 Capital, equitable adjustment of labor and 117 Causes of our deplorable financial condition 14 the present crisis 118 failure of banks 81 Century, retrospect of the 116 twentieth, will open with first real battle for commercial su- premacy 121 Changes proposed 32 Charters for clearing houses, Government 83 Cheap, money should be __ 84 Checks and drafts, business done by 30 Circulation, amount of bank-note 23 coin and paper, of the United States, 1860-1896 102,103 comparison of, per capita 97 graduated tax upon 70 in different sections of the United States to-day compared with prices 101 desirable, metal 38 etc., of failed banks in each year _ 71 of Bank of England, diagram showing 51 secured 53 table showing 54 Bank of France, diagram showing 61 table showing 60 Bank of Germany, diagram showing 57 table showing 58 Canadian banks, diagram and table showing 48 national banks, diagram showing 45 table showing 46 Scotch banks, diagram showing 49 table showing 50 per capita, free coinage, mines and mints bear no relation to 98 how determined 96 tn the United States 30 of gold, Hawaii has the greatest 96 sil ver. Straits Settlements have the greatest, 96 specie and bank-note, in United States, 18U0-1859, table show- ing 100.101 under Suffolk system, expansion of 63 Civilization, the real battle of material 110 what is material 130 Clearing-house charters may be granted by the Government 13,82 districts, advantages of 72 banks must belong to some one of the 9,72 how formed 9,72 notes must be returned to their respective. .. 9,72 houses. Government charters for 82 in New York and Boston, operations of 70 Coin, construing the meaning of the word - 86 2763 128 Page. Coin, juggling -with the word 17 Commercial nations have an ample supply of gold „.. 37 supremacy, twentieth century will open with first real battle for 121 Commodity, gold only a 88 Comptroller of the Currency, compensation of, inadequate 34 likely to have local prejudices 33 report of 42,G7,81 Condition of the country demands a new financial system 66 Conditions, local, effect of, on per capita circulation 96 Conditions necessary to permanent prosperity 4 Congestion of money in financial centers 31 Congress does many foolish things 15 Continuing body, importance of, in comptrolling department 34 Contraction of currency impossible under H. R. 50 37,41 Credit currency, all experience justifies 28 in Canada 47 Great Britain 51 too limited 53 Irish banks 26 other countries 26 Scotland 49 must be obtained 89 provisions for 43 reservation of, by Bank of England 52 Sir Robert Peel on 52 sound in principle 22 Credit is strained, national 118 strained 15 of the nation, free coinage will not strengthen the 119 Crisis, the present, causes of 118 due to want of wise counsel 33 Crops and silver bear no relation to each other 115 present system affords no means for raising money to move 46 Currency, advantage of a uniform sj'stem of 75 a secured, is inelastic 23 credit. See Credit. fixed in quantity 31 free coinage of silver will not give us an elastic 120 movement contradicting natural law 46 no contraction of , under H. R. 50 37 should be reformed, our 4 want of a sound and elastic, the trouble 21 what a bank actually does to get 67 Current redemption of notes insured under H. R. 50 74 C irse of an alter;. ating standard 93 Djbt, national, amount of 31 fund the 17 funding of 35 Harrison Administration paid off 23 ought to be funded in a popular loan 31 will soon be paid or must be funded 23 Debts, Government without resources to meet its 16 Deficiency in I'ovenue, bonds may be sold to provide for 13,82 power of Secretary of the Tre:isury to meet 83 Demagogues take advantage of ignorance to arouse prejudice G8 Demand obligations, danger of 42 2763 129 Page. Demand obligations, dates for canceling, fixed 43 free coinage will not retire the 93 Government redemption of 31 increased in 1890 15 must be retired 89 require the sale of bonds, our 16 retire all 17 See also Oreenbacks. Demand of the hour, the 123 Demonetization defined 90 Department of Finance provided 4,33 Depositors, insurance of , against loss by bank failures 11,76 Depositors of failed bank paid by the Government in sixty days 11,76 Deposits of all banks and of failed banks, table showing 78 Diagnosis, treatment depends upon the 14 Diagram showing circulation of Bank of England 51 Bank of France 61 Bank of Germany 57 Canadian banks 48 English joint stock banks 56 national banks 45 Scotch banks 49 Director of the Mint, report of the 89,94 Directors, duty of 81 must examine their banks 13,81 restrictions concerning loans to 13,80 Disaster wrought by Wilson-Gorman Act 119 Dividends of failed banks average 75 per cent , 78 Duration of bonds 6,36 Earnings of national banks 67 Eckels, James H. (Comptroller of the Currency), report of 43,67,81 Elastic currency, free coinage of silver will not give us an 130 Secretary Windom's views on 44 want of, the trouble 21 Elasticity, conditionsof 33 Enabling clause of H. R. 50 80 English bank act of 1814, suspension of 27,53.53 joint stock banks, diagram showing circulation of 56 table showing circulation of 55 Enterprises, banks must notpromote 80 Examination of banks by directors. 13,81 Exchange, disadvantage in, means failure 131 of bonds for gold or legal-tender money 13,80 present bonds for new bonds 6,36 notes for gold and silver by banks in reserve cities 7,40 outside reserve cities. . . 7, 40 Expenditures, free coinage of silver will not lessen 119 Experience justifies credit currency 28 of other countries valuable 23 theories must give way to 133 Evils from which wo suffer, importance of understanding 14 to be obviated 31 Evolution, banking the result of 23 selection of gold as a standard the result of 98 Failed banks, average dividends o!:, are 75 per cent 78 circulation of, in each year 71 deposits of, table showing 78 27C3— 9 130 Page. Failed tanks, Government shall rocleem notes of 10,75 l^'ailure, disadvantage in exchange means -- 121 Government redemption of notes in case of -. 75 of national banks, causes of. 81 Farm products, lower in ISiOthan in 1891 115 Farmers and producers will reap advantages of new system 68 Finance, department of 4,33 ministers of 4,33 Finances should be readjusted, our 4 Foreigners, investments of, withdrawn 16 Forfeiture of issues of other banks assumed by Bank of England. 53 Foster, Charles (Secretary of the Treasury), prepared bonds 18 Fi'ance, attempt of, to maintain parity of two metals 105 Bank of. See Bank. Free coinage brings no metal to the mint necessarily 90 has not increased our gold as rapidly as limited coinage has increased silver 90 never has raised the price of any metal 91 of silver. See Silver. two metals prevents their concurrent circulation 91 silver advocates, argumentative methods of 110 Functional trouble affecting our monetary system 20 Fundamental trouble, the 14 Funding the national debt 17,33,35,38 Funds, investment of the two guarantee funds provided by bill H. R. 50. 11, 79 Gain to the Government in funding thedebt 41 Gambling instinct, free silver coinage will not eradicate the 118 Germany, banking in... 27 Germany, Bank of. See Bank. Gold and silver countries, metal basis of, compared 105 in the United States, table showing stock of 89 reservesof banks shall be in.. 40 appreciation or depreciation of, how determined 107 as a standard, selection of, the result of evolution 96 drained from the Treasury 16 future supply of 38 Government must sell bonds to obtain 86 has fallen one-half or wages have doubled since 1840 109 Hawaii has greatest per capita circulation of 96 hoarding 16 in banks and gold required 41 is only a commodity 88 not rapidly increased by free coinage 90 payments, banks can maintain, better than the Government 86 in other countries maintain 86 Government has no natural facilities for maintaining. 80 our present gold supply sufficient to maintain 87 premium on, and gold value of United States legal-tender notes, 1862-1879, table showing 109 prices in, of 223 articles, 1810-1891, table showing 114 production of 38 reserve. Bank of England protects, by raising rate of interest 53 standard adopted by Russia and Japan 131 country should place itself squarely on the 19 countries use more silver than silver-standard coun- tries 96 difficulty of maintaining the 16 2763 J t 131 Page. Gold standard has the selection of, worked injustice 107 our people favor the 31 stock of,in various countries. 37 in the banks and the Treasury, ample 37 supply sufficient to maintain gold payments 87 will be obtained by any country selecting the gold standard 96 Government a guarantor of the bank's obligations 31 debt, reasons for funding the 38 gain to the, in funding the debt 41 has no natural facilities for maintaining gold payments. . . 86 issues discarded by leading nations 43 may grant clearing-house charters 13 reimburse itself out of assets of bank 11,76 must be relieved of banking functions 17 sell bonds to obtain gold 86 not to pay out notes or certificates after 1898-99 8,43 redeem bond notes 39 redemption of demand obligations 31 notes in case of failure 75 reserve unwise, large 19 shall pay depositors of insolvent bank in sixty days 11,76 redeem notes of insolvent banks 10,75 should go out of the warehouse business 40 without resources to meet its debts 16 Great Britain, credit currency in. 36,51,53 Greenbacks, cost of maintaining 43 gain to the Government in retiring the 41 may never be retired 16 protecting the ., 15 See also Demand obligations. Guaranty funds, how invested 11,79 Guarantor of bank obligations. Government as a 31 Harrison Administration paid off national debt 33 Hawaii has greatest per capita circulation in gold 98 Higher prices 117 Hoarding gold 16 of money 31 Honesty a necessity 17 Ignorance of technical terms... 34 Injustice being done sparsely settled sections.... . 44 has the selection the gold standard worked 107 Insurance of depositors against loss by bank failures 10,76 tax, low rate of 78 Insolvent banks. See Failed banks. Interest, free coinaj^o of silver means high rates of 93 equalization and lowering of rates of... 69 notes to bear - 10,75 on Government bonds, appreciation of gold tested by 109 raising the rate of, by the Bank of England 53 rates of 33 saving to the people in 84 International bimetallism. 19 Investment of guaranty funds provided in H. R. 50 11,79 Investments of foreigners withdrawn 16 Irish banks, credit currency of &i Issue of bonds, how made 35 Japan, free cokiage of silver in - 91 132 Page. Joint stock banks of England, diagram showing circulation of 56 table showing circulation of 55 Labor and capital, equitable adjustment of 117 Layman, plan adopted must be clear even to the 83 Legal tender. Bank of England notes a 53 between banks, notes shall be a 6,9,39,73 notes, table shoAving gold value of 109 quality of notes limited 39 Sea Demand obligations and Greenbacks. Legislation demanded, patriotic 124 Limit of loans made by bank to its officers and employees 12,80 Lincoln, Abraham, foresight of 21 Liquidation, acute, was not relieved by a proper currency system 120 Loaning deposits and loaning bank notes are identical 24 Loans, life of bank 107 real-estate 107 to officers and directors of bank, limit of 12,80 Low prices a curse, are Ill Maintaining the greenbacks, cost of 43 Measure of value must be unalterably fixed 16 should be unequivocal 16,31 Metal basis of gold and silver couu tries compared 105 circulation desii-able 38 poorer or cheaper drives out the better or dearer 105 Metallic expansion of the Bank of England 27 Mexico 98 money, use of, salutary 20 Ministers of finance 4,33 should be removed from political influence 33 Money, good, and prices bear no z'elation to each other 97 hoarding and congestion of 31 kinds of, in circulation 31 locked up in reserves 19 red-dog 24 should be cheap 84 Monetary system, functional trouble affecting our 20 systems and stocks of money in principal countries of the world 94,95 Monometallism, so-called bimetallism has always brought 105 National banks. See Banks. debt. See Debt. credit always safe 18 currency wanted 70 New Hampshire banks under the Suffolk system 63 table showing condi- tionof 64,65 Note holder should have a prior lien on assets 84 issues of small banks .: 60 Notes against assets, how issued 8,43 assistant cashier may sign 13 Bank of France loans its 25 Germany loans its 58 exchange of, for gold and silver by banks in reserve cities 7, 40 outside reserve cities.. 7,40 facilities for redemption of 74 issued against assets.. 8,43 must be returned to their respective clearing-house districts 9, 73 2763 133 Page. Notes of insolvent banks, Government shall redeem 10,75 reserve of banks against 8,43 suspension of tax upon 9,44 tax to be paid on 5,a5 to bear interest 10,75 Oathsof bank oflacers, how administered 13 Officers and directors, limitof loans to 12,80 Organic difficulties must be removed 14 disastrous effects of 16 Organization of banks 35 Panic in 1893, speculation began in 1884 and ended in 118 Panics, speculation the chief cause of 52 Paper money foolishly kept in circulation 15 Partisanship should disappear 1^ Patriotic legislation demanded 122 Peel, Sir Robert, on credit currency 53 Penal provisions of H. R. 50 13,80 Peru 98 Plan adopted must be clear even to the layman 83 banking capital must be attracted by any new 83 Political changes should not affect our banking system 31 influence, ministers of finance should be removed from 33 Popular loan, debt should be funded in a 31 Power for putting the act into operation 80 Prejudice, demagogues arouse 68 Premium on gold and gold value of United States legal-tender notes, table showing 109 Price at which bonds will be received 5,35 Prices a curse, are low Ill and good money bear no relation to each other 97 by five-year periods, 1840-1891, table showing 115 circulation in different sections of the United States to-day com- pared with 104 United States at different periods compared with. 104 fall of 115,116 high, of 1853-1883 explained 116 how to prevent them from falling 117 in gold of 233 articles, 1840-1891, table showing 114 low, of 1840 explained 116 of agricultural products, table showing relative 112, llS 1840-1850 and 1880-1890 compared 117 wages, and transportation. Senate report on 107,111 Producers swindled through tlie silver standard 106 Promotion of enterprises, banks may not engage in 80 Proposed system to be gradually adopted 63 Prosperity, fixed standard important to permanent 88 Rate of interest, raising the, by the Bank of England 53 Rates of interest 33 equalization and lowering of 69 Ratios, commercial and coinage 91,93 Real-estate loans, life of 107 "Red-dog" money 34 Redemption under Suffolk system, cost of 63 fund for United States national-bank notes 70 how used 9,70 use of excess of. over5 per cent 9.70 of bond notesat banks of issue - 39 2763 134 Page. Redemption national-bank notes — • 73 notes, facilities for 74 in case of failure, by the Government 75 Relief, intense desire for ^^ Remedy left, the only. 16 Report of the Comptroller of the Currency 45,81 Director of the Mint.. 89,94 Reserve unwise, large Government 19 of bank against notes issued against assets 8,43 Reserves of banks shall be gold and silver 40 Resources of the banks, total.. 88 Responsibilities of citizens 123 Retrospect of the century 116 Revenue, bonds may be sold to provide for deficiency in 13,83 free coinage of silver will not produce 119 lack of, not our trouble 18 power of Secretary of the. Treasury to meet any deficiency in. 83 Boot, L. Carroll (Secretary of the sound currency committee of the Re- form Club of New York), diagrams prepared by 45,48,49,51,56,57,61 Russia and Japan, experience of 91,97,98,131 Scotch banks, credit currency of 36 diagram showing circulation of 49 table showing circulation of 50 Scotland, credit currency in 38,49 Secured currency is inelastic 33 Secretary of the Treasury, power of, to meet any deficiency in revenue. . 83 Shaw, W. A., on bimetallism 105 Silver and crops bear no relation to each other.. 115 bonds of the United States payable in. 17 free coinage of, American people opposed to 19 at the present ratio, would destroy two-thirds of our money 98 in Japan 91 means high rates of interest 93 will not cure our ills 89 eradicate the gambling instinct 118 give us an elastic currency 120 produce revenue 119 retire our demand obligations 93 strengthen the credit of the nation 119 standard, producers swindled through the 106 Straits Settlements have greatest per capita circulation of 96 warehousing of , in the Treasury 31 work provided for 38 Small banks provided for 74 capital, banks with, authorized 10,74 Sound currency system, three objects essential to 88 want of, the trouble y 31 Speculation began in 1884 and ended in panic in 1893 118 by banks prohibited 13,80 the chief cause of panics ,. 52 Speculations started by credit, not money 29 Standard, a fixed, important to permanent prosperity 88 curse of an alternating 93 of the civilized world, we should ha ve the 93 selection of gold as the, the result of evolution 96 tampering with the 00 2763 135 Page. Standard, unequivocal, wanted above all things... 1()6 State bank notes not wanted I'C? banks, number of -. >'>'i Sfcialt Settlements, have greatest per capita circulation in silver tS Suffolk system — - 2o cost of redemption under 6:i expansion of currency under 62 New Hampshire banks under 62 table showing condition of. 6 1, 65 Suspension of tax upon notes 9,44 the English bank act 27,52.53 Table showing circulation of Bank of England 51 France 60 Germany 53,59 Canadian banks. 48 English joint-stock banks 55 national banks 46,47 Scotch banks 50 coin and paper circulation of the United States, 1869- 1880 102,103 deposits of failed banks 78 monetary systems and stocks of money of the principal nations of the world 94,95 premium on gold and gold value of United States legal- tender notes, 1862-1879 109 prices by five-year periods, 1840-1891 115 relative gold prices of 223 articles, 1840-1891 114 prices of agricultural products, 1840-1891 112,113 wages in all occupations, 1840-1891 108 specie and bank-note circulation of the United States, 1800-1859 100,101 stock of gold and silver in the United States 89 Tariff of 1894, disaster wrought by - 119 will not solve our present difl^culties 3 Tax, low rate of insurance 78 to be paid on notes 5,35 upon circulation, graduated 70 notes, suspension of 9 Technical terms, ignorance of 24 Text of bill H. R. 50 , 4 Theories must give way to experience 122 Treasury, gold drained from the 16 Treatment depends upon the diagnosis 1^ Uniform system of currency, advantage of 75 United States 98 Wages, appreciation of gold tested by 1C9 have doubled since 1840 or go! d has fallen one-half - 109 relative, in all occupations, 1810-1891, table showing 108 Warehouse business, Government should go out of the 40 Warehousing of silver in the Treasury. 31 Wilson-Gorman act, disaster wrought by the - - 119 Windom, William (Secretary of the Treasury), on elastic currency 4i 2763 # Dinaer Gaylord Bros. NCf]!.';'' Makers Stockton, Calif. PAT. JAN. 21. 1908 m-: 741837 UNIVERSITY OF CALIFORNIA LIBRARY ,V„„