suspended by order of the Government upon certain conditions when the governor and deputy governor of the bank certified that panic had caused a portion of the bank notes nominally in circulation to be locked up and withdrawn from (actual) circulation. The authority of Mr. Gladstone's administration had declined when this bill was introduced * * * and, assailed from many quarters, was withdrawn without the opinion of Parliament being taken on its merits. It was contended that Mr. Low's attempt ** * * to define beforehand the conditions of a panic was a logical contradiction. A panic has no laws; it has no fixed shape. It is precipitated we know not how, and we are in the midst of it before we are aware."

This amendment proposed by Mr. Low proclaims the fact "that in a stringency the people lock up the currency of the Bank of England, and that the law locks up its gold, and in its helplessness a crisis is thus actually precipitated and continued by the very provision of law avowedly enacted with the sole purpose of preventing or allaying crises such as are now created by it."

I repeat, the days of a run on a bank for specie, by presenting its currency for redemption, even in crises, are past, never to return, even under as liberal an issue of currency as was allowed by the old New England Suffolk system and that of Virginia and Louisiana (look at our experience in the currency famine and gold craze of 1893), always provided that every bank is compelled to redeem its currency in some (6 reserve city," as well as at its own counter, and also that the Government requires a very small safety-fund tax, to recoup itself for any loss from guaranteeing every dollar of currency issued by any bank, and keeps the same supervision and control as now of all banks issuing currency.

Of course, I shall be told of the suspension of specie payments by New England banks in 1857; but the fact is that they only nominally suspended specie payments at that time. Specie did not go to a premium, and all that was legitimately demanded of them by their cus tomers in the way of their legitimate business was paid to them "on demand," and the banks soon recalled their nominal suspension. They continued to supply their customers with specie through that crisis, precisely as France and Germany now furnish gold to their customers. They kept their currency at par with specie precisely as the Bank of France and the Bank of Germany now sustain the silver and currency of those countries at par with gold. The State banks of New England, Virginia, Louisiana, etc., made a better showing from 1840 through 1857 and up to 1864 than the Bank of England did in the same period, during which period the restriction on issuing currency by the Bank of England was suspended several times.

Political and party rivalry, and that only, prevented the passage of the Low amendment by the British Parliament, and the safe removal of the hideous wart from the nose of the comely Old Lady of Threadneedle street, that looks so lovely to some, and that without leaving a

scar.

Again, normally low rates of interest can not prevail where the true bank-note currency is not issued. This country has not seen a normally issued bank note since the State bank notes were taxed out of existence. It can be proven that the purchasing value of the wages or income of every man in this country is reduced by nearly one per centum per annum by our faulty banking, currency, and Treasury system.

1 will quote only one more opinion on the issue of currency system of the Bank of England, but it is the final judgment of one of the most careful and experienced investigators and financial experts and writers in Europe. He expresses practically their unanimous opinion. Pierre des Essarts, chief of the bureau of economics and statistics of the Bank of France, author of the History of Banking in All the Leading Nations, etc., in an article published in the Journal of Commerce and Commercial Bulletin of New York, March 10, 1897 (which no one can afford not to read), says:

* ** *

"The true bank note is unknown in the United States. The bank note should be simply a means of transforming a debt into cash. As between individuals the note is cash; but as between the issuing bank and the holder it is a credit instrument, because the note holder has loaned to the bank the coin he has a right to demand. When a bank of issue is properly managed, the circulation takes care of itself. * * These notes are sufficiently guaranteed if the property and securities against which they are issued (the assets of the bank) are valid and of sufficient value. * * * England has adopted an automatic device for issuing currency notes which works well in ordinary times, but the insufficiency of which has often been demonstrated in critical times. We may note in addition that the bank's regulations for issuing currency notes, which are practically useless in normal situations, become futile or even dangerous when the bank is called upon for unusual exertions."

No man can suggest any substantial advantage in the division of the issue department from the discount department of the Bank of England over and above the law and practice of the Bank of Germany or the Bank of France or the New England Suffolk system as it existed before 1864, while its disadvantages are clearly stated by authorities beyond question. In fact, as I have said, in the Bank of England and nowhere else, excepting partially under our national bank act, is any approach to the English system in operation. It is patent to all that very nearly the universal opinion of European financiers is that the success of the Bank of England is in spite of-not because of its thoroughly abnormal internal machinery for issuing currency and handling gold.

My excuse for this long paper is the strong effort that is being made not only to engraft upon our national banking system the currency system of the Bank of England, but to divert the United States Treasury, as Washington, Hamilton, and Gallatin made it, still further from its legitimate functions, and make it a huge bank, modelled upon what European financiers believe to be one of the absurdities of the English bank act of 1844.

Furthermore, the Bank of England is confessedly a monopoly, and its monopoly of currency the most excessive of its oppressive features. Our people demand all the freedom, the convenience, and the economy of the true bank-note currency of the old State banks, plus the security of national supervision and control of our national law, and also plus a small tax on currency to recoup the United States Treasury for its guarantee of every dollar of currency issued by the Government to the banks and put in circulation by them.

They have repeatedly refused to give up the United States legaltender notes. They probably would consent that they be reduced to $200,000,000 by paying $146,000,000 of them with the gold now in the Treasury. They demand that the old Suffolk system shall be national

ized, that the only power that can keep the $200,000,000 legal tender notes and all other currency and coin put in circulation at par with gold, absolutely free of expense, viz, the bank, shall do so by assuming the current redemption of the greenbacks pro rata to their capital.

No impartial investigator who will carefully examine the immense. body of facts furnished by the Comptroller of the Currency, and those furnished by the chairman and published in the reports at the hear ings before the committee, can come to any other conclusion than that no substantial relief can come to the United States Treasury by the enactment of any bill that is not drawn on the lines of the Walker bill (H. R. 10333).

Respectfully submitted.

J. H. WALKER, Chairman.

APPENDIX.

Not a single person has appeared before our committee who did not condemn the principle on which the Hill-Fowler bill (H. R. 10289) is drawn, and who did not approve the principle upon which the Walker bill (H. R. 10333) is drawn. This is so patent, when dissevered from commendation or condemnation of any particular bill, and therefore given without prejudice, that I append the following extracts from the testimony given before our committee and published in the "Hearings:"

NO GOLD PAID INTO THE TREASURY.

The CHAIRMAN. What percentage of the present income of the Treasury is paid in gold?

Secretary GAGE. Perhaps one-half of one per cent; something like that. It is so small that I have not looked into the matter. The CHAIRMAN. It cuts no figure?

Secretary GAGE. No; it cuts no figure whatever.

CHANGES IN THE LAW SHOULD BE FEW AS POSSIBLE.

Mr. WALKER. Should not the changes proposed, while being thorough, make banking as free and allow currency notes to be issued to the people as freely and at the lowest possible cost that is consistent with its sure current redemption in specie and the sure and immediate payment of these currency notes in case of insolvency?

Mr. FAIRCHILD. That is my idea.

Mr. WALKER. The changes should allow those sections of the country where interest is highest to make the same relative profit on the currency issued in those sections as is made in the lower-interest localities, should it not?

Mr. FAIRCHILD. I should think so, most decidedly.

UNWISE TO ATTEMPT BY MANDATE OF LAW TO UNDERTAKE TO COMPEL BANKS TO REDEEM IN GOLD.

Mr. STALLINGS. Does your bill provide that the national banks shall redeem their notes in gold?

Secretary GAGE. It does not.

Mr. STALLINGS. Do you think it ought to?

Secretary GAGE. After consideration I think it is indifferent whether it does or not. The reason I did not put it in was that I do not believe the Government, as an issuer of notes, ought to recognize any money on earth as better than its obligations, or discriminate against

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itself or its obligations. If they say that greenbacks or any of the Government's obligations are not good enough for something, but gold is, they thereby cast a reflection upon their own notes. Besides, I think it would be purely immaterial. If you make the banks redeem in gold, then the banks must get the gold to redeem with. If they have the obligations of the Government, you may make it necessary for them to present the notes to the Government with which to get the gold to redeem their notes, and therefore it does seem to me expedient from all points of view, practically and theoretically, not to put that in the law. The banks, if they find difficulty in maintaining other forms of legal money that will discharge debts, will have to carry gold. They have now in their possession in the country some $240,000,000 of that kind of metal, which is a pretty fair supply to start with.

*

*

Mr. HILL. * * Do you believe that it would be a wise course to pursue to make all bank redemption specifically in gold coin, eliminating the other legal tender of the country-silver and the lawful money, silver certificates?

Mr. FOWLER. Limit it to the notes, of course, and not the deposits. Mr. FAIRCHILD. My idea in all this was that the Government should not in its laws discriminate against any of the money which it had in circulation, because the tendency of so doing was to drive it into the Treasury.

Mr. HILL. But that redemption should be in lawful money?
Mr. FAIRCHILD. That was my idea.

GOLD REDEMPTION BY GOVERNMENT OF ALL PAPER MONEYTREASURY REDEMPTION IN GOLD.

Mr. BROSIUS. Now, how can we redeem the pledge we are under by existing law to maintain the parity of our money unless we afford some means for the people who hold paper to present those obligations for redemption in gold?

Secretary GAGE. We can not. I understand we have such a process

now.

Mr. BROSIUS. If we take $200,000,000 of the $346,000,000 out of circulation and hold it in the Treasury, that can not be presented? Secretary GAGE. No, sir.

Mr. BROSIUS. What kind of demand obligations will the people have to present to the Treasury to get their gold?

Secretary GAGE. They will have $146,000,000 of greenbacks. They will have $100,000,000 or more of Treasury notes, and they will have $450,000,000 of national-bank notes. They could not present them to the Treasury, but they can present them to those who promise to pay.

PARITY TO BE MAINTAINED.

* * *

Mr. BROSIUS. I know that; but the Government has undertaken to maintain the parity of all our money. Secretary GAGE. Yes, sir. The ability of the Government of the United States to maintain the parity between the different forms of its money outstanding depends upon its ability to control gold. So far as it can reduce the obligations that are outstanding, so far it increases its strength to take care of those that are out.

Mr. BROSIUS. Then the duty that we have undertaken, to maintain