of the banks so the people can not borrow it, but pays the bank 4 or 5 per cent interest on the bonds, and the bank also gets interest on the banknote money it got on the bond. Under our law the Government pays the bank nothing. The Government makes the notes we have provided you precisely the same money as to securities as the present notes, in case the bank fails, by writing in the statutes that every one of the notes shall be immediately paid out of the United States Treasury if the bank fails; and the Government shall then take all the property of the bank to pay itself with the property of the bank, and, besides that, it makes all the banks pay a tax on all these notes all the time, and enough to make up any loss it could possibly make in paying these notes, and several times as much as any loss could be.

(3) What, then, have we done?

A. We have given you a paper money as much guaranteed and made secure by the Government in case the bank fails as now-the same as it has always been.

B. The people have always complained that the banks got interest paid to them twice, once by the Government on the bonds put up and then by the borrower. We have stopped the Government interest to banks on the bonds by taking out of the law the right of only the bondholder, as you have said. You have always said "a man must become a bondholder to get paper money." Our law allows any five reputable citizens to get it without having to first buy bonds and then put up its $25,000 capital in the bonds as a guaranty to keep their bank notes as good as our greenbacks.

C. We have done more. We have put upon the banks the duty of keeping all our money-greenbacks, silver dollars, gold dollars, and bank notes-each and all as good as the best money in the world by keeping all at a parity.

Every greenbacker says that must be done.

Every man favoring unlimited coinage of silver says that must be done.

Every bank man says that must be done.

Our law does exactly what all classes of people say they want done. D. It cost the United States Treasury from $12,000,000 to $20,000,000 a year to keep our money at par, which is taken out of you by taxation, in the last twenty years. We have stopped all that, besides the hundreds of millions in indirect taxation. It has been cheap at its cost, rather than not have it done by anyone; but now the banks must do it in future, as banks do in all other countries, and at no cost to you, or cost to them, as to that matter.

E. We have also required in the bill that when a bank note gets into New York, Chicago, or any other city it shall be sent home, to be loaned there. They can not pile notes up in New York by the hundred million under our bill, as they do now.

F. As any five of you can get together and form a bank, with the money to put up in order to make the bank notes you get secure and not be obliged to use up your capital in first buying bonds, money can not be "cornered" or excessive interest charges be made on it by banks.

G. Under our law you can borrow such money nearly one-third (certainly one-fourth) less than the interest now is on our present bond money, for the reason that bond money uses up the capital you put up in buying the bonds.

H. Under our bill the people have the $25,000 capital to borrow, and

$25,000 bills also, as they do in Canada, Scotland, France, Germany, and every other country, and can therefore loan money as cheap here as in Europe.

Remember, in all this talk and in no talk ever made was the mind of a single one of the average voters, making three fourths of our voters, ever cleared up on the proposition that the banker did not get 4 to 5 per cent on his bonds, and 4, 6, 8, or 10 per cent interest in addition on the currency paid out by the banks.

That belief remains; and that belief and the further fact that there is now no bank in many considerable centers of business throughout many sections of the country to make the people loans at reasonable rates of interest, and, still more, educating a body of citizens connected with banks to post up the citizens on the real facts, and thus steady public opinion with their knowledge and experience, has done more to prepare the minds of the people to receive the seed of the error of unlimited coinage of silver by our country, without the help of other countries, than its adherents have done to propagate that error.

The only conceivable cure of it is in setting a back fire in increased free but sound bank currency.

The people have a moral right to this free and "true bank currency," such as the people in every other country have, such as is provided in the Walker bill, H. R. 10333.

Not one of these statements can be truthfully made of the Hill-Fowler bill.

BANK OF ENGLAND.

In addition to what has been already said in objection to grafting on to our bad banking system the one bad feature of the otherwise most excellent Bank of England system, I wish to say that the belief of some sincere friends of reform-that we can correct admitted evils by a system of Treasury bookkeeping, as in the Bank of England, while $1,000,000,000 to $1,200,000,000 still remain as demands for gold on the United States Treasury-is the most fatuous of all.

The Bank of England system of issuing currency could by no stretch of the imagination be thought by sound financiers to have any chance of adoption in England to-day were it an original proposition.

If the Bank of England system was not urged on us ex cathedra, no one would think of adopting it.

Nearly the whole body of European financiers, and English as well, believe the restriction of its note issue to be the one defect in the Bank of England system, with reference to the pretended greater security given to the business and commerce of Great Britain in preventing or allaying panics by its method of issuing currency, over and above the method pursued by the Bank of France, the Bank of Germany, or in New England under the Suffolk system, from 1840 to 1864, which latter I believe to have excelled all others, excepting the Scotch. No one believes in it, and yet it is proposed to foist the semblance of this system, but in a far more objectionable form on our present chaotic system, or rather want of system. The claim that the internal arrangements of the Bank of England required by law, as to keeping its accounts and its gold (for that is the sum and substance of the whole controversy), gives any greater security to the creditors of the bank and to the business interests of Great Britain, or makes its currency any more secure than are the currency notes of the institutions named, is wholly

unfounded. The highest, and, in fact, the only substantial approval in finance is imitation, and the Bank of England system has been unanimously condemned in not being adopted by a single bank in the world during the fifty-three years of its existence. The Bank of England is, first of all, the commercial, and still more the gold, clearing house of the world, rather than a bank proper. That it is managed with consummate ability, by "giants in the land," is not disputed, but its success is believed by nearly the whole body of the practical financiers in Europe to be not because of, but in spite of, its system of issuing currency. Its position is unique."

It is proposed in the Hill-Fowler bill to go further even than the Bank of England in making our legal-tender notes purely gold certificates.

The Bank of England notes are not gold certificates in form or substance, as distinguished from the notes of the Bank of Germany or the Bank of France.

The issue department of the Bank of England held gold to the amount of only 66 per cent of the currency it had outstanding on December 9, 1896, as shown by the Bankers' Magazine, London, England. It is therein reported that in 1847 the bank held gold to 48.84 per cent of its notes in circulation, 48.75 per cent in 1856. In 1857 it held gold to 41.23 per cent. In 1860 it held 65.21 per cent, on October 3, 1889, 73.37 per cent, etc., etc. To its total gold liabilities a comparatively small per cent, while not only English merchants, but the commerce of the world, looks to the $150,000,000, more or less, gold in the Bank of England for gold exchange.

The Bank of England law gives no preference to its obligation in the form of a Bank of England note over any other form of its total obligations of $450,000,000 in the requirement that it shall pay gold on every demand.

The provision of law requiring the bank to maintain two departments, one of issue and another of discount, is purely a matter of bookkeeping, in that the same men are one and the same corporate person, managing its issue department and also its discount department, and invariably with the two departments as one corporate person does every customer deal. That is to say, the law recognizes only one corporate person in the Bank of England. This is incontestably true. The law simply defines how this person shall act. How, then, can it be said that each department has an autonomy of its own, or increases its ability to maintain gold payments, or that its security is increased or diminished by legal restrictions on its freedom of action in an emergency? In fact, in every crucial emergency this restriction has been suspended.

It is impossible by a law, in provisions applying whoìly to the manner in which a corporate person shall manage its internal affairs, and making parties of the second part in no way responsible for its doings, to change or modify or give preference in securing gold to one obligation over any other obligation assumed by such corporation, when it is prescribed in the law that every obligation (of the Bank of England) is identical in this, viz, that they are each and all payable in gold on demand.

The testimony before the Committee on Banking and Currency was that the Government is responsible for maintaining parity in all forms of our money, keeping each at a parity with the other, directly or indi

rectly, each dollar of it on a par with the other in demanding gold. The least reflection will convince anyone that, in the nature of the case, this must be true.

Finally, the Bank of England was prohibited from giving any preference to one of its creditors who held one of its obligations in the form of a Bank of England note over a creditor who had one of its checks, drafts, bills of exchange, or only a deposit in the bank subject to check. That we may understand the situation, I give its exhibit for December 9, 1896, in dollars, and in the form used by national banks:

As not a dollar of this $570,000,000 has the slightest preference over any other dollar, from the Bank of England notes to deposits of individuals, in being payable in gold or having the right to demand gold, how can anyone conceive that a rigid bank regulation or inexorable statute law in restriction of the freedom of the bank as to the mechanism of keeping its gold or issuing its currency or paying out its currency as unforseen emergencies arise can be any other than a promoter and intensifier of panics rather than a source of stability and confidence in the ever-expanding and contracting demand for currency and the complex and ever-varying and unknowable banking gold conditions?

Shall this country, in the Hill-Fowler bill or at the request of any man or body of men, because of their eminent respectability and ardent patriotism, make our treasury condition ten-fold worse than it now is by adopting the currency system of the Bank of England, when, as I have said, it has received the most severe and unanimous condemnation in the practice of all the other banks of the whole world for the fifty-three years of its existence? The greatest, in fact the only, competent or tangible evidence of approval of any financial device is its adoption by those who approve it. Every bank in every country has in practice condemned the Bank of England machinery for keeping and paying out its gold and issuing its currency by refusing to adopt its system.

Furthermore, the whole body of the world's practical financiers, with few exceptions, condemn it in words, as they all do in practice. It is not abandoned by the Bank of England from the fact that the warp and woof, the success of moderate banking, is based on "confidence," and when confidence exists, rightly or wrongly, bankers are not warranted in disturbing the public mind by a change, however desirable in itself the change may be. The only justification for action here, bad as is our system, is that the people having come to a knowledge of the perils of our financial position, confidence is destroyed and immediate reform is demanded on every hand. I could fill a hundred pages with adverse criticism of the Bank of England system from the leading financial writers of the world, but as I am appealing to the great jury that must finally decide this question, viz, the plain people, I use my limited space in quoting the final verdict of those most competent to form right opinions, from authorities the people can consult, which are crystallized in encyclopedias.

The Encyclopedia Britannica is content to give definitions and state facts as to subjects in other cases, but in that of the Bank of England it confesses judgment through page after page of special pleadings that command the respect of but few financiers, and disputes its own facts.

It confesses that:

"It must be admitted that the variations in the rate of discount charged by the bank have been much more numerous and violent since 1844 than they were before, and on these occasions it has been judged necessary to authorize the suspension of the act so far as to allow the bank directors the power to strengthen the banking department by recourse to the reserves in the issue department. In each case the suspension of the act arrested and allayed the panic prevailing up to the moment of suspension, and in 1866 it was not, in fact, found necessary to exercise the power to borrow from the issue department, which had been conceded to the directors."

What is meant by the "suspension of the act" is the deliberate violation of the plain letter and spirit of the law of the land "by the action of the executive government (of the bank) acting on the faith of a subsequent indemnity by Parliament."

And this is the system of banking laws recommended to this country, badly as it serves the greatest bank in the world. On our Public Treasury, without a shred of banking business or banking powers to mitigate and hide its defects, this travesty of the true banking and true and safe currency principle and safe bank and currency practice is to be saddled with this excrescence.

Again it says:

"Again, it may be freely admitted that it is not improbable that changes (crises) have from time to time happened that might not have occurred supposing the separation of the banking and issue departments had not been established. * * The repeated suspensions

*

of the act of 1844 in time of trial do, prima facie, present a much stronger argument for the repeal of the statute. Legislation which breaks down upon critical (crucial) occasions discredits the legislature that decreed it. Sir Robert Peel, in common with the earlier advocates of the policy of the act (separate departments), believed that it would prevent the recurrence of commercial crises, etc."

The statement by it of the fundamental principles governing the issue of currency laid down by the article and accepted by all writers