ing them for payment in gold if they prefer to have them; and my opinion would be, as I have already expressed it, that having once established our principle they would be retained certainly during the ten years, and even after they cease to be a legal tender they would be performing a very large function.

Secretary GAGE. Mr. Walker, I would like to ask you a question or two on that point.

Mr. WALKER. Certainly.

Secretary GAGE. Your proposition is equivalent, as I understand it, to the banks loaning the Government of the United States 123 per cent of the amount of their circulating notes free of interest, substantially.

NOT A LOAN TO THE GOVERNMENT, BUT A CONVENIENCE TO THE

BANKS.

Mr. WALKER. No, not at all; because if it was to a greater amount it might be, but being at an amount so small, only one-quarter of the cash reserve that the law requires them to keep, and being all taken up in the reserve, and the coin reserve being ample without that, they being treated as coin and performing all the work of coin, it is equivalent to allowing banks the liberty of using their own paper in the place of gold. The bill is drawn upon that theory, and allows the bank with 50 per cent of greenbacks to take out 50 per cent of currency, but whenever the bill gets into full operation, it may take 100 per cent the same as a bank with 12 per cent, upon the theory that this was worth to the banks in practice as much as the gold.

Secretary GAGE. Still, it would remain true that the Government would get the advantage of $200,000,000 without interest? Mr. WALKER. Certainly.

COST BANKS NOTHING.

Secretary GAGE. The only difference is that it would be furnished by the banks without any sacrifice or cost?

Mr. WALKER. Yes.

Secretary GAGE. Since it would go into the bank reserves, being available to them in an ultimate case?

Mr. WALKER. It would never be circulated at all. It would take them from circulation as much as your system or Mr. Fairchild's.

Secretary GAGE. They probably would not be circulated, but if they were paid out the bank would have to redeem them and it would be as much a charge on them as if they were their own notes. Therefore, is it worth while to go through the machinery of those notes? Would it not be better for the banks to lend the Government $200,000,000 for the privilege of issuing their own notes?

PARITY MAINTAINED BY BANKS.

Mr. WALKER. It absolutely relieves the United States Treasury from all responsibility for redemption, for my bill provides that all the banks shall pay a penalty tax of one-half of 1 per cent on their deposits if they fail to maintain the parity between the four kinds of money-the national-bank notes, the legal-tender notes, and the silver dollars, and the gold coin.

A NEW UNITED STATES NOTE.

Mr. MCCLEARY. I have been trying to picture this note that you have been describing. Am I to understand that it is a United States note on one side and a bank note on the other?

Mr. WALKER. Yes; it is the legal-tender note except to the bank that has its note printed on the back, and to that bank it is purely a currency note, like the rest of the notes it issues against its assets.

Is it not a fact that neither the Government Treasury here nor any subtreasury can currently redeem paper with the current funds as banks can do it? The Government can not do it without the actual presence of the legal redeemer? I address my remark to either Secretary Fairchild or Secretary Gage, or to both. Mr. FAIRCHILD. Will you repeat that?

TREASURY REDEMPTION EXCHANGE.

Mr. WALKER. Can the United States Treasury or any of its subtreasuries currently redeem paper money as freely, immediately, and economically as the banks can redeem the paper money themselves?

Mr. FAIRCHILD. Do you mean can the Treasury redeem bank notes as economically?

Mr. WALKER. Paper money of any kind-paper money that they issue-as easily as the banks can redeem money they issue.

Mr. FAIRCHILD. That I can not say. That is a matter of statistics. I could not say as to the cost.

TREASURY REDEMPTION TO COST $27,000,000 A YEAR.

Mr. WALKER. For the cost of keeping the redemption of moneysthe whole system-the United States Government has held between $200,000,000 and $300,000,000 of money for twenty years. It is a cost to the people who are taxed to keep it of 6 per cent interest on that sum of money. Now, it is proposed in both your bill and in Secretary Gage's bill to add $200,000,000 more, bringing the money in the United States Treasury up to $450,000,000, and the interest on that costs the people 6 per cent. That makes $27,000,000 a year for the privilege of the United States Treasury redeeming this paper moneythat is, we have got to keep that amount on hand. Not only that, but the machinery of redemption, in the sense of products meeting products in the general funds of a bank, and their paper representatives, including currency notes, with its other obligations redeeming each other, not Treasury redemption, is not as convenient as it would be in a banking system outside the Treasury. Is not that a fact?

Mr. FAIRCHILD. That is a fact.

Mr. JOHNSON. Do you eliminate the United States Treasury in your scheme?

Mr. WALKER. Certainly. It is nothing to the public whether the Treasury receipts are more or less under my bill.

My bill absolutely relieves the United States Treasury from having anything to do with the current redemption of any money of any kind, and puts it on the banks, and on the theory that the banks can do it at no cost, that gold freely flows into the banks, and flows out of them where they issue true currency notes-paper money. That absolutely relieves the Treasury. My claim is that my system would relieve the

United States Treasury of keeping $400,000,000, more or less, that your bills require to be kept in the Treasury.

Mr. FAIRCHILD. What is the $400,000,000?

Mr. WALKER. There is $280,000,000 now in the United States Treasury, more or less-some $240,000,000 to $288,000,000; $288,000,000 it has averaged in some years.

Mr. NEWLANDS. Of what?

Mr. WALKER. I mean of "free moneys," as reported. Call it Government working note redemption capital if you choose. England has a working capital of about $20,000,000; France a working capital of about $30,000,090, and Germany a working capital of about $20,000,000, and we have $280,000,000.

PROPOSITION TO HAVE $350,000,000 IN THE TREASURY.

Now, Mr. Gage proposes to take out $125,000,000 of this $288,000,000; he proposes to add $200,000,000, making $325,000,000, which is equivalent to adding $200,000,000 to what we now have; while my bill relieves the Government of the necessity of keeping any money whatever except an ordinary exchequer balance, the same as any man keeps his business cash.

Mr. FAIRCHILD. Then somebody else is to take care of those things. Mr. WALKER. It costs the Government interest on it and would not cost the banks anything.

Mr. FAIRCHILD. They do not make interest on the money in their vaults.

Mr. WALKER. That is true, but they would not have to keep any additional sum there under my bill.

Mr. FAIRCHILD. They would take care of the notes, and the banks would not have to do any more than now. Is that it?

BANKS NOW SUSTAIN THE TREASURY, COSTING THE PEOPLE

$50,000,000 A YEAR.

Mr. WALKER. The banks to-day sustain the Treasury and are at the expense of sustaining the $1,000,000,000 that are in circulation. That is my assumption. Now, if the $1,000,000,000 that is in circulation pays only 1 per cent, the people are in fact paying the difference between 1 and 6 per cent on the whole $1,000,000,000 the way it is now issuedthat is, $50,000,000 a year in higher rates of interest. I ask you if that is not a fact?

Mr. FAIRCHILD. I do not get at that.

Mr. WALKER. Suppose there was no paper money in existence except that issued by the banks, and suppose the demands of the people call for $1,000,000,000 of paper money, as now, and the banks issued it and kept that amount in circulation. We will put it in round numbers. The banks would make on that what their rates of loans and discounts were on their general business.

Mr. FAIRCHILD. Yes.

UNITED STATES TREASURY TO PAY THE CURRENCY IN CASE OF INSOLVENCY UNDER THE WALKER BILL.

Mr. WALKER. If they are not making any money on that, then the banks are losing that much that they otherwise would make under the English or Scotch or French or German or Suffolk or State bank system, or under the Walker bill. Is not that true?

Mr. FAIRCHILD. Of course; that is a mathematical statement; that if they do not loan the money then they are not making the interest on it.

Mr. FOWLER. Ultimate redemption, however, is thrown upon the Government.

Mr. WALKER. Yes, when a bank becomes insolvent, $200,000,000 of it; but there is a tax that more than covers it.

Mr. FOWLER. But there is no limit to the tax?

Mr. WALKER. Yes.

Mr. FOWLER. The Government is responsible absolutely?

Mr. WALKER. Certainly; but there is a tax that will pay for that. Mr. FOWLER. But if that tax doesn't happen to cover it the Government must take it up?

Mr. WALKER. Certainly; the Government guarantees in a statute the same as now, with a bond.

Mr. FOWLER. It is an absolute guarantee for all the banks may issue.

Mr. WALKER. Yes. The money is just as safe as the bonds, except it is written in the statute instead of being written in the bonds.

Mr. HILL. There is a 5 per cent held by the Government of its own money against its own notes.

Mr. WALKER. Yes; it would amount to $10,000,000, and the bank also keeps with the Government an amount equal to 5 per cent of its currency, which it can not count in its reserve.

Mr. JOHNSON. Are you talking about your bill?
Mr. WALKER. I am talking about my bill.

TRUE VISIBLE GOLD.

Mr. WALKER. Now I want to call your attention to another remarkable thing. In the whole of the United States there was specie in the old State banks, in 1860, of $2.69 per capita. To day there is gold in the national banks to exactly the same amount-$2.69 per capita. Mr. FAIRCHILD. Does that include all the old State banks? Mr. WALKER. All; yes, sir.

Mr. FAIRCHILD. Then the gold in the national banks is equivalent to the gold in the State banks?

Mr. WALKER. It is fair to say that the gold in banks in 1860 per capita was $2.69 in this country. To-day it is the same per capita in the national banks alone. The amount in the State banks is not given to-day, but they hold of cash 44.7 per cent as much as the national banks. It is reasonable to suppose that there is $1.20 per capita of gold in State banks, which, added to the other, makes a specie, probably gold, to-day, per capita, $3.89, to $2.69 in 1860. Now, $3.96 in gold to each of the 73,000,000 amounts to $272,300,000 in gold. The visible gold, as shown in the Comptroller's report, December 7, 1896, page 22, was $421,236,388. Visible gold not in banks of loan and discount then was $148,936,388. Total gold in the United States is $696,270,542, by the report of the mint. I did not suppose it was anywhere near that amount, but my recent investigation, and the fact that gold is paid in for taxes in St. Louis and other cities by comparatively poor people, leads me to think that there is more than that. I should not be surprised if $800,000,000 developed if we had a proper banking system that fully restored confidence. The visible gold per capita-not the gold in pockets, but the visible gold in the various institutions-is $5.77, and the total gold in the country is $9.54 per capita that we know of, not counting that which is hoarded. I take the statistics as they are given.

Mr. NEWLANDS. Will you please state again what the per capita of visible gold is?

Mr. WALKER. Five dollars and seventy-seven cents. That was found by the investigation of Mr. Eckles, and was stated in his report of December, 1896, page 26. My point is, that if we had a banking system that would establish confidence, such as is felt in Germany, France, Canada, and Scotland, would not a large amount of gold that is not now visible be visible by flowing into banks at once, or at least very soon?

Mr. FAIRCHILD. I think so. I think if there was entire confidence in our monetary condition that we would see a great deal more gold.

SUFFOLK SYSTEM.

Mr. WALKER. The New England banking system-the Suffolk system-was understood to be about as safe a system as any country has ever had in its practical workings; so much so, that in 1857 scarcely a bank failed, and when they suspended specie payment (and then because New York had suspended and they were forced to do it for that reason) they paid, during the whole of that suspension to anybody that asked for it in the legitimate way of business, all the specie they wanted; and gold did not go to a premium by the smallest fraction during that nominal suspension.

Mr. MCCLEARY. When was that?

Mr. WALKER. In the panic of 1857. The statements that I have made are matters of history.

Mr. MCCLEARY. I do not doubt your statement, but was simply asking for information.

Mr. WALKER. Now, at that specie security we could issue to-day $1,454,075,000 of currency, with 13 per cent gold back of it, as New England banks then had.

Mr. MCCLEARY. And have as good security?

SUFFOLK SYSTEM NATIONALIZED IN WALKER BILL.

Mr. WALKER. Yes. And have the same amount of gold in the banks back of the currency now, as through the New England system for forty years-the Suffolk system. The Walker bill is the Suffolk system nationalized. It is absolutely and purely that, and nothing else; that is to say, essentially the same as the Scotch and the Canadian and the German and the French systems now. Issuing $800,000,000 of currency there would be visible gold in the banks within a small fraction of 24 per cent, about double of what there was in the New England banks under the Suffolk system. The visible gold that would flow into the bank immediately would be 52 per cent, more than half, which is an unheard of percentage of gold to currency issued.

In view of these facts, have you any doubt about the safety in the specie reserve to maintain the $800,000,000 currency that it is contemplated would be issued in the near future?

Mr. FAIRCHILD. I have no trouble on the specie question. I think there will be ample for that.

IMMENSE AMOUNT OF GOLD.

Mr. WALKER. In view of this immense amount of gold that we now have in banks and the additions that would find their way into the banks, namely, 52 per cent now of gold to $800,000,000 of currency, if that is issued, is not the retaining of $200,000,000 of legal tender notes that the