The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-12-17

they are unworthy objects they ought to be
rejected, or If the manner or securing thtih ,
IL not wise one as l have outlined II the
manner ought TO be rejected or reIorHleu Vi
THE DISCUSSION.
After this initial statement it was deemed
advisable to read the secretary's bill in de-
tail and discuss it section by section.
wide range of discussion occurred on Sec
ton of the bill. In answer to inquiries
he said it's general purpose was the same
as that set forth by the President Mr.
Gage said the only purpose of the bond sec
ton was to refund outstanding bonds for
low interest bonds payable in gold. This
would not reduce the gross amount of the
debt but it would make IA saving on inter-
est which the secretary roughly calculated
at ten million annually. At present the
government paid high rates on some OF us
bond issues. He thought it possible that
these could be taken up in time at raie Lit,
of interest even below per cent, but TINS
proposed 212 per cent. rate was at least
step toward reducing the interest charge
Mr.. Gage said he had excluded from his re-
funding plan bonds issued in 1885, although
in his recommendation 10 Congress these
bonds were enormously included. he SAID
he preferred to let these bonds alone. as u
question had been raised at the time OF their
issue as TO their payment in gold, ana ne
did not wish to enter on that question. The
bill would exclude all bonds issued under
the Cleveland administration. Mr.. Gage ex-
planned in detail the plan of issuing national
bank notes for United States notes, treas
ury notes and silver certificates and the
covering of the latter demand notes for re-
funding bonds He said the purpose of this
was to accumulate 5000 O0O, 600 of the demand
obligation. placing them aside where they
would relieve to that extent the demands
on the treasury. 1t was essential. he felt,
that these demand obligations should be
materially reduced. At the same time, he
did not consider it safe to contract the cur
rency of $500 600 900 at one stroke, and for
hn hu1 ~
national bank notes to fill the vacuum.
Mr.. Brossius asked how parity of the met
ais could be maintained if demand obli
cations were withdrawn from circulation
and accumulated in the treasury. Mr.. Gage
said there would be ample demand notes
Brossius insisted that it would impose on
the banks and not on the government the
obligation to maintain the parity. The sec
retary dissented from this, saying the de-
mand obligations left outstanding would be
sufficient to maintain parity. Mr. Brossius
TO maintain the parity, and that If they
We're unable to do so the country would at
once be forced to a silver basis Mr. Gage
smilngly remarked that he did not see the
situation in that light. He apprehended no
such emergency.
DEMAND OBLIGATIONS.
Mr.. Gage intimated, in response to inqui-
ries from Mr.. Prince, that there were $780,
100000 of demand obligations outstanding
Technically the entire $930,0O0 900 was sub
ject to demand at any time, and must be
met with gold if this was required. But it
was practical impossibility, he urged that
all these obligations should be presented at
any one time, or even a small percentage of
them. Mr.. Prince pointed out that $3.50 0OO-
900 of demand obligations would continue
outstanding. after the withdrawal of $780,
OO0 900 under the Gage bill. Besides this
amount outstanding there would be a. new
issue of national bank notes under the Sec
retaryS bill, raising the total demand obi-
cations on the government to 81 230 900 OOO
all payable in gold. Mr.. Gage responded
that national bank notes would not consti-
tute an ordinary demand obligation against
opngate only in case of a general collapse
of the banks and q disappearance of their
securities which was not apprehended.
Tha discussion brought from Mr.. Gage
ANOTHER general statement of all the demand
obligations of the United States. He said
ne spoke from the experience of practical
against the government would not be pre-
Sented at one time. 1t was a tenet of bank
ing that all demands did not come at once
II they did the banks would not last long
For that reason it was necessary only to pro-
VIDE against small percentage of the de-
mand. Mr.. Jordan, the subtreasurer at New
York. had said to him that all the trouble
IN redemption was caused by the last $780,
100000 OF demands. The secretary concurred
In TINS view. If, therefore, 5000, 900 600 was
set aside in redemption fund it would, to
large extent, relieve the demand.
Mr. Newlands, Of Nevada, argued that a
contraction of the currency would occur un-
der the secretary'S bill ii the banks surren-
dered their notes and took the refunding
bonds which We're proposed as a basis for
the notes. Mr.. Gage conceded that this
might occur, but he thought the chances
of 1t were excessively remote.
Mr. Cox, of Tennessee made the point
tnat under the bill banks would get circula-
ton up to the par value of bonds deposited
at reduced rate of interest, while at the
same time the government was to pay 21a
bonds ha
banks got their circulation with
Mr Gage answered that the proposal of
his bill was but first step. 1t had to rec
ognlze the fact that the national banking
law provided deposits of bonds as the basis
deemed 1t wise as first step to reduce the
interest on the bonds. When that desira Bile
end was accomplished, further steps could
be taken toward withdrawal of the gov
ernment's guaranty for bank note issues
and the interdependence between the banks
and the government
The hearing had continued until II 30 and
as several members desired to go on the
hoor OF the House. 1t was arranged that
Mr. Gage would resume his hearing before
the committee at 10 a. m. Tomorrow
In the course of his statement Mr. Gage
said that his bill would be supplemented at
later day by another measure carving
out the recommendation of the President
that the secretary of the treasury be en-
powered to borrow, when circumstances de-
manded, $780, ,OG0 for a term not exceed
ing one year. This power would not be ex-
erclSed except at rare intervals. but Il
would have steadying effect from the
knowledge it gave the market that the mower
existed: With this power 10 borrow in case
of need and the measures provided by his
bill, Mr.. Gage said he would just as leave
run the government finances as to run anv
bank, as there would be no more RESPONSE
np ha or1