Evening star. [volume] (Washington, D.C.) 1854-1972, 1897-12-17
Secretary Gage Questioned as to His
Currency Plan.
HEARING BEFORE HOUSE COMMITTEE
Committing the Country to the
Gold Standard.
RELATION TO POLITICS

house committee on banking and currency
today. Chairman Walker had left the city
and MIR. Brosius of Pennsylvania presided
Before the bill proper was taken up some
semi-political questions were asked
Mr. Hill Comm called Mr.. Cages atten-
tion 10 the statement made yesterday that
the first purpose of the bill was to commit
the country to the gold standard.
You are recognized as republican,"
said Mr.. Hill, addressing the Secretary,
"and You are familiar with the financial
platform of the republican national con-
vention at st. Louis. Do you consider that
this purpose of more firmly fixing the gold
standard on the country conflicts with the
principle Of the st. Louis platform?'
No, SIR" responded Mr. Gage mot as
look at the principle of bimetallism. BIZ
netaillsm must mean one of two things:
Elther 1t Is two kinds of money on unequal
Value circulating side by side by reason
OF the exchange of the less valuable for that
OF greater value, or else two kinds of money
OF such intrinsic equality that they will
circulate naturally side by side. We have
pimetalllc currency in the United States
now. A firm establishment of the gold
standard, with such interchangeability with
silver as will make it acceptable on an
equality with gold. will maintain this BIZ
nie.aiilsm the same as 1t has existed for the
last eighteen years"
The Secretary went On to state that this
III no way preJudiced any steps that might
be taken to bring silver up to a higher
standard OF value. The bill, however, was
designed to give such confidence in the
nnancial ability of the government that
,ne determinations against silver would
largely decrease
o. Mr, GoX Cox tIenn) asked if the result of the
Gage bill eventually would not lead to one
klhd or paper money-hank notes>and no
silver except subsidiary silver
, there Is nothing in the plan to operate
10 .hat extent now" answered the Secre-
tary. 1t is i'll that direction, and with fur-
tner legislation developing it, it might nj
umately lead to such a result. But / would
il'ot not say that silver would be restricted to
silver which would be subordinat. r. i
subordinate now
Considering the Hin.
After this diversion to the silver o,,es-
ton, the consideration of the bill bv seq
uons was resumed at section I. where tha
discussion closed yesterday
This section provides that on the denosit
by national bank of United States bonds
United States notes. treasury notes of 1880
OF SILVER certificates to an amount of not
less thar 30 per cent of its capital, 1t shall
receive national bank notes. in addition to
the % per cent otherwise provided to the
amount of - per cent of such deposit these
additional notes not being secured by the
deposit Of bonds or notes, but by the assets
OF the bank and the government guaranty
Mr.. Gage referred to the advantage of this
additional unsecured circulation in giving
an elasticity to the currency at points where
II was most needed. He showed from the
returns or the controllers office how small
percentage of loss came from nationai
banks, and urged that this unsecured circu-
lation would entail an inconsiderable obIi-
cation on the government, by reason of
It's guaranty, and this would be overcome
by the snail tax on the bank, constituting
a safety fund.
In answer to questions by Mr. Newlands
of Nevada, the Secretary said that the
amount of refundjng bonds under the bill
would reach S1,13S, S,00U,OO0 If all Of them
were issued. These being the basis for cir
culation, bank notes could be issued to
that amount. Besides these the additional
70 per cent Cf unsecured circulation would
give further issue of bank notes Of about
SiOO,eO,JOO. But tnLt vast issue was mere
ly the creation of specter, and was not
reality. The banks could not get all the
bonds and use them for il suing bank notes.
On the contrary, government bonds are al
ways taken largely by private investors,
trust companies, insurance companies and
parties across the water. Any effort by
the banks to absorb all the bonds would so
affect the price as to defeat the object in
view. And this also would serve as a
check to the expansion of bank circulation.
Gold Contracts.
Mr.. New!ands referred to gold contracts
and asked the Secretary's view of them.
Mr.. Gage said he did not consider it de-
srabe to interfere with private contracts
Of this character any more than was neces-
sary.
To Mr.. Price of Illinois he explained that
his expression gold and other legal
money" used in the bill meant no reflection
on silver or other classes of money. The
other legal money included silver and the
expression merely served 20 cover well
understood term.
The extent to which drains on the gov
ernment stock of gold would result under
the operations Of the bill excited much dis
cuSSion.
Mr. Gage stated that all redemptions
would be made in gold or its equivalent.
Mr.. Fowler of New Jersey said this OPEN
ed a serious question. The Secretary pro-
vided for the issue of bank notes on the de-
posit of United States notes (greenbacks)
treasury notes or silver certificates. The
result, he declared. would be that the most
undesirable form-silver certificates-Would
be deposited and impounded, and their place
taken by national bank notes. The latter
drew gold, the former did not. Hence, Mr..
Fowler asserted. the Secretary proposed in
creasing the drain on our gold supply.
Mr.. Gage answered that 1t was easy to
conjure up hypothetical objections, but he
did not look at this one as serious. While
1t was true that silver certificates might be
deposited and bank notes issued against
them. yet any Secretary of the Treasury
on receiving tneSe silver certlncateS, would
swap them for greenbacks, treasury
notes and other forms Of demand notes.
which served to drain gold. These other
forms of notes were always coming into
the treasury. and they could readily be
"swapped'' for the silver certificates, and
thus the redemption fund could be built up
of the gold drawing class of government
notes.
Guaranteed by the Government.
Proceeding to section 8. which provides
for deposit by the banks of sum equal
to 10 per cent of the circulation, and also
pledges the faith of the United States to
the redemption of the bank notes, Mr..
Gage said the latter feature was merely
to make clear the same pledge as the gov
ernment now gave to the integrity Of bank
notes. He did not agree with objections
suggested. that the 10 per cent deposit re-
quirei of the banks and the 2 per cent tax
on them for a safety fund would make 1t
improbable for them to issue circular tion.
There were other advantages secured to
them which offset this objection. He said
he would present table by the treasury
actuary showing the estimated profits arfs-
ing from the deposit OF various classes Of
bonds and securities.
On section 8, providing that issues of ma
tional bank notes shall be In denominations