Evening star. [volume] (Washington, D.C.) 1854-1972, 1897-12-16

bank notes to I'LL the vacuum
Mr.. Brosius asked how parity Of the
metals could be maintained II demand obli-
cations were withdrawn from circulation
and accumulated in the treasury.
Mr.. Gage said there would be ample de-
mand notes outstanding beyond the $780,
600. 900.
Mr.. Brosius insisted that it would impose
on the banks and not on the government
the obligation to maintain parity.
The Secretary dissented from this. saying
the demand obligations left outstanding
would be sufficient to maintain parity.
Mr.. Brosius asserted that the banks
would be called upon to maintain the par
ity and that if they were unable to do SO
the country would at once be forced to
silver basis.
Mr.. Gage smilingly remarked that he did
not see the situation in that light. He ap-
pretended no such emergencies.
Amount of Demand Obligations.
Mr.. Gage intimated in response to in
quiries from Mr.. Prince that there were
$3.50, DOC, 900 of demand obligations outstand-
ing.
Mr.. Prince asked II the Secretary held
that this entire amount was payable in gold
OH demand of the holders of these obliga-
tons.
The question was theoretical, Mr.. Gage
answered. Technically the entire 1910, Co.,
600 was subject to demand at any time. and
must be met with gold If this was required.
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. OOO. 600 Of
demand obligations would continue out
standing after the withdrawal of 500 OOO.-
900 under the Gage bill. Besides this
amount outstanding, there would be a new
issue of national bank notes under the Sec
retary's bill, raising the total demand obli-
cations on the government to 81, go OOO, 900.
all payable in gold.
Mr.. Gage responded that the national
bank notes would not constitute an ordi-
nary demand obligation against the gov
ernment, as the government would be
obligated only in case Of a general collapse
of the banks and a disappearance of their
securities, which was not apprehended.
Not All Demands Presented at Onc..
The discussion brought from Mr.. Gage
another general statement of all the de-
mand obligations of the United States. He
said he spoke from the experience of
practical banker in saying that all the
demands against the government would
not be presented at one time. 1t was a
tenet of banking that all demands did not
come at once. If they did the banks would
not last long. For that reason it was
necessary only to provide against a small
percentage of the demand. Mr.. Jordan,
the subtreasurer at New York, had said
to him that all the trouble in redemption
mands. The Secretary concurred in this
view. If, therefore, s2D.O0OOOO was set
aside in redemption fund it would to
large extent relieve the demand.
Mr.. Newlands of Nevada argued that
contraction of the currency would occur
under the Secretary's bill. IL the banks
surrendered their notes and took the re-
funding bonds which were proposed as
basis for the notes.
Mr.. Gage conceded that this might oc
cur. but he thought the chances of it were
excessively remote.
Mr.. Cox of Tennessee made the point
that under the bill banks would get cir
culation up to the Ear value of bonds de-
posted at reduced rate of interest while
at the same time the government was to
pay two and half per cent interest on
the bonds which the banks got their
circulation.
Mr.. Gage answered that the proposal
Of his bill was but a first step. 1t had to
recognize the fact that the national bank
ing law provided deposits of bonds as the
basis for circulation That being the case,
he had deemed it wise as a first step
to reduce the interest on the bonds Wien
that desirable end was accom- plished, fur
Their steps could be taken toward with
drawal of the governments guaranty for
bank note issues, and the interde2endenca
between the banks and the government.
The hearing had continued until 12:30
O'Clock, and, as several members desired
to go on the floor of the House, it was ar
hearing before the committee at 10 am.
tomorrow.
Introduced I'm the House. 60.
The bill was introduced in the House to-
day by Chairman Walker Immediately
after the hearing. The bill as presented to
the House is identical with the bill as
submitted to the committee. save for a
few changes of no especial significance
which We're suggested by Mr.. Walker.