The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-12-17

did not see the situation in that light.
He apprehended no such emergency.
Mr.. Gage intimated in response to in
quiries OF Mr.. Prince that there were
$3.50, 000, 600 of demand obligations out
standing. Technically. the entire $780,
100000 was subject to demand at any
time, and must be met with gold if this
was required Therefore it was prac-
tically impossible, he urged that all
these obligations should be presented
at any one time, or even a small per-
centage of them.
Mr.. Prince pointed out that $3.50, 000-
! 600 of demand obligations would con-
tinue outstanding after the withdrawal
of 500, 000 600 under the Gage bill. Be
sides this amount outstanding, tHH%
would be a new issue of national bank
notes under the secretary's bill, raising
the total demand obligations on the
government to 81, 230 900, 600, all payable
in gold.
Mr.. Gage responded that the national
bank notes would not constitute an or
binary demand obligation against the
government, as the government would
be obliged only in case of the general
collapse of the banks and: q disappear
ance of their securities, which was not
aDprehe-ded.
HIS OWN EXPERIENCE.
The discussion brought from Mr..
Gage another general statement of all
| the demand obligations of the United
States. He said he spoke from the ex-
perience of a practical banker in say
ing 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 neces-
sary only to provide against a small
| percentage of, the demand Mr.. Jordan,
the sub-treasurer at New York, had
said to him that all the trouble in re-
demption was caused by the last $780,
600, 900 of demands. The secretary con-
| Cured in this view. If, therefore, $780,
00O, 900 was set aside in a redemption
fund, it would, to a large extent, re-
lieve the demand.
CONTRACTION.
Mr.. Newlands of Arkansas argued
| that contraction Of the currency
would occur under the secretary's bill
if the banks surrendered their notes
and took the refunding bonds which
were proposed as a basis for the notes.
Mr.. Gage conceded that this might
occur, but he thought the chances of it
were exceedingly remote.
Mr.. Cox of Tennessee made the point
that under the bill banks would get a
circulation up to the par value of bank
| deposits at a reduced rate of interest,
while at the same time the government
was to pay 21a per cent interest on the
bonds which the banks got their cir
culation with.
FIRST STEP.
Mr. Gage answered that the proposal
of his bill was but q first step. 1t had
to recognize the fact that the national
banking law provided deposits of bonds
as the basis for circulation. That be-
ing the case, he had deemed it wise as
a first step to reduce the interest on
the bonds. When that desirable end
was accomplished further steps could
be taken toward a withdrawal of the
governments guaranty for bank note
issues, and the inter-dependence be-
tween the banks and the government.
The hearing had continued until 1890,
and as several members desired to go
Ion the floor of the house it was ar
ranged that Mr.. resume his
hearing before the committee at 10 a.
m. tomorrow.
ANOTHER MEASURE.
In the course of his statement, Mr..
/ Gage said that his bill would be sup
measure, carrying out the recommends
! tions of the president that the secretary
of the treasury be empowered to bor-
row. when circumstances demand, $780,
100000, for a term not exceeding one
year. This power would not be eXer-
cised except at rare intervals, but it
| would have a steadying effect from the
knowledge it gave the market that the
power existed. With this power to
borrow in case of need, and the meas
ures provided by his bill, Mr. Gage
said, he would just as leave run the
government finances as to run any
bank, as there would be no more re-
sponsibility or hazard.
After this initial statement, it was
deemed advisable to read the secre-
tary's bill in detail, and discuss its re-
lief by sections.
BILL IN DETAIL.
Secretary Cages financial bill, SUBJ
mitted today to the committee on bank
ing and currency of the house of rep
resentatives, is as follows:
A bill to provide for the funding of
the national debt, for establishing a re-
demption fund and a division of issue
and redemption in the treasury, and to
modify existing laws respecting ma
tional banks, and for other purposes.
Be it enacted, That there be estab-
lished in the treasury department, as
a part of the office of the treasury OF
the United States a division to be de-
signated and known as the division OF
issue and redemption, to which shall be
assigned, under such regulations as the
secretary of the treasury may approve
all records and accounts relating to the
,, ISSUE redemption and exchange, as
hereinafter provided, of the several
classes of United States paper money
There shall be transferred from the
general fund in the treasury of the
: United States and taken UP on the
books of said division as a redemption
fund the sum of $25 100000 in United
States gold coin and bullion, and such
| further sums of standard silver dollars
, and silver bullion purchased under the
! act of Congress, approved July IA, 1890
as shall equal the silver certificates out
side the treasury and treasury notes
: of 1890 outstanding on the date wher
I this act shall take effect; and there
after the gold and silver. coins and bull
lion hereby transferred from the gen
eral fund in the treasury, as herein pro.
Yided shall be increased or diminished
as the case may be, in accordance with
the provisions of this act, and in NJ
other way
I Sec. 2. That all United States notes