The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-12-17

pose on the banks and not on the gov
eminent the obligation to maintain
parity.
The secretary dissented from this.
saying the demand obligations left out
standing would be sufficient to main
tain parity
Mr.. Brosius asserted that the banks
would be called upon to maintain the
parity 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 apprehended no such emergencies
Mr.. Gage intimated, in response to in
quiries from Mr.. Prince, that there
were 1890 100000 of demand obligations
outstanding. Technically the entire
$920,OOO,000 was subject to demand at
any time and must be met with gold If
this was required. But it was a prac-
teal impossibility, he urged, that all
these obligations should be presented
az any one time, or even small per-
centage of them.
Mr.. Prince pointed out that $3.50, 000,-
900 of demand obligations would con-
tirue outstanding after the withdrawal
of 5000 1000, 900 under the Gage bill Be-
sides this amount outstanding there
would be new issue of national bank
notes under the secretary's bill, rails
ing the total demand obligations on the
government to 1920, OOO,O 900, 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 obligated only in case of a general
collapse of the banks and a disappear
ance of their securities which was not
apprehended.
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 tenet of banking
that all demands did not come at once.
If they did banks would not last long.
For that reason 1t was necessary to
provide against small per centage of
the demand. Mr.. Jordan, the sub
treasurer at New York, had said to him
that all the trouble in redemption was
caused by the last $200,0000OO of de-
mands. The secretary concurred in
this view. If, therefore, 100000 600 was
set aside in redemption fund it would
to a large extent relieve the demand.
Mr. Newlands, Of Nevada, argued
that a 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.
MIGHT OCCUR.
Mr. Gage conceded that this might
occur but he thought the chances Of it
were excessively remote.
Mr. Cox, of Tennessee, made the
point that under the bill banks would
! get circulation up to the par value Of
! bonds deposited at a reduced rate of
interest, while at the same time the
! government was to pay 2R per cent in
terest On the bonds on 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
| banking laws provided deposits Of
bonds as the basis for circulation.
| That being the case he had deemed
wise as a first step to reduce the inter-
| est 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
between the banks and the government.
The hearing had continued until 1890,
and as several members desired to go
on the floor of the house it was ar
ranged 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 sup
| plemented at later day by another
measure carrying out the recommended
lions of the president, that the secre-
tary of the treasury be empowered to
borrow when circumstances demanded,
500, 100000 for a term not exceeding
one year. This power would not be ex
ercised except at rare intervals, but 1t
would have a steadyinR effect from the
knowledge it gave the market that tho
power existed.
With this power to 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 any bank, as there would be
no more responsibility or hazard