The Topeka state journal., 1897-12-17
HOW 1T WOULD WORK.
Secretary Gage Explains His Bill to
the Committee.

the Committee.
washington Dec. I'm explaining
his financial bill to the committee yes
terday afternoon Secretary Gage said:
LAS to the first proposition-to com
nit the country more thoroughly to the
gold standard, remove, as far as possi-
BILE doubts and fears on that point ana
thus strengthen the United States both
at home and Abroad would say that
the proposition to refund the bonded
debt of the United States now payable
in coin, into bonds bearing on their face
a lower rate of interest and payable,
principal and interest in gold is a meas
ure directed to that end. It costs moth
ing to the government whatever so lar
as the refunding of it is concerned, ex-
cept the expenditure necessary to print
the bonds and to do the clerical work.
It takes ambiguity out of the relations
of the government to its creditors; It
gives, I believe, a strength and secu-
Tity and power to the whole CONNER
cial and industrial system Of the United
States and the measure as it is pre-
pared here in the bill, in my opinion,
will accomplish that object The other
measures which are before you, which
I am now ready to be questioned about,
have been drawn to accomplish not
only the objects named. but the vari-
Gus purposes already detailed by me.
If they are worthy objects they ought
to be recognized and secured.
IF they are unworthy objects, they
ought to be rejected; of the manner Of
have outlined it, the manner ought to
be rejected or reformed or improved. -
Discussion brought from Mr.. Gage
another general statement regarding
the demand obligations Of the United
States. He said he spoke from the ex-
perience of a practical banker in saying
that all the demands against the gov
ernment 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
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 redemption
was caused by the last 5000, 000 900 of de-
mands. The secretary cOncurred in
this view. If, therefore, 5000, ,0OO, 600
was set aside in a redemption fund, it
would to large extent relieve the de-
mand.
Mr. Newlands of Nevada, argued that
a contraction of the currency would Oc-
cur 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
We're exceedingly remote.
Mr.. Cox, CTenn.) made the point that
under the bill banks would get circula-
tiOn up to par value for bonds deposited
at a reduced rate of interest while at
the same time the government was to
pay 212 per cent interest on the bonds
which the banks got their circulation
with.
Mr., Gage answered that the proposal
of this bill was but first step. It 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 ta-
ken toward a withdrawal of the gov
ernments guaranty for bank note is
sues and the inter-dependency between
the banks and the government
In the course of his statement Mr.
Gage said that his bill would be supp.e-
mented at later day by another meas
ure carrying out the recommendation
of the president, that the secretary of
the treasury be empowered to borrow
when circumstances demanded $780,
100000 for a term not exceeding one
year. This power would not be exerl
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 Dor
row in case of need and the measures
provided by his bill, Mr. Gage said. he
would just as lief run the govern
ment finances as to run a bank. as
there would be no more responsibility
or hazard.