Kansas City journal. [volume] (Kansas City, Mo.) 1897-1928, 1898-01-18
SPECIE GIVES CONFIDENCE.
Secretary Gage Says That Without 1t
There Is Distrust, If Not
Panic,


Washington, Jan. 17.-Secretary Gage and
ex-Secretary Fairchild were before the
house committee on banking and currency
to-day for further discussion of
the pending plans for currency re-
form. In response to questions by Mr..
Walker, Mr.. Gage said he had been in the
banking business for forty years; for ten
years was president of the First National
bank of Chicago, with a capital Of 49,
10000 and loans and discounts Of 600
to SO, 100000. He assented to Mr.. Walkers 8
question that he appeared as a banker and
financier CT long experience to aid the COM
mittee. The chairman asked if it was pos
sible to use paper money and keep 1t at an
equality with coin in purchasing power
without the. coin on hand. Mr.. Gage an
swered that he thought not. Without the
specie on hand, there was tendency to
distrust, If not a panic and to a demand for
specie.
Mr.. Gage said it would be impossible in
this country to have general rate Of in
terest, as prevailed in England, where the
Bank Of England fixed the rate. Here IT
varied in the many states, under statutory
law, and the banks of the country had
never been able to coalesce on ruling
rate of interest.
Referring to the "endless chain process.
Mr.. Gage said 1t was a figure OF speech
applying to all financial operations where
obligations came in and went out in a
circle. So long as the obligations were
met the operation was not a horrible
thing, but was right and necessary.
Mr.. Mitchell, of New York, called at, at,
tention to the provision of the Gage bill
for the accumulation of greenbacks in the
treasury for the purpose of preventing the
endless chain
Mr. Gage said that, as applied to the
government, the endless chain was pre-.
judicial because the demand liabilities of
the government were SO great that the
theoretical provision of gold Is inadequate
to redeem promptly and to give confidence
of prompt redemption. and that, said Mr..
Gage, is a source Of weakness.
Mr.. Gage made a general statement OF
what he hoped to see ultimately accom-
plished as permanent financial system
1T would be condition of affairs with
national bank notes. made safe to the
people without specific security therefor.
wisely restricted by law SO as to prevent
such evils as might arise, and with the
government from paying its debts by Civ
ing other debts in payment"
'Why not accomplish this now?" asked
Mr.. Walker.
1t should not be done now; practically,
there are many reasons. The predisposi-
ton Of the people is in favor OF govern
ment notes. 1 believe the economic loss
TO the people from this system, although
unknown, outweighs the narrow advantage
Of the mere saving of interest secured by
these government notes. You cannot
change the minds of the people. They are
They disbelieve that anyone can uphold
system such as have sketched without
selfish and sordid motives: They fear 1t
involves hazard and loss. They recall the
period of wildcat banks. 1t is desirable.
therefore, to make the first step go simple
as to show the people that it involves no
dangers. so that in time the full develop
ment of the plan would be responsive TO
uublic sentiment" !"