The record-union., 1898-01-18

WASHINGTON, Jan. 17-Seeresary
Gage and ex-Secretarv Fairchild were
before the House Committee on Banking
ard Currency to-day for a discus SION of
the pending plans for currency reform.
a controversy arose among members as
To how they were to be questioned.
Chairman Walker made the interroga.
tories.
In response to questions by Mr.. Wal
ker. Mr.. Gage said he had been in the
banking business for forty years. for ten
years was President of tie FIRST Ma
tional Bank of Chicago, with Il capital
of $1,000, 900 and loans and discounts of
S16,0O0.000 to $4,000 600. He assented
to Mr.. Walkers question tha. he ap-
peared as banker and financier OF long
experience to aid the committee.
The Chairman asked if it were possible
to use paper money and keep it at an
equality with coin in purchasing power
without the coin on hand
Mr.. Gage answered that he thought
not. Without the specie on hand there
was tendency to distrust, if not panic,
and To Il demand for specie.
Mr.. Walkers questions took a wide
range, going into the technicalities and
theories of monetary science, the effect
of a raise in interest, the diminishing OF
loans, ste.
Mr.. Gage and Mr.. Fairchild aiternated
in giving their views, which in the main
covered the general operations of bank
ins and the conditions most conducive
to profitable circulation.
Mr.. Gage said it would be impossible
in this country to have general rate
of interest. 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 a ruling rate of in
terest.
Mr.. Fairchild explained that the rate
of the Bank of England was governed
by the market rate, which compelled the
establishment of the bank rate. To this
extent London and New York were on
the same basis, each interest rate being
responsive to the market and the law of
supply and demand
Further questions brought from Mr.
Fairchild the statement that one of the
effects of a raise in interest was to check
the demand for gold, and this was the
experience of the Bank of England.
Mr.. Walker asked if per cent rate
of interest would not almost invariably
stop the flow of gold from this coun-
try.
Mr.. Fairchild thought it would, if the
gold standard We're in operation.
Mr. Gage responded to another ex-
tended question that confidence depend
ed on the assurance of coin redemption.
Referring to the endless chain process,
Mr.. Gage said'it was a figure Of speech
applying to all financial operations
where obligations came in and went out
in circle. SO long as the obligations
were met, the operation was not hor-
rible thing, but was right and necessary.
Mr.. Fairchild assented to this, saying
this circle, by which redemption was ac-
complished was essential in banking,
but that the evil lay in the facr that the
Government had not the banking facili-
ties to make this redemption absolutely
regular and certain. Lacking these ia
cilities, fear was inspired and the de-
mands for gold increased.
Mr. Mitchell of New York called at
tention TO the provision of the Gage bill
for the accumulation of greenbacks in
the treasury for the purpose of pre-
venting the endless chain"
Mr.. Gage made a general statement Of
what he hoped to see ultimately accom-
plished as a permanent financial sys-
tenn. ''It would be a 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 entire elimination of the United
States Government from paying its
debts by giving other debts in payment
':Why not accomplish this now?'
asked Mr. Walker.
Theoretically, there is no reason why
it should not be done now: practically,
there are many reasons. The oredispo-
sition of the people is in favor Of Gov
ernment notes. l believe the economic
loss to the people from this system, al
though unknown, outweighs the mar
row advantage of the mere saving or
interest secured by these Government
notes. You cannot change the minds OF
the people. They are timid and suspi-
cious of bank note issues"
at 1890 Mr.. Cages hearing closed
until tomorrow. After recess, the ex-
animation of ex-Secretary Fairchild
was then resumed.
Murphy FiIibustering Case.