The age-herald., 1898-01-18
CURRENCY REFORM PLANS
Gage and FairchiId Before the
 Banking Committee.
QUESTIONED BY MIR. WALKER
The Secretary Explains the Workings of the So-Called Endless Chain Gage Talk
 ed and Fairchiid Assented.

Washington, Jan. 17.-Secretary Gage and ex-Secretary Fairchid were before the house committee on banking and currency today for further discussion of pending plans for currency reform. Mr. Gage as- scented to MT. Walkers question that he appeared as a banker and financier of long experience to aid the committee. The chairman asked if 1t was possible to use paper money and keep it at an equality with coin in purchasing power without the coin on hand. MT. Gage answered that he thought not. Without the specie on hand there was tendency to distrust, if not panic and to 0 demand for specie. MT. Walkers questions took a wide range, going into the techncalities and theories of monetary science; the effect of raise in interest, the diminishing Of loans, etc. MT. Gage and MT Fairchild al- ternated in giving their views, which, in the main, covered the general operations of banking and the conditions most con- ductive to profitable circulation.
 MT Gage said it would be impossible in this country to have a general rate or in- terest as prevailed in England, where the Bank of England fixed the rate. Here 1t varied in the many states, under statutory law, and the banks of the country had never been able to coalesee on ruling rate of interest MT Fairchild, in turn, ex- plained that the rate of the Bank of Eng land 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 in- terest rate being responsive to the market and the law of supply and demand Further questions brought from MT Fairchdld the statement that one effect Of a raise in interest was a check in demand for gold and this was the experience Of the Bank of England.
 MT Fowler asked if per cent. rate Of interest would almost invariably stop the flow of gold from this country. MT. Fair child thought 1t would, if the gold stand ard was in operation.
 Mir. Gage responded to another extended question that confidence depended upon the assurance of coin redemption.
 Referring to the 'endless chain" process, MT. Gage said it was a figure of speech applying to all financial operations where o1,ligations came in and went out in a circle. So long as the obligations were met. the operation was not profitable thing.
 MT. Fairchifd assented to this, saying this circle by which redemption was oc- complshesG was esential in banking, but that the evil lay in the fact that the gov- ernment had net the banking facilities to maket his redemption absolutely regular and certain. Lacking these facilities doubt was inspired and the demands for gold followed.
 MT. Mitchell, of New York, called atten- tion to the provisions of the Gage bill for the accumulation of greeRbacks in the treasury for the purpose of preventing the "endless chain"
 MT. Gage said that as applied to the government, the endless chain was preju- dicial because the demands for gold were so great that theoretical provision of gold is inadequate to redeem promptly and to give confidence of prompt redemption and that, said MT. Gage, is a source of weak ness.
 MT. Gage made general statement of what he hoped to see ultimately accom- plished as a permanent financial system.
 'It would be a wise 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 tne en- tire elimination of the United States gov ernment from paying its Gebts by giving other debts in paymeDt."