The morning news. [volume] (Savannah, Ga.) 1887-1900, 1898-01-18
COIN MUST BACK UP CURRENCY
CONFIDENCE DEPENDENT UPON
ABILITY TO REDEEM.

Secretary Gage and cx-Secretnry
FRirchiId Again Before the House
Committee ON Banking and Cur
rencS-COmmon Rate of Interest
for the Whole Country Desirable.
Six Per Cent. Interest Rate Would
Stop the Flow of Cola From the
Country If the Gold Standard Was
in Operation.
Washington, Jan 17.-Secretary Gage
and ex-Secretary Fairchild were before
the House committee on banking and cur
rency to-day for a further discussion Of
the plans for currency reform.
Mr.. Gage replied to Mr., Walkers ques-
tion that he appeared as a banker and
hnaneier of long experience TO aid the
committee.
The chairman asked IL it was possible
to use paper money and keep it at an
equality with coin in the purchasing pow
er without the coin on hand
Mr.. Gage argued that he thought not
Without specie on hand there was ten
dency to distrust, if not panic, and to a
demand for specie.
MIR Walkers questions took a wide
range, going into the technicaltles and
theories of monetary science; the effect
of rise in interest; the diminishing Of
loans, etc.
Mr. Gage and Mr.. Fairchild alternated
in giving their views, which in the main
covered the general operations of bank
ing, and the conditions most conducible
to profit table speculation.
Mr.. Gage said it was better in this coun-
try to have a general rate of interest, as
prevailed in England, where the Bank of
England fixed the rate. Here it varied in
many states, under statutory law, and the
banks of the country had never been able
TO coalesce on a ruling rate of interest
Mr.. Fairchild, in turn, explained that
the rate of the Bank OF England was gov
erned by the market rate
TO this extent New York and London
were on the same basis, each rate of in
terest being responsive to the market
and TO the law of supply and demand.
Further questions brought from Mr..
Fairchild the statement that one of the
effects of raising the interest rate was to
check the demand for gold, and this was
the experience of the Bank Of England.
Mr.. Fowler asked IL a per cent. rate Of
interest would not almost invariably STOP
the flow of gold from this country.
Mr.. Fairchild thought it would II the
gold standard was In operation.
MIR. Gage resopnded to an extended
question that confidence depended upon
the assurance of coin redemption.
Referring to the endless chain" process,
Mr.. Gage said IL was a figure of speech
applying to all financial operations where
obligations came in and went out In a cir
Gle. So long as the obligations were met
it was all right.
Mr.. Mitchell of New York called atten-
tion 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 gov
ernment the endless chain was prejudicial
because the demand liabilities of the gov
ernment were so great that the theoretical
production Of gold is inadequate to- re-
deem 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 a permanent result
''It would be a condition of affairs with
national bank notes, made safe to the peo-
pie without specific security therefor, wise
ly restricted by law, so as to prevent such
evils as might arise and with the entire
elimination of the United States govern
ment from paying its debts by giving only
debts in payment"
''Why not accomplish this now?" asked
Mr.. Walker.
theoretically there is no reason why 1t
should not be done now, practically there
are many reasons. The disposition Of the
people is in favor of government notes. L
believe the economic loss to the people
from this system, outweighs the narrow
advantage of the mere possession of these
securities.
''You cannot change the minds of the
people They are timd and suspicious Of
bank note Issues. They disbelieve that any
one can uphold "a system such as ! have
sketched without selfish and sordid mo-
tives. They fear that II involves hazard
and losses. They recall the period Of wild
cat banks. 1t Is desirable therefore, to
make the first step 50 simple as to show
the people that it involves no dangers, and
that in time the fun develoDment of the
plan would be responsive to public senti-
ment."
At 1890 o'clock Mr.. Cages examination
closed until tomorrow.
The examination of ex-Secretary Fair
child was then resumed.