Omaha daily bee., 1898-01-18
GOLD RESERVE is a NECESSITY.
Secretary Gngc Gives His Views to
CnrrnncN COmmlttcC.

Secretary Gngc Gives His views TO
Currency Committee.
WASHINGTON, Jan 17.-Secretary Gage
and ex-Secretary Fairchild were before the
house committee on banking and currency
today for a further discussion of the pend
ing plans for currency reform. After con-
siderable controversy among members as 20
how they were to be questioned, Chairman
Walker made the interrogatories. In re-
sponge to questions by Mr.. Walker, MIR.
Gage said he had been in the banking bust
ress for forty years; for ten years was pres
ident OF the First National bank OF Chi
cago, with a capital of SO 0O0.0 900 and leans
and discounts of Sl600O,OOO to $40
OCO. coo. He assented to Mr.. Walkers qucs-
ton that he appeared as a banker and iinan-
Ger Of long experience to aid the committee
The chairman asked II it was 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 a tendency to dstrust, II not
panic, and no demand for specie.
Mr.. Walkers question took n Wide range,
going into the technicalltiCs and theories of
monetary science; the effect Of a raise in In
terest; the diminishing of loans, etc.
Mr.. Gage and MIR Fairchild alternated in
giving their views which in oae main covered
the genen,l opemtors of banking and the
conditions most conducive to profitable cir
culation. Mr.. Gage said it would be mposei-
BILE in this country to have>n general rate OF
interest, aJ prevailed in England, where the
Bank Of England fixes the rate. Here 1t
varies in the many states, under statutory law
end the banks of the country rad never been
able to cCaloSCe on a ruling rate OF intereSt
Mr.. Tarchild in turn explained thlt the
rate of the Bank of England wos governed
by the market nute, which compelled the
establishment Of the bank rate To this ex-
tent L-ndCn ana New York were Cn the same
basis och interest rate being responsive to
the market and the law of supply and de-
mani. Further questions brought from Mr.
Furchid the statement that one of the eff
fects CT a raise on interest was to check
the demand for gold and this was the ex-
perence of the Bank of England.
Mr. Fowler asked if a per cent nlte of
interest would not almost invariably step the
flow of gold from this country.
Mr.. FairChld thought 1T would If the gold
standard was in operation.
MIR. Gage responded to another extended
question that confidence depended en- the as
sursuce of coin redemption. Referring to the
"enlless chain" process, Mr. Gage eaid it
wEs a figure of speech applying to all
financial operations where obigatlcrs came in
and went cut in a circle. So lOng as the obli-
glticrs were met, the operation was not
Gorribe thing, but was right ana necessary
circle by which redemption was accomplished
was essential in banking, but that the evil
lay in the fact tat the government hal
not the banking facilities to make this re-
dempti0n absolutely regular and certain
Lacking these facilities fear was inspired Cnd
the demands for gold increased.
Mr.. Mitchell of New York called attention
to the provision of the Gage bill for the ac-
emulation of greenbacks in the treasury ro:
the purpose of preventing the endless
chain"
Mr.. Gage said that as applied to the gov
ernmen. the endless chain was prejudicial
because the demand liabilities of the gov
ernment were so great the theoretical pro-
vision 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 gen
eral statement of what he hoped to see ulti-
mateiy accomplished as a permanent iinan-
Cal system.
1T would be a condition of affairs vita
national bank notes, made safe to the people
without specific security therefor, wisely re
stricted by law, SO as to prevent such evils
as might arise AMI with the entire elmina-
tion 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 nov; practically there
are many reasons. The predispostion of the
people is in favor of government notes. |
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 timid and suspicious of banknote
issues They dishelieve that anyone can up
hod a system such as | have sketched with
out selfish AM sordid motives. They fear it
involves hazard and loss. They recall the
period Of wildcat banks. 1t is desirable,
therefore to make the first step simple
as to show the people that it involves no
dangers SO thai in time the full develop
ment of the plan would be responsive to pub
lie sentiment"
At 1890 Mr.. Cages hearing was adjourned
until tomorrow.
wrangle over motions and counter mo-
tions to restrict the time of members in in
tercogating witnesses delayed the session Of
the banking and currency committee for over
an hour. In the course of the discussion Mr..
McCleary rep, Minn.) made the statement
that every republican on the committee fa-
vored the gold standard proposition of the
monetary commission in the bill, while Mr..
Hill rep, Comm protested tsat was not cor
rect. The examination of eX-Secretary Fair
child was then resumed