commerce, is like an epileptic patient, who goes into fits upon the slightest provocation.

Everybody asks, "What is the trouble?" And everybody who has taken the time and trouble to investigate the subject answers, "The want of a sound, elastic currency."

We have reached a point in this matter that demands patriotic and heroic action.

We should at once acknowledge every established fact and follow every vein of truth wherever it may lead, if happily we may find a solution to this intricate problem, and save our country from the stress of a continual financial storm and bring back confidence in us throughout the world and secure the blessing of prosperity to our own people. It has been with this spirit that I have pursued my study and indulged my thought, which has stripped me of some pet notions and dislodged many of my preconceived ideas that were born of political bias or were the children of wishes growing out of party zeal or the inheritance of some tradition partially true or utterly false. And now, when I pass my country in review and contemplate the stupendous losses and frightful havoc of recent years, I am impelled to hope that Diogenes may again appear with his candle and not cease his search until he has found a clear, frank, and honest political platform upon which the American people can fight this thing out, as they are longing to do.

As in 1858 Abraham Lincoln foresaw that this Government could not endure half slave and half free, so now it is clear that the domestic prosperity and commercial supremacy of this nation among all the nations of the earth wait alone upon our unequivocal declaration and irrevocable decision as to our measure of value.

AMERICAN PEOPLE FAVOR THE GOLD STANDARD.

The American people, strictly honest, highly intelligent, and supremely brave, are in favor of the gold standard as a measure of value because all history has shown it the most stable metal, all experience has proved it best suited for settling the balances of trade, and all the leading commercial nations of the earth have approved and adopted it. And while our people are in favor of the use of so much paper and silver money as is consistent with prudence and the demands of business, they are unalterably opposed to the free an unlimited coinage of silver except upon the single condition of an international arrangement, to which they are ready and anxious to give their hearty support.

In discussing this question we can not take the position of the schoolmaster, the theorist, or the dogmatist; but with a full and perfect knowledge of our present currency, our individual banking system, the extent of our country, and the magnitude of our commerce, we should attempt the solution of this most difficult problem.

The experience of other countries, so far as they have established principles that are equally adapted to our condition, are valuable; but we can not assume that everything that has worked well elsewhere will necessarily work equally well here. It is a question very largely of discrimination and adjustment. However, it is no evidence that because conditions elsewhere are very different from our own, that their experience is of no value to us; or that what has been well done there can not be equally well done here. Common sense here, almost more than anywhere else, must serve as a ballast to theory. Prejudice must give way to truth, and selfishness to principle.

To suppose that the people of the United States will give up a secured

currency in a day, a week, a year, or a decade even, for a credit currency, is a most violent presumption, even if such a thing were sound in principle. Again, even if they were willing to do so-and credit currency is sound beyond a peradventure in principle--I do not believe that such a step would be wise.

Banking is a development; it is the result of evolution; and each of the great commercial nations has its own system of banking which is still in the process of evolution. While our movement should be in the direction of radical changes, the movement itself should not be radical, so that what may be proposed may be tested and gradually adjusted to the vast and complicated factors involved in our commerce and banking.

SECURED CURRENCY MUST LACK ELASTICITY.

That any system of secured currency does lack and must lack all the elements of elasticity I presume no one here doubts. If, however, there are those who think that our system has ever responded and contracted as the demands of commerce required, they have only to consult our bank-note circulation by years and be convinced that it has practically been controlled by the normal demand of money on the one hand and the profit on the bonds on the other, and has often been lowest when it ought to have been highest, and highest when it ought to have been lowest. There is no pretense that it has been taken out every fall when the crops were to be removed and has automatically contracted when they were disposed of. It was $146,000,000 in 1865; $340,000,000 in 1875; $301,000,000 in 1877; $352,000,000 in 1882, and $122,000,000 in 1890. It is now about $200,000,000.

No system of currency will ever have the quality of true elasticity which does not reflect commercial activity and which must pay a tax when it is idle; hence the normal demand throughout the year will be the only material factor affecting the issue.

It will readily be seen why we have money panics somewhere nearly all the time and everywhere some of the time. Under a properly regu lated system I think one may safely say there should never be a currency famine anywhere at any time.

The great bulk of the money, the normal money of any country, may well be gold, silver, and secured currency, no one of which, nor all of which put together, are elastic. But to properly and adequately provide for the extra demand for money to handle crops and manufactures, to meet the disturbed conditions in commerce and the flurries in finance, something more is needed and demanded.

NATIONAL DEBT WILL SOON BE PAID.

Again, it is admitted that it will not be very long before the national debt will be paid off. We all remember what consternation there was throughout the whole country about contraction when President Harrison was paying off the national debt at the rate of about $100,000,000 a year during part of his Administration. Our system had absolutely no power of self-adjustment. Some were demanding that we have State bonds for security; some suggested city bonds; some urged railroad bonds; some sought relief in the repeal of the tax on State banks, while the bankers met at Baltimore and issued the plan bearing that name. All was confusion; all was chaos; nothing was done.

Now that there has been a slight increase in our bonded indebtedness, some talk as though it were to continue throughout eternity. In the

light of a surplus revenue of $1,333,000,000 from 1879 to 1889, such a suggestion is idle talk, for everybody knows that if the Government were disposed to do so it could wipe out this entire debt in five years, and that to distribute the liquidation over a period of ten years would render the burden so light as not to be noticed. Nothing is more certain than the absolute necessity of some system to succeed the present one in the course of time, and nothing is more important than that there should be an evolution in passing from one to the other, and not a revolution, with all its shocks, misfortunes, disasters, and ruin.

"RED DOG" MONEY.

As a preface to what I am going to say, I will venture the assertion that you can not mention the matter of credit money in any chance meeting of a dozen business men that some of them-indeed, in most instances a majority of them-will not shrug their shoulders and think of what they may remember, if age will permit, or what their fathers have told them about "red dog," ," "yellow dog," or some other dog money, as though they had heard or read all about all kinds of money, when, as a matter of fact, all they know about it is that there really was "red dog" money, and that the dog died. Neither the cause nor the circumstances surrounding his death seem ever to have entered their minds.

But, discarding the follies of the past, let us inquire into our necessities and misfortunes with a determination of overcoming them, if possible. As a preliminary but fundamental truth, I suppose all my listeners realize that there is not the slightest difference between a bank which has $100,000 capital and $100,000 of deposits subject to check, with $75,000 of its deposits loaned out on sixty-day two-name paper, and $25,000 reserve, and a bank which has $100,000 capital and $100,000 of credit notes outstanding, $75,000 of which having been loaned to identically the same men as in the former case and on the same conditions— sixty-day two-name paper, with $25,000 of notes turned into cash for a reserve against the $100,000 of notes.

When there are abundant deposits there will be no notes issued under ordinary circumstances, but where there is little wealth in the form of money, but great wealth in other forms and much money needed to develop it, there notes will be issued.

This fact can be illustrated by a comparison of the national banks of the city of New York in 1884, having $16,000,000 of capital, with all the national banks of the State of Massachusetts, outside of Boston, having $45,000,000 of capital. In the former the deposits amounted to $184,000,000, and the banks' circulation was but $13,200,000; while in the latter the deposits were but $45,400,000, and the circulation outstanding was $35,800,000-about three times as great.

THE SOUND SUFFOLK SYSTEM.

Again, during the operation of the Suffolk system at Boston, which was before Yankee ingenuity was crystallized into millions, and every river, stream, and rivulet was turned into a source of wealth, the country banks had no deposits to speak of, and many of them, considering the inconvenience of travel and the slowness of mail, were, speaking from our present facilities for both, thousands of miles away. Some of the Maine banks, with an actual capital and downright honesty, were, though more remote then in a business sense than California is now, issuing their notes and clearing at Boston, thus enabling the sturdy

sons of that then far-off region to develop the great resources of that section. So it was with nearly all of New England, but the current redemption which the system enforced kept their money absolutely good.

CONDITION OF BANK OF FRANCE.

Allow me to call your attention to the condition of the Bank of France January 1, 1895. Its capital is $36,500,000, with deposits, public and private, of $163,480,000; its outstanding notes, $701,140,000. The amount of cash on hand is $636,980,000, showing that the bills receivable taken in for the notes issued have been paid off and the notes are still outstanding.

It must not be forgotten in passing that the legal note issue, at present, of the bank is $800,000,000; but it does not seem to issue it and foolishly loan it just because it can do so. It will be observed that it had $100,000,000 still unissued.

Again, it must be remembered that there is not one dollar of specific security for any part of the whole $800,000,000 issue, which is a legal tender so long as redemption is maintained. This vast issue rests upon and is protected by the bills receivable taken in exchange for the notes, or the proceeds of those bills receivable which have already been paid off.

CREDIT MONEY OF GREAT BRITAIN.

Great Britain, too, has her sytem of credit notes and metal method of expansion. The banks of England and Wales, outside of the Bank of England, have the power to issue credit money amounting to £4,813,400, or about $25,000,000. But on the 1st day of January they had outstanding only $10,000,000, leaving credit money to be issued, if needed, amounting to $15,000,000.

SCOTCH BANKS.

The Scotch banks have an authorized issue of credit money amounting to $13,381,750, and on the 1st day of January had outstanding only $6,985,675, leaving to their credit and unissued about $7,000,000, which could be put out if conditions called for it.

IRISH BANKS.

The Irish banks have an authorized circulation of credit money amounting to $31,772,470, and on the 1st day of January there was issued only $15,000,000, leaving to their credit and unissued $16,772,470.

From these facts is it not reasonable to conclude that the same degree of caution is exercised in issuing credit notes as in loaning the deposits of the bank? A careful comparison of the figures shows that on the 1st day of January, 1895, they had issued less than 50 per cent of their authorized credit circulation, which aggregates about $70,000,000.

It must not be forgotten in this connection that we are now dealing with a country of vast accumulations and immense bank deposits. The prudence of the credit issues of Great Britain are certified to by the fact that in Scotland, the home of the system, there have never been but three bank failures worth mentioning.

BANK OF ENGLAND.

In the beginning of my comment upon Great Britain I alluded to her system of metallic expansion. The position of the Bank of England

is a most unique one, in that when they need more money or gold in England, London being the clearing house of the world, it is obtained by simply raising the rate of interest to a point that will attract gold from the money centers of the Continent, and against this the issuing department puts out its Bank of England notes.

Notwithstanding the various facilities for meeting exigencies, the Bank of England, owing to the fact that a limit was placed upon its issuing power by the act of 1844, which it was supposed at the time would forever end all panics, the bank suspended, as it is called over there, and the limit set aside October 25, 1847, November 12, 1857, and May 12, 1866. In February, 1861, and in May and September, 1864, the condition became critical also, while in 1873 the suspension of the act seemed certain for some days. By many it is now thought that it was a mistake to set a limit; for, on all occasions when the emergency has arisen, she has suspended the act and issued the requisite amount of money to meet the demand.

SYSTEM OF GERMANY.

At the formation of the German Empire, when the financial arrangement was being adjusted, the English act of 1844 was largely followed except in this particular power of issuing credit money, for they had learned by experience and observation of the English system that there was no limit except that set by necessity when the crises recur.

No limit was fixed, but rules and restraints were established to keep it down to a certain point-385,000,000 marks, or about $200,000,000 of money which was apportioned among the several banks, with the privilege of passing the limit if cash of a certain description was held; but, having passed the limit of issue fixed without cash to cover, the only penalty was a tax of 5 per cent per annum upon the notes issued. This limit has several times been passed by the smaller banks, and also by the Reischbank itself, the institution representing the Empire. This happened in the case of the Reischbank in December, 1881; in September and October, 1882; in December, 1884; in January, 1885; in December, 1886, and three times in the latter part of 1889. The overissue September 30, 1895, was $9,200,000; October 7, 1895, was $4,100,000; December 31, 1895, was $29,400,000. On some occasions the issues were much beyond the fixed limit, and it is now certain that in several instances the German community was saved from the shock of panic and the spasm of contraction which would have been inevitable if they had been acting under the English banking act of 1844.

But nearer home, even at our very doors, we can find an apt illus. tration of automatic banking currency.

CANADIAN BANKING SYSTEM.

Canada has no mint of her own, but uses our gold pieces as her standard money. The Canadian system is founded upon the Scotch system, many of her leading citizens and most prominent bankers being of Scotch origin.

The banking capital of Canada amounts to $62,196,391, or bears about the same proportion to their population that our banking capital bears to our own.

The Canadian banks have the right to issue credit money to an amount equal to their paid-up and unimpaired capital, which would be $62,196,391. But, as a matter of fact, they have never exceeded $38,000,000, and the greatest expansion in any one year to move the