the political caprice of any Administration that may be compelled to buy its credit over and over again by borrowing as the successive waves of doubt sweep over us.

LOUISIANA'S SUCCESSFUL SYSTEM.

Can anyone have a shadow of a doubt about the ability of the banks to maintain gold redemption just as easily in this country as it is done in Germany, England, Ireland, Scotland, and Canada to-day, and as was done through the Suffolk system at Boston before it was succeeded by our national system, or as was done in Louisiana up to the very capture of New Orleans during the war? Under that law Louisiana became, in 1860, the fourth State in the Union in point of banking capital and second in point of specie holdings. There was no security pledged for the circulating notes, but not a single bank in Louisiana suspended dur ing the panic of 1857.

Having passed over the several sections of this bill, pointing out their objects and effects, one question, and the final one, most naturally presents itself at the conclusion; and that is, in what way, if any, will the operation of the bill affect the amount of circulation now outstanding? Will it expand or contract it?

The total amount of money of all kinds in circulation at the end of the last fiscal year, June 30, 1895, was $1,604,131,968. The amount of gold now estimated to be in the country and which would then be in circulation is about $600,000,000; the amount of silver now estimated in the country and which would then be in circulation, $600,000,000. Should the United States Government bond notes taken out be just equal to the present national-bank capital there would be an expansion of $257,000,000.

However, it is not reasonable to expect that all the national banks in our great cities would take out the circulation, as their deposits are so large that they would not need it. Were the circulation increased or diminished, a perfect adjustment would be found in the bank notes, which would always automatically respond to the ever-varying conditions of every locality of our great country.

It is therefore apparent that the change would be completely effected within a very short time, and with only the most wholesome influence upon the public mind, and absolutely without interfering with the business interests anywhere, and as one banker wrote the other day, "We would then have a banking system superior even to that of Canada, which I now regard as the most perfect in the world." To review the result in a word:

RESULTS PROMISED.

First. Our banking business would be taken out of politics. Second. Our Government would be taken out of the banking business. Third. We would be saving the difference between 2 per cent and 4 and 5 per cent on our debt, or more than $15,000,000 annually.

Fourth. Hundreds of millions of dollars would come here for investment and vast sums now being withdrawn would remain, because there could be no fear then as now among foreign capitalists that they might get only 50 cents for each dollar they now have invested here.

Fifth. The great bulk of our paper money would be good enough to travel around the entire world side by side with. the Bank of England

note.

Sixth. The entire reserves of our banks would be gold and silver.

Seventh. A vast amount of gold and silver, taking the place of our smaller bills, would circulate among our people with a most salutary effect.

Eighth. Our smaller villages and more remote places would have the advantage of banking privileges.

Ninth. Instead of our eight different kinds of money we would have but two besides gold and silver.

Tenth. What is most important, there would be a lowering and equalization of the rates of interest in the different parts of the United States.

Eleventh. The people of every locality would be blessed with an elastic currency based upon their own wealth.

Twelfth. Panics would be checked and currency famines would be

unknown.

Thirteenth. Our financial evils would be removed, and unexampled prosperity would swiftly follow in the wake of the change.

Fourteenth. Doubt would give way to certainty; fear to hope; confusion to order; hesitation to confidence; and upon our integrity and intelligence would rest the beneficent smile of Providence.

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C., Wednesday, March 25, 1896. The committee met at 10.40 a. m. Members present: Mr. Walker (chairman), and Messrs. Brosius, Fowler, Lefever, Spalding, Calderhead, Hill, Cobb of Missouri, Cobb of Alabama, Black, Newlands, and Hendrick.

STATEMENT OF HON. E. J. HILL.

Hon. E. J. Hill, of Connecticut, a member of the committee, addressed the committee in advocacy of the bill H. R. 7085.

[H. R. 7085. Fifty-fourth Congress, first session.]

A BILL to increase the circulation of national banks and to provide for the retirement of United States legal-tender notes and Treasury notes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That upon deposit by national banking associations of United States bonds bearing interest as provided by law under the provisions of sections fiftyone hundred and fifty-nine and fifty-one hundred and sixty of the Revised Statutes, such associations shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations in blank, registered and countersigned as provided by existing law, equal in face value to the full par value of the bonds so deposited; and national banking associations now having bonds on deposit for the security of circulating notes less in face value than the par value of the bonds, or which may hereafter have such bonds on deposit, shall be entitled, upon due application to the Comptroller of the Currency, to receive additional circulating notes in blank to an amount which will increase the aggregate value of the circulating notes held by such associations to the par value of the bonds deposited, such additional notes to be held and treated in the same way as circulating notes of national banking associations heretofore issued, and subject to all the provisions of existing law affecting such notes: Provided, That nothing herein contained shall be construed to modify or repeal the provisions of sections fifty-one hundred and sixtyseven and fifty-one hundred and seventy-one of the Revised Statutes, authorizing the Comptroller of the Currency to require additional deposits of bonds or of lawful money in case the market value of the bonds held to secure the circulating notes shall fall below the par value of the circulating notes outstanding for which such bonds may be deposited as security.

SEC. 2. That in lieu of all existing taxes every national banking association shall pay to the Treasurer of the United States in the month of January of each year a duty of one-quarter of one per centum upon the average amount of its notes in circulation during the preceding year.

SEC. 3. That whenever and so often as circulating notes shall be issued to any such newly organized banking association, or to an existing association increasing its capital or circulating notes, it shall be the duty of the Secretary of the Treasury to redeem and cancel legal-tender United States notes issued under acts passed prior to July first, eighteen hundred and ninety, to an amount equal to the sum of national-bank notes so issued to any such banking association; and whenever the Treasury shall not have in its possession United States legal-tender notes issued as aforesaid, the provisions of this section shall then apply to the like redemption and cancellation of Treasury notes issued under the act of July fourteenth, eighteen hundred and ninety.

SEC. 4. That to enable the Treasurer of the United States to comply with the requirements of this act, and to redeem and cancel the United States legal-tender notes and Treasury notes named therein, he is hereby authorized to issue, from time to time, on the credit of the United States, coupon or registered bonds, redeemable at the pleasure of the United States after five years and payable twenty years from date, bearing interest at the rate of three per centum per annum, payable semiannually, to such an amount as may be necessary for the purpose herein expressed, and the proceeds of the same to be used for no other purpose whatsoever. The bonds so authorized shall be payable in gold, and shall be of such denominations, not less than one hundred dollars, as may be determined upon by the Secretary of the Treasury, and may be disposed of by him at any time at not less than their par value for either class of said notes or for gold in this country or elsewhere.

SEC. 5. That section fifty-one hundred and thirty-eight of the Revised Statutes is hereby so amended as to read as follows:

"SEC. 5138. No association shall be organized with a less capital than one hundred thousand dollars; except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants; and except that banks with a capital of not less than twenty thousand dollars may, with the sanction of the Secretary of the Treasury, be organized in any place the population of which does not exceed four thousand inhabitants. No association shall be organized in a city the population of which exceeds fifty thousand persons with a capital of less than two hundred thousand dollars."

SEC. 6. That from and after the passage of this act the Secretary of the Treasury be, and he hereby is, forbidden to issue silver certificates in denominations of one and two dollars, and whenever such certificates shall be paid into the Treasury of the United States they shall be withdrawn from circulation and canceled.

SEC. 7. That all provisions of law inconsistent with this act are hereby repealed. Mr. Hill addressed the committee as follows:

MR. CHAIRMAN AND GENTLEMEN OF THE COMMITTEE: It is with much hesitation and timidity that I venture even to express an opinion upon the important subject under consideration.

Pardon me if I suggest that we have wandered away from the main question, and have spent our time and thought not so much upon the all-important subject of currency reform as upon the adoption of a new banking system for the country.

The subject referred to this committee by the House was so much of the message of the President of the United States as related to banking and currency, and nowhere in that message is any intimation given that in any respect is there present need of change or even amendment in our banking system except in so far as it will thereby aid in bringing about relief for Government finances.

Now, I submit that the one thing desired by the people of this country is that the national currency should be improved, the national finances relieved from the miserable muddle into which they have come, and the national Treasury extricated from the embarrassments which have come upon it as the result of unwise legislation and the violation of every principle of sound finance.

If this is done the people of this country will attend to their own affairs and the business interests of the country will take care of themselves.

No cry has come up to us for interference with the existing banking system, and no demand whatever from any person for an increase in the volume of money.

On the contrary, notwithstanding that during the four months that we have been in session there has been an average of one hundred and seventy millions of currency locked up in the Treasury, except on the two or three occasions when the hasty action of Congress gave just cause for alarm, the rates for money in the principal financial centers have been low, ranging from 2 to 4 per cent on call and from 4 to 5 per cent on time, and good business paper has been and is selling at from 5 to 6 per cent.

If any further proof is needed that our condition to-day is not due to lack of money, look at the splendid total of bids for bonds on the 5th of February.

It is not money, but confidence and common sense that is needed most to-day.

The deposits of national banks never but once exceeded those of last year, and that in 1892 by only $65,000,000.

I challenge any member of this committee to name a single banking institution, insurance company, important business establishment, chamber of commerce, board of trade, or even an individual of any financial prominence whatever, that has directly or indirectly asked or petitioned Congress to take any steps toward abolishing or reconstructing the national banking system or to pass any banking legislation whatever, except in relation to clearing-house organizations.

DEMAND FOR RELIEF TO GOVERNMENT FINANCES.

There has, however, come to us from all over the land a universal demand for relief to Government finances and it has assumed two clear and explicit forms:

First, the immediate and absolute retirement or separation of the legal-tender paper money of the nation from daily use for current expenses, and,

Second, the free coinage of silver with all that it implies.

The latter question has been disposed of, I think, and need not longer engage the attention of this Congress at least.

But the other remains and must be met, if not by us, then by our

successors.

How, then, can we best meet and solve this problem?

I think that I may safely assume that there are some things about which we may all agree:

First. That whatever is done it shall inspire confidence and hope, not distrust and fear.

Second. That the times and the business conditions forbid changes not essential to produce the desired result.

Third. That we must have due regard for existing institutions. Fourth. That a mistake would be infinitely worse than no action whatever.

I do not believe that it is necessary that I should waste a single moment in discussing these propositions with the gentlemen who constitute this committee.

Five distinct plans of action are pending before us for our approval, all agreeing in some respects and radically differing in others.

SECRETARY CARLISLE'S VIEWS.

One offered by Mr. Cox and, as we are informed, prepared by Mr. Carlisle, I submit, should be dismissed from further consideration, for

its author has, after a year's reflection, declared himself in favor of and officially recommended substantially the one submitted by me, and has pronounced this "the most successful and economical method of accomplishing" the desired result.

Pardon me if I trespass upon the patience of the committee to read from the Secretary's report what doubtless you have all read, but which, in my opinion, is well worthy of a second perusal:

Reluctant as we may be to recognize the fact, our own persistence in an unwise policy has at last forced us into a situation which enables the holders of our securities and other creditors abroad to demand and take our gold whenever they choose, and the unsatisfactory state of our currency makes their demands more numerous and much larger in amount than they would otherwise be. There is but one safe and effectual way to protect our Treasury against these demands, and that is to retire and cancel the notes which constitute the only means through which the withdrawals can be made. Many partial and temporary remedies may be suggested and urged, with more or less plausibility, but this is the only one that will certainly remove the real cause of our troubles and give assurance of permanent protection against their recurrence in the future.

This can be most successfully and economically accomplished by authorizing the Secretary of the Treasury to issue from time to time bonds payable in gold, bearing interest at a rate not exceeding three per centum per annum and having a long time to run, and to exchange the bonds for United States notes and Treasury notes upon such terms as may be most advantageous to the Government, or to sell them abroad for gold whenever, in his judgment, it is advisable to do so, and use the gold thus obtained in redeeming the outstanding notes. Under the operation of such a plan, if judiciously executed, there could be no improper contraction of the circulation, because if it should at any time be found that other forms of currency were not being supplied to the extent required, exchanges of bonds for notes would be suspended, and gold would be procured by selling the securities abroad. In order to further facilitate the substitution of other currency for the retirement of legal-tender notes, the national banks should be authorized to issue notes equal in amount to the face value of bonds deposited to secure them, and the tax on their circulation should be reduced to one-fourth of one per centem per annum.

Whatever objections to a national-banking system may have heretofore existed, or may still exist, among our people, upon economic or other grounds, the fact must be recognized that it has been so long established, and notwithstanding its admitted defects, has served such a useful purpose in furnishing a convenient form of currency of uniform value throughout the country, that an attempt at this time to abolish it or materially abridge the franchises of the institutions organized under it, would not only be unsuccessful, but would provoke injurious agitation when the precarious condition of our fiscal affairs demands repose and such a restoration of confidence as will enable the people to avail themselves of all the facilities that can be afforded for the transaction of their business. The national banking associations now in operation have been established under charters granted by the Government, and so long as they are obedient to the laws and useful to the community, it would be an act of bad faith to deprive them of the privileges thus secured; but if, without detriment to any interest, the scope of their operations can be so extended as to bring them closer to the people in parts of the country remote from the large towns and cities, their capacity for useful service in affording accommodations to our farmers, merchants, and others engaged in business will be greatly increased, and we should not hesitate to make such amendments to the laws as would most certainly accomplish this purpose.

This proposition, in all of its details and as a whole, has been indorsed by the President of the United States and referred by the House to this committee for its consideration.

Before formulating it in a bill for action, I submitted it to the bankers in my district and many others in my State, and, with few excep. tions, received their hearty and emphatic approval, and it was only then that I ventured to offer any bill whatever.

I would modestly suggest that before taking any vote upon these various plans, the members of this committee pursue a similar course, and if taken, I shall gladly subordinate my views and wishes to the choice thereby indicated.