not another civilized country which does not intrust its finances to a single minister, taking the lead in and being responsible to a parliament or assembly. I am quite aware that it is regarded as patriotic and American to rejoice in our own methods, because they differ from those of every other nation; but when they involve disgrace and disaster, it may well be doubted whether the distinction, like some other kinds of glory, is worth what it costs. The institutions of the United States are not independent of the laws of nature, whether manifested in gravitation, electricity, or finance.

Mr. Cox. Well, then, Mr. Bradford, what is your suggestion? How would you get financial relief through Congress?

SECRETARY OF THE TREASURY TO APPEAR BEFORE CONGRESS.

Mr. BRADFORD. My suggestion is that the House of Representatives should invite the Secretary of the Treasury to state what he wants and why he wants it, in accordance with that Senate report of February, 1881. This requires no change in the Constitution like the resolution recently introduced in the House requiring the President to select his Cabinet from Members of Congress. A simple majority vote of the House would admit the Secretary of the Treasury to the floor, and if the experiment proved unsatisfactory, a vote would send him out again. Mr. Cox. Can you call my attention to the clause in the Constitution which says that a Cabinet officer shall be a Representative in Congress? Mr. BRADFORD. No, sir; I can not.

Mr. Cox. Then why insist on making the Secretary of the Treasury a Representative?

Mr. BRADFORD. No; I would not make him a Representative; I would make him a witness. You certainly could have no objection to him coming before Congress in the same way as he comes before the committees. The only difference is that when he comes before you now he can explain his ideas to but a small fraction, but if he stood on the floor of the House he would at once gain the attention of the entire country. Mr. BROSIUS. All for the purpose of having a bill introduced? Mr. JOHNSON. Does not the Secretary of the Treasury in his official capacity express his desires to Congress through his reports?

Mr. BRADFORD. Yes; of course he does; but they are simply referred to committees. But why have his report referred? Would it not be much better to hear him before Congress?

Mr. JOHNSON. Don't every newspaper give his suggestions full attention, for the good of the country?

Mr. BRADFORD. Oh, yes; but you know there is a great difference between newspaper discussion and an argument of the kind I refer to.

Mr. JOHNSON. I think if he came before the House he would not reach five-sixths of the people he does now by having his reports published fully in every newspaper of the country.

Mr. BRADFORD. Yes; that may be; but he now has no way in advance to have the defects of any scheme pointed out to him before his ideas are spread broadcast all over the country.

The CHAIRMAN. Mr. Carlisle came before our committee, and then went all over the country discussing his scheme. Then a bill was prepared after a long debate. But I would like you to state just how you propose to remedy the financial difficulty.

Mr. BRADFORD. Why, by having the House vote in accordance with the scheme outlined in the Senate report to which I have referred.

And to do this I think the best way would be to invite the Secretary of the Treasury to come before the Congress and give his views in advance. We all know that scheme after scheme has been brought here from the North and the South during the last few Congresses, but none of them has been made into law, and we are just where we commenced.

Mr. BROSIUS. Won't you tell us what remedy you propose as to the currency?

Mr. BRADFORD. I must decline to do it, as it would take too much time.

Mr. BROSIUS. I thought you were here for a specific purpose and to help us with a remedy. All you have said, of course, is outside of the subject we are considering.

Mr. BRADFORD. That may be, but if I should undertake to go into the subject further, I should conflict with a good many schemes-with the scheme of your honorable chairman, for example.

The CHAIRMAN. Oh, don't mind me; go right ahead.

Mr. BROSIUS. I think if you have any truth, you ought to give it to us, no matter whom it hurts.

Mr. LEFEVER. No one of us has any personal interest in the subject. The CHAIRMAN. There is not a member of this committee, Mr. Bradford, that has any interest in the subject which is not subordinate to the general good, and if you have any views don't think of us at all.

Mr. BROSIUS. You said the way to get light on the subject was to debate it, and if there are any defects here why don't you point them out? Tell us what the defects are in the present banking system and how best to correct them.

CONDITIONS OF SOUND CURRENCY.

Mr. BRADFORD. Yes, sir. There are two conditions which I should insist upon as a sine qua non in a sound adjustment of the currency. First, that it should be a legal tender all over the country except at one point of redemption in gold. There is a great outcry about fiat money. Gold coin is just as much fiat money as greenbacks. It does not circulate because it is of gold, but because it is a legal tender. Hundreds of thousands of notes are falling due everyday at 2 o'clock and mostly paid within an hour. A large part of them are collected by banks for other banks. Such banks do not care a penny about the value of what they receive, but only that the law shall justify them in taking it. Try to pay a note with sovereigns or bullion and you will see. The only object of the gold in coin is to limit the quantity issued and to maintain international monetary equilibrium.

For the rest a legal tender note of a solvent promisor is just as good as gold coin. Evidently the Government can not make the notes of banks, issued upon their assets, a legal tender, and unless you have a legal-tender paper it will be impossible to do the business of the country on anything like its present scale. The Bank of England note is a legal tender all over England and Scotland, except at the issue department in London.

CURRENCY SEPARATED FROM BANKING.

Second. Currency should be wholly separated from banking. They are two different businesses, notwithstanding that in practice they have been done together. The amount of paper money which any country can keep afloat depends upon its quantity. If there is too much, prices

will be high, imports increase, and gold be exported; if too little, exports will increase till gold is imported. The wants of trade are no guide. Trade will take any amount. The amount per head of population is no better, because it is mixed up with what the banks call deposits, which are nothing but their promises to pay on demand. And these, again, with rapidity of circulation, while being greater at one time and less at another, are exactly equivalent to a greater or less amount of money.

Now, the banks in easy times put out currency and increase their deposits. When a panic sets in they contract their deposits and their currency is the instrument of extending the panic from one to another. The Bank of England system, by which currency is separated from banking and practically issued only against gold, is the best which has ever been devised to steady a large banking system. The same principle might be applied to a separate department of the Treasury, which should take charge of the currency separate from all its other operations and leave banking to go back to the States, where it belongs. Mr. Bradford having concluded his remarks, the committee rose.

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C., Thursday, January 28, 1897.

The committee met at 10.30 a. m.

Members present: The chairman (Mr. Walker), and Messrs. Brosius, Johnson, Van Voorhis, McCleary, Fowler, Lefever, Spalding, Calderhead, Hill, Cooke, Cox, Stallings, Black, Newlands, and Hendrick.

The CHAIRMAN. Gentleman of the committee, we are to hear to-day Mr. James H. Eckels, Comptroller of the Currency.

The Comptroller of the Currency appeared before the committee in response to the following resolution:

[Extract from the Record of the meeting of the Committee on Banking and Currency, Decem. ber 9, 1896.]

Mr. BROSIUS offered the following resolution, which was unanimously agreed to: Resolved, That all general bills [H. R. 171, 1999, 6442, 7085, and 7247] now before the committee contemplating a revision of the banking and currency system be submitted to the Comptroller of the Currency, with the request that he analyze the same in writing and come before this committee and state the effect of each bill if enacted into law, and also that he formulate and submit to this committee his views of a proper measure for the revision of the financial and banking system of the country.

STATEMENT OF HON. JAMES H. ECKELS, COMPTROLLER OF THE CURRENCY.

Mr. Eckels addressed the committee as follows:

Mr. CHAIRMAN AND GENTLEMEN OF THE COMMITTEE: I am not sure I can be of much practical benefit to the committee at this time. The committee were good enough to extend an invitation to me to come before you to present such views as I entertain upon the subject of banking and currency, and wishing to cooperate with you in arriving at such conclusions as will remedy patent defects in the existing banking and currency laws of the country, I accepted it, and am present to discuss such questions as it is deemed best to inquire into.

There have been sent to me by the chairman a number of bills which were prepared and presented by different members of the committee, and which, I believe, have been discussed by the authors of them at greater or less length. The accompanying communication requested me to analyze the same and state to the committee what I deemed would be the effect of these bills if enacted into law. The task imposed is rather a difficult one, and I have not undertaken it except in a general way. I have not reduced my views to writing, and therefore do not wish that which I say to be considered in the nature of a set argument. My purpose is to talk on the general subject in a very conversational way.

I am sure everyone will agree that there is something wrong in the financial condition of the country, and that it ought to be remedied. The difficulty arises not so much in knowing what the causes are, but in agreeing as to the remedying of the financial laws of which the people complain.

LONG-CONTINUED FINANCIAL DEPRESSION.

The long-continued financial depression under which the country has rested and the general ill condition of both our own trade and commercial relations have been the means of attracting more attention to the lack of proper finance laws than would otherwise have followed. I think it not unlikely the general public charge more to the lack of proper financial measures as a cause of hard times than should attach to such cause. My own belief is that a great many causes have contributed to produce the conditions which have characterized the business world throughout the last few years. I think a great deal of business loss and depression has been brought about by overtrading and a great deal by unwise speculation. So, too, a great deal has resulted from an undue extension of credit, and still more by unusual and unnecessary extravagance in public and private expenditure. A careful examination will show that there has been on the part of the public a living beyond the public income, and on the part of the individual a similar disregard of the first essential to prosperity. In addition to all of these sources of commercial and industrial weakness the country has passed through an unusual number of far-reaching agitations of domestic and foreign questions, all tending to disturb, unsettle, and retard business undertakings.

LEGISLATION NEEDED.

However, all these things in and of themselves would not have produced the results now seen had they not been brought to a climax by both bad financial legislation and a want of good financial legislation. It therefore seems to me, as a step toward placing the country in a proper condition, there ought to be enacted such legislation as will completely relieve the Treasury's currency difficulties and give the people a banking law that will, as nearly as possible, furnish all sections of the country with proper banking facilities, both as to deposits and discounts and bank-note issues.

VOLUME OF CURRENCY NOT THE QUESTION.

Throughout the whole discussion of this question, both in the press and in public, and, with all due deference to Congress, in Congress as well, it seems to me there has been more importance attached to the mere matter of the volume of the circulating medium of the country

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than to some other things which are quite, if not more, essential to a right solution than volume. There may possibly have been a time in the country when the volume of the circulation was the most important factor to consider, but I think that period has passed. It is a great mistake to take the position that it is essential to financial prosperity that in any particular country or in any particular financial center there should always be a large volume of money. The modern methods of transportation and the improved methods of banking exchanges have largely solved that question. It is now of a great deal less importance in this country, for instance, whether there is always here a large volume of money than it is that here is maintained the very highest credit, national, corporate, and individual. If we have credit and hold out investments which offer inducements to those who have capital to invest, it is immaterial whether loanable capital is immediately in this country or elsewhere. It will always seek the place where the returns on the investments promise to be the best for the lender.

ESTABLISH NATIONAL CREDIT.

The first essential to placing the people of this country upon a safe business basis is to so establish the national credit that it will cease to be a matter of discussion either here or elsewhere. It ought to be rid of everything which raises the question as to whether or no the country will at all times and under all circumstances maintain it. The simple fact that there has been a continual discussion for the past four years of the ability of the United States to maintain the credit of the country and redeem its demand obligations in gold has alone been a great source of financial embarrassment to the people. The agitation of it worked harm to them abroad and, through a reflex action, at home. I am thus certain that the important act is to take the step that will obviate any further discussion upon the question of the maintenance here of national credit. Ultimately, if not immediately, I think the solution of the question of money, standards, and volume of circulation in this country will come through an economically sound banking bill.

BILLS BEFORE THE COMMITTEE.

The bills which have been presented, with a single exception-the one presented by Mr. Brosius-all tend to the same thing, in recognizing, as the predominating evil in our financial system and a source of immediate weakness, the demand obligations of the Government. The bill prepared by the chairman of the committee recognizes that fact; the bill which was prepared by Mr. Fowler recognizes that fact; the bill prepared by Mr. Hill recognizes that fact, and the bill prepared by Mr. Cox does also. The bill prepared by Mr. Brosius as an amendment to the present law not only takes the position that these demand obligations are not an evil, but distinctly provides that nothing in his bill shall in any wise repeal or set aside the provisions of the present law which provide that the demand obligations of the Government shall not be canceled and retired, and makes compulsory their reissue by the Secretary of the Treasury. While these bills recognize this fact, they all differ upon the point of how the Government shall be rid of these obligations.

THE SOURCE OF OUR FINANCIAL TROUBLE.

I am confident that the greatest source of the financial difficulty in the Treasury arises from the recurring current redemption of the demand obligations of the Government. My own opinion in this regard is