Mr. ECKELS. No. Mr. NEWLANDS. Do you know what the discount is? Mr. ECKELS. No, I do not. Mr. NEWLANDS. Do you know what amount of uncovered paper money Spain has? Mr. ECKELS. No; but there is a considerable amount. Mr. ECKELS. No. Mr. NEWLANDS. Do you know what the discount is? me; if Mr. NEWLANDS. I have not the Mint Director's report before the secretary will kindly get me the copy of the Director's reportMr. MCCLEARY. I have a table of the statements here. Mr. NEWLANDS. Will you be kind enough to let me have that? Mr. MCCLEARY. This is not the report of the Director of the Mint. Mr. NEWLANDS. I will state to you that the report of the Director of the Mint states that the uncovered paper money of the United States is $416,000,000, of the United Kingdom $113,000,000, of France $32,000,000, of Germany $60,000,000, of Italy $191,000,000, of Greece $22,000,000, of Spain $83,000,000, of Portugal $55,000,000, and of Russia $539,000,000. Now, I wish to ask you whether in the case of Russia, Italy, Spain, Portugal, or Austria, whose uncovered paper money is put at $200,000,000, if that uncovered paper money is kept at a par with gold? Mr. ECKELS. No; I take it, it is not. Mr. NEWLANDS. Is there a heavy discount in all of them? Mr. NEWLANDS. Now, this statement also shows that the South American States have $550,000,000 of uncovered paper money. Is any of that kept at a par with gold? Mr. ECKELS. I do not know what the conditions are in Chile now, nor in Brazil, but undoubtedly in all of those countries there is possibly a falling off. Mr. NEWLANDS. Is there any debtor country which keeps its uncovered paper money at a par with gold? Mr. ECKELS. No; I think not, except the United States. Mr. NEWLANDS. Can you point out to me a single debtor nation in the world, that is to say, a debtor in its relation to other nations as people bear to other people the relation of debtors, where uncovered paper money exists, where they have been able to keep that paper money at a par with gold? Mr. ECKELS. Not where the government has issued it, but they have where the banks have issued it. Mr. NEWLANDS. In what countries? Mr. ECKELS. In the United States, until the war, banks properly conducted, such as the bank of which Mr. McCulloch, of Indiana, was president, and other banks always maintained redemption in gold. The banks in the Suffolk system did the same thing. Mr. NEWLANDS. I am limiting my inquiry to the present time. Can you point out a single debtor country DEBTOR NATIONS. The CHAIRMAN. I want to ask Mr. Eckels whether as a matter of fact there is any such thing as a debtor nation? There is no debtor nation or creditor nation. Mr. ECKELS. I suppose where you speak of a debtor nation you speak of the financial condition of the aggregate of individuals. Mr. NEWLANDS. I have limited my inquiry to the present condition. Can you point out to me a single debtor country to-day which has uncovered paper money issued either by banking power or government power that keeps that money at a par with gold except the United States? Mr. ECKELS. No, but there is not a nation at the present day that has a banking system which makes so much of bank deposits as is made in this country and has as good and stable banks, but is able to maintain a parity between gold and the paper issued by such banks. Mr. NEWLANDS. You maintain that such countries could maintain it, but you do not insist that in any country you know of it does maintain it? Mr. ECKELS. The United States. Mr. NEWLANDS. I excepted the United States. Do you know any country besides the United States? Mr. ECKELS. Except Great Britain. Mr. NEWLANDS. I am talking about a debtor country. Mr. ECKELS. I think that is so. All of those countries, Mr. Newlands, are populated with peoples who are not to be compared, and are countries whose resources are not to be compared, with those of this country. Furthermore, and the point is an important one, all of these people are wanting in banking facilities as we have them. You can not make a fair comparison or arrive at a correct conclusion in this thing unless all conditions are of the same character and equally favorable. Mr. NEWLANDS. Can you point out a single debtor country where bank issues of uncovered paper money are kept at a par with gold, except in the United States? Mr. ECKELS. No, I do not know that I can. However, if the banks of the United States can so maintain their note issues, it is sufficient for this inquiry. The proposed bank legislation is for the United States alone, and is to be based upon conditions which the experience of this people demonstrate they can perform. Mr. NEWLANDS. We have maintained the parity of our uncovered paper money with gold thus far? Mr. ECKELS. Yes. Mr. NEWLANDS. The strain of that maintenance has only come upon us in the past three or four years? Mr. ECKELS. Well, of course we have only undertaken to do it since 1879. Mr. NEWLANDS. But I am saying the strain, the final strain, has been during the past three or four years? Mr. ECKELS. Up to that time the banks furnished the gold. They thus relieved the Treasury, and no one appreciated the danger who did not look ahead, until the point was reached when the banks shifted the burden to the Government, where, under the system maintained, it belongs. The banks only did this when it became evident that any other course invited danger to their creditors and themselves. RECENT BOND ISSUES. Mr. NEWLANDS. During those three years we have issued $264,000,000 of bonds. How much of that $264,000,000 of bonds was necessary to take the place of the deficit in the Treasury, and how much was necessary for gold redemption? Mr. ECKELS. That you will have to find out from the report of the Secretary of the Treasury. The fact is, that not a single dollar of it could have been issued if it had not been for the law applicable to the maintenance of the gold reserve required to redeem the Goverment's currency issues. Mr. NEWLANDS. I understand that, but I am speaking now of the facts. BONDS SOLD TO MEET CURRENT EXPENSES. Mr. ECKELS. Undoubtedly, Mr. Newlands, more or less of it was ultimately used to meet the current expenses of the Government, but the Secretary has always, and correctly, maintained that in only one instance would it have been necessary to issue bonds to meet the expenses of the Government. In all the others the bond issues were made absolutely necessary for the purpose of maintaining the parity of the two metals as called for under the act of Congress. Mr. NEWLANDS. Understand me, I do not make the inquiry for the purpose of criticising Mr. ECKELS. I understand that. Mr. NEWLANDS. -the Treasury Department in the employment of any of this fund to meet a deficit of revenue. I simply want to draw a dividing line and ascertain how much of this issue was necessary to make up a deficit and how much for gold redemption of greenbacks. Can you state that approximately? Mr. ECKELS. No, I can not. Mr. SPALDING. About $200,000,000 up to the present time. The CHAIRMAN. Was there a time in the last three years when there was not a sufficiency of money in the Treasury to have met the demands if it had not been for the desire to maintain the parity? Mr. ECKELS. I think, except in one instance, that the Secretary stated it was necessary. Mr. NEWLANDS. Then, in your judgment, the issue of these bonds was quite necessary to maintain the parity of the paper issued in gold. Mr. ECKELS. Absolutely. The CHAIRMAN. The hour of 1 o'clock has now arrived and the committee will take a recess until half past 1. AFTER RECESS. The committee reassembled at 1.30 p. m. STRAIN OF MAINTAINING PAPER AT A PARITY. The CHAIRMAN (to Mr. Eckels). Mr. Newlands said that the strain upon us in maintaining our paper money at par with gold has come upon us within the last three years, and you answered that that was true. I want to ask if the strain has not been upon us from 1879, when we resumed specie payments, and up to the present time, having culminated within the last three years, in the fact that the Treasury has carried in its vaults in the neighborhood of $300,000,000 in order to make the country feel satisfied that gold payment was to be maintained-carried it either in currency or gold, about half in gold. Mr. ECKELS. Yes, it has. Before Mr. Newlands came in I think I had stated why this condition had only come upon us within the three years. I alleged as a reason, the effect of the Bland-Allison Act, which became more manifest with time. Then as a culmination to it all, came the Sherman silver-purchasing act, whereby there was increased the demand obligations of the Government without any corresponding increase in the gold reserve to be held as a redemption fund against the same, and without giving to the Secretary of the Treasury any means of increasing such gold holdings. The result of these things was that the general public here, as well as those people abroad dealing with us, gained the impression that with the amount of silver and demand obligations which we had, and the law as it was, the Secretary of the Treasury could not, with the amount of gold at his disposal, maintain current redemption in that metal, and therefore could not carry out the provision of the statute relative to keeping the parity of the two metals. This was the reason why the banks ceased to furnish the amount of gold necessary to settle international balances, the consequent effect of which was that the Treasury was called upon to make these current redemptions, a thing which up to 1890 it had only infrequently been asked to do, and then only in small amounts. The CHAIRMAN. Up to 1890 the banks had furnished the gold both for paying the duties-very largely, 80 odd per cent of them-and for foreign gold export, by the Government's being a member of the New York clearing-house and paying the gold into the clearing-house; so it went into the Treasury and out again without depleting the Treasury. Mr. ECKELS. That is one reason. The CHAIRMAN. Now, furthermore, isn't it a fact that the taxation of the people was increased in the equivalent of what the money was worth to them that they had to pay in taxation, namely, 6 per cent on this whole $300,000,000 through that whole period, and that if the Government has to maintain gold payment we have to maintain it at the same expense we maintained it for the ten years, by $17,000,000 a year in increased taxation? Mr. ECKELS. The fact was that up to that time the banks furnished all the gold necessary for domestic and foreign purposes without any apparent strain upon them. Mr. NEWLANDS. Mr. Eckels, in your opinion, did the shifting of the balance of trade between this country and foreign countries in 1893 and the consequent demand for gold, in order to settle balances, have anything to do with increasing the strain of the gold redemption in this country? Mr. ECKELS. Only to the extent that it made gold a little harder for the Treasury and for the people to get. I intended recurring to the last thing you asked me. You spoke about debtor nations having been unable to carry on the current redemption of their paper issues in gold or to maintain the parity thereof with gold. Why do you draw the distinction in this matter between the debtor nation and the creditor nation? THE SILVER QUESTION. Mr. NEWLANDS. You have started the silver question now, and I don't want to go into that. Mr. ECKELS. I think you can state it briefly. Mr. NEWLANDS. I will say I think a debtor nation is more likely to be called upon for international money than a creditor nation is, and that the strain of the redemption in gold will be greater upon a debtor nation than a creditor nation; hence I assert that the reason why the creditor nations have been able to keep their uncovered paper at par with gold is that they have the advantage of being creditor nations and that the reason why debtor nations have been unable to do so is that they have the disadvantage of being debtor nations, and that consequently the demand for the redemption in gold is greater; and I also assume the theory of the bimetallists, that there is not enough gold in the world for gold redemption. Mr. ECKELS. To what extent do you give consideration to the individual management of the banks and character of the banking institu tions for instance, in this country or the banking institutions of Russia, or the countries to which you have alluded? Mr. NEWLANDS. I should make the proper allowance for that. The tendency of my investigation is to show that this idea of almost unlimited paper issues means an experiment which has not as yet been successfully tried by any debtor nation, that is all. UNCOVERED PAPER MONEY OF THE WORLD. I observe by the Mint Director's report that the total amount of uncovered paper money in the world is $2,469,000,000, and of that amount a little over $200,000,000 is issued by creditor nations, so called, leaving about $2,200,000,000 issued by debtor countries; and I believe we have your statement that, so far as your knowledge goes, the United States is the only one of these debtor countries that has been able to keep its uncovered paper at par with gold. WORLD'S STOCK OF SILVER AND GOLD. The Director of the Mint also states that the total bulk of silver in the world—the total silver stock-is about $4,000,000,000, and that the total stock of gold in the world is about $4,000,000,000, and that the total stock of paper money is $2,400,000,000, making in all about $10,400,000,000. Now, I believe the assumption of the gold standard men is that gold has not appreciated; that it is maintained at a fixed value. If that be true, this stock of silver, whose face value is $4,000,000,000, has depreciated to about $2,000,000,000, and we have a total stock of uncovered paper money in the world of about $250,000,000,000, of which only about one-fifth is kept at par with gold, the rest being at a very large discount, approximating $1,000,000,000; so that there is a total depreciation in its face value of the world's stock of money of at least $3,000,000,000 out of $10,250,000,000. Now, do you think that this dislocation of the par between gold and silver and paper in the world's currency has a bad effect upon trade and upon business? Mr. ECKELS. It undoubtedly has some effect, but I think the error of the assumption of the silver people lies in this: You base Mr. NEWLANDS. Pardon me, I did not intend to go into a silver argument. I simply wish to inquire whether in your opinion this depreciation of $2,000,000,000 in silver and $1,000,000,000 paper has had any disastrous effect upon the trade of the world? Mr. ECKELS. Undoubtedly it has affected the trade of the world somewhat but I think it has not been what you term disastrous, at all. MAINTAINING THE PAR OF EXCHANGE. Mr. NEWLANDS. Yes. Then we have in this country gold, silver, and paper. The effort of this country has been to maintain the par of exchange between those three classes of money. Do you think that it is desirable that the par of exchange should be maintained? Mr. ECKELS. Yes; I think every country ought to maintain all the money which circulates in that country at par. Mr. NEWLANDS. With gold? Mr. ECKELS. Yes. But I do not think it ought to get itself into a position where it must be at a continual expense to maintain one |