form of money at a parity with the other and that it ought to lop off those moneys which can not support themselves.

Mr. NEWLANDS. Your idea, then, is that it is desirable that we should maintain the par of exchange in this country between our various forms of money, and if that proves expensive then we should lop off depre ciated forms of money?

Mr. ECKELS. Yes.

Mr. NEWLANDS. That would mean getting rid of silver in this country as a primary money, and it would also, in your judgment, mean getting rid of paper money, unless its par could be maintained with the gold.

Mr. ECKELS. Yes, it has always been redeemed, on demand, in gold. Mr. NEWLANDS. Suppose you could not maintain that parity in this country; in your judgment, would it be disastrous to the business of the country?

Mr. ECKELS. Undoubtedly it would.

Mr. NEWLANDS. If that be true isn't it just as important to maintain the par of exchange in international moneys-the moneys of the world?

GOLD THE RECOGNIZED STANDARD.

Mr. ECKELS. Yes, it is important to have it maintained at a par in the countries with which we are dealing, and in all these countries with which we are dealing the recognized standard is the gold standard. Mr. NEWLANDS. But taking the world-wide view, is it your opinion that it is important to maintain the par of exchange between the dif ferent kinds of money throughout the world?

Mr. ECKELS. I think it would be a very good thing if it could be done. Mr. NEWLANDS. Now, if it could not be done; we will assume that we have the standard, with a par of exchange, twenty years ago, and we will assume that in the process of years, as has been the case, the silver has depreciated as compared with gold, and the uncovered paper money of the world has depreciated as compared with gold, and assuming that caused, as you think it would cause, a dislocation of the business of the world and disaster; upon whom would the disaster fall, upon the countries that had the depreciated currency or upon the countries which according to your judgment had the stable currency— gold?

Mr. ECKELS. Well, I would think it would affect both.

Mr. NEWLANDS. You think it would affect both?

Mr. ECKELS. Yes.

Mr. NEWLANDS. What particular disadvantage would it create as to the countries that had the depreciated currency?

Mr. ECKELS. To change the standard?

Mr. NEWLANDS. Yes.

Mr. ECKELS. For instance, in this country I think that the loss occurring by the change necessarily made in contracts would be far greater to our own people from simply their domestic exchanges than it would with those who are dealing with us abroad.

Mr. NEWLANDS. What effect would it have upon production and upon labor, in your judgment?

LABOR WOULD SUFFER MOST OF ALL.

Mr. ECKEIS. I think that labor would suffer quite the most of all. Mr. NEWLANDS. Your idea is that labor would be cheapened, although nominally paid in the same face value; that the money would have less purchasing power?

Mr. ECKELS. I think this: The only capital which the laborer has is his ability to work, which capital he sells for money. For his own good he ought to sell it for that money which buys for him the largest number of things. It therefore follows that if you lessen the value of that money you lessen the number of things which he can purchase with his capital, which is labor.

Mr. NEWLANDS. In other words, you cheapen his labor?

Mr. ECKELS. Yes; you cheapen his labor without increasing the price of it. On the other hand, you increase the price of the things which he has to purchase. The laborer occupies a very different position in the thing which he has to sell from the man who has merchandise to sell. Consequently anything which tends to raise the price of that which he has to purchase without increasing the receipts from that which he has to sell injuriously affects him.

Mr. NEWLANDS. I understand then, that in your judgment that would apply to all these countries which have a depreciated money— either silver or paper.

Mr. ECKELS. I think in the end that they would be very much more largely the sufferers than the people who maintained the gold standard. Mr. NEWLANDS. It has the tendency in these countries to really cheapen their labor, hasn't it?

Mr. ECKELS. Yes, because it does not give them an increased price for their labor, and it does increase the prices of the things which they have to buy.

Mr. NEWLANDS. Very well, then. Take these countries which have either silver or depreciated paper, and whose labor is cheapened, according to your statement, by that fact.

Mr ECKELS. There are other elements, of course, that contribute

Mr. NEWLANDS. Does it then enable them to produce both agricultural products and manufactured products at a less labor cost, all other things being equal?

1. Mr. ECKELS. Apparently, in the aggregate they do, but the way to estimate properly a labor cost is, not to say that this man who is working on this thing receives so much a day, but it is to take how much he receives a day and then estimate the labor cost by dividing the daily wage by the number of things he manufactures or makes a day. In this manner you are able to ascertain correctly the individual cost of the individual article. It is wholly inaccurate to compare simply the total dollars received and not take into account the results obtained from the expenditure of those dollars in every country between which comparisons are being made.

Mr. NEWLANDS. You mean efficient labor has a great deal to do with it?

Mr. ECKELS. Yes; very much.

Mr. NEWLANDS. But I covered all that by saying "all other things being equal"-appliances for manufacturing, the machinery, everything that human intelligence can produce to aid human labor. I ask you, if the labor unit cost less per day by reason of the depreciated money, whether the products of that country do not have a certain advantage in the markets of the world over the products of the country that has the currency that is stable, according to your judgment-gold.

Mr. ECKELS. Undoubtedly any country which has the lowest wages possible but has all the advantages in the way of advancement, in machinery, skill, education, etc., has the advantage over another country which though having the same advantages still pays higher wages, but you must entirely change the condition of the people of these countries, their habits of work, their habits of thought, and their habits of

living. It is impossible to make out of these people the same thing that you can make out of the Anglo-Saxon people.

Mr. NEWLANDS. Then you think the superiority is in race and not in money standard?

Mr. ECKELS. I think that is a very large contributing element. The superiority of race manifests itself in having in countries akin to us the best things in daily convenience, the best things in manufacture of which the world knows, and the reason we maintain here the highest standard of monetary value is because it best answers the purpose of the highest civilization as expressed in its commercial necessities.

THE SILVER QUESTION.

The CHAIRMAN. There are certain things in reference to the financial question that properly come before this committee; there are certain things in relation to coinage that properly come before the Committee on Coinage, Weights, and Measures. This committee is willing to hear views with reference to the bills in question that are now before this committee, but I do not think it is willing to go into a discussion of the silver question. I do not think this is the proper committee for that discussion.

Mr. NEWLANDS. I do not intend to go into the silver question at all. I am addressing myself to the importance of maintaining the par of exchange. We have Mr. Eckels's view that we ought to maintain the par of exchange between silver, paper, and gold in this country.

If the countries that have a depreciated currency have a cheaper labor as the result of it, all other things being equal, will not the products of their labor, in the world's markets, assuming that they are of equal quality, pull down the value of the product of the gold-standard countries to their level in the markets of the world?

WRONG PREMISES.

Mr. ECKELS. Yes; but the great difficulty, Mr. Newlands, with your question is that you make an assumption of something as a fact which is not a fact.

Mr. NEWLANDS. I quite agree with the gentleman as to the absolute importance of maintaining the par of exchange between our various moneys in this country. I also insist that as this country is a part of the general world and as its prosperity depends largely upon the question of exports and imports, that it is of the highest importance that the par of exchange be maintained in the world's money. Mr. ECKELS. It is so maintained, is it not?

Mr. NEWLANDS. No; because since 1873 the par of exchange has been absolutely lost between silver and gold and the result has been that the silver countries have been able to produce cheaper. Consequently their agricultural production has been stimulated at our expense and their manufacturing production is about to be stimulated at our expense; and hence I say that all legislation should be addressed to the question of restoring the par of exchange in the world's money. The CHAIRMAN. I think this committee has no jurisdiction over that question. Now, I ask the committee whether they want to go further with this investigation of silver or not.

Mr. NEWLANDS. I have about come to the end of that.

Mr. ECKELS. I do not think you can assume any one thing as the cause of these conditions of various countries being different now from

what they were.

You can not say, for instance, that because Argentina happens to be a silver country that therefore large amounts of wheat have been produced in Argentina to compete with our wheat in Dakota. There is no one single element which produces these conditions, but a great many.

Mr. NEWLANDS. I agree with you-a great many.

FUNCTION OF METALLIC MONEY.

Mr. ECKELS. And I think that the refinements of banking exchanges which have gone on through a process of evolution from first to the last have necessarily limited the use of metallic money, and that metallic money is now only in demand for the purpose of reserves in banks and for the purpose of settling international balances. What is said upon the subject of ultimate redemption of the demand obligations of the nations of the world, or the time obligations so far as it extends to the assumption that there is not enough gold in the world for that purpose, is based upon the very erroneous idea that all these obligations are to be redeemed at one and the same time. There is no one who wishes redemption of the obligations which he holds for any other purpose than to obtain something else, except a miser who desires to hoard his money.

The CHAIRMAN. Something else that can not be obtained by any other thing.

GOLD SUPPLY AMPLE.

Mr. ECKELS. But the amount of gold needed for the current obliga. tions of any people is to be estimated in the same way that the amount of reserve to be held against the deposits of a bank is estimated. Nobody expects the depositors of a banking company to come in and demand all their deposits at the same date. Bankers can estimate from time to time their needed reserves just as a man estimates who is conducting a grocery, or any other business, how much he will need to meet the current wants of his customers. To my mind it is just as erroneous to say on the grounds stated that there is not enough gold in the world to meet the outstanding obligations of the people as to say that everybody will want the same article of food on the same day and the supply is inadequate. For instance, the national banks in this country showed at their last call that they had nearly $2,000,000,000 in individual and other deposits and only had in bank $381,000,000 of lawful money reserve.

Now, that $381,000,000 is more than sufficient to meet any demand that might be made upon the part of depositors, as estimated by the action of depositors at previous times, and upon the same principle if to-day there is in this country or elsewhere the percentage of gold necessary for current redemption, the amount to be ascertained in the same way that bank reserves necessarily are ascertained, there would be sufficient amount to meet all demands. If there should be a sudden demand for a larger amount the bank has facility for getting that amount from the places where there is a surplus, because the banks have the kinds of assets which are convertible and which are desired by the people who have a loanable capital, and they have the machinery for the immediate conversion of them. It is just as it was when the Baring failure occurred. It was not difficult for the Bank of England to get from the Bank of France, which had a large surplus, all the necessary gold it desired.

The CHAIRMAN. Mr. Fowler has to go. Please let him ask one question, which he very much desires to ask.

BANK OF FRANCE.

Mr. FOWLER. I want to explain away another assumption that has been made by Mr. Newlands. The assumption is this: The argument has been repeated here that the Imperial Bank of Germany and the Bank of France issued their notes under cover. As a matter of fact, there is not one single dollar set aside by the Imperial Bank of Germany for the security of a single note, and although the issue power of the Bank of France is 4,000,000,000 francs, or $800,000,000 of our money, and its outstanding notes are $735,843,041, there is absolutely not one dollar security specifically set aside to cover a single one of those notes; that is, the issue of all notes amounts to $735,843,041. The deposits of the people of France, public and private, with the Bank of France amount to only $126,597,795; so that the Bank of France maintains its redemption purely upon a note issue for which there is absolutely not the cover of a single dollar.

And in addition to that, the banks of Scotland, the banks of Ireland, and the joint stock banks and private banks in England, excluding the Bank of England, have a credit currency of $70,000,000, for not one dollar of which is there a single dollar set aside for specific cover.

Mr. NEWLANDS. Are you on the witness stand now?

Mr. FOWLER. I am, sir.

Mr. NEWLANDS. Permit me to ask you one question. The report of the Director of the Mint for 1895, page 40, gives a statement of the uncovered paper money in France and Germany, and it states that the uncovered paper money of France is $32,000,000, and the uncovered paper money of Germany is $65,000,000. Do you claim that that is incorrect?

Mr. FOWLER. I say that statement was technically correct at the time it was made, because the bank itself simply had that in its treasury, but there was not one single dollar set aside to secure the note issue. It might be the next day they would not have half as much metallic money to secure that as the day the Director of the Mint made that statement?

Mr. NEWLANDS. You mean that they did not require it to be covered? Mr. FOWLER. That is it, exactly.

Mr. NEWLANDS. But do you take issue with the statement made by the Director of the Mint that on the day that that report was made France had out only $32,000,000 and Germany only $60,000,000?

Mr. FOWLER. I know nothing about the correctness of his statement that day. The Bank of France might not have had upon the same day a single dollar of metal there, excepting of its own volition.

Mr. NEWLANDS. Assuming that the bank has the power to issue this vast amount of uncovered paper money, it only verifies the proposi tion that no safe bank in God's world would ever issue it. If you rely on the banks of this country to furnish the country with paper money your hope of getting sufficient volume of such money will not be realized, because no safe bank will issue

Mr. FOWLER. Then the Bank of France is not a safe bank, and its issue of $710,000,000 in paper money is not safe.

Mr. NEWLANDS. Now, to come back to the United States and the question as to whether--as I understand it-bank currency should be substituted for Government currency. I wish to ask, in your judgment, what amount of uncovered paper money is there in this country to-day?