PAPER MONEY OF THE UNITED STATES.

Mr. ECKELS. There are $235,000,000 in national-bank notes. There are $346,000,000, technically, of legal-tender notes. There are about $125,000,000, I think, of the Sherman notes. In addition to these are

the Bland silver dollars and the other silver dollars that we have coined, which, correctly speaking, are credit currency, because they depend upon something besides themselves.

Mr. JOHNSON. Do you consider them credit currency to their face value?

Mr. ECKELS. I suppose that the silver dollars would be credit currency only to the extent of the difference between one hundred cents and their bullion value. There would be $565,000,000, about, in silver. Mr. NEWLANDS. Do you regard all that as credit currency, save so far as the bullion value of the silver may be there for its redemption? Mr. ECKELS. Yes; as stated.

Mr. NEWLANDS. If that bullion was paid out in redemption to its market value and put in the markets of the world, would it maintain that value?

Mr. ECKELS. Its bullion value?

Mr. NEWLANDS. Yes; its present bullion value. Mr. ECKELS. No; I suppose not. If a great quantity of it were thrown on the market it would go down, just as the price depreciated when the Sherman silver law made a market for all the silver in the country.

Mr. NEWLANDS. Then do you or do you not regard all this moneysilver certificates, silver, Treasury notes, greenbacks and national bank notes-as redeemable in gold?

Mr. ECKELS. I do. I think under the act of 1890, which says it is the declared policy of the Government to maintain the parity of the metals, that that law is nullified unless every dollar is exchangeable with every other dollar without loss to anyone.

Mr. NEWLANDS. And apart from that law would you regard it as wise policy to maintain that-all this credit money-redeemable in gold?

Mr. ECKELS. I would. I regard it as an unfortunate circumstance that we have this, but having gone into it, there is no way that the Government creditably, no matter what the cost, can get out of it except by maintaining the parity of the metals.

Mr. NEWLANDS. How much gold is there in this country?

GOLD STOCK OF THE UNITED STATES.

Mr. ECKELS. I think there is over $700,000,000. The estimate of the Director of the Mint is not at all high, and my information comes from an investigation made in June last of the amount of gold held by the individual banks, national, State, savings, and private ones. In their returns the kinds of cash which they held were separated. There was at that time, as I remember it, about $420,000,000 in gold in the banks. Mr. NEWLANDS. Exclusive of the Treasury?

Mr. ECKELS. Exclusive of the Treasury. Then there was the gold in the Treasury, and an estimate was made of the amount of gold hoarded, which at that time was a very large amount. I know of one incident where in one bank, after the election, one man took from its safe deposit vault $240,000 in gold coin and put it into the bank proper, and I know of a number of instances where $40,000 and $50,000 in gold coin were taken out of deposit boxes in this way. Of course there is

a large amount of gold coin in circulation in the Pacific States. In all the silver-producing States there is held by the banks about $15 of gold to $1 in silver.

Mr. NEWLANDS. What do you estimate the total amount of gold in circulation in the Pacific Coast States is to-day?

Mr. ECKELS. I can not tell that specifically.

Mr. NEWLANDS. That is not important if it takes any time.

Mr. ECKELS. It is in my report. I will be very glad to give you a copy of it.

Mr. NEWLANDS. The Mint Director, in his report for 1895, says that the gold stock of this country is $618,000,000. Do you regard that as an underestimate?

Mr. ECKELS. I do.

Mr. NEWLANDS. You think there is $700,000,000 of gold?

Mr. ECKELS. Yes; especially now, in view of the large imports which have occurred during the last few months.

Mr. NEWLANDS. Assuming that we have $618,000,000 of gold and we have credit money to the extent of $1,000,000,000 represented by these various forms of money, do you think it desirable that the number of units in this country should be diminished; do you think we can get along with less than $1,600,000,000?

Mr. ECKELS. I think to-day there is a redundancy of currency.

AMOUNT OF DEPOSITS IN THE BANKS.

Mr. NEWLANDS. Now, you stated that the deposits in the national banks alone were $2,000,000,000. What is your estimate of the total deposits in all the banks of the country?

Mr. ECKELS. $5,000,000,000 is a rough estimate. I can tell what they were in the last report.

Mr. NEWLANDS. This is in the last report, October 31; the deposits of the State banks were $695,659,914; loan and trust companies, $586,468,156; savings banks, $1,935,466,468, and in private banks $59,116,378.

Mr. ECKELS. Well, the aggregate of that is about $5,000,000,000, in deposits, isn't it?

Mr. NEWLANDS. Yes, I think so. It is not important as to the exact amount. It is between $4,000,000,000 and $5,000,000,000, not exceeding $5,000,000,000 and not probably less than $4,000,000,000.

Mr. ECKELS. I think it is certainly $5,000,000,000.

Mr. NEWLANDS. You think it is certainly $5,000,000,000?
Mr. ECKELS. Yes.

RESERVE HELD AGAINST DEPOSITS.

Mr. NEWLANDS. Now, assuming that we have 1,600,000,000 monetary units in the shape of dollars in this country and $600,000,000 or $700,000,000 of this is gold and the other is bank paper, redeemable in gold, I ask you whether you think that the banks of the country ought to have any considerable amount of gold as reserve against this deposit of $5,000,000,000.

Mr. ECKELS. Undoubtedly; they have to carry a reserve.

Mr. NEWLANDS. Would you think they ought to keep it in gold; would you have them keep their reserves in gold?

Mr. ECKELS. Yes; I would have them keep it in gold.

The CHAIRMAN. You are talking about their cash reserve?

Mr. ECKELS. Oh, yes.

Mr. NEWLANDS. About how much do you think they ought to keep? Mr. ECKELS. It has been found that the necessary amount of reserve to be held against deposits in what are termed reserve cities is 25 per cent of the individual deposits and 15 per cent in places not reserve cities.

Mr. NEWLANDS. What would you say is the average amount required?

Mr. ECKELS. The average amount would be between--you can not well draw an average.

Mr. NEWLANDS. Would you say 16, 18, or 20 per cent?

Mr. ECKELS. Eighteen per cent. They do hold a larger reserve than that, as a general thing.

Mr. NEWLANDS. We have here the statement that there are $5,000,000,000 of deposits in this country. Now, the question is, how much gold should these banks hold against these deposits as reserves.

The CHAIRMAN. He has answered that.

Mr. NEWLANDS. Very well, I am going on. He has just answered that question. Now, you say about an average of 18 per cent in gold would be sufficient?

Mr. ECKELS. Yes.

Mr. NEWLANDS. Now, 18 per cent of $5,000,000,000 would be $900,000,000 of gold as reserve for the deposits.

A SAFE RESERVE.

Mr. ECKELS. The national banks hold an average of about 18 per cent. Mr. NEWLANDS. And that, you say, is safe?

Mr. ECKELS. Yes, I think that is a safe reserve.

Mr. NEWLANDS. Requiring $900,000,000 in gold?

Mr. ECKELS. Yes.

Mr. NEWLANDS. Now, we have also out, say, $1,000,000,000 paper money. What would you regard as a safe gold reserve to hold against that?

Mr. ECKELS. The national-bank currency is taken care of very satisfactorily by a 5 per cent redemption fund. You can not, Mr. Newlands, estimate that the same amount of money as a redemption money is necessary for the current redemption of your notes as for deposits, because people do not care to carry metallic money, and they do not carry it, and they will not carry it. They only want to know that when they go to the bank of issue they can have their notes redeemed.

Mr. NEWLANDS. Then you have 5 per cent more needed as a reserve for the notes. That 5 per cent on $1,000,000,000 is $50,000,000. The total gold reserve of the country, then, would be $950,000,000.

Mr. ECKELS. Undoubtedly that would be so upon the estimate made But it must be remembered that when the point is reached where it is all bank credit currency, the legal-tender obligations have been exchanged, and the Sherman notes have been converted into gold, and the additional necessary gold, if any is needed, will have been imported into the country. So the gold in the country has been increased.

Mr. NEWLANDS. Will you tell me, Mr. Eckels, where you are to get this extra amount of gold from?

Mr. ECKELS. Get it wherever there is a surplus-and there is always a surplus somewhere-just as England got gold from France, the necessary surplus, to carry on the Bank of England when confronted by the Baring difficulty.

Mr. NEWLANDS. Now, then, let me call your attention to the Mint Director's report. His report shows that in England, France, and Germany alone one-half of the gold in the world is at the present time located, $2,000,000,000, and that the other half of the gold is scattered around the rest of the world-part of it is in Russia, part of it in Austria, part of it in this country, and a little of it in other countries. Assuming that $2,000,000,000 of gold are required for the business of England, France, and Germany, do you think the other $2,000,000,000 is enough for all the rest of the world?

Mr. ECKELS. That is an assumption. Let me ask you a practical question. Have you ever known a time, Mr. Newlands, when we wanted gold in this country that we could not get it if we were willing to pay for it?

Mr. NEWLANDS. That involves a long answer, and I do not want to take up the time of the committee.

GOLD CAN ALWAYS BE OBTAINED.

Mr. ECKELS. I will answer that question in this way; that it does not make any difference whether that $2,000,000,000 is in England, Germany, France, China, or anywhere else; if we want it we can get it if we are willing to pay for it. We may at times have to pay more for it than at other times, but there never has been a time, even during the period of the war, that gold could not be obtained if we paid the rate charged for it. I think that there will always be a sufficient amount of gold here when it is needed, and when it is not needed it will be elsewhere. It moves about. One day it will be in England, another day it will be in Germany, another day it will be in France, and another day it will be here, but always filling up the vacuum which ought to be filled, and if that vacuum exists in the United States, and the reason for its filling exists, the experience of the past proves it will be filled.

The amount also will vary. Your estimate of $950,000,000 may be just enough to-day, entirely too much to-morrow, and wholly insufficient the next day. It is always dependent upon changes in trade, conditions of credit, and other circumstances of a like character.

Mr. NEWLANDS. Suppose we should go to that kind of a banking system to-day, and require $950,000,000 in gold. Having only $700,000,000 we would require $250,000,000 more. Now, looking all over the world, from what country would you get it?

Mr. ECKELS. We could get it from England, from France, from Germany, just as the banks got it six months ago when they undertook to maintain the gold reserve in the Treasury, and as they have done before and, as I said earlier, the Chicago banks did in the panic of 1893. They sent over and obtained it abroad.

Mr. NEWLANDS. I presume they could get it if they bid high enough for it.

Mr. ECKELS. Yes; it would always come where it was needed by paying the price it commanded.

Mr. NEWLANDS. In other words, while we would have to increase our reserves from $700,000,000 to $950,000,000, your assumption is that gold always could be gotten somewhere by bidding enough for it, and that, on the other hand, those countries from which we get this gold could get it, in their turn, by bidding enough for it when they needed it.

The CHAIRMAN. Is he correct in his assumption that we need $900,000,000 in gold.

Mr. ECKELS. I have not made the estimate; that is the estimate of

Mr. Newlands. It really makes little if any difference, however, what the amount is. The fact remains that when it is needed here we could get it, and if it is not needed here then it goes where it is needed, because capital only remains in the place where it is needed and it leaves when it is not needed.

Mr. NEWLANDS. England, France, and Germany are the greatest creditor nations of the world, are they not?

Mr. ECKELS. I believe so.

Mr. NEWLANDS. They have vast deposits also in their banks, haven't they?

Mr. ECKELS. Yes.

Mr. NEWLANDS. They are obliged to keep certain reserves?
Mr. ECKELS. Yes.

Mr. NEWLANDS. Now, then, if as a matter of fact you find, running over a period of years, that those three countries have kept on hand about $2,000,000,000 in gold, would you not conclude that was the amount of gold that they regard as proper and necessary as the basis for their deposits and reserve for their note issues?

Mr. ECKELS. I should think that that was their estimate, but at the same time, if they had enough surplus of gold to furnish people elsewhere heretofore who needed it, I should think they could continue to do so.

Mr. NEWLANDS. Have you observed, during the past five or six months, that when we were selling wheat abroad, and the price was advancing because of the famine of wheat in India, there was a movement in England to check the export of gold to this country?

Mr. ECKELS. Yes.

Mr. NEWLANDS. Why did England seek to check that export; was it not because she thought she required the gold she had on hand?

Mr. ECKELS. She thought she had more need for it there than we did here, but she could not do it.

Mr. NEWLANDS. And she raised the discount from 2 or 3 per cent up to 5 per cent.

Mr. ECKELS. But she could not keep the gold from coming over here because there was more demand for it here and they wanted something else we had more than they wanted the gold.

RATE OF DISCOUNT OF BANK OF ENGLAND.

Mr. NEWLANDS. What is the normal rate of discount of the Bank of England?

Mr. ECKELS. I could not tell.

Mr. NEWLANDS. I believe it is about 2 per cent.

Mr. ECKELS. Between 1 and 2 per cent.

Mr. NEWLANDS. The discount recently has been 4 and 5 per cent? Mr. ECKELS. Yes.

Mr. NEWLANDS. That rate of discount was raised to check the export of gold from that country to this country?

Mr. ECKELS. Yes.

Mr. NEWLANDS. They needed the gold and they wanted to hold the gold?

Mr. ECKELS. But they needed wheat more than they did gold. Mr. NEWLANDS. So you say their gold came. It did not come in the same quantities, however, as it would had not the rate of discount been raised?

Mr. ECKELS. That is so.

Mr. NEWLANDS. Then, in order to get that gold, just as soon as