English can rely upon; isn't it equally true of the Scotch; and that the amount of specie they have has been proven to be amply sufficient; isn't that true of the Irish, although that is a part of Great Britain, and isn't it also true of the Canadians?

Mr. ECKELS. All these systems are based upon the experience that these immediate people have of themselves had, added to by the general principles of monetary science underlying all banking and monetary systems.

The CHAIRMAN. But the modification that the general principles of monetary science have exerted on statesmen as to what should be made into law is comparatively slight, is it not?

Mr. ECKELS. I think in some instances at least it has been.

The CHAIRMAN. You are familiar with the Suffolk system of New England, are you not?

Mr. ECKELS. Yes; somewhat.

The CHAIRMAN. Is it not reasonable to suppose that what was true of New England for thirty years as to the proportion of currency in the various things that could demand currency in redemption, would be satisfactory and safe?

Mr. ECKELS. Modified to change the present method of doing business. The CHAIRMAN. Then when you come to the last analysis of these theoretical propositions they would and ought to have but slight influ ence on legislation as compared with the actual facts developed by looking into what was actually done and to the conditions now in the countries named or in our own country and what were the facts in different systems in previous periods?

Mr. ECKELS. Except that the theoretical questions tend to bring out the actual facts, and I think that somebody has said where there is a conflict between facts and theories so much the worse for the theories. Mr. CALDERHEAD. When you say that France clings tenaciously to a large amount of gold, do you mean the people of France? Mr. NEWLANDS. The French people generally.

Mr. CALDERHEAD. What has legislation to do with that?

Mr. ECKELS. You know that virtually every French peasant is his own banker. He does not use banks of deposit; he does not trust banks; he keeps his metal money and does not exchange it for notes with the banks. It is in the cities where that thing prevails, and consequently there is a necessity for a larger store of the metal medium of exchange.

Mr. NEWLANDS. Then, taking into consideration the existing conditions of France, and the lack of banking facilities, etc., you do not regard the French people as unwise in holding on to this $850,000,000 of gold, do you?

Mr. ECKELS. I do not regard them as unwise in holding on to the amount which the necessities of business require.

Mr. NEWLANDS. Experience would tell them as to what the necessities of business require.

Mr. ECKELS. I would take all their experience; .and I find in one instance England was short of gold, but then, when they wanted it they got it immediately from the Bank of France. You can not say you must have always the same amount of gold in existence in the country all the time.

Mr. NEWLANDS. Do you remember how much they got from the Bank of France at that time?

Mr. ECKELS. £15,000,000, I think.

The CHAIRMAN. They got the right to £15,000,000, but actually got less than £6,000,000.

Mr. NEWLANDS. I am simply finding out with regard to the country that has a surplus of gold, and in regard to these countries that have a sufficiency of gold, and I am inquiring now whether France has too much gold. I understand Mr. Eckels practically admits that the experience of the country is a safe guide, with reference to its condition of banking and business, that it is not unwise to keep on hand $850,000,000 of gold—that is, he will trust to experience as to the wisdom of it.

NUMBER OF BANK DEPOSITORS IN THIS COUNTRY.

Mr. ECKELS. But coupled with the statement that we have always been able to furnish gold when demand is made for it. Two years since, I made an investigation at the Chairman's request of the number of bank depositors in this country-State, savings, private, national, and all. There were over 9,000,000 of them. That fact was so potent as indicating the extent to which credit instruments were used in this country that the Banker's Magazine, of London, called attention to it as indicating a condition of affairs here that must necessarily give our people a tremendous advantage in time over other commercial people with whom we were dealing, as lessening the amount of actual money which they must use and otherwise in the methods of transferring property, because 9,000,000 people depositing in banks means an enormous use of checks and drafts and a corresponding reduction of the use of actual money passing from hand to hand.

The CHAIRMAN. Paper money or coin money?

Mr. ECKELS. Yes; either one.

Mr. NEWLANDS. Do you think credit can be used too extensively in business?

Mr. ECKELS. Yes; it can. Overtrading can impede business.

Mr. NEWLANDS. Can you have a very large increase in the credits of the country or the world without correspondingly increasing the base in the shape of primary money of redemption?

Mr. ECKELS. I think we can have a very large increase of credits safely if we have an increase in the amount of property in the country. I do not think it depends on the amount of what you term primary money, but it depends upon what has been transferred-the increase in the value or the amount of that which is being transferred by your credit instruments.

Mr. CALDERHEAD. I would like to inquire whether you think a very large increase in the deposits of a country would make an increase of gold necessary by that country.

Mr. ECKELS. Not necessarily; no.

Mr. CALDERHEAD. It would not have anything to do with it, would it?

Mr. ECKELS. No. The values of those deposits depend largely on the things in which those deposits are invested, because as soon as a deposit is brought into a bank it is expected it will be loaned out and take the shape of some property which is of value. The expectation would be that the bank every day would loan out the amount it took in. The measure of the safe extension of credit is the measure of the value of the property.

Mr. NEWLANDS. Do I understand you, then, to point to England, France, and Germany as the countries which have a surplus of gold which can be drawn upon in order to enable the United States to establish a proper monetary system, and also these other countries which have a large amount of uncovered paper outstanding; you think those are the three countries which can be drawn upon for gold?

Mr. ECKELS. They can be drawn upon if we needed any more, and undoubtedly if we wanted more than they could supply us with we would buy it directly from the miner, not only here, but in Africa or anywhere else, and have it coined.

The CHAIRMAN. Isn't it a fact whatever coin money exists must necessarily be used, and the fact of the existence of a large body of coin in the country is not a proof that it is necessary to have that to do the large business of the country?

Mr. ECKELS. Undoubtedly, and the strongest criticism which has been presented against the Bank of England is that it unnecessarily keeps locked up such a tremendous amount of gold.

VISIBLE GOLD.

The CHAIRMAN. Isn't it a fact she puts down her rates of discount to 1 and 2 and 24 per cent to dispense the gold when she finds she has too much and when she finds it is being too rapidly withdrawn she puts up her rate to keep the gold? Isn't it a fact that all the visible commercial gold in England is now about $175,000,000, but ordinarily it is $120,000,000 to $135,000,000?

Mr. ECKELS. Yes; as to the rates of discounts and the purpose of them. I do not know exactly the amount of visible gold, but it is comparatively a very small amount at present.

The CHAIRMAN. Is it not a fact furthermore, that the gold in the pockets of the people is held on to tighter in case of excitement or panic and they do not pay it out then?

Mr. ECKELS. That is undoubtedly true.

Mr. NEWLANDS. Is it not a fact that the exports of gold from various countries and the imports to them are watched very carefully by all people interested in business, and particularly in financial business?

Mr. ECKELS. I think that is so, but they are watched with more anxiety by this people than any other people on the face of the earth, because ours is the one people that has its Government in partnership with every individual who is carrying on business.

BISMARCK ON THE SUPPLY OF GOLD.

Mr. NEWLANDS. Now, I ask whether the statement attributed to Bismarck is not substantially true, that this gold blanket is not sufficiently large to cover all the nations of the world, and when one nation tugs at it it exposes the naked members of the other nation?

Mr. ECKELS. No; and I think Bismarck's opinion, among men who are informed on this subject, has less weight in financial affairs than the opinion of any other statesman who ever rose to his prominence in public life.

Mr. NEWLANDS. With reference to the production of gold, you rely upon that to supply the wants of these countries that have these large amounts of uncovered paper money?

Mr. ECKELS. As a contributing element?

Mr. NEWLANDS. Yes; as a contributing element. At what figure do you put the production of gold during the past year?

Mr. ECKELS. I do not know; I suppose $225,000,000.

Mr. NEWLANDS. That is the largest production known in the history of the world, is it not?

Mr. ECKELS. Yes.

Mr. NEWLANDS. The world is searching for gold now very energet ically.

Mr. ECKELS. Yes.

Mr. NEWLANDS. Doesn't that indicate a great demand for gold?

GOLD A VALUABLE PROPERTY TO HAVE.

Mr. ECKELS. Yes; undoubtedly; or it indicates at least that the people think it is going to be a valuable property to have.

Mr. NEWLANDS. Now, as to that annual production of gold, have you any information as to how much of it is really absorbed in the monetary systems of the world and how much goes to dentistry and the other arts? Mr. ECKELS. I imagine all goes into the monetary systems of the world that can possibly be used to the best advantage by the monetary systems of the world, and that which can be best used in the arts, and thereby bring more profit to the owner of the gold, goes into the arts. It is necessary, of course, to buy the gold to coin into money. Mr. NEWLANDS. What proportion goes into money?

Mr. ECKELS. I do not know exactly.

Mr. NEWLANDS. A large proportion goes temporarily into money and finally into the arts?

Mr. ECKELS. It changes. It stays in money as long as it can best be used for money, and when it is of more value in the arts it goes to the melting pot.

Mr. NEWLANDS. Do you think more than one-half of it?

Mr. ECKELS. I would not undertake to give the exact proportion. The CHAIRMAN. That is a matter of public record.

Mr. ECKELS. I have not the statistics here; but I have always observed this, that there has never been a time in the history of this people, or any other people, that there was not a sufficient amount of gold obtainable if it was needed. Of course, sometimes more must be paid for it than at other times, just as you have to pay more for commodities at certain times than at other times; but it can always be bought by paying enough for it.

Mr. NEWLANDS. Do you know what statisticians have estimated as to the percentage of gold produced that goes into the arts-dentistry, etc.?

GOLD IN THE ARTS.

Mr. ECKELS. No; I do not know what their estimate is, and I do not care particularly, because I do not think it affects the question. My theory is that there always goes into money that which can be best used for money and there always goes into the arts that which can be best used in the arts.

Mr. JOHNSON. You would not be alarmed, then, to see a large amount of it being used in the arts?

Mr. ECKELS. I would not care if 95 per cent of it was used. It would indicate the condition of business was such that it could more profitably be used by putting that proportion into the arts, and that it was therefore not needed for money.

Mr. NEWLANDS. Isn't it true that the more valuable gold becomes the greater demand there is for it in the arts and on account of the very fact that the whole world is seeking for gold it makes it desirable in the arts?

Mr. ECKELS. I think that is so. I think some eminent authorities have said, the higher becomes the price of gold the better for the people, for the reason that it decreases the inconvenience of bringing about exchanges of property. The objection to any money which

increases the bulk of the thing which is to do a certain required work is that it thereby lessens the profits to the person who is handling that money.

APPRECIATION OF GOLD.

Mr. NEWLANDS. You believe, therefore, that it is a good thing that money should increase in value?

Mr. ECKELS. I do not think there is any harm in it at all.

Mr. NEWLANDS. You think that if gold appreciates it is a good thing? Mr. ECKELS. I do not think it would in any wise work a single loss to anybody.

Mr. NEWLANDS. Do you think that gold has appreciated?

Mr. ECKELS. No.

Mr. NEWLANDS. You think it is a stable measure of value?
Mr. ECKELS. I think it is a stable measure of value.

The CHAIRMAN. Is it not a fact, Mr. Comptroller, that when you speak of gold being more valuable in the arts, or going into the arts rather than into money, it is not a matter of increasing its price, but that the bankers and the money users having reached the amount necessary in the reserve to be held, the balance goes into the arts, so that the bankers and the people are not at the expense of holding it in a money form?

Mr. ECKELS. More valuable in that form.

The CHAIRMAN. More valuable because it is not necessary to use a reserve? Is it not a fact that, except in England and California, pretty generally, the use of gold has gone out as currency money and that paper and silver are being used as currency to the exclusion of gold?

Mr. ECKELS. Yes; and people do not want to carry silver because they prefer to carry paper. All these things have to be gauged by the habits of the people, and by their continual desire to have this thing or that which least inconveniences them and is of the least expense and best answers the immediate purpose. It would be about as reasonable to desire to go back to old things in the methods of transportation or in anything else as it would to go back to something which simply increases the inconvenience of doing a thing which you wanted accomplished in the best way.

Mr. NEWLANDS. I understand you to say that you regard gold as a suitable measure of value, and you regard it as a good thing if it appreciated in value?

Mr. ECKELS. I said that I do not think any harm would follow from it. The CHAIRMAN. Are there any other members who desire to ask any questions in the line of the questions that have been asked by Mr. Newlands?

BIMETALLISM.

Mr. JOHNSON (to Mr. Newlands). Why don't you put the direct question to him?

Mr. NEWLANDS. What was the direct question?

Mr. JOHNSON. Why, the question you have been driving at all through your long examination—whether or not bimetallism is necessary in order to get a broad enough basis for the issue of paper money.

Mr. ECKELS. If that is the purpose of Mr. Newlands's general tenor of questions, it will take but a few minutes to say a word on bimetallism. If I may be permitted, I would like to round out some things I have said on this subject.