I have touched upon the question of the use of metallic moneys, and, whether or not I am correct, I have reason to think that Mr. Newlands is a believer in bimetallism.

Mr. JOHNSON. There is a suspicion of that kind in the committee

room.

Mr. ECKELS. From some of the inquiries made on Thursday and my replies I am sure that he will draw the inference that I am not a believer in bimetallism, that I believe in the single gold standard as being the thing which is most essential to the proper conduct of the business of a commercial nation having transactions with other commercial nations desiring that which will best meet the needs of commerce.

BIMETALLISM AN IMPOSSIBILITY.

I do not believe that bimetallism would add in the least, if it were a possible thing, to facilitating commercial exchanges or aid in the transfer of property. As a practicable thing it is an impossibility, because there never yet has been seen in the history of commercial nations, or in the history of any people that have undertaken to maintain monetary systems in practical operation, simultaneously, the things which are essential to the maintenance of a bimetallic standard. Those things are, if it is possible in the maintenance of a national bimetallic standard and a national bimetallic currency, a ratio to be fixed upon by law as between two metals, which ratio ought to be as nearly as possible the commercial ratio as the lawmaking powers are able to ascertain, if it is international bimetallism then the ratio agreed upon between the agreeing nations.

There must be in addition, made of that silver and that gold, money of absolute redemption, every dollar coined being of the value of every other dollar entering into circulation. Every dollar must maintain itself independently, so that one dollar can be exchanged for the other without any loss, or a man transfer property and receive payment therefore either in silver or gold without any loss.

Again, there must be unlimited legal tender properties attaching to each and every dollar of the dollars coined out of the gold and silver upon the ratio agreed, and there must be full, unlimited free coinage of both metals. When all these elements are provided for, concurrent circulation of the dollars so coined out of the two metals must always be present. If at any time any one of these elements which I have enumerated is wanting, a country has not a bimetallic standard and a bimetallic circulation, but it has either an alternating standard and circulation or a single standard with a single coin in circulation.

I am confident that it can not be pointed out that for a single day in the history of the United States, under the operation of any coinage act, there have ever been these four elements essential to the maintenance of a bimetallic standard in combined action. We have never had a time in our history where the two metals have circulated independent of each other, each metal maintaining its full value independent of the other metal. We have never had independent concurrent circulation and without such concurrent circulation and such absolute independence of the sustaining power of one metal under the other we have not two moneys of equal redemptive powers. If we have to maintain our silver with a gold prop under it, then silver is not a money of redemption, and if we have to maintain our gold with the silver under it gold is not a money of redemption. Unless a man can exchange his property and his dollars without loss, whether or not he receives the silver or the gold, he is not given a money which in and of itself is the equal in value of

the other form of money which enters into the maintenance of the bimetallic circulation of the country.

Thus far in this country we have had only the single standard and a single self-sustaining circulation. At one time a silver standard and a silver circulation, at another a gold standard and a gold circulation, but never a bimetallic standard and a bimetallic circulation. Such a thing I believe to be an absolute impossibility.

Mr. NEWLANDS. You have observed throughout that I have hardly used the word "silver" in this inquiry. My whole inquiry has been directed to finding out whether or not there is sufficient gold in the world for redemption purposes and whether under the banking system that is proposed we can procure enough gold in this country for redemption purposes. My inquiry, therefore, has been directed to ascertaining the stocks of gold in the different countries of the world, and the possible requirements of countries that are now struggling to get upon the gold standard and to make gold redemption.

The CHAIRMAN. Mr. Comptroller, in 1893 I received from your Department, or copied from your report, a statement that it cost $137.48 per $100,000 for the redemption of currency. In the testimony given by the Secretary of the Treasury in 1893, on $75,000 he reports that the annual cost for the redemption was $37.50, express charges $2.50-I suppose those are to be included-making $40.

Mr. ECKELS. Yes.

The CHAIRMAN. That would make the entire cost on $100,000 $53.33, or one-third more than Mr. Carlisle figures on $75,000. In your report I think you say it cost $45 and some odd cents per $100,000, didn't you? Mr. ECKELS. I don't remember the exact figures. I will look that up. The CHAIRMAN. Now, the number of redemptions under the Suffolk system averaged in ordinary years about five. As shown in the paper sent here by Treasurer D. N. Morgan, December 1, 1896, it cost $1.125 per $1,000 to make the redemptions, and if it is averaged to be redeemed five times-that is to say, each $1,000-the redemptions will be a total cost of $6.62, and that would be $562.50 instead of $137.59 on $100,000 of bank notes. The point is whether the $137.50 covers merely the actual redemptions of each $100,000 each time, or whether that would cover the whole of the money in circulation in its actual redemption, if our paper money was all bank currency and frequently redeemed? The Treasurer's figures are as follows:

TREASURY DEPARTMENT, OFFICE OF THE TREASURER,
Washington, D. C., December 1, 1896.

The charges for transportation and the costs for assorting the notes of national banks redeemed during the fiscal year ending June 30, 1896, under the act approved June 20, 1874 (18 Statutes, 123), were as follows:

These expenses have been assessed upon the several national banks in proportion to the circulation redeemed. The aggregate amount redeemed and assorted during the fiscal year was $101,409, 451.50, giving $1. 12 as the average rate for each $1,000.

On November 1, 1894, he says:

The contract rates for the transportation of all kinds of paper currency to or from Washington are

Between Washington and points in the territory of the United States Express Company and reached by it, 20 cents per $1,000 or fractional part thereof over $500; sums of $500 or fractional part thereof, 10 cents.

Between Washington and points in the territory of another express company, excepting points in Texas, Arkansas, Colorado, Kansas, Nebraska, Montana, North Dakota, South Dakota, Wyoming, and the Indian and Oklahoma Territories, 60 cents per $1,000 or fractional part thereof over $500; sums of $500 or fractional part thereof, 40 cents.

Between Washington and points in Colorado, Kansas, and Nebraska, 75 cents per $1,000 or fractional part thereof over $500; sums of $500 or fractional part thereof, 50 cents.

Between Washington and points in Texas, Arkansas, Montana, North Dakota, South Dakota, Wyoming, and the Indian and Oklahoma Territories, $1 per $1,000 or fractional part thereof over $500; sums of $500 or fractional part thereof, 65 cents.

Express charges are paid by the Government, at contract rates, on standard silver dollars sent by the Treasurer or Assistant Treasurer in sums or multiples of $500, on fractional silver coin in sums of $200 or more, and on minor coin sent from the mint at Philadelphia in sums or multiples of $20.

Thereupon, at 4 p. m. the committee adjourned.

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C., Tuesday, February 2, 1897. The committee met at 10.30 a. m.

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

Hon. James H. Eckels, Comptroller of the Currency, appeared before the committee and continued his statement begun on January 28, 1897.

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

The CHAIRMAN. Mr. Comptroller, I asked you some questions yesterday, the answers to which we want in the record in order to complete that matter discussed.

Mr. ECKELS. The reporter, by referring to his notes of yesterday's hearing, will find that you asked me a number of questions relative to the cost of redemption of national-banking notes in 1893, statingThe CHAIRMAN. Some are for 1893, and some are for 1894; and the figures I gave you are from the very last report of last year.

COST OF BANK-NOTE REDEMPTION.

Mr. ECKELS. Yes; I asked the chief of the redemption division of the Comptroller's office to give me a statement of the cost of the redemption of the national-bank notes for the year ending June 30, 1893, as requested by Mr. Walker, and he informed me that the cost was $1.3551 per $1,000, or $135.51 per $100,000 actually redeemed and assessable. He further informed me that the estimated cost of maintaining $100,000 of the circulating notes issued to a bank is estimated to be about one-twentieth of 1 per cent, or about $50 per year.

The CHAIRMAN. That is, for each redemption?

Mr. ECKELS. Yes; for the year-about $50 per year.

Mr. FOWLER. I do not understand that that clears the first proposition.

Mr. ECKELS. The cost for redemption of national-bank notes for the year ending June 30, 1893, was $1.35 for each $1,000 actually redeemed.

The CHAIRMAN. Fifty dollars per year, with the notes actually redeemed, as it has actually taken place under our present system of redeeming national-banking circulation.

Mr. ECKELS. The $135.51 per $100,000 of notes redeemed in the year 1893 was for that year only. Last year-1896-the cost was reduced to $1.12 per $1,000, or $112.50 per $100,000, and the total amount redeemed was about one-half of the outstanding national-bank circulation, or $108,260,978.

The CHAIRMAN. That is to say, the total cost of the redemption for the year, divided by the total sum of currency that the banks had out that year, amounts to the $1.3551 per thousand, or whatever it is. Mr. ECKELS. Yes.

The CHAIRMAN. Then, of course, if this currency should average to be redeemed twice or thrice or five times you would have that many more times the estimate given?

Mr. ECKELS. But the estimate is, that for a bank having $90,000 in circulating notes the amount redeemed per year is about 50 per cent of the entire circulation.

The CHAIRMAN. Redeemed once.

Mr. ECKELS. Yes; and the greater the amount actually redeemed the less cost per thousand for redemption.

The CHAIRMAN. So that if the redemption was done five times on each note it would not be five times the amount as shown there? Mr. ECKELS. No.

The CHAIRMAN. Because the packages that came in would be larger? Mr. ECKELS. Yes; and the cost of handling less, so that the cost per thousand lessens with the number of times of redemption. You had, Mr. Chairman, a statement to the effect that the number of redemptions under the Suffolk system averaged in ordinary years, about five; and, as shown in the paper sent here by Treasurer Morgan, dated December 31, 1896, it cost $1.125 per thousand to make redemptions.

The CHAIRMAN. And if notes are averaged to be redeemed five times

Mr. ECKELS (Continuing). That is to say, each $1,000 of redemption will be a total cost of $5.624, and that would be $562.50 instead of $137.50 on $100,000 of bank notes. The point is, whether $137.50 covers merely the actual redemption of the $100,000 each time or whether that would cover the whole of the money in circulation in its actual redemption, if our paper money were all bank currency and frequently redeemed. To that statement of yours the chief of the redemption division of the Comptroller's office has added this note.

The above calculation of $5.625 is for $5,000 redeemed and at the same rate. It should be $112.50 per $100,000, instead of $562.50.

The CHAIRMAN. He did not know what he was talking about and I did.

Mr. ECKELS. He seemed to have the opinion that he did, and that you did not.

The CHAIRMAN. The facts are that the records show that the total circulating notes in New England was averaged to be redeemed about five times each year. What I wanted to get at was, if the total currency of the country was redeemed five times each year whether it would not cost five times what a single redemption would cost. The larger the volume you redeem the less is the cost per $1,000. Is it or is it not a fact, Mr. Comptroller, that, other things being equal, the larger the territory covered by any system of coin redemption, the less percentage of coin to the total liabilities of a bank is needed, because of

the varied industries, and the varied times at which crops are gathered, so that each business measurably balances the other? Now, what is your judgment on that?

Mr. ECKELS. You mean over the whole country or individual localities? The CHAIRMAN. Over the whole country. I will read the question again.

The Chairman repeated the question.

Mr. ECKELS. I think that is so, if the same perfection exists in the banking system in one part of the territory as in the other.

The CHAIRMAN. That is assumed. Secondly, is it not a fact that the larger and more varied the interests included in any banking system, the less percentage of coin, to the total of volume of liabilities, is needed? Mr. ECKELS. That is unquestionably so, because the more interests transacting their business through the bank the less occasion there is for the handling of coin in the transfer of property and the more there is of transfering of property through instruments of credit issued through the banks.

The CHAIRMAN. In any banking system where the currency is put in circulation, is it not a fact that the depositors make a larger draft on the coin held for redemption than the class of people that use the currency that is issued by the banks?

Mr. ECKELS. I stated yesterday that the note holder was less liable to come to a bank for the redemption of his note than the depositor, for the reason that people do not wish to carry with them a metallic currency except when there is some absolute necessity for so doing. Therefore the bank-note currency redemptions are less frequent than the redemption of what might be termed deposit currency.

The CHAIRMAN. You are talking now of final redemption in coin? Mr. ECKELS. Yes, the deposit money of the bank; and consequently there is less need for a large reserve against note issues than there is for a reserve against bank deposits.

The CHAIRMAN. The theory upon which our banking law and all sound banking proceeds is that the reserve both of coin and of bank balances should be adjusted to the deposits and not to the currency. You think that is a sound system?

Mr. ECKELS. There is no reserve maintained against note issues, for the reason that they are all provided for by the deposits of bonds. At the outset the national-bank act did provide for holding a reserve against note issues.

POPULAR IDEA OF A BANK'S SOLVENCY.

The CHAIRMAN. You have introduced an issue there. The bonds do not cut any figure and have no relation to the currency excepting in its final redemption upon the solvency of the bank. Our present system goes upon the theory that the reserves held ought to be adjusted to the individual deposits and also the coin held, instead of to the currency issued.

Mr. ECKELS. They cut this figure, that nobody ever thinks about a bank note, because he knows that as long as the credit of the Government is such that its bouds are redeemed, his note is good.

The CHAIRMAN. But in the popular mind the thing that tests a bank's ability to redeem is the currency it issues and not the deposits it accepts. Now, as a matter of fact, is it not the depositors, and not the currency holders, that demand coin redemption, as you have previously testified; and isn't our system adjusted upon that principle?