Mr. ECKELS. Mr. Walker says that under the penalties he has provided in this bill, while they might have the right, the penalties attaching to it would not make them wish to exercise it.

The CHAIRMAN. I say under the bill that would not be done. They would have no right to go to the Government whatever, because the bill makes it an act of suspension if they themselves do not maintain the parity between gold, silver, and paper.

Mr. NEWLANDS. I am now endeavoring to get at the construction of this act by the Comptroller of the Currency, and I would like to have his understanding regarding this.

Mr. ECKELS. I have no doubt that all the silver which the Government has issued, not being taken care of by the banks, the Government would be responsible for.

Mr. NEWLANDS. What do you mean by responsible for it?

Mr. ECKELS. Compelled to keep it at its parity with gold.

Mr. NEWLANDS. How?

Mr. ECKELS. They would have to provide the means for doing it. Mr. NEWLANDS. To what means do you refer?

Mr. ECKELS. Well, they would have to have gold in the Treasury, but that question would not arise if the things could be accomplished as provided by Mr. Walker, putting upon the banks the necessity of continually maintaining the parity of these metals. The whole thing would turn upon the ability of the banks to maintain the parity of these metals. There is this to be remembered in connection with this matter, that the stock of gold will continue to increase in this country, while, unless some new provision of law is made, the stock of silver will not.

Mr. NEWLANDS. I understand, under section 50, that any nationalbank association that fails to keep, use, and pay out its silver coin and gold coin and currency notes so as to keep all kinds of money at a parity each with all the others, shall be deemed to have failed to pay in coin or coin certificates on demand the greenback and reserved notes or other notes signed and issued by its officers, and that would, as I understand it, constitute an act of insolvency. Is that correct?

Mr. ECKELS. The act of insolvency arises from its not redeeming its notes, either in gold or equivalent to gold.

Mr. NEWLANDS. It says it shall be deemed to have failed to pay in coin.

Mr. ECKELS. Is there a further provision of the act explaining what is meant by coin payment?

The CHAIRMAN. This section 50 explains what is meant by coin payment. It says they shall redeem in coin, because while we have silver we can not make any more stringent provision than that. Then section 50 is put in. That is if the bank refuses to pay gold it puts gold at a premium, and you have to buy it in the market, then the bank has failed to redeem in coin; but if the payment of silver to an individual does not put gold at a premium, then no action can be maintained against the bank for refusing to pay gold. That is the way it is in Europe, Germany, and France.

Mr. NEWLANDS. Say a bank has $100,000 only in gold and $200,000 in silver, and the fear is by tendering silver to the man who demands redemption it may put gold at a premium. What is to prevent that bank from taking its silver to the Treasury of the United States and demanding gold and thus getting gold for redemption?

Mr. ECKELS. The fear of the penalty that is provided by the provision of the act if it does not maintain the parity of the metals.

Mr. NEWLANDS. As I understand it, it is maintaining the parity of the metals by that means. It is paying out gold, not silver, and it takes its silver to the Treasury of the United States and gets gold for it. Is not that maintaining the parity?

Mr. ECKELS. That is maintaining the parity, but the other thing would tend to break down the parity.

Mr. NEWLANDS. What, taking the silver to the Treasury Department for redemption in gold?

Mr. ECKELS. I think so.

Mr. NEWLANDS. Very well, then, if that is the case, why has not taking greenbacks and Treasury notes to the Treasury Department and demanding redemption in gold broken down the parity between greenbacks and Treasury notes and gold?

Mr. ECKELS. Possibly I should not have said parity. I should have said breaking down the credit of the Government.

Mr. NEWLANDS. Breaking down the credit of the Government, or
Mr. ECKELS. And injuring the credit of the bank.

Mr. NEWLANDS. The credit of the Government would not be broken down if it redeemed its silver in gold, would it?

Mr. ECKELS. No, I do not think it would break the credit of the Government if it redeemed, but as I understand it

Mr. NEWLANDS. The credit of the banks would not be broken if it got gold for silver and then tendered the gold in redemption of its obligation?

Mr. ECKELS. No, possibly I was in error in that. This is a matter that Mr. Walker should explain in detail. But it is the expectation on his part that by these various provisions of the bill which he has introduced such a parity would be maintained by the banks that the circumstances which you have inquired about would not arise. All the silver and the legal-tender paper issued in the manner provided by this act the Government would be obliged to take care of under its guaranty.

GEOGRAPHICAL LOCATION OF GOLD.

Mr. NEWLANDS. Can you tell from the reports that have been made to you where to-day most of the gold of the country is located? Have the Eastern banks more than the Western banks, or the Northern banks more than the Southern banks, of gold, proportionately?

Mr. ECKELS. You will find a full statement on this subject in my annual report for 1896, page 21. In order to make it a part of the record I wish that page to be taken as a part of my answer.

[Annual Report of the Comptroller of the Currency, 1896, p. 21.]

The total cash and the part thereof of gold and gold certificates held by reporting banks, in each geographical division is as follows:

A comparison of the money holdings in these geographical divisions shows that the 829 reporting banks in the New England States held but $6,602,671 more total cash and $5,845,585 more gold and gold certificates than the 676 reporting banks in the Southern States, not including Missouri; the 1,275 banks in the Eastern States $103,544,924 more total cash and $32,169,706 more gold and gold certificates than the 2,434 banks in the Western States; the 676 banks in the Southern States $3,451,841 more total cash and $10,047,647 less gold and gold certificates than the 509 banks in the Pacific States and Territories; the 829 banks in the New England States $10,054,510 more cash and $4,202,062 less gold and gold certificates than the 509 banks in the Pacific States and Territories. It has been deemed necessary to indicate the location of banks reporting and not reporting in order to give a proper measure by which to estimate the amount and character of cash of banks not reporting. It is a fair estimate to be drawn from reports received, and in view of their general distribution and character, and the proportion of cash of those reporting to total cash held in all such banks, that as 2,265, or 24.4 per cent of all banks and companies other than national banks held $34,484,737 in gold coin and gold certificates, the whole number of banking institutions and companies in operation in the United States on July 1, other than national, viz, 9,260, held on that day in gold coin and gold certificates $140,939,807. Adding to this amount $161,853,560, the total gold coin and gold certificate holdings of the national banks on July 14, as being the same as held by all of them on July 1, the total gold and gold certificate holdings of the banks of the country on that day was $302,793,367.

Mr. NEWLANDS. We all know that the Pacific States and Territories have more gold proportionately than any other States because they deal almost exclusively in metallic money.

Mr. ECKELS. On pages 20, 21, and 22 of the report will be found the distribution geographically of the cash and the classification of the cash of the banks reporting to me.

Mr. NEWLANDS. Assuming that the $400,000,000 of silver now in the Treasury becomes free and is paid out in Government expenditure, I ask you whether, in your judgment, that silver would land principally in the Eastern banks or in the Western or Southern banks.

TENDENCY OF MONEY TO CONGEST IN LARGE CENTERS.

Mr. ECKELS. Well, at the present there are $15 in gold held in the banks of the silver-producing States to $1 in silver. The tendency of all money is to congest in large centers.

Mr. NEWLANDS. Where was that $15 of gold to $1 of silver?

Mr. ECKELS. In the silver-producing States. That is the proportion. Mr. NEWLANDS. Leaving out the Pacific Coast and the mining States, which are almost exclusively upon a metallic basis, and considering only the Eastern States, the Middle Western States

The CHAIRMAN. You mean a metallic circulation.

Mr. NEWLANDS. Yes, sir. Taking the States I have named, and the Southern States, where do you think this silver would be more likely to drift?

Mr. ECKELS. I think there are more silver and silver certificates probably in general use in the Southern and Middle Western States than there are in the East.

Mr. NEWLANDS. Is there not a tendency of gold to collect in the great cities-the reserve centers?

AMOUNT OF GOLD IN SMALL CITIES.

Mr. ECKELS. No; except to the extent that all moneys collect in the reserve cities. I think it is rather surprising the amount of gold that is in the smaller places as shown by the returns.

Mr. NEWLANDS. You do not find a greater disparity between silver and its paper representatives on the one hand and gold on the other in the country banks than in the great city banks?

Mr. ECKELS. No; not to the extent generally supposed. I was surprised when I found from this investigation the relative proportion. Of course in the East, where the advantage of the longer time to accumulate occurs and where there is not the same need for expenditures for improvements in the way of buildings and that sort of thing, there is naturally more money and probably more gold-always excepting upon the Pacific Coast, where it is used in daily transactions.

Mr. NEWLANDS. Now, as between a bank which sought to collect the gold and pay out its gold to its depositors and in current redemption, and a bank which happened to have the bulk of its money in silver and paid out its obligations in silver, do you think there would be any bias in the public mind as against the gold in favor of the other? Mr. ECKELS. I think each individual bank, if it had the responsibility placed upon it, would take care of itself-I think competition would regulate that.

Mr. NEWLANDS. Competition would induce the banks that wanted to get upon the best basis, to maintain gold payment, would it not? Mr. ECKELS. Yes; and the other, to maintain its patronage, would do the same thing.

Mr. NEWLANDS. So they would both be competing for gold and both having a tendency to reject further deposits of silver, would they not?

Mr. ECKELS. No. Under the provision of this bill it is expected that that could not be done, that the banks organized under it would have to maintain the parity between these metals. I have no doubt they would take deposits of all moneys and representatives thereof.

Mr. NEWLANDS. There would not be any tendency to discourage the deposits of silver?

Mr. ECKELS. Hardly, if the provisions of that bill were carried out and could accomplish the things which the author expects the bill will accomplish. People are, under normal conditions, as ready to accept silver certificates, silver and legal tenders, as they are gold.

Mr. NEWLANDS. You would expect, then, that under this act the existing amount of silver in the country could be maintained at a par with gold?

Mr. ECKELS. I think the United States, with a proper banking system, if the banks were given the privilege of issuing all the credit currency of the country, would probably be able to take care of $565,000,000 in silver.

Mr. NEWLANDS. And maintain its parity with gold?
Mr.ECKELS. Yes.

PRESENT AMOUNT OF SILVER CURRENCY.

Mr. FOWLER. What is the point of saying $565,000,000 of silver. Mr. ECKELS. That is, as I remember it, the present amount of our silver currency. I do not think the country could take care of any

more.

The CHAIRMAN. Is $565,000,000 the present amount of silver in circulation?

Mr. ECKELS. Yes; there is almost that amount. I include in that the Sherman notes. I think there is about that amount of silver.

Mr. NEWLANDS. Would you regard it as an advantage and strengthening of our monetary system if the commercial value of that silver were equal to its coinage value?

Mr. ECKELS. Only to the extent that we would not then have to worry about the parity between the two metals.

Mr. NEWLANDS. Do you regard that as much of a worry?

Mr. ECKELS. It has been a great source of worry in the last few years.

Mr. NEWLANDS. Is it a matter of worry now?

SILVER COINAGE AGITATION ENDED.

Mr. ECKELS. No; but simply for the reason that people seem to be pretty well satisfied that we have gotten to the end of the agitation for silver coinage.

Mr. NEWLANDS. Is it a matter of any worry as to the future-any anxiety as to the future? Do you fear at all that the Government will be called upon to make gold redemption as heretofore, and to issue bonds for that purpose?

Mr. ECKELS. I suppose that there might an occasion arise when it would be, but the prudent thing, it seems to me, is, when there seems to be no occasion to fear any such thing, to get rid of the means which makes it a possibility in the future.

Mr. NEWLANDS. Now, the ultimate cause of this worry is the disparity between the bullion value of silver and gold, is it not?

Mr. ECKELS. Yes; that the Government is continually called upon to give artificial value to a part of the money.

INTERNATIONAL ACTION ON SILVER.

Mr. NEWLANDS. If it were possible, by international action or national action, to so increase the use of silver as to restore that parity, would you regard it as a desirable thing, or not?

Mr. ECKELS. I do not see that it would add to the actual benefit of the people to have a larger use of silver. The only benefit would beMr. NEWLANDS. I am addressing myself only to the parity now. Mr. ECKELS. The only benefit would be that there would be removed the fact that a part of the money is artificial as to its value instead of itself carrying the full value which it purports to carry.

CONSTITUTIONALITY OF PROPOSED LEGAL TENDERS.

Mr. BROSIUS. I would like to know whether, in your judgment-I do not know that you are a lawyer, but I presume you are-the issue by banks, under the conditions proposed in the bill now before us, of legaltender notes, would be constitutional.

The CHAIRMAN. It doesn't provide for that.

Mr. ECKELS. The Supreme Court stretched the Constitution once, and I presume it could again.

Mr. BROSIUS. The plan proposed is, for the Government to issue to the banks legal-tender notes, which the banks shall issue. If you say these are issued by the Government they are in the same attitude as the present legal tenders, and, of course, they are constitutional. My point is, whether it is obnoxious to constitutional objections for the Government to authorize banks to issue legal tender money.

The CHAIRMAN. The bill doesn't say that they shall print and deliver to the banks the legal-tender notes, or, in the language of the billThat the Secretary of the Treasury is hereby authorized to issue United States legal-tender notes described in section 3 of the act of March 3, 1863.

Mr. BROSIUS. And the bank shall issue them. The present law authorizes the banks to issue money, but that is not a legal tender. It