coined. It provides to give so much silver bullion in exchange for certificates. The Government sells its bullion to these certificate holders.

Mr. BROSIUS. The man who goes there to have his notes redeemed has a motive. He wants to ship it abroad and pay some balances. If he uses it for that purpose, it is done for; he would have no occasion to return; but if he chose to buy silver and bring it to the Government he could get silver certificates for it, but not gold certificates. Having been redeemed, that paper is canceled and can only be resurrected when somebody deposits that much gold.

Mr. Cox. He carries his silver certificates back?

Mr. BROSIUS. No; he does not.

The CHAIRMAN. He has not got any silver certificates.

Mr. Cox. Suppose he gets the silver?

Mr. ECKELS. What Mr. Cox would like to know is, if he got the silver could he take the silver back and get a silver certificate?

Mr. BROSIUS. The bill does not interfere with the silver certificates at all. It contemplates the continuance of silver certificates, but if any man has silver now he can go to the Government and get a silver certificate for it. This bill does not provide for any retirement of silver certificates at all.

Mr. JOHNSON. I think it is misleading.

Mr. Cox. It has misled me.

Mr. ECKELS. When we were discussing the provision of Mr. Brosius's bill relative to the silver bullion now in the Treasury, I said I thought the best thing would be for the Government to sell that silver for gold, and accept its loss and make up the difference. Mr. Brosius reaches the same result so far as that silver is concerned, only he would sell it at retail and I would sell it at wholesale.

Mr. BROSIUS. To be determined by the market price at that time. Mr. ECKELS. Yes; the market value in gold. That deals with the bullion alone. No provision at all is made to in any wise change existing conditions so far as the silver certificates are concerned; they are only issued against silver dollars coined.

Mr. FOWLER. Mr. Brosius just said that if any man went to the Government with that same bullion, the price having changed, he could deposit all that bullion.

Mr. BROSIUS. No; he must treat that silver just as anybody else who takes that to the mint.

Mr. ECKELS. He can not.

Mr. BROSIUS. We are not buying silver now, and under existing law he could not. I had in my mind that we were still issuing certificates for silver, but we are not under existing law, and he could not bring it to the Government because the Government is not buying silver.

SECURED CURRENCY NOT ELASTIC.

Mr. FOWLER. Mr. Eckels, in answer to Mr. Brosius's question with regard to a secured currency by municipal bonds, I think you stated it could be elastic. Can any secured currency be elastic?

Mr. ECKELS. No; I said it could not be elastic.

Mr. FOWLER. I think the way you said it will give the impression that you said it could be elastic, and give the requisite amount of money in the different localities of the country.

Mr. ECKELS. I did not speak about the elasticity of such a system, but I stated that probably for ordinary times there would be enough currency gotten into circulation. The difficulty with all bonded security

is, at the time an emergency might arise you could not get the increase of circulation necessary to meet that emergency, because you would lose so much time in purchasing your bonds, etc. I explained the matter at some length in answer to a previous question put to me.

STATE AND MUNICIPAL BONDS.

Mr. FOWLER. Does not the condition of the national banks of the country show that none of the national banks in the South and West and Southwest and Northwest hold any kind of municipal bonds?

Mr. ECKELS. They do not make a specific showing on the subject. Mr. FOWLER. They do not, except buying and selling them for immediate use.

Mr. ECKELS. I do not know exactly what the character is of the stocks or bonds they carry.

Mr. FOWLER. The point is this: That in the East national banks invest a portion of their assets in bonds and many of their investments are convertible in the stock exchange, while the banks in the newer portions of the United States, or in those parts of the country where they have less money in the form of capital to deposit in banks, do not have any investment in the shape of county, State, or city bonds.

Mr. ECKELS. I think most of the bonds of municipalities and State bonds are held in cities in New England and in New York.

Mr. FOWLER. They are not held by the Western banks at all. Take the States beginning with Virginia and sweeping on around and taking in Texas, Kansas, Nebraska, Dakota, Minnesota, and Ohio, if you please, outside of the cities; do those banks hold any municipal bonds as investments?

Mr. ECKELS. Comparatively speaking, very few. Most of them are held in places where there is a surplus of investable capital that can be put into bonds.

Mr. FOWLER. That is it, exactly. Now, another question on that scheme. Would there be any possible inducement whatever for any national bank anywhere in the United States where the rate of interest was, say, 8 per cent, or even 6 per cent, to buy bonds of a municipal character and then issue 75 per cent of those in currency, considering the rate at which the bonds are now held in the West? Good bonds run from 4 to 5 per cent. Would there be any possible advantage in, buying bonds and lending the money that the Government would give you against lending your own money out?

Mr. ECKELS. There would be the same objection, I imagine, that arises from investing so much money in Government bonds and only getting 90 per cent.

Mr. FOWLER. It is no step forward at all, is it?

Mr. ECKELS. I suppose Mr. Brosius's idea was that it would enlarge the field of investment in the establishment of banks.

Mr. FOWLER. But if it was not a source of profit?

Mr. ECKELS. They would not take out circulation; of course not. Mr. FOWLER. They would loan their own money. You have the same amount of money, and if you have paid $100 for $75 in currency you have lost $25, haven't you?

Mr. BROSIUS. My friend forgets that the banks of the United States to-day hold, in stock and miscellaneous securities, about $195,000,000. A large proportion of that is drawing interest at the rate of between 4 and 5 per cent. Those banks are largely investing their capital in security at 4 and 5 per cent. It does not take any more money to buy

municipal or State bonds than it does to buy railroad bonds. If they can take that and issue 75 per cent of that in currency, I think they are making money.

Mr. FOWLER. Now, it is a physical fact that entirely disposes of your proposition, when it is known, as Mr. Eckels has already stated, that none of those securities are held in those localities where the people are crying for currency. They are held in New England and New York.

Mr. BROSIUS. But they are; that is not a fact.

The CHAIRMAN. This is not in the line of the investigation. Mr. Eckels is here giving his views, and we are not discussing among ourselves.

Mr. FOWLER. Is it not a fact, Mr. Comptroller, that the bonds held by national banks are held in those localities where there is no need of additional currency at all?

Mr. ECKELS. I have already said that a majority of them are held in the East and in New England. But I suppose Mr. Brosius's idea is that if these bonds were permitted to be used for circulation, there would be more inducement for home people to buy them.

Mr. FOWLER. But, as a matter of fact, to-day they do not buy them at all.

Mr. ECKELS. No; such bonds are all sold, or at least the most of them, in New York City. They are bought in large blocks and from there distributed to people who wish to make investments in other parts of the country for the purpose of having a fixed income.

MISCELLANEOUS STOCKS HELD BY NATIONAL BANKS.

Mr. BROSIUS. Please allow me one word there. He has stated that these securities were not held in the sections of the country where they were demanding increased banking facilities and more money. I hold in my hand the statement compiled from the report of the Comptroller of the Currency for all the Southern States-22 of them-with the amount of stock and securities held by each one, showing that in every State considerable amounts of these miscellaneous stocks and securities are held by the national banks.

Mr. FOWLER. Will you give those statements with the amount of stocks and bonds?

Mr. BROSIUS. Yes, sir; they are as follows:

Mr. CALDERHEAD. While the banks in the 22 Southern and Western States hold $25,157,000 in stocks and securities, I would like to add to that statement that the banks in the 23 Northern and Eastern States hold $165,635,000 in stocks and securities.

Mr. FOWLER. Isn't it a fact that these bonds that you speak of are held in the large cities of those States by the large banks, and not by the country banks?

Mr. BROSIUS. They do not have large cities there.

Mr. ECKELS. As a general thing the city banks hold more stock than country banks, but I do not know how much of the kind of stock which he enumerates.

Mr. FOWLER. Is it not a fact that a great many bonds are temporarily bought by national banks simply for the purpose of negotiation in those Southern States, and they do not expect to hold them, but expect to sell them?

Mr. ECKELS. My idea is that as a rule all the bonds of municipalities and States are handled by stock brokers and bond houses in New York, Boston, or other large cities. They are bought there in their entirety.

Mr. FOWLER. Is it true, Mr. Eckels, that these bonds are bought much more by banks, who first buy these issues and then go on to New York and negotiate them?

Mr. ECKELS. Most of them are bought by the houses that make that their business. The percentage of municipal bonds held by the banks is not very large.

Mr. FOWLER. Is there anything in the reply that Mr. Brosius made to show whether these are railroad bonds?

Mr. BROSIUS. Nothing at all. They are designated as miscellaneous stocks and securities. It would not take any more or any less money to buy them than to buy railroad bonds.

Mr. FOWLER. But it does not necessarily follow that those are covered by your bill.

Mr. BROSIUS. I do not know how many municipal bonds; but it does not take any more money to buy municipal bonds than railroad bonds.

CREDIT CURRENCY.

Mr. FOWLER. I understood you to say to-day (or the other day), by intimation-and if I am mistaken I would like to be corrected-that you thought any principle of secured currency was unsoun and not a proper basis of currency.

Mr. ECKELS. That it was not a correct banking principle.

Mr. FOWLER. Do you think it would be prudent to allow the banks of this country now, having become accustomed to a system of secured currency, to at once adopt the system of credit currency without the supervision of some public official as to their right and privilege to take it out?

Mr. ECKELS. No, I should not permit it at all.

Mr. FOWLER. You would leave it under the supervision of public officials?

Mr. ECKELS. Yes; I think the issuance of currency ought to be superintended by public officials, whether it is secured currency or unsecured currency.

Mr. FOWLER. As I understand you, in answer to Mr. Hill's measure, I think it was, you stated that, in your judgment, granting them the privilege of taking out, say, in the outset, 20 or 25 per cent of credit currency, such 25 per cent should be under the permission or control of a public official?

Mr. ECKELS. Yes.

Mr. FOWLER. And that, having once started upon the course of

credit currency, the result of the system should be an evolution into a credit system entirely against a secured system?

Mr. ECKELS. I believe that would be the final outcome.

Mr. FOWLER. But that it should be one of evolution?

Mr. ECKELS. Yes.

The CHAIRMAN. I would like to ask a few questions that will perhaps interest the committee.

If you turn to page 5 of your report you will find a heading, "Summary of the state and condition of every national bank reported during the year ending October 6, 1896," and then the last column at the right, October 6, 1896, gives the last report. That is on page 10. Turning over to page 15, here at the bottom of the page it says, "The condition of State banks and banking associations." Now, is it fair to write in there, "Conditions of State banks of loan and discount?" Are you comparing those banks-State banks-doing the same kind of business as the banks you report as national banks, on page 10?

Mr. ECKELS. It is virtually the same kind of banks, because you see there is a separate report as to the condition of savings banks.

Mr. BROSIUS. Where is the comparison made to which you refer? The CHAIRMAN. It is not a comparison, but statistics on page 10 and on page 15.

On page 19, the second table, it says 9456-all banks. That does not include the savings banks. Those are the same banks you refer to

on pages 10 and 15, are they not?

Mr. ECKELS. No; with the addition of the savings banks.

The CHAIRMAN. Do you mean to say that the savings banks are not included?

Mr. ECKELS. Yes; on page 19. You find on page 17.

The CHAIRMAN. But you will find on page 10 the loans and discounts on October 6 are given at $1,893,268,829. You will find on page 15 the loans and discounts are given as $2,348,193,077. You add those together and it gives you the same $4,000,000,000, or about that, so that is what I want to have explained. It seems to me that if the table at the bottom of page 15 is of the loan and discount banks, then certainly the table on page 19 does not include savings banks. When you correct your testimony, please make that clear; and so I pass on. You will see that your $1,800,000,000 added to your $2,200,000,000 will make about the same as your total of all loans, State and national, on page 19.

Mr. ECKELS. I do not think it does include the savings banks.

The CHAIRMAN. Then it is safe for me to assume, in any estimates or figures or investigations I may make, that this table on page 19 includes the loans and capital and cash, etc., of all discount banks, whether State or national. One word further. That is the word "cash." In this second table, page 19, how much of that is gold, or is it gold and silver, or what is it?

Mr. ECKELS. It includes all kinds of cash.

The CHAIRMAN. Fractional and everything else, and do they hold as much as $512,000,000 clear from certificates, or do you count gold certificates?

Mr. ECKELS. Yes; all kinds of cash.

The CHAIRMAN. Ít counts all forms of metallic money or certificates of metallic money. Is that the idea?

Mr. ECKELS. Yes; specie and other currency held by the national banks on July 14, and by other banks about the same time, amounted to $135,000,000.