THE CARLISLE BILL.

The CHAIRMAN. In the first place, I want to ask whether this bill reported by Mr. Cox has been materially changed as to the amount of greenbacks that are required to be deposited in proportion to the currency issued, or as to the currency to be issued, whether it remains the same as when Mr. Carlisle presented it?

Mr. ECKELS. I think it is the same bill, with some changes to it; I do not know whether any changes have been made in it or not.

Mr. Cox. On the question of currency it is the same bill.

The CHAIRMAN. Look at the statement of Mr. Carlisle on page 29 of the report of the hearing before this committee on December 10, 1894. Mr. Carlisle said, in reply to my question-I read as follows:

Mr. WALKER. Have you thought of how long a time it would take to retire the greenbacks? Mr. CARLISLE. It might be done in twenty years or it might be done in five or six years.

The CHAIRMAN. Now, the point is whether you would proceed with legislation upon the theory that it would take twenty years or five or six years.

(After a pause.) Well, as you do not answer, my question can be put down and no answer need be put down.

Mr. Cox. I want to say

Mr. ECKELS. I think that is a question that Mr. Carlisle ought to

answer.

Mr. Cox. I want the answer of Mr. Carlisle put in the record.
The CHAIRMAN. I have the floor.

Mr. Cox. I think it is proper

The CHAIRMAN. The gentleman is out of order.

This bill-the Cox bill-temporarily confines the legal tenders, but it does not destroy them. They still remain in sight of the people in the Treasury as a deposit, do they not?

Mr. ECKELS. Yes; they are kept there as a deposit.

The CHAIRMAN. And in the eyes of the people the same as the silver is that they are now clamoring should be paid out, notwithstanding the certificates are out against it. Do you think that is a wise policy?

Mr. ECKELS. I have stated that I think those things ought to be paid and cancelled and gotten out of the way.

The CHAIRMAN. Isn't it a fact that the bill H. R. 171

Mr. Cox. I rise to a question of personal privilege.

The CHAIRMAN (continuing). Does not transform the legal-tender notes of the Government into bank currency?

Mr. ECKELS. I think the provision of your bill is to change the form of them. I think that the Secretary's bill, or Mr. Cox's bill

Mr. Cox. It is the Secretary's bill.

Mr. ECKLES (continuing). Provides for the retirement of the legal tenders by reviving the old statute that so many should be retired in accordance with the percentage of bank notes issued.

The CHAIRMAN. But in the first instance

Mr. ECKELS. They are deposited as a security.

The CHAIRMAN. One further question.

Mr. Cox. I rise to a question of personal privilege.

The CHAIRMAN. The objection to the use of bonds is covered by bill H. R. 171. Is not the security equally a Government security when the Government is obligated to pay upon the insolvency of the bank,

and as sure and as positive as holding a bond which the Government does for the money-is not that practically the same security for the notes?

Mr. ECKELS. I would just as lief have the Government's guaranty as the bond.

The CHAIRMAN. Now, Mr. Cox.

Mr. Cox. Now, let us put everybody square on this question. I read the answer of the Secretary to which Mr. Walker referred. It is as follows. Mr. Walker put this question:

Mr. WALKER. Have you thought of how long a time it would take to retire the greenbacks?

Mr. CARLISLE. It may be it would take twenty years, and it might be done in five or six years. If the proposed law had been enforced during Mr. Cleveland's last Administration or during Mr. Harrison's Administration, the greenbacks would have been retired.

The CHAIRMAN. That is expressing an opinion.

Mr. Cox. That is an expression of opinion, but he has as much right to express an opinion as you have. That is on page 29.

Mr. ECKELS. I do not think the Secretary of the Treasury thought this was the best way of getting rid of them, but it seemed, at the time the plan was offered, a commencement.

Mr. Cox. I do not; but he is doing the best he can.

ARE THE GREENBACKS DANGEROUS?

Mr. SPALDING. Mr. Comptroller, you seem to have indicated in all your answers and questions pertaining to the greenbacks that the Government was in danger because they were out. Now, is it not true that there was no danger or apprehension of danger up to March 4, four years ago; that up to that time there was no danger and there was no raid on the Treasury, and the greenbacks were doing their usual duty of a currency with the people, and the people were well satisfied with them?

Mr. ECKELS. There was danger then, but it was not so apparent. The conditions which developed it had not reached the proportions which they have since reached, in the fact that the burden resting upon the Treasury in the maintaining the parity of metals was not so great as it has been during the past four years. We have to deal with conditions as we find them to-day, instead of with the conditions of four or five years ago. If the condition may have been all right four or five years ago, it is all wrong now.

PROPOSED BOND ISSUE OF THE HARRISON ADMINISTRATION.

Mr. JOHNSON. Is it not a fact that during the last part of the Harrison Administration the receipts of gold for customs payment largely fell off, and a large number of greenbacks and Treasury notes were presented to the Treasury, and gold drawn out of the Treasury on them? Mr. ECKELS. Yes; and it is a further fact that in the last report made by Mr. Foster, the then Secretary of the Treasury, attention was called to the fact that there was an inadequate supply of gold and inadequate means given to the Secretary of the Treasury to provide gold to meet the additional burden put upon the Treasury through the issuing of the Sherman notes. Not only that, but the bond plate had been already prepared for the purpose of issuing bonds to obtain the gold.

Mr. JOHNSON. It is the fact, then, is it not, that the drain upon the gold in the Treasury, while it had not gotten down to the point of reaching the gold reserve, had been steadily going on during the last months of the Harrison Administration?

Mr. ECKELS. Yes; it commenced in 1892.

Mr. Cox. I want to put this question to the Comptroller: I want to ask him if it is not a fact in the history of the Treasury Department that during the Harrison Administration, when the greenbacks were presented, those greenbacks, amounting to several hundred thousand dollars, were redeemed in silver by the Administration of Mr. Harrison? Mr. ECKELS. I am sure I do not know as to that.

Mr. Cox. Call the Treasurer here and he will tell you that is so. Mr. HILL. I want it to go into the record right here that the statement made by Mr. Dingley last year, in connection with this matter, was-and I think in connection with the statement made by the Comptroller it should go in here-that Mr. Foster came to the Ways and Means Committee in 1892 and said that there would be sufficient revenue to meet the expenses of the Government; but that after the election of 1892 was over the falling off in revenues was so great that he came to that committee in February, 1893, and said that there would probably be a deficiency of $50,000,000 in the revenues, and it was for that bonds were to be issued.

GREENBACKS AN EXPENSIVE CURRENCY.

Mr. SPALDING. Is it not true that the greenback is a cheaper currency than any credit currency or national-bank currency?

Mr. ECKELS. No; it is the most expensive currency ever floated in this country.

Mr. SPALDING. How much has been paid out in gold in the redemption of greenbacks under this Administration?

Mr. ECKELS. I do not remember the exact amount.

Mr. SPALDING. Four hundred and forty million dollars, in round numbers.

The CHAIRMAN. It is all a matter of record.

Mr. SPALDING. No; it is not all a matter of record.

How much gold was put into the Treasury by the exchange of greenbacks for gold?

Mr. ECKELS. I can not say.

Add

Mr. SPALDING. I have it direct-$195,000,000 and over. $195,000,000 to the deficit which occurred and it would almost account for the entire gold, with the greenbacks, would it not? Mr. ECKELS. I do not think so.

Mr. SPALDING. Add $195,000,000 to a deficit of $180,000,000 or $190,000,000, and it makes pretty near the amount taken out of the Treasury. I have that and can furnish it.

Mr. ECKELS. You had better put it in the record.

The CHAIRMAN. Suppose you get your certificate to that effect and put it in the record.

Mr. SPALDING. I don't need any certificate. You have furnished no certificate for a great many of your statements.

Would it be a safer currency issued on any of the assets of the banks, even 25 per cent, as the present currency?

Mr. ECKELS. A safer?

Mr. SPALDING. Yes.

Mr. ECKELS. No; you could not get a safer currency as long as the Government meets its obligations. No one has ever questioned the safety of the present national-bank currency.

Mr. SPALDING. That is true, because the notes are Government in greenbacks, which are lawful money.

redeemed by the Now is it not true

if you have $450,000,000 in greenbacks and you keep $100,000,000 there are $350,000,000 upon which you pay no interest; and under the national-bank system they do pay interest on the currency, inasmuch as they pay interest on their bonds?

Mr. ECKLES. You do not pay interest in the form of interest on bonds, but you lose interest on the reserve you keep and you pay interest on that which you have to use at certain times to maintain your gold reserve. Thus when you come to estimate the expense, the expense is larger by not paying and canceling them. Then, too, there is no end to the number of times the same process is gone through with.

Mr. SPALDING. Bonds are issued, not for the purpose of a circulating medium, but for sale by the Government on account of its necessities; and they were bought by the banks and put up as security for their notes, and they drew interest on their bonds and drew interest on their issue. Is not that true?

Mr. ECKELS. Yes.

Mr. SPALDING. Is not that a more expensive system than the other? The CHAIRMAN. Your time is up.

Mr. Cox. I want this point clearly understood, that during the Administration of Mr. Harrison the plates were prepared for bonds to redeem those greenbacks, and not only that, but Mr. Foster, his Secretary of the Treasury, did redeem a large amount of greenbacks in silver. Is not that the fact?

Mr. ECKLES. I do not know anything about any redemption in silver. I know that Secretary Foster held to the idea that the Treasury Department, with the increased amount of demand obligations standing against the Government and without any additional power vested in the Secretary to provide gold, was approaching a condition of embarrassment, and that legislation ought to be had upon the subject, and that it was the purpose to issue bonds under the then existing laws relative to maintaining the gold reserve.

Mr. Cox. I understand.

Mr. ECKELS. Mr. Hill says it was for current expenses, but if it was for current expenses it was under a provision of law to provide a gold reserve against the payment of these notes.

Mr. Cox. I do not want to press the point any further except to emphasize this: That in the Administration of President Harrison silver was paid out when greenbacks and Treasury notes were presented. They paid these notes off to the extent of $700,000 in silver. Mr. ECKELS. I do not know anything about that.

Mr. NEWLANDS. Mr. Eckels stated that in his judgment the silver now in the Treasury ought to be sold and turned into gold. He said that the difference between himself and Mr. Brosius was that Mr. Brosius wanted to sell it at retail and he proposed to sell it at wholesale. Now, I want to question Mr. Eckels somewhat upon that—as to how he would do it, and as to what effect it would have, etc.-and I would like to have an opportunity to ask some questions on this line. Mr. ECKELS. That was in connection, Mr. Newlands, with the provision in Mr. Brosius's bill where he provides a certain way of getting rid of the greenbacks, and I said I preferred the other way, as between the two. That is simply in connection with the provision in Mr. Brosius's bill.

Mr. CALDERHEAD. When Mr. Eckels returns, on Thursday, I want to inquire about how much the suspension of gold payments by the subtreasury in paying its balances, as it occurred once, had to do with the loss of the gold in the Treasury.

Thereupon, at 3.15 p. m., the committee adjourned.

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C., Thursday, February 18, 1897.

The committee met at 10.30 a. m. Members present: The Chairman (Mr. Walker) and Messrs. Brosius, Johnson, Van Voorhis, Fowler, Spalding, Calderhead, Hill, Cox, Stallings, and Hendrick.

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

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

The CHAIRMAN. Mr. Fowler has the floor and will proceed to interrogate Mr. Eckels on House bill 6442. [For text of bill see page 107.] Mr. FOWLER. Mr. Eckels, in your opinion is it not true that the chief source of our financial troubles to-day is that our national credit is in doubt?

Mr. ECKELS. I believe the most of our financial difficulties have sprung from that fact in the past several years, and while it is not so patent to-day as it was some months since, the danger that the same conditions are liable to occur makes it a source of doubt.

The CHAIRMAN. That is, doubt to-day?

Mr. ECKELS. Yes.

Mr. FOWLER. Is it not your opinion that the injury to our credit is mostly due to the fact that it is still a debatable question whether the United States will maintain gold payments of all its demand obligations? Mr. ECKELS. I have no doubt with a great many people the continual suggestion that we are going to have another campaign upon the same lines as the last has created in their minds a question as to whether or not we might not be brought to a silver basis, although I myself do not believe we will ever get that far.

GOLD AND SILVER REDEMPTION.

Mr. FOWLER. Is it not your opinion that this debate will continue until this Government takes some decisive step looking to its construction of the word "coin" and determining definitively that our dollar is 25.8 grains of gold, nine-tenths fine, and not 50 cents' worth of silver bullion?

Mr. ECKELS. I think that is determined already, so far as the law on the statute book is concerned, but I imagine that in the minds of a great many people who are either doing business living here or doing business with us from abroad, there is a doubt in the midst of all this agitation as to whether or not we will maintain it at that point.

Mr. FOWLER. To what law do you refer when you say it is determined by law already?

Mr. ECKELS. We have here as a standard of value the gold dollar established by the act of 1873, though recognized as a matter of fact long before that act. The word "coin," however, as used in the bonds and as used in the Treasury's legal-tender paper, is not definitely decided as a matter of law to mean gold. It is only as a matter of practice on the part of the Secretaries of the Treasury. The attaching of that meaning to it, though, is emphasized by the statutory declaration that the established policy of the Government is to maintain the parity of the two metals.

Mr. FOWLER. Is it not a fact that the silver dollar is coin and silver is a legal tender?