COST OF COIN SHIPMENTS.

Do you believe that the difference in weight between gold and silver is of itself a cause of sufficient difference in cost of shipment, etc., to prevent its parity at any fixed ratio?

Mr. ECKELS. I do not believe you can ever maintain for monetary purposes a parity of the metals at any fixed ratio.

Mr. HILL. Would not that cause alone-the difference in the cost of shipment-be sufficient to prevent it being maintained at a parity at any fixed ratio?

Mr. ECKELS. The largest reason why silver has gone down in price in the commercial world is because it takes so much of it to answer purposes which can best be answered by a smaller quantity in gold.

Mr. HILL. The reason I asked the question is that I have taken that ground for the past few months and it was antagonized in the Senate yesterday.

Mr. ECKELS. The reason you can not get people to carry silver dollars is the weight of them.

Mr. HILL. The express charges?

Mr. ECKELS. Yes; the weight, and therefore they want to carry paper. People wish the convenient thing in business, just as they do in anything else. They wish the best and not the poorest in money metals. This desire can not be done away with by statutory enactment.

FINANCIAL POLICE POWERS.

The CHAIRMAN (Mr. Brosius in the chair). Growing out of the examination of Mr. Fowler, there is a question I want to ask just here. I do not think that on reading over the transcript the Comptroller will be quite satisfied with his answer on the subject of security afforded by the bonds, and so I want to put this question: Assuming that some banks, by mismanagement, either through indolence or fraud, will break up and not have enough to pay all their debts, do you agree that it is a sound principle to secure first the currency issued by the bank, rather than the depositor?

Mr. ECKELS. Yes.

The CHAIRMAN (Mr. Brosius). I need not go into the reason of that; the philosophy of it is very obvious. Assuming that the bank may deposit these assets to a greater or less extent, so that when it is closed up it does not have them all and can not pay all its debts, would not the fact that a portion of its assets had been placed in the hands of a trustee add that much to the security of the creditors, whatever kind they were?

Mr. ECKELS. Unquestionably

The CHAIRMAN (Mr. Brosius.) By as much as these assets that have been put into the hands of the trustee increased the total assets that were distributed, the depositors would get the benefit, would they not? Mr. ECKELS. Yes; they would get the benefit of it

The CHAIRMAN (Mr. Brosius). The depositors would get the benefit of that.

Mr. ECKELS. But it doesn't increase the total amount of the assets of the depositors, except as it increases the amount which had not been stolen

The CHAIRMAN (Mr. Brosius). Now, when you increase the amount that has not been stolen, do not you add to the security of the creditors? Mr. ECKELS. Oh, yes. I might add, in connection with all this, that I would not permit any credit currency to issue without either a safety

fund or a Government guarantee, or both, and I think it would be wise to have both.

Mr. HILL. Why should a Government guarantee a note holder or practically guarantee the solvency of a bank under a general law any more than it should guarantee the solvency of a railroad under a general law, without the securities being in its own possession, or a dry goods business, or any other business?

Mr. ECKELS. I do not think you can place bank notes which are to circulate as and answer the purposes of money upon the same footing with other evidence of indebtedness issued in other kinds of business. The Government, through enacted law, in every country regulates bank-note issues because of the great public interests involved, the number of people using them from day to day, the transactions resting upon their character and solvency, and because of the necessities of daily business compelling people to generally accept them. This regulation it can rightly carry to the extent of guaranteeing them. Upon these arguments are based the correct and scientific theory for the Government's assuming to regulate and care for bank-note issues. It is exercising financial police powers, justified by public necessity and the need of public protection. The guarantee of the Government would simply be a form of this power, having the effect of making the note holder feel absolutely secure. The Government, through other means provided, would be held harmless of loss.

Mr. FOWLER. It is really the moral effect you seek, without responsibility.

Mr. ECKELS. And the safety fund would be for the protection of the Government.

Mr. CALDERHEAD. I have some questions to ask about the subtreasury and clearing house.

Mr. ECKELS. If Mr. Calderhead will put his questions in writing I will be glad to answer them, and the questions and answers can go in the record.

Mr. CALDERHEAD. I will be glad to submit my questions in that way and have them, together with your answers, go into the record.

Upon motion of Mr. Hill, the committee, by a rising vote, unanimously tendered its thanks to the Comptroller for his kindness in appearing before the committee and so fully and clearly replying to the questions asked him.

Thereupon, at 1.30 p. m., the committee adjourned.

[The following are the questions asked the Comptroller of the Currency by Mr. Calderhead, in writing, with the replies of the Comptroller thereto.]

QUESTIONS BY MR. CALDERHEAD.

Mr. CALDERHEAD. What were the respective amounts of legal tenders and national-bank notes in the year 1878?

Mr. ECKELS. The legal tenders outstanding on June 30, 1878, were $346,681,016, and the national-bank notes outstanding on June 30, 1878, were $322,919,810.

Mr. CALDERHEAD. What amount of each below the denomination of five-dollar notes ?

Mr. ECKELS. The legal tenders, denomination of one dollar, are $20,929,874; legal tenders, denomination of two dollars, $20,910,948; national-bank notes, denomination of one dollar, $4,059,836; nationalbank notes, denomination of two dollars, $2,820,132.

Mr. CALDERHEAD. And what became of these notes of less than $5?

Mr. ECKELS. In 1886 the Department began the redemption of one and two dollar legal-tender notes and the substitution of silver certificates and later of Treasury notes of like denominations. The issue of national-bank notes of the denomination of one and two dollars ceased after January 1, 1879 (see sec. 5175, Rev. Stat.), and were canceled as presented.

Mr. CALDERHEAD. What apparent effect on the amount of nationalbank circulation did the coinage of silver dollars and the issue of certificates under the act of 1878 have?

Mr. ECKELS. The amount of circulation of national-bank note since 1878 has apparently varied with the needs of trade and the profit upon the same. From 1878 until the year 1882 there was a steady increase in national-bank issues. During this period there was an increase in trade and a consequent demand for currency. The increase in silver issues had not become so great as at a later time. It is noticeable that from 1882 until 1893 the reduction in the amount of bank notes was very marked and the increase in silver very large. There has been an increase in the amount of them since 1893, during which time there has been no issue of Sherman notes. Undoubtedly the competition of silver and Treasury issues must tend to restrict bank-note issues whenever the competition is made manifest. The variations in the volume of bank-note currency is shown to have been as follows since 1878:

National-bank notes outstanding on June 30, 1878 to June 30, 1896.

In order to fully appreciate the variations, I desire to call your attention to the increase in the amount of silver and silver certificates in the years since 1878.

The two tables should be studied together.

Silver and silver certificates in circulation on June 30, 1878, to June 30, 1896.

Mr. CALDERHEAD. When did the issue of silver certificates below $10 begin?

Mr. ECKELS. The issue of silver certificates below the denomination of ten dollars was authorized by the act of August 4, 1886.

Mr. CALDERHEAD. What apparent effect did the issue of these have on national-bank circulation?

Mr. ECKELS. My reply to a former question covers this.

Mr. CALDERHEAD. What amount of silver dollars and silver certificates were issued under the Bland-Allison Act of 1878, and what apparent effect did this have on the national-bank circulation?

Mr. ECKELS. The total coinage under the Bland-Allison Act of 1878 amounted to $378,166,793. Silver certificates issued under that act

(June 30, 1890), $301,539,751.

I can only make the same reply heretofore given as to the latter part of the question.

Mr. CALDERHEAD. What were the respective amounts of legal tenders, national-bank notes, and silver certificates in circulation in 1890, at the time the silver purchasing act of that year was passed?

Mr. ECKELS. The legal tender notes in circulation on June 30, 1890, were $323,046,826; the national-bank notes in circulation $181,396,823; the silver certificates in circulation $297,210,043.

Mr. CALDERHEAD. What amount of Treasury notes were issued under that act?

Mr. ECKELS. The Treasury notes issued under the act of 1890 were $155,931,002.

Mr. CALDERHEAD. What amount of silver dollars and silver certificates have been issued under that act?

Mr. ECKELS. Silver dollars issued under the act of 1890 were $61,261,626. There is no record of the silver certificates issued under the act of 1890, but when these silver dollars are returned silver certificates are issued thereon in the same manner as other silver dollars, and no separate account is kept of these certificates.

Mr. CALDERHEAD. What effect, apparently, did the issue of Treasury notes under that act, and the silver and silver certificates, have upon the amount of national-bank circulation?

Mr. ECKELS. I have already answered this, giving my judgment of the matter.

Mr. CALDERHEAD. When did the subtreasury begin to pay its balances at the clearing house in New York in gold, and how long did it continue to do so?

Mr. ECKELS. From September, 1880, to September, 1882, payments were made in gold coin, United States notes, and silver certificates. From October, 1882, to January, 1886, in United States notes and gold certificates, except in February, 1885, when $100,000 silver certificates were used, and in August, 1885, when $260,000 gold was used; from February to July, inclusive, 1886, United States notes were used exclusively; from August, 1886, to July, 1890, United States notes and gold certificates only were used; from August, 1890, to July, 1892, payments were made in United States notes, Treasury notes, and gold certificates, with the exception of about $62,000 of silver certificates used in the Spring of 1891; from August, 1892, to June, 1893, United States and Treasury notes were used in addition to about nine million of gold certificates during the months of October and November, 1892, and January, 1893; from July, 1893, to February, 1894, the settlements were mainly in gold coin and some United States and Treasury notes. The use of gold coin which began in July, 1893, and closed in February, 1894, was the only time since August, 1885, to September, 1896, that it occurred; from March, 1894, to December, 1894, United States and Treasury notes were used, and since that date United States notes only. Mr. CALDERHEAD. Did the stock of gold increase or diminish in this country during those years, and how much?

Mr. ECKELS. The stock of gold in the country for various reasons

increased, from June, 1893, to January 31, 1894, $123,724,216. The increase prior to the dates mentioned was very large because of foreign trade and investments from abroad and domestic production.

Mr. CALDERHEAD. What caused the flow of gold to this country during those years?

Mr. ECKELS. The inflow of gold to this country during the specific period referred to in my previous answer, viz, from June, 1893, to July, 1894, was largely the result of the stringency of money causing high rates of interest in this country. During the whole period of time when the increase of gold has gone on in this country, it has come from production of our mines, balances paid in gold in trade and commerce, amounts brought or sent here from abroad for investment, and through the purchase of our securities by those living abroad.

Mr. CALDERHEAD. What proportion of the revenue from customs duties was paid in gold each year from 1878 to 1892, and in what was the remainder paid?

Mr. ECKELS. I can only give as my answer the statistics as shown by the report of the Treasurer of the United States.

Percentage of gold coin, etc., received from customs at New York in June, 1878, to 1896.

I also call your attention to Table No. 50, pages 142 to 144, Annual Report of the Treasurer of the United States, 1896.

Mr. CALDERHEAD. How were the payments in gold of the balances from the subtreasury at the clearing house suspended, and when?

Mr. ECKELS. From 1882, the time of the issue of gold certificates, until August, 1890, the payments of balances at the clearing house were made almost entirely in gold certificates, with the exception of a few months in 1884 and 1886, when they were made in United States notes. After the issue of the Sherman notes under the law of 1890, in the month of August they were for the first time paid in settlement of such balances. Thereafter they formed a very large portion of such payments until the repeal of the Sherman act in 1893.

The suspension of the payment of gold certificates and gold coin occurred first in the month of August, 1892, to be resumed again in a comparatively small amount in October and November of that year and discontinued entirely in December of that year. A few were used in January, 1893, but none have been used since that time for this purpose.

The payment of gold coin for this purpose in the autumn and early