referred to. The rapidly increasing wealth of North and South America also enhances the need for a complete system of inter-American exchange, and insures the subscriptions for an adequate capitalization to an international American bank to meet such needs. As an evidence of this increase the valuation of the property of the United States in 1870 was estimated at $30,000,000,000; in 1880, at $3,600,000,000, being somewhat larger than the estimated value of the property of Great Britain at that time. The capital and the business of the Americas is now much larger than when European facilities for banking between Europe and the Americas were established.

Banks of the character described, having agencies in the financial centers of the countries here represented, would materially promote the establishment and immediate use of a common standard for calculating values whenever such a standard shall be determined upon by the countries in interest.

While the sentiments of the independent nations of this continent are favorable to the settlement of all disputes by arbitration as expressed by resolutions introduced in this conference, thus rendering war highly improbable if not impossible among them, there exists no such guaranty that war may not take place in Europe. In such event, as long as we remain solely dependent for our financial facilities upon European money centers, a complete demoralization of our credit facilities and our money markets would necessarily follow and cause financial disaster and distress, which would be considerably lessened, if not altogether avoided, were there a wellorganized system of inter-American exchange.

It may be asked, Why can not the object sought for in this memorial be attained through the agency of a private bank? The answer is, that in the extension of interAmerican trade it would be difficult, we might well say impossible, to impart either prestige or credit to a private bank. The establishment of an international bank by authority of Congress would promptly command from the other American Governments concurrent legislation which could provide the amplest and most trustworthy form of international cooperation. As neither the bank in the United States nor the branches that may be established elsewhere can have the power to issue circulating notes, the most complete evidence is afforded in that fact that the bank is to be devoted solely to the commercial interests of the two continents, and must rely for its profits upon the increase of the volume of business from which alone it can secure its profits.

After careful consideration your committee advises the adoption of the following resolution:

"Resolved, That the conference recommends to the Governments here represented the granting of liberal concessions to facilitate inter-American banking, and especially such as may be necessary for the establishment of an international American bank, with branches or agencies in the several countries represented in this conference."

J. M. HURTADO, Colombia.

E. C. VARAS, Chile.

CHAS. R. FLINT, United States.
SALVADOR DE MENDONÇA, Brazil.
MANUEL ARAGON, Costa Rica.

WASHINGTON, April 14, 1890.

Mr. Brosius having concluded his remarks, at 12 o'clock noon the committee took a recess until 2 p. m., at which time discussion of the bill was resumed.

Mr. Spalding addressed the committee as follows:

STATEMENT OF HON. GEORGE SPALDING.

Mr. CHAIRMAN AND GENTLEMEN OF THE COMMITTEE: The first objection I have to this bill is the naming of the incorporators, which, it seems to me, makes the company have what you might call an exclusive franchise granted by the Congress of the United States, inasmuch as it names these incorporators and fixes the capital at $5,000,000, which can be increased to $25,000,000 at their discretion after they are incorporated. I would prefer an amendment, if we were to pass a bill of this kind, providing that any five citizens of the United States might incorporate an international bank-give it the broad and general scope of all bank laws, the same as the national-bank law.

Another objection is that there is a question of the ability of this bank to establish branches

Mr. BROSIUS. Will you allow me a question right there?

Mr. SPALDING. Certainly.

Mr. BROSIUS. From that point of view, would it not be just as well to authorize all the national banks in the country to exercise the powers conferred upon the proposed international American bank, which you will see in a moment would be utterly nugatory and futile?

OBJECTION TO NAMING PROMOTERS IN THE BILL.

Mr. SPALDING. I would say that it is my opinion that every bank in the United States has all the power this bank could exercise in foreign countries, excepting as to the law authorizing them to establish branches. They can have financial agents, if they desire, at Buenos Ayres or any other place in South America; but the naming of the promoters in this bill is what I object to.

Mr. HILL. I think you are mistaken as to the objection. The incorporators are not named. These men whom the bill names are simply appointed as commissioners to take subscriptions to the capital stock, and the parties who subscribe the stock, whose names are not known, are the parties that are incorporated, and the duties of these gentlemen as commissioners cease and terminate before the company is incorporated.

Mr. SPALDING. I understand that these gentlemen are named for the express purpose

Mr. HILL. Simply to receive subscriptions to the capital stock.

Mr. SPALDING. I have no objection in the world to any of these gentlemen whom the bill names-Mr. Bliss, Mr. Carnegie, Mr. Armour, or any of the others.

Mr. BLACK. Does it say a majority of them?

Mr. SPALDING. No; it names these gentlemen as commissioners, authorizing them to receive subscriptions to the stock to the extent of $5,000,000, and after the subscriptions are complete of course the stock subscribers will have absolute control of the bank. There is no question about that. Mr. Hill and Mr. Brosius both know that the stockholders of a bank control it after the bank is fairly organized. Mr. HILL. That ought to be true, ought it not?

Mr. SPALDING. Yes; then it shall be capitalized at $5,000,000, and after it is organized they shall have power to increase the capital to $25,000,000 whenever the stockholders desire. The bill provides that it shall do business in this country and in foreign countries as it pleases, subject to the rules and regulations-very similar to the national-bank law as it now exists.

BANK TO ISSUE NOTES IN FOREIGN COUNTRIES.

There is one single provision, section 7, paragraph 11 of the bill, to which I wish to call attention. Under that provision, as I read it, the bank is authorized to issue notes wherever they can secure that right, in the Argentine Republic, Brazil, or any other country. The language to which I refer is as follows:

The corporation hereby created shall not have the power and shall not issue notes or obligations in any form to be used and circulated as money within the United States of America.

Inasmuch as it is prohibited to issue notes here, the supposition is that they might issue notes elsewhere, and that would bring in a

constitutional question, which I do not propose to discuss now. as I am not ready for it.

EXCHANGE FOLLOWS TRANSPORTATION.

I agree with what Mr. Brosius has said in regard to the exchange of commodities and that sort of thing, but I think he has the cart before the horse. Exchange follows transportation. In the South American countries there is no way that you can get a bill or a draft when you want one except via England, because they have the only steamship lines that are running there, and necessarily exchange must follow those lines. That is the only postal arrangement we have, and this is humiliating to us. The reason of it is because England and some of those continental European nations have larger steamship lines, and that comes from the fact that they have large surplus moneys which they can invest in such lines, they having a lower rate of interest than the United States.

BUILDING UP THE NATION.

We are engaged in building up this great nation of ours. We are not ready to build up other nations. We have not enough money in the South and West to take care of our own country, and yet some are seeking new fields for investment. I do not object to that, and it is naturally humiliating to us that the state of affairs which I have mentioned exists, and this is because they are satisfied with low rates of interest.

I visited Mexico in 1875, and I could not buy any exchange on America there, as there is no international bank; and there is no such bank in any of the South American countries. You find Jews there that are doing a banking business and you buy exchange on Boston, New York, and other cities the same as you could on London. I had no difficulty about it. I could sell exchange on New York to those tradesmen there; but there is no international bank. There are simply brokers. Mr. BLACK. How are they established?

Mr. SPALDING. A man opens a banking office and sells exchange and bills of discount, etc., the same as he does in this country.

Mr. BLACK. And have these countries that are carrying on this business any of them an international bank?

NO INTERNATIONAL BANK NOW IN EXISTENCE.

Mr. SPALDING. No; I do not think there is any international bank in Buenos Ayres, nor in the Argentine Republic, nor in any country that I have heard of. There are simply men seeking to do business as brokers, and they follow the lines of transportation very largely.

Mr. BROSIUS. If I am correctly informed, every great European nation has an international bank or bank connection in the South American Republics?

Mr. SPALDING. Tell me one bank in England that has a connection in South America.

Mr. BROSIUS. I can not give you the name of a bank at this minute, but I can give you the names of men who can tell you.

PRESENT METHOD OF EXCHANGE.

Mr. SPALDING. There are houses like Brown Brothers and Knauth, Nachod & Kühne that have deposits with the Bank of England or the Bank of Edinburgh or some other place, or with the First National

Bank of New York, and have a credit there, and will sell you their check. That is my understanding of the question. I have been in the business twenty-five years, and I think I know something about it. We have been shipping telegraph poles to Argentina, and I have no trouble in the matter of exchange. Our millers have been shipping to Ireland and Scotland and other countries their flour, with bills of lading attached-not sight drafts, but ninety-day drafts. I sent to the First National Bank of New York-I am speaking of my own bank now, or which I had the management before I came to Congress-and the money is immediately credited, less the discount, to the manufacturer of the flour. He has to have that money to go on with his business. It is credited to us by the First National Bank of New York. It is sent by the First National Bank of New York to their correspondent in London or in Ireland and there credited. There is no international bank. The Bank of England has no representative to day, so far as I know, in the Argentine Republic. The Baring Brothers were not a corporation, although they had large investments there, as I understand it. If I am wrong I would like to be corrected.

I am not particularly opposed to this bill if I could see that it is of any value to this country. My impression is that I can buy a letter of credit from Knauth, Nachod & Kühne or Brown Brothers and travel the world over. I can do the same thing in regard to the First National Bank of Chicago or the First National Bank of New York, or any bank in this country that has foreign exchange to sell. I can issue a draft in our little limited bank in Monroe, Mich., and it will take a man over the United States, and, whether the currency is silver or gold, his letter will carry him through; but it is arranged through a bank in England or this country.

Mr. BROSIUS. So you can not rid yourself of the agency of the English bank?

Mr. SPALDING. I can not rid myself of the agency of some bank. It must be drawn by somebody who has a deposit in Monroe in order to give me credit there. It is the same thing. It seems to me we are all wrong about this thing.

FIELD OF AN INTERNATIONAL BANK.

Now, what could this international bank do? It could not issue bills. It could do just such business as the banks are doing now in foreign countries. Let me give you an illustration. A friend of mine was in Naples, representing this Government there. He desired to have a credit with the Bank of France, and it took six hours to place money to his credit. But in order to do that he had to have the business done through the Bank of New York, that had a credit with the Bank of France, and he telegraphed to New York and they telegraphed to France to credit to A B C, and he was there ten hours after the telegram was sent to me and the money was there to his credit. That is the way exchanges are made.

If it were possible to have a method of exchange between us and the countries south of us, it would be of great value; but the separation of the two metals, silver and gold, has stopped the par of exchange and it is impossible, and they stand 50 per cent apart. That, of course, has to be figured. It has to be figured by England and by all the nations that do business in the South American Republics. Our own money does not go because it is an eagle, in London. It goes by weight, and it is quoted every day in the newspapers. If you look at the reports CUR- -32

of the moneys of the world you will see it is quoted at about $1.50 less than it is worth in this country. Double eagles there are quoted at about $18.50. We figure the double eagle as worth $20, but they are sold in the market every day as a commodity, the same as butter, cheese, and eggs, and are quoted every day in the paper.

We might possibly have an international arrangement and an international agreement that would be beneficial. If so, then our money and the money of England would stand on a par. We might arrange it with the South American states which use our decimal system instead of the English system. The English system would be very difficult to

use.

DIFFERENCE IN FINENESS OF GOLD.

Another thing that adds to these complications is the fineness of our gold differs from the fineness of the English gold. Theirs is 925 fine and ours is 900 fine. They call their silver sterling silver, and we call ours 900 fine, and there is a variation there. So there would be those various adjustments.

PAR OF EXCHANGE.

Now, the par of exchange would work a great deal to our benefit, and Mexico has been used in this campaign to show that you can take our dollar over there and get $2 for it in their money, because we maintain the parity of gold and in that country they do not. The gold dollar there is worth two of their silver dollars. If you could regulate that parity, and have the par of exchange, of course we could control absolutely the entire produce of that country. There is no doubt about it, because it would be 50 per cent in our favor. It would give us 50 per cent advantage over England, France, and Germany.

But the question is, how to do it. I see the Senate by a resolution has urged an agreement to a bimetallic basis, by which this par of exchange can be made-not only par in this country but par all over the world. The Russian ruble of paper and the gold ruble are not on a par, but the former is only 50 per cent. The metals have separated throughout the world, not only in this country, but in every country, and whereever they are on a silver basis the gold dollar is worth two silver dollars. In this country we maintain the parity the same as they do in France, largely, and our money is on a par with the English countries.

AMERICAN EAGLES AT A DISCOUNT.

You can take any paper, as I have said—and I looked at the paper this morning and see what our money is quoted at. I am sorry I didn't cut it out. I found our eagles are selling at about 14 discount; that is, counting $4.85 an English pound, as fixed by the Director of the Mint. So, when you go to England with a $20 gold piece, instead of its being current there, it is not current. They buy it from you and then send it to this country and buy goods, if you please, or credit it to some bank there, if you please, and do business on the par of exchange that way. But the metal itself is just the same as silver; that is, it is sold for what it is worth, and the stamp of the Government gives it no value whatever, except as to certifying to the fineness of the coin.

CAN THE UNITED STATES SPARE THE CAPITAL?

Now, there is another question, Whether this nation has this amount of capital to put into these banks to develop these nations when we are