amount that is insignificant when the business interests of the country are considered: The issue simply prohibits currency facilities-it does not provide them. The total capitalization, $648,000,000, less than $10 per capita, shows that the system is not in very general use by the people. This, however, can be easily explained, for the restrictions and taxes and reserves, and what not, however readily assented to when the Government bonds were low and their rate of interest high, are now, under changed conditions, most onerous, and, indeed, as a recent report of the Comptroller shows, very nearly destroy the profit of issuing currency.

VOLUME OF BANKING BUSINESS.

The fact that the deposits fall short of doubling the capital and surplus proves the enormous business that is done by upward of 9,000 State and savings banks, reaching a volume that is not generally recognized. And these institutions stand ready to expand in usefulness to the people as soon as the unjust discrimination against them is removed. The Government itself, from a financial point of view, has not the power for good that these debarred institutions possess. Much would be gained if the fact was realized that the national bank has outlived its period of special usefulness-its service to the Government that justified monopoly or gave color of reason for its existence. This for the liabilities.

As to the resources, the first thing to note is that the loans, $1,854,000,000 only exceed the deposits by $262,000,000; in other words, the depositors furnish 86 per cent of the loanable funds, proving the banks to give but limited facilities to trade, the investments in stocks and bonds $189,000,000 and banking house and real estate, $105,000,000, representing together a larger proportion of the capital than is used in discounting.

It

The most important consideration is the Government account. It should end forever all adherence to the national-bank currency. proves that the issue of $210,000,000 of notes means an investment of $237,000,000 in Government bonds, without counting premium, an encroachment of $27,000,000 upon the loanable funds of the banks.

NATIONAL-BANK SYSTEM A MONOPOLY.

The lawful money reserve represents over 50 per cent of the capital; hence high rates to borrowers. But I repeat, while the people who like the system should have it, the monopoly must be destroyed if danger is to be averted.

The inadequacy of the national-banking system to meet a crisis is seen by a comparison of the Comptroller's statement, issued August 18, of the condition of the banks on July 14, 1896, with that issued November 10, of their condition on October 6, 1896. Now, the period between July 14 and October 6 was one of great pressure, when all resources should have been at command. The distrust that prevailed was general, not special. The bank called the loan, not from fear of the insolvency of the customer, but to strengthen itself, and the customer responded at any sacrifice, recognizing that the bank must be protected. There could come no relief. There was no elasticity in the face of the fact that 90 per cent of the liquidation was between solvent interests. Thus, with the customers dependent and the bank powerless, what wonder is it that many people turned to the Government for relief.

The fatal error was in the nature of the demand. Instead of asking the Government to take further action in supplying the currency, they should have insisted that its interference in banking and private affairs

cease.

But as to the national-bank system, the comparison speaks for itself: TABLE E.-Comparison of the Comptroller's condensed balance sheet of the national banks, issued August 18 and November 10, 1896.

I should perhaps do well to close my argument by drawing attention to the fact that the increase of 10 millions in national-bank notes was offset by an increase of 10 millions in the holding of Government bonds— more than offset, for the premium is not taken into account. Here is a sheer loss of loanable funds; but you will note further that except $900 in real estate the only other increase is in surplus, which simply represents the discount and interest accrued for the January dividends. The whole statement tells the story of contraction and pressure upon the people.

The capital account was reduced $2,604,300, and it is interesting to note that if the Government had closed its account with the banks it would have provided all the money needed, and there would have been no contraction of logus, while to meet the $94,427,000 withdrawals or shrinkage of deposits loans were reduced $86,768,000, putting an average drain of over one million dollars per day upon business interests, no less distressing because it was unavoidable, the banks not being able to help themselves.

FINANCIAL RESTFULNESS UNKNOWN.

Plainly there should be granted to business all relief possible short of reckless inflation, but between no inflation and reckless inflation lies financial restfulness, unhappily now unknown. I say the $100,000,000 gold reserve will ever figure as the Black Douglas of the financial history of the United States. Its naming since 1893 has been a sword of Damocles suspended over every business man in the country. I am, in some sort, a centurion myself, saying "come" and "go" to many employees, but to the "gold reserve" I had to bow down. There was no room to take thought about the management of affairs. Yet it did some good. It showed the people what Government interference in private affairs means, and gave a much needed warning.

I can hope to tell this august gathering little that is new. I content myself with giving the status of the Richmond, Va., banks, comparing the years 1895 and 1896.

TABLE F.-Comparative statement of condition of banks of Richmond, Va.”

I present it only to show that the increase of $82,000 in national-bank notes in 1896 involved an increase of $100,000 in Government bonds, a distinct loss in loanable funds, whereas the rediscounts in 1895 of $700,000 in New York swelled the loans proportionately, with immediate and good effect. The banks brought money to our community by using their credit, and their credit should be wholly emancipated. It is, to my mind, absurd that banks having the credit to float $8,000,000 in the issue of pass books to depositors, should not be trusted to issue the notes that Richmond's business necessity demands; that they would issue them, the high prohibitory tax of 10 per cent proves, and it must be repealed.

CRITICISM OF MR. CLEVELAND.

I have always criticised Mr. Cleveland for calling Congress together to repeal the silver-purchasing act, and then offering nothing in substitution, and especially as the Democratic platform recommended the abolition of the 10 per cent bank tax; and since I am dissatisfied with the national-bank currency, I must offer something instead.

ESTABLISH STATE BANKS OF ISSUE.

I maintain first, on the principle of "the way to resume is to resume," that the way to get rid of the 10 per cent tax is to repeal it, and then our finances will be easy to solve in the establishment of State banks of issue with such safeguards as the good sense of the people may devise.

Recurring to the condition of the national banks on October 6, 1896, we find they have $343,000,000 of lawful money, and this could easily be increased to $500,000,000, without disturbing loans, by encroaching on the investments in Government bonds ($85,000,000) and other securities ($189,000,000), and possibly banking-house and real estate ($105,000,000). With this $500,000,000 as a reserve fund, gold or its equivalent, I would authorize the issue of three for one, or $1,500,000,000 of notes, making a loanable fund equal to $20 per capita that could be increased or diminished as demands of business require it. The reserve fund could be either gold, silver, or Government notes.

FIRST PURPOSE OF BANKS TO ISSUE CURRENCY.

Now, the first purpose of these banks should be to furnish the community with currency, the receiving of deposits being incidental. Indeed,

save for daily transactions of depositing collections and checking against them for current demands, the accumulation of funds at interest should be in savings banks. These, being run at small expense, can afford to pay such high rates to depositors as to induce a general saving and create great reservoirs of money. As much as possible, paying interest on balances should be avoided in banks of discount and deposit, and, I may say, of circulation.

CIRCULATION A FIRST LIEN UPON ASSETS.

As stated, the bank should be primarily one for circulation, and the circulation should be a prior lien upon all the assets of the bank. A redemption agency for Virginia notes should be at Richmond, for North Carolina notes at Raleigh, and so on, all details being carefully worked

out.

The banks show on October 6, 1896, $2,577,000,000 of resources. This I would swell to $4,077,000,000 with assets derived from the issue of $1,500,000,000 of notes, the notes representing not quite 40 per cent of the assets.

The bank statement would then be:

But this statement falls far short of what an abstract of all the money institutions of the country would show, as we see from the Comptroller's report of 1896 that, besides the 3,676 national banks, there are upward of 9,000 other establishments, and although only 5,780 of them reported to the Comptroller, they have a capital and surplus of $765,000,000, and some $3,200,000,000 of deposits, or double the deposits of the national banks.

In order to impress the insignificance of the demand for actual currency as compared with the combined assets of the 9,459 reporting national and State money institutions which could avail themselves of a proper law, I present it in the form of a statement:

Now, there is little likelihood that the bank notes would reach so large a sum as given above, but the amount given is not 20 per cent of the assets, which is nothing in comparison to the 90 per cent the Government allows issued upon its bonds. But the most startling thing in reviewing a statement involving $8,150,000,000 of assets, which would be increased to $9,000,000,000 if all had reported to the Comptroller, is

to consider in connection with it the ، $100,000,000 of gold reserve," say 1 per cent of the banking assets, so insignificant in proportion, and yet paralyzing everything.

It is an insult to the intelligence of the business men of the country, and those who would perpetuate its sway will rue it; but they are hard to move, for in a recent conversation with your Mr. Fowler, I asked him if it was not the fact that in pressing his view or discussing the currency question he had found as great a disregard of the first principles and ethics of money in the most luxurious bank parlor as between the plow handles-the repudiating theories of the latter equaled by the confiscating methods of the former-and he said that he had.

ASSETS THE SECURITY, NOT BONDS.

And only on Saturday last, in discussing the question with the Hon. Charles S. Fairchild, ex-Secretary of the Treasury, I asked him the same question, and he answered by a statement of the fact that in a recent meeting of his division of the banking association of the State of New York he had to combat the fixed belief in many that the security of Government bonds was absolutely an essential in currency, and that he presented, as I considered, a very strong view of this question. He said to them the Government bond was nothing without the assets of the bank; that on the higher plane of business and finance it must be recognized that upon the assets of the banks and their manipulation rested the revenues of the Government that furnished the money to pay the interest on the bond that gave it value; that the assets of the bank was our society, and if they were worthless the bond was worthless. He denied that the intermediary of the bond between the assets and the notes was necessary. His evident wish was to destroy the bond fetish that makes those who embrace it consider all who do not "disloyal." My deduction was that Mr. Fairchild agreed with Mr. Fowler and with me that financial education in high places is not amiss.

LOSS AND DISTRESS TO THE SOUTH.

And now to conclude, it is my judgment that the 10 per cent bank tax has brought greater loss and distress to the South than the desolation of the war.

Mr. JOHNSON. You can see that the national-bank system has furnished us a safe and uniform currency; and you regard that as admirable and indispensable for good currency?

Mr. TRIGG. We must have good currency, by all means.

The CHAIRMAN. Will you repeat what you said about the effect of the 10 per cent tax?

Mr. TRIGG. I maintain that the 10 per cent bank tax has brought greater loss and distress to the South than the desolation of the war. Mr. JOHNSON. Your complaint is that the national-bank system does not distribute the currency throughout the country at low rates of interest, isn't it?

Mr. TRIGG. It does not afford the South any currency at all, you

may say.

Mr. JOHNSON. You suggest as a remedy to repeal the 10 per cent tax on State banks, so you can revive the State banking system?

Mr. TRIGG. Yes, practically; but my principal object was to say the present condition is not satisfactory